speedy settlement of audit observations, inspection … week...speedy settlement of audit...

Speedy settlement of Audit observations, Inspection reports,

Disposal & Audit paras

The Audit of the receipts and expenditure of the state is conducted by AG

Karnataka, Bangalore as behalf of the comptroller and Auditor General of

India. The Aim and purpose of the audit is among other things, to bring to the

notice of Legislature, items of expenditure which are beyond the scope of the

authorization made by the Legislature, cases of irregular expenditure, loss of

public money caused by default, lack of supervision or other causes, as well as

excess or short collection of taxes, erroneous assessment of taxes etc., Such

Audit observation are included in the Annual Reports of the CAG of India on

the Accounts of the State Govt. Separate reports are prepared in respect of

public undertakings, PRI’s under Article 151(2) of the Constitution .The reports

of CAG are submitted to the Governor who will cause them to be laid before the

Legislature of the state. The Legislature refers the CAG report (Civil) i.e. PRI’s

other departments along with appropriation and finance accounts to the

committee on public on public accounts. Similarly the CAG Report

(Commercial) to the committee on public undertakings.

In the course of Audit, AG raises certain observations or asks for

clarifications in respect of expenditure incurred or Revenue realized by the

various officers of Govt. These observations are basis on the audit in central

office or during local audit or inspection of the accounts in the departmental

offices. Some of the observations, mentioned in the observation memoranda,

audit enquires, Inspection Reports are likely to lead to audit para in the CAG

Report to be placed before the Legislature. The expeditions settlement of these

observation is therefore, most important.

Inspection Reports

During the course of local inspections, the Audit staff will be issuing

“Enquiries” calling for information on various points. The audit officer generally

discusses with the Head of the office before finalizing his inspection report. The

Head of the office should seize this opportunity to check up whether are

relevant materials have been made available to audit to enable them to bring

out the fall facts of each case in the Inspection Report and by mutual

discussion is may be possible to settle on the object all the minor objections

and irregularity.

The Head of the office without waiting for the inspection report, initiate

action to rectify irregularities, defects omissions, which came to light in the

course of audit. For example if it is discovered that a sanction issued by the

Head of the Office was in excess of the powers delegated to him. Immediate

steps should be taken to get his action ratified by the competent authority.

The inspection report should be replied within fortnight from the date of

their receipt. If it is not possible interim replies indicating the action taken

should be sent to AG and final replies within 3 months.

The request of audit is reported to departmental officers so that

appropriate action is taken to rectify the defects and omissions where possible

and to prevent their recurrence. The delay in the disposal of audit observations

tends to defect the very purpose of audit. Besides, it may involve Govt in

available loss on account of fraud, defalcation and other serious irregularities,

which ma remain undetected for want of prompt attention. With the lapse of

time it may become more difficult to settle the audit observations due to

difficulty in locating the relevant records, or death, retirement of concerned

officers and officials.

Heads of officers should maintain a registered of audit observations in

the form given below.

Register of Audit (objections) observations

(Form No.21 Budget Mannual)

Sl

No.

Date of Receipt No and date of

Objections slip

Nature of

objection

Amount

objected

Date of

reply

Initials of

the Officers

Remarks

As soon as the audit observations is received from AG is should be

cantered in the register.

All the audit observations received in a calendar year should be serially

numbered. Each item of audit observations should be given a serial No. If there

are two or more items is a single memo or letter received from AG, separate

serial No. Should be given for each of them

An item should be treated as closed only after an intimation of

acceptance of the reply is received from the accountant General, if however, a

reply is not received during the half year and the item is not shown as

outstanding in the next half yearly list of outstanding objections received from

the AG, the item may be treated as closed. Items which are cleared should be

rounded off as Red ink, under the alterations of the Head of the Office.

There should be only one register for the whole office and one officials

should be made responsible for the maintenance of the register.

The register should be closed monthly and reviewed by the head of the

office, while doing so special attention should be given to the clearance of old

observations still pending. If there is any difficulty the head of the office should

keep contact with the office of AG and discuss with concerned.

The AG forwards to the Head of the Dept and secretaries to Govt. half

yearly statements of audit observations outstanding for more than six months,

during June and December every year.

Immediately as receipt of the half yearly statement the Head of the Dept

should address the concerned drawing officers to clear all the audit

observations expeditiously. He should obtain from the drawing officers every

month reports showing the details of the objections cleared during the previous

months and those awaiting clearance and the reasons for the delay in the

clearance of the outstanding items. The Head of the department should closely

watch the receipt of the monthly reports, review the progress in the clearance

of the objections. And issue suitable instructions to the drawing officers.

--------

Compliance to Pending Inspection Reports, Local Audit Reports and

Audit Reports.

The Accountant General (Audit) conducts periodical inspection of Government

Departments to test check the transactions and verify the maintenance of

important accounting and other records as per prescribed rules and

procedures, highlighting cases of financial irregularities, fraud,

misappropriations and issue inspection reports to the Heads of the Offices with

a copy to next higher authorities. Government Rules provide for prompt

response by the Executive to the inspection reports to ensure corrective action

and accountability for the lapses noticed. Serious irregularities proposed for

inclusion in the audit Reports are also brought to notice of Heads of

Departments by Audit. A half yearly report of pending inspection reports is

sent to the Secretary of the Administrative Department to facilitate monitoring.

Responses to audit observations and reports are not prompt in many cases.

There is therefore a need for significantly improved enforcement of the rules

regarding responses and follow ups. Appropriate incentives and penalties need

to e established for audit responsiveness like linking release of funds to a

department’s adherence to rules regarding audit observations.

At the field level all the drawing and disbursing officers shall be responsible for

sending compliance reports to the inspection reports / audit paras PAC paras

for years up to and inclusive of 2002-03. A report indicating year wise paras

outstanding in inspection reports / audit paras / PAC paras and the

compliance sent to audit in each quarter shall be sent to the Head of the

Department / internal Financial Advisor of the Administrative Department.

The format in which the report has to be sent is enclosed at Annexure – I.

Likewise the Heads of Departments shall forward a report in the format as in

Annexure II. Each quarter to the Finance Department. The Heads of

Departments and the Administrative Departments shall issue instructions to

the concerned treasuries not to honor non-salary bills presented by the

Drawing and Disbursing officers from whom reports are not received for the

quarter.

5

ANNEXURE – 1

Department: DDO:

Compliance Report on Paras Outstanding in Inspection Reports /

Local Audit Reports

Inspection Report/ Local Audit for the Period

Dates of Audit

Date of Receipt of Report

Year Wise No. of paras in Report

No. of paras for which replies are sent to Audit

No. of paras under Verification

No. of paras dropped based on compliance

No. of paras marked for verification during next audit

ANNEXTURE – II

(i) Compliance Report on Paras in Inspection Reports / Local

Audit Reports

Department:

No. of DDO’s

No. of DDO’s Audited

No. of IRs/LARs received

Year wise No. of paras in IRs/LARs

No. of paras for which replies are sent

No. of paras settled

No. of paras outstanding

(ii) Compliance Report on Paras on Audit Reports (Civil) and

Audit Reports (Revenue Receipts)

Department:

Sl. No.

Reference to para No. Page No. in the Audit Report for the year ended

Audit comment in brief

Reply of the Department

Remarks

6

Parliamentary Affairs and Legislation Secretariat

Notification

(First Published in the Karnataka Gazette on the thirteenth day of

December, 2000)

THE KARNATAKA TRANSPARENCY IN PUBLIC PROCUREMENTS

ACT, 1999.

[KARNATAKA ACT No. 29 OF 2000]

(Received the assent of the Governor on the tenth day of December 2000)

An Act to provide for ensuring transparency in public procurement

of goods and services by streamlining the procedure in inviting,

processing and acceptance of tenders by Procurement Entities, and

for matters related thereto.

Whereas it is expedient in public interest to render the process of

procurement of goods and services by Procurement Entities transparent

by streamlining the procedure in inviting, processing and acceptance of

tenders.

Be it enacted by the Karnataka State Legislature in the fiftieth

year of the Republic of India as follows:-

CHAPTER - I

1. Short title and commencement. - (1) This Act may be called the

Karnataka Transparency in Public Procurements Act, 1999.

(2) It shall be deemed to have come into force with effect from

the fourth day of October, 2000.

2. Definitions. - In this Act, unless the context otherwise

requires,-

7

(a) ‘Construction Works’ means putting up, demolishing,

repairs or renovation of buildings, roads, bridges or other structures

including fabrication of steel structures and all other civil works;

* [(aa) “E-procurement” means purchase of goods, obtaining of

services or undertaking of construction works by the procurement entity

through e-Procurement platform;

(aaa) “E-procurement platform” means a procurement platform

of electronic media comprising of procurement process set up and

managed by the state government through integrated internet enabled

procurement tools incorporated by customisation]

(b) ‘Goods’ means Machinery, Motor Vehicles, Equipment,

Furniture, Articles of Stationery, textiles raw materials, drugs, scientific

instruments, chemicals, food grains, Oil and oil seeds or other

commodity required for consumption, use or distribution by a

Procurement Entity in discharge of its public duties;

* clauses (aa) & (aaa) inserted by Act No. 13 of 2007 w.e.f 27-11-2006

(c) ‘Government’ means the State Government;

(d) ‘Procurement Entity’ means any Government Department,

a State Government Undertaking, Local Authority or Board, Body or

Corporation established by or under any law and owned or controlled by

the Government, and any other body or authority owned or controlled by

the Government and as may be specified by it.

(e) ‘Public Procurement’ or ‘procurement’ means purchase of

goods, obtaining of services or undertaking of construction works by the

procurement entities;

(f) ‘Services’ means the action of serving, attending upon,

helping or benefiting a Procurement Entity in the course of discharging

its public duties and includes construction works;

(g) ‘Specified goods or Services’ means the goods or services as

the case may be specified in a tender and identified in the contract

8

resulting from acceptance of a tender on account of a procurement

entity;

(h) ‘Tender’ means the formal offer made for supply of goods or

services in response to an invitation for tender published in a Tender

Bulletin;

(i) ‘Tender Accepting Authority’ means an officer or a

Committee appointed to accept tenders and a ‘ Tender Inviting Authority’

means an officer or a Committee appointed to invite tenders, under

section 9;

(j) ‘Tender Bulletin’ means a bulletin published for the State as

a whole or for any district or districts within the State containing the

details of invitation, processing and acceptance of Tenders;

(k) ‘Tender Bulletin Officer’ means a State Tender Bulletin

Officer or a Tender Bulletin Officer referred to in section 7;

(l) ‘Tender Document’ means the set of papers

detailing the schedule of works, Calendar of events, requirement of goods

and services, technical specifications, procurement criteria and such

other particulars, as may be prescribed for evaluation and comparison of

tenders.

* [Provided that for the purpose of e-procurement, the ‘tender

papers’ means set of documents in electronic form]

3. Provisions not to apply to certain Projects.- The provisions

of this Act in so far as they are inconsistent with the procedure specified

in respect of the Projects funded by International Financial Agencies or

Projects covered under International Agreements, shall not apply to

procurement of goods or services for such project.

* Inserted by Act No. 13 of 2007 w.e.f 27-11-2006

4. Exceptions to applicability. - The provisions of Chapter II

shall not apply to Procurement of goods and services,-

(a) During the period of natural calamity or emergency declared by

the Government;

9

(b) Where the goods or services are available from a single source or

where a particular supplier or contractor has exclusive rights in respect

of the goods or services or construction work and no reasonable

alternatives or substitutes exist:

Provided that for the purpose of this clause there shall be a

committee of three experts consisting of one technical representative of

the procuring entity one technical representative of the Government

organisation dealing with similar procurement and one representative

from a reputed Academic or Research Institution or Non-Commercial

Institution having expertise in such line to examine and declare that the

goods or services are available from a single source.

(c) Where the procuring entity having procured goods, services or

technology from a supplier or contractor determines that additional

supplies must be procured from the same supplier or contractor for

reasons of standardization and compatibility with the existing goods

service or technology;

(d) Where the goods or services are procured from certain

Departments of Government, public sector undertakings, statutory

boards and such other institutions specified by the Government and

such goods are manufactured or services are provided by them, for a

period not exceeding (three years)* from the date of commencement of

this Act;

** “(e) where the procurement is by the Government Departments,

State Government Undertakings, or any Board, Body or Corporation

established by or under any law and owned or controlled by the

Government or Zilla Panchayats constituted under the Karnataka

Panchayat Raj Act, 1993 or City Municipal Corporations established

under the Municipal Corporations Act, 1976 or City Municipal Councils

established under the Karnataka Municipalities Act, 1964 or the

Hyderabad Karnataka Areas Development Board constituted under the

Hyderabad Karnataka Area Development Board Act, 1993 or Malnad

Area Development Board constituted under the Malnad Area

Development Board Act,1991 or the Bayaluseeme Development Board

constituted under the Bayaluseeme Development Board Act,1994,-

(i) in case of construction works of all types the value of which does not exceed rupees five lakhs;

10

(ii) in case of goods or services other than construction works

the value of which does not exceed rupees one lakh;

*Act no. 4 of 2003 shall be deemed always to have been

substituted ** Clauses (e) & (ee) substituted by act no.21 of 2001 w e f

25-8-2001

(ee) where the procurement of goods or services is by the Grama

Panchayats and Taluk Panchayats constituted under the Karnataka

Panchayat Raj Act, 1993, Town Municipal Councils or Town Panchayats

constituted under the Karnataka Municipalities Act, 1964 or Urban

Development Authorities constituted under the

Karnataka Urban Development Authorities Act, 1987,-

for the purpose of implementing mini water supply scheme

or construction of school rooms and the value of such procurement

does not exceed rupees two lakhs; and

for other purposes and the value of such procurement does not

exceed rupees one lakh”.

(f) Where the goods or services are procured under rate

contracts from the Director General of Supplies and Disposals or from

Association of State Road Transport undertakings; and

(g) in respect of specific procurements as may be notified by

the Government from time to time.

(h) in respect of spot purchase of cotton by Spinning Mills,

Purchase of Oil seeds by the Karnataka Agro-Industries Corporation or

the Karnataka Co-operative Oil Seeds Grower’s Federation, purchase of

sugarcane by the Sugar Mills, direct purchase of paddy by the

Agriculture Produce Market Committees and the Karnataka Food and

Civil supplies Corporation, purchase of cloth by the Karnataka Handloom

Development Corporation, purchase of silk by the Karnataka Silk

Industries Corporation, purchase of milk by the Karnataka Milk

Producers Co-operative Federation, purchase of palm oil by the

Karnataka Food and Civil Supplies Corporation and the Karnataka Co-

operative Oil Seeds Grower’s Federation, purchase of cloth by the

Government Departments and public sector undertaking from the

Karnataka Handloom Development Corporation and purchase by such

11

other organizations or purchase of any other material as may be notified

by the Government from time to time.

CHAPTER II

REGULATION OF PROCUREMENT

5. Procurement other than by Tender Prohibited. - On and

from the date of commencement of this Act no Procurement Entity shall

procure goods or services except by inviting Tenders for supply.

6. Procurement Entities to follow Procedure.-No tender shall

be invited, processed or accepted by a Procurement Entity after the

commencement of this Act except in accordance with the procedure laid

down in this Act or the rules made there under.

7. Tender Bulletin Officers. - (1) The Government may by

notification appoint an officer not below the rank of a Deputy Secretary

to Government of the concerned department to be the State Tender

Bulletin Officer for the State in respect of that Department where the

procurement of that department covers more than one district.

(2) Deputy Commissioner of the District shall be the District

Bulletin Officer.

8. Publication of Tender Bulletin.- (1) The State Tender Bulletin

Officer, or as the case may be, the District Tender Bulletin Officer shall

on receipt of intimation relating to notice of invitation of tender from

tender inviting authority or information relating to details of acceptance

of tender under section 13 or rejection of tender under

section 14 from the tender Accepting Authority, publish within the

prescribed time, the State Tender Bulletin or as the case may be District

Tender Bulletin.

(2) The Tender Bulletin shall be made available for sale in the

office of the Tender Bulletin Officer and in such other places as the

Tender Bulletin Officer deems fit to make available.

9. Tender Inviting Authority and Tender Accepting Authority.

- The Procurement Entity may, by order, appoint, -

(i) one or more of officers or a Committee of Officers to be

the Tender Inviting Authority for any specified area,

12

specified procurement or specified class of goods or services, and

(ii) one or more of officers or a Committee of Officers to be the Tender Accepting Authority for any specified area

or Specified Procurement, specified class of goods and services:

Provided that where a multi-member Committee is already

appointed for any Procurement Entity for discharging the function of

accepting tenders, such Committee shall be deemed to be a Tender

Accepting Authority appointed under this Act.

10. Tender Scrutiny Committee .- The Tender Accepting

Authority may constitute a Tender Scrutiny Committee consisting of

such persons as it deems fit to scrutinise tenders above five crores in the

case of the Public Works, Irrigation and Minor Irrigation Departments of

the Government and above rupees one crore in other cases.

11. Opening of Tenders. - (1) The Procurement entity may

authorise either the Tender Inviting Authority or the Tender Accepting

Authority or any other Officer to open the Tenders and draw up a list of

Tenderers responding to the notice inviting tender, in each case.

(2) The Authority, or as the case may be the officer referred

to in sub-section (1) shall open the tender draw up a list of tenderers in

the prescribed manner and unless it is also the Tender Accepting

Authority, forward the tenders along with the list of tenderers, to the

Tender Accepting authority.

12. Duties of Tender Inviting authority. - (1) It shall be the duty

of every Tender Inviting Authority,-

(a) to take out notice inviting tenders at the behest of the

Procurement Entity in the prescribed manner;

(b) to communicate the notice inviting tenders by marking a

copy thereof to the Tender Bulletin Officer concerned immediately after

issue of the notice;

(c) to cause publication of notice inviting tenders in the

prescribed manner; and

(d) to supply the Schedule of Rates and Tender Documents to

every intending tenderer who has applied to get such documents.

13

(2) The Tender Inviting Authority shall take out notices,

communications and publications required to be taken out under this

section in such form, in such manner, by such mode and at such time

and interval as may be prescribed and different manner and mode of

publication may be prescribed for different procurements depending on

the value of the procurement.

(3) The Tender Inviting Authority shall collect all the details

received in response to the notice inviting tender, within the time

stipulated and unless it is itself authorised to open the tender shall

compile and forward all the tenders received to the Authority or Officer

authorised to open the tenders.

13. Acceptance of Tender. - The Tender Accepting Authority

shall, after following such procedure as may be prescribed pass order

accepting the tender and shall communicate the information relating to

acceptance of tender together with a comparative analysis and reasons

for accepting of tender to the procurement entity and the Tender Bulletin

Officer:

Provided that where the Tender Accepting Authority consists of

single officer who is due to retire within the next six months, from the

date fixed for the acceptance for tender, he shall not act to accept the

tender without obtaining prior approval of the Procurement Entity.

Provided further that subject to such general or special order

as may be issued by the Government from time to time, the Tender

Accepting Authority may before passing order accepting a tender

negotiate with lowest tenderer.

14. General rejection of tenders. - (1) The Tender accepting

authority may at any time before passing an order of acceptance under

section 13 reject all the tenders on the ground of changes in the scope of

procurement, failure of anticipated financial resource, accidents,

calamities or any other ground as may be prescribed which would render

the procurement unnecessary or impossible and report the same to the

Procurement Entity.

(2) The Procurement Entity shall thereafter communicate

the fact of the rejection under this section to all the Tenderers and also

cause the same to be published in the Tender Bulletin.

14

15. Power to give directions.- It shall be competent for the

Government to give appropriate directions to the Procurement Entity or

the Authorities under the Act in order to secure and maintain

transparency at any stage of the process of procurement, and it shall be

duty of the Procurement Entity or such authority to comply with the

directions.

16. Appeal. - (1) Any tenderer aggrieved by an order passed

by the Tender Accepting Authority other than the Government under

section 13 may appeal to the prescribed authority within thirty days from

the date of receipt of the order.

Provided that the prescribed authority may, in its discretion

allow further time not exceeding thirty days for preferring any such

appeal, if it is satisfied that the appellant had sufficient cause for not

preferring the appeal in time.

(2) The prescribed authority may after giving opportunity of being

heard to both the parties pass such order thereon as it deems fit and

such order shall be final.

(3) The prescribed authority shall as far as possible dispose of the

appeal within thirty days from the date of filing thereof.

17. Power to obtain information.- Notwithstanding

anything contained in this Act or in any other law for the time being in

force, the Government may with a view to ensuring transparency call for

and obtain, from any Authority under the Act, any information relating to

any matter in the process of procurement.

18. Power to call for records.- The Government may at any

time, with a view to ensuring transparency in the procurement process

call upon any authority under the Act,-

to produce records relating to invitation, processing and

acceptance of tenders;

to furnish the tender document, estimates/statements/accounts

or statistics relating to such tenders; and

to furnish report on any specific point incidental to the

procurement.

15

CHAPETER-II A

E-Procurement

*[18-A. E-Procurement,-(1) there shall be single unified e-

procurement platform for all procurement entity which may be notified

under subsection (2).

(2) With effect from such date as may be specified by the

Government, by notification, a procurement entity in respect of a class of

procurement, if any, as may be notified shall procure its procurements

through the e-procurement platform.

(3) Notwithstanding anything contained in this Act, the

Government may make rules, for specifying a separate procedure to be

followed by procurement entities notified under sub section(2) for e-

procurement through e-procurement platform; and for non-application of

other procedure of procurement to e-procurement.]

*[Inserted by Act No. 13 of 2007 w.e.f 27-11-2006

CHAPTER-III

MISCELLANEOUS

19. Officers deemed to be Public Servants.- Every Officer

acting under or in pursuance of the provisions of this Act or under a

rule, order or notification made there under, shall be deemed to be a

public servant within the meaning of section 21 of the Indian Penal Code,

1860 (Central Act XLV 1860)

20. Immunity for action taken in good faith. - No suit or

other legal proceeding shall lie against the Government or any officer or

authority empowered to exercise powers or perform the functions under

the Act in respect of anything which is in good faith done or intended to

be done under this Act.

21. Bar of Jurisdiction of Courts. - Save as otherwise

provided in this Act no order passed or proceedings taken by any officer

or authority under this Act shall be called in question in any court, and

no injunction shall be granted by any court in respect of any action

taken or to be taken by such officer or authority in exercise of powers

16

conferred on him or it, by or under this Act.

22. Act to override the other laws.- The provisions of this Act

shall have effect notwithstanding anything inconsistent therewith

contained in any other law for the time being in force or any custom or

usage, agreement, decree or order of a court or a Tribunal or other

Authority.

23. Penalty. - Whoever contravenes the provisions of this Act

or the rules made there under shall be punishable with imprisonment for

a term which may extend to three years and with fine which may extend

to five thousand rupees.

24. Power to remove difficulties .- If any difficulty arises in

giving effect to the provisions of this Act, the Government may, by an

order published in the Gazette make such provisions not inconsistent

with the provisions of the Act as appear to them to be necessary or

expedient for removing the difficulty:

Provided that no such order shall be made after the expiry

of a period of two years from the date of commencement of the Act.

25. Power to make rules. - (1) The Government, may by

notification, make such rules as are necessary for carrying out the

purposes of this Act.

(2) Every rule made or notification or order issued under

this Act shall as soon as possible, after it is made or issued, be placed

before each House of the State Legislature while it is in session for a total

period of thirty days, which may be comprised in one session or in two or

more successive sessions and if before the expiry of the session in which

it is laid or the sessions immediately following both Houses agree in

making any modifications in the rule, notification or order or both

Houses agree that the rule, notification or order shall not be made, the

rule or notification or order shall thereafter have effect only in such

modified form or be of no effect, as the case may be, so, however that any

such modification or annulment shall be without prejudice to the validity

of anything previously done under that rule or notification or order.

26. Savings.- All rules, regulations, orders, notifications

departmental codes, manuals, bye-laws, official Memoranda, circulars or

any other order made or issued before the commencement of this Act and

17

in force on the date of such commencement providing for or relating to

any of the above matters for the furtherance of which this Act is enacted

shall continue to be in force and effective as if they are made under the

corresponding provisions of this Act, to the extent they are not

inconsistent with the provisions of the Act and unless and until

superseded by anything done or any action taken or any rule,

notification or order, is made under this Act.

27. Repeal and savings.-

(1) The Karnataka Transparency in Public Procurements Ordinance,

2000 (Karnataka Ordinance No. 8of 2000) is hereby repealed.

(2) Notwithstanding such repeal anything done or any action taken under

the said Ordinance shall be deemed to have been done or taken under

this Act.

V.S.RAMADEVI

GOVERNOR OF KARNATAKA By Order and in the name of the Governor of Karnataka,

M.R. Hegde

Secretary to Government Department of Parliamentary Affairs and Legislation

18

THE KARNATAKA TRANSPARENCY IN PUBLIC PROCUREMENT

RULES 2000

(Published in the Karnataka Gazette, Extraordinary, dated 24-10-2000,

vide, Notification No. PWD 154 FC III 2000, Dated 24-10-2000)

No.PWD/154/FC-III/2000 Dated: 24th October 2000

NOTIFICATION

CHAPTER I

PRELIMINARY

In exercise of the powers conferred by Sub Section (1) of Section

23 of the Karnataka Transparency in Public Procurement Ordinance

2000, the Government of Karnataka hereby makes the following Rules

namely:-

1. Short title and commencement: -

(a) These rules may be called be called the Karnataka Transparency in

Public Procurements Rules, 2000,

(b) They shall come into force on the date of Publication in the Gazette

2. Definitions: In these rules, unless the context otherwise requires

(a) "Earnest money deposit" means the amount required to be

deposited by a tenderer along with his tender indicating his willingness

to implement the contract;

(b) "Pre-qualification" means the process by which the tenderers

are first screened for their capability and resources to implement the

contract before they are permitted to offer their tenders;

(c) "two-cover system" means a procedure under which the

tenderers are required simultaneously submit two separate sealed

covers, one containing the Earnest Money Deposit and the details of their

capability to undertake the tender which will be opened first and the

second cover containing the price quotation which will be opened only if

the tenderer is found to be qualified to execute the tender;

19

(d) "Two-stage Tender System" means a procedure under which

tenders for turn-key contractors are invited in two stages, the first stage

unpriced tender being a technical tender only on the basis of

conceptual design or performance specifications subject to technical as

well as commercial clarifications and adjustments to be followed by

amended tender documents and the submission of final technical

proposals and priced tenders in the second stage".

*(e) “Consultancy services” includes activities such as policy

Advices, Institutional reforms, Management, Engineering Services,

Construction Supervision, Financial Services, Investment and Merchant

Banking Services, Social and Environmental Studies, Identification,

preparation and implementation of projects to complement Government

of Karnataka capabilities.

*(f) “Consultants” means individuals Firms or Organisations

engaged for providing Consultancy Services in accordance with Chapter

VI A.

*(g) “Client” means the Procurement Entity engaging the

Consultants.

*(h) “Party” includes the client or the Consultant, as the case

may be and “parties” means both of them.

CHAPTER II

GENERAL

3. Categories of procurement: - (1) For the purposes of the

application of these rules, procurement is categorized as follows,

namely:-

(i) Construction; (ii) Supply of goods and services; and

(iii) Consultancy services*

20

CHAPTER III

PUBLICITY

4. Publication of tender bulletin: - (1) The District Tender

Bulletin shall be published by the District Bulletin Officer at least once in

every week.

(2) The State Tender Bulletin shall be published by the State

Tender Bulletin Officer at least once in every week.

(3) The Tender Bulletin Officer shall cause to be published all

notices inviting tenders and intimations of acceptance of tenders received

up to forty eight hours prior to the actual publication of the bulletin.

* Published in the Karnataka Gazette, Extraordinary, dated 29-05-

2008 vide notification No. PWD121 SO/FC 2003 dated 26th Sept 2003

(4) In case notice inviting tender or information relating to

acceptance of the tender needs to be published urgently, then the

Secretary to Government of the concerned administrative department in

the case of the State Tender Bulletin or the Deputy Commissioner in the

case of the District Tender Bulletin may for the reasons to be

recorded in writing, direct the respective tender bulletin officers to

publish an extraordinary issue of the tender bulletin.

5. Distribution of tender Bulletins:- (1) The Tender bulletin

Officer shall make the tender bulletin available in the concerned office of

the Government department, local authority statutory board, public

sector undertaking, university or cooperative institution.

(2) The Tender Bulletin Officer shall make available adequate

copies of the tender Bulletin at the office of the Tender Inviting Authority

whose notice inviting tenders and intimation of tender acceptance finds

place in the bulletin.

(3) Any person or institution can be enrolled as a regular

subscriber to the tender bulletin on payment of a fixed fee annually, half-

yearly or quarterly as the case may be.

6. Tender Bulletin to contain information only: - (1) The

tender bulletin shall contain only information of the notice inviting

tenders.

21

(2) Intimation of acceptance of tender shall not in itself create a

legal right.

(3) A notice inviting tender will not be invalidated merely on the

grounds that the notice has not been published in the News papers.

7. Information to be published in the state tender bulletin:

- The notice inviting tenders and decisions on tenders shall be published

in the State Tender Bulletin in cases where.-

(a) The Tender Inviting Authority is a secretary to Government, or a head of a government department, or the Chief Executive of a

public Sector Undertaking, Statutory board, apex Cooperative Institution, University or State Level Society Formed by the Government.

(b) The value of the procurement is rupees one crore and above.

8. Information to be published in the district tender

bulletin:-Subject to the provisions of rule 10, notices inviting tenders

and decisions on tenders shall be published in the district Tender

Bulletin of the district where the headquarters of the Tender Inviting

Authority is located.

Provided that where a value of procurement is rupees one

crore and above, it shall also be published in the State Bulletin.

9. Details to be mentioned in notice inviting tenders: -

The Notice inviting Tenders shall contain the Following details, namely,-

(a) The name and address of the procuring entity and the

designation and address of the Tender Inviting authority;

(b) Name of the scheme, project or programme for which the

procurement is to be effected;

(c) The date up to which and places from where the tender

documents can be obtained;

(d) The amount of earnest money deposit payable;

(e) The last date and time for receipt of tenders;

(f) The date, time and place for opening of tenders received; and

22

(g) any other information which the Tender Inviting authority

considers relevant.

10. Publication of notice inviting tenders in newspapers:-

(1) The Tender Inviting Authority shall have the notice inviting tenders

published in the Indian Trade Journal in all cases where the value of

procurement exceeds rupees ten crores.

(2) The number, editions and language of the newspapers in

which the notices inviting tenders shall be published will be based on the

value of procurement as per departmental rules.

(3) In cases where publication of Tender Notices is to be done

only in newspapers with circulation within the District, the Information

and Publicity Officer of the District shall be the competent authority to

release the advertisement and in all other cases the competent authority

to release the advertisement shall be the director of Information and

Publicity Bangalore.

(4) The notice inviting tender shall be given due publicity in

Newspapers and also by a fixing on notice boards in the District Offices.

The Director of Information and Publicity shall publish the Notice

Inviting Tenders as per instructions of the tendering department.

CHAPTER III

NOTICE INVITING TENDERS AND

TENDER DOCUMENTS

11. Technical specification contained in the tender

document: - (1) The technical specifications contained in the tender

documents shall include a detailed description of what is proposed to be

procured.

(2) Unbiased technical specifications shall be prepared by

observing the following safe guards, namely:-

(a) use of brand names and catalogue numbers shall be avoided and where it becomes unavoidable, along with the brand name the

expression “or equivalent” shall be added; (b) Where ever possible the appropriate Indian Standards with the

number shall be incorporated;

23

(c) In the case of construction tenders, detailed estimates shall be prepared by the competent technical authorities based on the

schedule of rates and standard data as revised from time to time

12. Commercial conditions:- (1) The tender documents shall

require all tenderers to pay an earnest money deposit at the rates as per

the departmental rules by means of a demand draft, bankers cheque,

specified small savings instruments or where the procuring entity deems

fit, irrevocable bank guarantee in a specified form of the department. The

tender documents shall clearly state that any tender submitted without

the earnest money deposit be summarily rejected.

Provided that any category of tenders specifically exempted by

the Government from the payment of earnest money deposit will not be

required to make such a deposit.

(2) The tender documents shall specify the period for which the

tenderer should hold the prices offered in the tender valid.

Provided that the initial period of validity shall not be less

than ninety days.

(3) The tender documents shall require that as a guarantee of

the tenderer's performance of the contract, a security deposit be taken

from the successful tenderer as per departmental rules.

(4) The tender documents and the contract shall include a

clause for payment of liquidated damages and penalty payable by the

tenderer in the event of non-fulfillment of any of the terms or whole of

the contract.

(5) The tender documents shall indicate the quantity proposed

to be procured in the tender, and the Tender Accepting authority shall be

ordinarily permitted to vary the quantity finally ordered only to the extent

of twenty five percent either way of the requirement indicated in the

tender documents.

13. Supply of tender documents:- (1) the Tender Inviting

Authority shall make available the tender documents from the date

indicated in the notice inviting tender.

(2) The Tender Inviting Authority shall ensure that the tender

documents are made available to any person, who is willing to remit the

cost of the documents,

24

Provided that in the cases where the procuring entity has a

system of registration of contractors, the tender documents will be

supplied only to registered contractors in the appropriate class.

(3) The Tender Inviting Authority shall send by registered

post or courier the tender documents to any prospective tenderer who

makes a request for the documents on payment of cost along with postal

charges at the risk and responsibility of the prospective tenderer.

14. Clarification to tender documents:- At any time after

the issue of the tender documents and before the opening of the tender,

the tender Inviting authority may make any changes, modifications or

amendments to the tender documents and shall send intimation of such

change to all those who have purchased the original tender documents.

CHAPTER - V

RECEIPT OF TENDERS AND TENDER OPENING

15. Place and time for receipt of tenders: - (1) The Tender

Inviting authority shall ensure that adequate arrangements are made for

the proper receipt and safe custody of the tenders at the place indicated

for the receipt of tenders.

(2) The Tender Inviting Authority shall permit the submission

of tenders by post or courier.

Provided that the Tender Inviting Authority shall not be

responsible for any delay in transit in such cases.

(3) The Tender Inviting Authority may extend the last date and

time for receiving tenders after giving adequate notice to all intending

tenderers in cases where:-

(a) The publication of the tender notice has been delayed;

(b) The communication of changes, in the tender documents to the

prospective tenderers under rule 14 took time;

(c) Any other reasonable grounds exist, for such extension which shall

be recorded in writing by the Tender Inviting Authority.

25

16. Marking of covers in which the tender is submitted:

- The tenderer shall be responsible for properly super scribing and

sealing the cover in which the tender is submitted and the Tender

Inviting Authority shall not be responsible for accidental opening of the

covers that are not properly super scribed and sealed as required in the

tender documents before the time appointed for tender opening.

17. Minimum time for submission of tenders:- (1)

Tender Inviting Authority shall ensure that adequate time is provided for

the submission of tenders and minimum time is allowed between date of

publication of the Notice Inviting Tenders in the relevant tender Bulletin

and the last date for submission of tenders. This minimum period shall

be as follows:-

(a) For tender up to rupees two crores in value, thirty

days, and

(b) For tenders in excess of rupees two crores in value

¹sixty days

(2) Any reduction in the time stipulated under sub-rule (1)

has to be specifically authorized by an authority superior to the Tender

Inviting Authority for reasons to be recorded in writing.

18. Opening of tenders: - (1) all the tenders received by the

tender Accepting Authority shall be opened at the time specified in the

Notice Inviting Tenders and in cases where an extension of time for the

submission of tenders has been given subsequent to the original Notice

Inviting Tenders in accordance with sub-rule (3) of rule 15 at the time so

specified subsequently.

(2) The tenders will be opened in the presence of the tenderers

or one of the representatives of the tenderer who chooses to be present.

19. Procedure to be followed at tender opening: - the

following procedure shall be followed at the tender opening:-

(a) All the envelopes received containing tenders shall be counted;

(b) All the tenders received in time shall be opened;

(c) A record of the corrections noticed at the time of the bid opening shall

be maintained

(d) The name of the tenderers and the quoted prices should be read out.

26

(e) The fact whether earnest money deposit has been made and other

documents required have been produced may be indicated, but this

shall be merely an examination of the documents and not an

evaluation;

(f) Minutes of the tender opening shall be recorded. The signatures of

the tenderers present shall be obtained unless any of the tenderers

or his representative refuses to sign the minutes.

20. Tender scrutiny committee:- (1) Tender

Accepting Authority may constitute a Tender Scrutiny Committee

consisting of such officers as it deems fit to scrutinize the tender

documents, supervise opening of tenders carry out the preliminary

examination and detailed evaluation of the tenders received and to

prepare an evaluation report for the consideration of the Tender

Accepting Authority.

(2) The Tender accepting authority shall constitute the

Tender Scrutiny Committee, where the value of tender exceeds rupees

five crores in respect of public works, irrigation department and minor

irrigation department and one crore in respect of all the other

departments.

CHAPTER - VI TENDER EVALUATION

21. Tender evaluation to be in accordance with

evaluation Criteria: - The Tender Accepting Authority shall cause the

evaluation of tenders to be carried out strictly in accordance with

evaluation criteria indicated in tender documents.

22. Time taken for evaluation and extension of tender

validity: - (1) The evaluation of tenders and award of contract shall be

completed, as for as possible, within the period for which the tenders are

held valid.

(2) The Tender Accepting Authority shall seek extension

of the validity of tenders from the tenderers for the completion of

evaluation, if it is not completed within the validity period of tender.

(3) In case the evaluation of tenders and award of

contract is not completed within extended period, all the tenders shall be

deemed to have become invalid and fresh tenders may be called for.

27

23. Process of tender evaluation to be confidential

until the award of the contract is notified: (1) The Tender Inviting

Authority shall ensure the confidentiality of the process of tender

evaluation until orders on the tenders are passed.

(2) Tenders shall not make attempts to establish unsolicited

and unauthorised contact with the Tender Accepting authority, Tender

Inviting Authority or Tender Scrutiny Committee after the opening of the

Tender and prior to the notification of the Award and if any attempt by

the tenderer to bring to bear extraneous pressures on the Tender

Accepting authority shall be sufficient reason to disqualify the tenderer.

(3) Notwithstanding anything contained in sub-rule (2), the

Tender Inviting authority or the Tender Accepting authority or the Tender

Scrutiny Committee may seek bona fide clarifications from tenderers

relating to the tenders submitted by them during the evaluation of

tenders.

24. Initial examination to determine substantial

responsiveness: - (1) The Tender Inviting Authority shall cause an initial

examination of the tenders submitted to be carried out in order to

determine their substantial responsiveness.

(2) During the initial examination the following factors

shall be considered, namely:-

(a) Whether the tenderer meets the eligibility criteria laid down

in the tender documents;

(b) Whether the crucial documents have been duly signed;

(c) Whether the requisite earnest money deposit has been

furnished;

(d) Whether the tender is substantially responsive to the

technical specifications set out in the bidding documents

including the testing of samples where required.

(3) Tenders which on initial examination are found not

to be substantially responsive under any of the clauses under

sub-rule (2) may be rejected by the Tender Accepting

Authority.

25. Determination of the lowest evaluated price:- (1)

Out of the tenders found to be substantially responsive after the initial

28

examination the tenderer who has bid the lowest evaluated price in

accordance with the evaluation criteria or tenderer scoring the highest on

the evaluation criteria specified as the case may be, shall be determined.

(2) In determining the lowest evaluated price, the following

factors shall be considered, namely:-

(a) the quoted price shall be corrected for arithmetical errors;

(b) In case of discrepancy between the prices quoted in words

and in figures, lower of the two shall be considered;

(c) Adjustments to the price quoted shall be made for

deviations in the commercial conditions such as the delivery

schedules and minor variations in the payment

terms which are quantifiable but deemed to be non-material in

the context of the particular tender;

(d) The evaluation shall include all central duties such as

customs duty and central excise duty inclusive of local levies

as a part of the price.

(e) In the case of purchase of equipment, the operation and

maintenance and spare part costs for appropriate periods as

may be specified in bid documents may be quantified, where

practicable and considered.

* Provided that for a period of five years from the

first day of April 2001, small scale industries in the state shall be given

Fifteen percent price preference in accordance with the New Industrial

Policy 2001-2006 issued by the Government in Order No. CI 167 SPI

2001, dated 30th June 2001 while determining the lowest evaluated

price.

Explanation : For the purpose of this proviso small

scale industry means an industrial undertaking in which investment in

fixed assets in plant and machinery whether held on ownership terms or

on lease or by hire purchase does not exceed rupees one hundred lakhs.

26. Preparation of evaluation report and award of

tenders:- (1) Tender Scrutiny Committee or the officer inviting the tender

shall prepare detailed evaluation report which shall be considered by the

Tender Accepting Authority before taking a final decision on the tender.

29

(2) As soon as the tenderer qualified to perform the contract

is identified, in accordance with (section13)** the Tender Accepting

Authority shall pass orders accepting the tender and communicate the

order of acceptance to the successful tenderer. The Tender Accepting

Authority shall also send to the Tender Bulletin Officer a statement of

evaluation of the tenders with a comparative statement of tenders

received and decision thereon for publication in the Tender Bulletin.

(*Proviso and explanation inserted by notification No.PWD 389 FC-

3/2001 dated30-8-2001w e f 1-09-2001 **Pwd 154 FC-3/2001(part-1)

2-04-2001)

(3) Within such reasonable time as may be indicated

in the tender documents, the tenderer whose tender has been accepted

will be required to execute the contract agreement in the specified format

(4) In case the successful tenderer fails to execute

necessary agreement under sub rule (3) within the period specified, then

Earnest Money Deposit shall be forfeited and his tender held as non-

responsive.

27. Pre-qualification Procedure: - (1) The tender inviting

authority shall for reasons to be recorded in writing provide for pre-

qualification of tenderers on the basis of:

(a) Experience and past performance in the execution of

similar contracts;

(b) Capabilities of the tenderer with respect to personnel,

equipment and construction or manufacturing facilities;

(c) Financial status and capacity.

(2) Only the tenders of pre-qualified tenderers shall be

considered for evaluation.

* “Provided that notwithstanding anything contrary

contained in these rules the tender inviting Authority may adopt the list

of prequalified tenderers empanelled by the Directorate of Information

Technology, Government of Karnataka in respect of computers,

peripherals and related services and call for price bids from all such

prequalified tenderers and the price bids received from the prequalified

tenderers shall be considered for evaluation by the tender accepting

authority, so far as may be in accordance with these rules."

30

28. Two Cover Tenders:- (1) In the case of construction or

supply and installation of equipment, tenders exceeding Rs. 50 lakhs in

value where the prequalification procedure or Turn Key Tender System

are not being followed the tender inviting authority shall follow the two -

cover tender system.

(2) The first cover shall contain the following information

about the tenderer namely:

(a) Experience and past performance in the execution of similar

contracts.

(b) Capabilities with respect to personnel, equipment and

construction or manufacturing facilities

(c) Financial status and capacity

(d) Any other information considered relevant.

* Proviso inserted by notification No. PWD 22 FC 3/2001, dated 1-3-

2001, w e f 19-4-2001

(3) The second cover shall contain the prices

quoted by the tenderer.

(4) The tender inviting authority shall cause the first cover

to be opened first and evaluate the tenderer's capacity on the basis of

criteria specialised in the tender document and on this basis, prepare a

list of qualified tenderers.

(5) Thereafter, the Second cover containing the price

quotations of only those tenderers found qualified under sub-rule (4)

shall be opened by the tender inviting authority.

(6) The tender inviting authority shall follow the procedure

outline in rule 25 and 26.

"28A. Two stage tender system. - (1) In the case of 'turn-key' contracts involving supply, installation, testing and commissioning of specially engineered plant and equipment

such as turbines, generators, boilers, switchyard, pumping stations, telecommunications, process and treatment plants

and the like for power, after, sewerage, telecommunication and similar projects or procurement of equipment subject to rapid technological advances such as computer and

31

communication systems, where it is undesirable or impractical to prepare a complete technical specifications in

advance, two-stage tender system may be adopted.

2) First stage tender will consist of a technical tender

only, without reference to the rates and prices for completing the

facilities and a list of deviations to the technical and commercial

conditions set forth in the tender documents or any alternate technical

solution as a tenderer wishes to offer and a justification therefore, always

provided that such deviation or alternate solution do not change the

basic objective of the contract and that they meet the conceptual design

or performance or functional specifications contained in the tender

documents.

3) The Tender Inviting Authority shall cause the first

stage tender to be opened and evaluate whether the tenderer meets the

required minimum acceptable qualification criteria, whether the tenderer

has submitted a technically responsive first stage tender and prepare a

list of qualified and responsive tenderers.

4) The Tender Inviting Authority shall convene a

clarification meeting of all first stage qualified tenderers and review the

tender's tender and prepare a memorandum of all required amendments,

additions, deletions and other adjustments.

5) The Tender Inviting Authority shall revise the tender

documents and specifications to permit new technologies and introduce

the right evaluation critcria.

6) Only those tenderers who have submitted a

technically responsive and acceptable first stage tender shall be invited

to submit Second Stage Tender.

7) The second stage tender shall consist of,-

(a) an updated technical tender incorporating all the changes

required by the tender Inviting Authority as recorded in the

memorandum prepared in sub-rule (4) or as necessary to

reflect any amendments to the tender documents issued

subsequent to submission of the first stage tender; and

(b) the commercial tender.

8) All second stage tenders must be accompanied by

specified tender security.

32

9) All second stage tenders (both technical and price) will

be opened in the presence of tenderers or their authorised

representatives.

10) The two stage tender shall be evaluated and awarded

following the procedure specified in rules 25 and 26.

CHAPTER – VIIA

CONSULTANCY SERVICES

* Published in the Karnataka Gazette, Extraordinary, dated 29-05-

2008 vide notification No. PWD121 SO/FC 2003 dated 26th Sept 2003

28B. Selection methods. - The following methods of

selection of Consultants shall be adopted as found appropriate for the

assignment.

(a) Quality and Cost Based Selection (QCBS);

(b) Least Cost Selection (LCS);

(c) Single Source Selection (SSS);

28C. Quality and Cost Based Selection (QCBS). - The quality and

cost based selection is based both on the quality of the proposals and the

cost of the services to be provided. In this method, the technical and

financial proposals shall be received in separate sealed envelope. The

technical proposals shall be opened first (unopened financial proposals

are kept under security) and the evaluation report of the technical

proposals shall be prepared and the approval of Tender Accepting

Authority shall be obtained. The financial envelopes of those consultants

who submitted responsive technical proposals meeting the minimum

qualifying scores shall be opened in the presence of the consultants or

their representatives. The proposals shall then be evaluated. Once the

financial proposals are evaluated, a combined evaluation of the technical

and financial proposals shall be carried out by weighing and adding the

quality and the cost scores, and the Consultant obtaining the highest

combined score shall be invited for negotiations. Since price is a factor of

selection, staff rates and other unit rates shall not be negotiated.

28D. Least Cost Selection (LCS). - The Least Cost Selection

method is more appropriate to selection of consultants for assignments

33

of a standard or routine nature (audits, engineering design of non-

complex works and so-forth) where well established practices and

standards exist. Under this method a minimum qualifying score for

quality is established and indicated while inviting proposals. Short-listed

consultants shall submit their proposals in two envelopes. The technical

proposals shall be opened first and evaluated. Proposals scoring less

than the minimum technical qualifying score shall be rejected, and the

financial envelopes of the rest shall be opened in public. The Consultant

with the lowest evaluated price shall be selected.

28E. Single Source Selection (SSS). - Under Single Source

Selection, the Client selects a specific consultant and requests him to

prepare technical and financial proposals, which are then negotiated.

Since there is no competition, this method is acceptable only in

exceptional cases and made on the basis of strong and convincing

justifications where it offers clear advantages over the competition,

because,-

(i) the assignment represents a natural or direct continuation

of a previous one awarded competitively (the estimated cost of the continuation assignment is not more than 50% of the

previous competitively awarded assignment), and the performance of the incumbent consultant has been satisfactory; or

(ii) a quick selection of the consultant is essential, e.g., in emergency operations such as natural disasters and

financial crisis; or (iii) the contract is very small in value (i.e., less than rupees

5,00,000 for consulting firms or organisations and less than

Rs. 1,00,000 for Individual Consultants); or (iv) only one Consultant has the qualifications or has

experience of exceptional worth to carry out the assignment.

28F. Steps in the Selection Process. - Depending on the

selection method adopted, the selection process carried out by the Client

generally shall include the following steps:

(i) Preparation of the Terms of Reference (TOR) for the

assignment; (ii) Preparation of the cost estimate to determine the budget

of the assignment;

34

(iii) Advertising to invite the expressions of interest from Consultants (mandatory in respect of assignments estimated

to cost more than rupees 20 lakhs); (iv) Short-listing to identify consultants qualified for the

assignment; (v) Preparation and issuance of the Request for Proposals

(RFP);

(vi) Preparation and submission of proposals by the consultants;

(vii) Evaluation of the technical proposals i.e., quality evaluation;

(viii) Evaluation of financial proposals; (ix) Final combined quality and cost evaluation to select the

winning proposal (QCBS); and

(x) Negotiations, if any, and signing of contract between the Client and Consultant.

28G. Contracts.- Two main considerations determine the type of

contract to be used for the various consultant assignments; the nature

and degree of the definition of the assignment, the distribution of risks

between the Client and Consultant and the level of contract supervision

the client will be able to provide. The following are the various types of

contracts that can be adopted for appropriate assignments, namely:-

(I) Lump Sum (Firm Fixed Price) contracts.- These are used

mainly for assignments in which the content and length of services and

the required output of the Consultant are clearly defined and for these

reasons the Consultant can generally control the scope of work and

duration of services. In these contracts payments are linked to clearly

specified outputs.

(II) Time-Based contracts. - Under this type of contract, the

Consultant provides services on a time basis according to quality

specifications, and Consultant's remuneration is based on, agreed unit

rates for Consultant Staff multiplied by the actual time spent by this

staff in executing the assignment and reimbursable expenses using

actual expenses and agreed unit prices.

(III) Percentage Contracts. - It is one where consultants are paid

an agreed percentage of the actual project cost.

35

(IV) Indefinite Delivery Contracts (Price Agreement or Standing

Offers). - These refer to contracts in which a Consultant is hired for a

specified period to undertake tasks as and when the need arises.

28H. Standard Requests for Proposals (RFP) and Contract

Formats. - Standard RFP (Requests for Proposals) and Contract Formats

as may be issued by the Government of Karnataka from time to time

shall be used. The Instructions to Consultants (ITC), Formats for

submission of Proposals (unless specified otherwise) as well as the

General Conditions of Contract (GCC) shall not be changed. However the

Data Sheet and Special Conditions of Contract enable the Procurement

Entities to amend or supplement Instructions to consultants (ITC) and

General Conditions of Contract (GCC) to reflect local conditions and

characteristics of assignment.

28I. Supervision of the Consultancy Contracts. - The Client is

responsible for supervising the assignment. He shall make arrangements

to monitor the progress of work, the timely completion of deliverables,

the staff months and money expended (for time-based contracts) and

determine where, within the contract, changes in the scope of work

might be appropriate. The Contract usually requires that the Consultant

shall submit regular progress reports and other periodical reports. The

Client shall ensure providing comments on these reports in a timely

manner. For large assignments, a Committee shall be constituted to

review Consultant’s work.

28J. Individual Consultants versus Consulting Firms. - (1)

Individual Consultants may be employed to assist the Client in various

areas of the project preparation and implementation. Individuals may be

engaged on assignments for which,-

(a) the experience and qualifications of the individual must be dominant;

(b) no support from an organization is needed for the Individual; and

(c) team work or multidisciplinary approach is not necessary.

When integrated technical work and joint responsibility for the

Consultants' output are important, it is necessary to hire a Consulting

Firm. The TOR of the assignment provides the basis for decision. As a

general rule, when dealing with project preparation services of a complex

36

nature, it is advisable to hire a firm, whereas individuals can be

considered for advisory services assignments or technical opinions on

specific matters in which specialist individual knowledge is the key issue.

As a practical rule, if three or more individuals are needed for an

assignment, it is often better to hire a Consulting firm, so that the firm

will be responsible for identifying the best individuals, ensuring

cohesiveness and technical solvency, as well as backup and transparent

administration.

28K. Hiring of Government Officials, officials of Government

Undertaking, Corporations etc.,. - Government officials and officials

employed in Government Undertakings or Corporations shall not be

engaged under consulting services, since there could be a conflict of

interest. This applies regardless of their being on leave or on deputation.

University Professors or Scientists from Autonomous Research Institutes

may be contracted individually, provided they are permitted by their

service conditions to undertake assignments for a specified period in a

year. Individual Consultants shall not be hired by Agencies, where the

relatives of the Individual Consultant, are employed in position of

influence.

CHAPTER - VII

APPEALS

29. Appeal: - An appeal under *(section 16) shall lie:

(a) To the Head of the Department concerned if the order is passed

by the Tender accepting authority subordinate to the Head of the

Department:

(b) To the Government if the order is passed by a tender accepting

authority which is Head of the Department, or a local authority or

a State Government Undertaking or a Board, Body Corporation or

any other authority owned or controlled by the Government.

By Order and in the name

Governor of Karnataka

K.R. BADIGER Under Secretary to Government

37

PROCEEDINGS OF THE GOVERNMENT OF KARNATAKA

Subject: Procurement of Works- Use of Standard Tender Documents

Preamble:

Rules regarding Procurement of Works are contained in the

Karnataka Transparency in Public Procurements Rules, 2000. Chapter

IV deals with tender documents. Para 167(1) of the Karnataka Public

Works Department (KPWD) Code Volume I specifies that contract for

works estimated to cost more than Rs.25, 000 should be prepared only

on regular Contract Form No. PWG-65. This document with little or no

modification is widely used by all Government Departments and some

PSUs, Municipal Corporations and local bodies. The document is the

same for all values of contract. However some PSUs have made

considerable changes in PWG-65 and are using the same for their works

contracts of large value. Some of the provisions of the Contract Form

PWG-65 are at variance/ do not conform with the provisions of the

Karnataka Transparency in Public Procurements Act 1999 and Rules,

2000. In addition, Circulars/Orders on various aspects of Procurement

have been issued in the recent past, which need to get reflected in the

tender documents. At present there is no prescribed pre-qualification

document. The Departments and PSUs executing large works have

devised their own pre-qualification documents with wide variations. In

order to ensure consistency across all Procurement entities in the State,

mandating of standard tender documents for Works has been under the

consideration of Government for quite some time now.

The Working Group constituted vide Government order No. PWD

1359 SO/FC 2001 dated 14/8/2002 reviewed the draft tender

documents for Procurement of Works. The Sub-Committee under the

Chairmanship of Secretary to Government, PWD, constituted by

Government order No. PWD 122 SO/FC 2003 Bangalore dated 8/5/2003

to examine and make recommendations regarding various aspects of

Procurement reforms in the state reviewed and finalized the draft tender

documents for works and made its recommendations. The Standing

Committee for Procurement reforms constituted vide Government order

No. PWD 1359 SO/FC 2001 dated. 5/8/2002 examined the

recommendations of the Working Group and Sub-Committee and decided

to place the draft tender documents on the website of Finance

Department and solicit comments and suggestions. Accordingly the draft

38

tender documents were hosted on the web site of the Finance

Department and a circular was issued vide No.PWD 141 SO/FC dated

29th

August 2003 requesting for comments and suggestions.

The standing committee considered the comments and suggestions

received in its meeting held on 13-4-2005; and has recommended to

government mandating the forms from 1-8-2005.

The Government have examined the recommendations. It is felt

that the works documents are tried out for a period of six months so that

any problems encountered in use of these documents can be suitably

addressed and taken care of before mandatory use in the entire state.

Hence, the following order.

Government Order No. FD 9 PCL 2004 (I),

Bangalore, Dated: 06.8.2005.

1. One Division each in PWD Buildings wing and General wing; one Division each in Water Resources Department and Minor Irrigation

Department; and one division each in the Corporations under the administrative control of the Water Resources Department, as may be identified by the concerned Principal Secretary to Government, shall

make use of standard tender documents given in Annexure I to VI to this government order in procurement of works from 1st September, 2005, for

a period of six months initially. This order supersedes the provisions contained in the codes, manuals or any other orders in this regard.

Form Number

Description of the document Value of Contract

K/W-1 Procurement of Works by inviting open tenders (Item Rate)- restricted to Registered

Contractors(Annexure I)

Less than Rs.20 lakhs

K/W-2 Procurement of Works by inviting

open tenders (Item Rate) – post-qualification criteria incorporated

(Annexure II)

More than Rs.20

lakhs but less than Rs.50 lakhs

(threshold for two cover tender system)

K/W-3 Procurement of Works by inviting open tenders (Item Rate) – Two

cover tender system- No Price

More than Rs.50 lakhs but less than

Rs.100 lakhs

39

Adjustment (Annexure III)

K/W-4 Procurement of Works by inviting open tenders (Item Rate) – Two cover tender system – With Price

Adjustment (Annexure IV)

More than Rs. 100 lakhs but less than Rs10 crores

(threshold for pre-qualification)

K/W-5 Pre-qualification by open invitation of Applications- Joint

Venture not permitted (Annexure V)

More than Rs.10 crores (threshold for

pre-qualification)

K/W-6 Pre-qualification by open

invitation of Applications – Joint Venture permitted (Annexure VI)

More than Rs.10

crores (threshold for pre-qualification)

2. Instructions to the Tenderers, Formats for submission of tender

(unless specified otherwise) and the General Conditions of Contract,

indicated in the standard tender documents shall not be changed.

However, amendments, supplementary instructions if any to the above,

to take care of local need/specific requirement, may be provided in the

Data sheet, Special Conditions of Contract, provided for in the

documents.

3. Amendments to the relevant codes and rules will be

incorporated in due course.

4. Additional tender document for Procurement of Works of value

of more than Rs.10 crores, documents for other types of contracts such

as Lump Sum, Percentage, Private Sector participation BOT, BOO, BOOT

etc and other documents as found necessary would be issued in due

course.

5. This order will apply for invitation of tenders for procurement of

works to be invited on or after September 1, 2005 and shall not be

applicable for tenders already invited and that are under process.

By order and in the name of

GOVERNOR of Karnataka

40


Subject : Procurement of Goods and Equipment- Use of

Standard Tender Documents.

Preamble:

Rules regarding Procurement of Goods and equipments are

contained in Karnataka Transparency in Public Procurements Rules,

2000. Chapter IV deals with tender documents. In the absence of

standard tender documents for Procurement of Goods and Equipments,

various Procurement entities of the State have been preparing and using

tender documents, with large variations. Mandating of standard tender

documents for Goods and Equipments has been under consideration of

the Government for quite some time now.



documents for procurement of some types of goods and equipments. The

standing committee for Procurement reforms constituted vides

Government order No. PWD 1359 SO/FC 2001 dated. 5/8/2002

examined the recommendations of the Working Group and decided to

place the draft tender documents on the website of Finance Department

and solicit comments and suggestions. Accordingly the draft Tender

Documents were hosted on the web site of the Finance Department and a

circular was issued vide No. PWD 141 SO/FC dated 29th

August 2003

requesting for comments and suggestions.




The Government have examined the recommendations, and are

pleased to issue the following order.

Government Order No. FD 9 PCL 2004(II),


41

1. Every ‘Procurement Entity’ under the government (as

defined in Section 2(d) of the Karnataka Transparency in Public

Procurements Act, 1999) shall make use of standard tender documents

given in Annexure I to VI to this government order in procurement of

goods and equipment from 1st September, 2005. This order supersedes

the provisions contained in the codes, manuals or any other orders in

this regard

Form

Number Description of the document Value of

Contract

K/G-1 Procurement of Goods and Equipment

by inviting open tenders (Annexure I)

Less than Rs.10

lakhs


by inviting open tenders

(Annexure II)

More than Rs.10

lakhs but less

than Rs.50

lakhs

K/G-3 Procurement of Computer Systems and

allied Equipment by inviting open

tenders (Annexure III)

Less than Rs.50

lakhs

K/Q-1 Procurement of Goods and Equipment

by inviting quotations from selected

vendors- Evaluation to be done for all

items put together

(Annexure IV)

Less than Rs. 1

lakh

K/Q-2 Procurement of Goods and equipment


vendors – Evaluation to be done for

each item separately (Annexure V)

Less than Rs.1

lakhs per

contract

K/S.O Format of Supply Order when

quotations are invited on Formats

K/Q-1 and K/Q-2 (Annexure VI)

2 Instructions to the Tenderers, Formats for submission of tender (unless specified otherwise) and the General Conditions of

42

Contract, indicated in the standard tender documents shall not be changed. However, amendments, supplementary instructions, if any,

to the above, to take care of local needs/specific requirements, may be provided in the Data sheet, Special Conditions of Contract, provided

for in the documents. 3. Amendments to the relevant codes and rules will be

incorporated in due course. 4. Additional tender documents for Procurement of Goods

and Equipments/Computer systems of value of more than Rs.50

lakhs with two cover tender system, Supply and Erection of

Equipment, Procurement of Health Sector Goods (Drugs and

Pharmaceuticals) and other documents as found necessary would be

issued in due course.

5. This order shall apply for invitation of tenders for

procurement of goods and equipment to be invited on or after

September 1, 2005 and shall not be applicable for tenders already

invited and that are under process.



SD/-

Additional secretary to the Government

Finance Department

43


Subject: Hiring of Consultancy Services - Use of Standard

Request for Proposals (RFPs) and Contract Formats.

Preamble:

Rules regarding Consultancy Services are contained in Chapter

VII A of the Karnataka Transparency in Public Procurement Rules, 2000

issued vide Government Notification No. PWD 121 SO/FC 2003 dated

26th

September 2003. The Chapter details the approved methods of

selection; steps in the selection process and types of contracts. Rule 28H

states that standard requests for proposals (RFPs) and Contract Formats


shall be used.


1359 SO/FC 2001 dated 14/8/2002 reviewed the draft RFPs and

contract formats for the various methods of selection and the contract

formats for various types of contracts. The Standing Committee for

Procurement Reforms constituted vide Government order No. PWD 1359

SO/FC 2001 dated. 5/8/2002 examined the recommendations of the

Working Group and decided to place the draft RFP documents on the

website of Finance Department and solicit comments and suggestions.

Accordingly the draft RFP documents were hosted on the web site of the

Finance Department and a circular was issued vide No. PWD 141 SO/FC

dated 29th


The standing committee considered the comments and

suggestions received in its meeting held on 13-4-2005; and has

recommended to Government mandating the forms from 1-8-2005.

The Government have examined the recommendations and are


44

Government Order No. FD 9 PCL 2004(III),

Bangalore, Dated : 06.8.2005

1. Every ‘Procurement Entity’ under the government (as defined in Section 2(d) of the Karnataka Transparency in Public Procurements Act, 1999) shall make use of standard RFP documents given in Annexure I to

XII to this government order in procurement of consultancy services from 1st September, 2005. This order supersedes the provisions contained in

the codes, manuals or any other orders in this regard.

Form

Number Consultant Entity

Method of

Selection

Type of

Contract

Value of

Contract

K/C-1

(Annexure I)

Firm/Organization/NGO Quality cum

cost Based Selection

(QCBS)

Time

Based

Less

than Rs.10

lakhs

K/C-2 (Annexure

II)

Firm/Organization/NGO Quality cum Cost Based

Selection (QCBS)

Time Based

More than

Rs.10 lakhs

K/C-3 (Annexure

III)

Firm/organization/NGO Quality cum Cost Based

Selection (QCBS)

Lump Sum

Less than

Rs.10 lakhs

K/C-4

(Annexure IV)


Cost Based Selection

(QCBS)

Lump

Sum

More

than Rs.10

lakhs

K/C-5

(Annexure V)

Firm/Organization/NGO Least Cost

Selection (LCS)

Time

Based

Less

than Rs.10 lakhs

K/C-6 (Annexure

VI)

Firm/Organization/NGO Least Cost Selection

(LCS)

Time Based

More than

Rs.10 lakhs

K/C-7 (Annexure VII)

Firm/Organization/NGO Least Cost Selection (LCS)

Lump Sum

Less than Rs.10

lakhs

K/C-8

(Annexure

VIII)


Selection (LCS)

Lump

Sum

More

than Rs.10

45

lakhs

K/C-9

(Annexure

IX)

Firm/Organization/NGO Single

Source Selection

(SSS)

Time

Based

Less

than Rs.5

lakhs

K/C-10

(Annexure

X)


Source

Selection (SSS)

Lump

Sum

Less

than

Rs.5 lakhs

K/C-11

(Annexure

XI)

Individual Single Source

Selection (SSS)

Time Based

Less than Rs.

1 lakh

K/C-12

(Annexure

XII)

Individual Single

Source Selection

(SSS)

Lump

Sum

Less

than Rs.1 lakh

2. Instructions to the Consultants, Formats for submission of

proposals (unless specified otherwise) and the General Conditions of

Contract, indicated in the standard RFP documents shall not be

changed. However, amendments, supplementary instructions, if any,

to the above, to take care of local needs/specific requirements, may be

provided in the Data sheet, Special Conditions of Contract, provided

for in the documents.



4. Additional documents as may be found necessary for other types

of contracts would be issued in due course.

5. This order shall apply for invitation of new proposals to be

invited on or after September 1, 2005 and shall not be applicable for

proposals already invited and are under process.



SD/-


Finance Department

46

GOVERNMENT OF KARNATAKA

NO. PWD 1359 SO/FC 2001(P-2) Karnataka Government Secretariat, Vidhana, Soudha,

Bangalore, dated 25th

October 2002

CIRCULAR

Subject: Awarding of contracts to the lowest evaluated technically

and commercially responsive tenderer meeting the prescribed

Qualification criteria including tender capacity and past

Performance.

It has come to the notice of the Government that some

Procurement Entitles are adopting the practice of splitting the contract

(particularly in Goods contracts) among all or some tenderers by offering

the price of the lowest tenderer to others and dividing the quantity of

Supply evenly or in other proportion. Such practices undermine the

rationale of competitive bidding promote collusion and go against the

provision of the KTPP Act and Rules.

The provisions of the KTPP Act and Rules provide for only the

acceptance of the lowest tender. The lowest evaluated responsive

tenderer deserves the full award, if he has satisfied the stipulated

qualifying criteria.

The following Provisions in the KTPP Act and Rules are

brought to the notice of all Procurement Entities:

(1) Section 13 of the Karnataka Transparency in Public

Procurement (KTPP) Act 1999 lays down that "The Tender

Accepting Authority shall, after following such procedure as may

be prescribed pass order accepting the tender and shall

communicate the information relating to acceptance of tender

together with a comparative analysis and reasons for accepting of

tender to the procurement entity and Tender Bulletin Officer".

(2) Rule 21, Chapter, VI of the KTPP Rules 2000 stipulates that

"The Tender Accepting Authority shall cause the evaluation of

tenders to be carried out strictly in accordance with evaluation

criteria indicated in the tender documents"

(3) Rule 24, details the procedure for the initial examination of

tenders to determine substantial responsiveness.

47

(4) Rules 25, explains the procedure of determination of the lowest

evaluated price.

(5) Rule 26(1) stipulates that "The tender Scrutiny Committee or

the officer inviting the tender shall prepare detailed evaluation

report which shall be considered by the Tender Accepting

Authority before taking a final decision on the tender."

(6) Rule 26(2) states that "As soon as the tenderer qualified to

perform the contract is identified in accordance with Section 13

of KTPP Act, the Tender Accepting Authority shall pass order

accepting the tender and communicate the order of acceptance to

the successful tenderer...."

From the above provisions in the KTPP Act and Rules, it is

clear that the Contract should be awarded only to the lowest evaluated

technically and commercially responsive tenderer, who meets the

prescribed qualification criteria including bid capacity and past

performance.

In view of the foregoing, the Government reiterates that

when tenders are invited for a specified quantity of Goods, the contract

should be awarded only to the lowest technically and commercially

responsive tenderer who meets the prescribed qualification criteria

including bid capacity and past performance.

The above instructions shall apply to all Government

Departments, Boards Corporations, Societies, Government Autonomous

organizations, Universities, Panchayat Raj institutions, Municipal

Corporations, Local bodies etc for which KTPP Act and Rules are

applicable.

All Procurement Entities shall ensure that the above

instructions are followed strictly in respect of all contracts irrespective of

the funding agency. It may be noted that any violation of the KTPP Act,

1999 and Rules, 2000 attracts the penal provision under Section 23 of

the Act.

The above instructions do not apply to tenders for fixing

Rate Contracts, for which instructions would be issued separately.

(Chiranjeev Singh) Principal Secretary to Government, Finance Department.

48


NO. PWD 1359 SO/FC 2001(P-2) Karnataka Government Secretariat, Vidhana Soudha,


October 2002

CIRCULAR

Subject: Procurement Planning, Packaging and Scheduling and

making Available funds to match with the requirement as

per approved Procurement Plan.

It is noticed that adequate attention is not given to Procurement

Planning, which is an integral phase of Procurement process. Planning of

packages is an important activity, which needs to be finalized before

taking up a project for implementation. In most of the cases, planning of

packages is not driven by the needs of the project (to ensure quality and

timely completion to achieve the project objectives), but rather by the

sanctioning powers, readiness of the designs, drawings and estimates at

particular point of time, availability of contracts and their specialization,

fund availability etc. The pros and cons of centralized and decentralized

procurement, bulking of procurement (in respect of Goods), small versus

big packages for works, packaging and slices do not seem to have been

examined thoroughly in most of the projects. There are no approved

Packaging Plans and Procurement Schedules (which determines the

timing of the various procurement activities such as invitation of tender,

sale of tender documents, receipt of tenders, preparation of evaluation

report, award decision, signing of contract, period of achievement of

milestones/delivery schedule, time of completion of works/supplies) for

most of the projects. Usually the field officers decide on the packaging as

the implementation of the project proceeds and invite tenders on that

basis. All these lead to haphazard completion of works and commitment

of scarce financial resources without realizing the project objectives.

No specific codal provisions on this aspect exist. However, Para 192(b) of

the KPWD Code volume I refer to the splitting of contracts. It reads as

follows: "It is permissible to give out different contracts to a number of

contractors relating to one work, even though such work may be

estimated to cost more than the amount up to which the officers are

empowered to accept the tenders. This splitting of the work should be

resorted to only in exception cases, in the interest of the speedy

execution of works or when the nature of the work is such that if any

49

difficulty for a single agency to execute its various aspects, subject to

obtaining prior approval of the authority who is competent to accept the

tender for the work as a whole. In case more than one contract is

awarded to the same contractor at the same time or one after the other

the sanction of the authority who is competent to accept the total of such

tenders and not the authority who can accept each tender with reference

to value of each contract is to be obtained." The principle behind

packaging appears to be the technical requirement, need for speedy

execution, preparedness to invite tenders and the expected competition.

In view of the above the following instructions are issued:

(1) The pros and cons of centralized versus decentralized procurement,

bulking of procurement (for Goods) and small versus big

packages for works, packaging and slices are to be thoroughly

examined, keeping in view the implementation Plan of the

project;

(2) After the packages are decided and approved, the appropriate Method

of Procurement and Procurement Schedule (Showing the timing

of the various procurement activities) should be framed

depending on the value of the packages;

(3) This Procurement Schedule should form the basis of the preparation

of designs and specifications, to match the invitation of tenders;

(4) The Procurement Plan should be used as a template for monitoring

thus helping with timely recognition of problems and also in

taking timely corrective action;

(5) The Procurement Plan should be used to help all participants to the

procurement process to understand the sequence and timing of

the procurement action (stages), their contributions and

responsibilities at each stage and who is responsible at the next

stage;

(6) The Procurement Plan should be used to record the progress of

planned action thus supporting monitoring of performance of

the responsible unit and the staff; and

(7) The Procurement Plan and Schedule Should form the basis for

working out requirement of funds and its release to the

implementing Agency. If the work is contemplated to be

completed within a year full provision, if within 2 years 40%

50

and 60% for I & II year and if it is 3 years 30%, 40% and 30%

for 1, II & III year shall be provided. No tender should be

awarded without having grant as indicated.

Authorities should ensure that these instructions are followed strictly in

respect of all projects irrespective of the funding agency.


Departments, Government Corporations, Societies, Semi Government

Autonomous Organizations, Universities, Panchayat Raj Institutions,

Municipal Corporations, Local Bodies, etc, for which KTPP Act and Rules

are applicable.

(Chiranjeev Singh) Principal Secretary to Government,

Finance Department.

51


NO.PWD 1359 SO/FC 2001(P-2) Karnataka Government Secretariat, Vidhana Soudha, Bangalore, dated 3rdDecember2002

CIRCULAR

Subject: Guidelines of conducting negotiations before award

of the contract.

1. It is observed that the Tender Accepting Authorities of

Government Departments, State Government Undertakings, Local

Authorities, Autonomous bodies and Corporations established by

or under law and owned and controlled by the Government,

sometimes negotiate with the lowest tenderer, before passing order

accepting the tender in terms of Sub Para 3 under Section 13 of

the KTPP Act.

2. It has to be recognized that:

• Negotiations even with the lowest tenderer defeats the very ethics of competitive tendering and should not be resorted solely for the purpose of reduction of rates;

• When negotiations are conducted in a routine manner, there is every possibility that the tenderer would have jacked up the

prices considerably and would reduce the prices marginally to satisfy the Employer/Purchaser with the result that the Employer/Purchaser may in most cases ends up paying more

than real cost of the work/goods;

• Negotiations very often leads to delay in award of the contracts; and

• Negotiations opens up opportunities for corruptive practices.

3. After careful consideration of the practices being followed

in the various organizations the following Guidelines are issued for

conducting negotiations, if needed be, in respect of Works Contracts.

3.1 Negotiations solely for the purpose of obtaining lower prices

would be appropriate only in exceptional circumstances, such

as lack of competition (less than three), single bid, suspected

52

collusion, or where the lowest evaluated responsive bid is

substantially above the estimated cost. In such cases also, the

first choice is for rejection of all tenders and reinviting fresh

tenders.

3.2 A substantially high tender is defined as under;

Period of contract and

provision of Price

Adjustment

Update Estimated cost

of the Work Upto Rs. 20 lakhs.

Updated Estimated cost

of the Work Rs. 50 lakhs and

above

(a) Contracts

where price adjustment is not provided

10% above the

update estimate or Rs. 1.Lakh whichever is

more

10% above the

updated* estimate

10% above the

updated* estimate

(b) Contracts

where price adjustment is provided from

the date of tenders

Does not arise ... Does not ... 5% above the

updated estimate or Rs.5,00,000

which ever is more.

* Estimate based on the current rates of labor and materials such as

cement, steel and other key materials.

3.3 In all cases where the tenders amount is not substantially high

(refer definition of substantially high given in Para 3.2 above), the

Tender Accepting Authority shall pass orders accepting the

lowest evaluated responsive and qualified tender only.

3.4 In respect of exceptional cases, as listed in Para 3.1 above

(other then those that are considered substantially high), the

Tender Scrutiny Committee or the Evaluating Officer as the case

may be, depending on the value of contract may choose to

propose to the Tender Acceptance Authority to reject all tenders

and reignite fresh renders or negotiate. In case the proposal is for

rejection and reinvitation, the causes leading to the rejection,

shall be examined by the Tender Scrutiny Committee or the

Evaluating Officer, who shall propose the changes, if any, to be

made in the estimated cost, specifications, provisions in the

53

Special Conditions of Contract or packaging, before reinviting the

tenders.

3.5 The Tender Accepting Authority shall pass orders for reinviting

tenders with changes if any on the tender document. Pre-tender

conference shall be held to explain the qualification criteria,

specifications and conditions of contract and clarify any

reservations if any to the prospective tenderers. The reservations

if any pointed out by the prospective tenderers shall be made in

the bidding documents.

3.6 After reentering the tenders shall be processed as per 3.1, 3.2

and 3.3 above.

3.7 In respect of tenders which are determined high in terms of

Para 3.2 above the Tender Scrutiny Committee or the Evaluating

Officer as the case may be, depending on the value of the

contract, shall (i) identify the item (s) for which the rates are

considered high and are contributing to the increase; (ii) get the

break up of rates (s) from the lowest evaluated responsive

tenderer and make a through examination of the reasonableness.

If the Tender Scrutiny Committee or the Evaluating Officer is

satisfied with the explanation by the tenderer it shall make its

recommendation for the acceptance of the tender.

3.8 In case where the Tender Scrutiny Committee or the Evaluating

Officer decides in favor of negotiation (in all exceptional cases

listed in Para 3.1 above), he shall seek the permission of the

Tender Acceptance Authority, detailing the reasons and the

points on which negotiations are proposed to be conducted. The

Tender Accepting Authority shall after careful examination of the

proposals approve the points (including the change in scope,

specifications, packaging etc.) on which negotiations are to held,

appoint a Negotiating Committee consisting of Tender Inviting

Authority, a representative of the Tender Scrutiny Committee or

the Evaluation Officer and Tender Accepting Authority. The

Committee shall conduct negotiations on the approved points

and make a record of the proceedings of the negotiations. The

Committee shall submit the proceedings to the Tender Accepting

Authority for taking decision. If the negotiations are successful

and the Tender Accepting Authority accepts the recommendation

54

of the Negotiating Committee, the tender is accepted at the

negotiated rates/terms and conditions and contract is concluded.

3.9 If the negotiations fail, the Tender Accepting Authority shall

issue orders on the future course of action to be taken by the

Tender Inviting Authority, which may include adoption of revised

procurement strategy (to include repackaging, execution by

departmental forces/facilities etc.)

4. In respect of Procurement of Goods, since there are no Schedule

of Rates and rates for equipment/goods satisfying the minimum

functional requirements vary widely, depending up to the quality,

specifications of the material input, award should generally be

made to the tenderer who is technically and commercially

responsive and meets the stipulated qualification criteria and who

is determined to perform the contract satisfactorily. If the tendered

rate is considered unreasonable (one of the method of determining

the reasonableness being the comparison with the market rate for

the same brand and specification of equipment,) negotiations shall

be conducted with the lowest tenderer. The procedure as outlined

in Para 3.7 and 3.8 above should be adopted scrupulously. Here

also the first choice would be to reject and reinvite the tenders,

after analyzing the causes leading to the rejection of tenders.

5.1 The above instructions are applicable only to Works/Goods

tenders received against notice inviting competitive tenders and

not for Consultancy Proposals, for which separate instructions

would follow. It is also not applicable for tenders invited to fix

rate contracts.

5.2 The above instruction shall apply to all Procurement Entities as

defined in Section 2(d) Chapter I of the KTPP Act.

5.3 The above Guidelines shall not be applicable to tenders invited

for Projects funded by International Financial Agencies or

Projects covered under International Agreements for which the

rules of funding agencies shall apply

6. Procurement Entities shall ensure that the above Guidelines are

followed strictly. It may be noted that any violation of the KTPP

55

Act !999 and Rules 2000 attracts the penal provision under

Section 23 of the Act.

(Approved by Principal Secretary Finance Department)

M.N. Seshappa Special Officer & Ex-officio

Deputy Secretary to Government


NO. PWD 1359 SO/FC 2001(P-2) Karnataka Government Secretariat,

Vidhana soudha, Bangalore, dated 30thJune 2003.

CIRCULAR

Subject: Two Cover Tenders System – Safeguards to be

adopted.

Rule 28 of the Karnataka Transparency in Public Procurement

Rules, 2000 explained the circumstances where Two-cover tenders

system is to be adopted and the procedure to be followed in such cases.

The rationale of the two-cover tenders system is that the tender

requirement will be strictly enforced and the possibility to consider a

tender, which has failed to most the tender requirement but has offered

an attractive price, will be eliminated. The second cover containing the

price quotations of only those tenderers found qualified as per tender

requirements shall be opened by the tender inviting authority.

In order to ensure transparency in the procurement process

and build public confidence in the system, the following safe guards shall

be adopted, whenever two-cover tenders system is adopted.

(i) At the time of opening of the First covers, the second covers

containing the price quotations shall be placed in a large cover and

securely sealed in the presence of the tenderers or their representatives,

who are present and also get the same signed by all those tenderers or

their representatives. This large cover containing the second covers

containing the price quotations shall be opened on a predetermined time

56

and data. This will instill confidence in the mind of the contracting

community;

(ii) The evaluation of the technical aspects contained in the first

cover should be completed within a reasonable period, and the time gap

between the opening of the first and the second cover should be the

minimum and, in any case not more than 45 days [In exceptional cases,

approval of the Secretary to the Government of the concerned

Department /Managing Director of the Corporation shall be obtained

where the period is more than 45 days but less than 60 days, If it

exceeds 60 days the tenders shall be reinvited].

(iii) The qualification criteria and the technical requirement

should not be restrictive/discriminatory and the specifications

particularly of equipment should be broad based and functional, without

any irrelevant details.

The above instructions shall apply to all Procurement Entitles

as defined in Section 2(d) of Chapter I of the Karnataka Transparency in

Public Procurement Act.

Procurement Entitles shall ensure that the above Guidelines are

strictly followed. It may be noted that any violation of the Karnataka

Transparency in Public Procurement Act 1999 and Rules 2000 attracts

the penal provision under Section 23 of the Act.

(B.K. DAS)

Principal Secretary to Government, Finance Department

57


PWD 140 SO/FC 2003 Karnataka Government Secretariat,

Vidhanasoudha,

Bangalore,Dated:1stSeptember 2003.

C I R C U L A R

Sub: Procedure for sale of tender documents.

1. The Notice Inviting Tenders (NITs) issued by the Tender

Inviting Authorities (TIAs) specify:

(i) the time and date (period being usually two to seven days) up to

which the applications for request of tender documents will be received; (ii) the time and date (usually one to three days) when the tender

documents would be sold to those who have submitted the applications earlier; (iii) the time and date up to which the tenders would be received as

well as the time and date on which the tenders would be opened (usually 7 to 8 days after the sale of tender documents).

2. The above procedure is being adopted to enable the TIAs to

know the number of

copies of the tender document to be prepared and provide adequate time

for the preparation of the re4quisite number of documents.

3. The procedure in vogue is against the spirit of the

Karnataka Transparency in Public Procurements (KTPP) Rules 2000 –

Rule 17 and should be discontinued. The tender documents should be

made available for entire period provided for the submission of tenders

as per KTPP Rule 17. For this purpose the TIAs shall prepare adequate

number of copies of tender documents before the publication of NIT and

sell the document as per instructions contained in KTPP Rule 13 from

the date of publication of the NIT up to the pre-declared time on the

working day previous to the day fixed for submission of tenders (either

original or extended).

4. The above instructions shall apply to all Procurement

Entities as defined in Section 2 (d) Chapter I of the KTPP Act (1999).

58

5. Procurement Entities shall ensure that the above instructions are

followed scrupulously. It may be noted that any violation of the KTPP Act 1999

Rules 2000 attracts the penal provision under Section 23 of the Said Act.

Sd/.,

(B.K. DAS)

ACS & Principal Secretary to Government Finance department

ROCEEDINGS OF THE GOVERNMENT OF KARNATAKA

Sub: Procurement Reforms – Measurement of Works and

Supplies – Use of Measurement Books

Preamble :

1. Paragraphs 208 & 209 of the Karnataka Public Works

(KPW) Accounts Code Volume I, Paragraphs 300 & 301 of the Karnataka

Public Works Departmental (KPWD) Code Volume I and Appendix VII of

the KPWD Code Volume II detail the instructions regarding issue of

measurement books, recording of measurements and storage of

measurement books. The salient instructions are:

(i) Payments for all work done otherwise than by daily

labour and for all supplies, are made on the basis of measurements

recorded in measurement books, Form PWG-27 in accordance with the

rules in paragraph 209;

(ii) The measurement should be considered as a very

important initial account record since it is the basis of all accounts of

quantities of work done whether by daily labour or by piece work or by

contract and of materials received which have to be counted or

measured:

(iii) All measurements should be neatly taken down in the

measurement book issued for the purpose and nowhere else;

(iv) The entries should be recorded in the measurement

book at the work spot indelibly in ink so as to render it difficult to

tamper with or to make unauthorized additions or alterations in entries

once made:

59

(v) As all payments for works or supplies are based on the

quantities recorded in the measurement book. it is incumbent upon the

person taking the measurement to record the measurements clearly and

accurately. He will also work out and enter in the measurement book the

figures for the contents or area column:

(vi) Measurements for all works and repairs should in the

first instance be taken by subordinates in charge and checked by Sub-

Divisional Officers and Divisional Officers [Assistant Executive Engineer

(AEE) is to check 75% in Case of works costing Rs. 5000 or more and

50% in case of other works and repairs. At least 50% of the works are to

be checked. Executive Engineer (EE) is to check 25% of items:

(vii) All final measurements irrespective of value to be

recorded by Assistant Engineer (AE) and AEE should check-measure

100% for all works estimated to cost Rs. 5000 and more if it is a

departmental work and Rs. 25.000 and more if it is A contract work. EE

should check 25% of the total value of work done if the works cost more

than Rs. 25,000;

(viii) No erasures of any kind should be permitted; mistakes

should be corrected by drawing the pen through the incorrect entry. and

inserting the correct figures or words between the lines. A reliable record

is the object to be aimed at, as the measurement book may have to be

produced as evidence in a court of law;

(ix) Apart from measurements, the description of the item as

per tender has to be written in the hand of the AE.

2. Paragraph 5 of Appendix IV-A of the KPWD Code Volume II

Rules for Registration of Contractors in PWD lay down that Class I and II

Contractors should engage at least one Engineering Graduate of every

work costing Rs.15 lakhs and above and Class III Contractor should

engage one Engineering Graduate for every work costing Rs.10 to 15

lakhs and at least one Diploma Holder on every work or group of works

together costing more than Rs. 2 lakhs but less than Rs. 10 lakhs

3. Clauses 7(a) and 7(b) of PWG-65 Form, the approved tender

document for works, state:

(i) A bill shall be submitted by the Contractor on or before the 15th

of each month of all items of work executed in the previous month;

60

(ii) The details furnished by the Contractor in the bill should be

measured by the subordinate in the presence of the Contractor or his

duly authorized agent. The countersignature of The Contractor or the

said agent in the measurement book shall be sufficient proof to the

correctness of the measurements, which shall be binding on the

Contractor in all respects;

(iii) If the Contractor does not submit the bills within the prescribed

time, the EE may depute within seven days of the prescribed date, a sub-

ordinate to measure up the said work. The countersignature of the

Contractor shall be obtained in the measurement book concerned with

reference to which, the Department may prepare the bill.

4. It is observed that the measurement books are not being used

in most of the Government Departments, Public Sector Undertakings,

Boards, Societies, and Local bodies for recording the receipt of goods and

equipment and payments of invoices are being made on the basis of

verification of receipt of materials. However most of the Government

Departments, Public Sector Undertakings, Boards, Societies and Local

bodies are using the measurement books for recording the

measurements as per provisions of KPWD Code. However the compliance

to the provisions of the Manual is resulting in lot of clercial work by the

technical officers whose primary duty is supervision of work in the field.

Also there are no consistent practices followed by various procurement

entities of the State.

5. The Sub-Committee constituted under the Chairmanship of

Secretary. Public Works Department by Government in GO No PWD 122

SO/FC 2003 dated 8.5.2003 to look into certain technical issues like

measurement books, from the Procurement Reforms Action Plan on the

recommendations of the Country Procurement Assessment Report

(CPAR) and make recommendations to the Standing Committee has

examined the issue, felt that the present provisions in the Codes and

manuals regarding measurement of works and supplies are archaic, time

and effort consuming, do not use the currently available information

Technology and has made recommendations for improvement of the

system. The Working Group constituted in GO No. PWD 1359 SO/FC

2001 dated 14.8.2002 for implementation of the said Action Plan

reviewed and endorsed the recommendations of Sub-Committee. The

Standing Committee constituted in GO No. PWD 1359 SO/FC 2001

dated 5.8.2002 for implementation of the said Action Plan on the

61

recommendations of CPAR, examined the recommendations of the Sub

Committee in detail.

Government Order No. FD 56 Pro. Cell 2004, Bangalore, 18thJanuary

2005.

1. Based on the recommendations of the Standing Committee

this order is issued for recording of measurement of Works and Supplies.

This order shall supersede the current instructions contained in the

Codes and Manuals.

(a) A uniform procedure for recording of measurements for

works and supplies should be enforced in all the Organizations

coming under the purview of the Karnataka Transparency in

Public Procurements Act 1999;

(b) The current provisions of the KPW Accounts and

Departmental Codes shall continue to be applicable for all

Works Contracts of value Rs.25 lakhs and less;

(c) In respect of Works Contracts of value more than Rs25 lakhs,

the Contractors shall be made responsible for submitting bills

duly supported by hard copy of detailed measurements of work

using electronic spreadsheets and making

computations thereof. The Contractor shall submit diskette/CD

ROM in addition to the hard copy;

(d) The Assistant Engineer in direct charge of the work shall take

independent measurements of the work and enter the same in

the electronic spreadsheet and make computations thereof. The

Assistant Engineer can make use of the detailed measurements

as given by the Contractor in the diskette/CD ROM. In any case

the responsibility for the correctness of the measurements shall

be entirely of the Assistant Engineer, as prescribed in the Codes

and Manuals;

(e) The measurements would be checked by the officers from the

hard copy of the spreadsheet as per present stipulations, and

computations would be made accordingly'.

(f) The countersignature of the Contractor or his authorized

Agent shall be obtained on each page in the hard copy of the

detailed measurement spreadsheets prepared by the Assistant

62

Engineer, which shall be binding on the Contractor in all

respects;

(g) The hard copies of the detailed measurement spreadsheets

shall be bound, numbered and stored, which shall be

considered as the measurement books, as referred to in the

Manuals and Codes. An index shall be prepared for each

Contract/Work, which shall show the details of the bills,

reference to measurement books and vouchers. Similarly the

diskettes/CD ROMs shall be indexed and stored.

(h) In respect of supplies – goods and equipment, the invoices

detailing the items supplied with specifications, quantity, rate

and amount would be sufficient. This shall be checked and

inspected by the receiving authority and accounted as per

normal accounting procedure prescribed by Government/

Corporation/ Board/ Society Local body from time to time.

Entry in measurement books need not be insisted upon.

2. This order will apply prospectively and shall not be

applicable for contracts concluded in the past.

3. This order shall apply to all Procurement Entities as defined in

Section 2(D) Chapter 1 of the Karnataka Transparency inPublic

Procurements Act. 1999.

4. This order shall be appropriately incorporated in the Conditions

of Contract of Tender documents.

5. The contents of this order shall be appropriately incorporated in

the Karnataka Public Works Accounts and Departmental Codes and

other Manuals.

By Order and in the name of the


(Sudhakar Rao)

Principal Secretary to Government

Finance Department.

63


Subject: Third Party Inspection of Works, Goods and

Equipment

Preamble:

1. There are no specific provision regarding Inspection of

Works in the Karnataka Public Works Department Manual, Clauses

12 (b) and (c) of the PWG 65. ... the approved tender document for

works, lay down the Guidelines for Inspection of Works. The

Contractor is primarily responsible to ensure that the works are

executed as per Specifications and deliver the Works is sound

condition. The Departmental Officers have to make periodical checks

to ensure the quality of works. The Government is concerned over the

deterioration in the quality of the works executed. To assist the

Departmental Officers to ensure quality works, in some major projects

separate in-house quality control organizations have been set up and

in some other projects funded by International Donor Agencies,

Supervision Consultants have been employed. However for most of the

works under execution, the Departmental Officers (here-in-after called

Employer) are responsible for ensuring the quality of the works.

2. Similar is the position in respect of procurement of

goods and equipment. The inspection is mostly in-house. In some

PSUs third party inspections are adopted on a case-by-case basis and

there is no consistency and uniformity of approach.

3. Complaints regarding acceptance of poor quality of

works and procurement of goods and equipment not conforming to

stipulated specifications continue to be reported.

4. The Sub-Committee under the Chairmanship of

Secretary PWD, constituted by Government vide No. PWD 122 SO/FC

2003, Bangalore dated 8/5/2003 to examine and make

recommendations regarding various aspects of Procurement Reform in

the State examined the measures to improve quality control of works,

inspection of goods and equipment and has made recommendations

for improvement of Quality Control. The Working Group constituted

vide GO No. PWD 1359 SO/FC 2001 dated 14/8/2002 reviewed and

endorsed the recommendations of Sub-Committee. The Standing

Committee for Procurement Reforms Action Plan based on CPAR.

64

Karnataka constituted vide GO No. PWD 1359 SO/FC 2001 dated

5/8/2002 examined the recommendations in detail.

5. Third Party Inspection of Works and Supplies would

ensure adherence to quality standards, leading to value for money.

This will also check corruptive practices and instill public confidence

in the system.

Government Order No. FD 55 Pro. Cell 2004,Bangalore, Dated:

17.02.2005

Based on the recommendations of the Standing

Committee the following orders are issued.

(a) The appointment of independent

Third Party Inspectors designated Quality Supervision Consultants

would go a long way in assisting the Departmental Officers to ensure

adherence to quality standards in construction works and

procurement of goods and equipment;

(b) Third Party Inspection shall be mandatory in

respect of all works contracts of estimated value more than Rs.2 crore

and all goods and equipment contracts estimated to cost more than

Rs.25 lakhs for an item of goods and equipment; (c)

Reputed Quality Supervision Consultants (either Individual of Firm)

known for integrity and professionalism should be appointed by

following the procedures for procurement of Consultancy services

issued vide GO No. PWD 121 SO/FC 2003, Bangalore dated

26/9/2003 with amendments issued from time to time thereof. The

Terms of Reference should be well defined. Detailed Checklists, to be

completed by the Quality Supervision Consultants, should be

prepared (with the assistance of experts if need be) to ensure that the

Consultants perform their obligations satisfactorily;

(d) The employment of the Quality Supervision

Consultants could be either for one or more contracts for works or

procurement of goods and equipment or for procurement made in a

term or stipulated period for a Procurement Entity;

(e) Heads of the Department of the Government

Managing Directors of PSUs Boards/ Societies Local Bodies shall

employ the Quality Supervision Consultants and order payments to

them on satisfactory performance. The expenditure on the

employment of the Quality Supervision Consultants shall be charged

to the cost of the works and goods and equipment under procurement;

(f) The Quality Supervision Consultant shall inspect

the works periodically, submit reports along with the prescribed

65

checklists duly completed to the Employer for taking action with a

copy to the Secretary to the Government Managing Director of the

Corporation/Board/Society/Local body. who will be responsible for

review of the Action Taken Reports of the Employer;

(g) The Quality Supervision Consultant shall inspect

the goods and equipment during manufacture/before dispatch after

receipt, assembly and commissioning as per the terms of the contract

and submit reports along with prescribed checklists duly completed to

the Purchaser with a copy to the Secretary to the

Government/Managing Director of the Corporation Board

Society/Local body who will be responsible for Review of the Action

Taken Reports of the Purchaser;

(h) The employment of the Quality Supervision

Consultant and the inspections conducted by them shall not absolve

the primary responsibility of the Employer to ensure completion of

works of sound quality as per stipulated specifications and of

Purchasers for Procurement of goods and equipment of good quality

as per stipulations in the specifications. The Quality Supervision

Consultants are there to assist the Employer/Purchaser in

discharging their primary responsibility.

(i) The Quality Supervision Consultants should not

be employed in respect of works and goods and equipment contracts

of projects, where a specialized in house Quality Control Organization

exists is planned or a separate Supervision Consultant has been

employed.

2. This order will apply prospectively and will not

be applicable for contracts conclude in the past or for tenders already

invited.

3. This order shall apply to all Procurement

Entities as defined in Section 2(d) of Chapter I of the KTPP Act, 1999

4. This order shall be appropriately incorporated

in the Special conditions of contract of the tender documents.

5. The contents of this order be appropriately

incorporated in the Karnataka Public Works Department and other

Manuals.


The Governor of Karnataka

( Sudhakar Rao)

Principal Secretary to the Government,

Finance Department

66


Sub : Procurement of works - use of Standard

Tender Document - Revision - Reg.

Read : (1) G.O.No.FD 9 PCL 2004 dtd:6-8-2005

(2) G.O.No.FD 6 PCL 2006 dated:21-03-2007

(3) G.O.No.FD 04 PCL 2006 dated:12-07-2007

(4) G.O.No.FD 04 PCL 2007 dated:2-4-2008

(5) Proceedings of the Procurement Reforms

Standing Committee meeting held on 2-8-2008.

PREAMBLE:

In Government Order dated:6-8-2005, Standard Tender

Documents given in Annexure 1 to 6 appended there with were

prescribed to be used in certain identified divisions of PWD and WRD

and the corporations under WRD for procurement of works from 1st

September 2005 for a period of six months initially on an

experimental basis, so that any problems encountered in use of these

Standard Tender Documents can be

suitably addressed before making the Standard Tender Documents

mandatory for procurement of works.

By the G.O.No.FD 06 PCL 2006, dated:21-03-2007 use of

Standard Tender Documents was made mandatory for all

procurement entities under the Government for procurement of works

specified in Annexure I to VII to the Government Order cited at (1)

above.

However, implementation of G.O No.FD 06 PCL 2006 dated:

21-03-2007 mandating Standard Tender Documents was deferred till

31-12-2007 as per G.O. cited at (3) above or till the final decision is

taken on the proposed modification and the same was extended till

30-06-2008 by the G.O’s cited at 3&4 above.

In the procurement Reforms Standing Committee Meeting held on 2-

8-2008, the proposal of the Public Works Department for certain

modifications to the tender documents was discussed in detail. The

Public Works Department had expressed the following difficulties in

the implementation of Standard Tender Documents prescribed

videG.O.No.FD 9 PCL 2004 (1) dated:6-8-2005:-

(i) Minimum financial turnover

(ii) Satisfactory completion of similar works

67

(iii) Owning of machineries

(iv) Furnishing of 10% FSD

(v) Payments to be made within 90 days to the Contractor

(vi) Design and Drawings part of agreement

(vii) Bid capacity, etc.,

The Committee considered in detail the proposal of the PWD and the

Government has decided to modify certain clauses of the STD.

Hence the following Order.

Government Order No.FD 4 PCL 2008, Bangalore, dated:14.10.2008

Under the circumstances explained in the preamble, the

following clauses of the Standard Tender Documents as prescribed in

Government Order dated: 6-8-2005 are modified to the extent noted

below:

Sl.No

.

Reference to standard

tender documents

Existing Clauses

Modified clauses

1. Clause 3.2.b. page 5

KW-1,2/3/4

Work experience: Satisfactorily completed (at least 90% of the

contract value), as prime contractor, at least one

similar work such as….. of value not less than Rs._____(usually not Less

than 80% estimated Value of contract)

a) Mandating satisfactory completion as a prime contractor for at least one

similar work to an extent of 50% of the cost of the work,

for all works costing up to and Rs.100 lakh. b) Mandating satisfactory

completion as a prime contractor for at least one

similar work to an extent of 80% of the cost of the work, for all works costing more

than Rs.100 lakh. The PWG Form 65 will be discontinued. The relevant

Paragraphs of the KPWD Code will be amended.

2.

Clause 3.1

Page 5 K/W-1, Clause 3.3.

Page 5

Assessed available tender

Capacity: (A*N*1.5-B) where A = Maximum value of civil Engineering

works Executed in any

In order to ensure higher

tender capacity and better selection of eligible contractors and also to

ensure more competition the

68

K/W-2,

Clause 3.6 Page 6 K/W-4

one year during the last

five years (updated to_____price level) taking into account the

completed as well as works in progress N= umber of years

prescribed for completion of the works

for which Tenders are invited. B = Value, at….. price level, of existing

commitments and on-going works to be

completed during the next _____years.

existing multiplying factor of

1.50 for assessing the available tender capacity may be modified to 2.50 for

works costing upto Rs.100 lakh.

However, the existing clause clause shall remain

the same for works costing more than Rs.100 lakh.

Sl.

No

Reference

to standard tender

documents

Existing Clauses

Modified clauses

3. Clause 3.2

(a) page Page 5 K/W-4

Qualification:

To qualify for award of this Contract, each Tenderer in its name

should have in the last five years i.e.2000-2001 to 2004-2005 (a)

achieved in at least two financial years a

Minimum financial turn over (in all classes of civil engineering construction

works only) of Rs.___ (usually not less than

two times the estimated annual payments under this contract)

Qualification:

To qualify for award of this contract each tenderer in his name should have in the

last five years’ period (a) achieved in at least two financial years an average

annual financial turnover of Rs.…… (usually not less

than the estimated cost under this contract for works costing up to Rs.100

lakh). However the existing clause remains the same for

works costing more than Rs.100 lakh.

4.

Clause 3.2

(c) page 5 K/W-4

Executed in any one

Financial year, the minimum quantities of work (usually 80% of the

peak annual rate of construction)

Executed in any one year

(for a continuous period of 12 months), the minimum

quantities of work (usually 80% of annual requirement)

for works costing up to Rs.100 lakh. However the existing clause remains the

same for works costing more than Rs.100 lakh.

69

5. Clause 3.3 (b) page 6

K/W-4

Liquid assets and/or availability of credit facilities of not

less than Rs._____(Credit

lines/letter of credit/Certificates from Banks

for meeting the fund requirement etc., (usually

the equivalent of the estimated cash flow for three months in peak

construction period).

Liquid assets and or availability of credit facilities of not less than Rs.……

(Credit lines / Letters of Credit / Certificates from

Banks) for meeting the fund requirement etc., (usually 30% of the amount of

contract) for works costing up to Rs.100 lakh.

However the existing clause remains the same for works

costing more than Rs.100 lakh.

Sl.No. Reference to

standard tender documents

Existing Clauses

Modified clauses

6. Additional Clause for inclusion:

In the case of the death of a contractor after executing the agreement/

commencement of the work, his legal heir, if an eligible

registered contractor and willing, can execute and complete the work at the

accepted tender rates irrespective of the cost of

the work

7. Clause 3.3 Page 5

K/W-3&4

Equipment Capacity: Each Tenderer should

Further demonstrate: (a) Availability by

owning the following key and critical equipment for

this work.

Equipment Capacity: Each tenderer should

further demonstrate: (a) availability by owning at

least 50% of the required / specified key and critical equipment for this work

and (b) the remaining 50% can be deployed on lease /

hire basis for all works provided, the relevant

70

documents (commitment

agreements etc.) for availability for this work are furnished.

8. Earnest money

Deposits. Clause 9.1 Page 6 of

KW1 Page 7

KW2/3 Clause 13.1 Page 8

KW 4

Earnest Money Deposit

The Tenderer shall furnish, as part of his tender, Earnest

Money Deposit in the amount as shown in

Column 4 of the table of IFT for this particular work. This

earnest money deposit shall be in favor of and may be in the

form of Banker’s cheque/Demand

Draft/Pay Order, in favor of_____payable

at_____or Cash or specified Small

Savings Instruments pledged to—

Earnest Money Deposit The tenderer shall furnish

as part of his tender, Earnest Money Deposit (EMD) at the following rates.

EMD amount as % of the estimated cost of the work

put to tender a) Upto Rs.20 lakh – 2.5% b) Rs.20 lakh and above up

to Rs.1 crore – 2% subject to a minimum of Rs.50,000/-

c) Rs.1 crore and above up to Rs.10 crore – 1.5%

subject to a minimum of Rs.2,00,000/- d) Rs.10 crore and above -

1% subject to a minimum of Rs.15,00,000/-

Sl.No. Reference to


Existing Clauses

Modified clauses

9. Performance Security

(Clause 25)

Performance Security Security Deposit

Within 20 days of receipt of the Letter of Acceptance the

successful Tenderer shall deliver to the

Employer a Security Deposit in any of the forms given below for

an amount equivalent to 10% of the contract

price plus additional security for unbalanced tenders

Performance Security Within 20 days of the

receipt of the letter of acceptance, the successful tenderer shall deliver to the

employer a security deposit in any of the forms given

below for an amount equivalent to 5% of the contract price plus

additional security for unbalanced tenders in

accordance with clause 25.5 of ITT & Clause 44 of the conditions of contract

71

in accordance with

Clause 25.5 of ITT and Clause 44 of the Conditions of

Contract.

for all works.

10.

Clause 7 Page 22 KW 4

Subcontracting:

The Contractor may subcontract with the approval of the

Employer but may not assign the

Contract without the approval of the Employer in writing.

Subcontracting does not alter the Contractor’s

obligations

This Clause is deleted.

11. Clause 37.1

Page 27 KW 4

Payments:

Payments shall be adjusted for

deductions for advance payments, other

recoveries in terms of the contract and taxes, at sources, as

applicable under the law. The Employer

shall pay the Contractor within 60 Days of

submission of bill.

Payments:

Payments shall be adjusted for deductions for advance

payments other than recoveries in terms of contract and taxes, at

source, as applicable under the law. The Employer shall pay the Contractor within

60 days of submission of the bill. The contractor

shall be liable to pay liquidated damages for shortfall in progress.

For progress beyond the agreed programme payment

is subject to availability of the grants.

Sl.No. Reference to

standard tender

documents

Existing Clauses

Modified clauses

12. Clause 49

page 29 K/W-4

49.1) The Employer or

the Contractor may terminate the Contract if the other

Party causes a fundamental breach of the Contract.

49.2) a to h _ _ _ _ _ _ _ _ _ _ _

Termination

49.1) The Employer may terminate the Contract if the other

party causes a fundamental breach of the Contract. 49.2) Sub Clause (b) & (d)

under this clause are deleted.

72

13. 13 Clause 24

Page 24 KW4

Disputes:

Procedure for resolution of Disputes through

arbitration

Disputes

Arbitration Clause will not be applicable wherever the value of the work is less

than Rs.100 lakh.

14.

14 Clause 34.4 Page 26

K/W4

Variations: The Contractor shall promptly request in

writing the Employer to confirm verbal

orders and if no such confirmation is received within 15

days of request, it shall be deemed to be an order in writing by

the Employer.

Variations: The Contractor shall promptly request in writing

to the Employer to confirm verbal orders and the officer

issuing oral instructions shall confirm it in writing within 30 days, failing

which the work shall be carried out as though there is no variation. In case

variation is approved it shall be accompanied

by BOQ, failing which the contractor shall be responsible for deviation if

any. Further, approval of Govt. has to be obtained for

the variation exceeding 5%.

15. Clause

Sec. 3 1.4 Column 7 /

Foot Note 18 K/W-2

Certificates:

Attach certificate from the Engineer- in-

charge

Certificates:

The contractor shall enclose /attach all the necessary

certificates duly attested by the employer.

Sl.No.


tender documents

Existing Clauses

Modified clauses

16. G.O.No.FD 06 PCL 2006

Bangalore Dated:21.3.2

007 Para No.4

Additional Tender Documents for Procurement of Works

of Value of more Rs.10 crore, documents for

other types of contracts such as lump sum, percentage,

private Sector participation BOT, BOO, BOOT etc.,

and other documents and found necessary

Para 4 of the operative portion of the G.O. will be suitably

modified. Since, it is proposed

to dispense with Form PWG 65 Standard Tender

Documents will be applicable for all contracts irrespective of the value of

the contract. As far as works costing Rs.10.00

73

would be issued in due

course.

Crore & above KW-4 shall

be adopted.

17. Identical Clause numbers

in Tender Documents : All the Standard Tender

Documents may be redrafted with same clause numbers for various

aspects of similar activity to avoid references to

individual documents. Wherever certain clauses are not applicable in

different tender documents, the title shall remain but the content

shall be mentioned as “deleted”.

There is no change in the remaining clauses of the

Standard Tender Documents. The forms PWG 65 and 66 Tender

Documents are discontinued hence-forth.

2) Instructions to the Tenderers, Formats for submission of

tender (unless specified otherwise) and the General Conditions of

Contract, indicated in the standard tender documents shall not be

changed. However, supplementary instructions, if any, to the above, to

take care of local need/specific requirement, shall be provided in the


documents.

3) Amendments to the relevant Codes and Rules will be

incorporated indue course.

4) This order will apply for invitation of tenders for

procurement of works to be invited hereafter and shall not be

applicable for tenders already invited.

By Order and in the name of

Governor of Karnataka,

(M.R.SREENIVASA MURTHY)


Finance Department

74

PROCCEDINGS OF THE GOVERNMENT OF KARNATAKA

Subject: Provision for price Adjustment for specified

materials for works – Revision Reg.

Read : Govt. Order No. FD 59 PRO CELL 2004, dated:26-

11-2004

Preamble :

In Government Order No. FD 59 PRO CELL 2004 dated:

26thNovember 2004 read above, the following instructions were

issued about price adjustment.

(a) A Price Adjustment clause shall be included in all Works

contracts whose estimated cost put to tender is Rs.100 lakhs or more

and the period of completion is 12 months or more. The

Price Adjustment clause and the formulae for adjustment shall be as

per Annexure-1 of the said G.O.

(b) In works contracts where, Price Adjustment Clause is

provided the Price Adjustment shall be admissible from the date of

opening of tenders (original or extended).

(c) Price Adjustment Clause shall not be included in Goods

and Equipment tender documents. However in respect of tender

documents for procurement of electric cables, transformers,

generators, motors, that have raw material component subject to

price fluctuations, appropriate Price Adjustment clauses may be

incorporated by the Tender Inviting Authority in the tender

documents, with the specific approval of the concerned Head of

the Department or Managing Director of the Public

Undertaking/Board.

The PWD has requested for certain modifications in the above

conditions as the Department is facing problem in procurement of

agencies for implementation of various works due to rapid fluctuation

of rates of construction materials especially cement, steel and

bitumen. This has resulted in poor response to the tenders floated by

the department and also slowdown or stoppage of on-going works by

the agencies. Further, the tender premiums being quoted by the

agencies are very high which creates an opinion that the Schedule of

Rates or the estimates are defective. Hence, P.W.D has requested to

resolve this problem suitably by modifying the existing contract

agreement to absorb the fluctuation in the market prices of major

construction viz., cement, steel and bitumen.

In the procurement Reforms Standing Committee

Meeting held on 2-8-2008, the proposal of PWD for effecting certain

75

changes in the price djustment clause in the Tender Documents was

discussed in detail and considering the frequent fluctuations in the

basic rates of construction materials i.e. Cement, Steel, Bitumen, it

was recommended by the Committee to modify the Government Order

dated: 26.11.2004 referred to above.

The Government has considered the issue in detail and accordingly

the following orders are issued.

Government Order No.FD 3 PCL 2008, Bangalore, dated:21-11-2008.

In the circumstances explained in the preamble, in modification of

the Government Order dated: 26-11-2004, it is directed that the

following price adjustment methods are applicable hereafter.

a) For all works costing more than Rs.50 lakhs, if the

period of execution is more than 12 months, the price adjustment will

be calculated as prescribed in Annexure to G.O. No: FD 59 PRO

Cell/ 2004, dt: 26.11.2004.

b) If the period of execution is more than 6 months but

less than or equal to 12 months for work costing more than Rs.50

lakhs, star rates in respect of specified materials (cement, steel and

bitumen) only shall be payable to the contractor based on the

all India average wholesale price index for the said materials.

The star rates adjustment shall be as per the increase or

decrease in the index as applied to the said materials between

the last date for receiving bids and the date of execution as per

the approved programme of works submitted by the

contractor at the time of execution of agreement which shall

mandatorily be a part of the agreement.

c) If the period of execution is less than or equal to 6

months, for all works irrespective of the cost of the works, price

adjustment or star rates shall not be applicable.

d) In works contracts where price adjustment clause is

provided, the price adjustment shall be admissible from the date of

opening of tenders (Original or extended).

76

e) Price adjustment clause shall not be included in Goods

and Equipment tender documents. However, in respect of tender

documents for procurement of Electric Cables, Transformers,

Generators, Motors that have raw material component subject

to price fluctuations, appropriate price adjustment clauses

may be incorporated by the Tender Inviting Authority in the

tender documents, with the specific approval of the concerned

Head of the Department or Managing Director of the Public

Sector Undertaking/Board.

2. The above mentioned methods of price adjustment clause are

subject to the following conditions:

i) The price adjustment clause or the star rates shall not be admissible if the contract period is extended due to lapse on the part of the contractor.

ii) For the cases (a) and (b) above, if the contract period is

extended due to no fault of the contractor, the modified programme

shall be approved by the competent authority and shall become a part

of agreement for which price adjustment/star rates will be applicable.

iii) For the purpose of working out price adjustment and star

rates, the price index issued from time to time by the Ministry of

Commerce and Industry, Government of India should be adopted.

iv) The formulae for price adjustment shall be as prescribed in

Annexure-1 to the G.O. No: FD 59 PRO.Cell/2004 dated: 26.11.2004,

which is appended.

3. The above instructions will only be applicable prospectively and

shall not be applicable for contracts concluded in the past or being

concluded presently or for tenders already invited.

4. The above instructions shall apply to all Procurement Entities as

defined in Section 2(d) Chapter I of the Karnataka Transparency in

Public Procurement Act, 1999.

5. The above instructions should be appropriately incorporated in the


By order and in the name of the


(M.R. Sreenivasa Murthy)

Principal Secretary to Government,

Finance Department

77


No. DPAR 2 EPR 2009

Karnataka Government Secretariat M.S. Building

Bengaluru, Dated: 9th October 2012

NOTIFICATION

In exercise of the powers conferred by sub-section (2) of

section 18A of the Karnataka Transparency in Public

Procurements Act, 1999 (Karnataka Act 29 of 2000), read

with section 21 of the Karnataka General Clauses Act, 1899

(Karnataka Act III of 1899) in supersession of notifications

specified in the Annexure to this notification issued in this

behalf, the Government of Karnataka hereby specify that all

procurement entities, in respect of every procurement under

the said Act, value of which exceeds Rupees five lakhs

(Rs.5.00 lakhs) shall procure their Procurements through e-

Procurement platform with effect from the third day of

December, 2012.


Governor of Karnataka (H.R Nagaraja) Desk Officer1

Dept. of Personnel & Administrative Reforms,

(e-Governance)

78

PROCEEDINGS OF THE GOVERNMENT OF KARNATANA

Sub: General delegation of common financial powers to

Heads of Departments and others - Review of.

Read: (1) G.O.No.FD 7 TFP 91, Bangalore, Dated:16-09-1991.

(2) G.O.No.FD 1 TFP 95, Bangalore, Dated:27-06-1995.


(4) G.O.No.FD 4 TFP (2) 99, Bangalore, Dated:15-10-1999.

(5) G.O. No.FD 1 TFP 2001, Bangalore, Dated:02-02-2001.

PREAMBLE:

In the Govt. Order dated: FD 1 TFP 2001 dated:02-02-2001 read at (5)

above, order was issued enhancing the General delegation of common

financial powers to Heads of departments, Divisional level officers, District

level officers, Sub-division level officers and Taluk level officers.

In respect of certain departments, special financial powers have also been

delegated for purchases, repairs, works, write off etc. These powers will be

exercised only by the particular departments to whom such powers have been

delegated.

The common financial powers were enhanced in 2001. The question

of revising these powers was under consideration of the Government. While

revising such powers, special powers delegated to different departments

were also reviewed. It was found that all powers could be brought under

specific items which are common to all departments with some

modifications. Therefore, an attempt has been made to bring all such

powers both under special and common financial powers in one place so as

to make applicable to all departments. This will reduce the proposals from

different departments for delegation of special powers. In course of time the special powers delegated to certain departments will be withdrawn. Accordingly following order is issued.

Govt. Order No.FD 2 TFP 2010, Bangalore, Dated:30-04-2010.

After careful consideration Government are pleased to delegate

common financial powers as specified in the Annexure to this order to all the

79

Heads of Departments and other departmental officers.

2. Subject to provision in para 6 hereunder, these orders are in super

session of the delegation of powers as contained in part-III of Manual of

Financial Powers 1967 and all orders issued as read above.

3. Wherever Special Powers are delegated to the Departments in

respect of certain items included in the Annexure of this order, such

Departments should exercise either special powers or common powers for such

items but not both, until the Special Powers delegated for these items in respect of

their Department are withdrawn.

4. No authority can sub-delegate any of the financial powers delegated by

this order to any other authority wholly or partly.

5. These orders shall come into force with immediate effect.

6. The designated officers as per Government Order No. FD 2 TFP

98 dated: 17-5-1999 will exercise the powers as specified in the Annexure.

By Order and in the Name of

the Governor of Karnataka,

(C. Shamarao)

Deputy Secretary to Government,

Finance Department,

(FR & BCC).

81

Annexure to Government Order No.FD 2 TFP 2010 Dated:30-04-2010.

Sl.

No

1

2

Description of power

Administrative approval of

works.

Books and periodicals:-

To sanction purchase of

reference books and journals

for facilitating official work

Heads of Divisional Level

Department Officers

Estimate of Estimate of

Rs.1.00 crore Rs.50.00 lakh

for one work for one work

subject to Subject for

availability of availability of

grants grants

Full powers Full powers

District Level Sub Division Level Taluk Level

Officers Officers Officers

Estimate of Estimate of Rs.5.00 Estimate of

Rs.25.00 lakh lakh for one work Rs.1.00 lakh

for one work Subject to for one work

Subject to availability of Subject to

availability of grants availability of

grants grants

Rs.10,000/- Rs.5,000/- per Rs.1,000/-

per annum annum per annum

3 Stationery

4 Office equipment

5 Computers and peripherals

(subject to the Government

Orders from e-

Governance(DPAR)


Rs.10.00 lakh Rs.5.00 lakh

per annum per annum


per annum per annum

Rs.10,000/- each Rs.5,000/- each Rs.2,000/-

time and time and each time and

Rs.1.00 lakh p.a. Rs.50,000 p.a. Rs.20,000 p.a.

Rs.2.50 lakh Rs.1.00 lakh Rs.50,000

per annum per annum per annum

Rs.2.00 lakh

per annum _ _

82

6 Furniture

7 Laboratory equipment and

consumables

8 Drugs & medicines

9 Diet items

10 Tools and machinery

11 Items and implements used

under government

programmes

12 Miscellaneous items for

hospitals/hostels/child

homes/ (utensils, linen etc.)

Full powers Rs.5.00 lakh

per annum


per annum


per annum





Per annum



Rs.25.00 lakh - -

per annum

Rs.10.00 lakh Rs.5.00 lakh per Rs.3.00 lakh


Full powers Full powers Full powers

Rs.5.00 lakh Rs.2.50 lakh Rs.1.00 lakh


Rs.25.00 lakh Rs.10.00 lakh -

per annum per annum

83

13 Repair & AMC of computer

and related items

14 Repair and AMC of office

equipment and furniture

15 Repair of vehicles

16 Repair and AMC of

machinery and laboratory/

hospital equipment

17 Write off losses

To sanction writing off in

respect of the following.

(i) Government goods

or money lost

(ii) Irrecoverable

departmental revenues

(iii) Irrecoverable loans

and advances

(In all such cases, the

authorised officer

shall record that the

loss has not been

caused because of

fraud or negligence)


per annum

Full powers Rs. 10.00 lakh

per annum

Full powers Rs.50,000/-


per annum

Rs.10,000 in Rs.5,000 in

individual case, individual case

subject to subject to


per annum per annum



Rs.5.00 lakh per Rs.2.50 lakh Rs.1.00 lakh

annum per annum per annum

Up to Rs.30,000 Up to Rs.20,000 on Up to

on one vehicle, one vehicle, subject Rs.10,000 on

subject to to Rs.2.00 lakh per one vehicle,

Rs.5.00 lakh per annum subject to

annum Rs.50,000 per

annum



Rs.2,000 in

individual case

subject to _ _

Rs.50,000

per annum

84

18 Writing off goods

To sanction writing off or

disposal of the following

(i) Unusable goods Rs.10,000 in Rs.5,000 in one Rs.2,000 in one _ _

in government one case, case subject to case, subject to

store subject to Rs.1.00 lakh Rs.50,000

Rs.2.00 lakh per annum per annum

per annum

_ _

(ii) Perishable items Full powers 2% of the value 2% of the value

like plant, food of the item, of the item,

material, subject to subject to

consumables, Rs.1.00 lakh Rs.50,000

drugs, fertilizers, per annum per annum

etc.

(iii) Unusable books Full powers Full powers Full powers Full powers Full powers

and periodicals.

(iv) Obsolete or Full powers Rs.10,000 in one Rs.5,000 in one -- --

unserviceable case subject to case subject to

equipment Rs.5.00 lakh Rs.1.00 lakh

per annum per annum

(v) Vehicles beyond Full powers _ _ -- --

economic repair,

subject to

certification by

the RTO

(Subject to certificate by

the competent authority

that the condition of

obsolescence, expiry, or

unserviceability has not been caused by negligence in planning,

procurement or maintenance)

85

19 Advertisement.

(i) To sanction publishing of

official advertisements

subject to guidelines from

Department/Directorate of

Information and Publicity,

and also subject to

availability of grants for this

purpose.

(ii) To sanction printing of

publicity material under

government programmes

20 Hiring of vehicles at rates

approved by DPAR/

Transport Department

Rs.50,000 in Rs.20,000 in one Rs.10,000 in one

one case, case subject to case subject to

subject to Rs.2.00 lakh per Rs.1.00 lakh per

Rs.10.00 lakh annum annum

per annum

Full powers Full powers Rs.10,000 in one

case subject to

Rs.1.00 lakh

per annum

Full powers Rs.20,000 p.m. Rs.10,000 p.m.

at a time subject at a time subject

to Rs.100,000 to Rs.50,000

per annum per annum

Rs.5,000 in one

case subject to

Rs.50,000

per annum

Rs.1,000 in one

case subject to

Rs.10,000 per

annum

Rs.5,000 p.m. at a

time subject to

Rs.50,000 per

annum

Rs.1,000 in

one case

subject to

Rs.10,000

per annum

Rs.500 in one

case subject to

Rs.5,000 per

annum

Rs.2,000 p.m.

at a time

subject to

Rs.25,000 per

annum

86

21 Training

To sanction training

programmes, and incur

expenditure on honorarium,

transport, training material,

contingency, etc. subject to

the programme being

authorised under some

approved scheme.

22 Advances

(i) To sanction tour advance

(ii) To sanction house

building advance as per rules

and subject to allotment

(iii)To sanction vehicle

purchase advance as per

rules and subject to allotment

23 Hiring of building in

consultation with PWD/Rent

Controller

Full powers Rs.20,000 at a Rs.10,000 at a

time, subject to time subject to

Rs.2.00 lakh Rs.1.00 lakh per

per annum annum




Rs.50,000/- for Rs.25,000/- for a Rs.20,000 for a

a building for a building for a building for a

month month month

Rs.5,000 at a time

subject to

Rs.50,000/- per

annum.

Full powers

--

--

Rs.10,000 for a

building for a

month

Rs.2,000 at a

time subject to

Rs.20,000 per

annum

Full powers

--

--

Rs.5,000 for a

building for a

month

87

24 Exhibition

To sanction expenditure for

participating in Dasara

Exhibition or similar activity

of creating awareness.

25 Hiring manpower

Subject to guidelines from

DPAR/FD, and subject to

vacancy of posts or

availability of grants for

service-outsourcing

26 Refunds

To sanction refund of

revenue including fees, fines,

etc. and to refund wrong or

excess credit, subject to the

claim being established with

authenticated documents

27 Countersignature of AC bills,

etc. subject to budgetary

limits and appropriate

authorisation. Up to Rs.2

lakh, the authorization can be

given by the Controlling

Officer. For A.C. bills above

Rs.2 lakh, the authorization

has to be obtained from the

Finance Department.

Full powers Rs.50,000 per

annum

Full powers --



Rs.25,000 per Rs.5,000 per annum ---

annum

- - -



88

28 Reappropriation

To sanction reappropriation from one

detailed head of account to another

within the same major head in the

Departmental budget provided it does

not involve.

a) A diversion of provision from

the plan to non-plan items.

b) Diversion of provision for

schemes eligible for assistance

from central Govt. or other

institutions to other schemes.

c) The undertaking of a recurring

liability

d) An increase in the allotment

for secret service expenditure

e) Expenditure on a new service.

f) An increase on an item the

provision for which has been

specifically reduced by a vote

of the legislature.

g) From charged item to voted

and vice-versa.

h) Diversion of funds for

purposes other than that

provided in the Budget (Article

308 to 314 of KFC)

General Conditions:

Rs.5.00 lakh

between two units

of appropriation

under same major

head and within

same demand.

_

_ _ _

1. All relevant rules, procedures and instructions under the Karnataka Transparency in Public

Procurement Act, 1999 and Rules, shall be followed to ensure transparent and cost-effective

procurement.

2. All procurement should be within the annual approved budgetary grants. Delegated powers

including ‘Full Powers’ are to be exercised subject to that limit.

89

3. It will be the responsibility of the officer exercising the delegated powers to ensure that the items of procurement are essential and that the process being followed is as per the KTPP Act and Rules so as to make quality procurement at competitive prices.

4. This order of delegation of financial powers does not supersede economy orders issued by Finance Department. Similarly, specific orders from e-Governance on procurement of computers, from DPAR on purchase or hiring of vehicles, outsourcing etc. need to be

followed.

5. For new schemes, only after approvals at all levels and issue of Govt. Order regarding

operationalising the scheme, these delegations will apply.

6. These delegated powers cannot be further subdelegated by the departments.

90

Sl. Description of power Heads of Divisional District level Sub-Divisional Taluk level

No. Department level officer officer level officer officer

1 2 3 4 5 6 7

KCSR:

29 To authorize subordinate Full powers Full powers Full powers Full powers Full powers

Government servants to

proceed on duty beyond the limits of their charges but

within the State (vide rule 16(a)

of KCSRs)

30 To authorize subordinate 1) Non 15 days in 15 days in case of

Government servant to proceed Gazetted Full case of non- non-gazetted

on duty beyond the limits of powers gazetted

their charges outside the State 2) Gazetted

within India (vide Rule 16(b) of 15 days KCSRs)

31 To sanction the acceptance of Full powers Full powers Full powers Full powers Full powers

remuneration by Government

servants under their control for

work as examiners for various

examinations conducted by

Government departments or

bodies set up by Government or

Universities within the State in

accordance with the scales

sanctioned (vide Rule 28(d) of

KCSRs).

91

32 To sanction the acceptance of Full powers Full powers Full powers --- ---

fees by Government servants (NGOs) (NGOs) under their control from a private person, a private body or a public body whose funds

are administered by

Government when not covered

by any rules, special or local

law or orders of Government (vide Rules 28 and 29 of KCSRs).

33 To sanction in-charge

arrangements in posts which are

vacant or the incumbents of

which are absentees and the

filling up of which requires the

sanction of a higher authority

(vide Rule 32,68,192 & 196 of

KCSRs) Government servants

who are in the scale of pay of:

a) Rs.14050-25050 and 4 months 3 months 2 months --- ---

above

---

ii) Rs.10800-20025 and 6 months 4 months 3 months 2 months

above but below

Rs.14050-25050

iii) Rs.4800-7275 and above Full powers Full powers Full powers Full powers Full powers

but below Rs.10800-20025

92

34 To sanction, the extension of

joining time to subordinate non-

gazetted Government servants

(vide Rule 86 of KCSRs)

35 To sanction maternity leave to

married female Government

servants (vide Rule 135 of

KCSRs)

i) Gazetted

ii) Non-gazetted

36 Sanction of leave other than

special disability leave to

subordinate Government

servants (vide Rule 192 and

196 of KCSRs);

Government servants who are

in the scale of pay of:-

i) Rs.14050-25050 & above

ii) Rs.10800-20025 but

below Rs.14050-25050

iii)Rs.4800-7275 & above


Note: The powers to sanction

leave as above includes the

powers to sanction leave

preparatory to retirement but

does not include the powers to

refuse earned leave applied for

as leave preparatory to

retirement.

Upto 15 days Upto 15 days --- --- ---

---

Full powers Full powers Full powers Full powers


4 months 3 months 2 months

6 months 4 months 3 months 2months ---

Full powers Full powers Full powers Full powers Full powers

93

37 Sanction of encashment of

earned leave once in block

period of two years in

accordance with rule 118 of

KCSRs.

38 Encashment of earned leave at

the time of retirement or at the

time of death while in service in

accordance with rule 118(A) of

KCSRs.

39 To sanction disbursement to

subordinate non-gazetted

Government servants of arrears

of leave salary arising as a

result of the sanction or

communication of leave more

than one year from the date of

relief (vide rule 198 of KCSRs)

40 To order the retirement on invalid pension of non-gazetted

Government servants appointed

by them or by a lower

authority, who by bodily or

mental infirmity are

permanently incapacitated from

the public service (vide rule

273 of KCSRs)

41 To sanction in exceptional

cases, road metreage both ways

for road journeys made by


servants between places

connected by rail vide (rule 462

(h) of KCSRs)




Full powers Full powers Full powers --- ---

Full powers Full powers --- --- ---

94

42 To sanction daily allowance for

halts on tour exceeding 10 days (i)30 days in (i) 20 days in (i) 15 days in case

case of case of of Gaz officers

at a place to subordinate Gaz. Officers Gaz officers ------ -----

-

(ii)60 days (ii) 30 days

Government servants (vide rule (ii) 90 days in case of in case of

516 of KCSRs) in case of Non- gaz Non- gaz

Non-Gaz

43 To allow subordinate

Government servants on

transfer, the actual cost of Full powers Full powers Full powers Full powers Full

powers transport by rail or other

craft or their conveyance at owner’s

risk (vide rule 532 (3) (A) (1)

(4) (2) of KCSRs)

(C. SHAMARAO)


Finance Department,(FR& BCC).

1

CASE 1 :

Terms and Conditions in a Notice Inviting Tender

A short term tender notification was published as under:

SHORT TERM TENDER NOTIFICATION dt. 9-11-2009

Sealed tenders in duplicate are invited from Class I Licensed Electrical

contractor issued by Government of Karnataka.

(1) Name of the work: The work for strengthening the existing earth

mat at 66/11 KV sub-station X, in Y (Tq), Z (Dist.). Approximate

cost of estimate : Rs. 22,72,809/- EMD : Rs. 50,000/- Tender

Book cost (including 4% VAT) Rs. 520/-

(2) Name of the work : The work for providing new earth mat with

electrodes of existing 66/11 S/S A. Approximate cost of estimate :

Rs. 25,76,935.- EMD : Rs.51,540 Tender Book Cost (including 4%

VAT): Rs. 520/-

Terms and Conditions

Last date for receiving requisition for tender forms up to 24.11.2009

Issue of blank tender forms from 26.11.2009 to 27.11.2009 up to

12.00 Noon.

Due date and time of receipt of sealed tender 03.12.2009 up to

12.30pm

Date and time of opening the bids 03.12.2009 at 4.00p.m or next

working day.

The bidder should produce experience certificate for having completed

single similar type of work amounting to 80% of the amount put to

tender satisfactory in electrical companies

Average annual turnover for the best of one year out of last three

years of the firm should be at least twice the cost of the amount put to

tender.

Proof of the above documents should be shown at the time of

requisition for blank tenders

Blank tender forms shall not be sent by post.

EMD shall be drawn in favor of the undersigned in the form of DD

payable at State Bank of India, payable at Z only.

2

Undersigned reserves the right to accept or reject any or all bids

without assigning any reason

Any other information in this regard can be had from this office

during working hours.

Note: If the date specified above is declared to be holiday then the

next working day shall be considered.

Sd/-

Tender inviting authority

Audit observation

(A) During audit it was observed that the minimum period as stipulated

in the Act is not provided as per KTPP rules 17(1). Which is against

the provision of KTPP Rules the DDO has replied to the audit enquiry

that proper sanction was obtained to reduce the minimum period and

the objection may be dropped.

Analysis

“Any reduction in the time stipulated under sub rule 17(1) (KTPP Rule)

has to be specifically authorized by an authority superior to Tender

Inviting Authority for reasons to be recorded in writing”.

An order of the authority superior to the tender inviting authority was

obtained in the file by TIA, for the reduction of minimum period, as such

the Min period of 30 days not given and hence it is not against the

provisions of KTPP Act.

Questions

1. What is the minimum period prescribed under the Rules?

2. Procedure to be followed to reduce the prescribed minimum period?

(B) The Audit observed that only two days from 26-11-2009 to 27-11-

2009 was provided for issue of tender documents which is against the

spirit of KTPP Act.

Analysis

As per circular PWD140 SO/FC 2003 dated 01-09-2003 the tender

documents should be made available for the entire period provided for

the submission of tenders as per KTPP Rule 17. For this purpose the

TIA’s shall prepare adequate number of copies of the tender documents

3

and issue as per KTPP Rule 13 from the date of publication of NIT up to

the pre declared time on the working day previous to the day fixed for

submission of tenders

In the instant case only two days are provided for issue of tender

documents. It is a clear case of violation of the KTPP Act and Rules and

attracts penal provision under Sec. 23 of the said Act.

Questions

1. Explain the procedure for the sale of tender document.

2. What are the penal provisions under the Act?

(C) Audit observed that the date of opening of tenders on 03-12-

2009 4pm or next working day mentioned in the notification is not in

accordance with the act, there cannot be any ambiguity for opening date

and time of the tender documents.

Analysis

The Employer will open all the Tenders received (except those

received late), including modifications made pursuant to Clause 14, in

the presence of the Tenderers or their representatives who choose to

attend at ........... hours on the date and the place specified in Clause 12.

In the event of the specified date of Tender opening being declared a

holiday for the Employer, the Tenders will be opened at the appointed

time and location on the next working day. The above instructions shall

be followed.

Questions

1. Is it mandatory to mention the time, date and place of opening

of tenders by the TIA? Explain the provisions.

(D) Audit observed that mandating satisfactory completion as a

prime contractor for at least one similar work to an extent of 80%

of the amount put to tender mentioned in the notification is

against the provision of the Act.

Analysis

In the government order FD 4 PCL 2008 dated 14-10-2008 the

work experience fixed up to one crore is 50% of the contract value. In the

4

model qualification criteria for works and goods the work experience

shall be defined, and it shall not be mentioned as “similar work”.

Questions

1. Define work experience of a tender?

2. Discuss the model qualification criteria.

(E) Audit observed that the average annual turn-over for the best

of one year out of last 3 years of the firm should be at least twice

the cost put to tender mentioned in the notification is against the

provision of the Act.

Analysis

In the government order FD 4 PCL 2008 dated 14-10-2008, to

qualify for award of this contract up to one crore the tenderer in the last

five years achieved in at least two financial years a minimum financial

turn over the value of which is not less than the estimated cost.

Questions

1. Discuss the commercial Qualification criteria as in the provisions.

(F) Audit observed that the practice of showing the proof of the

documents at the time of requisition for blank tenders is not required.

Analysis

As per Rule 13 of KTPP Act the tender inviting authority shall

ensure that the tender documents are made available to any person who

is willing to remit the cost of the document. Also Art 14 of the

constitution of India provides for equal opportunity to participate.

Questions

1. What is meant by Qualification criteria?

2. When the Q.C does has to be considered in the process of tender?

(G) Audit observed that prohibition to send Tender documents by

post is against to the provisions of KTPP.

Analysis : As per Rule 13 of KTPP Act the tender inviting authority shall

send by register post or courier the tender documents to any prospective

tenderer who makes a request for the documents on payment of cost

5

along with postal charges at the risk and responsibility of the prospective

tenderer.

Question

1.Up to what date the tender documents may be issued to intended

tenderers either by person or by post?

(H) Audit observed that restricting EMD only in the form of DD is

not correct.

Analysis

The EMD shall be submitted at the tenderers option, in the form of DD,

Certified Cheque, pay-order, from a nationalized / schedule bank and

specified small savings instruments as per the provisions.

Questions

1. Whether EMD can be paid in the form of cash?

2. Explain the accounting procedure with regard to receipt and

refund of EMD

(I) The Audit observed that, reserving the Right to accept or

Reject any or all bids without assigning any reasons is bad

in law.

Analysis As per Sec 14 of KTPP Act the Authority may at any time

before passing an order of acceptance reject all the tenders on the

ground of

changes in the scope of procurement

failure of anticipated financial resource

accidents

calamities or any other grounds

as may be prescribed which would rendered the procurement

unnecessary or impossible.

Question

1. Explain the circumstance under which the tenders were

cancelled/ rejected in your work place. Give example

6

CASE 2 :

Negligence in collecting securities

A local body has collected EMD, of 1% of estimated cost for the

work of 80 lakhs. The time stipulated for the completion of the building

work is 10 months. The tender accepting authority waived collection of

performance security deposit (PSD) on the basis of the request of the

contractor. The period of the work is extended for the delay in execution

on the part of the contractor for a period of 6 months. No liquidated

damages were levied. After the completion of the work the bill was fully

paid. During the rainy season the building developed defects resulting

additional expenditure of 5 lakhs. This expenditure was met out of

departmental funds and the defects were rectified during defect liability

period.

Audit observed that EMD was collected at 1% instead of 2% of the

estimated cost (up to 1 crore). The PSD was not collected at the time of

entering into agreement. Liquidated damages for the delay caused by

the contractor was also not collected.

Analysis:

1. EMD : Government in their order dated 14.10.2008 prescribed

the EMD to be collected for the contract amount between 20 lakh

and 1 crore to be 2% of the contract amount subject to a minimum

of 50,000/-. In the present case EMD of rupees 1.6 lakh has to be

collected instead, Rs. 80,000/- was collected which was 1% of the

estimated cost. Besides, in Rule 24 of the KTPP initial examination

has to be done to determine substantial responsiveness. In the

initial examination, the requisite earnest money deposit as per rule

is a factor that shall be considered. In case, on examination if it is

not substantially responsive the tenders shall be rejected. The

authority in accepting the tender with lesser amount of EMD

violated the KTPP Act and Rules

Questions

1. What is the percentage of EMD prescribed?

2. What is the minimum validity period of the EMD

3. What are the points to be considered during initial examination

of the tender?

7

2. Performance Security Deposit (PSD) : The Performance Security

Deposit of 5% of the contract price plus additional security of

unbalanced tenders has to be collected within 20 days of the receipt

of the letter of acceptance. In the present case the authority on the

request made by the contractor has waived the performance security

deposit. The PSD will be taken to cover the defects if any during the

defect liability period. The total PSD will be 4 lakhs in this case.

The defect liability period for all the buildings is 12 months. In

absence of the PSD the defects developed during the defect liability

period could not be rectified by the contractor and in this case an

expenditure of 5 lakhs made by the dept.

Questions

1. What action to be taken by the authorities when a contractor refuses

to pay the PSD?

2. When the PSD has to be collected and what is the minimum period of

validity?

3. Liquidated Damages. : If the work is not completed within the

period specified and the delay is attributed by the contractor, liquidated

damages has to be collected at 0.1 % of the total cost of the estimate for

the days of delay subject to a maximum of 10% of the cost of the

estimate. In this case the liquidated damages were not levied.

In the above case the executive authority violated the KTPP Act and

Rules thereby extending undue benefit to the contractor besides

incurring a loss to the institution.

During the defect liability period the defects developed and the

authority has to spend an additional expenditure of 5 lakhs. If the PSD

of Rs. 4 lakh was collected the expenditure on rectification of defects

should have been charged on that account. The delay in the execution

was on the part of the contractor. Hence Liquidated damages should

have been collected. This is a clear case of lack of integrity. This attracts

the provisions of KCS (CCA) Rules.

Questions

1. How to calculate liquidated damages for delayed supply of

goods and delayed execution of work?

8

Case 3 :

Procurement of Goods (Schedule of requirements)

An Institution “X” requires stationary material, computer

stationary, printing materials, files, folders, bags etc for its training

activities. The same materials are required for other two sister

institutions also. The requirement of the institutes is brought under one

package. The package is scheduled as A.B.C and D, and invited tender.

1. Stationary for office use A 25

2 Computer Stationary B 15

3 Files, Folders, Bags, executive bags, Suitcase C 18

4 Printing materials D 5

For the first two schedules 5 bidders participated and quoted for all the

items in the schedule and the response was good.

For the third schedule three bidders were participated. One bidder has

quoted for all the18 items and the other two have not quoted for all the

18 items.

In the 4th schedule all the 5 items were included giving specific code of

the manufacturer there by restricting the competition of the bidders.

During the evaluation of schedule A and B the technically and

commercially responsive lowest bidders were awarded.

During the evaluation of schedule C the one bidder who has quoted for

all the 18 items (20% above the estimated rates) was treated as

responsive tenderer and the contract was awarded to him. The other two

bidders are not technically qualified as such their bids were treated as

non responsive. During the evaluation of schedule D one bidder has

quoted for 4 items and the other bidders quoted for 3items, 2 items and

one item respectively. The bidder who quoted for 4 items was treated as

technically responsive tenderer and contract was awarded.

9

During audit the following observations were made regarding award of

schedule C

1. The quoted price was 20 % above the estimated cost which is

exorbitantly high.

2. As per the provisions of KTPP Act negotiations were not held

3. Not opting for fresh tender, after rejecting the said tender.

During the audit of 4th schedule it was observed that though the

bidder was not quoted for all the 5 items and non responsive the tender

was awarded to him. The specification adopted was manufacturer’s code,

which has brought down the competition. The specification shall be

generic in nature and not to favor any branded items. If the items are

treated as proprietary items codal provisions has to be followed. During

audit enquiry the authorities replied that the award was made due to the

urgency and who has quoted for maximum number of items compared to

others. The reply was not accepted and the objection drafted in the

Inspection report and sent to Head of the department for compliance.

Analysis of the case :

The Tenderer shall indicate on the Price Schedule the unit prices

and total tender prices of the goods it proposes to supply under the Contract. To this end, the tenderers are allowed the option to submit the tenders for any one or more schedules specified in the ‘Schedule of

Requirements’ and to offer discounts for combined schedules. However, tenderers shall quote for the complete requirement of goods and services specified under each schedule on a single responsibility basis, failing

which such tenders will not be taken into account for evaluation and will not be considered for award. (7.1 of ITT of S T D KG1)

The Purchaser will evaluate and compare the tenders which have

been determined to be substantially responsive, pursuant to ITT Clause

7 for each schedule separately. No tender will be considered if the complete requirements covered in the schedule is not included in the

tender. However, as stated in ITT Clause 7, Tenderers are allowed the option to tender for any one or more schedules and to offer discounts for combined schedules. These discounts will be taken into account in the

evaluation of the tenders so as to determine the tender or combination of tenders offering the lowest evaluated cost for the Purchaser in deciding award(s) for each schedule. (20.1 of ITT of S T D KG1)

As per the above provisions of the Act since one bidder has quoted for all the 18 items treating him as technically responsive is in order. At the

10

same time the DDO should have considered his commercial responsiveness also. The bids above 10% of the estimated cost is treated

as substantially high and the government order ( ) provides for negotiation. In case the bidder is not ready to bring down the bid price

nearer to market price the GO provides rejection of tenders and to invite fresh tenders.

It is observed that the DDO has furnished the reply for audit enquiry at the time of audit that the rates quoted was only 5% above the market rate as on the date of evaluation which is very well within the

limits as mentioned in the above G.O. Hence the bid was considered. The audit party should have accepted this reply and dropped the objection.

In the 4th schedule all the 5 items are proprietary items. As per

section 4(b) g the KTPP Act proprietary item (single source) are exempted

from the process of tendering.

While purchasing proprietary item the procedure mentioned in the Act is

to constitute a committee of 3 experts from

1. Technique representation of the organization

2. Technical representation of the Govt. organization dealing with

similar procurement and

3. Technical representation from a reputed academic or research

institute having expertise in such line to examine and declare the

goods are available from a single source.

As per the Act under 4(b) g exemption clause open tenders were

not required for 4th schedule. The items can be directly purchased from

the respective manufacturers. In the present case it is a procedural lapse

by not constituting a committee to declare the items as proprietary and

available in single source which will be followed in future. Accordingly

the compliance to inspection report (I R) may be furnished.

Questions :

1. What do you understand by Schedule of requirements?

2. What action to be taken in procurement of proprietary items?

11

Case 4 :

Specifications :

A contract was awarded for the strengthening of the road crust on a

high-way. One of the conditions of the contract was that the correction

layer in the built up Spray-gout (BUSG) and the strengthening layer in

the BUSG shall be laid simultaneously so as to avoid the provision of a

tack-coat in between. However, the two layers were not laid

simultaneously, and instead a tack coat was provided. This resulted in

an extra expenditure of Rs. 0.24 million on the tack coat. According to

the executing agency, it was necessary as there was heavy traffic on the

road.

Analysis: Two questions arise here, whether the traffic conditions

had been assessed earlier while laying down the specifications, and

whether the bids would have been the same if the tack coat was provided

in specifications. Improper or inadequate surveys, resulting in

unworkable specifications, are unlikely to draw reasonable bids. These

create grounds for a contractor to ask for more moneys as it can

justifiably state that the ground conditions are different from the survey

reports.

Question

1.Discuss the effect of Survey report in assessing the right

specifications.

Case 5 :

Over Specification

In an organization the technical experts recommended for

purchase of polyvenyl chloride pipes of 197 mm diameter and 2 mm

thickness. Tenders were floated, two tenders were received. One of the

tenderer has quoted for 197mm diameter and 3.2 mm thickness pipe and

the other has quoted for 197 mm diameter and 3.5 mm thickness pipe.

The tender accepting authority accepted the tender for 197 mm diameter

and 3.2 mm thickness pipe. There by incurring an additional

expenditure of 10 lakhs which is 55% above the estimated cost?

12

Audit observed that higher specification of goods than the

originally approved is purchased. The officer replied to the audit enquiry

that higher specification materials were purchased to ensure quality and

longevity. The reply was not accepted and audit report pointed out

purchase of higher specification of goods than the technically approved

goods is against the provisions of the KTPP Act which resulted in excess

expenditure to the organization.

Analysis :

The specification of 197 mm diameter and 2 mm thickness of PVC

pipe is approved by the technical committee taking into consideration the

volume of the water to be discharged, including the flow pressure of the

water. The reason given by the officer to purchase higher specification is

not justified in the light of KTPP Act.

The specification is drafted to permit the widest possible

competition and present a clear statement of minimum functional

specification of the goods. This is done with the objectives of economy,

efficiency and fairness. But the organization has purchased the material,

where the specification is superfluous thereby incurring an excess

expenditure.

Article 15 of the KFC envisages that the expenditure from public

fund is to be guided by the principles of propriety and efficiency. and

expected to enforce vigilance as a man of ordinary prudence.

Questions

1. How to write specifications incorporating the physical and

chemical properties?

2. Explain canons of financial propriety.

13

Case 6 :

Specification ( Supply of offset printing paper)

A Government organization placed an order on a firm to supply white

offset printing paper, in two installments. Supplies of both the

installments were found unsuitable; but the paper was purchased and

used for other purposes. No sample of the paper to be purchased has

been taken from the supplier.

Analysis: It is naive to believe that the general description of paper as

offset printing paper is good enough for purchases. There are standards

of weight, strength, whiteness, and other qualities of paper. Spending

some time on defining specifications in precise terms may avoid mishaps

like these.

Questions

1. Write specification of paper used for writing, Xerox?

Case 07 :

Inspections and Tests (Supply of Equipment)

Equipment was accepted after inspection as conforming to

specifications and 95 % cent of the payment was made. After

installation, the equipment was found much below specifications. It took

four years to update the equipment to specifications.

Analysis :

Suppliers may be satisfied with 95 percent payment. It is the

buyer who suffers for its inability to test equipment competency. Large

amounts should not be paid for critical and important equipment

without adequate performance guarantees. The Contractor is primarily

responsible to ensure that the goods are supplied as per Specifications

and deliver the goods in sound condition. The Departmental Officers

have to make periodical checks to ensure the quality of goods. The

Government is concerned over the deterioration in the quality of the

goods purchased. To assist the Departmental Officers to ensure quality,

quality control organizations have been set up and in some other projects

funded by International Donor Agencies, Supervision Consultants have

14

been employed. However for most of the supplies, the Departmental

Officers are responsible for ensuring the quality.

Third Party Inspection of Works and Supplies would ensure adherence

to quality standards, leading to value for money. This will also check

corruptive practices and instill public confidence in the system.

The Quality Supervision Consultant shall inspect the goods and

equipment during manufacture/before dispatch after receipt, assembly

and commissioning as per the terms of the contract and submit reports

along with prescribed checklists duly completed to the Purchaser.

Questions

1. What are all the quality control checks to be exercised to prevent

inferior quality materials?

Case 08 :

Inspections and Tests (Construction of a bridge)

A contract for the design and construction of a bridge over was awarded

to a firm at Rs. 10.4 million. A satisfactory completion certificate was

issued. The bridge was not opened to traffic as the executing agency

discovered major defects and damages such as cracks and sinking of

piers. Disciplinary action against the erring official was under progress.

The bridge was not open even by the time the audit report was presented.

Analysis:

Disciplinary action against erring officials may no doubt, be taken.

However, Preventive action is more important. This brings up the

following questions:

How are the works inspected during execution?

What documentation of inspection and laboratory tests is kept?

How credible is the integrity of the inspection agency?

Somehow, there is a belief that a certificate is all that is required;

though it may not even be worth the paper on which it is written If

effective inspection is not a part of the day-do-day work, the instances of

15

wastage of public moneys would recur often than they should. After all,

inspections are not dependant on one person alone. There may be

failures down the ladder. It is immaterial that all of it is due to the

collusive action of the contractor and the executing agency, or due to

sheer carelessness on the part of the inspecting agencies.

To overcome such instances Government brought the concept of third

party inspection. This is as follows:

(a) The appointment of independent Third Party

Inspectors designated Quality Supervision Consultants would go a long

way in assisting the Departmental Officers to ensure adherence to

quality standards in construction works and procurement of goods and

equipment;




Rs.25 lakhs for an item of goods and equipment;

(c) Reputed Quality Supervision Consultants (either

Individual of Firm) known for integrity and professionalism should be

appointed by following the procedures for procurement of Consultancy

services issued vide GO No. PWD 121 SO/FC 2003, Bangalore dated



completed by the Quality Supervision Consultants, should be prepared

(with the assistance of experts if need be) to ensure that the Consultants

perform their obligations satisfactorily;



procurement of goods and equipment or for procurement made in a term

or stipulated period for a Procurement Entity;


Managing Directors of PSUs Boards/ Societies Local Bodies shall employ

the Quality Supervision Consultants and order payments to them on

satisfactory performance. The expenditure on the employment of the

Quality Supervision Consultants shall be charged to the cost of the

works and goods and equipment under procurement;


the works periodically; submit reports along with the prescribed

16

checklists duly completed to the Employer for taking action with a copy

to the Secretary to the Government Managing Director of the

Corporation/Board/Society/Local body. Who will be responsible for






the Purchaser with a copy to the Secretary to the Government/Managing

Director of the Corporation Board Society/Local body who will be

responsible for Review of the Action Taken Reports of the Purchaser;


Consultant and the inspections conducted by them shall not absolve the

primary responsibility of the Employer to ensure completion of works of

sound quality as per stipulated specifications and of Purchasers for

Procurement of goods and equipment of good quality as per stipulations

in the specifications. The Quality Supervision Consultants are there to

assist the Employer/Purchaser in discharging their primary

responsibility.

Questions


poor quality works?

17

Case 09 :

Inspections and Tests (Ship Building)

A supplier manufactured a twin screw speed launch and delivered it to a

government department. Before delivery, a surveyor of the Mercantile

Marine Department had inspected it. When in use, the launch was

found to have several defects and deficiencies. One of the defects was

that the thickness of the steel plates used was less than the stipulated

one.

Analysis: Ship building requires good inspection at the construction

stage itself. The inspectors should be competent in their profession and

keep a signed, detailed documentation of inspection. The practice of

keeping records of what was checked should be insisted upon. Also third

party quality control measures to be adopted to ensure quality.

Questions



Case 10 :

Inspection of goods ( Late delivery of goods)

A supplier completed the supply of goods 26 weeks after the agreed date

of delivery. The buyer deducted Rs. 0.74 million for late delivery. The

arbitrator provided substantial relief to the supplier on two grounds.

The buyer’s failure to carry out inspection of the goods within seven days

of receiving the notice that the goods were ready for inspection. The

buyer took seven weeks to inspect the goods.

The failure of the buyer to quantify the loss suffered due to delays.

Analysis:

The contract clause for inspection of goods should be realistic. If a buyer

has to send its own employee for inspection, then it must consider the

distance between the place of work of the employer and the supplier.

The journey time, the contingencies of bureaucratic delays if it is large

organization, and non availability of qualified inspection staff at the

crucial time, have to be considered. If the time for inspection is provided

18

on a higher scale, then the bid price is likely to go up as the bidder’s

moneys will be blocked in the finished goods.

Time is the essence of contract. Commitment to quality and time by

both is the key to success of the contract.

Questions

1. What are the criteria to be considered while framing conditions of

contract for inspection of goods?

2. How to calculate liquidated damages for delayed supply of goods

CASE 11 :

Quality control : (Warranty Clause)

Out of 52 blood storage refrigerators (Cabinets), 40 proved

defective as these were not able to maintain the required temperatures

for blood storage. The supplier stated that it would repair the cabinets if

these were brought to any of the three designated places. Further, it is

asked for service charges for the cabinets already repaired or to be

repaired. The cost of defective cabinets was Rs. 0.75 million.

Analysis : This case highlights the need for quality checks and assurance before selecting a product. 40 out of 53 items being defective

casts a long shadow on the reliability of procurement methods and the quality assurance programme set up by the supplier.

The Purchaser or its representative shall have the right to inspect and/or to test the Goods to confirm their conformity to the Contract specifications at no extra cost to the Purchaser. The Technical

Specifications shall specify what inspections and tests the Purchaser requires and where they are to be conducted. The Purchaser shall notify the Supplier in writing in a timely manner of the identity of any

representatives retained for these purposes. If any inspected or tested Goods fail to conform to the

specifications, the Purchaser may reject the goods and the Supplier

shall either replace the rejected Goods or make alterations

necessary to meet specification requirements free of cost to the

Purchaser.

The following warranty clause shall be included in the conditions of

contract

19

The Supplier warrants that the Goods supplied under this Contract are new, unused, of the most recent or current models and

that they incorporate all recent improvements in design and materials unless provided otherwise in the Contract. The Supplier

further warrants that all Goods supplied under this Contract shall have no defect arising from design, materials or workmanship or from any act or omission of the supplier, that may develop under

normal use of the supplied Goods in the conditions prevailing in the State. This warranty shall remain valid for 12months after the Goods

or any portion thereof as the case may be, have been delivered to and accepted at the final destination indicated in the Contract.

Questions

1. How does a buyer ensure that a product is up to the specifications in critical areas like blood preservation?

20

Case 12 :

Fraudulent claim of M/R bills

A Taluka level officer with a cadre strength of 30 officials claimed

M.R bills for all its employees and their dependents up to a tune of 60

lakhs in a financial year 2009-10. The Gazetted manager in the District

level office is the countersignature authority for M/R bills. The following

observations were made by Audit.

1. The Medical attendant has diagnosed the disease as “Lower

Respiratory Infection” in all the M/R bills and prescribed same 2

medicines for all the employees and their dependents.

2. The vouchers presented to audit to a tune of 60 lakhs are found to

be fictious as the medical shops does not exist.

3. No records were maintained in the countersigning office for the

receipt countersignature, dispatch of M/R bills.

4. It was observed that these M/R bills were presented only when the

regular Gazetted Manager was on leave and got countersigned by

the in charge G.M

5. Three employees of District level office and Taluka level office were

placed under suspension and a Departmental enquiry is in

progress.

Analysis:

The Drawing officer who signs the M/R bills shall exercise the

same vigilance as a man of ordinary prudence, spending his own money.

The DDO is further responsible for seeing that whether the rules

regarding preparation of bills are followed.

The countersigning officers shall satisfy the necessity of the claim

and proper voucher. In the instant case all the employees in all the M/R

bills claimed the same medicine for the same diseases and the

countersigning officer has not observed this, which leads to negligence.

The Drawing officer or the countersigning officer at no point of

time refer the matter to medical board to verify the authenticity of the

same type of medicine to same type of disease for all the 30 employees

21

up to a tune of 60 lakhs and their dependents. This shows the

negligence of both D.D.O & Controlling officer in handling public money.

The controlling officer shall maintain a check register for

countersigned medicine bills drawing officer-wise when there is huge

amount of M/R bills from a single office as seen from the check register

and also from monthly expenditure statement the controlling officer has

not exercised his power as stipulated in Article 3 of KFC.

The C/o should have taken care while placing the superintendent

in charge of Gazetted manager. While assigning the work only

supervisory works should have been given and not countersignature of

the bills .

This is a clear case of lack of integrity on the part of drawing and

disbursing officer and countersigning officer. Authorities shall take

disciplinary action as per CCA Rules 1957 for the act of misconduct and

to recover the embezzled amount.

Questions

1. What are all the rules to be followed by DDO while preparing

M.R. bills?

2. Discuss internal checking mechanism to be adopted by the

controlling officer while countersigning the M. R. bills.

22

Case 13 :

Embezzlement of Scholarship Amount:

The scholarship amount for the students is allotted to Taluka Level

Officer through the District Officer of a Department. The Taluka officer

shall obtain list of students who are eligible for scholarship from the

Heads of Educational Institutions and a cheque has to be drawn and

paid to the Head of the Educational Institutions for Disbursement of

Scholarship to the students. The Head of the Institution shall obtain

acknowledgement from the students and send the same to Taluka level

officer for record.

Audit observed in one of the Taluka Level Office, that they have opened

three SB Accounts in State Bank of Mysore and have drawn 20 lakhs

scholarship amount from the PD accounts in the Treasury and deposited

the same with the SB accounts. Subsequently Rs. 17 Lakhs was drawn

on self cheques from the SB Account. There were no records to show the

disbursement of scholarship to the students.

During Audit enquiry it was found that four officers were in charge of the

office during the said period. All of them stated that the signature on the

cheques does not belong to them.

Audit observed that

All the transactions were not entered in the cash book though cash

book is a primary record of financial transaction.

Check books was not in the custody of the DDO

Reconciliation of the funds with reference to cash book, bank

account, PD account were not done, which is against Art. 3 of KFC.

The list of students from the Head of the Institutions is not

available to audit and also acknowledgment of the students are not

furnished to audit.

Analysis:

As per KFC 329(ii) all monetary transactions should be entered in

the cash book as soon as they occur and attested by the Head of the

office in token of check. As seen from the audit observation & records it

is evident that the Head of the office has not followed the rules

prescribed in KFC and it is a clear case of negligence.

23

As per Art 67 of KFC each cheque book must be kept under lock

and key in the personal custody of the drawing officer. When a transfer

of charge takes place a note should be written over the signature of both

relieved and relieving officer showing the no. of unused cheques and

cheque books made over and received on transfer by them respectively.

A note should be made in the cash book or other permanent register in

which the expenditure for which cheques are drawn is recorded.

As seen from the above all the four Taluka level officer who were in

charge of the office during the incident took place are personally held

responsible for the act of negligence for violating the codal provisions.

As per 286 of KFC the remittance to the Bank are made without

details and withdrawals are made only on cheques. Each administrator

is furnished with a monthly extract of his account as appear in the bank.

The Bank transaction with reference to the cash book has to be

reconciled. If the reconciliation with ref to Art 286 is done by the DDO

the fraud should have been come to the notice to the DDO earlier.

As per Art. 396, when there is a reasonable suspicion that a

criminal offence has been committed in respect of any public money this

should have been reported at once to the police and to head of the

Department.

This is a clear case of lack of integrity and negligence on the part of

drawing and disbursing officer and controlling officer. Authorities shall

take disciplinary action as per CCA Rules 1957 for the act of misconduct

and to recover the embezzled amount.

Questions

1. Explain the responsibility of the DDO in maintaining the Cash

Book as laid down in KFC.

2. What action to be taken by the DDO in case of loss of public

money?

3. Explain the procedure involved in reconciliation of the accounts

24

Case 14:

A case on Consultancy services (Success Story)

Government of India sanctioned construction of a Comprehensive

building consisting of 120 Hostel Rooms 8 Training Halls, Dining Hall,

Parking facilities and longue to training Institute at a cost of 19 Crores.

The institute does not have engineering section to look into the

activities of construction. A building committee with Chief Architect,

Superintendent Engineer of the Circle, Superintendent Engineer of the

municipal corporation, EE of KEB under the chairman ship of the Head

of the Training Institute was constituted, with provision to co-opt

members required for the activities of the construction.

The Building committee discussed the option to keep the amount

in public works department under deposit contribution, or appointment

of consultant and inviting tenders for contract. The committee decided

for appointment of consultant and to go for construction.

Under the provisions of 28B of KTPP Rules 2000 tenders were

invited for the appointment of consultant prescribing the objectives and

scope of services. Standard Tender documents KC8 was used, the

criteria being least cost selection, Lump sum payment as the cost of the

consultancy is more than 10 lakhs.

The Qualification criteria prescribed is as follows.

I. Specific Experience

1. Consultancy provided for the work of construction of the building

of the above type with G+5 as a total consultant. The cost of the

building being 16 crores.

2. Experience Certificate for having executed project management

within a stipulated time, for the total cost of Rupees 30 lakhs.

3. Submission of the conceptual design of the building.

II. Adequacy of proposed work plan and methodology.

1. Methodology proposed

2. Quality Assurance.

25

III. Qualification and competence of the Key Professionals (CV’s)

1. Project manager

2. Architect

3. Structural Engineer

4. Engineer in charge of water supply, sewerage.

5. Site Engineer

The minimum technical score require to pass was 75%. The precise

statement of objectives of the assignments and the outline of the task to

be carried out are as follows.

Precise statement of objectives of the assignment:

1. To provide consultancy services / consultation work for getting

latest technology and methodology.

2. To assist the client in implementing the project as phased.

3. To implement the project economically, effectively and in a time

bound manner.

Outline of the tasks to be carried out (Scope of the services)

The Architect shall provide services in respect of the following

assignments.

1. Architectural design.

2. Structural design

3. Sanitary, Plumbing design, Water supply and sewage works.

4. Electrical work

5. Painting, Ventilation and air conditioning work

6. Acoustical work

7. Interior design

8. Landscaping

9. Site Development

10. Project Management

11. Supervision of the work including taking measurements

12. Quality control

13. Approval of plan by statutory bodies wherever required.

26

Schedule of Services :

Prepare conceptual designs with reference to requirements

given by the client and prepare approximate block estimates of

cost and to submit two sets of the same for approval of the

client.

Modify the conceptual designs, if required with reference to the

requirements of the client and prepare approximate block

estimates of cost and to submit two sets to the client for

approval.

On receiving approval of the client to the conceptual designs,

prepare and submit two sets of drawing for sanction from

statutory bodies and technically assist in the formalities.

Prepare and submit six sets of detailed drawing with

specifications and schedule of quantities sufficient to prepare

estimate of cost and preparation of the estimates.

Assist in for pre qualification of contractors.

Prepare and submit 8 sets of working drawings including

detailed specification and schedule of quantities and also other

documents sufficient to invite tenders.

Assisting for preparation of tender document and finalization of

tenders and execution of agreement with the successful

tenderer and issue of work order.

Prepare and submit 8 sets of further working drawing and other

details sufficient to commence the work at the site and proper

execution during construction work, details of work plan,

methodology for completion of the project as per time schedule.

Day to day supervision of work at the site including quality

checking of materials brought to site for use in the project.

Submit quality control measures planned and quality control

test results of the construction.

Be present at the site of work and provide periodical supervision

and also to interpret the drawing specifications and to attend

meetings called by the client.

Take measurement / Joint measurement of the work with the

contractor and to obtain bills, certifying the work and to

recommend for payment to the contractor.

On completion of the work prepare and submit two sets of

drawings incorporating revisions.

27

Total project management right from conceptual stage till

completion along with planning the time schedule.

Prepare and submit Completion Report and Utilization

Certificate

Schedule execution of project, watching shortcomings, if any

and suggest remedial measures thereon. Carryout periodical

review of the construction work schedule and advice on delay in

implementation for corrective action.

Furnish Inspection report of work plan of all the works and

monthly progress report.

5% of the consultancy services as S.D to ensure quality of work

will be deducted in recurring bills apart from EMD and the

same will be held for a period of three years from the date of

completion of project.

The terms of payment to the consultant is as follows,

Sl. No. Description of Items Fees Payable

1 Along with letter of Intent 5%

2 On finalization of Master plan, concepts for services and line

estimates

15%

3 On issue of Tender Documents 10%

4 On award of construction contract 10%

5 On progressive submission of Working

drawings

50%

6 On completion of the scope of work 10%

Total 100%

Short listing of consultants was proposed and a pre bid meeting

was called accordingly and many points raised were clarified.

The important among them were quantifying the qualifications of

key professional, which was not projected at the beginning of the tender

processes. In the meeting it was clarified that in all the cases engineer

degree with 5 years field experience will be treated as minimum unit and

will be awarded 5 marks and every additional 2 years experience with 1

marks each will be given. However for post graduate qualification 2

additional marks will be given.

The institute was able to go for a best and suitable consultant by

drafting carefully the objectives of the assignment and the outline of the

task to be carried out. This was also dependent on the Q.C prescribed

28

for selection of the consultant. The institute needs a total management

consultant with all its technical aspects and execution including the

methods of Q.C and also best methodologies for day to day activities of

construction.

The 3 firms short listed were

1. Karnataka state PSU Firm ‘A’ 2. A private Consultant organization Firm ‘B’ 3. Government of India enterprises Firm ‘C’

Technical evaluation

A technical scrutiny committee constituted to scrutinize the tender

document and to evaluate on the basis of the Q.C and Documents

furnished by the consultants. The committee awarded the marks as per

the qualification criteria prescribed in the tender document.


Basic Marks

Firm ‘A’

Firm ‘B’

Firm ‘C’

1 Similar construction work executed

Basic Work 3

Work executed as consultant 4

7 3 0

2 2

3 3

2 Experience for having executed

project management

Basic work 3 Work executed as consultant 4

7 3

0

3

2

3

2

3 Conceptual Design

Basic 3

Work Execution 3

6

0 0

3 2

3 3

II. Work Plan & Methodology

1 Methodology Proposed 15 No

Proposals 10 08

2 Quality Assurance 15 No

Proposals 10 08

III. Qualification (QC)

1 Project Manager Qualification

Experience

5 5

3

3

3 3

4 4

2 Architect Engineer

Q E

5

5

3 5

3

5

3

5

3 Structural Engineer

5 5

5

5

5 5

5 5

4 Engineer

Q

E

5

5

5

5

5

29

5 5 5

5 Site Engineer

Q E

5 5

5 5

5 5

5 5

50 78 79

Firm ‘B’ and Firm ‘C’ are technically qualified as they have scored more

than 75% as per Tender conditions.

Out of the two qualified Consultants Firm ‘B’ quoted 4.5 and Firm ‘C’

Quoted 4.9%. Contract was awarded to Firm ‘B’.

The consultants Firm ‘B’. Assisted in the preparation of Tender

Documents and finalized the tender in favor of Contractor ‘X’ who was a

successful bidder. The building completed within the stipulated time of

18 months. The building was constructed as per schedule both on the

basis of bar chart, PERT chart, land mark progress and also quality

assurance on time and handed over the building.

During the defect liability period no defects identified and the PSD

collected from the contractor was returned. There is no audit observation

on this project. The main feature for success is as follows.

The terms of reference was drafted to meet all the performance

requirement of the consultant.

Statement of objectives and outline of the task to be carried out by

the consultant.

Qualification criteria prescribed for the consultant

Technical committee is constituted to evaluate for the selection of

the consultant based on Q C

Methodology as approved by the client for contract management

Methodology proposed for quality assurance.

Prequalification of the contractors

Finalization of Q.C of contractors

Preparation of estimates as pre actual by the consultants

Finalization of the contract

Approval of the concept design plan & estimate.

Furnishing working plan in advance to the contractor.

Day to day supervision of the work at the site including Quality

Checking of materials brought to site and quality control test

results of the construction.

30

Interaction with third party quality control and implementing the

suggestions.

Taking measurements & joint measurements.

Preparation of bills.

Timely payment of bills by the institute.

Questions

1. How to frame Qualification criteria?

2. What is meant by scope of service?

3. How to manage consultancy and contract?

31

Case 15 :

Healthy Returns: (Best practice)

A regional deal for medical equipment is set to go nationwide and

save the NHS £ 15 million.

Project to buy equipment for hospitals in the North West in UK

which is now being extended throughout the NHS looks very much like a

textbook case of good purchasing practice.

The Pennine Acute Hospitals NHS Trust won the public sector –

local award for its purchase of endoscopy equipment. (Used to examine

patients internally to spot several diseases, particularly cancer) while

supplies manager David Scott was awarded the CIPS Purchasing and

Supply Management Professional of the Year.

While examining a list of medical and surgical items due to be

purchased, Scott noticed that endoscopy products had been bought from

the same UK supplier for no less than 27 years without ever being put

out to tender.

Seven flexible video endoscopes were initially due to be replaced at

a cost of £ 190,000. So Scott set about testing the market by putting the

contract out to tender, and it soon became clear that there were new

players in the market offering cheaper and better products.

The tendering exercise revealed that the best deal meant 12 new

endoscopes could be brought with a saving of 37% on the incumbent

supplier’s price.

The new equipment needed less maintenance and was more

reliable, meaning fewer cancelled appointments. And its slimmer design

meant it was more comfortable for patients.

The new endoscopes, however, would not work with the old

equipment in the examination rooms at the hospital. But the deal with

the new supplier meant a room could be completely re-equipped at lower

cost than the endoscopes alone from the old supplier.

Throughout the process, Scott managed the change by organizing

meetings with medical and nursing staff. They were not the easiest

groups to impress, he says, but all concerned were soon convinced.

32

The new equipment was commissioned and was soon being

enthusiastically used. The exercise had been a clear success and was

repeated the following year, saving £ 300,000 over the seven year life

cycle of the equipment.

Discussing all this with his colleagues in other trusts, it soon

became evident that the same situation existed throughout the NHS.

Scott decided to extend his findings to other trusts in the North West.

Several joined forces to form a consortium, saving a combined total of £

1.5 million, or about half their spending on the equipment over seven

years.

The Judges in the public sector local category of the CIPS Supply

Management Awards 2003 said the project was “an excellent example of

one purchasing department challenging the status quo and stimulating a

change in attitude throughout the sector”. One Judge with specialist

knowledge of the NHS said it was “the best thing that has happened in

health service purchasing for a long time”.

When awarding Scott his individual prize, the judges said he had

“demonstrated an excellent approach to analysis and problem-solving,

stake holder management and team skills, high presentational quality

and clear tangible delivery”.

Scott is proud of the awards and the work he put in. “I was

absolutely thrilled when colleagues in the region said they were keen to

work with me on this” he says.

“Our raison d’être in the NHS is to get the best for patients, so it’s very

nice to feel I’ve been able to do my little bit.” Working on this project and

winning the wards has been the highlight of my career”.

{Winner CIPS Purchasing and Supply Management Professional of the

year David Scott (The Pennine Acute Hospitals NHS Trust)}

Questions

1. Discuss the importance of open tenders, packaging, and

consortium in procurement

33


Subject: Procurement of Works- Use of Standard Tender Documents

Preamble:

Rules regarding Procurement of Works are contained in the

Karnataka Transparency in Public Procurements Rules, 2000. Chapter

IV deals with tender documents. Para 167(1) of the Karnataka Public

Works Department (KPWD) Code Volume I specifies that contract for

works estimated to cost more than Rs.25, 000 should be prepared only

on regular Contract Form No. PWG-65. This document with little or no

modification is widely used by all Government Departments and some

PSUs, Municipal Corporations and local bodies. The document is the

same for all values of contract. However some PSUs have made

considerable changes in PWG-65 and are using the same for their works

contracts of large value. Some of the provisions of the Contract Form

PWG-65 are at variance/ do not conform with the provisions of the

Karnataka Transparency in Public Procurements Act 1999 and Rules,

2000. In addition, Circulars/Orders on various aspects of Procurement

have been issued in the recent past, which need to get reflected in the

tender documents. At present there is no prescribed pre-qualification

document. The Departments and PSUs executing large works have

devised their own pre-qualification documents with wide variations. In

order to ensure consistency across all Procurement entities in the State,

mandating of standard tender documents for Works has been under the

consideration of Government for quite some time now.



documents for Procurement of Works. The Sub-Committee under the

Chairmanship of Secretary to Government, PWD, constituted by

Government order No. PWD 122 SO/FC 2003 Bangalore dated 8/5/2003

to examine and make recommendations regarding various aspects of

Procurement reforms in the state reviewed and finalized the draft tender

documents for works and made its recommendations. The Standing

Committee for Procurement reforms constituted vide Government order

No. PWD 1359 SO/FC 2001 dated. 5/8/2002 examined the

recommendations of the Working Group and Sub-Committee and decided

to place the draft tender documents on the website of Finance

Department and solicit comments and suggestions. Accordingly the draft

34

tender documents were hosted on the web site of the Finance

Department and a circular was issued vide No.PWD 141 SO/FC dated

29th





The Government have examined the recommendations. It is felt

that the works documents are tried out for a period of six months so that

any problems encountered in use of these documents can be suitably

addressed and taken care of before mandatory use in the entire state.

Hence, the following order.

Government Order No. FD 9 PCL 2004 (I),


1. One Division each in PWD Buildings wing and General wing; one Division each in Water Resources Department and Minor Irrigation

Department; and one division each in the Corporations under the administrative control of the Water Resources Department, as may be identified by the concerned Principal Secretary to Government, shall

make use of standard tender documents given in Annexure I to VI to this government order in procurement of works from 1st September, 2005, for

a period of six months initially. This order supersedes the provisions contained in the codes, manuals or any other orders in this regard.

Form Number

Description of the document Value of Contract

K/W-1 Procurement of Works by inviting open tenders (Item Rate)- restricted to Registered

Contractors(Annexure I)

Less than Rs.20 lakhs

K/W-2 Procurement of Works by inviting

open tenders (Item Rate) – post-qualification criteria incorporated

(Annexure II)

More than Rs.20

lakhs but less than Rs.50 lakhs

(threshold for two cover tender system)

K/W-3 Procurement of Works by inviting open tenders (Item Rate) – Two

cover tender system- No Price

More than Rs.50 lakhs but less than

Rs.100 lakhs

35

Adjustment (Annexure III)

K/W-4 Procurement of Works by inviting open tenders (Item Rate) – Two cover tender system – With Price

Adjustment (Annexure IV)

More than Rs. 100 lakhs but less than Rs10 crores

(threshold for pre-qualification)

K/W-5 Pre-qualification by open invitation of Applications- Joint

Venture not permitted (Annexure V)

More than Rs.10 crores (threshold for

pre-qualification)

K/W-6 Pre-qualification by open

invitation of Applications – Joint Venture permitted (Annexure VI)

More than Rs.10

crores (threshold for pre-qualification)

2. Instructions to the Tenderers, Formats for submission of tender

(unless specified otherwise) and the General Conditions of Contract,

indicated in the standard tender documents shall not be changed.

However, amendments, supplementary instructions if any to the above,

to take care of local need/specific requirement, may be provided in the


documents.



4. Additional tender document for Procurement of Works of value

of more than Rs.10 crores, documents for other types of contracts such

as Lump Sum, Percentage, Private Sector participation BOT, BOO, BOOT

etc and other documents as found necessary would be issued in due

course.

5. This order will apply for invitation of tenders for procurement of

works to be invited on or after September 1, 2005 and shall not be

applicable for tenders already invited and that are under process.



36


Subject : Procurement of Goods and Equipment- Use of


Preamble:

Rules regarding Procurement of Goods and equipments are

contained in Karnataka Transparency in Public Procurements Rules,

2000. Chapter IV deals with tender documents. In the absence of

standard tender documents for Procurement of Goods and Equipments,

various Procurement entities of the State have been preparing and using

tender documents, with large variations. Mandating of standard tender

documents for Goods and Equipments has been under consideration of

the Government for quite some time now.



documents for procurement of some types of goods and equipments. The

standing committee for Procurement reforms constituted vides

Government order No. PWD 1359 SO/FC 2001 dated. 5/8/2002

examined the recommendations of the Working Group and decided to

place the draft tender documents on the website of Finance Department

and solicit comments and suggestions. Accordingly the draft Tender

Documents were hosted on the web site of the Finance Department and a

circular was issued vide No. PWD 141 SO/FC dated 29th

August 2003

requesting for comments and suggestions.




The Government have examined the recommendations, and are


Government Order No. FD 9 PCL 2004(II),


37

1. Every ‘Procurement Entity’ under the government (as

defined in Section 2(d) of the Karnataka Transparency in Public

Procurements Act, 1999) shall make use of standard tender documents

given in Annexure I to VI to this government order in procurement of

goods and equipment from 1st September, 2005. This order supersedes

the provisions contained in the codes, manuals or any other orders in

this regard

Form

Number Description of the document Value of

Contract


by inviting open tenders (Annexure I)

Less than Rs.10

lakhs


by inviting open tenders

(Annexure II)

More than Rs.10

lakhs but less

than Rs.50

lakhs

K/G-3 Procurement of Computer Systems and

allied Equipment by inviting open

tenders (Annexure III)

Less than Rs.50

lakhs

K/Q-1 Procurement of Goods and Equipment


vendors- Evaluation to be done for all

items put together

(Annexure IV)

Less than Rs. 1

lakh

K/Q-2 Procurement of Goods and equipment


vendors – Evaluation to be done for

each item separately (Annexure V)

Less than Rs.1

lakhs per

contract

K/S.O Format of Supply Order when

quotations are invited on Formats

K/Q-1 and K/Q-2 (Annexure VI)

2 Instructions to the Tenderers, Formats for submission of tender (unless specified otherwise) and the General Conditions of

38

Contract, indicated in the standard tender documents shall not be changed. However, amendments, supplementary instructions, if any,

to the above, to take care of local needs/specific requirements, may be provided in the Data sheet, Special Conditions of Contract, provided

for in the documents. 3. Amendments to the relevant codes and rules will be

incorporated in due course. 4. Additional tender documents for Procurement of Goods

and Equipments/Computer systems of value of more than Rs.50

lakhs with two cover tender system, Supply and Erection of

Equipment, Procurement of Health Sector Goods (Drugs and

Pharmaceuticals) and other documents as found necessary would be

issued in due course.

5. This order shall apply for invitation of tenders for

procurement of goods and equipment to be invited on or after

September 1, 2005 and shall not be applicable for tenders already

invited and that are under process.



SD/-


Finance Department

39


Subject: Hiring of Consultancy Services - Use of Standard

Request for Proposals (RFPs) and Contract Formats.

Preamble:

Rules regarding Consultancy Services are contained in Chapter

VII A of the Karnataka Transparency in Public Procurement Rules, 2000

issued vide Government Notification No. PWD 121 SO/FC 2003 dated

26th

September 2003. The Chapter details the approved methods of

selection; steps in the selection process and types of contracts. Rule 28H

states that standard requests for proposals (RFPs) and Contract Formats


shall be used.


1359 SO/FC 2001 dated 14/8/2002 reviewed the draft RFPs and

contract formats for the various methods of selection and the contract

formats for various types of contracts. The Standing Committee for

Procurement Reforms constituted vide Government order No. PWD 1359

SO/FC 2001 dated. 5/8/2002 examined the recommendations of the

Working Group and decided to place the draft RFP documents on the

website of Finance Department and solicit comments and suggestions.

Accordingly the draft RFP documents were hosted on the web site of the

Finance Department and a circular was issued vide No. PWD 141 SO/FC

dated 29th


The standing committee considered the comments and

suggestions received in its meeting held on 13-4-2005; and has

recommended to Government mandating the forms from 1-8-2005.

The Government have examined the recommendations and are


40

Government Order No. FD 9 PCL 2004(III),

Bangalore, Dated : 06.8.2005

1. Every ‘Procurement Entity’ under the government (as defined in Section 2(d) of the Karnataka Transparency in Public Procurements Act, 1999) shall make use of standard RFP documents given in Annexure I to

XII to this government order in procurement of consultancy services from 1st September, 2005. This order supersedes the provisions contained in

the codes, manuals or any other orders in this regard.

Form

Number Consultant Entity

Method of

Selection

Type of

Contract

Value of

Contract

K/C-1

(Annexure I)


cost Based Selection

(QCBS)

Time

Based

Less

than Rs.10

lakhs

K/C-2 (Annexure

II)

Firm/Organization/NGO Quality cum Cost Based

Selection (QCBS)

Time Based

More than

Rs.10 lakhs

K/C-3 (Annexure

III)

Firm/organization/NGO Quality cum Cost Based

Selection (QCBS)

Lump Sum

Less than

Rs.10 lakhs

K/C-4

(Annexure IV)


Cost Based Selection

(QCBS)

Lump

Sum

More

than Rs.10

lakhs

K/C-5

(Annexure V)


Selection (LCS)

Time

Based

Less

than Rs.10 lakhs

K/C-6 (Annexure

VI)

Firm/Organization/NGO Least Cost Selection

(LCS)

Time Based

More than

Rs.10 lakhs

K/C-7 (Annexure VII)

Firm/Organization/NGO Least Cost Selection (LCS)

Lump Sum

Less than Rs.10

lakhs

K/C-8

(Annexure

VIII)


Selection (LCS)

Lump

Sum

More

than Rs.10

41

lakhs

K/C-9

(Annexure

IX)


Source Selection

(SSS)

Time

Based

Less

than Rs.5

lakhs

K/C-10

(Annexure

X)


Source

Selection (SSS)

Lump

Sum

Less

than

Rs.5 lakhs

K/C-11

(Annexure

XI)

Individual Single Source

Selection (SSS)

Time Based

Less than Rs.

1 lakh

K/C-12

(Annexure

XII)

Individual Single

Source Selection

(SSS)

Lump

Sum

Less

than Rs.1 lakh

2. Instructions to the Consultants, Formats for submission of

proposals (unless specified otherwise) and the General Conditions of

Contract, indicated in the standard RFP documents shall not be

changed. However, amendments, supplementary instructions, if any,

to the above, to take care of local needs/specific requirements, may be

provided in the Data sheet, Special Conditions of Contract, provided

for in the documents.



4. Additional documents as may be found necessary for other types

of contracts would be issued in due course.

5. This order shall apply for invitation of new proposals to be

invited on or after September 1, 2005 and shall not be applicable for

proposals already invited and are under process.



SD/-


Finance Department

42


NO. PWD 1359 SO/FC 2001(P-2) Karnataka Government Secretariat, Vidhana, Soudha,


October 2002

CIRCULAR

Subject: Awarding of contracts to the lowest evaluated technically

and commercially responsive tenderer meeting the prescribed

Qualification criteria including tender capacity and past

Performance.

It has come to the notice of the Government that some

Procurement Entitles are adopting the practice of splitting the contract

(particularly in Goods contracts) among all or some tenderers by offering

the price of the lowest tenderer to others and dividing the quantity of

Supply evenly or in other proportion. Such practices undermine the

rationale of competitive bidding promote collusion and go against the

provision of the KTPP Act and Rules.

The provisions of the KTPP Act and Rules provide for only the

acceptance of the lowest tender. The lowest evaluated responsive

tenderer deserves the full award, if he has satisfied the stipulated

qualifying criteria.

The following Provisions in the KTPP Act and Rules are

brought to the notice of all Procurement Entities:

(1) Section 13 of the Karnataka Transparency in Public

Procurement (KTPP) Act 1999 lays down that "The Tender

Accepting Authority shall, after following such procedure as may

be prescribed pass order accepting the tender and shall

communicate the information relating to acceptance of tender

together with a comparative analysis and reasons for accepting of

tender to the procurement entity and Tender Bulletin Officer".

(2) Rule 21, Chapter, VI of the KTPP Rules 2000 stipulates that

"The Tender Accepting Authority shall cause the evaluation of

tenders to be carried out strictly in accordance with evaluation

criteria indicated in the tender documents"

(3) Rule 24, details the procedure for the initial examination of

tenders to determine substantial responsiveness.

43

(4) Rules 25, explains the procedure of determination of the lowest

evaluated price.

(5) Rule 26(1) stipulates that "The tender Scrutiny Committee or

the officer inviting the tender shall prepare detailed evaluation

report which shall be considered by the Tender Accepting

Authority before taking a final decision on the tender."

(6) Rule 26(2) states that "As soon as the tenderer qualified to

perform the contract is identified in accordance with Section 13

of KTPP Act, the Tender Accepting Authority shall pass order

accepting the tender and communicate the order of acceptance to

the successful tenderer...."

From the above provisions in the KTPP Act and Rules, it is

clear that the Contract should be awarded only to the lowest evaluated

technically and commercially responsive tenderer, who meets the

prescribed qualification criteria including bid capacity and past

performance.

In view of the foregoing, the Government reiterates that

when tenders are invited for a specified quantity of Goods, the contract

should be awarded only to the lowest technically and commercially

responsive tenderer who meets the prescribed qualification criteria

including bid capacity and past performance.


Departments, Boards Corporations, Societies, Government Autonomous

organizations, Universities, Panchayat Raj institutions, Municipal

Corporations, Local bodies etc for which KTPP Act and Rules are

applicable.

All Procurement Entities shall ensure that the above

instructions are followed strictly in respect of all contracts irrespective of

the funding agency. It may be noted that any violation of the KTPP Act,

1999 and Rules, 2000 attracts the penal provision under Section 23 of

the Act.

The above instructions do not apply to tenders for fixing

Rate Contracts, for which instructions would be issued separately.

(Chiranjeev Singh) Principal Secretary to Government, Finance Department.

44


NO. PWD 1359 SO/FC 2001(P-2) Karnataka Government Secretariat, Vidhana Soudha,


October 2002

CIRCULAR

Subject: Procurement Planning, Packaging and Scheduling and

making Available funds to match with the requirement as

per approved Procurement Plan.

It is noticed that adequate attention is not given to Procurement

Planning, which is an integral phase of Procurement process. Planning of

packages is an important activity, which needs to be finalized before

taking up a project for implementation. In most of the cases, planning of

packages is not driven by the needs of the project (to ensure quality and

timely completion to achieve the project objectives), but rather by the

sanctioning powers, readiness of the designs, drawings and estimates at

particular point of time, availability of contracts and their specialization,

fund availability etc. The pros and cons of centralized and decentralized

procurement, bulking of procurement (in respect of Goods), small versus

big packages for works, packaging and slices do not seem to have been

examined thoroughly in most of the projects. There are no approved

Packaging Plans and Procurement Schedules (which determines the

timing of the various procurement activities such as invitation of tender,

sale of tender documents, receipt of tenders, preparation of evaluation

report, award decision, signing of contract, period of achievement of

milestones/delivery schedule, time of completion of works/supplies) for

most of the projects. Usually the field officers decide on the packaging as

the implementation of the project proceeds and invite tenders on that

basis. All these lead to haphazard completion of works and commitment

of scarce financial resources without realizing the project objectives.

No specific codal provisions on this aspect exist. However, Para 192(b) of

the KPWD Code volume I refer to the splitting of contracts. It reads as

follows: "It is permissible to give out different contracts to a number of

contractors relating to one work, even though such work may be

estimated to cost more than the amount up to which the officers are

empowered to accept the tenders. This splitting of the work should be

resorted to only in exception cases, in the interest of the speedy

execution of works or when the nature of the work is such that if any

45

difficulty for a single agency to execute its various aspects, subject to

obtaining prior approval of the authority who is competent to accept the

tender for the work as a whole. In case more than one contract is

awarded to the same contractor at the same time or one after the other

the sanction of the authority who is competent to accept the total of such

tenders and not the authority who can accept each tender with reference

to value of each contract is to be obtained." The principle behind

packaging appears to be the technical requirement, need for speedy

execution, preparedness to invite tenders and the expected competition.

In view of the above the following instructions are issued:

(1) The pros and cons of centralized versus decentralized procurement,

bulking of procurement (for Goods) and small versus big

packages for works, packaging and slices are to be thoroughly

examined, keeping in view the implementation Plan of the

project;

(2) After the packages are decided and approved, the appropriate Method

of Procurement and Procurement Schedule (Showing the timing

of the various procurement activities) should be framed

depending on the value of the packages;

(3) This Procurement Schedule should form the basis of the preparation

of designs and specifications, to match the invitation of tenders;

(4) The Procurement Plan should be used as a template for monitoring

thus helping with timely recognition of problems and also in

taking timely corrective action;

(5) The Procurement Plan should be used to help all participants to the

procurement process to understand the sequence and timing of

the procurement action (stages), their contributions and

responsibilities at each stage and who is responsible at the next

stage;

(6) The Procurement Plan should be used to record the progress of

planned action thus supporting monitoring of performance of

the responsible unit and the staff; and

(7) The Procurement Plan and Schedule Should form the basis for

working out requirement of funds and its release to the

implementing Agency. If the work is contemplated to be

completed within a year full provision, if within 2 years 40%

46

and 60% for I & II year and if it is 3 years 30%, 40% and 30%

for 1, II & III year shall be provided. No tender should be

awarded without having grant as indicated.

Authorities should ensure that these instructions are followed strictly in

respect of all projects irrespective of the funding agency.


Departments, Government Corporations, Societies, Semi Government

Autonomous Organizations, Universities, Panchayat Raj Institutions,

Municipal Corporations, Local Bodies, etc, for which KTPP Act and Rules

are applicable.

(Chiranjeev Singh) Principal Secretary to Government,

Finance Department.

47


NO.PWD 1359 SO/FC 2001(P-2) Karnataka Government Secretariat, Vidhana Soudha, Bangalore, dated 3rdDecember2002

CIRCULAR

Subject: Guidelines of conducting negotiations before award

of the contract.

1. It is observed that the Tender Accepting Authorities of

Government Departments, State Government Undertakings, Local

Authorities, Autonomous bodies and Corporations established by

or under law and owned and controlled by the Government,

sometimes negotiate with the lowest tenderer, before passing order

accepting the tender in terms of Sub Para 3 under Section 13 of

the KTPP Act.

2. It has to be recognized that:

• Negotiations even with the lowest tenderer defeats the very ethics of competitive tendering and should not be resorted solely for the purpose of reduction of rates;

• When negotiations are conducted in a routine manner, there is every possibility that the tenderer would have jacked up the

prices considerably and would reduce the prices marginally to satisfy the Employer/Purchaser with the result that the Employer/Purchaser may in most cases ends up paying more

than real cost of the work/goods;

• Negotiations very often leads to delay in award of the contracts; and

• Negotiations opens up opportunities for corruptive practices.

3. After careful consideration of the practices being followed

in the various organizations the following Guidelines are issued for

conducting negotiations, if needed be, in respect of Works Contracts.

3.1 Negotiations solely for the purpose of obtaining lower prices

would be appropriate only in exceptional circumstances, such

as lack of competition (less than three), single bid, suspected

48

collusion, or where the lowest evaluated responsive bid is

substantially above the estimated cost. In such cases also, the

first choice is for rejection of all tenders and reinviting fresh

tenders.

3.2 A substantially high tender is defined as under;

Period of contract and

provision of Price

Adjustment

Update Estimated cost

of the Work Upto Rs. 20 lakhs.

Updated Estimated cost

of the Work Rs. 50 lakhs and

above

(a) Contracts

where price adjustment is not provided

10% above the

update estimate or Rs. 1.Lakh whichever is

more

10% above the

updated* estimate

10% above the

updated* estimate

(b) Contracts

where price adjustment is provided from

the date of tenders

Does not arise ... Does not ... 5% above the

updated estimate or Rs.5,00,000

which ever is more.

* Estimate based on the current rates of labor and materials such as

cement, steel and other key materials.

3.3 In all cases where the tenders amount is not substantially high

(refer definition of substantially high given in Para 3.2 above), the

Tender Accepting Authority shall pass orders accepting the

lowest evaluated responsive and qualified tender only.

3.4 In respect of exceptional cases, as listed in Para 3.1 above

(other then those that are considered substantially high), the

Tender Scrutiny Committee or the Evaluating Officer as the case

may be, depending on the value of contract may choose to

propose to the Tender Acceptance Authority to reject all tenders

and reignite fresh renders or negotiate. In case the proposal is for

rejection and reinvitation, the causes leading to the rejection,

shall be examined by the Tender Scrutiny Committee or the

Evaluating Officer, who shall propose the changes, if any, to be

made in the estimated cost, specifications, provisions in the

49

Special Conditions of Contract or packaging, before reinviting the

tenders.

3.5 The Tender Accepting Authority shall pass orders for reinviting

tenders with changes if any on the tender document. Pre-tender

conference shall be held to explain the qualification criteria,

specifications and conditions of contract and clarify any

reservations if any to the prospective tenderers. The reservations

if any pointed out by the prospective tenderers shall be made in

the bidding documents.

3.6 After reentering the tenders shall be processed as per 3.1, 3.2

and 3.3 above.

3.7 In respect of tenders which are determined high in terms of

Para 3.2 above the Tender Scrutiny Committee or the Evaluating

Officer as the case may be, depending on the value of the

contract, shall (i) identify the item (s) for which the rates are

considered high and are contributing to the increase; (ii) get the

break up of rates (s) from the lowest evaluated responsive

tenderer and make a through examination of the reasonableness.

If the Tender Scrutiny Committee or the Evaluating Officer is

satisfied with the explanation by the tenderer it shall make its

recommendation for the acceptance of the tender.

3.8 In case where the Tender Scrutiny Committee or the Evaluating

Officer decides in favor of negotiation (in all exceptional cases

listed in Para 3.1 above), he shall seek the permission of the

Tender Acceptance Authority, detailing the reasons and the

points on which negotiations are proposed to be conducted. The

Tender Accepting Authority shall after careful examination of the

proposals approve the points (including the change in scope,

specifications, packaging etc.) on which negotiations are to held,

appoint a Negotiating Committee consisting of Tender Inviting

Authority, a representative of the Tender Scrutiny Committee or

the Evaluation Officer and Tender Accepting Authority. The

Committee shall conduct negotiations on the approved points

and make a record of the proceedings of the negotiations. The

Committee shall submit the proceedings to the Tender Accepting

Authority for taking decision. If the negotiations are successful

and the Tender Accepting Authority accepts the recommendation

50

of the Negotiating Committee, the tender is accepted at the

negotiated rates/terms and conditions and contract is concluded.

3.9 If the negotiations fail, the Tender Accepting Authority shall

issue orders on the future course of action to be taken by the

Tender Inviting Authority, which may include adoption of revised

procurement strategy (to include repackaging, execution by

departmental forces/facilities etc.)

4. In respect of Procurement of Goods, since there are no Schedule

of Rates and rates for equipment/goods satisfying the minimum

functional requirements vary widely, depending up to the quality,

specifications of the material input, award should generally be

made to the tenderer who is technically and commercially

responsive and meets the stipulated qualification criteria and who

is determined to perform the contract satisfactorily. If the tendered

rate is considered unreasonable (one of the method of determining

the reasonableness being the comparison with the market rate for

the same brand and specification of equipment,) negotiations shall

be conducted with the lowest tenderer. The procedure as outlined

in Para 3.7 and 3.8 above should be adopted scrupulously. Here

also the first choice would be to reject and reinvite the tenders,

after analyzing the causes leading to the rejection of tenders.

5.1 The above instructions are applicable only to Works/Goods

tenders received against notice inviting competitive tenders and

not for Consultancy Proposals, for which separate instructions

would follow. It is also not applicable for tenders invited to fix

rate contracts.

5.2 The above instruction shall apply to all Procurement Entities as

defined in Section 2(d) Chapter I of the KTPP Act.

5.3 The above Guidelines shall not be applicable to tenders invited

for Projects funded by International Financial Agencies or

Projects covered under International Agreements for which the

rules of funding agencies shall apply

6. Procurement Entities shall ensure that the above Guidelines are

followed strictly. It may be noted that any violation of the KTPP

51

Act !999 and Rules 2000 attracts the penal provision under

Section 23 of the Act.

(Approved by Principal Secretary Finance Department)

M.N. Seshappa Special Officer & Ex-officio



NO. PWD 1359 SO/FC 2001(P-2) Karnataka Government Secretariat,

Vidhana soudha, Bangalore, dated 30thJune 2003.

CIRCULAR

Subject: Two Cover Tenders System – Safeguards to be

adopted.

Rule 28 of the Karnataka Transparency in Public Procurement

Rules, 2000 explained the circumstances where Two-cover tenders

system is to be adopted and the procedure to be followed in such cases.

The rationale of the two-cover tenders system is that the tender

requirement will be strictly enforced and the possibility to consider a

tender, which has failed to most the tender requirement but has offered

an attractive price, will be eliminated. The second cover containing the

price quotations of only those tenderers found qualified as per tender

requirements shall be opened by the tender inviting authority.

In order to ensure transparency in the procurement process

and build public confidence in the system, the following safe guards shall

be adopted, whenever two-cover tenders system is adopted.

(i) At the time of opening of the First covers, the second covers

containing the price quotations shall be placed in a large cover and

securely sealed in the presence of the tenderers or their representatives,

who are present and also get the same signed by all those tenderers or

their representatives. This large cover containing the second covers

containing the price quotations shall be opened on a predetermined time

52

and data. This will instill confidence in the mind of the contracting

community;

(ii) The evaluation of the technical aspects contained in the first

cover should be completed within a reasonable period, and the time gap

between the opening of the first and the second cover should be the

minimum and, in any case not more than 45 days [In exceptional cases,

approval of the Secretary to the Government of the concerned

Department /Managing Director of the Corporation shall be obtained

where the period is more than 45 days but less than 60 days, If it

exceeds 60 days the tenders shall be reinvited].

(iii) The qualification criteria and the technical requirement

should not be restrictive/discriminatory and the specifications

particularly of equipment should be broad based and functional, without

any irrelevant details.

The above instructions shall apply to all Procurement Entitles

as defined in Section 2(d) of Chapter I of the Karnataka Transparency in

Public Procurement Act.

Procurement Entitles shall ensure that the above Guidelines are

strictly followed. It may be noted that any violation of the Karnataka

Transparency in Public Procurement Act 1999 and Rules 2000 attracts

the penal provision under Section 23 of the Act.

(B.K. DAS)

Principal Secretary to Government, Finance Department

53


PWD 140 SO/FC 2003 Karnataka Government Secretariat,

Vidhanasoudha,

Bangalore,Dated:1stSeptember 2003.

C I R C U L A R

Sub: Procedure for sale of tender documents.

1. The Notice Inviting Tenders (NITs) issued by the Tender

Inviting Authorities (TIAs) specify:

(i) the time and date (period being usually two to seven days) up to

which the applications for request of tender documents will be received; (ii) the time and date (usually one to three days) when the tender

documents would be sold to those who have submitted the applications earlier; (iii) the time and date up to which the tenders would be received as

well as the time and date on which the tenders would be opened (usually 7 to 8 days after the sale of tender documents).

2. The above procedure is being adopted to enable the TIAs to

know the number of

copies of the tender document to be prepared and provide adequate time

for the preparation of the re4quisite number of documents.

3. The procedure in vogue is against the spirit of the

Karnataka Transparency in Public Procurements (KTPP) Rules 2000 –

Rule 17 and should be discontinued. The tender documents should be

made available for entire period provided for the submission of tenders

as per KTPP Rule 17. For this purpose the TIAs shall prepare adequate

number of copies of tender documents before the publication of NIT and

sell the document as per instructions contained in KTPP Rule 13 from

the date of publication of the NIT up to the pre-declared time on the

working day previous to the day fixed for submission of tenders (either

original or extended).

4. The above instructions shall apply to all Procurement

Entities as defined in Section 2 (d) Chapter I of the KTPP Act (1999).

54

5. Procurement Entities shall ensure that the above instructions are

followed scrupulously. It may be noted that any violation of the KTPP Act 1999

Rules 2000 attracts the penal provision under Section 23 of the Said Act.

Sd/.,

(B.K. DAS)

ACS & Principal Secretary to Government Finance department

ROCEEDINGS OF THE GOVERNMENT OF KARNATAKA

Sub: Procurement Reforms – Measurement of Works and

Supplies – Use of Measurement Books

Preamble :

1. Paragraphs 208 & 209 of the Karnataka Public Works

(KPW) Accounts Code Volume I, Paragraphs 300 & 301 of the Karnataka

Public Works Departmental (KPWD) Code Volume I and Appendix VII of

the KPWD Code Volume II detail the instructions regarding issue of

measurement books, recording of measurements and storage of

measurement books. The salient instructions are:

(i) Payments for all work done otherwise than by daily

labour and for all supplies, are made on the basis of measurements

recorded in measurement books, Form PWG-27 in accordance with the

rules in paragraph 209;

(ii) The measurement should be considered as a very

important initial account record since it is the basis of all accounts of

quantities of work done whether by daily labour or by piece work or by

contract and of materials received which have to be counted or

measured:

(iii) All measurements should be neatly taken down in the

measurement book issued for the purpose and nowhere else;

(iv) The entries should be recorded in the measurement

book at the work spot indelibly in ink so as to render it difficult to

tamper with or to make unauthorized additions or alterations in entries

once made:

55

(v) As all payments for works or supplies are based on the

quantities recorded in the measurement book. it is incumbent upon the

person taking the measurement to record the measurements clearly and

accurately. He will also work out and enter in the measurement book the

figures for the contents or area column:

(vi) Measurements for all works and repairs should in the

first instance be taken by subordinates in charge and checked by Sub-

Divisional Officers and Divisional Officers [Assistant Executive Engineer

(AEE) is to check 75% in Case of works costing Rs. 5000 or more and

50% in case of other works and repairs. At least 50% of the works are to

be checked. Executive Engineer (EE) is to check 25% of items:

(vii) All final measurements irrespective of value to be

recorded by Assistant Engineer (AE) and AEE should check-measure

100% for all works estimated to cost Rs. 5000 and more if it is a

departmental work and Rs. 25.000 and more if it is A contract work. EE

should check 25% of the total value of work done if the works cost more

than Rs. 25,000;

(viii) No erasures of any kind should be permitted; mistakes

should be corrected by drawing the pen through the incorrect entry. and

inserting the correct figures or words between the lines. A reliable record

is the object to be aimed at, as the measurement book may have to be

produced as evidence in a court of law;

(ix) Apart from measurements, the description of the item as

per tender has to be written in the hand of the AE.

2. Paragraph 5 of Appendix IV-A of the KPWD Code Volume II

Rules for Registration of Contractors in PWD lay down that Class I and II

Contractors should engage at least one Engineering Graduate of every

work costing Rs.15 lakhs and above and Class III Contractor should

engage one Engineering Graduate for every work costing Rs.10 to 15

lakhs and at least one Diploma Holder on every work or group of works

together costing more than Rs. 2 lakhs but less than Rs. 10 lakhs

3. Clauses 7(a) and 7(b) of PWG-65 Form, the approved tender

document for works, state:

(i) A bill shall be submitted by the Contractor on or before the 15th

of each month of all items of work executed in the previous month;

56

(ii) The details furnished by the Contractor in the bill should be

measured by the subordinate in the presence of the Contractor or his

duly authorized agent. The countersignature of The Contractor or the

said agent in the measurement book shall be sufficient proof to the

correctness of the measurements, which shall be binding on the

Contractor in all respects;

(iii) If the Contractor does not submit the bills within the prescribed

time, the EE may depute within seven days of the prescribed date, a sub-

ordinate to measure up the said work. The countersignature of the

Contractor shall be obtained in the measurement book concerned with

reference to which, the Department may prepare the bill.

4. It is observed that the measurement books are not being used

in most of the Government Departments, Public Sector Undertakings,

Boards, Societies, and Local bodies for recording the receipt of goods and

equipment and payments of invoices are being made on the basis of

verification of receipt of materials. However most of the Government

Departments, Public Sector Undertakings, Boards, Societies and Local

bodies are using the measurement books for recording the

measurements as per provisions of KPWD Code. However the compliance

to the provisions of the Manual is resulting in lot of clercial work by the

technical officers whose primary duty is supervision of work in the field.

Also there are no consistent practices followed by various procurement

entities of the State.

5. The Sub-Committee constituted under the Chairmanship of

Secretary. Public Works Department by Government in GO No PWD 122

SO/FC 2003 dated 8.5.2003 to look into certain technical issues like

measurement books, from the Procurement Reforms Action Plan on the

recommendations of the Country Procurement Assessment Report

(CPAR) and make recommendations to the Standing Committee has

examined the issue, felt that the present provisions in the Codes and

manuals regarding measurement of works and supplies are archaic, time

and effort consuming, do not use the currently available information

Technology and has made recommendations for improvement of the

system. The Working Group constituted in GO No. PWD 1359 SO/FC

2001 dated 14.8.2002 for implementation of the said Action Plan

reviewed and endorsed the recommendations of Sub-Committee. The

Standing Committee constituted in GO No. PWD 1359 SO/FC 2001

dated 5.8.2002 for implementation of the said Action Plan on the

57

recommendations of CPAR, examined the recommendations of the Sub

Committee in detail.

Government Order No. FD 56 Pro. Cell 2004, Bangalore, 18thJanuary

2005.

1. Based on the recommendations of the Standing Committee

this order is issued for recording of measurement of Works and Supplies.

This order shall supersede the current instructions contained in the

Codes and Manuals.

(a) A uniform procedure for recording of measurements for

works and supplies should be enforced in all the Organizations

coming under the purview of the Karnataka Transparency in

Public Procurements Act 1999;

(b) The current provisions of the KPW Accounts and

Departmental Codes shall continue to be applicable for all

Works Contracts of value Rs.25 lakhs and less;

(c) In respect of Works Contracts of value more than Rs25 lakhs,

the Contractors shall be made responsible for submitting bills

duly supported by hard copy of detailed measurements of work

using electronic spreadsheets and making

computations thereof. The Contractor shall submit diskette/CD

ROM in addition to the hard copy;

(d) The Assistant Engineer in direct charge of the work shall take

independent measurements of the work and enter the same in

the electronic spreadsheet and make computations thereof. The

Assistant Engineer can make use of the detailed measurements

as given by the Contractor in the diskette/CD ROM. In any case

the responsibility for the correctness of the measurements shall

be entirely of the Assistant Engineer, as prescribed in the Codes

and Manuals;

(e) The measurements would be checked by the officers from the

hard copy of the spreadsheet as per present stipulations, and

computations would be made accordingly'.

(f) The countersignature of the Contractor or his authorized

Agent shall be obtained on each page in the hard copy of the

detailed measurement spreadsheets prepared by the Assistant

58

Engineer, which shall be binding on the Contractor in all

respects;

(g) The hard copies of the detailed measurement spreadsheets

shall be bound, numbered and stored, which shall be

considered as the measurement books, as referred to in the

Manuals and Codes. An index shall be prepared for each

Contract/Work, which shall show the details of the bills,

reference to measurement books and vouchers. Similarly the

diskettes/CD ROMs shall be indexed and stored.

(h) In respect of supplies – goods and equipment, the invoices

detailing the items supplied with specifications, quantity, rate

and amount would be sufficient. This shall be checked and

inspected by the receiving authority and accounted as per

normal accounting procedure prescribed by Government/

Corporation/ Board/ Society Local body from time to time.

Entry in measurement books need not be insisted upon.

2. This order will apply prospectively and shall not be

applicable for contracts concluded in the past.

3. This order shall apply to all Procurement Entities as defined in

Section 2(D) Chapter 1 of the Karnataka Transparency inPublic

Procurements Act. 1999.

4. This order shall be appropriately incorporated in the Conditions

of Contract of Tender documents.

5. The contents of this order shall be appropriately incorporated in

the Karnataka Public Works Accounts and Departmental Codes and

other Manuals.



(Sudhakar Rao)


Finance Department.

59


Subject: Third Party Inspection of Works, Goods and

Equipment

Preamble:

1. There are no specific provision regarding Inspection of

Works in the Karnataka Public Works Department Manual, Clauses

12 (b) and (c) of the PWG 65. ... the approved tender document for

works, lay down the Guidelines for Inspection of Works. The

Contractor is primarily responsible to ensure that the works are

executed as per Specifications and deliver the Works is sound

condition. The Departmental Officers have to make periodical checks

to ensure the quality of works. The Government is concerned over the

deterioration in the quality of the works executed. To assist the

Departmental Officers to ensure quality works, in some major projects

separate in-house quality control organizations have been set up and

in some other projects funded by International Donor Agencies,

Supervision Consultants have been employed. However for most of the

works under execution, the Departmental Officers (here-in-after called

Employer) are responsible for ensuring the quality of the works.

2. Similar is the position in respect of procurement of

goods and equipment. The inspection is mostly in-house. In some

PSUs third party inspections are adopted on a case-by-case basis and

there is no consistency and uniformity of approach.

3. Complaints regarding acceptance of poor quality of

works and procurement of goods and equipment not conforming to

stipulated specifications continue to be reported.

4. The Sub-Committee under the Chairmanship of

Secretary PWD, constituted by Government vide No. PWD 122 SO/FC

2003, Bangalore dated 8/5/2003 to examine and make

recommendations regarding various aspects of Procurement Reform in

the State examined the measures to improve quality control of works,

inspection of goods and equipment and has made recommendations

for improvement of Quality Control. The Working Group constituted

vide GO No. PWD 1359 SO/FC 2001 dated 14/8/2002 reviewed and

endorsed the recommendations of Sub-Committee. The Standing

Committee for Procurement Reforms Action Plan based on CPAR.

60

Karnataka constituted vide GO No. PWD 1359 SO/FC 2001 dated

5/8/2002 examined the recommendations in detail.

5. Third Party Inspection of Works and Supplies would

ensure adherence to quality standards, leading to value for money.

This will also check corruptive practices and instill public confidence

in the system.

Government Order No. FD 55 Pro. Cell 2004,Bangalore, Dated:

17.02.2005

Based on the recommendations of the Standing

Committee the following orders are issued.

(a) The appointment of independent

Third Party Inspectors designated Quality Supervision Consultants

would go a long way in assisting the Departmental Officers to ensure

adherence to quality standards in construction works and

procurement of goods and equipment;




Rs.25 lakhs for an item of goods and equipment; (c)

Reputed Quality Supervision Consultants (either Individual of Firm)

known for integrity and professionalism should be appointed by

following the procedures for procurement of Consultancy services

issued vide GO No. PWD 121 SO/FC 2003, Bangalore dated



completed by the Quality Supervision Consultants, should be

prepared (with the assistance of experts if need be) to ensure that the

Consultants perform their obligations satisfactorily;



procurement of goods and equipment or for procurement made in a

term or stipulated period for a Procurement Entity;


Managing Directors of PSUs Boards/ Societies Local Bodies shall

employ the Quality Supervision Consultants and order payments to

them on satisfactory performance. The expenditure on the

employment of the Quality Supervision Consultants shall be charged

to the cost of the works and goods and equipment under procurement;


the works periodically, submit reports along with the prescribed

61

checklists duly completed to the Employer for taking action with a

copy to the Secretary to the Government Managing Director of the

Corporation/Board/Society/Local body. who will be responsible for






the Purchaser with a copy to the Secretary to the

Government/Managing Director of the Corporation Board

Society/Local body who will be responsible for Review of the Action

Taken Reports of the Purchaser;


Consultant and the inspections conducted by them shall not absolve

the primary responsibility of the Employer to ensure completion of

works of sound quality as per stipulated specifications and of

Purchasers for Procurement of goods and equipment of good quality

as per stipulations in the specifications. The Quality Supervision

Consultants are there to assist the Employer/Purchaser in


(i) The Quality Supervision Consultants should not

be employed in respect of works and goods and equipment contracts

of projects, where a specialized in house Quality Control Organization

exists is planned or a separate Supervision Consultant has been

employed.

2. This order will apply prospectively and will not

be applicable for contracts conclude in the past or for tenders already

invited.

3. This order shall apply to all Procurement

Entities as defined in Section 2(d) of Chapter I of the KTPP Act, 1999

4. This order shall be appropriately incorporated

in the Special conditions of contract of the tender documents.

5. The contents of this order be appropriately

incorporated in the Karnataka Public Works Department and other

Manuals.


The Governor of Karnataka

( Sudhakar Rao)

Principal Secretary to the Government,

Finance Department

62


Sub : Procurement of works - use of Standard

Tender Document - Revision - Reg.

Read : (1) G.O.No.FD 9 PCL 2004 dtd:6-8-2005

(2) G.O.No.FD 6 PCL 2006 dated:21-03-2007

(3) G.O.No.FD 04 PCL 2006 dated:12-07-2007

(4) G.O.No.FD 04 PCL 2007 dated:2-4-2008

(5) Proceedings of the Procurement Reforms

Standing Committee meeting held on 2-8-2008.

PREAMBLE:

In Government Order dated:6-8-2005, Standard Tender

Documents given in Annexure 1 to 6 appended there with were

prescribed to be used in certain identified divisions of PWD and WRD

and the corporations under WRD for procurement of works from 1st

September 2005 for a period of six months initially on an

experimental basis, so that any problems encountered in use of these

Standard Tender Documents can be

suitably addressed before making the Standard Tender Documents

mandatory for procurement of works.

By the G.O.No.FD 06 PCL 2006, dated:21-03-2007 use of

Standard Tender Documents was made mandatory for all

procurement entities under the Government for procurement of works

specified in Annexure I to VII to the Government Order cited at (1)

above.

However, implementation of G.O No.FD 06 PCL 2006 dated:

21-03-2007 mandating Standard Tender Documents was deferred till

31-12-2007 as per G.O. cited at (3) above or till the final decision is

taken on the proposed modification and the same was extended till

30-06-2008 by the G.O’s cited at 3&4 above.

In the procurement Reforms Standing Committee Meeting held on 2-

8-2008, the proposal of the Public Works Department for certain

modifications to the tender documents was discussed in detail. The

Public Works Department had expressed the following difficulties in

the implementation of Standard Tender Documents prescribed

videG.O.No.FD 9 PCL 2004 (1) dated:6-8-2005:-

(i) Minimum financial turnover

(ii) Satisfactory completion of similar works

63

(iii) Owning of machineries

(iv) Furnishing of 10% FSD

(v) Payments to be made within 90 days to the Contractor

(vi) Design and Drawings part of agreement

(vii) Bid capacity, etc.,

The Committee considered in detail the proposal of the PWD and the

Government has decided to modify certain clauses of the STD.

Hence the following Order.

Government Order No.FD 4 PCL 2008, Bangalore, dated:14.10.2008

Under the circumstances explained in the preamble, the

following clauses of the Standard Tender Documents as prescribed in

Government Order dated: 6-8-2005 are modified to the extent noted

below:

Sl.No

.


tender documents

Existing Clauses

Modified clauses

1. Clause 3.2.b. page 5

KW-1,2/3/4

Work experience: Satisfactorily completed (at least 90% of the

contract value), as prime contractor, at least one

similar work such as….. of value not less than Rs._____(usually not Less

than 80% estimated Value of contract)

a) Mandating satisfactory completion as a prime contractor for at least one

similar work to an extent of 50% of the cost of the work,

for all works costing up to and Rs.100 lakh. b) Mandating satisfactory

completion as a prime contractor for at least one

similar work to an extent of 80% of the cost of the work, for all works costing more

than Rs.100 lakh. The PWG Form 65 will be discontinued. The relevant

Paragraphs of the KPWD Code will be amended.

2.

Clause 3.1

Page 5 K/W-1, Clause 3.3.

Page 5

Assessed available tender

Capacity: (A*N*1.5-B) where A = Maximum value of civil Engineering

works Executed in any

In order to ensure higher

tender capacity and better selection of eligible contractors and also to

ensure more competition the

64

K/W-2,

Clause 3.6 Page 6 K/W-4

one year during the last

five years (updated to_____price level) taking into account the

completed as well as works in progress N= umber of years

prescribed for completion of the works

for which Tenders are invited. B = Value, at….. price level, of existing

commitments and on-going works to be

completed during the next _____years.

existing multiplying factor of

1.50 for assessing the available tender capacity may be modified to 2.50 for

works costing upto Rs.100 lakh.

However, the existing clause clause shall remain

the same for works costing more than Rs.100 lakh.

Sl.

No

Reference

to standard tender

documents

Existing Clauses

Modified clauses

3. Clause 3.2

(a) page Page 5 K/W-4

Qualification:

To qualify for award of this Contract, each Tenderer in its name

should have in the last five years i.e.2000-2001 to 2004-2005 (a)

achieved in at least two financial years a

Minimum financial turn over (in all classes of civil engineering construction

works only) of Rs.___ (usually not less than

two times the estimated annual payments under this contract)

Qualification:

To qualify for award of this contract each tenderer in his name should have in the

last five years’ period (a) achieved in at least two financial years an average

annual financial turnover of Rs.…… (usually not less

than the estimated cost under this contract for works costing up to Rs.100

lakh). However the existing clause remains the same for

works costing more than Rs.100 lakh.

4.

Clause 3.2

(c) page 5 K/W-4

Executed in any one

Financial year, the minimum quantities of work (usually 80% of the

peak annual rate of construction)

Executed in any one year

(for a continuous period of 12 months), the minimum

quantities of work (usually 80% of annual requirement)

for works costing up to Rs.100 lakh. However the existing clause remains the

same for works costing more than Rs.100 lakh.

65

5. Clause 3.3 (b) page 6

K/W-4

Liquid assets and/or availability of credit facilities of not

less than Rs._____(Credit

lines/letter of credit/Certificates from Banks

for meeting the fund requirement etc., (usually

the equivalent of the estimated cash flow for three months in peak

construction period).

Liquid assets and or availability of credit facilities of not less than Rs.……

(Credit lines / Letters of Credit / Certificates from

Banks) for meeting the fund requirement etc., (usually 30% of the amount of

contract) for works costing up to Rs.100 lakh.

However the existing clause remains the same for works

costing more than Rs.100 lakh.

Sl.No. Reference to


Existing Clauses

Modified clauses

6. Additional Clause for inclusion:

In the case of the death of a contractor after executing the agreement/

commencement of the work, his legal heir, if an eligible

registered contractor and willing, can execute and complete the work at the

accepted tender rates irrespective of the cost of

the work

7. Clause 3.3 Page 5

K/W-3&4

Equipment Capacity: Each Tenderer should

Further demonstrate: (a) Availability by

owning the following key and critical equipment for

this work.

Equipment Capacity: Each tenderer should

further demonstrate: (a) availability by owning at

least 50% of the required / specified key and critical equipment for this work

and (b) the remaining 50% can be deployed on lease /

hire basis for all works provided, the relevant

66

documents (commitment

agreements etc.) for availability for this work are furnished.

8. Earnest money

Deposits. Clause 9.1 Page 6 of

KW1 Page 7

KW2/3 Clause 13.1 Page 8

KW 4

Earnest Money Deposit

The Tenderer shall furnish, as part of his tender, Earnest

Money Deposit in the amount as shown in

Column 4 of the table of IFT for this particular work. This

earnest money deposit shall be in favor of and may be in the

form of Banker’s cheque/Demand

Draft/Pay Order, in favor of_____payable

at_____or Cash or specified Small

Savings Instruments pledged to—

Earnest Money Deposit The tenderer shall furnish

as part of his tender, Earnest Money Deposit (EMD) at the following rates.

EMD amount as % of the estimated cost of the work

put to tender a) Upto Rs.20 lakh – 2.5% b) Rs.20 lakh and above up

to Rs.1 crore – 2% subject to a minimum of Rs.50,000/-

c) Rs.1 crore and above up to Rs.10 crore – 1.5%

subject to a minimum of Rs.2,00,000/- d) Rs.10 crore and above -

1% subject to a minimum of Rs.15,00,000/-

Sl.No. Reference to


Existing Clauses

Modified clauses

9. Performance Security

(Clause 25)

Performance Security Security Deposit

Within 20 days of receipt of the Letter of Acceptance the

successful Tenderer shall deliver to the

Employer a Security Deposit in any of the forms given below for

an amount equivalent to 10% of the contract

price plus additional security for unbalanced tenders

Performance Security Within 20 days of the

receipt of the letter of acceptance, the successful tenderer shall deliver to the

employer a security deposit in any of the forms given

below for an amount equivalent to 5% of the contract price plus

additional security for unbalanced tenders in

accordance with clause 25.5 of ITT & Clause 44 of the conditions of contract

67

in accordance with

Clause 25.5 of ITT and Clause 44 of the Conditions of

Contract.

for all works.

10.

Clause 7 Page 22 KW 4

Subcontracting:

The Contractor may subcontract with the approval of the

Employer but may not assign the

Contract without the approval of the Employer in writing.

Subcontracting does not alter the Contractor’s

obligations

This Clause is deleted.

11. Clause 37.1

Page 27 KW 4

Payments:

Payments shall be adjusted for

deductions for advance payments, other

recoveries in terms of the contract and taxes, at sources, as

applicable under the law. The Employer

shall pay the Contractor within 60 Days of

submission of bill.

Payments:

Payments shall be adjusted for deductions for advance

payments other than recoveries in terms of contract and taxes, at

source, as applicable under the law. The Employer shall pay the Contractor within

60 days of submission of the bill. The contractor

shall be liable to pay liquidated damages for shortfall in progress.

For progress beyond the agreed programme payment

is subject to availability of the grants.

Sl.No. Reference to

standard tender

documents

Existing Clauses

Modified clauses

12. Clause 49

page 29 K/W-4

49.1) The Employer or

the Contractor may terminate the Contract if the other

Party causes a fundamental breach of the Contract.

49.2) a to h _ _ _ _ _ _ _ _ _ _ _

Termination

49.1) The Employer may terminate the Contract if the other

party causes a fundamental breach of the Contract. 49.2) Sub Clause (b) & (d)

under this clause are deleted.

68

13. 13 Clause 24

Page 24 KW4

Disputes:

Procedure for resolution of Disputes through

arbitration

Disputes

Arbitration Clause will not be applicable wherever the value of the work is less

than Rs.100 lakh.

14.

14 Clause 34.4 Page 26

K/W4

Variations: The Contractor shall promptly request in

writing the Employer to confirm verbal

orders and if no such confirmation is received within 15

days of request, it shall be deemed to be an order in writing by

the Employer.

Variations: The Contractor shall promptly request in writing

to the Employer to confirm verbal orders and the officer

issuing oral instructions shall confirm it in writing within 30 days, failing

which the work shall be carried out as though there is no variation. In case

variation is approved it shall be accompanied

by BOQ, failing which the contractor shall be responsible for deviation if

any. Further, approval of Govt. has to be obtained for

the variation exceeding 5%.

15. Clause

Sec. 3 1.4 Column 7 /

Foot Note 18 K/W-2

Certificates:

Attach certificate from the Engineer- in-

charge

Certificates:

The contractor shall enclose /attach all the necessary

certificates duly attested by the employer.

Sl.No.


tender documents

Existing Clauses

Modified clauses

16. G.O.No.FD 06 PCL 2006

Bangalore Dated:21.3.2

007 Para No.4

Additional Tender Documents for Procurement of Works

of Value of more Rs.10 crore, documents for

other types of contracts such as lump sum, percentage,

private Sector participation BOT, BOO, BOOT etc.,

and other documents and found necessary

Para 4 of the operative portion of the G.O. will be suitably

modified. Since, it is proposed

to dispense with Form PWG 65 Standard Tender

Documents will be applicable for all contracts irrespective of the value of

the contract. As far as works costing Rs.10.00

69

would be issued in due

course.

Crore & above KW-4 shall

be adopted.

17. Identical Clause numbers

in Tender Documents : All the Standard Tender

Documents may be redrafted with same clause numbers for various

aspects of similar activity to avoid references to

individual documents. Wherever certain clauses are not applicable in

different tender documents, the title shall remain but the content

shall be mentioned as “deleted”.

There is no change in the remaining clauses of the

Standard Tender Documents. The forms PWG 65 and 66 Tender

Documents are discontinued hence-forth.

2) Instructions to the Tenderers, Formats for submission of

tender (unless specified otherwise) and the General Conditions of

Contract, indicated in the standard tender documents shall not be

changed. However, supplementary instructions, if any, to the above, to

take care of local need/specific requirement, shall be provided in the


documents.

3) Amendments to the relevant Codes and Rules will be

incorporated indue course.

4) This order will apply for invitation of tenders for

procurement of works to be invited hereafter and shall not be

applicable for tenders already invited.

By Order and in the name of


(M.R.SREENIVASA MURTHY)


Finance Department

70

PROCCEDINGS OF THE GOVERNMENT OF KARNATAKA

Subject: Provision for price Adjustment for specified

materials for works – Revision Reg.

Read : Govt. Order No. FD 59 PRO CELL 2004, dated:26-

11-2004

Preamble :

In Government Order No. FD 59 PRO CELL 2004 dated:

26thNovember 2004 read above, the following instructions were

issued about price adjustment.

(a) A Price Adjustment clause shall be included in all Works

contracts whose estimated cost put to tender is Rs.100 lakhs or more

and the period of completion is 12 months or more. The

Price Adjustment clause and the formulae for adjustment shall be as

per Annexure-1 of the said G.O.

(b) In works contracts where, Price Adjustment Clause is

provided the Price Adjustment shall be admissible from the date of

opening of tenders (original or extended).

(c) Price Adjustment Clause shall not be included in Goods

and Equipment tender documents. However in respect of tender

documents for procurement of electric cables, transformers,

generators, motors, that have raw material component subject to

price fluctuations, appropriate Price Adjustment clauses may be

incorporated by the Tender Inviting Authority in the tender

documents, with the specific approval of the concerned Head of

the Department or Managing Director of the Public

Undertaking/Board.

The PWD has requested for certain modifications in the above

conditions as the Department is facing problem in procurement of

agencies for implementation of various works due to rapid fluctuation

of rates of construction materials especially cement, steel and

bitumen. This has resulted in poor response to the tenders floated by

the department and also slowdown or stoppage of on-going works by

the agencies. Further, the tender premiums being quoted by the

agencies are very high which creates an opinion that the Schedule of

Rates or the estimates are defective. Hence, P.W.D has requested to

resolve this problem suitably by modifying the existing contract

agreement to absorb the fluctuation in the market prices of major

construction viz., cement, steel and bitumen.

In the procurement Reforms Standing Committee

Meeting held on 2-8-2008, the proposal of PWD for effecting certain

71

changes in the price djustment clause in the Tender Documents was

discussed in detail and considering the frequent fluctuations in the

basic rates of construction materials i.e. Cement, Steel, Bitumen, it

was recommended by the Committee to modify the Government Order

dated: 26.11.2004 referred to above.

The Government has considered the issue in detail and accordingly

the following orders are issued.

Government Order No.FD 3 PCL 2008, Bangalore, dated:21-11-2008.

In the circumstances explained in the preamble, in modification of

the Government Order dated: 26-11-2004, it is directed that the

following price adjustment methods are applicable hereafter.

a) For all works costing more than Rs.50 lakhs, if the

period of execution is more than 12 months, the price adjustment will

be calculated as prescribed in Annexure to G.O. No: FD 59 PRO

Cell/ 2004, dt: 26.11.2004.

b) If the period of execution is more than 6 months but

less than or equal to 12 months for work costing more than Rs.50

lakhs, star rates in respect of specified materials (cement, steel and

bitumen) only shall be payable to the contractor based on the

all India average wholesale price index for the said materials.

The star rates adjustment shall be as per the increase or

decrease in the index as applied to the said materials between

the last date for receiving bids and the date of execution as per

the approved programme of works submitted by the

contractor at the time of execution of agreement which shall

mandatorily be a part of the agreement.

c) If the period of execution is less than or equal to 6

months, for all works irrespective of the cost of the works, price

adjustment or star rates shall not be applicable.

d) In works contracts where price adjustment clause is

provided, the price adjustment shall be admissible from the date of

opening of tenders (Original or extended).

72

e) Price adjustment clause shall not be included in Goods

and Equipment tender documents. However, in respect of tender

documents for procurement of Electric Cables, Transformers,

Generators, Motors that have raw material component subject

to price fluctuations, appropriate price adjustment clauses

may be incorporated by the Tender Inviting Authority in the

tender documents, with the specific approval of the concerned

Head of the Department or Managing Director of the Public

Sector Undertaking/Board.

2. The above mentioned methods of price adjustment clause are

subject to the following conditions:

i) The price adjustment clause or the star rates shall not be admissible if the contract period is extended due to lapse on the part of the contractor.

ii) For the cases (a) and (b) above, if the contract period is

extended due to no fault of the contractor, the modified programme

shall be approved by the competent authority and shall become a part

of agreement for which price adjustment/star rates will be applicable.

iii) For the purpose of working out price adjustment and star

rates, the price index issued from time to time by the Ministry of

Commerce and Industry, Government of India should be adopted.

iv) The formulae for price adjustment shall be as prescribed in

Annexure-1 to the G.O. No: FD 59 PRO.Cell/2004 dated: 26.11.2004,

which is appended.

3. The above instructions will only be applicable prospectively and

shall not be applicable for contracts concluded in the past or being

concluded presently or for tenders already invited.

4. The above instructions shall apply to all Procurement Entities as

defined in Section 2(d) Chapter I of the Karnataka Transparency in

Public Procurement Act, 1999.

5. The above instructions should be appropriately incorporated in the


By order and in the name of the


(M.R. Sreenivasa Murthy)

Principal Secretary to Government,

Finance Department

73


No. DPAR 2 EPR 2009

Karnataka Government Secretariat M.S. Building

Bengaluru, Dated: 9th October 2012

NOTIFICATION

In exercise of the powers conferred by sub-section (2) of

section 18A of the Karnataka Transparency in Public

Procurements Act, 1999 (Karnataka Act 29 of 2000), read

with section 21 of the Karnataka General Clauses Act, 1899

(Karnataka Act III of 1899) in supersession of notifications

specified in the Annexure to this notification issued in this

behalf, the Government of Karnataka hereby specify that all

procurement entities, in respect of every procurement under

the said Act, value of which exceeds Rupees five lakhs

(Rs.5.00 lakhs) shall procure their Procurements through e-

Procurement platform with effect from the third day of

December, 2012.


Governor of Karnataka (H.R Nagaraja) Desk Officer1

Dept. of Personnel & Administrative Reforms,

(e-Governance)

74

PROCEEDINGS OF THE GOVERNMENT OF KARNATANA

Sub: General delegation of common financial powers to

Heads of Departments and others - Review of.

Read: (1) G.O.No.FD 7 TFP 91, Bangalore, Dated:16-09-1991.



(4) G.O.No.FD 4 TFP (2) 99, Bangalore, Dated:15-10-1999.

(5) G.O. No.FD 1 TFP 2001, Bangalore, Dated:02-02-2001.

PREAMBLE:

In the Govt. Order dated: FD 1 TFP 2001 dated:02-02-2001 read at (5)

above, order was issued enhancing the General delegation of common

financial powers to Heads of departments, Divisional level officers, District

level officers, Sub-division level officers and Taluk level officers.

In respect of certain departments, special financial powers have also been

delegated for purchases, repairs, works, write off etc. These powers will be

exercised only by the particular departments to whom such powers have been

delegated.

The common financial powers were enhanced in 2001. The question

of revising these powers was under consideration of the Government. While

revising such powers, special powers delegated to different departments

were also reviewed. It was found that all powers could be brought under

specific items which are common to all departments with some

modifications. Therefore, an attempt has been made to bring all such

powers both under special and common financial powers in one place so as

to make applicable to all departments. This will reduce the proposals from

different departments for delegation of special powers. In course of time the special powers delegated to certain departments will be withdrawn. Accordingly following order is issued.

Govt. Order No.FD 2 TFP 2010, Bangalore, Dated:30-04-2010.

After careful consideration Government are pleased to delegate

common financial powers as specified in the Annexure to this order to all the

75

Heads of Departments and other departmental officers.

2. Subject to provision in para 6 hereunder, these orders are in super

session of the delegation of powers as contained in part-III of Manual of

Financial Powers 1967 and all orders issued as read above.

3. Wherever Special Powers are delegated to the Departments in

respect of certain items included in the Annexure of this order, such

Departments should exercise either special powers or common powers for such

items but not both, until the Special Powers delegated for these items in respect of

their Department are withdrawn.

4. No authority can sub-delegate any of the financial powers delegated by

this order to any other authority wholly or partly.

5. These orders shall come into force with immediate effect.

6. The designated officers as per Government Order No. FD 2 TFP

98 dated: 17-5-1999 will exercise the powers as specified in the Annexure.

By Order and in the Name of

the Governor of Karnataka,

(C. Shamarao)

Deputy Secretary to Government,

Finance Department,

(FR & BCC).

77

Annexure to Government Order No.FD 2 TFP 2010 Dated:30-04-2010.

Sl.

No

1

2

Description of power

Administrative approval of

works.

Books and periodicals:-

To sanction purchase of

reference books and journals

for facilitating official work

Heads of Divisional Level

Department Officers

Estimate of Estimate of

Rs.1.00 crore Rs.50.00 lakh

for one work for one work

subject to Subject for

availability of availability of

grants grants


District Level Sub Division Level Taluk Level

Officers Officers Officers

Estimate of Estimate of Rs.5.00 Estimate of

Rs.25.00 lakh lakh for one work Rs.1.00 lakh

for one work Subject to for one work

Subject to availability of Subject to

availability of grants availability of

grants grants

Rs.10,000/- Rs.5,000/- per Rs.1,000/-


3 Stationery

4 Office equipment

5 Computers and peripherals

(subject to the Government

Orders from e-

Governance(DPAR)



per annum per annum


per annum per annum

Rs.10,000/- each Rs.5,000/- each Rs.2,000/-

time and time and each time and

Rs.1.00 lakh p.a. Rs.50,000 p.a. Rs.20,000 p.a.



Rs.2.00 lakh

per annum _ _

78

6 Furniture

7 Laboratory equipment and

consumables

8 Drugs & medicines

9 Diet items

10 Tools and machinery

11 Items and implements used

under government

programmes

12 Miscellaneous items for

hospitals/hostels/child

homes/ (utensils, linen etc.)


per annum


per annum


per annum





Per annum



Rs.25.00 lakh - -

per annum

Rs.10.00 lakh Rs.5.00 lakh per Rs.3.00 lakh





Rs.25.00 lakh Rs.10.00 lakh -

per annum per annum

79

13 Repair & AMC of computer

and related items

14 Repair and AMC of office

equipment and furniture

15 Repair of vehicles

16 Repair and AMC of

machinery and laboratory/

hospital equipment

17 Write off losses

To sanction writing off in

respect of the following.

(i) Government goods

or money lost

(ii) Irrecoverable

departmental revenues

(iii) Irrecoverable loans

and advances

(In all such cases, the

authorised officer

shall record that the

loss has not been

caused because of

fraud or negligence)


per annum

Full powers Rs. 10.00 lakh

per annum

Full powers Rs.50,000/-


per annum

Rs.10,000 in Rs.5,000 in

individual case, individual case

subject to subject to


per annum per annum



Rs.5.00 lakh per Rs.2.50 lakh Rs.1.00 lakh

annum per annum per annum

Up to Rs.30,000 Up to Rs.20,000 on Up to

on one vehicle, one vehicle, subject Rs.10,000 on

subject to to Rs.2.00 lakh per one vehicle,

Rs.5.00 lakh per annum subject to

annum Rs.50,000 per

annum



Rs.2,000 in

individual case

subject to _ _

Rs.50,000

per annum

80

18 Writing off goods

To sanction writing off or

disposal of the following

(i) Unusable goods Rs.10,000 in Rs.5,000 in one Rs.2,000 in one _ _

in government one case, case subject to case, subject to

store subject to Rs.1.00 lakh Rs.50,000

Rs.2.00 lakh per annum per annum

per annum

_ _

(ii) Perishable items Full powers 2% of the value 2% of the value

like plant, food of the item, of the item,

material, subject to subject to

consumables, Rs.1.00 lakh Rs.50,000

drugs, fertilizers, per annum per annum

etc.

(iii) Unusable books Full powers Full powers Full powers Full powers Full powers

and periodicals.

(iv) Obsolete or Full powers Rs.10,000 in one Rs.5,000 in one -- --

unserviceable case subject to case subject to

equipment Rs.5.00 lakh Rs.1.00 lakh

per annum per annum

(v) Vehicles beyond Full powers _ _ -- --

economic repair,

subject to

certification by

the RTO

(Subject to certificate by

the competent authority

that the condition of

obsolescence, expiry, or

unserviceability has not been caused by negligence in planning,

procurement or maintenance)

81

19 Advertisement.

(i) To sanction publishing of

official advertisements

subject to guidelines from

Department/Directorate of

Information and Publicity,

and also subject to

availability of grants for this

purpose.

(ii) To sanction printing of

publicity material under

government programmes

20 Hiring of vehicles at rates

approved by DPAR/

Transport Department

Rs.50,000 in Rs.20,000 in one Rs.10,000 in one

one case, case subject to case subject to

subject to Rs.2.00 lakh per Rs.1.00 lakh per

Rs.10.00 lakh annum annum

per annum

Full powers Full powers Rs.10,000 in one

case subject to

Rs.1.00 lakh

per annum

Full powers Rs.20,000 p.m. Rs.10,000 p.m.

at a time subject at a time subject

to Rs.100,000 to Rs.50,000

per annum per annum

Rs.5,000 in one

case subject to

Rs.50,000

per annum

Rs.1,000 in one

case subject to

Rs.10,000 per

annum

Rs.5,000 p.m. at a

time subject to

Rs.50,000 per

annum

Rs.1,000 in

one case

subject to

Rs.10,000

per annum

Rs.500 in one

case subject to

Rs.5,000 per

annum

Rs.2,000 p.m.

at a time

subject to

Rs.25,000 per

annum

82

21 Training

To sanction training

programmes, and incur

expenditure on honorarium,

transport, training material,

contingency, etc. subject to

the programme being

authorised under some

approved scheme.

22 Advances

(i) To sanction tour advance

(ii) To sanction house

building advance as per rules

and subject to allotment

(iii)To sanction vehicle

purchase advance as per

rules and subject to allotment

23 Hiring of building in

consultation with PWD/Rent

Controller

Full powers Rs.20,000 at a Rs.10,000 at a

time, subject to time subject to

Rs.2.00 lakh Rs.1.00 lakh per

per annum annum




Rs.50,000/- for Rs.25,000/- for a Rs.20,000 for a

a building for a building for a building for a

month month month

Rs.5,000 at a time

subject to

Rs.50,000/- per

annum.

Full powers

--

--

Rs.10,000 for a

building for a

month

Rs.2,000 at a

time subject to

Rs.20,000 per

annum

Full powers

--

--

Rs.5,000 for a

building for a

month

83

24 Exhibition

To sanction expenditure for

participating in Dasara

Exhibition or similar activity

of creating awareness.

25 Hiring manpower

Subject to guidelines from

DPAR/FD, and subject to

vacancy of posts or

availability of grants for

service-outsourcing

26 Refunds

To sanction refund of

revenue including fees, fines,

etc. and to refund wrong or

excess credit, subject to the

claim being established with

authenticated documents

27 Countersignature of AC bills,

etc. subject to budgetary

limits and appropriate

authorisation. Up to Rs.2

lakh, the authorization can be

given by the Controlling

Officer. For A.C. bills above

Rs.2 lakh, the authorization

has to be obtained from the

Finance Department.

Full powers Rs.50,000 per

annum

Full powers --



Rs.25,000 per Rs.5,000 per annum ---

annum

- - -



84

28 Reappropriation

To sanction reappropriation from one

detailed head of account to another

within the same major head in the

Departmental budget provided it does

not involve.

a) A diversion of provision from

the plan to non-plan items.

b) Diversion of provision for

schemes eligible for assistance

from central Govt. or other

institutions to other schemes.

c) The undertaking of a recurring

liability

d) An increase in the allotment

for secret service expenditure

e) Expenditure on a new service.

f) An increase on an item the

provision for which has been

specifically reduced by a vote

of the legislature.

g) From charged item to voted

and vice-versa.

h) Diversion of funds for

purposes other than that

provided in the Budget (Article

308 to 314 of KFC)

General Conditions:

Rs.5.00 lakh

between two units

of appropriation

under same major

head and within

same demand.

_

_ _ _

1. All relevant rules, procedures and instructions under the Karnataka Transparency in Public

Procurement Act, 1999 and Rules, shall be followed to ensure transparent and cost-effective

procurement.

2. All procurement should be within the annual approved budgetary grants. Delegated powers

including ‘Full Powers’ are to be exercised subject to that limit.

85

3. It will be the responsibility of the officer exercising the delegated powers to ensure that the items of procurement are essential and that the process being followed is as per the KTPP Act and Rules so as to make quality procurement at competitive prices.

4. This order of delegation of financial powers does not supersede economy orders issued by Finance Department. Similarly, specific orders from e-Governance on procurement of computers, from DPAR on purchase or hiring of vehicles, outsourcing etc. need to be

followed.

5. For new schemes, only after approvals at all levels and issue of Govt. Order regarding

operationalising the scheme, these delegations will apply.

6. These delegated powers cannot be further subdelegated by the departments.

86

Sl. Description of power Heads of Divisional District level Sub-Divisional Taluk level

No. Department level officer officer level officer officer

1 2 3 4 5 6 7

KCSR:

29 To authorize subordinate Full powers Full powers Full powers Full powers Full powers

Government servants to

proceed on duty beyond the limits of their charges but

within the State (vide rule 16(a)

of KCSRs)

30 To authorize subordinate 1) Non 15 days in 15 days in case of

Government servant to proceed Gazetted Full case of non- non-gazetted

on duty beyond the limits of powers gazetted

their charges outside the State 2) Gazetted

within India (vide Rule 16(b) of 15 days KCSRs)

31 To sanction the acceptance of Full powers Full powers Full powers Full powers Full powers

remuneration by Government

servants under their control for

work as examiners for various

examinations conducted by

Government departments or

bodies set up by Government or

Universities within the State in

accordance with the scales

sanctioned (vide Rule 28(d) of

KCSRs).

87

32 To sanction the acceptance of Full powers Full powers Full powers --- ---

fees by Government servants (NGOs) (NGOs) under their control from a private person, a private body or a public body whose funds

are administered by

Government when not covered

by any rules, special or local

law or orders of Government (vide Rules 28 and 29 of KCSRs).

33 To sanction in-charge

arrangements in posts which are

vacant or the incumbents of

which are absentees and the

filling up of which requires the

sanction of a higher authority

(vide Rule 32,68,192 & 196 of

KCSRs) Government servants

who are in the scale of pay of:

a) Rs.14050-25050 and 4 months 3 months 2 months --- ---

above

---

ii) Rs.10800-20025 and 6 months 4 months 3 months 2 months

above but below

Rs.14050-25050

iii) Rs.4800-7275 and above Full powers Full powers Full powers Full powers Full powers


88

34 To sanction, the extension of

joining time to subordinate non-

gazetted Government servants

(vide Rule 86 of KCSRs)

35 To sanction maternity leave to

married female Government

servants (vide Rule 135 of

KCSRs)

i) Gazetted

ii) Non-gazetted

36 Sanction of leave other than

special disability leave to


servants (vide Rule 192 and

196 of KCSRs);

Government servants who are

in the scale of pay of:-

i) Rs.14050-25050 & above

ii) Rs.10800-20025 but

below Rs.14050-25050

iii)Rs.4800-7275 & above


Note: The powers to sanction

leave as above includes the

powers to sanction leave

preparatory to retirement but

does not include the powers to

refuse earned leave applied for

as leave preparatory to

retirement.

Upto 15 days Upto 15 days --- --- ---

---



4 months 3 months 2 months

6 months 4 months 3 months 2months ---


89

37 Sanction of encashment of

earned leave once in block

period of two years in

accordance with rule 118 of

KCSRs.

38 Encashment of earned leave at

the time of retirement or at the

time of death while in service in

accordance with rule 118(A) of

KCSRs.

39 To sanction disbursement to

subordinate non-gazetted

Government servants of arrears

of leave salary arising as a

result of the sanction or

communication of leave more

than one year from the date of

relief (vide rule 198 of KCSRs)

40 To order the retirement on invalid pension of non-gazetted

Government servants appointed

by them or by a lower

authority, who by bodily or

mental infirmity are

permanently incapacitated from

the public service (vide rule

273 of KCSRs)

41 To sanction in exceptional

cases, road metreage both ways

for road journeys made by


servants between places

connected by rail vide (rule 462

(h) of KCSRs)




Full powers Full powers Full powers --- ---

Full powers Full powers --- --- ---

90

42 To sanction daily allowance for

halts on tour exceeding 10 days (i)30 days in (i) 20 days in (i) 15 days in case

case of case of of Gaz officers

at a place to subordinate Gaz. Officers Gaz officers ------ -----

-

(ii)60 days (ii) 30 days

Government servants (vide rule (ii) 90 days in case of in case of

516 of KCSRs) in case of Non- gaz Non- gaz

Non-Gaz

43 To allow subordinate

Government servants on

transfer, the actual cost of Full powers Full powers Full powers Full powers Full

powers transport by rail or other

craft or their conveyance at owner’s

risk (vide rule 532 (3) (A) (1)

(4) (2) of KCSRs)

(C. SHAMARAO)


Finance Department,(FR& BCC).

1

Case 1:

Procurement of works: (Procurement Planning)

Under PMGSY an all weather road was proposed and was entrusted to a

contractor at his tendered cost of Rs. 1.20 crores. The scheme guidelines

stipulates for a proper survey to asses land availability and feasibility of the

work. The detailed project report should have the entire checklist for its

approval. It was certified that the road formatting width was available as per

the guidelines and no need to acquire extra land.

The state quality monitor inspected the alignment of the road and

reported that the width of the road was insufficient, and the alignment ran

along the side of the deep stone quarry. He suggested some protective

measures. An aggrieved person “X” moved the court and obtained stay for

acquisition of his land for the road work. The authorities inspected and stated

that the estimate for the work was prepared without considering Guidelines as

stipulated and were not technically feasible and ordered the work to be

dropped. Till then an expenditure of 25 lakhs has been incurred towards

construction of embankment. The audit objected with the above facts that this

is a clear indication of giving sanction to the works in a routine manner instead

of inspecting at the spot.

The Audit observed that flouting of the scheme guidelines and failure of

the authorities in conducting survey and investigation to ensure existing

connectivity, proper alignment availability of land, technical feasibility prior to

proposing the work resulting in abandoning the work rendering the

expenditure of Rs. 25 lakhs wasteful. The audit Para was incorporated in the

CAG report.

Analysis of the case:

The procurement schedule should form the basis of the preparation of

designs and specifications to match the scheme guidelines. It should also help

to recognize problems and to take corrective measures. The planning should

understand the sequence and timing of the procurement stages, their

contribution and responsibility at each stage, as mentioned in circular No.

PWD 1359/SO/FC 2001(P2) 25.10.2002. The above guidelines have not been

followed which resulted in wasteful expenditure of 25.00 Lakhs. This attracts

the provisions of KCS (CCA) Rules 1957 for the act of negligence.

Questions : What is the planning process in implementing a project?

2

CASE 2 :

Unfruitful Expenditure:

The construction of lift irrigation scheme was completed during 1978 at a

cost of 5.5 lakhs. The lift irrigation scheme could not be put to use unless

second stage lift irrigation scheme is approved and taken up. The second stage

was administratively approved comprising of a delivery chamber, canals,

erecting of pumping machinery which involves acquisition of land. The civil

portion of work was entrusted to a contractor for 21.7 lakhs and an

expenditure of 15.7 lakhs was incurred. It could not be completed due to land

acquisition problem. Supply and erecting of machinery was approved at a cost

of 1.36 crores. In the 2nd stage the rising main was laid up to 250 meters

against 1100 meters and the work was stopped due to non availability of land.

The updated expenditure incurred on the 2nd stage was 1.19 crores.

Audit observes that the Land acquisition proceedings started in 2001

could not be completed due to nonpayment of deposit amount by the engineer

in charge therefore construction of the second stage lift irrigation scheme

could not be completed rendering the expenditure of 1.25 crores made till date

on the scheme is unfruitful.

Analysis :

As per standard Tender Document 18 of the Contract conditions the

employer shall give possession of the site to the contractor.

Contract management in the context of execution of work means that the

public procurement authority is responsible for securing due performance of

contract by making available the required land as per the terms and the

condition set forth in the contract document without giving room for cost

overrun or time overrun in the completion of the project. In the present case

because of the failure of the authorities in providing land for execution of the

contract the expenditure became unfruitful.

Questions

1. Can a work order be issued to a contractor before handing over of

work site in full?

2. In case of delays, what should be the standard procedure to be

adopted?

3

CASE 3 :

Extra Expenditure Due to Defective Estimate :

Govt. approved the entrustment of the work of widening and

strengthening of the existing road to a contractor at a cost of Rs. 7.75 crore

which was 24.1% above the SR rates for 2007-08. The quantity of the

excavation in ordinary soil increased from 14,750 cmt to 28,500 cmt.

The extra amount paid at a higher rate resulting in avoidable extra payment of

39 lakh to the contractor.

Analysis :

The specification prescribed by the ministry of surface transport, Govt. of

India, for preparation of estimates for road works shall be followed by the

institution. In the specification cross section of the road are to be taken at an

interval of 15 meters in plain and rolling terrains to determine accurately the

quantities of road way excavation. Contrary to this the institution has adopted

an adhoc basis for estimation. This estimate was not checked by the drawing

branch. Though there are faulty investigation that the ground level in the

stretches was 1 to 1.5 meters higher than the existing road level estimate was

approved by the higher authorities. This resulted in faulty estimates. The

action of the CE in not following the prescribed specification led to avoidable

extra payment of 40 lakhs. This attracts the provisions of KCS (CCA) Rules

1957 for the act of lack of integrity.

Questions

1. Discuss the preparation of estimates on the basis of standard

specification.

2. Discuss the importance of survey report before preparation of

estimates.

4

Case 4 :

Undue Benefit to a Contractor:

The work of widening and construction of Road in a local body was taken

@ a cost of Rs. 4.00 Crore, based on the schedule of rates (SR) for 2006-07.

Technical sanction was accorded by the CE and short term item rate-tenders

were called by the EE. Only two tenders were received. The commissioner

recommended the lower of the two tenders for approval of the State Govt..

Govt. negotiated and approved the lowest tender at 15% above the estimated

cost based on SR of 2007-08.

Details of quoted rates in respect of some of the items are as detailed. Sl. No. Item of work Estimated

Rate Estimate Cost in Crores

Tendered Rate

TC % + or -

1. Construction of wet mix macadam

1500.00 0.69 2220 1.02 +50

2. Providing & laying dense bituminous macadam

6400.00 1.18 9462 1.74 +47

3. Providing & laying bituminous concrete

7000.00 0.80 10600 1.21 +51

4. Providing & constructing coursed rubble stone masonry drain

4200.00 1.08 800 0.21 (-)81

Out of 20 items of work entrusted to the contractor as per agreement, the

amount quoted for 19 items worked out to Rs. 5.60 crore which was 41.1%

above the estimated cost based on SR of 2007-08. The amount quoted for the

remaining item i.e “Construction of rubble stone masonry drain was 20.70

lakhs as against the estimated cost of 1.10 Crore which was 81% below the

estimated cost on SR rates.

During inspection the CE cited lack of space on the road side for

stacking materials due to heavy traffic and suggested construction of drain

with reinforced cement concrete (RCC) instead of coursed rubble stone. The

construction of RCC drain was paid for as an extra item at the schedule of

rates for 2008-09, Plus the tender percentage of 14.48 %. The reason given by

EE for change of scope is blockage of traffic due to stacking of materials. This

was not approved by the commissioner. The additional cost on this was Rs. 87

Lakhs.

5

There was no evidence on record as to assessment of heavy traffic. The

approval of the Government was given and the contractor entered in to an

agreement. The CE order for conversion of coursed rubble stone drain to RCC

drain before the contractor entered in to an agreement and also before the

sanction of Government.

Audit observed that there are irregularities in the tendering process

which should have been aborted due to lack of competition coupled with

unjustified change over from stone masonry to RCC for the road drains

resulted in an undue benefit of 90 lakhs to the contractor.

Analysis of the Case

(i) Process of evaluation and negotiation

The contracts are to be awarded to the lowest evaluated technically and

commercially responsive tenderers meeting the prescribed qualification criteria.

The tenders are to be evaluated both for Technical Responsiveness and

Responsiveness of financial bid. While evaluating the financial bid the items

for which the rates are considered very high and are contributing to the

increase are to be identified. In this case all the 19 items except one item of

rubble stone masonry were hiked which was 41% above the estimated cost of

the present year scheduled rates. The option open to the tender accepting

authority in absence of the competitive prices was to reject the tenders, and to

invite fresh tenders. The tenderer has quoted 80% below the SR rates for one

item (2006-07) (for rubble stone masonry) with an intention to bring down over

all percentage considerably low and to get the award after negotiation at the

rate of 15% above the recast (2007-08) estimated rates.

The guidelines for negotiation before award mentions that a substantially

high tender is one where the price quoted by the contractor is above 10% of the

updated (recast) estimate and where price adjustment is provided. In this

instance case this is a substantially high tender. Tenderer has quoted 14.45%

above the Recast estimate. The option open was to reject the tenders and go

for fresh tenders. (Circular dated 3.12.2002).

It was also observed that lack of space on the road side for stacking

materials due to heavy traffic and changing of specification of the drain from

coursed rubble stones to RCC is before the contractor executed the agreement

raising following questions.

6

The inspection of the CE was conducted before signing of the contract i.e before

issue of work order.

1. Govt. accorded approval during June 2008.

2. Contractor executed agreement on July 2008.

3. CE’s inspection to alter the scope of work during June 2008.

Change in the Item of Work

The Suggestion of the CE for variation to a new item of work from

coursed rubble stone drain to RCC drain was enforced by the EE despite the

fact that every variation order authorizing a new item of work was to be

approved by the commissioner (TAA) before execution of work. The reason

given for change of item of work was not tenable as the traffic conditions were

within the knowledge of the contractor before submission of the bid and were

intentionally factored in his quoted rates. Thus the changeover was not need

driven and was directed towards relieving the contractor of the responsibility

of constructing stone masonry drain at this abnormally low rates, thereby

resulted in undue benefit of 90 lakhs to the contractor. This attracts the

provisions of KCS (CCA) Rules 1957 for the act of lack of integrity

Questions

1. What is meant by change in scope of work? Give examples

2. What are the circumstances inevitable for change of scope of work?

Explain the procedure.

3. What should be done to avoid such future occurances?

7

CASE 5 :

In fractious Expenditure

Faulty execution of a drinking water supply scheme rendered the scheme

non functional due to contamination of its source by sewage water.

A drinking water supply scheme to a town with an existing tank as a

source was approved at a cost of 4 crores. A sum of Rs. 5.2 crore was

incurred on the work for completion of all components. The drinking water

supply scheme was not been commissioned as the tank has not been filled

and contaminated by sewage water which resulted in an in fractious

expenditure, by denying of drinking water facility to the intended population.

Analysis :

During initial investigation it was recorded that the tank was not filled

during the last 4 years due to closure of its feeder channels. Even the report

accompanying the estimate was also highlighted this aspect. The minor

irrigation department cleared 10,033 cubic meter of silt from 8 feeder channels

it was also within the knowledge that the sewage water from the town was let

in to the valley and draining in to the tank. Before going for the scheme of

water supply, diversion of sewage from the tank should have been taken up.

The authorities replied to Audit that the sewage entering the tank has

been diverted at one point and there is progress in diversion at the other

points. The entire cost including the water treatment plant/ pump set which

are likely to become dysfunctional if not put to use, had not also been tested

and commissioned.

This case is an instance of impropriety and extra expenditure involving

Rs 5 crores. Authorization of expenditure from public fund is to be guided by

the principles of propriety and efficiency of public expenditure. Authorities

empowered to incur expenditure are expected to enforce the same vigilance as

a man of ordinary prudence would exercise in respect of his own money and

should enforce financial order and strict economy at every step. This is a clear

case of lack of integrity as per KCS(CCA) Rules 1957

Questions

1. What are the reasons for the expenditure to become in fractious?

2. Write down the points to avoid in fractious expenditure

8

CASE 6 :

Skewed Planning and Faulty estimation

Skewed Planning and Faulty estimation resulted in escalating the cost of

the Reservoir and delaying its completion.

A contract for the work of improvements to a reservoir, a source of

drinking water to the town was awarded to a contractor for 5.7 crores (1.7%)

below the estimated cost, and to complete the project within 9 months. There

is a dispute between two local authorities in sharing of water from the

reservoir. Due to the dispute the contractor could not commence the work;

also the estimate was not prepared on the investigation. The technical

committee which examined the work found that a comprehensive investigation

of the reservoir had not been carried out resulting in faulty estimate. The

dispute was resolved after one year and the contractor expressed his inability

to carry out the work at the quoted rates in view of the delay in

commencement. The board approved higher rates as per the S.R of 2007-08

this resulted in an additional liability of 1.5 crores. Even after resolving

dispute the board took possession of the tank after two years.

There was mismatch between the scope of work as per the tender and

the requirement based on detail investigation. The board approved these

deviations resulted in increase over the tender qualities. After all these

exercises the contract price was raised from 5.7 crores to 14 crores.

Audit observed that the work was awarded without resolving a long

pending dispute over sharing of water and without preparing the estimate

based on investigation, these lapses resulted in long delay in commencement

of work and avoidable payment of 2.2 crores besides depriving the targeted

population from drinking water supply.

Analysis

Dispute existed even before the Board approved the estimate for the

improvement of the reservoir. Also a comprehensive investigation of the

reservoir was not carried out before preparation of the estimate, resulting in

approximation in preparation of the estimate. The board could not take

possession of the reservoir soon after resolving dispute. Major changes in the

scope of work are done after investigation resulted in increase over the tender

quantities and many extra items. All these resulted in delay in execution and

9

escalation of cost to 9.00 crores. Also payment of extra amount of 2 crores

between the tendered rates and the revised higher rates which was avoidable.

Adequate and accurate planning and realistic estimation of various

components of the projects based after proper survey and investigation,

availability of the land/site resolving the disputes if any of the site are the

factors governing successful contract management.

This is a case of impropriety and authorities concerned for non-resolving

the dispute and approving the estimate without the process of investigation

contributed for impropriety. It is clear violation of Codal provisions of KPWD.

Questions

1. What are the components required at the time of project report for

execution of a project?

2. What role does the planning play?

3. What are the methods of supervision as prescribed by KTPP Act,

Karnataka Financial Code or your department?

10

Case 7 :

Procurement of Solar Lights:

The District Planning Committee approved the proposal of providing solar

lighting system to SC/ST colony of a town under backward region Grant fund

scheme. Accordingly it was approved by ZP. The EO prepared Action plan for

supply of 80 sets of solar lighting system with an estimated cost of 50 lakhs.

While according sanction the ZP ordered to invite short term tenders or

purchase through DGS&D.

The Taluk Panchayath directed to invite quotations as the same was

discussed in the Finance and audit standing committee of the TP. The EO

invited quotations. The finance and audit standing committee of the TP resolve

to procure solar lighting systems from the lowest rate quoted supplier from out

of the quotations invited. This was also approved by the ZP Subsequently.

Audit observes that the rates quoted by lowest quoted supplier

(Rs.66000/- per set) was much higher than the rate contract under DGS&D

(Rs. 24209/- per set). The Director Quality assurance of DGS&D confirmed

that the quoted rates were higher than their rates. Thus failure to follow the

prescribed procurement procedure by the Finance and Audit standing

committee of the T P resulted in avoidable expenditure of 32 lakhs on purchase

of solar lighting system.

Analysis:

The KTPP Act 1999 is implemented from 4th Oct 2000. As per Section 5

of the Act “on and from the date of commencement of this Act no procurement

entity shall procure goods or services except by inviting tenders for supply”.

Under section 4(f) of KTPP Act the goods and services procured under DGS&D

is exempted from the procedure of inviting tenders.

The cost was estimated in this case for 80 sets were Rs 50 Lakhs. As per

KTPP Act if the cost is above 1 Lakh, It is mandatory on the part of the

procurement entity to invite open tenders. But in this case quotations were

invited for a single set and purchased 80 sets, which is contrary to the

provision of the Act and Rules. The notice inviting tender shall contain

description of the material, specification, quantity to be purchased and the

approximate market cost on the basis of the enquiries. In the above case

11

without observing all these formality locally quotations were invited for rate

contract. From the date on which KTPP Act came in to existence entering into

the rate contract for goods and services is prohibited. This attracts the


Questions

1. What are the provisions to invite Quotations and tenders?

2. What is the roll of tender inviting authority in this case?

12

CASE 8 :

Non recovery of Securities and statutory deductions in R A bills.

An organization awarded work on construction of Auditorium & Sports

complex at an estimated cost of 7.25 crores. It was awarded to a contractor “X”

and was asked to submit 5% PSD before signing of the contract. The

contractor pleaded inability to submit PSD and requested for a period of 6

months and to issue work order. Subsequently the contractor was issued work

order and the authority ordered to recover PSD in RA bills. The contractor was

given 35 lakhs mobilization advance at an interest rate of 15% as in tender

document The period of contract is 15 months and monthly progress both

financial and physical fixed at 60 lakhs. He has submitted 9th RA and final bill

for Rs 1,85,00,000 after completion of 18 months there by delaying 3 months.

The contract data provides for recovery of liquidated damages at Rs.

72,500/day for delay after the completion of stipulated contract period. The

liquidated damages calculated at 0.1% of the contract price per day subject to

a maximum of 10% of the contract price.

During audit the following observations are made

1. Non collection of PSD is against KTPP Act.

2. The statutory deduction like income tax, VAT, CBF & Interest on

mobilization advance was not recovered in all the RA bills.

Analysis

On the date of Audit, 8 RA bills were paid to the tune of 5.2 crore to the

contractor in all the 8 RA bills neither the PSD nor other statutory deductions

including mobilization advance with interest was not recovered. As per the

agreement clause the recovery of mobilization advance shall commence from

2nd running account bill onwards and be recovered at 5 lakhs for every 1 crore

value of bills.

As per the clause 25 of the KW4 standard tender document and Govt.

order dated FD4PCL 2008 Dated 14.10/2008 the performance security shall be

paid by the contractor within 20 days of the receipt of the letter of acceptance

for an amount equivalent to 5% of the contract price in any of the form (Cash,

Bankers cheque, Demand Draft, Pay order & NSC) specified in the standard

tender document. Failure of the successful tenderer to comply in furnishing

the PSD shall constitute sufficient grounds for cancellation of award and

forfeiture of EMD and treating the tender as non responsive.

13

In the present case awarding the contract without collecting PSD at the

time of contract and to collect the PSD in RA bills is against the provisions of

the KTPP Act. PSD is not recovered even in the RA bills.

The Mobilization Advance of 35 lakhs was paid on an unconditional

Bank Guarantee with an interest rate of 15% and recoverable after first RA bill

at 5 lakhs for every 1 crore progress. The contract DATA also stipulates the

same conditions with recovery of interest. In all the 8 RA bills with a progress

of 5 crore, mobilization advance with interest was not recovered. Non recovery

of PSD and M.A in the above case in all the RA bills (up to a progress of 5

crores) shows undue favor to the contractor. If the contractor discontinued the

work for any reason the authority have no hold on the contractor. If the

security deposits were collected public money will be safeguarded.

Income-Tax on all contract bills shall be recovered by the DDO at 2% of

the total value of the bill and shall be remitted to the IT head of account before

10th of subsequent month. The DDO should have TAN No. and (Tax Deduction

Account Number) the contractor / Firm should have a PAN No. The amount

deducted shall be paid to Income-Tax Dept in favor of the PAN No. of the

contractor.

As per 194 C (2) Any person responsible for paying any sum any resident

in pursuance of the contract with the sub contractor for carrying out or for

the supply of labor for carrying out the whole or any part of the work

undertaken by the contractor or for supplying wholly or partly any labor which

the contractor has undertaken to supply shall at the time of credit of such

sum to the account of the contractor / sub contractor or at the time of

payment thereof as cash or by issue of a cheque or draft or by any other mode

whichever is earlier deduct an amount equal to 1% or 2% of income comprised

there in. As per 194 “C” the Threshold limit of payment in a year is 30,000

(Individual 1%, firm 2%). Non deduction of IT in all the 8 RA bills contravenes

the provision of Sec 194 C (2) f IT Act for which DDO is held responsible.

The DDO shall deduct sales tax from the Contractors bill as and when

the amount is paid to the contractor at 13.5% of the total value of the bill paid.

The amount so deducted shall be paid to the sales tax head of Account before

10th of subsequent month and a return has to be submitted by DDO

comprising of all such deductions made by the contractors to the Dept.

The contractor benefit fund at 0.1% has to be deducted by the contractor

and shall be sent to CE C & B Bangalore immediately. The labor cess at 1%

shall be collected as per tender conditions.

14

The contractor has presented 9th RA and final bills for Rupees 1,85,00,000

The liability are as follows

1. PSD 36,25,000 36,25,000

2. M.A

Int. on M.A

35,00,000

7,87,500

35,00,000

7,87,500

3. I.T 12,24,000 12,24,000

4. S.T 5% 30,60,000 30,60,000

5. Liquidated damages 65,25,000 65,25,000

6. C.B.F. 72,500 72,500

7. Labor Cess 7,25,000 7,25,000

6. TOTAL 1,95,19,000 1,85,00,000

Since the liability of the contractor is 1,95,19,000 and his bill is

1,85,00,000 the bill has to be passed for 1,85,00,000. The balance of L.D of

Rs. 10, 19,000 may be recovered from the contractor as arrears. If there are

any damages identified during defect liability period the same may be got

rectified from the PSD. The balance of L.D. may be recovered from the PSD at

the time of refund.

Questions

1. What is the percentage of Income Tax for individual and a firm?

2. When Service Tax has to be deducted?

3. Explain responsibility of the DDO in recovering statutory

deductions.

15

Case 09 :

Short Term Tender

The work of construction of a canal for supply of drinking water to a

town was entrusted to a contractor “X”. The progress of the work was not as

per schedule and the contract was terminated.

The Department due to the exigency of supplying drinking water to the

population floats short term tender estimating 30 lakhs for the balance of

work. The minimum time specified for submission of tender was 15 days. 3

Bids were received ( A,B,C). The lowest bidder “C” was awarded the contract.

The bidder “B” filed a writ petition in the High Court. The reason for

filing writ petition was that the minimum period of 30 days for submission of

tender was not given and the reduction of minimum period should have been

done by the Tender accepting authority (M D), where as in this case SE has

accorded sanction for reduction of minimum period for submission of tender.

The award of Honorable Court is as follows “ Karnataka Transparency in

Public Procurement Act 1999 Sec 6 & 23; KTPP Rules 2000, Rule 17(1) and (2)

submission of tenders – Authority competent to authorize reduction in time

stipulated for where tenders were invited by EE, Reduction in time authorized

by SE, who is authority superior to EE is competent and reason given for such

reduction in time i.e expedition completion of irrigation canal to provide much

needed water supply to farmers is valid. Tender notification issued stipulating

reduced time for submission of tenders cannot therefore be said to be violated

by any error or irregularity” (Karnataka Law Journal 2008 (6))

Questions

1. Discuss the procedure for reduction of the minimum period for

submission of tender.

16

Case 10 :

Validity of the Tenders During extended period.

Tenders were invited for the construction of barrages across a river at various

places. 17 bids were received. The tenders were opened on 8.11.2001. The

tender validity period was up to 7.2.2002 (90 days). The evaluation was not

done before 7.2.2002, Hence the validity period was extended up to 7.4.2002.

This extension was not accepted by the lowest bidder. After the completion of

extended period, it was further extended up to 7.6.2002. Now all the 17

bidders accepted for this extension of tender. Tenders were cancelled on

13.5.2002 (under rule of 22(3) of KTPP Rules) and a decision was taken to

invite fresh tenders and communicated.

The lowest bidder filed a writ petition questioning the authorities’ decision in

canceling the bids during the second extended validity period the Honorable

court opined.

“-------Now the question arises for consideration is weather the TAA had the

power to extend the validity of Tender beyond 7.4.2002. In other words,

weather the TAA had the power to grant the second extension.

Karnataka Transparency is Public Procurement Rule 22 (1) (2) (3) reads as

under

Time taken for evaluation and extension of tender validity: - 22 (1) the

evaluation of tenders and award of contract shall be completed, as for as

possible, within the period for which the tenders are held valid.

(2) The Tender Accepting Authority shall seek extension of the

validity of tenders from the tenderers for the completion of evaluation, if it is

not completed within the validity period of tender.

(3) In case the evaluation of tenders and award of contract is

not completed within extended period, all the tenders shall be deemed to have

become invalid and fresh tenders may be called for.

Completion of evaluation of Tenders within the period stipulated is the rule and

only in exceptional cases, the period of evaluation may be extended under Rule

22(2). Therefore when this power is to be exercised as an exception, the said

provision has to be construed strictly. Sub rule (3) of rule 22 categorically

provides that even if the evaluation of the tender is not made within the

extended period then no option is given to the TAA and the legislature has

17

made his intention clear by using the words that all the tenders shall be

deemed to have become invalid and fresh tenders have to be called for,

therefore once the TAA does not evaluate tenders within the stipulated period

or within the extended period then that tender becomes invalid and no

discretion is given to the said authority except to call for fresh tenders.

Therefore the writ petition does not find any merit and are rejected”.

2003(6) Karnataka Law journal KLJ 243 : 11.3.2003.

Questions

1. What is the minimum validity period of a tender?

2. Whether the minimum validity period can be extended? To what extent?

Under what circumstances?

3. Whether the consent by all the bidders required?

.

18

Case 11:

Minimum time for submission of Tender

Tenders were invited for supply of food materials to different hospitals. The

date of notification was 17.2.2005 and the date of submission was 15.3.2005.

A writ petition was filed on the ground that the notification is contrary to Rule

17 of KTPP Rules 2000. According to the petition the minimum period of 30

days was not provided in the notification and hence requested to quash the

notification

Honorable Court opined:

“As per Rule 17 of the KTPP Rule 2000 which reads hereunder

Minimum time for submission of tenders : (1) Tender Inviting Authority shall

ensure that adequate time is provided for the submission of tenders and

minimum time is allowed between date of publication of the Notice Inviting

Tenders in the relevant Bulletin and the last date for submission of tenders.

This minimum period shall be as follows.

(a) For tender up to rupees two crores in value, thirty days, and

(b) For tenders in excess of rupees two crores in value sixty days.

17(2) any reduction in the time stipulated under sub-rule (1) has to be

specifically authorized by an authority superior to the Tender Inviting

Authority for reasons to be recorded in writing.

From a reading of the above provision, it is clear that the time stipulated under

sub-rule (1) can be reduced by an authority superior to the tender inviting

authority for the reasons to be recorded in writing. Even if the officials of the

respondents were deputed on election duty even if the notification is not in

accordance with sub-rule (1)(a) of Rule 17, still the 4th respondent or 3rd

respondent could have obtained permission from the superior authority to

publish the notification even before completion of 30 days time. The

respondents have not explained the reasons for having not obtained such

permission from the superior authorities. Even though the law provides for

such an act, when the respondents have acted contrary to the Rule 17(2) of

the Rules 2000, this Court has to quash Annexure-A issued by the 4th

respondent contrary to sub-rule(1)(a) of the Rules. When such being the case,

this Court cannot permit the respondents to proceed with the finalization of the

tender, when the respondents have committed an error on the face of the

record.

19

In the result, the writ petition is allowed. Annexure –A, dated 17-2-2005

issued by the 4th respondent is hereby quashed. It is open for the 4th

respondent to issue fresh notification for remaining period and to finalize the

tender process in accordance with law.

2005 (1), KLJ 287 Dated 13.10.2004

Questions

1. Who is competent to reduce the Min time for submission of

Tenders

2. What is the procedure to be adopted in reducing the minimum

period?

20

Case 12 :

“Authorization to Reduce Minimum time for Tender Submission”

Tenders were invited for supply of food articles for hostels run by the Govt.

Department. The said notification could not be finalized since none of the

bidders were qualified. A second notification was issued giving 5 days time for

submission of tenders. The competent authority has directed the TIA to issue

the said second Tender notification. This is issued having regard to the

urgency in the matter for supply of food articles to the Hostels.

The petitioner in his writ petition prayed to quash the tender notification as it

is contrary to the mandatory provisions of KTPP Act & Rules, which stipulates

that a minimum of 30 days or more should be given for submission of tender.

The Honorable Court opined:

“ ………The said notification is the compliance of Rule 17(2) of the Karnataka

Transparency in Public Procurements Rules, 2000, under which it is crystal

clear that, any reduction in time stipulated under sub-rule (1) has to be

specifically authorized by an authority superior to the tender inviting

authority for reasons to be recorded in writing. It is seen that the earlier tender

notification has been cancelled for reasons that are recorded and thereafter the

competent authority has directed the second respondent to issue the impugned

tender notification. The said notification is issued having regard to the urgency

in the matter for supply of food articles, fruits, vegetables to the hostels in the

District by taking necessary authorization. Hence in view of urgency in the

matter that, the academic year of the primary schools had already commenced,

the second respondent by taking authorization/ permission from the first

respondent, has issued the impugned tender notification. The said decision is

in accordance with law and does not call for interference. Hence, I do not find

any error much less irregularity in issuing the impugned tender notification.

Hence, interference by this Court, at this stage, is not justifiable in view of the

reasons assigned as per the original records made available by the learned

Government Pleader.

For the above reasons, the writ petition filed by petitioner is dismissed as

devoid of merits. 2006 (6) KLJ 248) 5-6-2006

Questions

1. Whether permission of the competent authority is required in this case

while issuing second notification – discuss.

21

Case 13 :

Extension of the period of Contract

An Organization has floated tender for supply of examination answer

scripts and other printed materials for 2009-10. The estimated cost of the

Tender was 60 lakhs. The condition of evaluation of tender is item wise

evaluation of the materials. There are 15 items of the material 10 items were

awarded to contractor “X” and 5 items were awarded to contractor “Y”. The

contractors have supplied the material within the contract period and the bills

were paid accordingly.

During 2010-11, the authorities of the organization has extended the

supply of materials to contractor “x” and “Y” as in 2009-10. The estimate of

the supply for the extended contract is Rs 65 Lakhs.

Audit observed that Fresh Tenders are not floated during 2010-11,.

Whereas the authorities extended the contract of 2009-10. This is against the

provision of KTPP Act.

Analysis :

While inviting tender for goods and services the supplies can be

scheduled and accordingly tender has to be quoted. The bidder will have to

quote for all the items in the schedules but it is not compulsory to quote for all

the schedules. Evaluation may be done taking each schedule as a separate

supply but inviting tenders for evaluation of individual items is not allowed

under KTPP Act.

(GO No. PWD 1359 SO/FC/2001 (P-2) Dated 25.10.2002).

As per Rule 12 (5) of KTPP Rule 2000 the Tender Document shall

indicate the quantity proposed to be procured in the tender, and the tender

accepting authority shall ordinarily permitted to vary the quantity finally

ordered only to the extent of 25% either way of the requirement indicated in the

tender document. In the present case the authority instead of extending the

contract up to 25% of supply of 2009-10, extended the supply for 100% to the

whole year of 2010-11 which is against the rules.

The authorities, which give compliance to Audit report highlighted the urgency

and importance of timely conduct of examination. This compliance cannot be

22

justified as the G.O (PWD 1359 SO/FC/2001 (P-2) Dated 25.10.2002) of

procurement planning indicates that proper planning is required at the

beginning of the year for procurement of the materials for the whole year.

Questions

1. Define responsiveness of the tenderer.

2. Define scheduling of items.

23

Case 14 :

Outsourcing of Hostel Cooks: (Proper execution of Contract conditions)

A district level office invited tenders for supply of 20 cooks for the Hostel for

a period of One year. The minimum wages for a cook as per minimum wages

Act is Rs. 170/- per day. The following are the terms and conditions of tender.

1. The contractor shall posses’ license from Labour Department.

2. Registration in provident fund department.

3. The contractor shall posses PAN Number, VAT Number and be assessed

to service tax with service tax number.

4. The contractor shall registered in ESI

5. The contractor shall maintain Daily wage register for disbursement of

wages.

6. The employer contribution of PF will be paid by the office and the

employee portion shall be deducted from the salary of the cooks by the

contractor and both contributions shall be remitted to PF account.

7. The service tax will be paid as per the provisions of the Act. And Income

tax will be deducted as per rule.

Three bids were received, ‘A; has quoted 5%, as service charges ‘B’ has

quoted 4%, as service charges and “C” has not quoted service charges. ‘C’ has

claimed that he will do the service without any profit. Since “C” being the

lowest the contract was awarded to “C”.

A complaint was received from the cooks that the P.F is not credited to the

Account, the ESI was not paid and cards were not issued to them. The wages

are not being disbursed as per minimum wages Act.

The Head of the organization issued notice to contractor for breach of

contract condition and to rectify it immediately.

After 8 months from the date of award of contract a notice was received from

the office of P.F for having not paid P.F contribution. After verification it was

found that the employee’s contribution was not paid to the PF department

which is a gross negligence on the part of contractor and also on the part of

DDO as a principal employer for having not confirmed the credit of PF.

By the time the dispute aggravates the period of contract was completed.

Meanwhile PF authorities issued a notice to the DDO who is the principle

employer to pay PF contribution, interest and penalty. On verification of the

contract document, it was noticed that the contractor does not possess P.F

24

registration. The authority were fined and paid contribution, penalty and

interest for delayed payment. Similarly cases were also booked by ESI, Labor

department on the principle employer for having not disbursed minimum

wages and not credited ESI contribution.

The authorities paid P.F contribution Rs.302640 Interest Rs.30260 and

penalty Rs. 25000 also ESI contribution of Rs. 79920 and Service Tax of Rs

177840 was paid aggregating to Rs. 6, 15,660 out of Government grant.

During audit it was observed that the amount paid out of government

funds to the PF, ESI and service tax authorities by the DDO (principal

employer) shall be recovered as it has already been drawn and paid to the

contractor. The DDO should have confirmed payment of PF, ESI and service

tax regularly.

Analysis of the Case:

During evaluation the T.A.A should have confirmed the Registration with

the PF Authority and ESI also with PAN card & service tax Registration

Certificate after verifying originals, obtaining a copy including the

validity along with labor registration.

The following conditions shall be insisted in tender document.

The minimum wages of the employees after deducting PF & ESI has to be

adjusted to the employees in to their bank accounts by the contractor.

The wages has to be paid before 7th of every month and then a bill has to

be presented to the DDO along with previous months P.F, ESI and

service tax challans.

As per the provisions of Income Tax Act 2% of Income tax has to be

deducted in the bill. If the contractor has not quoted for his services

charges then an amount equal to 2% of the gross amount for the whole

year has to be collected as income tax amount in advance to be payable

after each payment from the successful bidder.

He should obtain ESI card and disburse to the entire employee (cooks)

within one month from the date of award of contract.

Minimum Wages for a Cook Rs. 170 x 30 Days 5100

P.F 12 + 1.6% 649

ESI 4.75% 243

Total 5992

Service Charges of Contractor 5% 0

TOTAL 5992

25

Service Tax @ 12.36% 741

TOTAL 6733

Deduct 2% I.T 135 *

Amount to be paid by the Principle employer after deducting I.T to the contractor.

6733

Actual amount to be adjusted to the bank account of the employees by the contractor

(-) PF 12% 612 (-) ESI 1.75% 90

5100 702

Net Payable to the employee through Bank Account 4398

*the total amount of Income tax Rs. 1620 (135X12) for the whole year for one

employee shall be collected in advance

Out of the total amount of Rs. 6733 the contractor has to pay as detailed

below:-

Sl. No. Details Amount Employer / Employee Contribution

1. To the employee 4398

2. Provident fund 1261 Employer contribution 649 Employee contribution 612

3. ESI 333 Employer contribution 243

Employee contribution 90

4. Service Tax 741

TOTAL 6733

The head of the department instructed the DDO to forfeit the PSD

amount of Rs. 1, 00.000 from the contractor accordingly it was forfeited. As per

law a departmental enquiry was initiated on the DDO for the act of negligence

and to recover pecuniary loss caused to government.

Questions

1. While framing the conditions of contract in case of services what

are all the safe guards to be adopted in the following:

A) PF

B) ESI

C) Service tax

D) Income tax

2. Discuss about the rate, mode of payment and proof of payment

26

Case 15 :

Tender Accepting Authority & Tender Scrutiny Committee

Tenders were invited for selection of Net work proposal. The project was

proposed on BOOT basis. The successful bidder was required to build the

project, operate it for 5 years and transfer it to the Govt. The bids were placed

before the existing multi-member committee which is comprised of 10 members

of the board.

The tender scrutiny committee announced that on the basis of the RFP all

the 8 bidders are qualified. The bidders are required to perform demonstration

tests and present before the committee of their proposed techniques and

strategies for the implementation of the project. After presentation, the TSC

has announced that one bidder has failed in the technical evaluation process.

The bidder who was not qualified filed a writ petition questioning appointment

of the TSC and the TAA. The court opined

Under the scheme of things, as envisaged under the KTPP Act, Section

9 provides that the “procurement entity” may appoint a Tender Inviting

Authority and a Tender Accepting Authority. The said section also provides

that where a Multi member Committee is already appointed for any

procurement entity for discharging the function of accepting the tenders, such

committee shall be deemed to be a Tender Accepting Authority under this Act.

Hence, the terms of reference given to the above committee would fit the

description of a Multi member Committee appointed in terms of the said

provision. The supervision of the implementation of the project has been

conferred on the Network Steering Committee and the said Committee having

been conferred with the power to finalize the acceptance of the tender and to

recommend the final bidder, is deemed to be a Tender Accepting Authority for

purposes of the Act. The argument canvassed as regards there being an

ambiguity in the appointment of a Tender Accepting Authority and the Tender

Scrutiny Committee, in that the latter being recommended for appointment,

even before the appointment of a Tender Accepting Authority, being an

inconsistency is therefore not tenable. The NSC at its meeting on 21.5.2007 as

per Annexure R7 having named the members of the Tender Scrutiny

Committee and the observation that the Steering Committee “would be

appointed” as the Tender Accepting Authority, does not result in any

incongruity, in the light of the proviso to Section 9 where it is deemed that the

NSC is in fact, the Tender Accepting Authority. The formality of naming the

said Committee as the Tender Accepting Authority has been completed by the

27

order dated 28-5-2007, insofar as the Tender Scrutiny Committee is

concerned, cannot be said to be irregular or illegal. Hence, no infirmity can be

found in the appointment of the authorities contemplated under the KTPP Act,

namely the Tender Inviting Authority, the Tender Accepting Authority and the

Tender Scrutiny Committee.

(a) In the above case the TSC set up a sub-committee of experts to help

/ assist technical evaluation of bids. This act of the TSC was also

questioned by the petitioner.

The court held having regard to the magnitude of the

project and the apparent complexities in its technical detail,

requiring the State Government to prepare over several years, even

in inviting the tenders with the assistance of the Technical experts

from within and outside the state. The further circumstance that in

proceeding to make a technical evaluation of the bids, the Tender

Scrutiny Committee having found that it would require the

assistance of other experts in assessing the technical aspects and

having taken an informed decision to appoint such a Technical sub

committee consisting of a Chairman, who was already a member of

the Tender Scrutiny Committee and two other individuals from

prestigious institutions with apparent specialized knowledge in the

area, is a matter of record. The terms and conditions of such an

exigency cannot be said to result in an unfair practice or an illegality

which has caused prejudice to any tenderer and the complexity of

the technical details furnished by each such tenderer is sought to be

assessed closely and with the help of experts. This cannot be

characterized as resulting in an irregularity which vitiates the tender

process insofar as the technical evaluation of the bid is concerned.

Even if the total of 11 marks which were assigned for that part of

the technical evaluation component, which was made by the

Technical Sub –Committee and in which, the petitioner was awarded

only 4 marks is to be ignored and if the petitioner is in fact awarded

all the 11 marks which the petitioner could have possibly gained if it

is to be accepted that the Technical Sub-Committee was biased in

awarding only 4 marks to the petitioner, the petitioner would yet not

achieve the total marks of 70 which was prescribed to qualify for the

opinion of the commercial bid. The appointment of a Technical Sub-

Committee in the discretion of the Tender Scrutiny Committee, it

28

cannot be said that it was a whimsical or mala fide action to

discredit or disqualify any tenderer including the petitioner. There

are no allegations of mala fides or bias as regards the Technical sub-

Committee. It is the very appointment that is sought to be

questioned and going by the facts and circumstances and the

informed decision of the Tender Scrutiny Committee as to the need

for the assistance of such a Committee, the exercise cannot be

faulted and the tender process cannot be said to be vitiated on

account of this.

(b) In the above case the petitioner questioned the legality of

appointment of TAA & TSC. The court held the petitioner having

participated in the tender process cannot feign ignorance of the

Constitution and appointment of the authorities or the Committees

referred to hereinabove. The petitioner seeking to question the

modalities after the petitioner was disqualified on an evaluation of

its technical bid, would certainly disentitle the petitioner from

seeking to question the propriety or otherwise or even the

appointment or Constitution of propriety or otherwise or even the

appointment or Constitution of the said committees. In the above

background it cannot be said that the disqualification of the

petitioner on an examination of the sequence of events, leading up

to the evaluation of its technical bid is arbitrary and hence the

rejection of the petitioner’s bid is arbitrary and hence, the rejection

of the petitioner’s bid cannot be said to be vitiated.

(c) In the above case the scope of judicial scrutiny was also observed by

the Honorable court as under.

The Courts ought to interfere only when it is possible to arrive at

a conclusion in a case such as this that there is an overwhelming

public interest in entertaining the petition and that is not “every

wandering from the precise path of best practice that lends fuel to a

claim for judicial review”, the same to be noticed that the very

provisions of the Act are wanting in precision and cohesion. It is

necessary that the entire Act and Rules be reviewed by the

Legislature in seeking to implement the objects sought to be

achieved by the Act. Hence, the inconsistency, if any in the

respondents adhering to the procedural rules may even be

attributed to the poor manner in which the provisions of the Act are

29

drafted and the fact that the project concerned in the case on hand

was an unusual project involving several expert bodies and

Committees and the strict adherence to the letter of the Act found

wanting cannot by itself, in the absence of other serious infirmity

which, as already stated does not involve overwhelming public

interest or unlawful policy, would warrant the interference of this

Court.

2008(5) KLJ 521 Dated 4th Feb 2008

Questions:

1. Define TIA and TAA

2. Discuss constitution of TSC

3. TSC has appointed a sub-committee to assist evaluation of technical bid.

Discuss

30

CASE 16 :

Functions of Tender Scrutiny Committee

Tenders were invited by a power corporation for transportation of coal for

a period of 3 years. 3 bidders applied for the tender under 2 cover systems.

The first cover contains technical bid and the second price bid. The tender

scrutinize committee after scrutinizing the technical bids of all the three

tenderers reported as under.

“Based on the documents furnished by the bidders the TSC has examined with

reference to prequalification conditions and other terms and conditions for

evaluating their eligibility for being qualified.”

After evaluation report of TSC the same was placed before the technical

committee of board of Directors of the corporation. The committee on

examination found that the bidder “X” does not meet the prequalification on

requirements and accordingly disqualified the bids of “X”. The finance bid of

the other two bidders opened and the contract awarded to the lowest bidder.

Aggrieved “X” filed a writ petition in the court of law on two grounds.

(A) The petitioner submits that the TSC is a statutory committee in terms of

Sec. 20 of the Act Read with Rule 10 of the KTPP Rules. There is no

statutory recognition to the so called technical committee that can

overrule the view of the TSC.

The Court opined

“……once the TSC accepts tenderers as eligible it has no choice but to

open cover containing price bid and to send report. There was no reason

as to why the matter should have gone before the TAA whether it be

called as technical committee of the board or otherwise, Assuming that

Technical Committee of the board is the TAA, the entire procedure

adopted by the board is totally flawed even a perusal of the record does

not inspire that confidence of the court that the matter had gone on the

methodical manner. In the circumstances eliminating the petitioner at

that stage amounts to denial of equal opportunity to the petitioner and

directed the corporation to re-notify and call for fresh tenders”

(B) The prequalification criteria prescribed shall be in accordance with Rule

28 of KTPP Act. The court opined.

31

“….Prequalification requisite should be in such manner that it can be

understood easily free from ambiguities and are free from providing

scope for such disputes or confusion or Ambiguity so that the awarding

of the contract can be possessive in a proper methodical manner without

giving room for unnecessary avoidable disputes.”

2006 (6) KLJ 394 dated 6.9.2006.

Questions:

1. Discuss the Role and responsibility of TSC & TAA.

Case 17 :

Fraudulent payment on de-silting works executed by a

corporation

The Commissioner of a corporation issued a circular to take up emergency

works before the monsoon season and de silting of road side drains, clearance

of debris on the road side so that no flood havocs should take place during the

next monsoon period. To take up these works, Commissioner ordered to draw

the money on A.C Bills at Rs. 1.00 lakh per Ward and use this amount to meet

the emergent nature of works and also ordered that on exhausting the 1.00

lakh rupees, further amount may be drawn from the Concerned Asst.

Controller (Finance). But the Engineering department staff drawn the amounts

on D.C.Bills.to a tune of 5.oo crore

On verification of the vouchers pertaining to above works executed in

various divisions, it was observed in audit that instead of following the above

procedure, D.C bills have been prepared, and letter head bills of the

contractor have been attached for having hired Earth excavators (JCB) and

Tractors on daily rental basis. In some cases, though the estimate is prepared,

no quantification of the work has been done and no measurement is recorded.

This is a clear case of mis-utilization of a circular issued in good faith to

mitigate the hardship faced by public in monsoon. The circular was also in

violation of the time tested procedures laid down in KPWD and KPWA codes.

Analysis

The emergent natures of works enlisted and ordered to be executed by

the Commissioner to combat the floods are all of Civil Nature. Civil Nature of

32

works (Public Works) are to be executed as per the procedure prescribed in

KPW Departmental code and payment are to be made as per the procedure

prescribed in KPW Accounts Code. All Public works are to be executed after

preparing a realistic estimate, obtaining necessary administrative and

Technical Sanction. The procedure of entrustment of civil works is either by

piece work or after calling for tender depending on the estimated cost. The

work executed should be measured as per the instruction issued in appendix 3

of KPWD code volume II and the bills are to be prepared in the form prescribed

in Para 212 of KPW Accounts code. The works should be check measured by

Asst. Executive Engineer and Executive Engineer to the extent of 100% and 25

% respectively. This is a clear case of violating the orders. It attracts the

provisions of KCA (CCA) Rules 1957 for the act of lack of integrity in violating

MCE, KPWA & D codes

Questions

1. What are the conditions laid down in MCE to draw money on AC bills?

2. What are the conditions to draw money on D.C. bills?

3. Role of drawing and disbursing officers in drawing money on contingent

bills?

33

CASE 18 :

Fishing rights of a tank

Fishing Rights of a tank of 1162 Hectare were granted for a period of 5 years

to a contractor without issuing a public notification and by following

established procedure of tender / Auction after giving wide publicity. The

same was questioned. It was held By the Hon. Single Judge that

transparency was not followed. Government appealed to the Hon. Bench on

the ground for giving lease in favor of the appellant is that there was no

other rival claim.

The court held that it is settled law that the need to maintain the

transparency in grant of public contracts is mandate. Maintenance of

transparency and compliance of Article 14 of the Constitution would inter

alia be ensured by holding public auction upon issuance of advertisement in

the well known news papers. Therefore, the state or its instrumentalities

should not give contracts by private negotiation but by open public

auction/tender after wide publicity. The law is therefore, clear that

ordinarily all contracts by the Government or by an instrumentality of the

State should be granted only by public auction or by inviting tenders, after

advertising the same in well known newspapers having wide circulation, so

that all eligible persons will have opportunity to participate in the bid, and

there is total transparency and the same is an essential requirement in

democracy. The order of the learned Single Judge is fully justified even from

equity point of view. Hence, finding no merit, we dismiss the writ appeal.

2009 (3) KLJ 107 (DB) 3-10-2008

Questions:

1. Discuss the procedure to be followed in public auction by the DDO.

34

CASE 19 :

Purchase of spot billing machine (Type of procurement not mentioned)

Tenders were invited by an electrical company for the supply of spot

billing machines. The electrical company shall give required software for the

spot billing machines. Along with SBM the supplier share the required

stationary for the SBM and also computers, printers, Bar code scanners and

also required UPS. The condition for Qualification is as follows.

1. The suppliers shall be in the “business of providing similar service” for

the last 3 years in any electrical supply company in India.

2. The total turnover per year shall be 5 crores.

The contract was awarded to Mr. “x” who has an experience of only one year in

supplying SBM. 3 years back he has also supplied Data base software for the

company.

Mr. “Y” the other bidder preferred a statutory appeal against the order

passed by the TAA. The appellate authority after considering the contention of

“Y” Dismissed the appeal since there is no specific definition in the tender

document on what constitute “business of providing similar nature of service”.

Mr. “Y” preferred a writ , The court observed that for the supply of afore said

goods the qualification prescribed for the bidder is “business of providing

similar service” instead it should have been supply of goods. (Spot billing

machine) therefore the contract was not at all contract of supply of goods. The

word similar service is referable to the goods to be supplied under the

requirement for a period of 3 years. In fact in the context the word similar is

not only inappropriate but also misleading.

The second condition on which the contract was awarded is for maintenance of

hardware & software which were supplied by the contractor. The decision of

the P.E that the contractor do posses 3 years experience in supplying SBM to

the company for a period of 3 years is ex-facie illegal and contrary to the

material on record. Therefore the award of contract to the contract “X” is

illegal and liable to be quashed. 2009 (6) KLJ 509 23.7.2008

Questions:

1.Define “Specification”, Define Qualification Criteria & Give examples

35

CASE 20 :

Single source

Bill Net Software for the electrical software company was developed and

maintained on an experimental basis by “Y” company and was demonstrated

before the company’s Board Members. The Board decided to implement the

billing software to have a uniform billing system across the company. To

examine the provisions of KTPP Act for utilizing Bill Net Software and also to

treat “Y” company as a single source and to award contract a committee was

constituted with the following members.

1. Joint Secretary of the Department

2. Director of the Company

3. C.E. of the Company

4. General manager of the Company

The committee in its meeting resolved that the members of the committee are

not experts in the software domain and the matter was referred to Prof. “X”

Director of IIT.

Prof. “X” opined that the software is best to upgrade the current version of

Oracle. It is best for transmission to other operating system and for portability

on the basis of the above opinion the contract was awarded to Mr. “Y”.

The aggrieved bidder “A” preferred a writ petition. The court held that

“As per Section 4 (b) of KTPP Act.

To identify single source for purchase of goods and services a three member

expert committee has to be constituted,

1. One technical representative of the Procurement Entity

2. One technical representative of the Government organization dealing

with similar procurement.

3. One representative from a reputed Academic or Research institution or

Non Commercial Institution having expertise in such line to examine and

declare that the goods or services are available from a single source.

The committee constituted was not of experts. They were unable to take

decisions. The said committee committed an error in referring the matter to a

professor, an expert in the field for which they had no power in the Act. The

Procurement Entity should constitute a three member expert committee as

36

above to consider whether tenderer is the only person who has got exclusive

control of the said service. This has not been done. He has not certified that

the tenderer is the only source from which this service could be procured. The

recommendation made by him is very general in nature. It does not satisfy the

requirement contemplated under provision to sub-section (b) of Section 4.

Therefore, the electricity company committed a serious illegality in awarding

the contract to the contractor “Y”. Tenders awarded were quashed.

2009 (6) KLJ 509 23.7.2008

Questions:

1. Discuss the Constitution of the committee and its function in single source

procurement.

37

CASE 21 :

Criteria for rejection of tenders

Tenderers were invited for appointment of IT implementation agency by IT

department. Only two tenders were received the lowest one was 78% above the

amount put to Tender. The Authorities took decision to reject tenders and to

go for retender with a view to getting more bids which might result in more

competitive bids. Accordingly Tenders were re-invited. The lowest bidder filed

a writ petition for not awarding the contract and re-inviting the tender.

See 14 of the KTPP Act Reads as under

General Rejection of Tenders:

1. “The tender accepting authority may at any time before passing an order

of acceptance under section 13 reject all the tenders on the ground of

changes in the scope of procurement, failure of anticipated financial

resource, accidents, calamities or any other ground as may be prescribed

which would render the procurement unnecessary or impossible and

report the same to the procurement entity.

2. The procurement entity shall thereafter communicate the fact of the

rejection under this section to all the renderers and also cause the same

to be published in the tender bulletin”.

A compendious reading of Section 14 would indicate that the tender accepting

authority may reject all the tenders on several grounds before it is accepted.

Indeed a reading of the said provision indicates that once the tender offered is

accepted. Section 14 of the Transparency Act would not come into play. But

however, if the tenders are not accepted and if they are still at the nascent

stage, in as much as they are being considered and there is no positive

indication that it is likely to be crystallized into a concluded contract, it is

open for the tendering authority to invoke Section 14 of the Transparency Act

and reject all the tenders on the ground of certain changes which are stated

therein. The said rejection of tenders is on couple of grounds.

(1) Ground of change in the scope of procurement and

(2) Failure of anticipated financial resource, accidents, calamities or any

other ground as may be prescribed which would render the procurement


38

One will have to assess and see whether the floating of the second tender is

justified and if not, all or one of the ingredients would satisfy the rejection of

the tender of the bidders. In the case on hand, it is to be noticed that initially

the amount which was put to tender was Rs. 368.38 crores and the bid

amount was Rs. 652.77 crores thus there was a substantial difference between

the amount put to tender as well as the bid amount as quoted by the

petitioner. To any mind, it would fall squarely into the category of failure of

anticipated financial resource. Even otherwise, it is to be noticed that the

minutes of the State level Distribution Reforms Committee (DRC) has in their

minutes of the meeting, have recorded, after due deliberations, to re-tender

because of the following reasons:

Tender premiums too high i.e., 78% above the amount put to tender.

The technical responsive bids being only two, it is better to get more bids

which may result in more competitive bids.

The GOI has revised certain technical specification of router midway

when last bids being evaluated, retendering would allow these changes

which may result in economy;

Negotiations are not feasible because of lack of benchmarks in the

project;

The process of retendering should be complete by 31.10.2009;

The DRC would meet in the first week of November 2009.

Indeed, the last i.e point No. 6 is not relevant for our purpose. But if one were to go by the deliberations as well as the reasons given by the committee as to

why the subsequent tender is required to be floated to my mind, appears to be justifiable. It is to be noticed that the tender premium is certainly too high i.e 78% above the amount put to tender. The amount put to tender is Rs. 368.38

crores and the amount quoted is Rs. 652.77 crores.

“Tenderer has no locus stand or right to urge for acceptance of his tenders

merely because it is lowest one in terms of cost and on grounds of legitimate

expectation”

2010(5) KLJ 407 dated 03.12.2009.

Questions:

1. Discuss the provision for rejection of tenders.

39

Case 22 :

Negotiation

Tenders were invited for supply of 5.92 lakh of bicycles by publishing in 3

national dailies and 2 local news papers. 4 companies’s coated a uniform rate

of 2750, 2795 per bicycle for boys and girls respectively.

After negotiations the company’s agreed to supply bicycles for both boys and

girls at a uniform rate of 2657 per unit. Govt. rejected the proposal and

decided to invite fresh tenders for 2 academic years. The tenders were

published as the same news papers and the same 4 company’s coated a

uniform rate of Rs. 2800 & 2970 for supply of bicycles to boys and girls on

negotiation. The unit price was agreed at Rs. 2750 and 2775 for supply of

bicycles for boys and girls respectively. A purchase order was issued for 11,

27,376 bicycles.

Audit observed that, before expiry of validity period of 120 days fresh tenders

were invited. The authority could have increased the quantity within the

validity period of offer. Further the department did not provide vide publicity

for the tender notification but again published in the same news paper due to

which competent rates were not obtained as desired. This resulted in extra

expenditure of 5.9 crore

Analysis:

As per KTPP Rule 12(5) the tender documents shall indicate the quantity

proposed to be procured in the tender and the tender accepting authority shall

be ordinarily permitted to vary the quantity finally ordered only to the extent of

25% either way of the requirement indicated in the tender document.

In this case the quantity to be procured is almost doubled and the authorities

intended to go for fresh tenders and as per Sec. 14 the tenders were rejected

and fresh tenders were invited.

As per Rule 10 of KTPP Rule the TIA shall have the notice inviting tenders


procurement exceeds Rs. 10 crore. In this case the tenders were published

40

only in news papers. The tender inviting authority should have given vide

publicity in national dailies and Indian trade journal to get competitive rates.

Questions

1. Discuss the responsibility of Tender Inviting Authority in giving

publicity as per the Act.

Case 23 :

Procurement of bicycles in excess of requirement

The Procurement entity instructed that purchase of bicycles should be

assessed according to actual requirement for the years 2006-07 to 2009-10

without resulting in any surplus/deficit buying. However, it was observed that

bicycles were purchased in excess of the required quantity amounting to excess

expenditure of Rs. 1.82 crore during the above period.

Audit observed that indents were placed on the information furnished by the

District Information system of Education in a routine manner. This indicated

that the purchases were affected without proper survey/ assessment. The

conditions and quality of excess bicycles stored could not be ensured.

Analysis

Article 15 of the KFC envisages that the expenditure from public fund is to be

guided by the principles of propriety and efficiency. The concerned authorities

are expected to enforce vigilance as a man of ordinary prudence.

Art. 16 of KFC envisages that the procurement authorities are to be

constantly watchful to see the best possible value is obtained for all public

funds spent and also to guard scrupulously against every kind of wasteful

expenditure from public fund.

As per MCE Rule 23 only the required quantity as occasion demands shall be

procured. In the present case the above provision are violated.

Questions

1. Discuss the process of survey and estimate as per procurement planning.

41

Case 24 :

Procurement of Goods and services – Out sourcing of men:

Tenders were invited for outsourcing 24x7 services in a corporation, and

tenders were finalized for one year on the basis of the responsiveness of the

tenderer “X”. After completion of one year the corporation extended the

contract for one more year and also in its general body meeting it was resolved

to pay 10% more than the previous year’s rates.

Audit observed that there is no provision to extend the contract after the expiry

of the contract period also resolution to pay 10% excess over the previous

year’s rate is not admissible.

Analysis:

The essence of contract is time. Once a contract is finalized for a particular

period it cannot be extended. In case of Goods and Service, the TAA shall be

ordinarily permitted to vary the quantity finally ordered only to the extent of

25% of either way.

When once the lowest responsive tender, who is qualified technically and

whose bids are lowest, and accepted and paid, question of enhancement of

rates for the coming year which is not in the contract conditions is not in

accordance with the provision of KTPP Rule.

Questions

1. What are the provisions under the Act for additional supply or extension

of service beyond the period of contract?

42

Case 25 :

Non payment of rent

Sri “X” was allotted a shop by a corporation after conducting public auction at

Rs. 29000/- per month. He becomes a defaulter by nonpayment of rent for 48

month. Subsequently the corporation took possession of the shop by

cancelling the allotment. Sri. “X” filed an appeal in the court. His plea was

rejected and the action taken by the corporation in vacating the shop was

upheld by the court.

Sri. “X” requested the Finance committee of the corporation to hand over

the shop and agreed to pay the balance in installment of 24 months and to

reduce the rent. The committee agreed to this and fixed the rent at 7400 per

month.

Audit observed that since “X’ was a defaulter the amount should have been

recovered by decreeing in the court of law. Besides allotting the shop by public

auction after following due procedure.

Analysis:

The corporation failed to recover rent along with interest. When once auction is

conducted and shop is allotted for a specific period and amount it is the duty of

the corporation to collect the monthly rent. In case of any default the allotment

has to be cancelled and fresh auction to be conducted. This legal procedure

was not followed by the corporation.

Questions

1. What is the procedure to be followed in allotment of a shop by public

auction?

2. Responsibility of the concerned authorities for collection of rent?

43

Case 26 :

Non-submission of NDC bills

The Annual audit report of the University drafted a Para regarding NDC not

submitted for a total amount of Rs. 3 lakh from the director of an institution.

The Director was officiating from 1-72003 to 25-2-2004.and relieved on 25-2-

2004. Audit for the year 2001-02 to 2003-04 is completed on 1-10-2004. It was

found Rs. 3 lakh was drawn on AC bill by the Director for which NDC is due.

The Director gets a No Due Certificate from the concerned authority. He takes

voluntary retirement during 2004. The Director has submitted the NDC for the

total amount before getting voluntary retirement The pension settlement of the

Director is held up for not clearing the amount and not submitting NDC as

stated in the audit report and it is held up as per the orders of the VC. The

Director writes to the registrar and the VC stating all the facts and submits

relevant documents as proof of his clearance of all dues and request for

settlement of his pension claims. The file was delayed for 8 years from 2004 to

2012. There was no decision taken regarding the said matter to get the audit

objection dropped.

On a personal request by the Director to the Govt. Auditor in 2012, the matter

is taken up for scrutiny by the Govt. Auditor. A detailed scrutiny reveals that

the Para can be dropped. A letter is issued by the Govt. Auditor to the

concerned Director and the concerned authorities of the university that the

Director has no dues pending against him. As such the Para was dropped and

the pension claims of the Director settled.

Analysis:

1. Dearth of pro-active attitude on part of the officials to look in to the case.

2. Delay due to hesitancy in taking decisions & Fear of accountability.

3. Causing financial loss to the Director.

4. Unnecessary mental torture caused to the Director

5. The audit being falsely accused of being the cause for with-holding

pension claims.

6. Pension settlement Para objections have to be attended on first priority.

Questions

1 What is procedure for recording audit inspection report?

2. Role and responsibility of DDO in furnishing timely compliance to audit. 3. Role of audit to drop audit Para after satisfactory reply.

44

Case 27 :

Statutory deductions

The annual audit report of the University drafted a Para regarding non

deduction of TDS from the contractor who running a mess of the University

hostel.

1. The contract of supplying food to inmates of hostel was awarded to Mr. X

2. In the first year, the VC issued an OM to the contractor to execute the

work and the OM is specifically mentioned regarding the required TDS to

be deducted from the bills. As per the OM, the TDS amount had been

deducted regularly.

3. In the 2nd year, the same contract was renewed with the same contractor.

4. The OM regarding the renewal contract did not mention the TDS to be

deducted. Audit observed non-payment of TDS

5. The contractor did not get the TDS amount deducted from his bills.

6. The contractor of the hostel and the warden replied to the objection

saying that since it was not in the OM and the TDS deduction was not

deducted

Analysis :

1. Every entrepreneur ought to know about TDS.

2. The reply given could not be accepted.

3. The responsibility of the DDO as per 194 of the Income Tax Act is as

follows

As per 194 C (2) Any person responsible for paying any sum any resident in

pursuance of the contract with the sub contractor for carrying out or for


undertaken by the contractor or for supplying wholly or partly any labor

which the contractor has undertaken to supply shall at the time of credit of

such sum to the account of the contractor / sub contractor or at the time of

payment thereof as cash or by issue of a cheque or draft or by any other

mode whichever is earlier deduct an amount equal to 1% or 2% of income

comprised there in. As per 194 “C” the Threshold limit of payment in a year

is 30,000 (Individual 1%, firm 2%). Non deduction of IT in the bills

contravenes the provision of Sec 194 C (2) f IT Act for which DDO is held

responsible.

Questions : Discuss the provisions of KFC for statutory deductions.

45

Case 28 :

Risk Purchase: (Short supply of Goods)

An order was placed on a firm “G” which failed to supply the full quantity

of goods. The balance quantity of goods was ordered from the firm “H” at a

higher price on risk purchase conditions. Risk purchase order means that the

additional cost of purchase will be recovered from the previous firm “G”. Yet

another risk purchase order on another firm “I” was placed as even the firm “H”

failed to supply the goods ordered in full. No recovery could be made from the

firm “G” as the factory was closed. No recovery had been made till the audit

paragraph had been published. No recovery had been made from the firm “H”

also.

Analysis:

The audit paragraph highlights the need to judge the suitability of a bidder to

meet its commitments. Unless a reasonable criterion for the selection of a

bidder is laid down, failures will often recur. The government rarely publishes

any data on the amount of risk purchase differences recovered from defaulters.

If government departments were largely successful in recovering the amounts,

and they publicized this information, then this may deter incompetent bidders.

If government departments have a bad experience then there is all the more

need to review the existing process of selecting a bidder. It is a very onerous

and difficult process to blacklist a firm, and blacklisted firms easily start

functioning in another name.

The provisions of KTPP Act & Rules in framing Qualification criteria has to

be scrupulously followed to mitigate such circumstances and to select the

right qualified contractor for the supply.

Questions

1. What are the conditions for risk purchase of goods?

2. What are the conditions required to frame qualification criteria?

46

Case 29 :

Risk Purchase (Cancellation of Contract)

A supplier failed to supply the goods ordered. The central purchase authority

cancelled the contract, without invoking the risk purchase clause. The

indenter purchased goods elsewhere at a much higher cost.

Analysis:

Invoking risk purchase clauses has not resulted in any success. The major

failure seems to lie in the selection of competent suppliers. Also the provisions

of taking securities before entering into contract and framing suitable Q C for

selection of contractors on the basis of production capacity, commercial

capability, and experience in the field contribute for successful contract.

Questions :What are the conditions required to frame qualification criteria?

Case 30 :

Surveys

A contract of works for a pile foundation was awarded for completion in nine

months. During the progress of the work discovered that the design based on

the assumptions of the detailed soil investigation report was not suitable.

Originally it was assumed that a raft foundation over hard rock would be

possible at the site. But it was found that the sub-strata consisted of fissured

rocks of highly varying depths. Very high subsoil water level and thus raft

foundation was not possible. Further, detailed explorations were carried out.

The design of the foundation and the entire structural analysis of the building

have to be completely redone. The work was completed after an extra period of

about three years at more than double the original estimated cost of Rs. 6.28

Million.

Analysis :

The report of the task force pointed out the failure of the investigation and

survey set up. Though one recognizes that human culpability may be there, yet

the absence of correct data in survey reports needs to be effectively overcome.

Otherwise, the entire project gets delayed, with cost escalation and losses, as

the benefits of the projects and investments do not start flowing in time.

Questions : Discuss the responsibility of authorities in conducting proper

survey

47

Case 31 :

Qualification of bidders and bid capacity (Works)

“Non-ensuring of contractor’s eligibility:

The State government’s instructions (October 2008) read with NIT, specified

certain conditions for participation in the tender above Rs. 50 lakh, such as

satisfactory completion of at least one work to the extent of 50 per cent of the

tendered cost for works costing up to Rs. One crore, the contractor owning at

least 50% of the equipment required for the work etc. Scrutiny of 18 technical

evaluations for works costing Rs. 50 lakh to Rs. 2.72 Crore revealed that in 16

cases the details of execution of works to the extent prescribed were not

obtained and in 14 cases the details of equipment owned by the contractors

were not insisted upon. It was evident from the above cases that the tender

evaluation was not done as prescribed and works were entrusted to agencies

without ensuring the eligibility criteria for executing such works.”

Analysis

The model qualification criteria as modified in Government order FD4 PCL

2008 dated 14-10-2008 has to be adopted before floating of tenders by the

tender inviting authority.

The model Clause for Works contract shall be as follows:

"To qualify for award of the contract, each tenderer in its name should have in

the last five years i.e..........

(i) Achieved, in at least two financial years, a minimum annual financial

turnover (in all classes of civil engineering construction works only) of Rs......@

(usually not less than the estimated cost under this contract for works costing

up to Rs. 100 lakh and not less than two times the estimated annual payments

in case of the contract value is more than 100 lakhs under this contract)

(ii) Satisfactorily completed (not less than 90% of contract value), as a

prime contractor, at least one similar work (Define) of value not less

then Rs......@ (usually not less than 50% of the estimated value of the

contract for all works costing up to 100 lakh and not less than 80% of

the estimated value of the contract for all works costing more than Rs.

100 lakh);

48

(iii) Executed in any one year, the following minimum quantities of work;

(usually 80% of the expected peak rate of construction for 3 or 4 critical

items which account for more than 60% of the total cost of the work);

...................................................

...................................................

...................................................

...................................................

The tenderer or his identified sub-contractor should have

executed.............................

works** totaling to Rs.........@ in any one year

@ at ............ price level. Financial turnover and cost of completed works of

previous years shall be given weight age of 10% per year based on

the rupee Value of bring them to .........* price level

* the financial year in which tenders are received.

** repeat for other items of works for which subcontracting would be allowed

The tenderer should .....

(a) availability (either owned cr...... or by procurement against mobilization

advances) of the following key and critical equipment for this work:

......................................................

........................................................

(b) availability for this work of a Project manager with no less than five years'

experience in construction of similar civil engineering works and other key

personnel with adequate experience as required; and

(c) Liquid assets and/or availability of credit facilities of no less than Rs.......

lakhs (Credit lines/letter of credit/certificated from Banks for meting the funds

requirements etc. (usually the equivalent of the estimated cash flow for 3 months

in peak construction period)

From the above case it is evident that the TIA has not

followed the prescribed procedure there by attracts the provisions of

Sec.23 of the KTPP Act.

Questions

1. How Qualification criteria is to be fixed in case of Goods and works?

49

Case 32 :

Qualification of bidders and bid capacity (Goods)

Tenders were invited for purchase of 300 equipments amounting to Rs.

50 Lakh. The qualification criteria prescribed for the Tender is as follows

Work Experience:

He should have satisfactorily completed as a prime contractor at least one work

of supply of similar equipment to an extent of 25 lakh in any one year in the

last 5 years.

Qualification:

(1) Each Tenderer in his name should have in the last 5 years period

achieved in at least in 2 financial years an average annual financial

turnover of Rs. 50 lakh.

(2) The Tenderer should have supplied in any one year minimum 240

equipments to any Govt. organization

(3) The Tenderer should have liquid asset or availability of credit facility of

not less than 20 lakh.

(4) The commitment of supply as the dated of sub missing of the tenderer is

required to be mentioned in the Tender Document.

Three bids were received following are the criteria for consideration of

qualification.

A (in Lakhs) B(in Lakhs) C (in Lakhs)

Annual Production Capacity 400 350 420

Annual Financial Turnover for last two years

50 55

52 51

56 54

Supply of Materials 28 32 20

Supply of equipment 350 300 280

Liquid Assets 20 25 30

Balance to be supplied to various clients

120 150 200

50

Sl.

No.

As

Prescribed

A B C

1 Work Experience 25 Lakh 28 32 30

2 Qualification 50 Lakh 50 50

3 Supply of Materials 240 350 300 280

4 Liq. Assets 20 20 25 30

5 Existing Commitments - 120 150 200

6 Annual Production - 400 350 450

Bid Capacity -= A x N – B

Where A = Annual Production Capacity

N = No. of years prescribed for completion of contract

B = No. of existing commitment

Bid capacity of A = 400x1 – 120 = 280

Bid Capacity of B = 350 x 1 – 150 = 200

Bid Capacity of C = 450 x 1 – 200 = 250

The Bid was awarded to A

Audit observed that the Tender was awarded to “A” who does not possess bid

capacity.

Analysis:-

Tenders were invited for supply of 300 equipments all the 3 bidders are

qualified in the qualification criteria prescribed. As for as available tender

capacity is concerned all the 3 bidders does not possess the available Tender

Capacity i.e 300 equipment in the year. As such all are disqualified. As per

Govt. Order No. PWD 1359/50/FC/2001/P2 dated 3.12.2002 “Lowest

evaluated responsive tenderer who satisfies the aggregate qualifying criteria

would be qualified for the award of the contract only if he satisfies the available

Tender capacity more than the no of equipments of the Tender under

consideration. In this case Tenders should have been cancelled and fresh

tenders invited.

Questions

1. What are the requirements to assess bid capacity?

51

Case 33 :

Qualification of bidders and bid capacity (Cancellation of Contract)

A contract for automatic fire fighting and fire alarm system was awarded in for

Rs 1.76 Million. After the physical progress of 99 per cent of the work, and the

payment of Rs. 1.72 million, the contract was cancelled in. Another contract at

the risk and cost of the former contractor was awarded for Rs. 0.16 million in

to carry out the testing and commissioning of the system. The work was still

incomplete after 8 years of invitation of tenders. Government offices stated

that the fire fighting and fire alarm system is a specialist job, very few firms

who were undertaking its installation. The system could not be commissioned

making the expenditure unfruitful.

Analysis :

There may be very few qualified contractors for specialized works. Therefore, it

is important to prequalify contractors with the criterion of successful

completion of a few similar jobs. Sometimes, works are awarded on the basis

of similar contracts – in hand of a bidder without any relationship to successful

completion of a work. Such a practice cannot be considered reasonable in the

absence of evidence of the competence of the bidder.

Questions

1. Discuss model Q C for goods.

2.How to arrive at the bid capacity in case of goods contract?

52

Case No. 34 :

Qualification of bidders and bid capacity

(failure of execution of contract)

A contract was awarded for the design manufacture, supply, erection and

commissioning low profile quay side gantry cranes at a cost of 6 crores. The

period given for completion of work was 15 months. Owing to the contractors

failure to start the work for want of funds an advance of Rs. 30 lakh at 20%

annual interest rate was given. The cranes have not been commissioned even

after 5 years of the date of award of contract.

Analysis:

As per KTPP Act the minimum Q.C for the financial resources of a bidder shall

be satisfactorily completion as a prime contractor for at least one similar works

to an extent of rupees 4.8 crores.

To qualify for award the tenderer should have in the last 5 years period

achieved in at least 2 financial year an average financial turnover of rupees 6

crores. The bidder should have liquid assets and or availability of credit facility

of not less than 6 crores.

From the above case it is evident that there is failure in the execution of

contract. The GO Dated PWD 1359/SO/FC/2001/P2 Dated 3.12.2002

specifies the model Q.C and also bid capacity of the tenders, which shall be

followed by the Tender Accepting Authorities.

Questions


2. How to arrive at the bid capacity in case of goods contract?

53


























Inspection Reports








and irregularity.



54




















Sl

No.

Date of Receipt No and date of

Objections slip

Nature of

objection

Amount

objected

Date of

reply

Initials of

the Officers

Remarks











55




















--------


Audit Reports.










56




















quarter.

57

ANNEXURE – 1

Department: DDO:

Compliance Report on Paras Outstanding in Inspection Reports / Local

Audit Reports

Inspection Report/ Local Audit for the Period

Dates of Audit

Date of Receipt of Report

Year Wise No. of paras in Report

No. of paras for which replies are sent to Audit

No. of paras under Verification

No. of paras dropped based on compliance

No. of paras marked for verification during next audit

ANNEXTURE – II

(i) Compliance Report on Paras in Inspection Reports / Local Audit

Reports

Department:

No. of DDO’s

No. of DDO’s Audited

No. of IRs/LARs received

Year wise No. of paras in IRs/LARs

No. of paras for which replies are sent

No. of paras settled

No. of paras outstanding

(ii) Compliance Report on Paras on Audit Reports (Civil) and Audit

Reports (Revenue Receipts)

Department:

Sl. No.

Reference to para No. Page No. in the Audit Report for the year ended

Audit comment in brief

Reply of the Department

Remarks

58

Parliamentary Affairs and Legislation Secretariat

Notification

(First Published in the Karnataka Gazette on the thirteenth day of December,

2000)

THE KARNATAKA TRANSPARENCY IN PUBLIC PROCUREMENTS ACT,

1999.

[KARNATAKA ACT No. 29 OF 2000]

(Received the assent of the Governor on the tenth day of December 2000)

An Act to provide for ensuring transparency in public procurement of

goods and services by streamlining the procedure in inviting, processing

and acceptance of tenders by Procurement Entities, and for matters

related thereto.

Whereas it is expedient in public interest to render the process of

procurement of goods and services by Procurement Entities transparent by

streamlining the procedure in inviting, processing and acceptance of tenders.

Be it enacted by the Karnataka State Legislature in the fiftieth year of

the Republic of India as follows:-

CHAPTER - I

1. Short title and commencement. - (1) This Act may be called the

Karnataka Transparency in Public Procurements Act, 1999.

(2) It shall be deemed to have come into force with effect from the

fourth day of October, 2000.

2. Definitions. - In this Act, unless the context otherwise requires,-

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(a) ‘Construction Works’ means putting up, demolishing, repairs or

renovation of buildings, roads, bridges or other structures including fabrication

of steel structures and all other civil works;

* [(aa) “E-procurement” means purchase of goods, obtaining of services

or undertaking of construction works by the procurement entity through e-

Procurement platform;

(aaa) “E-procurement platform” means a procurement platform of

electronic media comprising of procurement process set up and managed by

the state government through integrated internet enabled procurement tools

incorporated by customisation]

(b) ‘Goods’ means Machinery, Motor Vehicles, Equipment, Furniture,

Articles of Stationery, textiles raw materials, drugs, scientific instruments,

chemicals, food grains, Oil and oil seeds or other commodity required for

consumption, use or distribution by a Procurement Entity in discharge of its

public duties;

* clauses (aa) & (aaa) inserted by Act No. 13 of 2007 w.e.f 27-11-2006

(c) ‘Government’ means the State Government;

(d) ‘Procurement Entity’ means any Government Department, a State

Government Undertaking, Local Authority or Board, Body or Corporation

established by or under any law and owned or controlled by the Government,

and any other body or authority owned or controlled by the Government and as

may be specified by it.

(e) ‘Public Procurement’ or ‘procurement’ means purchase of goods,

obtaining of services or undertaking of construction works by the procurement

entities;

(f) ‘Services’ means the action of serving, attending upon, helping or

benefiting a Procurement Entity in the course of discharging its public duties

and includes construction works;

(g) ‘Specified goods or Services’ means the goods or services as the

case may be specified in a tender and identified in the contract resulting from

acceptance of a tender on account of a procurement entity;

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(h) ‘Tender’ means the formal offer made for supply of goods or

services in response to an invitation for tender published in a Tender Bulletin;

(i) ‘Tender Accepting Authority’ means an officer or a Committee

appointed to accept tenders and a ‘ Tender Inviting Authority’ means an officer

or a Committee appointed to invite tenders, under section 9;

(j) ‘Tender Bulletin’ means a bulletin published for the State as a

whole or for any district or districts within the State containing the details of

invitation, processing and acceptance of Tenders;

(k) ‘Tender Bulletin Officer’ means a State Tender Bulletin Officer or

a Tender Bulletin Officer referred to in section 7;

(l) ‘Tender Document’ means the set of papers detailing the

schedule of works, Calendar of events, requirement of goods and services,

technical specifications, procurement criteria and such other particulars, as

may be prescribed for evaluation and comparison of tenders.

* [Provided that for the purpose of e-procurement, the ‘tender papers’

means set of documents in electronic form]

3. Provisions not to apply to certain Projects.- The provisions of this

Act in so far as they are inconsistent with the procedure specified in respect of

the Projects funded by International Financial Agencies or Projects covered

under International Agreements, shall not apply to procurement of goods or

services for such project.

* Inserted by Act No. 13 of 2007 w.e.f 27-11-2006

4. Exceptions to applicability. - The provisions of Chapter II shall not

apply to Procurement of goods and services,-

(a) During the period of natural calamity or emergency declared by the

Government;

(b) Where the goods or services are available from a single source or where

a particular supplier or contractor has exclusive rights in respect of the goods

or services or construction work and no reasonable alternatives or substitutes

exist:

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Provided that for the purpose of this clause there shall be a committee of

three experts consisting of one technical representative of the procuring entity

one technical representative of the Government organisation dealing with

similar procurement and one representative from a reputed Academic or

Research Institution or Non-Commercial

Institution having expertise in such line to examine and declare that the goods

or services are available from a single source.

(c) Where the procuring entity having procured goods, services or

technology from a supplier or contractor determines that additional supplies

must be procured from the same supplier or contractor for reasons of

standardization and compatibility with the existing goods service or technology;

(d) Where the goods or services are procured from certain Departments of

Government, public sector undertakings, statutory boards and such other

institutions specified by the Government and such goods are manufactured or

services are provided by them, for a period not exceeding (three years)* from

the date of commencement of this Act;

** “(e) where the procurement is by the Government Departments, State

Government Undertakings, or any Board, Body or Corporation established by

or under any law and owned or controlled by the Government or Zilla

Panchayats constituted under the Karnataka Panchayat Raj Act, 1993 or City

Municipal Corporations established under the Municipal Corporations Act,

1976 or City Municipal Councils established under the Karnataka

Municipalities Act, 1964 or the Hyderabad Karnataka Areas Development

Board constituted under the Hyderabad Karnataka Area Development Board

Act, 1993 or Malnad Area Development Board constituted under the Malnad

Area Development Board Act,1991 or the Bayaluseeme Development Board

constituted under the Bayaluseeme Development Board Act,1994,-

(i) in case of construction works of all types the value of which does

not exceed rupees five lakhs; (ii) in case of goods or services other than construction works the

value of which does not exceed rupees one lakh;

*Act no. 4 of 2003 shall be deemed always to have been

substituted ** Clauses (e) & (ee) substituted by act no.21 of 2001 w e f

25-8-2001

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(ee) where the procurement of goods or services is by the Grama

Panchayats and Taluk Panchayats constituted under the Karnataka Panchayat

Raj Act, 1993, Town Municipal Councils or Town Panchayats constituted under

the Karnataka Municipalities Act, 1964 or Urban Development Authorities

constituted under the

Karnataka Urban Development Authorities Act, 1987,-

for the purpose of implementing mini water supply scheme

or construction of school rooms and the value of such procurement

does not exceed rupees two lakhs; and

for other purposes and the value of such procurement does not exceed

rupees one lakh”.

(f) Where the goods or services are procured under rate contracts

from the Director General of Supplies and Disposals or from Association of

State Road Transport undertakings; and

(g) in respect of specific procurements as may be notified by the

Government from time to time.

(h) in respect of spot purchase of cotton by Spinning Mills,

Purchase of Oil seeds by the Karnataka Agro-Industries Corporation or the

Karnataka Co-operative Oil Seeds Grower’s Federation, purchase of sugarcane

by the Sugar Mills, direct purchase of paddy by the Agriculture Produce Market

Committees and the Karnataka Food and Civil supplies Corporation, purchase

of cloth by the Karnataka Handloom Development Corporation, purchase of

silk by the Karnataka Silk Industries Corporation, purchase of milk by the

Karnataka Milk Producers Co-operative Federation, purchase of palm oil by the

Karnataka Food and Civil Supplies Corporation and the Karnataka Co-

operative Oil Seeds Grower’s Federation, purchase of cloth by the Government

Departments and public sector undertaking from the Karnataka Handloom

Development Corporation and purchase by such other organizations or

purchase of any other material as may be notified by the Government from

time to time.

CHAPTER II

REGULATION OF PROCUREMENT

5. Procurement other than by Tender Prohibited. - On and from the

date of commencement of this Act no Procurement Entity shall procure goods

or services except by inviting Tenders for supply.

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6. Procurement Entities to follow Procedure.-No tender shall be

invited, processed or accepted by a Procurement Entity after the

commencement of this Act except in accordance with the procedure laid down

in this Act or the rules made there under.

7. Tender Bulletin Officers. - (1) The Government may by notification

appoint an officer not below the rank of a Deputy Secretary to Government of

the concerned department to be the State Tender Bulletin Officer for the State

in respect of that Department where the procurement of that department

covers more than one district.

(2) Deputy Commissioner of the District shall be the District Bulletin

Officer.

8. Publication of Tender Bulletin.- (1) The State Tender Bulletin

Officer, or as the case may be, the District Tender Bulletin Officer shall on

receipt of intimation relating to notice of invitation of tender from tender

inviting authority or information relating to details of acceptance of tender

under section 13 or rejection of tender under

section 14 from the tender Accepting Authority, publish within the prescribed

time, the State Tender Bulletin or as the case may be District Tender Bulletin.

(2) The Tender Bulletin shall be made available for sale in the office of

the Tender Bulletin Officer and in such other places as the Tender Bulletin

Officer deems fit to make available.

9. Tender Inviting Authority and Tender Accepting Authority. - The

Procurement Entity may, by order, appoint, -

(i) one or more of officers or a Committee of Officers to be the Tender Inviting Authority for any specified area, specified

procurement or specified class of goods or services, and (ii) one or more of officers or a Committee of Officers to be the

Tender Accepting Authority for any specified area or Specified Procurement, specified class of goods and services:

Provided that where a multi-member Committee is already appointed

for any Procurement Entity for discharging the function of accepting tenders,

such Committee shall be deemed to be a Tender Accepting Authority appointed

under this Act.

10. Tender Scrutiny Committee .- The Tender Accepting Authority may

constitute a Tender Scrutiny Committee consisting of such persons as it deems

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fit to scrutinise tenders above five crores in the case of the Public Works,

Irrigation and Minor Irrigation Departments of the Government and above

rupees one crore in other cases.

11. Opening of Tenders. - (1) The Procurement entity may authorise

either the Tender Inviting Authority or the Tender Accepting Authority or any

other Officer to open the Tenders and draw up a list of Tenderers responding to

the notice inviting tender, in each case.

(2) The Authority, or as the case may be the officer referred to in

sub-section (1) shall open the tender draw up a list of tenderers in the

prescribed manner and unless it is also the Tender Accepting Authority,

forward the tenders along with the list of tenderers, to the Tender Accepting

authority.

12. Duties of Tender Inviting authority. - (1) It shall be the duty of

every Tender Inviting Authority,-

(a) to take out notice inviting tenders at the behest of the

Procurement Entity in the prescribed manner;

(b) to communicate the notice inviting tenders by marking a copy

thereof to the Tender Bulletin Officer concerned immediately after issue of the

notice;

(c) to cause publication of notice inviting tenders in the prescribed

manner; and

(d) to supply the Schedule of Rates and Tender Documents to every

intending tenderer who has applied to get such documents.

(2) The Tender Inviting Authority shall take out notices,

communications and publications required to be taken out under this section

in such form, in such manner, by such mode and at such time and interval as

may be prescribed and different manner and mode of publication may be

prescribed for different procurements depending on the value of the

procurement.

(3) The Tender Inviting Authority shall collect all the details received in

response to the notice inviting tender, within the time stipulated and unless it

is itself authorised to open the tender shall compile and forward all the tenders

received to the Authority or Officer authorised to open the tenders.

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13. Acceptance of Tender. - The Tender Accepting Authority shall,

after following such procedure as may be prescribed pass order accepting the

tender and shall communicate the information relating to acceptance of tender

together with a comparative analysis and reasons for accepting of tender to the

procurement entity and the Tender Bulletin Officer:

Provided that where the Tender Accepting Authority consists of single

officer who is due to retire within the next six months, from the date fixed for

the acceptance for tender, he shall not act to accept the tender without

obtaining prior approval of the Procurement Entity.

Provided further that subject to such general or special order as may

be issued by the Government from time to time, the Tender Accepting Authority

may before passing order accepting a tender negotiate with lowest tenderer.

14. General rejection of tenders. - (1) The Tender accepting

authority may at any time before passing an order of acceptance under section

13 reject all the tenders on the ground of changes in the scope of procurement,

failure of anticipated financial resource, accidents, calamities or any other

ground as may be prescribed which would render the procurement

unnecessary or impossible and report the same to the Procurement Entity.

(2) The Procurement Entity shall thereafter communicate the fact

of the rejection under this section to all the Tenderers and also cause the same

to be published in the Tender Bulletin.

15. Power to give directions.- It shall be competent for the

Government to give appropriate directions to the Procurement Entity or the

Authorities under the Act in order to secure and maintain transparency at any

stage of the process of procurement, and it shall be duty of the Procurement

Entity or such authority to comply with the directions.

16. Appeal. - (1) Any tenderer aggrieved by an order passed by the

Tender Accepting Authority other than the Government under section 13 may

appeal to the prescribed authority within thirty days from the date of receipt of

the order.

Provided that the prescribed authority may, in its discretion allow

further time not exceeding thirty days for preferring any such appeal, if it is

satisfied that the appellant had sufficient cause for not preferring the appeal in

time.

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(2) The prescribed authority may after giving opportunity of being heard

to both the parties pass such order thereon as it deems fit and such order shall

be final.

(3) The prescribed authority shall as far as possible dispose of the

appeal within thirty days from the date of filing thereof.

17. Power to obtain information.- Notwithstanding anything

contained in this Act or in any other law for the time being in force, the

Government may with a view to ensuring transparency call for and obtain, from

any Authority under the Act, any information relating to any matter in the

process of procurement.

18. Power to call for records.- The Government may at any time,

with a view to ensuring transparency in the procurement process call upon any

authority under the Act,-

to produce records relating to invitation, processing and acceptance of

tenders;

to furnish the tender document, estimates/statements/accounts or

statistics relating to such tenders; and

to furnish report on any specific point incidental to the procurement.

CHAPETER-II A

E-Procurement

*[18-A. E-Procurement,-(1) there shall be single unified e-

procurement platform for all procurement entity which may be notified under

subsection (2).

(2) With effect from such date as may be specified by the Government,

by notification, a procurement entity in respect of a class of procurement, if

any, as may be notified shall procure its procurements through the e-

procurement platform.

(3) Notwithstanding anything contained in this Act, the Government

may make rules, for specifying a separate procedure to be followed by

procurement entities notified under sub section(2) for e-procurement through

e-procurement platform; and for non-application of other procedure of

procurement to e-procurement.]

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*[Inserted by Act No. 13 of 2007 w.e.f 27-11-2006

CHAPTER-III

MISCELLANEOUS

19. Officers deemed to be Public Servants.- Every Officer acting

under or in pursuance of the provisions of this Act or under a rule, order or

notification made there under, shall be deemed to be a public servant within

the meaning of section 21 of the Indian Penal Code, 1860 (Central Act XLV

1860)

20. Immunity for action taken in good faith. - No suit or other

legal proceeding shall lie against the Government or any officer or authority

empowered to exercise powers or perform the functions under the Act in

respect of anything which is in good faith done or intended to be done under

this Act.

21. Bar of Jurisdiction of Courts. - Save as otherwise provided in

this Act no order passed or proceedings taken by any officer or authority under

this Act shall be called in question in any court, and no injunction shall be

granted by any court in respect of any action taken or to be taken by such

officer or authority in exercise of powers

conferred on him or it, by or under this Act.

22. Act to override the other laws.- The provisions of this Act shall

have effect notwithstanding anything inconsistent therewith contained in any

other law for the time being in force or any custom or usage, agreement, decree

or order of a court or a Tribunal or other Authority.

23. Penalty. - Whoever contravenes the provisions of this Act or the

rules made there under shall be punishable with imprisonment for a term

which may extend to three years and with fine which may extend to five

thousand rupees.

24. Power to remove difficulties .- If any difficulty arises in giving

effect to the provisions of this Act, the Government may, by an order published

in the Gazette make such provisions not inconsistent with the provisions of the

Act as appear to them to be necessary or expedient for removing the difficulty:

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Provided that no such order shall be made after the expiry of a

period of two years from the date of commencement of the Act.

25. Power to make rules. - (1) The Government, may by notification,

make such rules as are necessary for carrying out the purposes of this Act.

(2) Every rule made or notification or order issued under this Act

shall as soon as possible, after it is made or issued, be placed before each

House of the State Legislature while it is in session for a total period of thirty

days, which may be comprised in one session or in two or more successive

sessions and if before the expiry of the session in which it is laid or the

sessions immediately following both Houses agree in making any modifications

in the rule, notification or order or both Houses agree that the rule, notification

or order shall not be made, the rule or notification or order shall thereafter

have effect only in such modified form or be of no effect, as the case may be, so,

however that any such modification or annulment shall be without prejudice to

the validity of anything previously done under that rule or notification or order.

26. Savings.- All rules, regulations, orders, notifications

departmental codes, manuals, bye-laws, official Memoranda, circulars or any

other order made or issued before the commencement of this Act and in force

on the date of such commencement providing for or relating to any of the above

matters for the furtherance of which this Act is enacted shall continue to be in

force and effective as if they are made under the corresponding provisions of

this Act, to the extent they are not inconsistent with the provisions of the Act

and unless and until superseded by anything done or any action taken or any

rule, notification or order, is made under this Act.

27. Repeal and savings.-

(1) The Karnataka Transparency in Public Procurements Ordinance, 2000

(Karnataka Ordinance No. 8of 2000) is hereby repealed.

(2) Notwithstanding such repeal anything done or any action taken under the

said Ordinance shall be deemed to have been done or taken under this Act.

V.S.RAMADEVI

GOVERNOR OF KARNATAKA

By Order and in the name of the Governor of Karnataka, M.R. Hegde

Secretary to Government Department of Parliamentary Affairs and Legislation

69

THE KARNATAKA TRANSPARENCY IN PUBLIC PROCUREMENT

RULES 2000

(Published in the Karnataka Gazette, Extraordinary, dated 24-10-2000, vide,

Notification No. PWD 154 FC III 2000, Dated 24-10-2000)

No.PWD/154/FC-III/2000 Dated: 24th October 2000

NOTIFICATION

CHAPTER I

PRELIMINARY

In exercise of the powers conferred by Sub Section (1) of Section 23 of

the Karnataka Transparency in Public Procurement Ordinance 2000, the

Government of Karnataka hereby makes the following Rules namely:-

1. Short title and commencement: -

(a) These rules may be called be called the Karnataka Transparency in Public

Procurements Rules, 2000,

(b) They shall come into force on the date of Publication in the Gazette

2. Definitions: In these rules, unless the context otherwise requires

(a) "Earnest money deposit" means the amount required to be

deposited by a tenderer along with his tender indicating his willingness to

implement the contract;

(b) "Pre-qualification" means the process by which the tenderers are

first screened for their capability and resources to implement the contract

before they are permitted to offer their tenders;

(c) "two-cover system" means a procedure under which the tenderers

are required simultaneously submit two separate sealed covers, one containing

the Earnest Money Deposit and the details of their capability to undertake the

tender which will be opened first and the second cover containing the price

quotation which will be opened only if the tenderer is found to be qualified to

execute the tender;

70

(d) "Two-stage Tender System" means a procedure under which

tenders for turn-key contractors are invited in two stages, the first stage

unpriced tender being a technical tender only on the basis of conceptual

design or performance specifications subject to technical as well as

commercial clarifications and adjustments to be followed by amended tender

documents and the submission of final technical proposals and priced

tenders in the second stage".

*(e) “Consultancy services” includes activities such as policy

Advices, Institutional reforms, Management, Engineering Services,

Construction Supervision, Financial Services, Investment and Merchant

Banking Services, Social and Environmental Studies, Identification,

preparation and implementation of projects to complement Government of

Karnataka capabilities.

*(f) “Consultants” means individuals Firms or Organisations engaged

for providing Consultancy Services in accordance with Chapter VI A.

*(g) “Client” means the Procurement Entity engaging the Consultants.

*(h) “Party” includes the client or the Consultant, as the case may be

and “parties” means both of them.

CHAPTER II

GENERAL

3. Categories of procurement: - (1) For the purposes of the

application of these rules, procurement is categorized as follows, namely:-

(i) Construction; (ii) Supply of goods and services; and

(iii) Consultancy services*

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CHAPTER III

PUBLICITY

4. Publication of tender bulletin: - (1) The District Tender Bulletin

shall be published by the District Bulletin Officer at least once in every week.

(2) The State Tender Bulletin shall be published by the State Tender

Bulletin Officer at least once in every week.

(3) The Tender Bulletin Officer shall cause to be published all notices

inviting tenders and intimations of acceptance of tenders received up to forty

eight hours prior to the actual publication of the bulletin.

* Published in the Karnataka Gazette, Extraordinary, dated 29-05-2008 vide

notification No. PWD121 SO/FC 2003 dated 26th Sept 2003

(4) In case notice inviting tender or information relating to

acceptance of the tender needs to be published urgently, then the Secretary to

Government of the concerned administrative department in the case of the

State Tender Bulletin or the Deputy Commissioner in the case of the District

Tender Bulletin may for the reasons to be

recorded in writing, direct the respective tender bulletin officers to publish an

extraordinary issue of the tender bulletin.

5. Distribution of tender Bulletins:- (1) The Tender bulletin Officer

shall make the tender bulletin available in the concerned office of the

Government department, local authority statutory board, public sector

undertaking, university or cooperative institution.

(2) The Tender Bulletin Officer shall make available adequate copies of

the tender Bulletin at the office of the Tender Inviting Authority whose notice

inviting tenders and intimation of tender acceptance finds place in the bulletin.

(3) Any person or institution can be enrolled as a regular subscriber to

the tender bulletin on payment of a fixed fee annually, half-yearly or quarterly

as the case may be.

6. Tender Bulletin to contain information only: - (1) The tender

bulletin shall contain only information of the notice inviting tenders.

(2) Intimation of acceptance of tender shall not in itself create a legal

right.

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(3) A notice inviting tender will not be invalidated merely on the

grounds that the notice has not been published in the News papers.

7. Information to be published in the state tender bulletin: - The

notice inviting tenders and decisions on tenders shall be published in the State

Tender Bulletin in cases where.-

(d) The Tender Inviting Authority is a secretary to Government, or a head of a government department, or the Chief Executive of a public Sector Undertaking, Statutory board, apex Cooperative Institution,

University or State Level Society Formed by the Government. (b) The value of the procurement is rupees one crore and above.

8. Information to be published in the district tender bulletin:-

Subject to the provisions of rule 10, notices inviting tenders and decisions on

tenders shall be published in the district Tender Bulletin of the district where

the headquarters of the Tender Inviting Authority is located.

Provided that where a value of procurement is rupees one crore and

above, it shall also be published in the State Bulletin.

9. Details to be mentioned in notice inviting tenders: - The

Notice inviting Tenders shall contain the Following details, namely,-

(a) The name and address of the procuring entity and the designation

and address of the Tender Inviting authority;

(b) Name of the scheme, project or programme for which the

procurement is to be effected;

(c) The date up to which and places from where the tender documents

can be obtained;

(d) The amount of earnest money deposit payable;

(e) The last date and time for receipt of tenders;

(f) The date, time and place for opening of tenders received; and

(g) any other information which the Tender Inviting authority

considers relevant.

10. Publication of notice inviting tenders in newspapers:- (1) The

Tender Inviting Authority shall have the notice inviting tenders published in

73

the Indian Trade Journal in all cases where the value of procurement exceeds

rupees ten crores.

(2) The number, editions and language of the newspapers in which

the notices inviting tenders shall be published will be based on the value of

procurement as per departmental rules.

(3) In cases where publication of Tender Notices is to be done only in

newspapers with circulation within the District, the Information and Publicity

Officer of the District shall be the competent authority to release the

advertisement and in all other cases the competent authority to release the

advertisement shall be the director of Information and Publicity Bangalore.

(4) The notice inviting tender shall be given due publicity in

Newspapers and also by a fixing on notice boards in the District Offices. The

Director of Information and Publicity shall publish the Notice Inviting Tenders

as per instructions of the tendering department.

CHAPTER III

NOTICE INVITING TENDERS AND

TENDER DOCUMENTS

11. Technical specification contained in the tender

document: - (1) The technical specifications contained in the tender

documents shall include a detailed description of what is proposed to be

procured.

(2) Unbiased technical specifications shall be prepared by

observing the following safe guards, namely:-

(a) use of brand names and catalogue numbers shall be avoided and where it becomes unavoidable, along with the brand name the expression “or

equivalent” shall be added; (b) Where ever possible the appropriate Indian Standards with the number

shall be incorporated;

(c) In the case of construction tenders, detailed estimates shall be prepared by the competent technical authorities based on the schedule of rates and standard data as revised from time to time

12. Commercial conditions:- (1) The tender documents shall

require all tenderers to pay an earnest money deposit at the rates as per the

departmental rules by means of a demand draft, bankers cheque, specified

74

small savings instruments or where the procuring entity deems fit, irrevocable

bank guarantee in a specified form of the department. The tender documents

shall clearly state that any tender submitted without the earnest money deposit

be summarily rejected.

Provided that any category of tenders specifically exempted by the

Government from the payment of earnest money deposit will not be required to

make such a deposit.

(2) The tender documents shall specify the period for which the

tenderer should hold the prices offered in the tender valid.

Provided that the initial period of validity shall not be less than

ninety days.

(3) The tender documents shall require that as a guarantee of the

tenderer's performance of the contract, a security deposit be taken from the

successful tenderer as per departmental rules.

(4) The tender documents and the contract shall include a clause for

payment of liquidated damages and penalty payable by the tenderer in the

event of non-fulfillment of any of the terms or whole of the contract.

(5) The tender documents shall indicate the quantity proposed to be

procured in the tender, and the Tender Accepting authority shall be ordinarily

permitted to vary the quantity finally ordered only to the extent of twenty five

percent either way of the requirement indicated in the tender documents.

13. Supply of tender documents:- (1) the Tender Inviting Authority

shall make available the tender documents from the date indicated in the

notice inviting tender.

(2) The Tender Inviting Authority shall ensure that the tender

documents are made available to any person, who is willing to remit the cost of

the documents,

Provided that in the cases where the procuring entity has a

system of registration of contractors, the tender documents will be supplied

only to registered contractors in the appropriate class.

(3) The Tender Inviting Authority shall send by registered post or

courier the tender documents to any prospective tenderer who makes a request

for the documents on payment of cost along with postal charges at the risk and

responsibility of the prospective tenderer.

14. Clarification to tender documents:- At any time after the

issue of the tender documents and before the opening of the tender, the tender

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Inviting authority may make any changes, modifications or amendments to the

tender documents and shall send intimation of such change to all those who

have purchased the original tender documents.

CHAPTER - V

RECEIPT OF TENDERS AND TENDER OPENING

15. Place and time for receipt of tenders: - (1) The Tender Inviting

authority shall ensure that adequate arrangements are made for the proper

receipt and safe custody of the tenders at the place indicated for the receipt of

tenders.

(2) The Tender Inviting Authority shall permit the submission of

tenders by post or courier.

Provided that the Tender Inviting Authority shall not be

responsible for any delay in transit in such cases.

(3) The Tender Inviting Authority may extend the last date and time

for receiving tenders after giving adequate notice to all intending tenderers in

cases where:-

(a) The publication of the tender notice has been delayed;

(b) The communication of changes, in the tender documents to the

prospective tenderers under rule 14 took time;

(c) Any other reasonable grounds exist, for such extension which shall

be recorded in writing by the Tender Inviting Authority.

16. Marking of covers in which the tender is submitted: - The

tenderer shall be responsible for properly super scribing and sealing the cover

in which the tender is submitted and the Tender Inviting Authority shall not be

responsible for accidental opening of the covers that are not properly super

scribed and sealed as required in the tender documents before the time

appointed for tender opening.

17. Minimum time for submission of tenders:- (1) Tender

Inviting Authority shall ensure that adequate time is provided for the

submission of tenders and minimum time is allowed between date of

publication of the Notice Inviting Tenders in the relevant tender Bulletin and

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the last date for submission of tenders. This minimum period shall be as

follows:-

(a) For tender up to rupees two crores in value, thirty days,

and

(b) For tenders in excess of rupees two crores in value ¹sixty

days

(2) Any reduction in the time stipulated under sub-rule (1) has to be

specifically authorized by an authority superior to the Tender Inviting Authority

for reasons to be recorded in writing.

18. Opening of tenders: - (1) all the tenders received by the

tender Accepting Authority shall be opened at the time specified in the Notice

Inviting Tenders and in cases where an extension of time for the submission of

tenders has been given subsequent to the original Notice Inviting Tenders in

accordance with sub-rule (3) of rule 15 at the time so specified subsequently.

(2) The tenders will be opened in the presence of the tenderers or

one of the representatives of the tenderer who chooses to be present.

19. Procedure to be followed at tender opening: - the following

procedure shall be followed at the tender opening:-

(a) All the envelopes received containing tenders shall be counted;

(b) All the tenders received in time shall be opened;

(c) A record of the corrections noticed at the time of the bid opening shall be

maintained

(d) The name of the tenderers and the quoted prices should be read out.

(e) The fact whether earnest money deposit has been made and other

documents required have been produced may be indicated, but this shall

be merely an examination of the documents and not an evaluation;

(f) Minutes of the tender opening shall be recorded. The signatures of the

tenderers present shall be obtained unless any of the tenderers or his

representative refuses to sign the minutes.

20. Tender scrutiny committee:- (1) Tender Accepting

Authority may constitute a Tender Scrutiny Committee consisting of such

officers as it deems fit to scrutinize the tender documents, supervise opening of

tenders carry out the preliminary examination and detailed evaluation of the

77

tenders received and to prepare an evaluation report for the consideration of

the Tender Accepting Authority.

(2) The Tender accepting authority shall constitute the Tender

Scrutiny Committee, where the value of tender exceeds rupees five crores in

respect of public works, irrigation department and minor irrigation department

and one crore in respect of all the other departments.

CHAPTER - VI TENDER EVALUATION

21. Tender evaluation to be in accordance with evaluation

Criteria: - The Tender Accepting Authority shall cause the evaluation of

tenders to be carried out strictly in accordance with evaluation criteria

indicated in tender documents.

22. Time taken for evaluation and extension of tender

validity: - (1) The evaluation of tenders and award of contract shall be

completed, as for as possible, within the period for which the tenders are held

valid.







23. Process of tender evaluation to be confidential until

the award of the contract is notified: (1) The Tender Inviting Authority shall

ensure the confidentiality of the process of tender evaluation until orders on

the tenders are passed.

(2) Tenders shall not make attempts to establish unsolicited and

unauthorised contact with the Tender Accepting authority, Tender Inviting

Authority or Tender Scrutiny Committee after the opening of the Tender and

prior to the notification of the Award and if any attempt by the tenderer to

bring to bear extraneous pressures on the Tender Accepting authority shall be

sufficient reason to disqualify the tenderer.

(3) Notwithstanding anything contained in sub-rule (2), the Tender

Inviting authority or the Tender Accepting authority or the Tender Scrutiny

Committee may seek bona fide clarifications from tenderers relating to the

tenders submitted by them during the evaluation of tenders.

78

24. Initial examination to determine substantial

responsiveness: - (1) The Tender Inviting Authority shall cause an initial

examination of the tenders submitted to be carried out in order to determine

their substantial responsiveness.

(2) During the initial examination the following factors shall

be considered, namely:-

(a) Whether the tenderer meets the eligibility criteria laid down in the

tender documents;

(b) Whether the crucial documents have been duly signed;

(c) Whether the requisite earnest money deposit has been furnished;

(d) Whether the tender is substantially responsive to the technical

specifications set out in the bidding documents including the testing

of samples where required.

(3) Tenders which on initial examination are found not to be

substantially responsive under any of the clauses under sub-rule (2)

may be rejected by the Tender Accepting Authority.

25. Determination of the lowest evaluated price:- (1) Out of

the tenders found to be substantially responsive after the initial examination

the tenderer who has bid the lowest evaluated price in accordance with the

evaluation criteria or tenderer scoring the highest on the evaluation criteria

specified as the case may be, shall be determined.

(2) In determining the lowest evaluated price, the following

factors shall be considered, namely:-

(a) the quoted price shall be corrected for arithmetical errors;

(b) In case of discrepancy between the prices quoted in words and in

figures, lower of the two shall be considered;

(c) Adjustments to the price quoted shall be made for deviations in

the commercial conditions such as the delivery schedules and minor

variations in the payment terms which are quantifiable but deemed

to be non-material in the context of the particular tender;

(d) The evaluation shall include all central duties such as customs

duty and central excise duty inclusive of local levies as a part of the

price.

79

(e) In the case of purchase of equipment, the operation and

maintenance and spare part costs for appropriate periods as may be

specified in bid documents may be quantified, where practicable and

considered.

* Provided that for a period of five years from the first day

of April 2001, small scale industries in the state shall be given Fifteen percent

price preference in accordance with the New Industrial Policy 2001-2006

issued by the Government in Order No. CI 167 SPI 2001, dated 30th June

2001 while determining the lowest evaluated price.

Explanation : For the purpose of this proviso small scale

industry means an industrial undertaking in which investment in fixed assets

in plant and machinery whether held on ownership terms or on lease or by hire

purchase does not exceed rupees one hundred lakhs.

26. Preparation of evaluation report and award of tenders:- (1)

Tender Scrutiny Committee or the officer inviting the tender shall prepare

detailed evaluation report which shall be considered by the Tender Accepting

Authority before taking a final decision on the tender.

(2) As soon as the tenderer qualified to perform the contract is

identified, in accordance with (section13)** the Tender Accepting Authority

shall pass orders accepting the tender and communicate the order of

acceptance to the successful tenderer. The Tender Accepting Authority shall

also send to the Tender Bulletin Officer a statement of evaluation of the tenders

with a comparative statement of tenders received and decision thereon for

publication in the Tender Bulletin. (*Proviso and

explanation inserted by notification No.PWD 389 FC-3/2001 dated30-8-2001w

e f 1-09-2001 **Pwd 154 FC-3/2001(part-1) 2-04-2001)

(3) Within such reasonable time as may be indicated in the

tender documents, the tenderer whose tender has been accepted will be

required to execute the contract agreement in the specified format

(4) In case the successful tenderer fails to execute

necessary agreement under sub rule (3) within the period specified, then

Earnest Money Deposit shall be forfeited and his tender held as non-

responsive.

27. Pre-qualification Procedure: - (1) The tender inviting

authority shall for reasons to be recorded in writing provide for pre-

qualification of tenderers on the basis of:

80


contracts;

(b) Capabilities of the tenderer with respect to personnel, equipment

and construction or manufacturing facilities;

(c) Financial status and capacity.

(2) Only the tenders of pre-qualified tenderers shall be

considered for evaluation.

* “Provided that notwithstanding anything contrary

contained in these rules the tender inviting Authority may adopt the list of

prequalified tenderers empanelled by the Directorate of Information

Technology, Government of Karnataka in respect of computers, peripherals and

related services and call for price bids from all such prequalified tenderers and

the price bids received from the prequalified tenderers shall be considered for

evaluation by the tender accepting authority, so far as may be in accordance

with these rules."

28. Two Cover Tenders:- (1) In the case of construction or supply

and installation of equipment, tenders exceeding Rs. 50 lakhs in value where

the prequalification procedure or Turn Key Tender System are not being

followed the tender inviting authority shall follow the two -cover tender system.

(2) The first cover shall contain the following information about

the tenderer namely:


contracts.

(b) Capabilities with respect to personnel, equipment and construction

or manufacturing facilities

(c) Financial status and capacity

(d) Any other information considered relevant.

* Proviso inserted by notification No. PWD 22 FC 3/2001, dated 1-3-2001, w e f

19-4-2001

(3) The second cover shall contain the prices quoted

by the tenderer.

81

(4) The tender inviting authority shall cause the first cover to be

opened first and evaluate the tenderer's capacity on the basis of criteria

specialised in the tender document and on this basis, prepare a list of qualified

tenderers.

(5) Thereafter, the Second cover containing the price quotations

of only those tenderers found qualified under sub-rule (4) shall be opened by

the tender inviting authority.

(6) The tender inviting authority shall follow the procedure

outline in rule 25 and 26.

"28A. Two stage tender system. - (1) In the case of 'turn-key' contracts involving supply, installation, testing and

commissioning of specially engineered plant and equipment such as turbines, generators, boilers, switchyard, pumping stations, telecommunications, process and treatment plants and the like for

power, after, sewerage, telecommunication and similar projects or procurement of equipment subject to rapid technological advances

such as computer and communication systems, where it is undesirable or impractical to prepare a complete technical specifications in advance, two-stage tender system may be adopted.

2) First stage tender will consist of a technical tender only,

without reference to the rates and prices for completing the facilities and a list

of deviations to the technical and commercial conditions set forth in the tender

documents or any alternate technical solution as a tenderer wishes to offer and

a justification therefore, always provided that such deviation or alternate

solution do not change the basic objective of the contract and that they meet

the conceptual design or performance or functional specifications contained in

the tender documents.

3) The Tender Inviting Authority shall cause the first stage

tender to be opened and evaluate whether the tenderer meets the required

minimum acceptable qualification criteria, whether the tenderer has submitted

a technically responsive first stage tender and prepare a list of qualified and

responsive tenderers.

4) The Tender Inviting Authority shall convene a clarification

meeting of all first stage qualified tenderers and review the tender's tender and

prepare a memorandum of all required amendments, additions, deletions and

other adjustments.

82

5) The Tender Inviting Authority shall revise the tender

documents and specifications to permit new technologies and introduce the

right evaluation critcria.

6) Only those tenderers who have submitted a technically

responsive and acceptable first stage tender shall be invited to submit Second

Stage Tender.

7) The second stage tender shall consist of,-

(a) an updated technical tender incorporating all the changes

required by the tender Inviting Authority as recorded in the

memorandum prepared in sub-rule (4) or as necessary to reflect any

amendments to the tender documents issued subsequent to

submission of the first stage tender; and

(b) the commercial tender.

8) All second stage tenders must be accompanied by specified

tender security.

9) All second stage tenders (both technical and price) will be

opened in the presence of tenderers or their authorised representatives.

10) The two stage tender shall be evaluated and awarded

following the procedure specified in rules 25 and 26.

CHAPTER – VIIA

CONSULTANCY SERVICES

* Published in the Karnataka Gazette, Extraordinary, dated 29-05-2008 vide

notification No. PWD121 SO/FC 2003 dated 26th Sept 2003

28B. Selection methods. - The following methods of

selection of Consultants shall be adopted as found appropriate for the

assignment.

(a) Quality and Cost Based Selection (QCBS);

(b) Least Cost Selection (LCS); (c) Single Source Selection (SSS);

83

28C. Quality and Cost Based Selection (QCBS). - The quality and cost

based selection is based both on the quality of the proposals and the cost of the

services to be provided. In this method, the technical and financial proposals

shall be received in separate sealed envelope. The technical proposals shall be

opened first (unopened financial proposals are kept under security) and the

evaluation report of the technical proposals shall be prepared and the approval

of Tender Accepting Authority shall be obtained. The financial envelopes of

those consultants who submitted responsive technical proposals meeting the

minimum qualifying scores shall be opened in the presence of the consultants

or their representatives. The proposals shall then be evaluated. Once the

financial proposals are evaluated, a combined evaluation of the technical and

financial proposals shall be carried out by weighing and adding the quality and

the cost scores, and the Consultant obtaining the highest combined score shall

be invited for negotiations. Since price is a factor of selection, staff rates and

other unit rates shall not be negotiated.

28D. Least Cost Selection (LCS). - The Least Cost Selection method is

more appropriate to selection of consultants for assignments of a standard or

routine nature (audits, engineering design of non-complex works and so-forth)

where well established practices and standards exist. Under this method a

minimum qualifying score for quality is established and indicated while inviting

proposals. Short-listed consultants shall submit their proposals in two

envelopes. The technical proposals shall be opened first and evaluated.

Proposals scoring less than the minimum technical qualifying score shall be

rejected, and the financial envelopes of the rest shall be opened in public. The

Consultant with the lowest evaluated price shall be selected.

28E. Single Source Selection (SSS). - Under Single Source Selection,

the Client selects a specific consultant and requests him to prepare technical

and financial proposals, which are then negotiated. Since there is no

competition, this method is acceptable only in exceptional cases and made on

the basis of strong and convincing justifications where it offers clear

advantages over the competition, because,-

(i) the assignment represents a natural or direct continuation of a previous one awarded competitively (the estimated cost of the continuation assignment is not more than 50% of the previous

competitively awarded assignment), and the performance of the incumbent consultant has been satisfactory; or

(ii) a quick selection of the consultant is essential, e.g., in emergency operations such as natural disasters and financial crisis; or

84

(iii) the contract is very small in value (i.e., less than rupees 5,00,000 for consulting firms or organisations and less than Rs.

1,00,000 for Individual Consultants); or (iv) only one Consultant has the qualifications or has experience of

exceptional worth to carry out the assignment.

28F. Steps in the Selection Process. - Depending on the selection

method adopted, the selection process carried out by the Client generally shall

include the following steps:

(i) Preparation of the Terms of Reference (TOR) for the assignment; (ii) Preparation of the cost estimate to determine the budget of the

assignment;

(iii) Advertising to invite the expressions of interest from Consultants (mandatory in respect of assignments estimated to cost more than rupees 20 lakhs);

(iv) Short-listing to identify consultants qualified for the assignment;

(v) Preparation and issuance of the Request for Proposals (RFP);

(vi) Preparation and submission of proposals by the consultants;

(vii) Evaluation of the technical proposals i.e., quality evaluation; (viii) Evaluation of financial proposals; (ix) Final combined quality and cost evaluation to select the

winning proposal (QCBS); and (x) Negotiations, if any, and signing of contract between the Client

and Consultant.

28G. Contracts.- Two main considerations determine the type of

contract to be used for the various consultant assignments; the nature and

degree of the definition of the assignment, the distribution of risks between the

Client and Consultant and the level of contract supervision the client will be

able to provide. The following are the various types of contracts that can be

adopted for appropriate assignments, namely:-

(I) Lump Sum (Firm Fixed Price) contracts.- These are used mainly for

assignments in which the content and length of services and the required

output of the Consultant are clearly defined and for these reasons the

Consultant can generally control the scope of work and duration of services. In

these contracts payments are linked to clearly specified outputs.

85

(II) Time-Based contracts. - Under this type of contract, the Consultant

provides services on a time basis according to quality specifications, and

Consultant's remuneration is based on, agreed unit rates for Consultant Staff

multiplied by the actual time spent by this staff in executing the assignment

and reimbursable expenses using actual expenses and agreed unit prices.

(III) Percentage Contracts. - It is one where consultants are paid an

agreed percentage of the actual project cost.

(IV) Indefinite Delivery Contracts (Price Agreement or Standing

Offers). - These refer to contracts in which a Consultant is hired for a specified

period to undertake tasks as and when the need arises.

28H. Standard Requests for Proposals (RFP) and Contract Formats. -

Standard RFP (Requests for Proposals) and Contract Formats as may be issued

by the Government of Karnataka from time to time shall be used. The

Instructions to Consultants (ITC), Formats for submission of Proposals (unless

specified otherwise) as well as the General Conditions of Contract (GCC) shall

not be changed. However the Data Sheet and Special Conditions of Contract

enable the Procurement Entities to amend or supplement Instructions to

consultants (ITC) and General Conditions of Contract (GCC) to reflect local

conditions and characteristics of assignment.

28I. Supervision of the Consultancy Contracts. - The Client is

responsible for supervising the assignment. He shall make arrangements to

monitor the progress of work, the timely completion of deliverables, the staff

months and money expended (for time-based contracts) and determine where,

within the contract, changes in the scope of work might be appropriate. The

Contract usually requires that the Consultant shall submit regular progress

reports and other periodical reports. The Client shall ensure providing

comments on these reports in a timely manner. For large assignments, a

Committee shall be constituted to review Consultant’s work.

28J. Individual Consultants versus Consulting Firms. - (1) Individual

Consultants may be employed to assist the Client in various areas of the

project preparation and implementation. Individuals may be engaged on

assignments for which,-

(a) the experience and qualifications of the individual must be dominant;

(b) no support from an organization is needed for the Individual; and

(c) team work or multidisciplinary approach is not necessary.

86

When integrated technical work and joint responsibility for the

Consultants' output are important, it is necessary to hire a Consulting Firm.

The TOR of the assignment provides the basis for decision. As a general rule,

when dealing with project preparation services of a complex nature, it is

advisable to hire a firm, whereas individuals can be considered for advisory

services assignments or technical opinions on specific matters in which

specialist individual knowledge is the key issue. As a practical rule, if three or

more individuals are needed for an assignment, it is often better to hire a

Consulting firm, so that the firm will be responsible for identifying the best

individuals, ensuring cohesiveness and technical solvency, as well as backup

and transparent administration.

28K. Hiring of Government Officials, officials of Government

Undertaking, Corporations etc.,. - Government officials and officials

employed in Government Undertakings or Corporations shall not be engaged

under consulting services, since there could be a conflict of interest. This

applies regardless of their being on leave or on deputation. University

Professors or Scientists from Autonomous Research Institutes may be

contracted individually, provided they are permitted by their service conditions

to undertake assignments for a specified period in a year. Individual

Consultants shall not be hired by Agencies, where the relatives of the

Individual Consultant, are employed in position of influence.

CHAPTER - VII

APPEALS

29. Appeal: - An appeal under *(section 16) shall lie:

(a) To the Head of the Department concerned if the order is passed by the

Tender accepting authority subordinate to the Head of the Department:

(b) To the Government if the order is passed by a tender accepting

authority which is Head of the Department, or a local authority or a

State Government Undertaking or a Board, Body Corporation or any

other authority owned or controlled by the Government.

By Order and in the name


K.R. BADIGER Under Secretary to Government

1

Case 1: Procurement of works: (Procurement Planning)

Under PMGSY an all weather road was proposed and was entrusted to a

contractor at his tendered cost of Rs. 1.20 crores. The scheme guidelines

stipulates for a proper survey to asses land availability and feasibility of the

work. The detailed project report should have the entire checklist for its

approval. It was certified that the road formatting width was available as per

the guidelines and no need to acquire extra land.

The state quality monitor inspected the alignment of the road and

reported that the width of the road was insufficient, and the alignment ran

along the side of the deep stone quarry. He suggested some protective

measures. An aggrieved person “X” moved the court and obtained stay for

acquisition of his land for the road work.

The authorities inspected and stated that the estimate for the work was

prepared without considering Guidelines as stipulated and were not technically

feasible and ordered the work to be dropped. Till then an expenditure of 25

lakhs has been incurred towards construction of embankment. The audit

objected with the above facts that this is a clear indication of giving sanction to

the works in a routine manner instead of inspecting at the spot.

The Audit observed that flouting of the scheme guidelines and failure of

the executive authorities in conducting suitable survey and investigation to

ensure existing connectivity, proper alignment availability of land and technical

feasibility prior to proposing the work resulting in abandoning the work

rendering the expenditure of Rs. 25 lakhs wasteful. The audit Para was

incorporated in the CAG report.

Analysis of the case:

The procurement schedule should form the basis of the preparation of

Designs and specifications to match the scheme guidelines. It should also help

to recognize problems and to take corrective measures. The planning should

understand the sequence and timing of the procurement stages, their

contribution and responsibility at each stage, as mentioned in circular No.

PWD 1359/SO/FC 2001(P2) 25.10.2002. The above guidelines have not been

followed which resulted in wasteful expenditure of 25.00 Lakhs. This attracts

the provisions of KCS (CCA) Rules 1957 for the act of negligence.

Questions

1. What is the planning process in implementing a project?

2

CASE 2 :

Unfruitful Expenditure:

The construction of lift irrigation scheme was completed during 1978 at a

cost of 5.5 lakhs. The lift irrigation scheme could not be put to use unless

second stage lift irrigation scheme is approved and taken up. The second stage

was administratively approved comprising of a delivery chamber, canals,

erecting of pumping machinery which involves acquisition of land. The civil

portion of work was entrusted to a contractor for 21.7 lakhs and an

expenditure of 15.7 lakhs was incurred. It could not be completed due to land

acquisition problem. Supply and erecting of machinery was approved at a cost

of 1.36 crores. In the 2nd stage the rising main was laid up to 250 meters

against 1100 meters and the work was stopped due to non availability of land.

The updated expenditure incurred on the 2nd stage was 1.19 crores.

Audit observes that the Land acquisition proceedings started in 2001

could not be completed due to nonpayment of deposit amount by the engineer

in charge therefore construction of the second stage lift irrigation scheme

could not be completed rendering the expenditure of 1.25 crores made till date

on the scheme is unfruitful.

Analysis :

As per standard Tender Document 18 of the Contract conditions the

employer shall give possession of the site to the contractor.

Contract management in the context of execution of work means that the

public procurement authority is responsible for securing due performance of

contract by making available the required land as per the terms and the

condition set forth in the contract document without giving room for cost

overrun or time overrun in the completion of the project. In the present case

because of the failure of the authorities in providing land for execution of the

contract the expenditure became unfruitful.

Questions

1. Can a work order be issued to a contractor before handing over of

work site in full?

2. In case of delays, what should be the standard procedure to be

adopted?

3

CASE 3 :

Extra Expenditure Due to Defective Estimate :

Govt. approved the entrustment of the work of widening and

strengthening of the existing road to a contractor at a cost of Rs. 7.75 crore

which was 24.1% above the SR rates for 2007-08. The quantity of the

excavation in ordinary soil increased from 14,750 cmt to 28,500 cmt.

The extra amount paid at a higher rate resulting in avoidable extra payment of

39 lakh to the contractor.

Analysis :

The specification prescribed by the ministry of surface transport, Govt. of

India, for preparation of estimates for road works shall be followed by the

institution. In the specification cross section of the road are to be taken at an

interval of 15 meters in plain and rolling terrains to determine accurately the

quantities of road way excavation. Contrary to this the institution has adopted

an adhoc basis for estimation. This estimate was not checked by the drawing

branch. Though there are faulty investigation that the ground level in the

stretches was 1 to 1.5 meters higher than the existing road level estimate was

approved by the higher authorities. This resulted in faulty estimates. The

action of the CE in not following the prescribed specification led to avoidable

extra payment of 40 lakhs. This attracts the provisions of KCS (CCA) Rules

1957 for the act of lack of integrity.

Questions

1. Discuss the preparation of estimates on the basis of standard

specification.

2. Discuss the importance of survey report before preparation of

estimates.

4

Case 4 :

Undue Benefit to a Contractor:

The work of widening and construction of Road in a local body was taken

@ a cost of Rs. 4.00 Crore, based on the schedule of rates (SR) for 2006-07.

Technical sanction was accorded by the CE and short term item rate-tenders

were called by the EE. Only two tenders were received. The commissioner

recommended the lower of the two tenders for approval of the State Govt..

Govt. negotiated and approved the lowest tender at 15% above the estimated

cost based on SR of 2007-08.

Details of quoted rates in respect of some of the items are as detailed. Sl. No. Item of work Estimated

Rate

Estimate

Cost in Crores

Tendered

Rate

TC %

+ or -

1. Construction of wet mix

macadam

1500.00 0.69 2220 1.02 +50

2. Providing & laying dense

bituminous macadam

6400.00 1.18 9462 1.74 +47

3. Providing & laying

bituminous concrete

7000.00 0.80 10600 1.21 +51

4. Providing & constructing

coursed rubble stone

masonry drain

4200.00 1.08 800 0.21 (-)81

Out of 20 items of work entrusted to the contractor as per agreement, the

amount quoted for 19 items worked out to Rs. 5.60 crore which was 41.1%

above the estimated cost based on SR of 2007-08. The amount quoted for the

remaining item i.e “Construction of rubble stone masonry drain was 20.70

lakhs as against the estimated cost of 1.10 Crore which was 81% below the

estimated cost on SR rates.

During inspection the CE cited lack of space on the road side for

stacking materials due to heavy traffic and suggested construction of drain

with reinforced cement concrete (RCC) instead of coursed rubble stone. The

construction of RCC drain was paid for as an extra item at the schedule of

rates for 2008-09, Plus the tender percentage of 14.48 %. The reason given by

EE for change of scope is blockage of traffic due to stacking of materials. This

was not approved by the commissioner. The additional cost on this was Rs. 87

Lakhs.

5

There was no evidence on record as to assessment of heavy traffic. The

approval of the Government was given and the contractor entered in to an

agreement. The CE order for conversion of coursed rubble stone drain to RCC

drain before the contractor entered in to an agreement and also before the

sanction of Government.

Audit observed that there are irregularities in the tendering process

which should have been aborted due to lack of competition coupled with

unjustified change over from stone masonry to RCC for the road drains

resulted in an undue benefit of 90 lakhs to the contractor.

Analysis of the Case

(i) Process of evaluation and negotiation

The contracts are to be awarded to the lowest evaluated technically and

commercially responsive tenderers meeting the prescribed qualification criteria.

The tenders are to be evaluated both for Technical Responsiveness and

Responsiveness of financial bid. While evaluating the financial bid the items

for which the rates are considered very high and are contributing to the

increase are to be identified. In this case all the 19 items except one item of

rubble stone masonry were hiked which was 41% above the estimated cost of

the present year scheduled rates. The option open to the tender accepting

authority in absence of the competitive prices was to reject the tenders, and to

invite fresh tenders. The tenderer has quoted 80% below the SR rates for one

item (2006-07) (for rubble stone masonry) with an intention to bring down over

all percentage considerably low and to get the award after negotiation at the

rate of 15% above the recast (2007-08) estimated rates.

The guidelines for negotiation before award mentions that a substantially

high tender is one where the price quoted by the contractor is above 10% of the

updated (recast) estimate and where price adjustment is provided. In this

instance case this is a substantially high tender. Tenderer has quoted 14.45%

above the Recast estimate. The option open was to reject the tenders and go

for fresh tenders. (Circular dated 3.12.2002).

It was also observed that lack of space on the road side for stacking

materials due to heavy traffic and changing of specification of the drain from

coursed rubble stones to RCC is before the contractor executed the agreement

raising following questions.

6

The inspection of the CE was conducted before signing of the contract i.e before


1. Govt. accorded approval during June 2008.

2. Contractor executed agreement on July 2008.

3. CE’s inspection to alter the scope of work during June 2008.

Change in the Item of Work

The Suggestion of the CE for variation to a new item of work from

coursed rubble stone drain to RCC drain was enforced by the EE despite the

fact that every variation order authorizing a new item of work was to be

approved by the commissioner (TAA) before execution of work. The reason

given for change of item of work was not tenable as the traffic conditions were

within the knowledge of the contractor before submission of the bid and were

intentionally factored in his quoted rates. Thus the changeover was not need

driven and was directed towards relieving the contractor of the responsibility

of constructing stone masonry drain at this abnormally low rates, thereby

resulted in undue benefit of 90 lakhs to the contractor. This attracts the


Questions

1. What is meant by change in scope of work? Give examples

2. What are the circumstances inevitable for change of scope of work?

Explain the procedure.

3. What should be done to avoid such future occurances?

7

CASE 5 :

Infractious Expenditure

Faulty execution of a drinking water supply scheme rendered the scheme

non functional due to contamination of its source by sewage water.

A drinking water supply scheme to a town with an existing tank as a

source was approved at a cost of 4 crores. A sum of Rs. 5.2 crore was

incurred on the work for completion of all components. The drinking water

supply scheme was not been commissioned as the tank has not been filled

and contaminated by sewage water which resulted in an infractuous

expenditure, by denying of drinking water facility to the intended population.

Analysis :

During initial investigation it was recorded that the tank was not filled

during the last 4 years due to closure of its feeder channels. Even the report

accompanying the estimate was also highlighted this aspect. The minor

irrigation department cleared 10,033 cubic meter of silt from 8 feeder channels

it was also within the knowledge that the sewage water from the town was let

in to the valley and draining in to the tank. Before going for the scheme of

water supply, diversion of sewage from the tank should have been taken up.

The authorities replied to Audit that the sewage entering the tank has

been diverted at one point and there is progress in diversion at the other

points. The entire cost including the water treatment plant/ pump set which

are likely to become dysfunctional if not put to use, had not also been tested

and commissioned.

This case is an instance of impropriety and extra expenditure involving

Rs 5 crores. Authorization of expenditure from public fund is to be guided by

the principles of propriety and efficiency of public expenditure. Authorities

empowered to incur expenditure are expected to enforce the same vigilance as

a man of ordinary prudence would exercise in respect of his own money and

should enforce financial order and strict economy at every step. This is a clear

case of lack of integrity as per KCS(CCA) Rules 1957

Questions

1. What are the reasons for the expenditure to become infractious?

2. Write down the points to avoid infractious expenditure

8

CASE 6 :

Skewed Planning and Faulty estimation

Skewed Planning and Faulty estimation resulted in escalating the cost of

the Reservoir and delaying its completion.

A contract for the work of improvements to a reservoir, a source of

drinking water to the town was awarded to a contractor for 5.7 crores (1.7%)

below the estimated cost, and to complete the project within 9 months. There

is a dispute between two local authorities in sharing of water from the

reservoir. Due to the dispute the contractor could not commence the work;

also the estimate was not prepared on the investigation. The technical

committee which examined the work found that a comprehensive investigation

of the reservoir had not been carried out resulting in faulty estimate. The

dispute was resolved after one year and the contractor expressed his inability

to carry out the work at the quoted rates in view of the delay in

commencement. The board approved higher rates as per the S.R of 2007-08

this resulted in an additional liability of 1.5 crores. Even after resolving

dispute the board took possession of the tank after two years.

There was mismatch between the scope of work as per the tender and

the requirement based on detail investigation. The board approved these

deviations resulted in increase over the tender qualities. After all these

exercises the contract price was raised from 5.7 crores to 14 crores.

Audit observed that the work was awarded without resolving a long

pending dispute over sharing of water and without preparing the estimate

based on investigation, these lapses resulted in long delay in commencement

of work and avoidable payment of 2.2 crores besides depriving the targeted

population from drinking water supply.

Analysis

Dispute existed even before the Board approved the estimate for the

improvement of the reservoir. Also a comprehensive investigation of the

reservoir was not carried out before preparation of the estimate, resulting in

approximation in preparation of the estimate. The board could not take

possession of the reservoir soon after resolving dispute. Major changes in the

scope of work are done after investigation resulted in increase over the tender

quantities and many extra items. All these resulted in delay in execution and

9

escalation of cost to 9.00 crores. Also payment of extra amount of 2 crores

between the tendered rates and the revised higher rates which was avoidable.

Adequate and accurate planning and realistic estimation of various

components of the projects based after proper survey and investigation,

availability of the land/site resolving the disputes if any of the site are the

factors governing successful contract management.

This is a case of impropriety and authorities concerned for non-resolving

the dispute and approving the estimate without the process of investigation

contributed for impropriety. It is clear violation of Codal provisions of KPWD.

Questions

1. What are the components required at the time of project report for

execution of a project?

2. What role does the planning play?

3. What are the methods of supervision as prescribed by KTPP Act,

Karnataka Financial Code or your department?

10

CASE 7 :

Factors to be considered while framing Notice Inviting Tender

A short term tender notification was published as under:

SHORT TERM TENDER NOTIFICATION dt. 9-11-2009

Sealed tenders in duplicate are invited from Class I Licensed Electrical

contractor issued by Government of Karnataka.

(1) Name of the work: The work for strengthening the existing earth mat at

66/11 KV sub-station X, in Y (Tq), Z (Dist.). Approximate cost of estimate

: Rs. 22,72,809/- EMD : Rs. 50,000/- Tender Book cost (including 4%

VAT) Rs. 520/-

(2) Name of the work : The work for providing new earth mat with electrodes

of existing 66/11 S/S A. Approximate cost of estimate : Rs. 25,76,935.-

EMD : Rs.51,540 Tender Book Cost (including 4% VAT): Rs. 520/-

Terms and Conditions

(1) Last date for receiving requisition for tender forms up to 24.11.2009

(2) Issue of blank tender forms from 26.11.2009 to 27.11.2009 up to

12.00 Noon.

(3) Due date and time of receipt of sealed tender 03.12.2009 up to

12.30pm

(4) Date and time of opening the bids 03.12.2009 at 4.00p.m or next

working day.

(5) The bidder should produce experience certificate for having

completed single similar type of work amounting to 80% of the amount

put to tender satisfactory in electrical companies

(6) Average annual turnover for the best of one year out of last three

years of the firm should be at least twice the cost of the amount put to

tender.

(7) Proof of the above documents should be shown at the time of

requisition for blank tenders

(8) Blank tender forms shall not be sent by post.

(9) EMD shall be drawn in favor of the undersigned in the form of DD

payable at State Bank of India, payable at Z only.

(10) Undersigned reserves the right to accept or reject any or all bids

without assigning any reason

11

(11) Any other information in this regard can be had from this office

during working hours.

Note: If the date specified above is declared to be holiday then the next

working day shall be considered.

Sd/-

Tender inviting authority

Audit observation

(A) During audit it was observed that the minimum period as stipulated

in the Act is not provided as per KTPP rules 17(1). Which is against

the provision of KTPP Rules the DDO has replied to the audit enquiry

that proper sanction was obtained to reduce the minimum period

and the objection may be dropped.

Analysis

“Any reduction in the time stipulated under sub rule 17(1) (KTPP Rule) has to

be specifically authorized by an authority superior to Tender Inviting Authority

for reasons to be recorded in writing”.

An order of the authority superior to the tender inviting authority was obtained

in the file by TIA, for the reduction of minimum period, as such the Min period

of 30 days not given and hence it is not against the provisions of KTPP Act.

Questions

1. What is the minimum period prescribed under the Rules?

2. Procedure to be followed to reduce the prescribed minimum period?

(B) The Audit observed that only two days from 26-11-2009 to 27-11-

2009 was provided for issue of tender documents which is against

the spirit of KTPP Act.

Analysis

As per circular PWD140 SO/FC 2003 dated 01-09-2003 the tender

documents should be made available for the entire period provided for the

submission of tenders as per KTPP Rule 17. For this purpose the TIA’s shall

prepare adequate number of copies of the tender documents and issue as per

KTPP Rule 13 from the date of publication of NIT up to the pre declared time on

the working day previous to the day fixed for submission of tenders

12

In the instant case only two days are provided for issue of tender

documents. It is a clear case of violation of the KTPP Act and Rules and

attracts penal provision under Sec. 23 of the said Act.

Questions

1. Explain the procedure for the sale of tender document.

2. What are the penal provisions under the Act?

(C) Audit observed that the date of opening of tenders on 03-12-2009

4pm or next working day mentioned in the notification is not in accordance

with the act, there cannot be any ambiguity for opening date and time of the

tender documents.

Analysis

The Employer will open all the Tenders received (except those received

late), including modifications made pursuant to Clause 14, in the presence of

the Tenderers or their representatives who choose to attend at ........... hours on

the date and the place specified in Clause 12. In the event of the specified date

of Tender opening being declared a holiday for the Employer, the Tenders will

be opened at the appointed time and location on the next working day. The

above instructions shall be followed.

Questions

1. Is it mandatory to mention the time, date and place of opening of

tenders by the TIA? Explain the provisions.

(D) Audit observed that mandating satisfactory completion as a prime

contractor for at least one similar work to an extent of 80% of the

amount put to tender mentioned in the notification is against the

provision of the Act.

Analysis

In the government order FD 4 PCL 2008 dated 14-10-2008 the work

experience fixed up to one crore is 50% of the contract value. In the model

qualification criteria for works and goods the work experience shall be defined,

and it shall not be mentioned as “similar work”.

13

Questions

1. Define work experience of a tender?

2. Discuss the model qualification criteria.

(E) Audit observed that the average annual turn-over for the best of one

year out of last 3 years of the firm should be at least twice the cost put

to tender mentioned in the notification is against the provision of the

Act.

Analysis

In the government order FD 4 PCL 2008 dated 14-10-2008, to qualify for

award of this contract up to one crore the tenderer in the last five years

achieved in at least two financial years a minimum financial turn over the

value of which is not less than the estimated cost.

Questions

1. Discuss the commercial Qualification criteria as in the provisions.

(F) Audit observed that the practice of showing the proof of the

documents at the time of requisition for blank tenders is not required.

Analysis

As per Rule 13 of KTPP Act the tender inviting authority shall ensure

that the tender documents are made available to any person who is willing to

remit the cost of the document. Also Art 14 of the constitution of India provides

for equal opportunity to participate.

Questions

1. What is meant by Qualification criteria?

2. When the Q.C does has to be considered in the process of tender?

(G) Audit observed that prohibition to send Tender documents by post is

against to the provisions of KTPP.

Analysis

As per Rule 13 of KTPP Act the tender inviting authority shall send by

register post or courier the tender documents to any prospective tenderer who

14

makes a request for the documents on payment of cost along with postal

charges at the risk and responsibility of the prospective tenderer.

Question

1.Up to what date the tender documents may be issued to intended

tenderers either by person or by post?

(H) Audit observed that restricting EMD only in the form of DD is not

correct.

Analysis

The EMD shall be submitted at the tenderers option, in the form of DD,

Certified Cheque, pay-order, from a nationalized / schedule bank and specified

small savings instruments as per the provisions.

Questions

1. Whether EMD can be paid in the form of cash?

2. Explain the accounting procedure with regard to receipt and refund

of EMD

(I) The Audit observed that, reserving the Right to accept or Reject

any or all bids without assigning any reasons is bad in law.

Analysis As per Sec 14 of KTPP Act the Authority may at any time before

passing an order of acceptance reject all the tenders on the ground of

• changes in the scope of procurement

• failure of anticipated financial resource

• accidents

• calamities or any other grounds

as may be prescribed which would rendered the procurement unnecessary or

impossible.

Question

1. Explain the circumstance under which the tenders were cancelled/

rejected in your work place. Give example

15

Case 8 :

Procurement of Solar Lights:

The District Planning Committee approved the proposal of providing solar

lighting system to SC/ST colony of a town under backward region Grant fund

scheme. Accordingly it was approved by ZP. The EO prepared Action plan for

supply of 80 sets of solar lighting system with an estimated cost of 50 lakhs.

While according sanction the ZP ordered to invite short term tenders or

purchase through DGS&D.

The Taluk Panchayath directed to invite quotations as the same was

discussed in the Finance and audit standing committee of the TP. The EO

invited quotations. The finance and audit standing committee of the TP resolve

to procure solar lighting systems from the lowest rate quoted supplier from out

of the quotations invited. This was also approved by the ZP Subsequently.

Audit observes that the rates quoted by lowest quoted supplier

(Rs.66000/- per set) was much higher than the rate contract under DGS&D

(Rs. 24209/- per set)

The Director Quality assurance of DGS&D confirmed that the quoted

rates were higher than their rates. Thus failure to follow the prescribed

procurement procedure by the Finance and Audit standing committee of the T

P resulted in avoidable expenditure of 32 lakhs on purchase of solar lighting

system.

Analysis:

The KTPP Act 1999 is implemented from 4th Oct 2000. As per Section 5

of the Act “on and from the date of commencement of this Act no procurement

entity shall procure goods or services except by inviting tenders for supply”.

Under section 4(f) of KTPP Act the goods and services procured under DGS&D

is exempted from the procedure of inviting tenders.

The cost was estimated in this case for 80 sets were Rs 50 Lakhs. As per

KTPP Act if the cost is above 1 Lakh, It is mandatory on the part of the

procurement entity to invite open tenders. But in this case quotations were

invited for a single set and purchased 80 sets, which is contrary to the

provision of the Act and Rules. The notice inviting tender shall contain

description of the material, specification, quantity to be purchased and the

approximate market cost on the basis of the enquiries. In the above case

16

without observing all these formality locally quotations were invited for rate

contract. From the date on which KTPP Act came in to existence entering into

the rate contract for goods and services is prohibited. This attracts the


Questions

1. What are the provisions to invite Quotations and tenders?

2. What is the roll of tender inviting authority in this case?

3.

CASE 9 :

Negligence in collecting securities

A local body has collected EMD, of 1% of estimated cost for the work of

80 lakhs. The time stipulated for the completion of the building work is 10

months. The tender accepting authority waived collection of performance

security deposit (PSD) on the basis of the request of the contractor. The

period of the work is extended for the delay in execution on the part of the

contractor for a period of 6 months. No liquidated damages were levied. After

the completion of the work the bill was fully paid. During the rainy season the

building developed defects resulting additional expenditure of 5 lakhs. This

expenditure was met out of departmental funds and the defects were rectified

during defect liability period.

Audit observed that EMD was collected at 1% instead of 2% of the

estimated cost (up to 1 crore). The PSD was not collected at the time of

entering into agreement. Liquidated damages for the delay caused by the

contractor was also not collected.

Analysis:

1. EMD

Government in their order dated 14.10.2008 prescribed the EMD to be

collected for the contract amount between 20 lakh and 1 crore to be 2% of the

contract amount subject to a minimum of 50,000/-. In the present case EMD

of rupees 1.6 lakh has to be collected instead, Rs. 80,000/- was collected

which was 1% of the estimated cost. Besides, in Rule 24 of the KTPP initial

examination has to be done to determine substantial responsiveness. In the

initial examination, the requisite earnest money deposit as per rule is a factor

that shall be considered. In case, on examination if it is not substantially

17

responsive the tenders shall be rejected. The authority in accepting the tender

with lesser amount of EMD violated the KTPP Act and Rules

Questions

1. What is the percentage of EMD prescribed?

2. What is the minimum validity period of the EMD

3. What are the points to be considered during initial examination of the

tender?

1. Performance Security Deposit (PSD)

The Performance Security Deposit of 5% of the contract price plus

additional security of unbalanced tenders has to be collected within 20 days of

the receipt of the letter of acceptance. In the present case the authority on the

request made by the contractor has waived the performance security deposit.

The PSD will be taken to cover the defects if any during the defect liability

period. The total PSD will be 4 lakhs in this case. The defect liability period

for all the buildings is 12 months. In absence of the PSD the defects

developed during the defect liability period could not be rectified by the

contractor and in this case an expenditure of 5 lakhs made by the dept.

Questions

1. What action to be taken by the authorities when a contractor refuses

to pay the PSD?

2. When the PSD has to be collected and what is the minimum period of

validity?

3. Liquidated Damages. :

If the work is not completed within the period specified and the delay is

attributed by the contractor, liquidated damages has to be collected at 0.1 %

of the total cost of the estimate for the days of delay subject to a maximum of

10% of the cost of the estimate. In this case the liquidated damages were not

levied.

In the above case the executive authority violated the KTPP Act and

Rules thereby extending undue benefit to the contractor besides incurring a

loss to the institution.

During the defect liability period the defects developed and the authority

has to spend an additional expenditure of 5 lakhs. If the PSD of Rs. 4 lakh

18

was collected the expenditure on rectification of defects should have been

charged on that account. The delay in the execution was on the part of the

contractor. Hence Liquidated damages should have been collected.This is a

clear case of lack of integrity. This attracts the provisions of KCS (CCA) Rules.

Questions


and delayed execution of work?

CASE 10 :

Non recovery of Securities and statutory deductions in R A bills.

An organization awarded work on construction of Auditorium & Sports

complex at an estimated cost of 7.25 crores. It was awarded to a contractor “X”

and was asked to submit 5% PSD before signing of the contract. The

contractor pleaded inability to submit PSD and requested for a period of 6

months and to issue work order. Subsequently the contractor was issued work

order and the authority ordered to recover PSD in RA bills. The contractor was

given 35 lakhs mobilization advance at an interest rate of 15% as in tender

document The period of contract is 15 months and monthly progress both

financial and physical fixed at 60 lakhs. He has submitted 9th RA and final bill

for Rs 1,85,00,000 after completion of 18 months there by delaying 3 months.

The contract data provides for recovery of liquidated damages at Rs.

72,500/day for delay after the completion of stipulated contract period. The

liquidated damages calculated at 0.1% of the contract price per day subject to

a maximum of 10% of the contract price.

During audit the following observations are made

1. Non collection of PSD is against KTPP Act.

2. The statutory deduction like income tax, VAT, CBF & Interest on

mobilization advance was not recovered in all the RA bills.

Analysis

On the date of Audit, 8 RA bills were paid to the tune of 5.2 crore to the

contractor in all the 8 RA bills neither the PSD nor other statutory deductions

including mobilization advance with interest was not recovered. As per the

agreement clause the recovery of mobilization advance shall commence from

19

2nd running account bill onwards and be recovered at 5 lakhs for every 1 crore

value of bills.

As per the clause 25 of the KW4 standard tender document and Govt.

order dated FD4PCL 2008 Dated 14.10/2008 the performance security shall be

paid by the contractor within 20 days of the receipt of the letter of acceptance

for an amount equivalent to 5% of the contract price in any of the form (Cash,

Bankers cheque, Demand Draft, Pay order & NSC) specified in the standard

tender document. Failure of the successful tenderer to comply in furnishing

the PSD shall constitute sufficient grounds for cancellation of award and

forfeiture of EMD and treating the tender as non responsive.

In the present case awarding the contract without collecting PSD at the

time of contract and to collect the PSD in RA bills is against the provisions of

the KTPP Act. PSD is not recovered even in the RA bills.

The Mobilization Advance of 35 lakhs was paid on an unconditional

Bank Guarantee with an interest rate of 15% and recoverable after first RA bill

at 5 lakhs for every 1 crore progress. The contract DATA also stipulates the

same conditions with recovery of interest. In all the 8 RA bills with a progress

of 5 crore, mobilization advance with interest was not recovered. Non recovery

of PSD and M.A in the above case in all the RA bills (up to a progress of 5

crores) shows undue favor to the contractor. If the contractor discontinued the

work for any reason the authority have no hold on the contractor. If the

security deposits were collected public money will be safeguarded.

Income-Tax on all contract bills shall be recovered by the DDO at 2% of

the total value of the bill and shall be remitted to the IT head of account before

10th of subsequent month. The DDO should have TAN No. and (Tax Deduction

Account Number) the contractor / Firm should have a PAN No. The amount

deducted shall be paid to Income-Tax Dept in favor of the PAN No. of the

contractor.

As per 194 C (2) Any person responsible for paying any sum any resident

in pursuance of the contract with the sub contractor for carrying out or for


undertaken by the contractor or for supplying wholly or partly any labor which

the contractor has undertaken to supply shall at the time of credit of such

sum to the account of the contractor / sub contractor or at the time of

payment thereof as cash or by issue of a cheque or draft or by any other mode

whichever is earlier deduct an amount equal to 1% or 2% of income comprised

there in. As per 194 “C” the Threshold limit of payment in a year is 30,000

20

(Individual 1%, firm 2%). Non deduction of IT in all the 8 RA bills contravenes

the provision of Sec 194 C (2) f IT Act for which DDO is held responsible.

The DDO shall deduct sales tax from the Contractors bill as and when

the amount is paid to the contractor at 13.5% of the total value of the bill paid.

The amount so deducted shall be paid to the sales tax head of Account before

10th of subsequent month and a return has to be submitted by DDO

comprising of all such deductions made by the contractors to the Dept.

The contractor benefit fund at 0.1% has to be deducted by the contractor

and shall be sent to CE C & B Bangalore immediately. The labor cess at 1%

shall be collected as per tender conditions.

The contractor has presented 9th RA and final bills for Rupees 1,85,00,000

The liability are as follows

1. PSD 36,25,000 36,25,000

2. M.A Int. on M.A

35,00,000 7,87,500

35,00,000 7,87,500

3. I.T 12,24,000 12,24,000

4. S.T 5% 30,60,000 30,60,000

5. Liquidated damages 65,25,000 65,25,000

6. C.B.F. 72,500 72,500

7. Labor Cess 7,25,000 7,25,000

6. TOTAL 1,95,19,000 1,85,00,000

Since the liability of the contractor is 1,95,19,000 and his bill is

1,85,00,000 the bill has to be passed for 1,85,00,000. The balance of L.D of

Rs. 10, 19,000 may be recovered from the contractor as arrears. If there are

any damages identified during defect liability period the same may be got

rectified from the PSD. The balance of L.D. may be recovered from the PSD at

the time of refund.

Questions

1. What is the percentage of Income Tax for individual and a firm?

2. When Service Tax has to be deducted?

3. Explain responsibility of the DDO in recovering statutory

deductions.

21

Case 11 : Over Specification

In an organization the technical experts recommended for purchase of

polyvenyl chloride pipes of 197 mm diameter and 2 mm thickness. Tenders

were floated, two tenders were received. One of the tenderer has quoted for

197mm diameter and 3.2 mm thickness pipe and the other has quoted for 197

mm diameter and 3.5 mm thickness pipe. The tender accepting authority

accepted the tender for 197 mm diameter and 3.2 mm thickness pipe. There

by incurring an additional expenditure of 10 lakhs which is 55% above the

estimated cost?

Audit observed that higher specification of goods than the originally

approved is purchased. The officer replied to the audit enquiry that higher

specification materials were purchased to ensure quality and longevity. The

reply was not accepted and audit report pointed out purchase of higher

specification of goods than the technically approved goods is against the

provisions of the KTPP Act which resulted in excess expenditure to the

organization.

Analysis :

The specification of 197 mm diameter and 2 mm thickness of PVC pipe is

approved by the technical committee taking into consideration the volume of

the water to be discharged, including the flow pressure of the water. The

reason given by the officer to purchase higher specification is not justified in

the light of KTPP Act.

The specification is drafted to permit the widest possible competition and

present a clear statement of minimum functional specification of the goods.

This is done with the objectives of economy, efficiency and fairness. But the

organization has purchased the material, where the specification is superfluous

thereby incurring an excess expenditure.

Article 15 of the KFC envisages that the expenditure from public fund is

to be guided by the principles of propriety and efficiency. and expected to

enforce vigilance as a man of ordinary prudence.

Questions

1. How to write specifications incorporating the physical and chemical

properties?

2. Explain canons of financial propriety.

22

Case 12 : Specifications :

A contract was awarded for the strengthening of the road crust on a high-way.

One of the conditions of the contract was that the correction layer in the built

up Spray-gout (BUSG) and the strengthening layer in the BUSG shall be laid

simultaneously so as to avoid the provision of a tack-coat in between.However,

the two layers were not laid simultaneously, and instead a tack coat was

provided. This resulted in an extra expenditure of Rs. 0.24 million on the tack

coat. According to the executing agency, it was necessary as there was heavy

traffic on the road. CAG para 7.6

Analysis: Two questions arise here, whether the traffic conditions had

been assessed earlier while laying down the specifications, and whether the

bids would have been the same if the tack coat was provided in specifications.

Improper or inadequate surveys, resulting in unworkable specifications, are

unlikely to draw reasonable bids. These create grounds for a contractor to ask

for more moneys as it can justifiably state that the ground conditions are

different from the survey reports.

1.Discuss the effect of Survey report in assessing the right specifications.

Case 13 : Higher specifications

Orders were placed on four suppliers for 19km of (HDPE) of higher specification

pipes of 75 mm/10 kg than the prescribed specifications. It resulted in an

extra expenditure of Rs. 0.45 million. The audit report found no reason for the

higher specification.

Analysis: The audit paragraph brings out the inherent need for taking

care while writing specifications, evaluating bids and placing orders. The

specification is drafted to permit the widest possible competition and present a

clear statement of minimum functional specification of the goods. This is done

with the objectives of economy, efficiency and fairness. But the organization

has purchased the material, where the specification is superfluous thereby

incurring an excess expenditure.

Article 15 of the KFC envisages that the expenditure from public fund is

to be guided by the principles of propriety and efficiency. and expected to

enforce vigilance as a man of ordinary prudence.

Questions

1. What are the reasons for adopting over specification in the estimates?

23

Case 14 : Inspections and Tests (Supply of Equipment)

Equipment was accepted after inspection as conforming to specifications

and 95 % cent of the payment was made. After installation, the equipment was

found much below specifications. It took four years to update the equipment to

specifications.

Analysis :

Suppliers may be satisfied with 95 percent payment. It is the buyer who

suffers for its inability to test equipment competently. Large amounts should

not be paid for critical and important equipment without adequate performance

guarantees. The Contractor is primarily responsible to ensure that the goods

are supplied as per Specifications and deliver the goods in sound condition.

The Departmental Officers have to make periodical checks to ensure the quality

of goods. The Government is concerned over the deterioration in the quality of

the goods purchased. To assist the Departmental Officers to ensure quality,

quality control organizations have been set up and in some other projects

funded by International Donor Agencies, Supervision Consultants have been

employed. However for most of the supplies, the Departmental Officers are

responsible for ensuring the quality.

Third Party Inspection of Works and Supplies would ensure adherence to

quality standards, leading to value for money. This will also check corruptive

practices and instill public confidence in the system.

The Quality Supervision Consultant shall inspect the goods and equipment

during manufacture/before dispatch after receipt, assembly and

commissioning as per the terms of the contract and submit reports along with

prescribed checklists duly completed to the Purchaser.

Questions



24

Case 15 : Inspections and Tests (Construction of a bridge)

A contract for the design and construction of a bridge over was awarded to a

firm at Rs. 10.4 million. A satisfactory completion certificate was issued. The

bridge was not opened to traffic as the executing agency discovered major

defects and damages such as cracks and sinking of piers. Disciplinary action

against the erring official was under progress. The bridge was not open even

by the time the audit report was presented.

Analysis:

Disciplinary action against erring officials may no doubt, be taken. However,

Preventive action is more important. This brings up the following questions:

How are the works inspected during execution?

What documentation of inspection and laboratory tests is kept?

How credible is the integrity of the inspection agency?

Somehow, there is a belief that a certificate is all that is required; though it

may not even be worth the paper on which it is written If effective inspection is

not a part of the day-do-day work, the instances of wastage of public moneys

would recur often than they should. After all, inspections are not dependant

on one person alone. There may be failures down the ladder. It is immaterial

that all of it is due to the collusive action of the contractor and the executing

agency, or due to sheer carelessness on the part of the inspecting agencies.

To overcome such instances Government brought the concept of third party

inspection. This is as follows:

(a) The appointment of independent Third Party Inspectors

designated Quality Supervision Consultants would go a long way in assisting

the Departmental Officers to ensure adherence to quality standards in

construction works and procurement of goods and equipment;

(b) Third Party Inspection shall be mandatory in respect of all

works contracts of estimated value more than Rs.2 crore and all goods and

equipment contracts estimated to cost more than Rs.25 lakhs for an item of

goods and equipment;

(c) Reputed Quality Supervision Consultants (either Individual

of Firm) known for integrity and professionalism should be appointed by

following the procedures for procurement of Consultancy services issued vide

25

GO No. PWD 121 SO/FC 2003, Bangalore dated 26/9/2003 with amendments

issued from time to time thereof. The Terms of Reference should be well

defined. Detailed Checklists, to be completed by the Quality Supervision

Consultants, should be prepared (with the assistance of experts if need be) to

ensure that the Consultants perform their obligations satisfactorily;

(d) The employment of the Quality Supervision Consultants

could be either for one or more contracts for works or procurement of goods

and equipment or for procurement made in a term or stipulated period for a

Procurement Entity;

(e) Heads of the Department of the Government Managing

Directors of PSUs Boards/ Societies Local Bodies shall employ the Quality

Supervision Consultants and order payments to them on satisfactory

performance. The expenditure on the employment of the Quality Supervision

Consultants shall be charged to the cost of the works and goods and

equipment under procurement;

(f) The Quality Supervision Consultant shall inspect the

works periodically; submit reports along with the prescribed checklists duly

completed to the Employer for taking action with a copy to the Secretary to the

Government Managing Director of the Corporation/Board/Society/Local body.

Who will be responsible for review of the Action Taken Reports of the Employer;

(g) The Quality Supervision Consultant shall inspect the

goods and equipment during manufacture/before dispatch after receipt,

assembly and commissioning as per the terms of the contract and submit

reports along with prescribed checklists duly completed to the Purchaser with

a copy to the Secretary to the Government/Managing Director of the

Corporation Board Society/Local body who will be responsible for Review of the

Action Taken Reports of the Purchaser;

(h) The employment of the Quality Supervision Consultant

and the inspections conducted by them shall not absolve the primary

responsibility of the Employer to ensure completion of works of sound quality

as per stipulated specifications and of Purchasers for Procurement of goods

and equipment of good quality as per stipulations in the specifications. The

Quality Supervision Consultants are there to assist the Employer/Purchaser in


Questions

1. What are all the quality control checks to be exercised to prevent poor

quality works?

26

Case 16 : Inspections and Tests (Ship Building)

A supplier manufactured a twin screw speed launch and delivered it to a

government department. Before delivery, a surveyor of the Mercantile Marine

Department had inspected it. When in use, the launch was found to have

several defects and deficiencies. One of the defects was that the thickness of

the steel plates used was less than the stipulated one.

Analysis: Ship building requires good inspection at the construction stage

itself. The inspectors should be competent in their profession and keep a

signed, detailed documentation of inspection. The practice of keeping records

of what was checked should be insisted upon. Also third party quality control

measures to be adopted to ensure quality.

Questions



Case 17 : Specification ( Supply of offset printing paper)

A Government organization placed an order on a firm to supply white offset

printing paper, in two installments. Supplies of both the installments were

found unsuitable; but the paper was purchased and used for other purposes.

No sample of the paper to be purchased has been taken from the supplier.

Analysis: It is naive to believe that the general description of paper as offset

printing paper is good enough for purchases. There are standards of weight,

strength, whiteness, and other qualities of paper. Spending some time on

defining specifications in precise terms may avoid mishaps like these.

Questions

1. Write specification of paper used for writing, Xerox?

Case 18 :

Inspection of goods ( Late delivery of goods)

A supplier completed the supply of goods 26 weeks after the agreed date of

delivery. The buyer deducted Rs. 0.74 million for late delivery. The arbitrator

provided substantial relief to the supplier on two grounds.

27

The buyer’s failure to carry out inspection of the goods within seven days of

receiving the notice that the goods were ready for inspection. The buyer took

seven weeks to inspect the goods.

The failure of the buyer to quantify the loss suffered due to delays.

Analysis:

The contract clause for inspection of goods should be realistic. If a buyer has

to send its own employee for inspection, then it must consider the distance

between the place of work of the employer and the supplier. The journey time,

the contingencies of bureaucratic delays if it is large organization, and non

availability of qualified inspection staff at the crucial time, have to be

considered. If the time for inspection is provided on a higher scale, then the

bid price is likely to go up as the bidder’s moneys will be blocked in the

finished goods.

Time is the essence of contract. Commitment to quality and time by both

is the key to success of the contract.

Questions

1. What are the criteria to be considered while framing conditions of

contract for inspection of goods?


28

CASE 19 :

Quality control

Out of 52 blood storage refrigerators (Cabinets), 40 proved defective as

these were not able to maintain the required temperatures for blood storage.

The supplier stated that it would repair the cabinets if these were brought to

any of the three designated places. Further, it is asked for service charges for

the cabinets already repaired or to be repaired. The cost of defective cabinets

was Rs. 0.75 million.

Analysis : This case highlights the need for quality checks and assurance before selecting a product. 40 out of 53 items being defective casts a long shadow on the reliability of procurement methods and the quality assurance programme set up by the supplier.

The Purchaser or its representative shall have the right to inspect and/or to test the Goods to confirm their conformity to the Contract specifications at no extra cost to the Purchaser. The Technical Specifications shall specify what inspections and tests the Purchaser requires and where they are to be conducted. The Purchaser shall notify the Supplier in writing in a timely manner of the identity of any representatives retained for these purposes.

If any inspected or tested Goods fail to conform to the specifications, the

Purchaser may reject the goods and the Supplier shall either replace the

rejected Goods or make alterations necessary to meet specification

requirements free of cost to the Purchaser.

The following warranty clause shall be included in the conditions of

contract

The Supplier warrants that the Goods supplied under this Contract are new, unused, of the most recent or current models and that they incorporate all recent improvements in design and materials unless provided otherwise in the Contract. The Supplier further warrants that all Goods supplied under this Contract shall have no defect arising from design, materials or workmanship or from any act or omission of the supplier, that may develop under normal use of the supplied Goods in the conditions prevailing in the State. This warranty shall remain valid for 12months after the Goods or any portion thereof as the case may be, have been delivered to and accepted at the final destination indicated in the Contract.

Questions

1. How does a buyer ensure that a product is up to the specifications in

critical areas like blood preservation?

29

Case 20 :

Short Term Tender

The work of construction of a canal for supply of drinking water to a

town was entrusted to a contractor “X”. The progress of the work was not as

per schedule and the contract was terminated.

The Department due to the exigency of supplying drinking water to the

population floats short term tender estimating 30 lakhs for the balance of

work. The minimum time specified for submission of tender was 15 days. 3

Bids were received ( A,B,C). The lowest bidder “C” was awarded the contract.

The bidder “B” filed a writ petition in the High Court. The reason for

filing writ petition was that the minimum period of 30 days for submission of

tender was not given and the reduction of minimum period should have been

done by the Tender accepting authority (M D), where as in this case SE has

accorded sanction for reduction of minimum period for submission of tender.

The award of Honorable Court is as follows “ Karnataka Transparency in

Public Procurement Act 1999 Sec 6 & 23; KTPP Rules 2000, Rule 17(1) and (2)

submission of tenders – Authority competent to authorize reduction in time

stipulated for where tenders were invited by EE, Reduction in time authorized

by SE, who is authority superior to EE is competent and reason given for such

reduction in time i.e expedition completion of irrigation canal to provide much

needed water supply to farmers is valid. Tender notification issued stipulating

reduced time for submission of tenders cannot therefore be said to be violated

by any error or irregularity” (Karnataka Law Journal 2008 (6))

Questions

1. Discuss the procedure for reduction of the minimum period for

submission of tender.

30

Case 21:

Validity of the Tenders During extended period.

Tenders were invited for the construction of barrages across a river at various

places. 17 bids were received. The tenders were opened on 8.11.2001. The

tender validity period was up to 7.2.2002 (90 days). The evaluation was not

done before 7.2.2002, Hence the validity period was extended up to 7.4.2002.

This extension was not accepted by the lowest bidder. After the completion of

extended period, it was further extended up to 7.6.2002. Now all the 17

bidders accepted for this extension of tender. Tenders were cancelled on

13.5.2002 (under rule of 22(3) of KTPP Rules) and a decision was taken to

invite fresh tenders and communicated.

The lowest bidder filed a writ petition questioning the authorities’ decision in

canceling the bids during the second extended validity period the Honorable

court opined.

“-------Now the question arises for consideration is weather the TAA had the

power to extend the validity of Tender beyond 7.4.2002. In other words,

weather the TAA had the power to grant the second extension.

Karnataka Transparency is Public Procurement Rule 22 (1) (2) (3) reads as

under

Time taken for evaluation and extension of tender validity: - 22 (1) the

evaluation of tenders and award of contract shall be completed, as for as

possible, within the period for which the tenders are held valid.







Completion of evaluation of Tenders within the period stipulated is the rule and

only in exceptional cases, the period of evaluation may be extended under Rule

22(2). Therefore when this power is to be exercised as an exception, the said

provision has to be construed strictly. Sub rule (3) of rule 22 categorically

provides that even if the evaluation of the tender is not made within the

extended period then no option is given to the TAA and the legislature has

31

made his intention clear by using the words that all the tenders shall be

deemed to have become invalid and fresh tenders have to be called for,

therefore once the TAA does not evaluate tenders within the stipulated period

or within the extended period then that tender becomes invalid and no

discretion is given to the said authority except to call for fresh tenders.

Therefore the writ petition does not find any merit and are rejected”


Questions

1. What is the minimum validity period of a tender?

2. Whether the minimum validity period can be extended? To what extent?

Under what circumstances?

3. Whether the consent by all the bidders required?


32

Case 22: Minimum time for submission of Tender

Tenders were invited for supply of food materials to different hospitals. The

date of notification was 17.2.2005 and the date of submission was 15.3.2005.

A writ petition was filed on the ground that the notification is contrary to Rule

17 of KTPP Rules 2000. According to the petition the minimum period of 30

days was not provided in the notification and hence requested to quash the

notification

Honorable Court opined:

“As per Rule 17 of the KTPP Rule 2000 which reads hereunder

Minimum time for submission of tenders : (1) Tender Inviting Authority shall

ensure that adequate time is provided for the submission of tenders and

minimum time is allowed between date of publication of the Notice Inviting

Tenders in the relevant Bulletin and the last date for submission of tenders.

This minimum period shall be as follows.

(a) For tender up to rupees two crores in value, thirty days, and

(b) For tenders in excess of rupees two crores in value sixty days.

17(2) any reduction in the time stipulated under sub-rule (1) has to be

specifically authorized by an authority superior to the Tender Inviting

Authority for reasons to be recorded in writing.

From a reading of the above provision, it is clear that the time stipulated under

sub-rule (1) can be reduced by an authority superior to the tender inviting

authority for the reasons to be recorded in writing. Even if the officials of the

respondents were deputed on election duty even if the notification is not in

accordance with sub-rule (1)(a) of Rule 17, still the 4th respondent or 3rd

respondent could have obtained permission from the superior authority to

publish the notification even before completion of 30 days time. The

respondents have not explained the reasons for having not obtained such

permission from the superior authorities. Even though the law provides for

such an act, when the respondents have acted contrary to the Rule 17(2) of

the Rules 2000, this Court has to quash Annexure-A issued by the 4th

respondent contrary to sub-rule(1)(a) of the Rules. When such being the case,

this Court cannot permit the respondents to proceed with the finalization of the

tender, when the respondents have committed an error on the face of the

record.

33

In the result, the writ petition is allowed. Annexure –A, dated 17-2-2005

issued by the 4th respondent is hereby quashed. It is open for the 4th

respondent to issue fresh notification for remaining period and to finalize the

tender process in accordance with law.

2005 (1), KLJ 287 Dated 13.10.2004

Questions

1. Who is competent to reduce the Min time for submission of

Tenders

2. What is the procedure to be adopted in reducing the minimum

period?

34

Case 23:

“Authorization to Reduce Minimum time for Tender Submission”

Tenders were invited for supply of food articles for hostels run by the Govt.

Department. The said notification could not be finalized since none of the

bidders were qualified. A second notification was issued giving 5 days time for

submission of tenders. The competent authority has directed the TIA to issue

the said second Tender notification. This is issued having regard to the

urgency in the matter for supply of food articles to the Hostels.

The petitioner in his writ petition prayed to quash the tender notification as it

is contrary to the mandatory provisions of KTPP Act & Rules, which stipulates

that a minimum of 30 days or more should be given for submission of tender.

The Honorable Court opined:

“ ………The said notification is the compliance of Rule 17(2) of the Karnataka

Transparency in Public Procurements Rules, 2000, under which it is crystal

clear that, any reduction in time stipulated under sub-rule (1) has to be

specifically authorized by an authority superior to the tender inviting

authority for reasons to be recorded in writing. It is seen that the earlier tender

notification has been cancelled for reasons that are recorded and thereafter the

competent authority has directed the second respondent to issue the impugned

tender notification. The said notification is issued having regard to the urgency

in the matter for supply of food articles, fruits, vegetables to the hostels in the

District by taking necessary authorization. Hence in view of urgency in the

matter that, the academic year of the primary schools had already commenced,

the second respondent by taking authorization/ permission from the first

respondent, has issued the impugned tender notification. The said decision is

in accordance with law and does not call for interference. Hence, I do not find

any error much less irregularity in issuing the impugned tender notification.

Hence, interference by this Court, at this stage, is not justifiable in view of the

reasons assigned as per the original records made available by the learned

Government Pleader.

For the above reasons, the writ petition filed by petitioner is dismissed as

devoid of merits. 2006 (6) KLJ 248) 5-6-2006

Questions

1. Whether permission of the competent authority is required in this case

while issuing second notification – discuss.

35

Case 24 :

Extension of the period of Contract

An Organization has floated tender for supply of examination answer

scripts and other printed materials for 2009-10. The estimated cost of the

Tender was 60 lakhs. The condition of evaluation of tender is item wise

evaluation of the materials. There are 15 items of the material 10 items were

awarded to contractor “X” and 5 items were awarded to contractor “Y”. The

contractors have supplied the material within the contract period and the bills

were paid accordingly.

During 2010-11, the authorities of the organization has extended the

supply of materials to contractor “x” and “Y” as in 2009-10. The estimate of

the supply for the extended contract is Rs 65 Lakhs.

Audit observed that Fresh Tenders are not floated during 2010-11,.

Whereas the authorities extended the contract of 2009-10. This is against the

provision of KTPP Act.

Analysis :

While inviting tender for goods and services the supplies can be

scheduled and accordingly tender has to be quoted. The bidder will have to

quote for all the items in the schedules but it is not compulsory to quote for all

the schedules. Evaluation may be done taking each schedule as a separate

supply but inviting tenders for evaluation of individual items is not allowed

under KTPP Act.

(GO No. PWD 1359 SO/FC/2001 (P-2) Dated 25.10.2002).

As per Rule 12 (5) of KTPP Rule 2000 the Tender Document shall

indicate the quantity proposed to be procured in the tender, and the tender

accepting authority shall ordinarily permitted to vary the quantity finally

ordered only to the extent of 25% either way of the requirement indicated in the

tender document. In the present case the authority instead of extending the

contract up to 25% of supply of 2009-10, extended the supply for 100% to the

whole year of 2010-11 which is against the rules.

36

The authorities, which give compliance to Audit report highlighted the urgency

and importance of timely conduct of examination. This compliance cannot be

justified as the G.O (PWD 1359 SO/FC/2001 (P-2) Dated 25.10.2002) of

procurement planning indicates that proper planning is required at the

beginning of the year for procurement of the materials for the whole year.

Questions

1. Define responsiveness of the tenderer.

2. Define scheduling of items.

Case 25 :

Outsourcing of Hostel Cooks: (Proper execution of Contract conditions)

A district level office invited tenders for supply of 20 cooks for the Hostel for

a period of One year. The minimum wages for a cook as per minimum wages

Act is Rs. 170/- per day. The following are the terms and conditions of tender.

1. The contractor shall posses’ license from Labour Department.

2. Registration in provident fund department.

3. The contractor shall posses PAN Number, VAT Number and be assessed

to service tax with service tax number.

4. The contractor shall registered in ESI

5. The contractor shall maintain Daily wage register for disbursement of

wages.

6. The employer contribution of PF will be paid by the office and the

employee portion shall be deducted from the salary of the cooks by the

contractor and both contributions shall be remitted to PF account.

7. The service tax will be paid as per the provisions of the Act. And Income

tax will be deducted as per rule.

Three bids were received, ‘A; has quoted 5%, as service charges ‘B’ has

quoted 4%, as service charges and “C” has not quoted service charges. ‘C’ has

claimed that he will do the service without any profit. Since “C” being the

lowest the contract was awarded to “C”.

A complaint was received from the cooks that the P.F is not credited to the

Account, the ESI was not paid and cards were not issued to them. The wages

are not being disbursed as per minimum wages Act.

The Head of the organization issued notice to contractor for breach of

contract condition and to rectify it immediately.

37

After 8 months from the date of award of contract a notice was received from

the office of P.F for having not paid P.F contribution. After verification it was

found that the employee’s contribution was not paid to the PF department

which is a gross negligence on the part of contractor and also on the part of

DDO as a principal employer for having not confirmed the credit of PF.

By the time the dispute aggravates the period of contract was completed.

Meanwhile PF authorities issued a notice to the DDO who is the principle

employer to pay PF contribution, interest and penalty. On verification of the

contract document, it was noticed that the contractor does not possess P.F

registration. The authority were fined and paid contribution, penalty and

interest for delayed payment. Similarly cases were also booked by ESI, Labor

department on the principle employer for having not disbursed minimum

wages and not credited ESI contribution.

The authorities paid P.F contribution Rs.302640 Interest Rs.30260 and

penalty Rs. 25000 also ESI contribution of Rs. 79920 and Service Tax of Rs

177840 was paid aggregating to Rs. 6, 15,660 out of Government grant.

During audit it was observed that the amount paid out of government

funds to the PF, ESI and service tax authorities by the DDO (principal

employer) shall be recovered as it has already been drawn and paid to the

contractor. The DDO should have confirmed payment of PF, ESI and service

tax regularly.

Analysis of the Case:

• During evaluation the T.A.A should have confirmed the Registration with

the PF Authority and ESI also with PAN card & service tax Registration

Certificate after verifying originals, obtaining a copy including the

validity along with labor registration.

The following conditions shall be insisted in tender document.

• The minimum wages of the employees after deducting PF & ESI has to be

adjusted to the employees in to their bank accounts by the contractor.

• The wages has to be paid before 7th of every month and then a bill has to

be presented to the DDO along with previous months P.F, ESI and

service tax challans.

• As per the provisions of Income Tax Act 2% of Income tax has to be

deducted in the bill. If the contractor has not quoted for his services

charges then an amount equal to 2% of the gross amount for the whole

38

year has to be collected as income tax amount in advance to be payable

after each payment from the successful bidder.

• He should obtain ESI card and disburse to the entire employee (cooks)

within one month from the date of award of contract.

Minimum Wages for a Cook Rs. 170 x 30 Days 5100

P.F 12 + 1.6% 649

ESI 4.75% 243

Total 5992

Service Charges of Contractor 5% 0

TOTAL 5992

Service Tax @ 12.36% 741

TOTAL 6733

Deduct 2% I.T 135 *

Amount to be paid by the Principle employer after deducting I.T to the contractor.

6733

Actual amount to be adjusted to the bank account of the employees by the contractor

(-) PF 12% 612 (-) ESI 1.75% 90

5100 702

Net Payable to the employee through Bank Account 4398

*the total amount of Income tax Rs. 1620 (135X12) for the whole year for one

employee shall be collected in advance

Out of the total amount of Rs. 6733 the contractor has to pay as detailed

below:-

Sl. No. Details Amount Employer / Employee Contribution

1. To the employee 4398

2. Provident fund 1261 Employer contribution 649 Employee contribution 612

3. ESI 333 Employer contribution 243 Employee contribution 90

4. Service Tax 741

TOTAL 6733

The head of the department instructed the DDO to forfeit the PSD

amount of Rs. 1, 00.000 from the contractor accordingly it was forfeited. As per

law a departmental enquiry was initiated on the DDO for the act of negligence

and to recover pecuniary loss caused to government.

39

Questions

1. While framing the conditions of contract in case of services what

are all the safe guards to be adopted in the following:

A) PF

B) ESI

C) Service tax

D) Income tax

2. Discuss about the rate, mode of payment and proof of payment

Case 26: Tender Accepting Authority & Tender Scrutiny Committee

Tenders were invited for selection of Net work proposal. The project was

proposed on BOOT basis. The successful bidder was required to build the

project, operate it for 5 years and transfer it to the Govt. The bids were placed

before the existing multi-member committee which is comprised of 10 members

of the board.

The tender scrutiny committee announced that on the basis of the RFP all

the 8 bidders are qualified. The bidders are required to perform demonstration

tests and present before the committee of their proposed techniques and

strategies for the implementation of the project. After presentation, the TSC

has announced that one bidder has failed in the technical evaluation process.

The bidder who was not qualified filed a writ petition questioning appointment

of the TSC and the TAA. The court opined

Under the scheme of things, as envisaged under the KTPP Act, Section

9 provides that the “procurement entity” may appoint a Tender Inviting

Authority and a Tender Accepting Authority. The said section also provides

that where a Multi member Committee is already appointed for any

procurement entity for discharging the function of accepting the tenders, such

committee shall be deemed to be a Tender Accepting Authority under this Act.

Hence, the terms of reference given to the above committee would fit the

description of a Multi member Committee appointed in terms of the said

provision. The supervision of the implementation of the project has been

conferred on the Network Steering Committee and the said Committee having

been conferred with the power to finalize the acceptance of the tender and to

40

recommend the final bidder, is deemed to be a Tender Accepting Authority for

purposes of the Act. The argument canvassed as regards there being an

ambiguity in the appointment of a Tender Accepting Authority and the Tender

Scrutiny Committee, in that the latter being recommended for appointment,

even before the appointment of a Tender Accepting Authority, being an

inconsistency is therefore not tenable. The NSC at its meeting on 21.5.2007 as

per Annexure R7 having named the members of the Tender Scrutiny

Committee and the observation that the Steering Committee “would be

appointed” as the Tender Accepting Authority, does not result in any

incongruity, in the light of the proviso to Section 9 where it is deemed that the

NSC is in fact, the Tender Accepting Authority. The formality of naming the

said Committee as the Tender Accepting Authority has been completed by the

order dated 28-5-2007, insofar as the Tender Scrutiny Committee is

concerned, cannot be said to be irregular or illegal. Hence, no infirmity can be

found in the appointment of the authorities contemplated under the KTPP Act,

namely the Tender Inviting Authority, the Tender Accepting Authority and the

Tender Scrutiny Committee.

(a) In the above case the TSC set up a sub-committee of experts to help

/ assist technical evaluation of bids. This act of the TSC was also

questioned by the petitioner.

The court held having regard to the magnitude of the

project and the apparent complexities in its technical detail,

requiring the State Government to prepare over several years, even

in inviting the tenders with the assistance of the Technical experts

from within and outside the state. The further circumstance that in

proceeding to make a technical evaluation of the bids, the Tender

Scrutiny Committee having found that it would require the

assistance of other experts in assessing the technical aspects and

having taken an informed decision to appoint such a Technical sub

committee consisting of a Chairman, who was already a member of

the Tender Scrutiny Committee and two other individuals from

prestigious institutions with apparent specialized knowledge in the

area, is a matter of record. The terms and conditions of such an

exigency cannot be said to result in an unfair practice or an illegality

which has caused prejudice to any tenderer and the complexity of

the technical details furnished by each such tenderer is sought to be

assessed closely and with the help of experts. This cannot be

41

characterized as resulting in an irregularity which vitiates the tender

process insofar as the technical evaluation of the bid is concerned.

Even if the total of 11 marks which were assigned for that part of

the technical evaluation component, which was made by the

Technical Sub –Committee and in which, the petitioner was awarded

only 4 marks is to be ignored and if the petitioner is in fact awarded

all the 11 marks which the petitioner could have possibly gained if it

is to be accepted that the Technical Sub-Committee was biased in

awarding only 4 marks to the petitioner, the petitioner would yet not

achieve the total marks of 70 which was prescribed to qualify for the

opinion of the commercial bid. The appointment of a Technical Sub-

Committee in the discretion of the Tender Scrutiny Committee, it

cannot be said that it was a whimsical or mala fide action to

discredit or disqualify any tenderer including the petitioner. There

are no allegations of mala fides or bias as regards the Technical sub-

Committee. It is the very appointment that is sought to be

questioned and going by the facts and circumstances and the

informed decision of the Tender Scrutiny Committee as to the need

for the assistance of such a Committee, the exercise cannot be

faulted and the tender process cannot be said to be vitiated on

account of this.

(b) In the above case the petitioner questioned the legality of

appointment of TAA & TSC. The court held the petitioner having

participated in the tender process cannot feign ignorance of the

Constitution and appointment of the authorities or the Committees

referred to hereinabove. The petitioner seeking to question the

modalities after the petitioner was disqualified on an evaluation of

its technical bid, would certainly disentitle the petitioner from

seeking to question the propriety or otherwise or even the

appointment or Constitution of propriety or otherwise or even the

appointment or Constitution of the said committees. In the above

background it cannot be said that the disqualification of the

petitioner on an examination of the sequence of events, leading up

to the evaluation of its technical bid is arbitrary and hence the

rejection of the petitioner’s bid is arbitrary and hence, the rejection

of the petitioner’s bid cannot be said to be vitiated.

42

(c) In the above case the scope of judicial scrutiny was also observed by

the Honorable court as under.

The Courts ought to interfere only when it is possible to arrive at

a conclusion in a case such as this that there is an overwhelming

public interest in entertaining the petition and that is not “every

wandering from the precise path of best practice that lends fuel to a

claim for judicial review”, the same to be noticed that the very

provisions of the Act are wanting in precision and cohesion. It is

necessary that the entire Act and Rules be reviewed by the

Legislature in seeking to implement the objects sought to be

achieved by the Act. Hence, the inconsistency, if any in the

respondents adhering to the procedural rules may even be

attributed to the poor manner in which the provisions of the Act are

drafted and the fact that the project concerned in the case on hand

was an unusual project involving several expert bodies and

Committees and the strict adherence to the letter of the Act found

wanting cannot by itself, in the absence of other serious infirmity

which, as already stated does not involve overwhelming public

interest or unlawful policy, would warrant the interference of this

Court.

2008(5) KLJ 521 Dated 4th Feb 2008

Questions:

1. Define TIA and TAA

2. Discuss constitution of TSC

3. TSC has appointed a sub-committee to assist evaluation of technical bid.

Discuss

43

CASE 27 :

Functions of Tender Scrutiny Committee

Tenders were invited by a power corporation for transportation of coal for

a period of 3 years. 3 bidders applied for the tender under 2 cover systems.

The first cover contains technical bid and the second price bid. The tender

scrutinize committee after scrutinizing the technical bids of all the three

tenderers reported as under.

“Based on the documents furnished by the bidders the TSC has examined with

reference to prequalification conditions and other terms and conditions for

evaluating their eligibility for being qualified.”

After evaluation report of TSC the same was placed before the technical

committee of board of Directors of the corporation. The committee on

examination found that the bidder “X” does not meet the prequalification on

requirements and accordingly disqualified the bids of “X”. The finance bid of

the other two bidders opened and the contract awarded to the lowest bidder.

Aggrieved “X” filed a writ petition in the court of law on two grounds.

(A) The petitioner submits that the TSC is a statutory committee in terms of

Sec. 20 of the Act Read with Rule 10 of the KTPP Rules. There is no

statutory recognition to the so called technical committee that can

overrule the view of the TSC.

The Court opined

“……once the TSC accepts tenderers as eligible it has no choice but to

open cover containing price bid and to send report. There was no reason

as to why the matter should have gone before the TAA whether it be

called as technical committee of the board or otherwise, Assuming that

Technical Committee of the board is the TAA, the entire procedure

adopted by the board is totally flawed even a perusal of the record does

not inspire that confidence of the court that the matter had gone on the

methodical manner. In the circumstances eliminating the petitioner at

that stage amounts to denial of equal opportunity to the petitioner and

directed the corporation to re-notify and call for fresh tenders”

(B) The prequalification criteria prescribed shall be in accordance with Rule

28 of KTPP Act. The court opined.

44

“….Prequalification requisite should be in such manner that it can be

understood easily free from ambiguities and are free from providing

scope for such disputes or confusion or Ambiguity so that the awarding

of the contract can be possessive in a proper methodical manner without

giving room for unnecessary avoidable disputes.”

2006 (6) KLT 394 wt 6.9.2006.

Questions:

1. Discuss the Role and responsibility of TSC & TAA.

Case 28 :

Fraudulent payment on de-silting works executed by a corporation

The Commissioner of a corporation issued a circular to take up emergency

works before the monsoon season and de silting of road side drains, clearance

of debris on the road side so that no flood havocs should take place during the

next monsoon period. To take up these works, Commissioner ordered to draw

the money on A.C Bills at Rs. 1.00 lakh per Ward and use this amount to meet

the emergent nature of works and also ordered that on exhausting the 1.00

lakh rupees, further amount may be drawn from the Concerned Asst.

Controller (Finance). But the Engineering department staff drawn the amounts

on D.C.Bills.to a tune of 5.oo crore

On verification of the vouchers pertaining to above works executed in

various divisions, it was observed in audit that instead of following the above

procedure, D.C bills have been prepared, and letter head bills of the

contractor have been attached for having hired Earth excavators (JCB) and

Tractors on daily rental basis. In some cases, though the estimate is prepared,

no quantification of the work has been done and no measurement is recorded.

This is a clear case of mis-utilization of a circular issued in good faith to

mitigate the hardship faced by public in monsoon. The circular was also in

violation of the time tested procedures laid down in KPWD and KPWA codes.

Analysis

The emergent natures of works enlisted and ordered to be executed by

the Commissioner to combat the floods are all of Civil Nature. Civil Nature of

works (Public Works) are to be executed as per the procedure prescribed in

45

KPW Departmental code and payment are to be made as per the procedure

prescribed in KPW Accounts Code. All Public works are to be executed after

preparing a realistic estimate, obtaining necessary administrative and

Technical Sanction. The procedure of entrustment of civil works is either by

piece work or after calling for tender depending on the estimated cost. The

work executed should be measured as per the instruction issued in appendix 3

of KPWD code volume II and the bills are to be prepared in the form prescribed

in Para 212 of KPW Accounts code. The works should be check measured by

Asst. Executive Engineer and Executive Engineer to the extent of 100% and 25

% respectively. This is a clear case of violating the orders. It attracts the

provisions of KCA (CCA) Rules 1957 for the act of lack of integrity in violating

MCE, KPWA & D codes

Questions

1. What are the conditions laid down in MCE to draw money on AC bills?

2. What are the conditions to draw money on D.C. bills?

3. Role of drawing and disbursing officers in drawing money on contingent

bills?

46

CASE 29 :

Fishing rights of a tank

Fishing Rights of a tank of 1162 Hectare were granted for a period of 5 years

to a contractor without issuing a public notification and by following

established procedure of tender / Auction after giving wide publicity. The

same was questioned. It was held By the Hon. Single Judge that

transparency was not followed. Government appealed to the Hon. Bench on

the ground for giving lease in favor of the appellant is that there was no

other rival claim.

The court held that it is settled law that the need to maintain the

transparency in grant of public contracts is mandate. Maintenance of

transparency and compliance of Article 14 of the Constitution would inter

alia be ensured by holding public auction upon issuance of advertisement in

the well known news papers. Therefore, the state or its instrumentalities

should not give contracts by private negotiation but by open public

auction/tender after wide publicity. The law is therefore, clear that

ordinarily all contracts by the Government or by an instrumentality of the

State should be granted only by public auction or by inviting tenders, after

advertising the same in well known newspapers having wide circulation, so

that all eligible persons will have opportunity to participate in the bid, and

there is total transparency and the same is an essential requirement in

democracy. The order of the learned Single Judge is fully justified even from

equity point of view. Hence, finding no merit, we dismiss the writ appeal.

Questions:

1. Discuss the procedure to be followed in public auction by the DDO.

2009 (3) KLJ 107 (DB) 3-10-2008

47

CASE 30 :

Purchase of spot billing machine (Type of procurement not mentioned)

Tenders were invited by an electrical company for the supply of spot

billing machines. The electrical company shall give required software for the

spot billing machines. Along with SBM the supplier share the required

stationary for the SBM and also computers, printers, Bar code scanners and

also required UPS. The condition for Qualification is as follows.

1. The suppliers shall be in the “business of providing similar service” for

the last 3 years in any electrical supply company in India.

2. The total turnover per year shall be 5 crores.

The contract was awarded to Mr. “x” who has an experience of only one year in

supplying SBM. 3 years back he has also supplied Data base software for the

company.

Mr. “Y” the other bidder preferred a statutory appeal against the order

passed by the TAA. The appellate authority after considering the contention of

“Y” Dismissed the appeal since there is no specific definition in the tender

document on what constitute “business of providing similar nature of service”.

Mr. “Y” preferred a writ , The court observed that for the supply of afore said

goods the qualification prescribed for the bidder is “business of providing

similar service” instead it should have been supply of goods. (Spot billing

machine) therefore the contract was not at all contract of supply of goods. The

word similar service is referable to the goods to be supplied under the

requirement for a period of 3 years. In fact in the context the word similar is

not only inappropriate but also misleading.

The second condition on which the contract was awarded is for maintenance of

hardware & software which were supplied by the contractor. The decision of

the P.E that the contractor do posses 3 years experience in supplying SBM to

the company for a period of 3 years is ex-facie illegal and contrary to the

material on record. Therefore the award of contract to the contract “X” is

illegal and liable to be quashed. 2009 (6) KLJ 509 23.7.2008

Questions:

1.Define “Specification”, Define Qualification Criteria & Give examples

48

CASE 31 : Single source

Bill Net Software for the electrical software company was developed and

maintained on an experimental basis by “Y” company and was demonstrated

before the company’s Board Members. The Board decided to implement the

billing software to have a uniform billing system across the company. To

examine the provisions of KTPP Act for utilizing Bill Net Software and also to

treat “Y” company as a single source and to award contract a committee was

constituted with the following members.

1. Joint Secretary of the Department

2. Director of the Company

3. C.E. of the Company

4. General manager of the Company

The committee in its meeting resolved that the members of the committee are

not experts in the software domain and the matter was referred to Prof. “X”

Director of IIT.

Prof. “X” opined that the software is best to upgrade the current version of

Oracle. It is best for transmission to other operating system and for portability

on the basis of the above opinion the contract was awarded to Mr. “Y”.

The aggrieved bidder “A” preferred a writ petition. The court held that

“As per Section 4 (b) of KTPP Act.

To identify single source for purchase of goods and services a three member

expert committee has to be constituted,

1. One technical representative of the Procurement Entity

2. One technical representative of the Government organization dealing

with similar procurement.

3. One representative from a reputed Academic or Research institution or

Non Commercial Institution having expertise in such line to examine and

declare that the goods or services are available from a single source.

The committee constituted was not of experts. They were unable to take

decisions. The said committee committed an error in referring the matter to a

professor, an expert in the field for which they had no power in the Act. The

Procurement Entity should constitute a three member expert committee as

above to consider whether tenderer is the only person who has got exclusive

control of the said service. This has not been done. He has not certified that

49

the tenderer is the only source from which this service could be procured. The

recommendation made by him is very general in nature. It does not satisfy the

requirement contemplated under provision to sub-section (b) of Section 4.

Therefore, the electricity company committed a serious illegality in awarding

the contract to the contractor “Y”. Tenders awarded were quashed.

2009 (6) KLJ 509 23.7.2008

Questions:

1. Discuss the Constitution of the committee and its function in single source

procurement.

Case 32 :

Fraudulent claim of M/R bills

A Taluka level officer with a cadre strength of 30 officials claimed M.R

bills for all its employees and their dependents up to a tune of 60 lakhs in a

financial year 2009-10. The Gazetted manager in the District level office is the

countersignature authority for M/R bills. The following observations were

made by Audit.

1. The Medical attendant has diagnosed the disease as “Lower Respiratory

Infection” in all the M/R bills and prescribed same 2 medicines for all the

employees and their dependents.

2. The vouchers presented to audit to a tune of 60 lakhs are found to be

fictious as the medical shops does not exist.

3. No records were maintained in the countersigning office for the receipt

countersignature, dispatch of M/R bills.

4. It was observed that these M/R bills were presented only when the

regular Gazetted Manager was on leave and got countersigned by the in

charge G.M

5. Three employees of District level office and Taluka level office were placed

under suspension and a Departmental enquiry is in progress.

50

Analysis:

The Drawing officer who signs the M/R bills shall exercise the same

vigilance as a man of ordinary prudence, spending his own money. The DDO is

further responsible for seeing that whether the rules regarding preparation of

bills are followed.

The countersigning officers shall satisfy the necessity of the claim and

proper voucher. In the instant case all the employees in all the M/R bills

claimed the same medicine for the same diseases and the countersigning

officer has not observed this, which leads to negligence.

The Drawing officer or the countersigning officer at no point of time

refer the matter to medical board to verify the authenticity of the same type of

medicine to same type of disease for all the 30 employees up to a tune of 60

lakhs and their dependents. This shows the negligence of both D.D.O &

Controlling officer in handling public money.

The controlling officer shall maintain a check register for countersigned

medicine bills drawing officer-wise when there is huge amount of M/R bills

from a single office as seen from the check register and also from monthly

expenditure statement the controlling officer has not exercised his power as

stipulated in Article 3 of KFC.

The C/o should have taken care while placing the superintendent in

charge of Gazetted manager. While assigning the work only supervisory works

should have been given and not countersignature of the bills .

This is a clear case of lack of integrity on the part of drawing and

disbursing officer and countersigning officer. Authorities shall take disciplinary

action as per CCA Rules 1957 for the act of misconduct and to recover the

embezzled amount.

Questions

1. What are all the rules to be followed by DDO while preparing M.R.

bills?

2. Discuss internal checking mechanism to be adopted by the

controlling officer while countersigning the M. R. bills.

51

Case 33 :

Embezzlement of Scholarship Amount:

The scholarship amount for the students is allotted to Taluka Level Officer

through the District Officer of a Department. The Taluka officer shall obtain

list of students who are eligible for scholarship from the Heads of Educational

Institutions and a cheque has to be drawn and paid to the Head of the

Educational Institutions for Disbursement of Scholarship to the students. The

Head of the Institution shall obtain acknowledgement from the students and

send the same to Taluka level officer for record.

Audit observed in one of the Taluka Level Office, that they have opened three

SB Accounts in State Bank of Mysore and have drawn 20 lakhs scholarship

amount from the PD accounts in the Treasury and deposited the same with the

SB accounts. Subsequently Rs. 17 Lakhs was drawn on self cheques from the

SB Account. There were no records to show the disbursement of scholarship to

the students.

During Audit enquiry it was found that four officers were in charge of the office

during the said period. All of them stated that the signature on the cheques

does not belong to them.

Audit observed that

• All the transactions were not entered in the cash book though cash book

is a primary record of financial transaction.

• Check books was not in the custody of the DDO

• Reconciliation of the funds with reference to cash book, bank account,

PD account were not done, which is against Art. 3 of KFC.

• The list of students from the Head of the Institutions is not available to

audit and also acknowledgment of the students are not furnished to

audit.

Analysis:

As per KFC 329(ii) all monetary transactions should be entered in the

cash book as soon as they occur and attested by the Head of the office in token

of check. As seen from the audit observation & records it is evident that the

Head of the office has not followed the rules prescribed in KFC and it is a clear

case of negligence.

52

As per Art 67 of KFC each cheque book must be kept under lock and key

in the personal custody of the drawing officer. When a transfer of charge takes

place a note should be written over the signature of both relieved and relieving

officer showing the no. of unused cheques and cheque books made over and

received on transfer by them respectively. A note should be made in the cash

book or other permanent register in which the expenditure for which cheques

are drawn is recorded.

As seen from the above all the four Taluka level officer who were in

charge of the office during the incident took place are personally held

responsible for the act of negligence for violating the codal provisions.

As per 286 of KFC the remittance to the Bank are made without details

and withdrawals are made only on cheques. Each administrator is furnished

with a monthly extract of his account as appear in the bank. The Bank

transaction with reference to the cash book has to be reconciled. If the

reconciliation with ref to Art 286 is done by the DDO the fraud should have

been come to the notice to the DDO earlier.

As per Art. 396, when there is a reasonable suspicion that a criminal

offence has been committed in respect of any public money this should have

been reported at once to the police and to head of the Department.

This is a clear case of lack of integrity and negligence on the part of

drawing and disbursing officer and controlling officer. Authorities shall take

disciplinary action as per CCA Rules 1957 for the act of misconduct and to

recover the embezzled amount.

Questions

1. Explain the responsibility of the DDO in maintaining the Cash Book

as laid down in KFC.

2. What action to be taken by the DDO in case of loss of public money?

3. Explain the procedure involved in reconciliation of the accounts

53

Case 34 :

Healthy Returns: (Best practice)

A regional deal for medical equipment is set to go nationwide and save

the NHS £ 15 million.

Project to buy equipment for hospitals in the North West in UK which is

now being extended throughout the NHS looks very much like a textbook case

of good purchasing practice.

The Pennine Acute Hospitals NHS Trust won the public sector – local

award for its purchase of endoscopy equipment. (Used to examine patients

internally to spot several diseases, particularly cancer) while supplies manager

David Scott was awarded the CIPS Purchasing and Supply Management

Professional of the Year.

While examining a list of medical and surgical items due to be

purchased, Scott noticed that endoscopy products had been bought from the

same UK supplier for no less than 27 years without ever being put out to

tender.

Seven flexible video endoscopes were initially due to be replaced at a cost

of £ 190,000. So Scott set about testing the market by putting the contract out

to tender, and it soon became clear that there were new players in the market

offering cheaper and better products.

The tendering exercise revealed that the best deal meant 12 new

endoscopes could be brought with a saving of 37% on the incumbent supplier’s

price.

The new equipment needed less maintenance and was more reliable,

meaning fewer cancelled appointments. And its slimmer design meant it was

more comfortable for patients.

The new endoscopes, however, would not work with the old equipment in

the examination rooms at the hospital. But the deal with the new supplier

meant a room could be completely re-equipped at lower cost than the

endoscopes alone from the old supplier.

Throughout the process, Scott managed the change by organizing

meetings with medical and nursing staff. They were not the easiest groups to

impress, he says, but all concerned were soon convinced.

54

The new equipment was commissioned and was soon being

enthusiastically used. The exercise had been a clear success and was repeated

the following year, saving £ 300,000 over the seven year life cycle of the

equipment.

Discussing all this with his colleagues in other trusts, it soon became

evident that the same situation existed throughout the NHS. Scott decided to

extend his findings to other trusts in the North West. Several joined forces to

form a consortium, saving a combined total of £ 1.5 million, or about half their

spending on the equipment over seven years.

The Judges in the public sector local category of the CIPS Supply

Management Awards 2003 said the project was “an excellent example of one

purchasing department challenging the status quo and stimulating a change in

attitude throughout the sector”. One Judge with specialist knowledge of the

NHS said it was “the best thing that has happened in health service purchasing

for a long time”.

When awarding Scott his individual prize, the judges said he had

“demonstrated an excellent approach to analysis and problem-solving, stake

holder management and team skills, high presentational quality and clear

tangible delivery”.

Scott is proud of the awards and the work he put in. “I was absolutely

thrilled when colleagues in the region said they were keen to work with me on

this” he says.

“Our raison d’être in the NHS is to get the best for patients, so it’s very nice to

feel I’ve been able to do my little bit.” Working on this project and winning the

wards has been the highlight of my career”.

{Winner CIPS Purchasing and Supply Management Professional of the year

David Scott (The Pennine Acute Hospitals NHS Trust)}

Questions

1. Discuss the importance of open tenders, packaging, and consortium

in procurement

55

Case 35:

A case on Consultancy services

Government of India sanctioned construction of a Comprehensive

building consisting of 120 Hostel Rooms 8 Training Halls, Dining Hall, Parking

facilities and longue to training Institute at a cost of 19 Crores.

The institute does not have engineering section to look into the activities

of construction. A building committee with Chief Architect, Superintendent

Engineer of the Circle, Superintendent Engineer of the municipal corporation,

EE of KEB under the chairman ship of the Head of the Training Institute was

constituted, with provision to co-opt members required for the activities of the

construction.

The Building committee discussed the option to keep the amount in

public works department under deposit contribution, or appointment of

consultant and inviting tenders for contract. The committee decided for

appointment of consultant and to go for construction.

Under the provisions of 28B of KTPP Rules 2000 tenders were invited for

the appointment of consultant prescribing the objectives and scope of services.

Standard Tender documents KC8 was used, the criteria being least cost

selection, Lump sum payment as the cost of the consultancy is more than 10

lakhs.

The Qualification criteria prescribed is as follows.


1. Consultancy provided for the work of construction of the building of the

above type with G+5 as a total consultant. The cost of the building being

16 crores.

2. Experience Certificate for having executed project management within a

stipulated time, for the total cost of Rupees 30 lakhs.

3. Submission of the conceptual design of the building.

II. Adequacy of proposed work plan and methodology.

1. Methodology proposed

2. Quality Assurance.

56

III. Qualification and competence of the Key Professionals (CV’s)

1. Project manager

2. Architect

3. Structural Engineer

4. Engineer in charge of water supply, sewerage.

5. Site Engineer

The minimum technical score require to pass was 75%. The precise statement

of objectives of the assignments and the outline of the task to be carried out

are as follows.

Precise statement of objectives of the assignment:

1. To provide consultancy services / consultation work for getting latest

technology and methodology.

2. To assist the client in implementing the project as phased.

3. To implement the project economically, effectively and in a time bound

manner.

Outline of the tasks to be carried out (Scope of the services)

The Architect shall provide services in respect of the following assignments.

1. Architectural design.

2. Structural design

3. Sanitary, Plumbing design, Water supply and sewage works.

4. Electrical work

5. Painting, Ventilation and air conditioning work

6. Acoustical work

7. Interior design

8. Landscaping

9. Site Development

10. Project Management

11. Supervision of the work including taking measurements

12. Quality control

13. Approval of plan by statutory bodies wherever required.

Schedule of Services

The consultant shall, render the following services:

57

• Prepare conceptual designs with reference to requirements given by

the client and prepare approximate block estimates of cost and to

submit two sets of the same for approval of the client.

• Modify the conceptual designs, if required with reference to the

requirements of the client and prepare approximate block estimates of

cost and to submit two sets to the client for approval.

• On receiving approval of the client to the conceptual designs, prepare

and submit two sets of drawing for sanction from statutory bodies and

technically assist in the formalities.

• Prepare and submit six sets of detailed drawing with specifications

and schedule of quantities sufficient to prepare estimate of cost and

preparation of the estimates.

• Assist in for pre qualification of contractors.

• Prepare and submit 8 sets of working drawings including detailed

specification and schedule of quantities and also other documents

sufficient to invite tenders.

• Assisting for preparation of tender document and finalization of

tenders and execution of agreement with the successful tenderer and


• Prepare and submit 8 sets of further working drawing and other

details sufficient to commence the work at the site and proper

execution during construction work, details of work plan,

methodology for completion of the project as per time schedule.

• Day to day supervision of work at the site including quality checking

of materials brought to site for use in the project.

• Submit quality control measures planned and quality control test

results of the construction.

• Be present at the site of work and provide periodical supervision and

also to interpret the drawing specifications and to attend meetings

called by the client.

• Take measurement / Joint measurement of the work with the

contractor and to obtain bills, certifying the work and to recommend

for payment to the contractor.

• On completion of the work prepare and submit two sets of drawings

incorporating revisions.

• Total project management right from conceptual stage till completion

along with planning the time schedule.

• Prepare and submit Completion Report and Utilization Certificate

58

• Schedule execution of project, watching shortcomings, if any and

suggest remedial measures thereon. Carryout periodical review of the

construction work schedule and advice on delay in implementation for

corrective action.

• Furnish Inspection report of work plan of all the works and monthly

progress report.

• 5% of the consultancy services as S.D to ensure quality of work will

be deducted in recurring bills apart from EMD and the same will be

held for a period of three years from the date of completion of project.

The terms of payment to the consultant is as follows,

Sl. No. Description of Items Fees Payable

1 Along with letter of Intent 5%

2 On finalization of Master plan, concepts for services and line estimates

15%

3 On issue of Tender Documents 10%

4 On award of construction contract 10%

5 On progressive submission of Working drawings

50%

6 On completion of the scope of work 10%

Total 100%

Short listing of consultants was proposed and a pre bid meeting was

called accordingly and many points raised were clarified.

The important among them were quantifying the qualifications of key

professional, which was not projected at the beginning of the tender processes.

In the meeting it was clarified that in all the cases engineer degree with 5

years field experience will be treated as minimum unit and will be awarded 5

marks and every additional 2 years experience with 1 marks each will be given.

However for post graduate qualification 2 additional marks will be given.

The institute was able to go for a best and suitable consultant by drafting

carefully the objectives of the assignment and the outline of the task to be

carried out. This was also dependent on the Q.C prescribed for selection of

the consultant. The institute needs a total management consultant with all its

technical aspects and execution including the methods of Q.C and also best

methodologies for day to day activities of construction.

59

The 3 firms short listed were

1. Karnataka state PSU Firm ‘A’ 2. A private Consultant organization Firm ‘B’ 3. Government of India enterprises Firm ‘C’

Technical evaluation

A technical scrutiny committee constituted to scrutinize the tender

document and to evaluate on the basis of the Q.C and Documents furnished by

the consultants. The committee awarded the marks as per the qualification

criteria prescribed in the tender document.


Basic Marks

Firm ‘A’

Firm ‘B’

Firm ‘C’

1 Similar construction work

executed Basic Work 3 Work executed as consultant 4

7 3 0

2 2

3 3

2 Experience for having executed project management Basic work 3

Work executed as consultant 4

7 3 0

3 2

3 2

3 Conceptual Design Basic 3

Work Execution 3

6 0 0

3 2

3 3

II. Work Plan & Methodology

1 Methodology Proposed 15 No

Proposals 10 08

2 Quality Assurance 15 No Proposals

10 08

III. Qualification (QC)

1 Project Manager

Qualification Experience

5 5

3 3

3 3

4 4

2 Architect Engineer Q

E

5 5

3

5

3 5

3 5

3 Structural Engineer 5 5

5 5

5 5

5 5

4 Engineer Q

E

5 5

5

5

5 5

5 5

5 Site Engineer

Q E

5 5

5 5

5 5

5 5

50 78 79

60

Firm ‘B’ and Firm ‘C’ are technically qualified as they have scored more than

75% as per Tender conditions.

Out of the two qualified Consultants Firm ‘B’ quoted 4.5 and Firm ‘C’ Quoted

4.9%. Contract was awarded to Firm ‘B’.

The consultants Firm ‘B’. Assisted in the preparation of Tender

Documents and finalized the tender in favor of Contractor ‘X’ who was a

successful bidder. The building completed within the stipulated time of 18

months. The building was constructed as per schedule both on the basis of

bar chart, PERT chart, land mark progress and also quality assurance on time

and handed over the building.

During the defect liability period no defects identified and the PSD collected

from the contractor was returned. There is no audit observation on this project.

The main feature for success is as follows.

• The terms of reference was drafted to meet all the performance

requirement of the consultant.

• Statement of objectives and outline of the task to be carried out by the

consultant.

• Qualification criteria prescribed for the consultant

• Technical committee is constituted to evaluate for the selection of the

consultant based on Q C

• Methodology as approved by the client for contract management

• Methodology proposed for quality assurance.

• Prequalification of the contractors

• Finalization of Q.C of contractors

• Preparation of estimates as pre actual by the consultants

• Finalization of the contract

• Approval of the concept design plan & estimate.

• Furnishing working plan in advance to the contractor.

• Day to day supervision of the work at the site including Quality Checking

of materials brought to site and quality control test results of the

construction.

• Interaction with third party quality control and implementing the

suggestions.

• Taking measurements & joint measurements.

• Preparation of bills.

• Timely payment of bills by the institute.

61

Questions

1. How to frame Qualification criteria?

2. What is meant by scope of service?

3. How to manage consultancy and contract?

62

CASE 36

Criteria for rejection of tenders

Tenderers were invited for appointment of IT implementation agency by IT

department. Only two tenders were received the lowest one was 78% above the

amount put to Tender. The Authorities took decision to reject tenders and to

go for retender with a view to getting more bids which might result in more

competitive bids. Accordingly Tenders were re-invited. The lowest bidder filed

a writ petition for not awarding the contract and re-inviting the tender.

See 14 of the KTPP Act Reads as under

General Rejection of Tenders:

1. “The tender accepting authority may at any time before passing an order

of acceptance under section 13 reject all the tenders on the ground of

changes in the scope of procurement, failure of anticipated financial

resource, accidents, calamities or any other ground as may be prescribed

which would render the procurement unnecessary or impossible and

report the same to the procurement entity.

2. The procurement entity shall thereafter communicate the fact of the

rejection under this section to all the renderers and also cause the same

to be published in the tender bulletin”.

A compendious reading of Section 14 would indicate that the tender accepting

authority may reject all the tenders on several grounds before it is accepted.

Indeed a reading of the said provision indicates that once the tender offered is

accepted. Section 14 of the Transparency Act would not come into play. But

however, if the tenders are not accepted and if they are still at the nascent

stage, in as much as they are being considered and there is no positive

indication that it is likely to be crystallized into a concluded contract, it is

open for the tendering authority to invoke Section 14 of the Transparency Act

and reject all the tenders on the ground of certain changes which are stated

therein. The said rejection of tenders is on couple of grounds.

(1) Ground of change in the scope of procurement and

(2) Failure of anticipated financial resource, accidents, calamities or any

other ground as may be prescribed which would render the procurement


One will have to assess and see whether the floating of the second tender is

justified and if not, all or one of the ingredients would satisfy the rejection of

63

the tender of the bidders. In the case on hand, it is to be noticed that initially

the amount which was put to tender was Rs. 368.38 crores and the bid

amount was Rs. 652.77 crores thus there was a substantial difference between

the amount put to tender as well as the bid amount as quoted by the

petitioner. To any mind, it would fall squarely into the category of failure of

anticipated financial resource. Even otherwise, it is to be noticed that the

minutes of the State level Distribution Reforms Committee (DRC) has in their

minutes of the meeting, have recorded, after due deliberations, to re-tender

because of the following reasons:

• Tender premiums too high i.e., 78% above the amount put to tender.

• The technical responsive bids being only two, it is better to get more bids

which may result in more competitive bids.

• The GOI has revised certain technical specification of router midway

when last bids being evaluated, retendering would allow these changes

which may result in economy;

• Negotiations are not feasible because of lack of benchmarks in the

project;

• The process of retendering should be complete by 31.10.2009;

• The DRC would meet in the first week of November 2009.

Indeed, the last i.e point No. 6 is not relevant for our purpose. But if one were to go by the deliberations as well as the reasons given by the committee as to why the subsequent tender is required to be floated to my mind, appears to be justifiable. It is to be noticed that the tender premium is certainly too high i.e 78% above the amount put to tender. The amount put to tender is Rs. 368.38 crores and the amount quoted is Rs. 652.77 crores.

“Tenderer has no locus stand or right to urge for acceptance of his tenders

merely because it is lowest one in terms of cost and on grounds of legitimate

expectation”

2010(5) KLJ 407 dated 03.12.2009.

Questions:

1. Discuss the provision for rejection of tenders.

64

Case 37 :

Negotiation

Tenders were invited for supply of 5.92 lakh of bicycles by publishing in 3

national dailies and 2 local news papers. 4 companies’s coated a uniform rate

of 2750, 2795 per bicycle for boys and girls respectively.

After negotiations the company’s agreed to supply bicycles for both boys and

girls at a uniform rate of 2657 per unit. Govt. rejected the proposal and

decided to invite fresh tenders for 2 academic years. The tenders were

published as the same news papers and the same 4 company’s coated a

uniform rate of Rs. 2800 & 2970 for supply of bicycles to boys and girls on

negotiation. The unit price was agreed at Rs. 2750 and 2775 for supply of

bicycles for boys and girls respectively. A purchase order was issued for 11,

27,376 bicycles.

Audit observed that, before expiry of validity period of 120 days fresh tenders

were invited. The authority could have increased the quantity within the

validity period of offer. Further the department did not provide vide publicity

for the tender notification but again published in the same news paper due to

which competent rates were not obtained as desired. This resulted in extra

expenditure of 5.9 crore

Analysis:

As per KTPP Rule 12(5) the tender documents shall indicate the quantity

proposed to be procured in the tender and the tender accepting authority shall

be ordinarily permitted to vary the quantity finally ordered only to the extent of

25% either way of the requirement indicated in the tender document.

In this case the quantity to be procured is almost doubled and the authorities

intended to go for fresh tenders and as per Sec. 14 the tenders were rejected

and fresh tenders were invited.

As per Rule 10 of KTPP Rule the TIA shall have the notice inviting tenders


procurement exceeds Rs. 10 crore. In this case the tenders were published

65

only in news papers. The tender inviting authority should have given vide

publicity in national dailies and Indian trade journal to get competitive rates.

Questions

1. Discuss the responsibility of Tender Inviting Authority in giving

publicity as per the Act.

Case 38 : Procurement of bicycles in excess of requirement

The Procurement entity instructed that purchase of bicycles should be

assessed according to actual requirement for the years 2006-07 to 2009-10

without resulting in any surplus/deficit buying. However, it was observed that

bicycles were purchased in excess of the required quantity amounting to excess

expenditure of Rs. 1.82 crore during the above period.

Audit observed that indents were placed on the information furnished by the

District Information system of Education in a routine manner. This indicated

that the purchases were affected without proper survey/ assessment. The

conditions and quality of excess bicycles stored could not be ensured.

Analysis

Article 15 of the KFC envisages that the expenditure from public fund is to be

guided by the principles of propriety and efficiency. The concerned authorities

are expected to enforce vigilance as a man of ordinary prudence.

Art. 16 of KFC envisages that the procurement authorities are to be

constantly watchful to see the best possible value is obtained for all public

funds spent and also to guard scrupulously against every kind of wasteful

expenditure from public fund.

As per MCE Rule 23 only the required quantity as occasion demands shall be

procured. In the present case the above provision are violated.

Questions

1. Discuss the process of survey and estimate as per procurement planning.

66

Case 39 :

Procurement of Goods and services – Out sourcing of men:

Tenders were invited for outsourcing 24x7 services in a corporation, and

tenders were finalized for one year on the basis of the responsiveness of the

tenderer “X”. After completion of one year the corporation extended the

contract for one more year and also in its general body meeting it was resolved

to pay 10% more than the previous year’s rates.

Audit observed that there is no provision to extend the contract after the expiry

of the contract period also resolution to pay 10% excess over the previous

year’s rate is not admissible.

Analysis:

The essence of contract is time. Once a contract is finalized for a particular

period it cannot be extended. In case of Goods and Service, the TAA shall be

ordinarily permitted to vary the quantity finally ordered only to the extent of

25% of either way.

When once the lowest responsive tender, who is qualified technically and

whose bids are lowest, and accepted and paid, question of enhancement of

rates for the coming year which is not in the contract conditions is not in

accordance with the provision of KTPP Rule.

Questions

1. What are the provisions under the Act for additional supply or extension

of service beyond the period of contract?

67

40. Procurement of Goods (Schedule of requirements)

An Institution “X” requires stationary material, computer stationary,

printing materials, files, folders, bags etc for its training activities. The same

materials are required for other two sister institutions also. The requirement of

the institutes is brought under one package. The package is scheduled as

A.B.C and D, and invited tender.

1. Stationary for office use A 25

2 Computer Stationary B 15

3 Files, Folders, Bags, executive bags, Suitcase C 18

4 Printing materials D 5

For the first two schedules 5 bidders participated and quoted for all the items

in the schedule and the response was good.

For the third schedule three bidders were participated. One bidder has quoted

for all the18 items and the other two have not quoted for all the 18 items.

In the 4th schedule all the 5 items were included giving specific code of the

manufacturer there by restricting the competition of the bidders.

During the evaluation of schedule A and B the technically and commercially

responsive lowest bidders were awarded.

During the evaluation of schedule C the one bidder who has quoted for all the

18 items (20% above the estimated rates) was treated as responsive tenderer

and the contract was awarded to him. The other two bidders are not technically

qualified as such their bids were treated as non responsive. During the

evaluation of schedule D one bidder has quoted for 4 items and the other

bidders quoted for 3items, 2 items and one item respectively. The bidder who

quoted for 4 items was treated as technically responsive tenderer and contract

was awarded.

During audit the following observations were made regarding award of

schedule C

68

1. The quoted price was 20 % above the estimated cost which is exorbitantly

high.

2. As per the provisions of KTPP Act negotiations were not held

3. Not opting for fresh tender, after rejecting the said tender.

During the audit of 4th schedule it was observed that though the bidder was

not quoted for all the 5 items and non responsive the tender was awarded to

him. The specification adopted was manufacturer’s code, which has brought

down the competition. The specification shall be generic in nature and not to

favor any branded items. If the items are treated as proprietary items codal

provisions has to be followed. During audit enquiry the authorities replied that

the award was made due to the urgency and who has quoted for maximum

number of items compared to others. The reply was not accepted and the

objection drafted in the Inspection report and sent to Head of the department

for compliance.

Analysis of the case :

The Tenderer shall indicate on the Price Schedule the unit prices and

total tender prices of the goods it proposes to supply under the Contract. To this end, the tenderers are allowed the option to submit the tenders for any one or more schedules specified in the ‘Schedule of Requirements’ and to offer discounts for combined schedules. However, tenderers shall quote for the complete requirement of goods and services specified under each schedule on a single responsibility basis, failing which such tenders will not be taken into account for evaluation and will not be considered for award. (7.1 of ITT of S T D KG1)

The Purchaser will evaluate and compare the tenders which have been

determined to be substantially responsive, pursuant to ITT Clause 7 for each schedule separately. No tender will be considered if the complete requirements covered in the schedule is not included in the tender. However, as stated in ITT Clause 7, Tenderers are allowed the option to tender for any one or more schedules and to offer discounts for combined schedules. These discounts will be taken into account in the evaluation of the tenders so as to determine the tender or combination of tenders offering the lowest evaluated cost for the Purchaser in deciding award(s) for each schedule. (20.1 of ITT of S T D KG1) As per the above provisions of the Act since one bidder has quoted for all the 18 items treating him as technically responsive is in order. At the same time the DDO should have considered his commercial responsiveness also. The bids above 10% of the estimated cost is treated as substantially high and the government order ( ) provides for negotiation. In case the bidder is not ready to

69

bring down the bid price nearer to market price the GO provides rejection of tenders and to invite fresh tenders.

It is observed that the DDO has furnished the reply for audit enquiry at the time of audit that the rates quoted was only 5% above the market rate as on the date of evaluation which is very well within the limits as mentioned in the above G.O. Hence the bid was considered. The audit party should have accepted this reply and dropped the objection.

In the 4th schedule all the 5 items are proprietary items. As per section

4(b) g the KTPP Act proprietary item (single source) are exempted from the

process of tendering.

While purchasing proprietary item the procedure mentioned in the Act is to

constitute a committee of 3 experts from

1. Technique representation of the organization

2. Technical representation of the Govt. organization dealing with similar

procurement and

3. Technical representation from a reputed academic or research institute

having expertise in such line to examine and declare the goods are

available from a single source.

As per the Act under 4(b) g exemption clause open tenders were not

required for 4th schedule. The items can be directly purchased from the

respective manufacturers. In the present case it is a procedural lapse by not

constituting a committee to declare the items as proprietary and available in

single source which will be followed in future. Accordingly the compliance to

inspection report (I R) may be furnished.

Case 41 :

Non payment of rent

Sri “X” was allotted a shop by a corporation after conducting public auction at

Rs. 29000/- per month. He becomes a defaulter by nonpayment of rent for 48

month. Subsequently the corporation took possession of the shop by

cancelling the allotment. Sri. “X” filed an appeal in the court. His plea was

rejected and the action taken by the corporation in vacating the shop was

upheld by the court.

70

Sri. “X” requested the Finance committee of the corporation to hand over

the shop and agreed to pay the balance in installment of 24 months and to

reduce the rent. The committee agreed to this and fixed the rent at 7400 per

month.

Audit observed that since “X’ was a defaulter the amount should have been

recovered by decreeing in the court of law. Besides allotting the shop by public

auction after following due procedure.

Analysis:

The corporation failed to recover rent along with interest. When once auction is

conducted and shop is allotted for a specific period and amount it is the duty of

the corporation to collect the monthly rent. In case of any default the allotment

has to be cancelled and fresh auction to be conducted. This legal procedure

was not followed by the corporation.

Questions

1. What is the procedure to be followed in allotment of a shop by public

auction?

2. Responsibility of the concerned authorities for collection of rent?

71

Case 42 : Non-submission of NDC bills

The Annual audit report of the University drafted a Para regarding NDC not

submitted for a total amount of Rs. 3 lakh from the director of an institution.

The Director was officiating from 1-72003 to 25-2-2004.and relieved on 25-2-

2004. Audit for the year 2001-02 to 2003-04 is completed on 1-10-2004. It was

found that Rs. 3 lakh was drawn on AC bill by the Director for which NDC is

due.

The Director gets a No Due Certificate from the concerned authority. He takes

voluntary retirement during 2004. The Director has submitted the NDC for the

total amount before getting voluntary retirement The pension settlement of the

Director is held up for not clearing the amount and not submitting NDC as

stated in the audit report and it is held up as per the orders of the VC. The

Director writes to the registrar and the VC stating all the facts and submits

relevant documents as proof of his clearance of all dues and request for

settlement of his pension claims. The file was delayed for 8 years from 2004 to

2012. There was no decision taken regarding the said matter to get the audit

objection dropped.

On a personal request by the Director to the Govt. Auditor in 2012, the matter

is taken up for scrutiny by the Govt. Auditor. A detailed scrutiny reveals that

the Para can be dropped. A letter is issued by the Govt. Auditor to the

concerned Director and the concerned authorities of the university that the

Director has no dues pending against him. As such the Para was dropped and

the pension claims of the Director settled.

Analysis:

1. Dearth of pro-active attitude on part of the officials to look in to the case.

2. Delay due to hesitancy in taking decisions.

3. Fear of accountability.

4. Causing financial loss to the Director.

5. Unnecessary mental torture caused to the Director

6. The audit being falsely accused of being the cause for with-holding

pension claims.

7. Pension settlement Para objections have to be attended on first priority.

Questions

1 What is procedure for recording audit inspection report? 2. Role and responsibility of DDO in furnishing timely compliance to audit. 3. Role of audit to drop audit Para after satisfactory reply.

72

Case 43 : Statutory deductions

The annual audit report of the University drafted a Para regarding non

deduction of TDS from the contractor who running a mess of the University

hostel.

1. The contract of supplying food to the inmates of the hostel was awarded

to Mr. X

2. In the first year, the VC issued an OM to the contractor to execute the

work and the OM is specifically mentioned regarding the required TDS to

be deducted from the bills. As per the OM, the TDS amount had been

deducted regularly.

3. In the second year, the same contract was renewed with the same

contractor.

4. The OM regarding the renewal contract did not mention the TDS to be

deducted. Audit observed non-payment of TDS

5. The contractor did not get the TDS amount deducted from his bills.

6. The contractor of the hostel and the warden replied to the objection

saying that since it was not in the OM and the TDS deduction was not

deducted

Analysis :

1. Every entrepreneur ought to know about TDS.

2. The reply given could not be accepted.

3. The responsibility of the DDO as per 194 of the Income Tax Act is as

follows

As per 194 C (2) Any person responsible for paying any sum any resident in

pursuance of the contract with the sub contractor for carrying out or for


undertaken by the contractor or for supplying wholly or partly any labor

which the contractor has undertaken to supply shall at the time of credit of

such sum to the account of the contractor / sub contractor or at the time of

payment thereof as cash or by issue of a cheque or draft or by any other

mode whichever is earlier deduct an amount equal to 1% or 2% of income

comprised there in. As per 194 “C” the Threshold limit of payment in a year

is 30,000 (Individual 1%, firm 2%). Non deduction of IT in the bills

contravenes the provision of Sec 194 C (2) f IT Act for which DDO is held

responsible.

Questions : Discuss the provisions of KFC for statutory deductions.

73

Case 44 : Risk Purchase: (Short supply of Goods)

An order was placed on a firm “G” which failed to supply the full quantity

of goods. The balance quantity of goods was ordered from the firm “H” at a

higher price on risk purchase conditions. Risk purchase order means that the

additional cost of purchase will be recovered from the previous firm “G”. Yet

another risk purchase order on another firm “I” was placed as even the firm “H”

failed to supply the goods ordered in full. No recovery could be made from the

firm “G” as the factory was closed. No recovery had been made till the audit

paragraph had been published. No recovery had been made from the firm “H”

also.

Analysis:

The audit paragraph highlights the need to judge the suitability of a bidder to

meet its commitments. Unless a reasonable criterion for the selection of a

bidder is laid down, failures will often recur. The government rarely publishes

any data on the amount of risk purchase differences recovered from defaulters.

If government departments were largely successful in recovering the amounts,

and they publicized this information, then this may deter incompetent bidders.

If government departments have a bad experience then there is all the more

need to review the existing process of selecting a bidder. It is a very onerous

and difficult process to blacklist a firm, and blacklisted firms easily start

functioning in another name.

The provisions of KTPP Act & Rules in framing Qualification criteria has to

be scrupulously followed to mitigate such circumstances and to select the

right qualified contractor for the supply.

Questions

1. What are the conditions for risk purchase of goods?


74

Case 45 : Risk Purchase (Cancellation of Contract)

A supplier failed to supply the goods ordered. The central purchase authority

cancelled the contract, without invoking the risk purchase clause. The

indenter purchased goods elsewhere at a much higher cost.

Analysis:

Invoking risk purchase clauses has not resulted in any success. The major

failure seems to lie in the selection of competent suppliers. Also the provisions

of taking securities before entering into contract and framing suitable Q C for

selection of contractors on the basis of production capacity, commercial

capability, and experience in the field contribute for successful contract.

Questions


Case 46:

Surveys

A contract of works for a pile foundation was awarded for completion in nine

months. During the progress of the work discovered that the design based on

the assumptions of the detailed soil investigation report was not suitable.

Originally it was assumed that a raft foundation over hard rock would be

possible at the site. But it was found that the sub-strata consisted of fissured

rocks of highly varying depths. Very high subsoil water level and thus raft

foundation was not possible. Further, detailed explorations were carried out.

The design of the foundation and the entire structural analysis of the building

have to be completely redone. The work was completed after an extra period of

about three years at more than double the original estimated cost of Rs. 6.28

Million.

Analysis :

The report of the task force pointed out the failure of the investigation and

survey set up. Though one recognizes that human culpability may be there, yet

the absence of correct data in survey reports needs to be effectively overcome.

Otherwise, the entire project gets delayed, with cost escalation and losses, as

the benefits of the projects and investments do not start flowing in time.

Questions : Discuss the responsibility of authorities in conducting proper

survey

75

Case 47 :

Qualification of bidders and bid capacity (Works)

“Non-ensuring of contractor’s eligibility:

The State government’s instructions (October 2008) read with NIT, specified

certain conditions for participation in the tender above Rs. 50 lakh, such as

satisfactory completion of at least one work to the extent of 50 per cent of the

tendered cost for works costing up to Rs. One crore, the contractor owning at

least 50% of the equipment required for the work etc. Scrutiny of 18 technical

evaluations for works costing Rs. 50 lakh to Rs. 2.72 Crore revealed that in 16

cases the details of execution of works to the extent prescribed were not

obtained and in 14 cases the details of equipment owned by the contractors

were not insisted upon. It was evident from the above cases that the tender

evaluation was not done as prescribed and works were entrusted to agencies

without ensuring the eligibility criteria for executing such works.”

Analysis

The model qualification criteria as modified in Government order FD4 PCL

2008 dated 14-10-2008 has to be adopted before floating of tenders by the

tender inviting authority.

The model Clause for Works contract shall be as follows:

"To qualify for award of the contract, each tenderer in its name should have in

the last five years i.e..........

(i) Achieved, in at least two financial years, a minimum annual financial

turnover (in all classes of civil engineering construction works only) of Rs......@

(usually not less than the estimated cost under this contract for works costing

up to Rs. 100 lakh and not less than two times the estimated annual payments

in case of the contract value is more than 100 lakhs under this contract)

(ii) Satisfactorily completed (not less than 90% of contract value), as a

prime contractor, at least one similar work (Define) of value not less

then Rs......@ (usually not less than 50% of the estimated value of the

contract for all works costing up to 100 lakh and not less than 80% of

the estimated value of the contract for all works costing more than Rs.

100 lakh);

76

(iii) Executed in any one year, the following minimum quantities of work;

(usually 80% of the expected peak rate of construction for 3 or 4 critical

items which account for more than 60% of the total cost of the work);

...................................................

...................................................

...................................................

...................................................

The tenderer or his identified sub-contractor should have

executed.............................

works** totaling to Rs.........@ in any one year

@ at ............ price level. Financial turnover and cost of completed works of

previous years shall be given weight age of 10% per year based on

the rupee Value of bring them to .........* price level

* the financial year in which tenders are received.

** repeat for other items of works for which subcontracting would be allowed

The tenderer should .....

(a) availability (either owned cr...... or by procurement against mobilization

advances) of the following key and critical equipment for this work:

......................................................

........................................................

(b) availability for this work of a Project manager with no less than five years'

experience in construction of similar civil engineering works and other key

personnel with adequate experience as required; and

(c) Liquid assets and/or availability of credit facilities of no less than Rs.......

lakhs (Credit lines/letter of credit/certificated from Banks for meting the funds

requirements etc. (usually the equivalent of the estimated cash flow for 3 months

in peak construction period)

From the above case it is evident that the TIA has not

followed the prescribed procedure there by attracts the provisions of

Sec.23 of the KTPP Act.

Questions

1. How Qualification criteria is to be fixed in case of Goods and works?

77

Case 48: Qualification of bidders and bid capacity (Goods)

Tenders were invited for purchase of 300 equipments amounting to Rs.

50 Lakh. The qualification criteria prescribed for the Tender is as follows

Work Experience:

He should have satisfactorily completed as a prime contractor at least one work

of supply of similar equipment to an extent of 25 lakh in any one year in the

last 5 years.

Qualification:

(1) Each Tenderer in his name should have in the last 5 years period

achieved in at least in 2 financial years an average annual financial

turnover of Rs. 50 lakh.

(2) The Tenderer should have supplied in any one year minimum 240

equipments to any Govt. organization

(3) The Tenderer should have liquid asset or availability of credit facility of

not less than 20 lakh.

(4) The commitment of supply as the dated of sub missing of the tenderer is

required to be mentioned in the Tender Document.

Three bids were received following are the criteria for consideration of

qualification.

A (in Lakhs) B(in Lakhs) C (in Lakhs)

Annual Production Capacity 400 350 420

Annual Financial Turnover for last two years

50 55

52 51

56 54

Supply of Materials 28 32 20

Supply of equipment 350 300 280

Liquid Assets 20 25 30

Balance to be supplied to various clients

120 150 200

Sl. No.

As Prescribed

A B C

1 Work Experience 25 Lakh 28 32 30

2 Qualification 50 Lakh 50 50

3 Supply of Materials 240 350 300 280

4 Liq. Assets 20 20 25 30

5 Existing Commitments - 120 150 200

6 Annual Production - 400 350 450

78

Bid Capacity -= A x N – B

Where A = Annual Production Capacity

N = No. of years prescribed for completion of contract

B = No. of existing commitment

Bid capacity of A = 400x1 – 120 = 280

Bid Capacity of B = 350 x 1 – 150 = 200

Bid Capacity of C = 450 x 1 – 200 = 250

The Bid was awarded to A

Audit observed that the Tender was awarded to “A” who does not possess bid

capacity.

Analysis:-

Tenders were invited for supply of 300 equipments all the 3 bidders are

qualified in the qualification criteria prescribed. As for as available tender

capacity is concerned all the 3 bidders does not possess the available Tender

Capacity i.e 300 equipment in the year. As such all are disqualified. As per

Govt. Order No. PWD 1359/50/FC/2001/P2 dated 3.12.2002 “Lowest

evaluated responsive tenderer who satisfies the aggregate qualifying criteria

would be qualified for the award of the contract only if he satisfies the available

Tender capacity more than the no of equipments of the Tender under

consideration. In this case Tenders should have been cancelled and fresh

tenders invited.

Questions

1. What are the requirements to assess bid capacity?

79

Case 49 :

Qualification of bidders and bid capacity (Cancellation of Contract)

A contract for automatic fire fighting and fire alarm system was awarded in for

Rs 1.76 Million. After the physical progress of 99 per cent of the work, and the

payment of Rs. 1.72 million, the contract was cancelled in. Another contract at

the risk and cost of the former contractor was awarded for Rs. 0.16 million in

to carry out the testing and commissioning of the system. The work was still

incomplete after 8 years of invitation of tenders. Government offices stated

that the fire fighting and fire alarm system is a specialist job, very few firms

who were undertaking its installation. The system could not be commissioned

making the expenditure unfruitful.

Analysis :

There may be very few qualified contractors for specialized works. Therefore, it

is important to prequalify contractors with the criterion of successful

completion of a few similar jobs. Sometimes, works are awarded on the basis

of similar contracts – in hand of a bidder without any relationship to successful

completion of a work. Such a practice cannot be considered reasonable in the

absence of evidence of the competence of the bidder.

Questions


2.How to arrive at the bid capacity in case of goods contract?

80

Case No. 50 : Qualification of bidders and bid capacity (failure of

execution of contract)

A contract was awarded for the design manufacture, supply, erection and

commissioning low profile quay side gantry cranes at a cost of 6 crores. The

period given for completion of work was 15 months. Owing to the contractors

failure to start the work for want of funds an advance of Rs. 30 lakh at 20%

annual interest rate was given. The cranes have not been commissioned even

after 5 years of the date of award of contract.

Analysis:

As per KTPP Act the minimum Q.C for the financial resources of a bidder shall

be satisfactorily completion as a prime contractor for at least one similar works

to an extent of rupees 4.8 crores.

To qualify for award the tenderer should have in the last 5 years period

achieved in at least 2 financial year an average financial turnover of rupees 6

crores. The bidder should have liquid assets and or availability of credit facility

of not less than 6 crores.

From the above case it is evident that there is failure in the execution of

contract. The GO Dated PWD 1359/SO/FC/2001/P2 Dated 3.12.2002

specifies the model Q.C and also bid capacity of the tenders, which shall be

followed by the Tender Accepting Authorities.

Questions


2. How to arrive at the bid capacity in case of goods contract?

Government of Karnataka

Administrative Training Institute Lalitha Mahal Road, Mysore-11

CASE STUDIES

ON

PROCUREMENT AND AUDIT

Volume - I

Administratative Training Institute Lalitha Mahal Road, Mysore – 570 011

Dr.(Smt) Amita Prasad, I.A.S.,

Director General PREFACE

ATI, Mysore has always adopted innovative methods in imparting

training. “Case Study Method” is a valuable tool in developing analytical ability,

sharpening Skills for understanding specific situations and visualizing different

dimensions of a problem. The discussion of cases in class room enables the

participants to develop creative thinking and promote decision making skill,

which are crucial to enhance performance.

In this present Book-let the CAG Audit paras, Case laws & Inspection

reports on procurement have been used for case study. This is proposed to

used in all trainings related to Financial Management and Contract

Management Courses. The case study would provide an excellent frame work

for drawing out the insights and experiences of the participants & also

enlighten the importance of interpreting rules, acquiring knowledge of Govt.

orders and cannons of Financial Proprietary, thereby minimizing the audit

observations.

I appreciate the efforts of Sri. Ramachandra Swamy, Joint Controller

(Rtd.) State Accounts Department and Sri. K.Srinivasa, Consultant, (Financial

Management) ATI in bringing out this booklet. The two volumes based on audit

reports will serve as guiding factor in understanding financial and procedural

issues.

I am sure that this booklet would provide an opportunity to participants

to analyze the cases, understand the issues & improve their perception

towards procurement.

Place : Mysore Date : 22-5-2013 (Dr.AMITA PRASAD)


A

dministration Training Institute

Lalitha Mahal Road, Mysore –

570 011

Dr.(Smt) Amita Prasad, I.A.S., Director General

CONTENTS

Case Nos Particulars Page Nos

1. Procurement of works:

(Procurement Planning)

1

2. Unfruitful Expenditure

2

3. Extra Expenditure Due to Defective

Estimate

3

4. Undue Benefit to a Contractor

4 - 6

5. In fractious Expenditure

7

6. Skewed Planning and Faulty estimation

8 - 9

7. Procurement of Solar Lights

10 - 11

8. Non recovery of Securities and statutory

deductions in R A bills.

12 – 14

9. Short Term Tender

15

10. Validity of the Tenders During extended

period

16 - 17

11. Minimum time for submission of Tender

18 - 19

12. Authorization to Reduce Minimum time for

Tender Submission

20

13. Extension of the period of Contract

21 - 22

14. Outsourcing of Hostel Cooks: (Proper

execution of Contract conditions)

23 - 25

15. Tender Accepting Authority & Tender

Scrutiny Committee

26 - 29

16. Functions of tender Scrutiny Committee

30 - 31

17. Fraudulent payment on de-silting works

executed by a corporation

31 - 32

18. Fishing rights of a tank 33

19. Purchase of spot billing machine

(Type of procurement not mentioned)

34

20. Single source

35 - 36

21. Criteria for rejection of tenders

37 - 38

22. Negotiation

39 - 40

23. Procurement of bicycles in excess of

requirement

40

24. Procurement of Goods and services – Out

sourcing of men

41

25. Non payment of rent

42

26. Non-submission of NDC bills

43

27. Statutory deductions

44

28. Risk Purchase: (Short supply of Goods) 45

29. Risk Purchase

(Cancellation of Contract)

46

30 Surveys

46

31. Qualification of bidders, bid capacity

(Works)

47 - 48

32. Qualification of bidders and bid capacity

(Goods)

49 - 50

33. Qualification of bidders and bid capacity

(Cancellation of Contract)

51

34. Qualification of bidders and bid

capacity(failure of execution of contract)

52

35.

Speedy settlement of Audit observations, IR’s, Disposal & Audit paras

53 - 57

36

The Karnataka Transparency in Public

Procurement Act, 1999.

58 - 68

37

The Karnataka Transparency in Public

Procurement Rules, 2000

69 - 86



CASE STUDIES

ON


Volume - II

CONTENTS

Case No.

Particulars Page Nos

1.

Terms & Conditions of a Notice Inviting Tender

1 – 5

2.

Negligence in Collecting Securities 6 - 7

3.

Procurement of Goods (Schedule of requirements)

8 – 10

4. Specification

11

5. Over Specification

11 – 12

6. Specification ( Supply of offset printing paper)

13

7. Inspection & Tests (Supply of equipments)

13 – 14

8. Inspections and Tests (Construction of a bridge)

14 – 16

9. Inspections and Tests (Ship Building)

17

10. Inspection of goods ( Late delivery of goods)

17 – 18

11. Quality Control (Warranty Clause)

18 – 19

12. Fraudulent claim of M/R bills

20 – 21

13. Embezzlement of Scholarship Amount

22 - 23

14. A case on Consultancy services (Success Story)

24 - 30

15. Healthy Returns: (Best practice)

31 - 32

Government Orders / Circulars

1. Procurement of Works- Use of Standard Tender Documents. Government Order No. FD 9 PCL 2004 (I), Bangalore, Dated: 06.8.2005.

33 - 35

2. Procurement of Goods and Equipment- Use of Standard Tender Documents. Government Order No. FD 9 PCL 2004(II), Bangalore, Dated: 06.8.2005.

36 - 38

3. Hiring of Consultancy Services - Use of Standard Tender Documents. Government Order No. FD 9 PCL 2004(III), Bangalore, Dated : 06.8.2005.

39 - 41

4. Awarding of contracts to the lowest evaluated technically and commercially responsive tenderer meeting the prescribed Qualification criteria including tender capacity and past Performance. Circular - NO. PWD 1359 SO/FC 2001(P-2)

dated 25th

October 2002.

42 - 43

5. Procurement Planning, Packaging and Scheduling. Circular - NO. PWD 1359 SO/FC 2001(P-2)

dated 25th

October 2002.

44 - 46

6. Guidelines of conducting negotiations before award of the contract. Circular - NO.PWD 1359 SO/FC 2001(P-2) dated 3rdDecember2002.

47 - 51

7. Two Cover Tenders System – Safeguards to be adopted. Circular - NO. PWD 1359 SO/FC 2001(P-2) dated 30thJune 2003.

51 - 52

8. Procedure for sale of tender documents Circular - PWD 140 SO/FC 2003.

Dated:1stSeptember 2003.

53 - 54

9. Procurement Reforms – Measurement of Works and Supplies – Use of Measurement Books. Government Order No. FD 56 Pro. Cell 2004, Bangalore, 18thJanuary 2005.

54 - 58

10. Third Party Inspection of Works, Goods and Equipment.

Government Order No. FD 55 Pro. Cell 2004,Bangalore, Dated: 17.02.2005.

59 - 61

11. Procurement of works - use of Standard Tender Document - Revision – Reg. Government Order No.FD 4 PCL 2008, Bangalore, dated:14.10.2008.

62 - 69

12. Provision for price Adjustment for specified materials for works – Revision Reg. Government Order No.FD 3 PCL 2008, Bangalore, dated:21-11-2008.

70 - 72

13. Invitation of Tender through e-tendering – Limitations. Notification - No. DPAR 2 EPR 2009 Dtd. 9th October 2012

73

14. General delegation of common financial powers to Heads of Departments and others. Govt. Order No.FD 2 TFP 2010, Bangalore, Dated:30-04-2010.

74 – 90



CASE STUDIES

ON


Volume - I

Administratative Training Institute Lalitha Mahal Road, Mysore – 570 011

Dr.(Smt) Amita Prasad, I.A.S.,

Director General PREFACE

ATI, Mysore has always adopted innovative methods in imparting

training. “Case Study Method” is a valuable tool in developing analytical ability,

sharpening Skills for understanding specific situations and visualizing different

dimensions of a problem. The discussion of cases in class room enables the

participants to develop creative thinking and promote decision making skill,

which are crucial to enhance performance.

In this present Book-let the CAG Audit paras, Case laws & Inspection

reports on procurement have been used for case study. This is proposed to

used in all trainings related to Financial Management and Contract

Management Courses. The case study would provide an excellent frame work

for drawing out the insights and experiences of the participants & also

enlighten the importance of interpreting rules, acquiring knowledge of Govt.

orders and cannons of Financial Proprietary, thereby minimizing the audit

observations.

I appreciate the efforts of Sri. Ramachandra Swamy, Joint Controller

(Rtd.) State Accounts Department and Sri. K.Srinivasa, Consultant, (Financial

Management) ATI in bringing out this booklet. The two volumes based on audit

reports will serve as guiding factor in understanding financial and procedural

issues.

I am sure that this booklet would provide an opportunity to participants

to analyze the cases, understand the issues & improve their perception

towards procurement.

(AMITA PRASAD) Place : Mysore Director General Date : 22-5-2013


A

dministration Training Institute

Lalitha Mahal Road, Mysore –

570 011

Dr.(Smt) Amita Prasad, I.A.S., Director General

CONTENTS

Case Nos Particulars Page Nos 1. Procurement of works:

(Procurement Planning)

1

2. Unfruitful Expenditure 2

3. Extra Expenditure Due to Defective Estimate

3

4. Undue Benefit to a Contractor 4 - 6

5. Infructious Expenditure 7

6. Skewed Planning and Faulty estimation 8 - 9

7. Factors to be considered while framing Notice Inviting Tender

10 - 14

8. Procurement of Solar Lights 14 - 15

9. Negligence in collecting securities 15 – 18

10. Non recovery of Securities and statutory deductions in R A bills.

18 – 20

11. Over Specification 21

12. Specification 22

13. Higher Specification 22

14. Inspection & Tests (Supply of equipments)

23

15. Inspections and Tests (Construction of a bridge)

24 - 25

16. Inspections and Tests (Ship Building) 26

17. Specification ( Supply of offset printing paper)

26

18. Inspection of goods ( Late delivery of goods)

27

19. Quality Control 28

20. Short Term Tender 29

21. Validity of the Tenders During extended period

30 – 31

22. Minimum time for submission of Tender 32 - 33

23. Authorization to Reduce Minimum time for Tender Submission

34

24. Extension of the period of Contract 35 – 36

25 Outsourcing of Hostel Cooks: (Proper execution of Contract conditions)

36 - 39

26. Tender Accepting Authority & Tender Scrutiny Committee

39 - 42

27. Functions of tender Scrutiny Committee 43 - 44

28. Fraudulent payment on de-silting works executed by a corporation

44 – 45

29. Fishing rights of a tank 46

30. Purchase of spot billing machine (Type of procurement not mentioned)

47

31. Single source 48 – 49

32. Fraudulent claim of M/R bills 49 – 50

33. Embezzlement of Scholarship Amount 51 – 52

34. Healthy Returns: (Best practice) 53 – 54

35. A case on Consultancy services 55 – 61

36. Criteria for rejection of tenders 62 – 63

37. Negotiation 64 – 65

38. Procurement of bicycles in excess of requirement

65

39. Procurement of Goods and services – Out sourcing of men

66

40. Procurement of Goods (Schedule of requirements)

67 - 69

41. Non payment of rent 69 - 70

42. Non-submission of NDC bills 71

43. Statutory deductions 72

44. Risk Purchase: (Short supply of Goods) 73

45. Risk Purchase (Cancellation of Contract)

74

46. Surveys 74

47. Qualification of bidders and bid capacity (Works)

75 - 76

48. Qualification of bidders and bid capacity (Goods)

77 – 78

49. Qualification of bidders and bid capacity (Cancellation of Contract)

79

50. Qualification of bidders and bid capacity (failure of execution of contract)

80

Essentials of

KTPP Act & Rules

K. Srinivasa Consultant (Financial Management)

ATI, Mysore

Title and Commencement

• The Karnataka Transparency in Public Procurement Act, 1999

• W.E.F 4-10-2000

• The Karnataka Transparency in Public Procurement Rules 2000

• W.E.F 24-10-2000

Objective of the Act

• To Provide for ensuring transparency in

Public Procurement, by streamlining the Procedure in

• Inviting

• Opening

• Acceptance or Rejection Of tenders by Procurement Entities

Procurement Entities

• Government Departments, a State Government undertaking, Local Authority or Board, Body or corporation established by or under any Law and owned or controlled by the Government, any other body or Authority owned or controlled by the Government.

Public Procurement

Means :

• Obtaining Goods and Services

• Execution of Works

• Consultancy Services

Provisions not to apply sec. 3

• Project funded by international financial agencies

• Projects covered under international agreements

Exceptions to applicability

Sec-4

• During calamity / Emergency Sec-4 (a)

• Single Source Sec-4 (b)

• Additional Supplies from same supplier for reasons of standardization and compatibility

Sec-4 (c)

• Procurement from certain Departments of Government, PSU and other institutions and such goods or services provided by them for a period specified by Government from the commencement of this Act. Sec-4 (d)

• Where the value of works does not exceed 5 lakhs.

• Goods and services does not exceed 1 lakh.

• For G.P. mini water scheme and construction of school building does not exceed 2 lakhs.

Sec-4 (e)

• DGS &D Sec-4 (f)

• In respect of specific procurement as may be notified by the Government from time to time. Sec-4 (g)

• Spot purchase Sec-4 (h)

Regulation of Procurement

• Procurement other than by tender is prohibited. Sec.5

• Procurement entities to follow procedure as laid down in Act & Rules Sec.6

Tender Bulletin

• Dist Tender Bulletin officer

–Deputy Commissioner

• State Tender Bulletin officer

–Deputy secretary to the concerned Department

Publication

• Notice inviting Tenders or decisions on Tenders shall be published within the prescribed time. Sec.8

• NIT will be Published in the District, where the H.Q of TIA is Located.

• If the value of Procurement is Rs. 1.00 crore and above it shall also publish in the STB.

Rule 8

• NIT will not be invalidated merely on the grounds that it has not published in news papers Rule 6

• If TIA is a Sec to Government /Head of the Department, Chief Executive of a PSU, university, board, apex co-operative institution then it shall be published in STB as well as DTB irrespective of monetary limit.

Rule 7

Tender Inviting Authority and Tender

Accepting Authority

The P.E may by order appoint :

• One or more officers or committee of officers as TIA for any Specified area / specified procurement or specified class of goods and services.

• One or more officers or a committee of officers to be the TAA for any Specified area / specified procurement or specified class of goods and services. Sec. 9

Tender Scrutiny Committee

• TAA shall constitute TSC where the value of Tender exceeds 5 crores in respect of PW & irrigation Department and Minor irrigation Department and 1 crore in respect of all other Departments. Rule. 20

Duties of TIA

• To take out NIT in the prescribed manner

• To communicate the NIT to TBO.

• To cause publication of NIT in the prescribed manner.

• To supply the schedule of rates and Tender Document to every intending tenderers.

• The TIA shall collect all details received in response to the NIT and open the tenders or forward to the authority authorised to open the tenders Sec. 12

Notice Inviting Tender

Rule 9

• Name and Address of P.E and Designation

and Address of TIA.

• Name of the Project

• Specify the place and last date for issuing Tender document.

• EMD

• Last date, time, place of Receipt of Tenders (Ensure the min. prescribed period)

• The date, time and place for opening of Tenders.

Min Time for Submission of Tenders

Rule 17

• For tenders upto Rs. 2 crores, 30 days and (b)

For tender above 2 crores 60 days the TIA shall ensure that a min time is allowed between date of publication of NIT in the Tender Bulletin and the last date for submission of tenders. Rule 17 (1)

• Any reduction in time stipulated under sub rule (1) has to be specifically authorized by an authority superior to the TIA for reasons to be recorded in writing. Rule 17 (2)

Technical Specification

Section-11

• Detailed Description of what is proposed to

be procured.

• Use of Brand names shall be avoided, ISI number shall be incorporated.

Construction:

• Detailed estimates as per schedule of rates as revised from time to time.

Commercial Condition

• EMD: DD, Small Savings Instrument • Bankers Cheque • Valid for 45 days after Minimum Validity period • Minimum Validity period for prices quoted is 90

days. • PSD 5% • Liquidated damages for non fulfillment of terms

of contract. • Quantity proposed to purchase may vary 25%

either way at the time of contract.

Opening of Tender

Rule 18,19 • The tender will be opened in the place and time

as indicated in NIT.

• All the tenders received in time shall be counted and opened.

• Corrections shall be noticed and recorded.

• Read out the name and quoted prices.

• EMD

• Minutes of the tender opening shall be recorded and signature obtained.

Evaluation

Rule 24

• TIA shall cause an initial examination to determine the substantial responsiveness of tenderes. Rule 24 (1)

The following factors shall be considerded:

Rule 24(2)

• Meets eligibility criteria. Rule 24 (a)

• Crucial documents have duly signed Rule 24 (b)

• EMD furnished Rule 24 (c)

• Technical specification, including Testing of samples. Rule 24 (d)

• Tender may be rejected if any of the clauses above are not fulfilled.

Determination of Lowest evaluated price

Rule 25

• Arithmetical errors. • In case of discrepancy between prices quoted in

words and figures, Lower of the two shall be considered.

• TIA will prepare detailed evaluation report. TAA after Acceptance send the report for publication in Tender Bulletin and communicate to successful bidder and asked to sign contract of Agreement within 21 days from the date of receipt of communication.

Negotiation

Sec. 13

• Negotiation with L-1 only

(Lowest evaluated responsive bid)

• Compare with market rate.

(For same brand and specification)

• Negotiation committee.

• Rejection of Tender

General Rejection of Tenders Sec. 14

• The TAA may at any time before passing an order of acceptance may reject all the tenders on the ground of :

• Changes in the scope of procurement

• Budget not received

• Calamities

• Accidents

• Or any other grounds which would render the procurement impossible or unnecessary and report the same to PE

Two Cover System

Rule 28

• Tenders exceeding Rs. 50 lakhs in value,

where prequalification are not followed, two cover system shall be adopted.

• First cover- Technical bid.

• Second cover- Finance bid.

Power to call for records sec. 18

• The govt. at any time to ensure transparency call upon any authority under the act:

• To produce records of invitations, processing and acceptance of tenders

• To produce tender documents, estimates, and accounts

• Any specific point incidental to the procurement.

Penalty sec. 23

• Who ever contravenes the provisions of this act or the rules shall be punishable for imprisonment for three years and with fine up to five thousand rupees

Audit– Role of C&AG

&

Compliance to Audit

1

COMPTROLLER

&

AUDITOR GENERAL OF INDIA

CAG Constitutional Authority (Art 148)

Sole (independent) authority entrusted with the

responsibility of audit of accounts of the Union

and of the States. (149)

2

CONTD..

CAG duties, powers and conditions of service are

governed through an act passed by the parliament

in 1971 known as C&AG’s DPC Act 1971(Act

56 of 1971)

3

AUDIT

CAG submits Appropriation Accounts & Audit Reports in respect of Central Government to President and in respect of State Governments to Governor(ART 151)

Expenditure from the Consolidated Fund of India and of the State and Union Territory having legislative assembly (Sn. 13)

Any body or authority even though not substantially financed, the audit of which may be entrusted to the C&AG(Sn.14)

Grants and loans given by Government to bodies and authorities for specific purposes (Sn.15)

4

CONTD..

Receipts of Union or of States (Sn.16)

Accounts of stores and stock kept in Government department ( Sn.17)

Government companies as per the provisions of the Companies Act, 1956 (Sn. 19)

Corporations established by or under laws made by Parliament /Legislature (Sn.19)

Authorities and bodies substantially financed from the Government (Sn.20)

Entrusted audit (Sn. 20)

5

CORE VALUES OF CAG AUDIT

Core values which are guiding beacons for all

that C & AG does & gives benchmarks for

assessing performance

• Independence • Objectivity • Integrity

• Reliability

• Professional Excellence• Transparency

• Positive Approach

9/26/2014

6

GENERAL PRINCIPLES OF AUDIT

To provide an unbiased, impartial and objective

assessment of the reliability and fair presentation of

financial activities

To provide an assessment of due observance of laws,

rules, procedures and systems

Assessment of the achievement of value of money in

the implementation of mandated activities

To ensure legality, regularity, economy, efficiency,

effectiveness of Fin. Mgt.& public administration.

7

9/26/2014

TYPES OF AUDIT

Financial Audit

Compliance Audit/Regularity audit

Performance Audit

Social Audit

Information Technology Audit

Environment Audit

8

SCOPE AND EXTENT OF AUDIT

Authority to decide scope and extent of audit (sn.

23)

SCOPE

CAG is the sole authority to decide

Includes all category of audit – including internal

control

Can undertake audit of any transaction,

programme or organisation

9

CONTD..

Extent of audit

Power to dispense with detailed audit (Sn.24)

Special audit

-Approval of Secretary to Government.

-Justification/reasons

-Period to be covered

-CAG’s decision is final

10

COMMUNICATION OF RESULTS OF

AUDIT Through Audit Notes/Enquiries, Inspection

Reports

Maintenance of record of audit observations by the institutions

Initiation of action for settlement of audit observations not to wait for receipt of inspection report

11

INTERNAL AUDITING

GOVERNANCE, RISK AND CONTROL

BASIC CONCEPTS

Internal audit an independent appraisal function

established within organisation to examine and

evaluate its activities as a service to the organisation.

Objective assurance and consulting activity to add

value and improve organisation’s operation.

Helps to accomplish objectives, disciplined approach

to evaluate and improve the effectiveness of risk

management, control and governance process

OBJECTIVES OF IA

Objectives are:

Verification of the accuracy and authenticity of the financial, accounting and statistical records.

Ascertaining that accepted accounting policies& practices have been followed while preparing the financial accounts.

Assets are purchased or disposed and access to assets is restricted to the authorized persons at the authorized times

Liabilities are incurred for the legitimate

activities of the organisation.

Internal check system operating in the

organisation is sound and economical.

Frauds and errors are prevented and detected.

RECOMMENDATIONS OF IA

Internal audit should assess and make appropriate

recommendations for improving the governance

process of following objectives:

Promoting appropriate ethics and values within

organisation;

Ensuring effective organisational performance

Effectively communicating risk and control

information in appropriate areas of the

organisation,

Effectively coordinating the activities of and

communicating information among board,

external audit and internal auditors and

management.

AUDIT REPORT AND INTERNAL AUDIT

Under sub section (4A) of section 227 of the

Companies Act 1956 Central Govt. has issued

order dated 12 Jun 2003 which prescribes that

company auditors as per clause 4(1w) of the

order have to make a report on the adequacy of

internal control system

INTERNAL AUDIT AND CERTIFICATION PROCESS

Three roles in certification process any one of which can be played by IA:

1. Traditional role: Monitoring of compliance activities and reporting of management’s performance

2. Active participation and monitoring role: Assuming active role that sees consulting on a range of issues designed to add value to the organisation’s certification process including:

Liaising between external auditor and management

Assisting in the development and training of personnel involved in conducting certification documentation and testing;

Performing quality assurance reviews of documentation and testing;

Conducting ongoing monitoring of testing and remediation activities

IA to report their results to management to ensure appropriate levels of independence and objectivity

3 Management assertion testing role: Internal

auditors becomes key contributors to

management testing process in more

complex areas such as entity controls.

External auditors place high reliance if the

internal audit function is deemed to be

competent and independent

4 Irrespective of the role of internal auditor in

certification process he has much broader

role in anti fraud programme and risk

management.

INTERNAL AUDITOR & EXTERNAL AUDITOR

AAS-7 prescribes while relying on the work of

internal auditor the external auditor has to

evaluate the IA functioning to determine its

relevancy regarding:

Timing and extent of audit procedures

Nature of audit.-

RISK BASED INTERNAL AUDIT

Risk is a set of circumstances that hinder the

achievement of objectives.

ISO defines risk as the combination of the

probability of an event and its consequences.

Risk cannot be avoided but it has to be

managed.

Internal control is a process which manages a

risk

Management of an organiosation responsible for:

Identifying risks

Assessing the risks ensuring that there is an appropriate response to all risks.

Informing the board about risks which are outside acceptable levels.

Assuring the organisation’s executive that it is monitoring the system of internal control which brings the remaining risk to within acceptable levels.

Internal auditing provides an independent and objective opinion whether risks are managed to acceptable levels

AUDIT RISKS

Audit Risk is that the auditor gives an

inappropriate opinion when the financial

statements materially misstated.

AAS-6 identifies following components of Audit

Risks;

1. Inherent Risk

2. Control Risk

3. Detection Risk

The management

of an organisation

have

A risk is a set of

circumstances that

hinder the

achievement of

objectives

An internal control

is a process which

manages a risk

Objectives

The main aim of internal

auditing is to assist the

organisation to achieve its

objectives

Internal Auditing provides

an independent and objective

opinion to an organisation’s

management

Annexure I

K/G - 1 GOVERNMENT OF KARANATAKA

——————————————— (Name of organization) ——————————————— ——————————————— (Address) Telephones:———— Fax: ————

TENDERS FOR THE SUPPLY OF ———— GOODS/EQUIPMENT

TENDER REFERENCE : DATE OF COMMENCEMENT OF SALE OF TENDER DOCUMENT : LAST DATE FOR SALE OF TENDER DOCUMENT : * LAST DATE AND TIME FOR RECEIPT OF TENDERS : TIME AND DATE OF OPENING OF TENDERS : PLACE OF OPENING OF TENDERS : ADDRESS FOR COMMUNICATION :

* Should be the same as for the deadline for receipt of tenders or promptly thereafter

K/G – 1 Goods/Equipment /Open tenders/Less than Rs.10 lakhs

K/G-1 Goods/Equipment/Open tenders/Less than Rs.10 lakhs

2


SECTION I. INVITATION FOR TENDERS (IFT) Date : IFT No. : 1. The .................................... (Purchaser) invites tenders from eligible tenderers for the supply of the goods listed below: 2. The tenderers may submit tenders for any or all of the goods given above. Tenderers are advised to note the qualification criteria specified in Section VII to qualify for award of the contract. 3. Tender documents (and additional copies) may be purchased from the office of.............. ................................ from ...........to..........,during office hours, for a non-refundable fee (two sets)of Rs………….. (Rupees ……………………………………………………………….), in the form of cash or Demand Draft/Pay Order on any Nationalized/ Scheduled bank payable at................ in favour of...... .................... Interested tenderers may obtain further information at the same address. Tender documents requested by mail will be dispatched by registered/speed post on payment of an extra amount of Rs........... The .......................... will not be held responsible for the postal delay if any, in the delivery of the documents or non-receipt of the same. 4. Tenders must be accompanied by earnest money deposit of the amount specified in the tender document, drawn in favour of.......................... Earnest money deposit will have to be in any one of the forms as specified in the Tender document and shall have to be valid for 45 days beyond the validity of the tender. 5. Tenders must be delivered to................................................................. on or before.........hours on ............. (date) and will be opened on the same day at...........hours, in the presence of the tenderers or their authorized representatives who wish to attend. If the office happens to be closed on the date of receipt of the tenders as specified, the tenders will be received and opened on the next working day at the same time and venue. 6. Other details can be seen in the tender documents.

SECTION II: INSTRUCTIONS TO TENDERERS

TABLE OF CLAUSES Clause Topic Page No. Number No. A. Introduction 1. Eligible Tenderer 4 B. Tender Documents 2. Contents of Tender Documents 4 3. Amendment of Tender Documents 4 C. Preparation of Tenders 4. Language of Tender 4 5. Documents Comprising the Tender 4 6.. Tender Form 5 7. Tender Prices 5 8. Tender Currency 5 9. Documents Establishing Tenderer’s Qualifications 5 10. Documents Establishing Goods Conformity to Tender Documents 6 11. Earnest Money Deposit 6 12. Period of Validity of Tenders 7 13. Format and Signing of Tender 7

D. Submission of Tenders

14 Sealing and Marking of Tenders 7 15 Deadline for submission of Tenders 7 16. Late Tenders 8 17 Modification and Withdrawal of Tenders 8

E. Tender Opening and Evaluation of Tenders

18 Opening of Tenders by the Purchaser 8 19 Preliminary Examination 8 20 Evaluation and Comparison of Tenders 9

F. Award of Contract

21 Post-qualification 10 22 Award Criteria 10 23 Purchaser’s Right to Vary Quantities at Time of Award 10 24 Purchaser’s Right to Accept any Tender and to Reject any or all Tenders 10 25 Notification of Award 10 26 Signing of Contract 11 27 Performance Security 11



4SECTION II: INSTRUCTIONS TO TENDERERS

A. Introduction

1. Eligible Tenderers 1.1 Bidders shall not be under a declaration of ineligibility for corrupt and fraudulent practices issued by

Government of Karnataka B. The Tender Documents 2. Contents of Tender Documents 2.1 The goods required, tendering procedures and contract terms are prescribed in the tender documents. In addition

to the Invitation for Tenders, the tender documents include: (a) Instruction to Tenderers (ITT) ; (b) General Conditions of Contract (GCC) ; (c) Special Conditions of Contract (SCC) ; (d) Schedule of Requirements; (e) Technical Specifications; (f) Tender Form and Price Schedules; (g) Earnest money deposit Form; (h) Contract Form; (i) Performance Security Form; (k) Manufacturer’s Authorization/Guarantee Form 2.2 The Tenderer is expected to examine all instructions, forms, terms, and specifications in the tender documents.

Failure to furnish all information required by the tender documents or submission of a tender not substantially responsive to the tender documents in every respect will be at the Tenderer’s risk and may result in rejection of its tender.

3. Amendment of Tender Documents 3.1 At any time prior to the deadline for submission of tenders, the Purchaser may, for any reason, whether at its

own initiative or otherwise, modify the tender documents by amendment. 3.2 All prospective tenderers who have received the tender documents will be notified of the amendment in writing

or by cable or by fax, and will be binding on them. 3.3 In order to allow prospective tenderers reasonable time in which to take the amendment into account in

preparing their tenders, the Purchaser, at its discretion, may extend the deadline for the submission of tenders.

C. Preparation of Tenders 4. Language of Tender 4.1 The tender prepared by the Tenderer, as well as all correspondence and documents relating to the tender

exchanged by the Tenderer and the Purchaser, shall be written in Kannada language. Supporting documents and printed literature furnished by the Tenderer may be in another language provided they are accompanied by an accurate translation of the relevant passages in Kannada language in which case, for purposes of interpretation of the Tender, the translation shall govern.

5. Documents Comprising the Tender 5.1 The tender prepared by the Tenderer shall comprise the following components: (a) A Tender Form and a Price Schedule completed in accordance with ITT Clauses 6, 7 and 8;


5 (b) Documentary evidence established in accordance with ITT Clause 9 that the Tenderer is eligible

to tender and is qualified to perform the contract if its tender is accepted; (c) Documentary evidence established in accordance with ITT Clause 10 that the goods and ancillary

services to be supplied by the Tenderer conform to the tender documents; and (d) Earnest money deposit furnished in accordance with ITT Clause 11. 6. Tender Form 6.1 The Tenderer shall complete the Tender Form and the Price Schedule furnished in the tender documents,

indicating the goods to be supplied, a brief description of the goods, quantity and prices. 7. Tender Prices 7.1 The Tenderer shall indicate on the Price Schedule the unit prices and total tender prices of the goods it proposes

to supply under the Contract. To this end, the tenderers are allowed the option to submit the tenders for any one or more schedules specified in the ‘Schedule of Requirements’ and to offer discounts for combined schedules. However, tenderers shall quote for the complete requirement of goods and services specified under each schedule on a single responsibility basis, failing which such tenders will not be taken into account for evaluation and will not be considered for award

7.2 Prices indicated on the Price Schedule shall be entered separately in the following manner:

(i) the price of the goods, quoted (ex-works, ex-factory, ex-showroom, ex-warehouse, or off-the-shelf, as applicable), including all duties and sales and other taxes already paid or payable

a. on components and raw material used in the manufacture or assembly of goods quoted ex-works or ex-factory; or

b. on the previously imported goods of foreign origin quoted ex-showroom, ex-warehouse or off-the-shelf.

(ii) any Indian duties, sales and other taxes which will be payable on the goods if this Contract is awarded; (iii) the price for inland transportation, insurance and other local costs incidental to delivery of the goods to

their final destination; and (iv) the price of other incidental services listed in Clause 4 of the Special Conditions of Contract 7.3 Prices quoted by the Tenderer shall be fixed during the Tenderer’s performance of the Contract and not subject

to variation on any account. A tender submitted with an adjustable price quotation will be treated as non-responsive and rejected, pursuant to ITT Clause 19.

8. Tender Currency 8.1 Prices shall be quoted in Indian Rupees: 9. Documents Establishing Tenderer's Eligibility and Qualifications 9.1 Pursuant to ITT Clause 5, the Tenderer shall furnish, as part of its Tender, documents establishing the

Tenderer’s eligibility to tender and its qualifications to perform the Contract if its tender is accepted 9.2 The documentary evidence of the Tenderer's qualifications to perform the Contract if its tender is accepted, shall

establish to the Purchaser's satisfaction: (a) that, in the case of a Tenderer offering to supply goods under the contract which the Tenderer did not

manufacture or otherwise produce, the Tenderer has been duly authorized (as per authorization form in Section XIII) by the goods' Manufacturer or producer to supply the goods in India or is a Authorized Dealer of the Goods.

(The item or items for which Manufacturer’s Authorization is required should be specified)


6 (b) that the Tenderer has the financial, technical, and production capability necessary to perform the Contract

and meets the criteria outlined in the Qualification requirements specified in Section VII. 10. Documents Establishing Goods' Conformity to Tender Documents 10.1 Pursuant to ITB Clause 5, the Tenderer shall furnish, as part of its tender, documents establishing the

conformity to the tender documents of all goods and services which the tenderer proposes to supply under the contract..

10.2 The documentary evidence of conformity of the goods and services to the tender documents may be in the form

of literature, drawings and data, and shall consist of : (a) A detailed description of the essential technical and performance characteristics of the goods ;

(b) A list giving full particulars, including available sources and current prices, of spare parts, special tools, etc., necessary for the proper and continuing functioning of the goods for a period of two years, following commencement of the use of the goods by the Purchaser;

11. Earnest Money Deposit 11.1 Pursuant to ITT Clause 5, the Tenderer shall furnish, as part of its tender, earnest money deposit in the amount

as specified in Section-V - Schedule of Requirements. 11.2 The earnest money deposit is required to protect the Purchaser against the risk of Tenderer's conduct which

would warrant the security's forfeiture, pursuant to ITB Clause 11.7. 11.3 The earnest money deposit shall be denominated in Indian Rupees and shall: (a) at the tenderer’s option, be in the form of either a certified check, pay order, a demand draft, from a

nationalized/Scheduled Bank located in India; specified small savings instruments; and

(b) remain valid for a period of 45 days beyond the original validity period of tenders, or beyond any period of extension subsequently requested under ITT Clause 12.2.

11.4 Any tender not secured in accordance with ITT Clauses 11.1 and 11.3 above (unless the category of tenderer

has been specifically exempted by the Government) will be rejected by the Purchaser as non-responsive, pursuant to ITT Clause 19.

11.5 Unsuccessful Tenderer's tender securities will be discharged/returned as promptly as possible but not later than

30 days after the expiration of the period of tender validity prescribed by the Purchaser, pursuant to ITT Clause 12.

11.6 The successful Tenderer's earnest money deposit will be discharged upon the Tenderer signing the Contract,

pursuant to ITT Clause 26, and furnishing the performance security, pursuant to ITT Clause 27. 11.7 The earnest money deposit may be forfeited:

(a) if a Tenderer

(i) withdraws its tender during the period of tender validity specified by the Tenderer on the Tender Form; or

(ii) does not accept the correction of errors pursuant to ITT Clause 19.3; or (b) in case of a successful Tenderer, if the Tenderer fails: (i) to sign the Contract in accordance with ITT Clause 26; or (ii) to furnish performance security in accordance with ITT Clause 27.


7

12.2

12. Period of Validity of Tenders 12.1 Tenders shall remain valid for 90 days after the deadline for submission of tenders prescribed by the Purchaser,

pursuant to ITB Clause 15. A tender valid for a shorter period shall be rejected by the Purchaser as non-responsive.

In exceptional circumstances, the Purchaser may solicit the Tenderer's consent to an extension of the period of validity. The request and the responses thereto shall be made in writing (or by cable or fax). The earnest money deposit provided under ITT Clause 11 shall also be suitably extended. A Tenderer may refuse the request without forfeiting its earnest money deposit. A Tenderer granting the request will not be required nor permitted to modify its tender.

13. Format and Signing of Tender 13.1 The Tenderer shall prepare two copies of the tender, clearly marking each "Original Tender" and "Copy

Tender", as appropriate. In the event of any discrepancy between them, the original shall govern. 13.2 The original and all copies of the tender shall be typed or written in indelible ink and shall be signed by the

Tenderer or a person or persons duly authorized to bind the tenderer to the Contract. The latter authorization shall be indicated by written power-of-attorney accompanying the tender. All pages of the tender, except for unamended printed literature, shall be initialed by the person or persons signing the tender.

13.3 Any interlineations, erasures or overwriting shall be valid only if they are initialed by the persons or persons

signing the tender.


14. Sealing and Marking of Tenders 14.1 The Tenderers shall seal the original and each copy of the tender in separate inner envelopes, duly marking the

envelopes as "original" and "copy". He shall then place all the inner envelopes in an outer envelope. 14.2 The inner and outer envelopes shall: (a) be addressed to the Purchaser at the following address: --------------------------------------------------------------- ---------------------------------------------- (b) bear the Project Name, the Invitation for Tenders (IFT) title and number, and a statement "Do not open

before —— hours on ——." 14.3 The inner envelopes shall also indicate the name and address of the Tenderer to enable the tender to be returned

unopened in case it is declared "late". 14.4 If the outer envelope is not sealed and marked as required by ITT Clause 14.2, the Purchaser will assume no

responsibility for the tender’s misplacement or premature opening. 14.5 Cable or facsimile tenders will be rejected. 15. Deadline for Submission of Tenders 15.1 Tenders must be received by the Purchaser at the address specified under ITT Clause 14.2 (a) no later than the

time and date specified in the Invitation for Tenders (Section I). In the event of the specified date for the


8submission of Tenders being declared a holiday for the Purchaser, the Tenders will be received upto the appointed time on the next working day.

15.2 The Purchaser may, at its discretion, extend this deadline for submission of tenders by amending the tender

documents in accordance with ITT Clause 3, in which case all rights and obligations of the Purchaser and Tenderers previously subject to the deadline will thereafter be subject to the deadline as extended.

16. Late Tenders 16.1 Any tender received by the Purchaser after the deadline for submission of tenders prescribed by the Purchaser,

pursuant to ITT Clause 15, will be rejected and/or returned unopened to the Tenderer. 17. Modification and Withdrawal of Tenders 17.1 The Tenderer may modify or withdraw its tender after the tender's submission, provided that written notice of

the modification or withdrawal is received by the Purchaser prior to the deadline prescribed for submission of tenders.

17.2 The Tenderer's modification or withdrawal notice shall be prepared, sealed, marked and dispatched in

accordance with the provisions of ITT Clause 14. A withdrawal notice may also be sent by telex or cable or fax but followed by a signed confirmation copy, post marked not later than the deadline for submission of tenders.

17.3 No tender may be modified subsequent to the deadline for submission of tenders. 17.4 No tender may be withdrawn in the interval between the deadline for submission of tenders and the expiration

of the period of tender validity specified by the Tenderer on the Tender Form. Withdrawal of a tender during this interval may result in the Tenderer's forfeiture of its earnest money deposit, pursuant to ITT Clause 11.7.

E. Tender Opening and Evaluation of Tenders 18. Opening of Tenders by the Purchaser 18.1 The Purchaser will open all tenders, in the presence of Tenderers’ representatives who choose to attend, at ——

hours on —— and in the following location: ------------------------------------------------------------------------------------------------------------------------------------ The Tenderers' representatives who are present shall sign a register evidencing their attendance. In the event of

the specified date of Tender opening being declared a holiday for the Purchaser, the tenders shall be opened at the appointed time and location on the next working day.

18.2 The Tenderers’ names, tender modifications or withdrawals, tender prices, discounts, and the presence or

absence of requisite tender security and such other details as the Purchaser, at its discretion, may consider appropriate, will be announced at the opening. No tender shall be rejected at tender opening, except for late tenders, which shall be returned unopened to the Tenderer pursuant to ITT Clause 16.

18.3 Tenders (and modifications sent pursuant to ITT Clause 17.2) that are not opened and read out at tender

opening shall not be considered further for evaluation, irrespective of the circumstances. 18.4 The Purchaser will prepare minutes of the tender opening. 19. Preliminary Examination 19.1 The Purchaser will examine the tenders to determine whether they are complete, whether any computational

errors have been made, whether required sureties have been furnished, whether the documents have been


9properly signed, and whether the tenders are generally in order. Tenders from Agents/Authorized Dealers, without proper authorization from the manufacturer as per Section XIII, shall be treated as non-responsive.

19.2 Where the Tenderer has quoted for more than one schedule, if the earnest money deposit furnished is

inadequate for all the schedules, the Purchaser shall take the price tender into account only to the extent the tender is secured. For this purpose, the extent to which the tender is secured shall be determined by evaluating the requirement of earnest money deposit to be furnished for the schedule included in the tender (offer) in the serial order of the Schedule of Requirements of the Tender document.

19.3 Arithmetical errors will be rectified on the following basis. If there is a discrepancy between the unit price and

the total price that is obtained by multiplying the unit price and quantity, the unit price shall prevail and the total price shall be corrected. If there is a discrepancy between words and figures, the lower of the two will prevail. If the supplier does not accept the correction of errors, its tender will be rejected and its earnest money deposit may be forfeited.

19.4 The Purchaser may waive any minor informality or non-conformity or irregularity in a tender which does not

constitute a material deviation, provided such a waiver does not prejudice or affect the relative ranking of any Tenderer.

19.5 Prior to the detailed evaluation, pursuant to ITT Clause 20, the Purchaser will determine the substantial

responsiveness of each tender to the tender documents. For purposes of these Clauses, a substantially responsive tender is one which conforms to all the terms and conditions of the tender documents without material deviations. Deviations from or objections or reservations to critical provisions such as those concerning Performance Security (GCC Clause 4). Warranty (GCC Clause 12), Applicable law (GCC Clause 19), and Taxes & Duties (GCC Clause 21) will be deemed to be a material deviation. The Purchaser's determination of a tender's responsiveness is to be based on the contents of the tender itself without recourse to extrinsic evidence.

19.6 If a tender is not substantially responsive, it will be rejected by the Purchaser and may not subsequently be

made responsive by the Tenderer by correction of the non-conformity. 20. Evaluation and Comparison of Tenders 20.1 The Purchaser will evaluate and compare the tenders which have been determined to be substantially

responsive, pursuant to ITT Clause 7 for each schedule separately. No tender will be considered if the complete requirements covered in the schedule is not included in the tender. However, as stated in ITT Clause 7, Tenderers are allowed the option to tender for any one or more schedules and to offer discounts for combined schedules. These discounts will be taken into account in the evaluation of the tenders so as to determine the tender or combination of tenders offering the lowest evaluated cost for the Purchaser in deciding award(s) for each schedule.

20.2 The Purchaser's evaluation of a tender will take into account in the case of goods manufactured in India or

goods of foreign origin already located in India, sales and other similar taxes, which will be payable on the goods if a contract is awarded to the Tenderer;

20.3 The Purchaser's evaluation of a tender will take into account, in addition to the tender price (Ex-factory/ex-

warehouse/off-the-shelf price of the goods, such price to include all costs as well as duties and taxes paid or payable on components and raw material incorporated or to be incorporated in the goods, and Excise duty on the finished goods, if payable) and price of incidental services, the following factors, in the manner and to the extent indicated in ITT Clause 20.4 and in the Technical Specifications:

(a) cost of inland transportation, insurance and other costs within India incidental to the delivery of the

goods to their final destination (b) the cost of components, mandatory spare parts and service; 20.4 Pursuant to ITT Clause 20.3, one or more of the following evaluation methods will be applied:


10 (a) Inland Transportation, Insurance and Incidentals: (i) Inland transportation, insurance and other incidentals for delivery of goods to the final destination

as stated in ITT Clause 7.2 (iii). The above costs will be added to the tender price. (b) Cost of Components, mandatory Spare Parts and Services: (i) Appendix ..... to the Technical Specifications lists the items and quantities of major assemblies,

components and selected items of spare parts, likely to be required during the initial .... year period of operation of the equipment. The total cost of these items and quantities at the unit prices quoted in each bid will be added to the tender price.

F. Award of Contract 21. Postqualification 21.1 The Purchaser will determine to its satisfaction whether the Tenderer that is selected as having submitted the

lowest evaluated responsive tender meets the criteria specified in ITT Clause 9.2 (b) and is qualified to perform the contract satisfactorily.

21.2 The determination will take into account the Tenderer's financial, technical and production capabilities. It will

be based upon an examination of the documentary evidence of the Tenderer's qualifications submitted by the Tenderer, pursuant to ITT Clause 9, as well as such other information as the Purchaser deems necessary and appropriate.

21.3 An affirmative determination will be a prerequisite for award of the Contract to the Tenderer. A negative

determination will result in rejection of the Tenderer's tender, in which event the Purchaser will proceed to the next lowest evaluated tender to make a similar determination of that Tenderer's capabilities to perform the contract satisfactorily.

22. Award Criteria 22.1 Subject to ITT Clause 24, the Purchaser will award the Contract to the successful Tenderer whose tender has

been determined to be substantially responsive and has been determined as the lowest evaluated tender, provided further that the Tenderer is determined to be qualified to perform the Contract satisfactorily.

23. Purchaser's right to vary Quantities at Time of Award 23.1 The Purchaser reserves the right at the time of Contract award to increase or decrease by up to 25 percent of the

quantity of goods and services originally specified in the Schedule of Requirements without any change in unit price or other terms and conditions.

24. Purchaser's Right to Accept Any Tender and to Reject Any or All Tenders 24.1 The Purchaser reserves the right to accept or reject any tender, and to annul the tendering process and reject all

tenders at any time prior to contract award, without thereby incurring any liability to the affected Tenderer or Tenderers.

25. Notification of Award 25.1 Prior to the expiration of the period of tender validity, the Purchaser will notify the successful tenderer in

writing by registered letter or by cable/telex or fax, to be confirmed in writing by registered letter, that its tender has been accepted.

25.2 The notification of award will constitute the formation of the Contract.


1125.3 Upon the successful Tenderer's furnishing of performance security pursuant to ITT Clause 27, the

Purchaser will promptly notify the name of the winning Tenderer to each unsuccessful Tenderer and will discharge its earnest money deposit, pursuant to ITT Clause 11.

25.4 If, after notification of award, a Tenderer wishes to ascertain the grounds on which its tender was not selected, it

should address it’s request to the Purchaser. The Purchaser will promptly respond in writing to the unsuccessful Tenderer.

26. Signing of Contract 26.1 At the same time as the Purchaser notifies the successful tenderer that its tender has been accepted, the

Purchaser will send the Tenderer the Contract Form provided in the tender documents, incorporating all agreements between the parties.

26..2 Within 21 days of receipt of the Contract Form, the successful Tenderer shall sign and date the Contract and

return it to the Purchaser. 27. Performance Security 27.1 Within 21 days of the receipt of notification of award from the Purchaser, the successful Tenderer shall furnish

the performance security in accordance with the Conditions of Contract, in the Performance Security Form provided in the tender documents or in another form acceptable to the Purchaser.

27.2 Failure of the successful Tenderer to comply with the requirement of ITT Clause 26.2 or ITT Clause 27.1 shall

constitute sufficient grounds for the annulment of the award and forfeiture of the earnest money deposit, in which event the Purchaser may make the award to the next lowest evaluated Tenderer or call for new tenders.


12

SECTION III: GENERAL CONDITIONS OF CONTRACT TABLE OF CLAUSES

Clause Number Topic Page Number 1. Definitions 13

2. Application 13

3. Standards 13

4. Performance Security 13

5. Inspection and Tests 14

6. Packing 14

7. Delivery and Documents 14

8. Insurance 14

9. Transportation 14

10. Incidental Services 14

11. Spare Parts 15

12. Warranty 15

13. Payment 15

14. Prices 15

15. Contract Amendments 16

16. Delays in Supplier's Performance 16

17. Liquidated Damages 16

18. Termination for Default 16

19. Applicable Law 16

20. Notices 17

21. Taxes and Duties 17


13

SECTION III: GENERAL CONDITIONS OF CONTRACT

General Conditions of Contract 1. Definitions 1.1 In this Contract, the following terms shall be interpreted as indicated: (a) "The Contract" means the agreement entered into between the Purchaser and the Supplier, as recorded in

the Contract Form signed by the parties, including all the attachments and appendices thereto and all documents incorporated by reference therein;

(b) "The Contract Price" means the price payable to the Supplier under the Contract for the full and proper

performance of its contractual obligations; (c) "The Goods" means all the equipment, machinery, and/or other materials which the Supplier is required to

supply to the Purchaser under the Contract; (d) "Services" means services ancillary to the supply of the Goods, such as transportation and insurance, and

any other incidental services, such as installation, commissioning, provision of technical assistance, training and other obligations of the Supplier covered under the Contract;

(e) “GCC” means the General Conditions of Contract contained in this section. (f) “SCC” means the Special Conditions of Contract. (g) “The Purchaser” means the organization purchasing the Goods, as named in SCC. (h) “The Supplier” means the individual or firm supplying the Goods and Services under this Contract.

(i) “The Government” means the Government of Karnataka State.

(j) “The State” means the Karnataka State (k) “The Project Site”, where applicable, means the place or places named in SCC. (l) “Day” means calendar day. 2. Application 2.1 These General Conditions shall apply to the extent that they are not superseded by provisions in other parts of the

Contract. 3. Standards 3.1 The Goods supplied under this Contract shall conform to the standards mentioned in the Technical

Specifications, and, when no applicable standard is mentioned, to the authoritative standard appropriate to the Goods' country of origin and such standards shall be the latest issued by the concerned institution.

4. Performance Security 4.1 Within 21 days of receipt of the notification of contract award, the Supplier shall furnish Performance Security to

the Purchaser for an amount of 5% of the Contract Value, valid up to 60 days after the date of completion of performance obligations including Warranty obligations. In the event of any correction of defects or replacement of defective material during the Warranty period, the Warranty for the corrected/replaced material shall be extended to a further period of 12 months and the Performance Bank Guarantee for proportionate value shall be extended 60 days over and above the initial Warranty period.


144.2 The proceeds of the performance security shall be payable to the Purchaser as compensation for any loss

resulting from the Supplier's failure to complete its obligations under the Contract. 4.3 The Performance Security shall be denominated in Indian Rupees and shall be in one of the following forms: (a) A Bank guarantee, issued by a nationalized/scheduled bank in the form provided in the tender documents or

another form acceptable to the Purchaser; or (b) A cashier's check or Banker’s certified check, or crossed demand draft or pay order drawn in favour of the

Purchaser.; or (c) Specified small savings instruments duly pledged to the Purchaser. 4.4 The Performance Security will be discharged by the Purchaser and returned to the Supplier not later than 60 days

following the date of completion of the Supplier's performance obligations, including any Warranty obligations, under the Contract.

4.5 In the event of any contract amendment, the Supplier shall, within 20 days of receipt of such amendment, furnish

the amendment to the Performance Security, rendering the same valid for the duration of the Contract as amended for 60 days after the completion of performance obligations including Warranty obligations.

5. Inspections and Tests 5.1 The Purchaser or its representative shall have the right to inspect and/or to test the Goods to confirm their

conformity to the Contract specifications at no extra cost to the Purchaser. SCC and the Technical Specifications shall specify what inspections and tests the Purchaser requires and where they are to be conducted. The Purchaser shall notify the Supplier in writing in a timely manner of the identity of any representatives retained for these purposes.

5.2 Should any inspected or tested Goods fail to conform to the specifications, the Purchaser may reject the goods

and the Supplier shall either replace the rejected Goods or make alterations necessary to meet specification requirements free of cost to the Purchaser.

5.3 Nothing in GCC Clause 5 shall in any way release the Supplier from any warranty or other obligations under this

Contract. 6. Packing 6.1 The Supplier shall provide such packing of the Goods as is required to prevent their damage or deterioration

during transit to their final destination as indicated in the Contract. The packing shall be sufficient to withstand, without limitation, rough handling during transit and exposure to extreme temperatures, salt and precipitation during transit and open storage.

7. Delivery and Documents 7.1 Delivery of the Goods shall be made by the Supplier in accordance with the terms specified by the Purchaser in

the Notification of Award along with supporting documents. 8. Insurance 8.1 The Goods supplied under the Contract shall be fully insured against loss or damage during transportation,

storage and delivery. . 9. Transportation 9.1 Where the Supplier is required under the Contract to transport the Goods to a specified place of destination

within the State defined as Project site, transport to such place of destination in State including insurance, as shall be specified in the Contract, shall be arranged by the Supplier, and the related cost shall be included in the Contract Price


15 10. Incidental Services 10.1 The supplier may be required to provide any or all of the following services, including additional services, if any,

specified in SCC: (a) performance or supervision of the on-site assembly and/or start-up of the supplied Goods; (b) furnishing of tools required for assembly and/or maintenance of the supplied Goods; (c) furnishing of detailed operations and maintenance manual for each appropriate unit of supplied Goods; (d) performance or supervision or maintenance and/or repair of the supplied Goods, for a period of time agreed

by the parties, provided that this service shall not relieve the Supplier of any warranty obligations under this Contract; and

(e) training of the Purchaser's personnel, at the Supplier's plant and/or on-site, in assembly, start-up, operation,

maintenance and/or repair of the supplied Goods. 10.2 Prices charged by the Supplier for incidental services, shall be included in the Contract Price for the Goods. 11. Spare Parts 11.1 As specified in the SCC, the Supplier may be required to provide , notifications, and information pertaining to

spare parts manufactured or distributed by the Supplier, such spare parts as the Purchaser may elect to purchase from the Supplier, providing that this election shall not relieve the Supplier of any warranty obligations under the Contract; and

11.2 The Supplier shall carry sufficient inventories to assure ex-stock supply of consumable spares for the Goods,

such as gaskets, plugs, washers, belts etc. Other spare parts and components shall be supplied as promptly as possible but in any case within 3 months of placement of order.

12. Warranty 12.1 The Supplier warrants that the Goods supplied under this Contract are new, unused, of the most recent or current

models and that they incorporate all recent improvements in design and materials unless provided otherwise in the Contract. The Supplier further warrants that all Goods supplied under this Contract shall have no defect arising from design, materials or workmanship or from any act or omission of the Supplier, that may develop under normal use of the supplied Goods in the conditions prevailing in the State.

12.2 This warranty shall remain valid for ….. hours of operation or 12months after the Goods or any portion thereof

as the case may be, have been delivered to and accepted at the final destination indicated in the Contract, or for 18 months after the date of shipment from the place of loading whichever period concludes earlier.

13. Payment 13.1 The method and conditions of payment to be made to the Supplier under this Contract shall be specified in the

SCC. 13.2 The Supplier's request(s) for payment shall be made to the Purchaser in writing, accompanied by an invoice

describing, as appropriate, the Goods delivered and the Services performed, and by documents, submitted pursuant to GCC Clause 7, and upon fulfillment of other obligations stipulated in the contract.

13.3 Payments shall be made promptly by the Purchaser but in no case later than sixty (90) days after submission of

the invoice or claim by the Supplier. 13.4 Payment shall be made in Indian Rupees.


16 14. Prices 14.1 Prices payable to the supplier as stated in the contract shall be firm during the performance of the contract. 15. Contract Amendments 15.1 No variation in or modification of the terms of the Contract shall be made except by written amendment signed

by the parties. 16. Delays in the Supplier's Performance 16.1 Delivery of the Goods and performance of the Services shall be made by the Supplier in accordance with the

time schedule specified by the Purchaser in the Schedule of Requirements. 16.2 If at any time during performance of the Contract, the Supplier or its sub-contractor(s) should encounter

conditions impeding timely delivery of the Goods and performance of Services, the Supplier shall promptly notify the Purchaser in writing of the fact of the delay, its likely duration and its cause(s). As soon as practicable after receipt of the Supplier’s notice, the Purchaser shall evaluate the situation and may, at its discretion, extend the Supplier’s time for performance with or without liquidated damages, in which case the extension shall be ratified by the parties by amendment of the Contract.

16.3 A delay by the Supplier in the performance of its delivery obligations shall render the Supplier liable to the

imposition of liquidated damages pursuant to GCC Clause 17, unless an extension of time is agreed upon pursuant to GCC Clause 16.2 without the application of liquidated damages.

17. Liquidated Damages 17.1 If the Supplier fails to deliver any or all of the Goods or to perform the Services within the period(s) specified in

the Contract, the Purchaser shall, without prejudice to its other remedies under the Contract, deduct from the Contract Price, as liquidated damages, a sum equivalent to 0.5% of the delivered price of the delayed Goods or unperformed Services for each week or part thereof of delay until actual delivery or performance, up to a maximum deduction of 10% of the Contract Price. Once the maximum is reached, the Purchaser may consider termination of the Contract pursuant to GCC Clause 18.

18. Termination for Default 18.1 The Purchaser may, without prejudice to any other remedy for breach of contract, by written notice of default

sent to the Supplier, terminate the Contract in whole or part: (a) if the Supplier fails to deliver any or all of the Goods within the period(s) specified in the Contract, or

within any extension thereof granted by the Purchaser pursuant to GCC Clause 16; or (b) if the Supplier fails to perform any other obligation(s) under the Contract. (c) If the Supplier, in the judgement of the Purchaser has engaged in corrupt or fraudulent practices in

competing for or in executing the Contract. 18.2 In the event the Purchaser terminates the Contract in whole or in part, pursuant to GCC Clause 18.1, the

Purchaser may procure, upon such terms and in such manner as it deems appropriate, Goods or Services similar to those undelivered, and the Supplier shall be liable to the Purchaser for any excess costs for such similar Goods or Services. However, the Supplier shall continue the performance of the Contract to the extent not terminated.

19. Applicable Law 19.1 The Contract shall be interpreted in accordance with the laws of the Union of India.


17 20. Notices 20.1 Any notice given by one party to the other pursuant to this Contract shall be sent to other party in writing or by

cable, or facsimile and confirmed in writing to the other Party’s address specified in SCC. 20.2 A notice shall be effective when delivered or on the notice's effective date, whichever is later. 21. Taxes and Duties 21.1 Suppliers shall be entirely responsible for all taxes (including Sales tax), duties, license fees, octroi, road permits,

etc., incurred until delivery of the contracted Goods to the Purchaser.


18

SECTION IV: SPECIAL CONDITIONS OF CONTRACT

TABLE OF CLAUSES Item No. Topic Page Number 1. Definitions (GCC Clause 1) 19 2. Inspection and Tests (GCC Clause 5) 19 3. Delivery and Documents (GCC Clause 7) 19 4. Incidental Services (GCC Clause 10) 19 5. Payment (GCC Clause 13) 19 6. Notices (GCC Clause 20) 20


19

SECTION IV:SPECIAL CONDITIONS OF CONTRACT

Special Conditions of Contract The following Special Conditions of Contract shall supplement the General Conditions of Contract. Whenever

there is a conflict, the provisions herein shall prevail over those in the General Conditions of Contract. The corresponding clause number of the General Conditions is indicated in parentheses.

1. Definitions (GCC Clause 1) (a) The Purchaser is ...............................................

(b) The Supplier is ................................................ 2. Inspection and Tests (GCC Clause 5) The following inspection procedures and tests are required by the Purchaser: _________________________________________________________ _________________________________________________________ _________________________________________________________ _________________________________________________________ 3. Delivery and Documents (GCC Clause 7) Upon delivery of the Goods, the supplier shall furnish to the Purchaser the following documents: (i) One Original and two Copies of the Supplier invoice showing contract number, goods' description,

quantity, unit price, total amount; (iii) One Original and two Copies of packing list identifying the contents of each package;

(iv) Insurance Certificate;

(v) Manufacturer's/Supplier's warranty certificate;

(vi) Inspection Certificate issued by the nominated inspection agency, and the Supplier's factory inspection report; and

4. Incidental Services (GCC Clause 10) The following services covered under Clause 10 shall be furnished and the cost shall be included in the contract

price: ________________________________________________________ ________________________________________________________ ________________________________________________________ 5. Payment (GCC Clause 13) (i) On Delivery: Eighty percent of the contract price shall be paid on receipt of Goods and establishing that

the supplied goods broadly conform to the number and specifications of the ordered goods, and further upon submission of the documents specified in SCC Clause 3 above; and


20

(ii)

On Final Acceptance: the remaining twenty percent of the Contract Price shall be paid to the supplier within 30 days after the date of the acceptance certificate issued by the Purchaser’s representative for the respective delivery

6. Notices (Clause 20) For the purpose of all notices, the following shall be the address of the Purchaser and Supplier. Purchaser: ............................................. ............................................. ............................................. ............................................. Supplier: (To be filled in at the time of Contract signature) ............................................. ............................................. ............................................. .............................................


21

SECTION V: SCHEDULE OF REQUIREMENTS (To be inserted in the Tender Documents by the Purchaser, as applicable. The Schedule should cover, at a minimum, the required items, quantities, services, delivery period(s) and earnest money deposit (EMD).) Part - I

Serial Brief Unit Quantity Delivery EMD Number Description Schedule in Rupees ____________________________________________________________________________________________ Schedule I Delivery in _____ weeks/ months from ________* at destination (project site) Schedule II Part – II (Incidental Services) ** * The Purchaser must specify here the date from which the date of delivery schedule will start. That date

should be either the date of contract award, or the date of contract signature, as appropriate. The Tender Form should include only a cross reference to this Schedule.

** Specify the required Incidental Services.

SECTION VI - TECHNICAL SPECIFICATIONS [Notes:*

1. Text of Technical specifications to be inserted in the Tender Documents by the Purchaser, as applicable.

2. The Specifications should be drafted to permit the widest possible competition and, at the same time, present a clear statement of the required standards of workmanship, materials, and performances of the goods to be procured. Minimum Functional Specifications should be specified. Only if this is done will the objectives of economy, efficiency, and fairness in procurement is realized, responsiveness of tenders be ensured, and the subsequent task of tender evaluation facilitated.

3. Where ever the goods are covered by Bureau of Indian Standards, the reference to the Standards should be given.

4. Reference to brand name and Catalogue number should be avoided as far as possible; where un avoidable, they should be followed by the words “or at least equivalent” ]

* Delete the Notes in the final document.


SECTION VII : QUALIFICATION CRITERIA

(Referred to in Clause 9.2 (b) of ITT) 1. (a) The tenderer should be a manufacturer who must have manufactured, tested and supplied the

equipment (s) similar to the type specified in the ‘Schedule of Requirements’ up to at least .......% 1 of the quantity required in any one of the last 3 years. The equipments offered for supply must be of the most recent series models incorporating the latest improvements in design. The models should have been released on or after .....2 and be in satisfactory operation for ...... 3months as on date of tender opening.

(b) Tenders of tenderers quoting as authorized representative/dealer of a manufacturer, meeting with

the above requirement in full, can also be considered provided : (i) the manufacturer furnishes authorization in the prescribed format assuring full guarantee

and warranty obligations as per GCC and SCC; and (ii) the tenderer, as authorized representative/dealer , has supplied, installed and

commissioned satisfactorily at least……%4 of the quantity similar to the type specified in the Schedule of Requirements in any one of the last three years which must be in satisfactory operation for at least …. 5months on the date of tender opening.

2. The tenderer should furnish the information on all past supplies and satisfactory performance for both (a)

and (b) above, in proforma under Section XII.

1 Indicate the percentage as considered appropriate – usually not less than 80% of the requirement. 2 Indicate year of model as appropriate. 3 Specify appropriate period. 4 Indicate the percentage as considered appropriate –usually not less than 30% of requirement.


5 Specify appropriate period.


24 SECTION VIII: TENDER FORM Date :........................................ IFT No :.................................... TO: (Name and address of purchaser) Gentlemen and/or Ladies : Having examined the Tender Documents including Addenda Nos............... [insert numbers], the receipt of which is hereby duly acknowledged, we, the undersigned, offer to supply and deliver....................................................... (Description of Goods and Services) in conformity with the said tender documents for the sum of ..................... (Total tender amount in words and figures) or such other sums as may be ascertained in accordance with the Schedule of Prices attached herewith and made part of this tender. We undertake, if our tender is accepted, to deliver the goods in accordance with the delivery schedule specified in the Schedule of Requirements. If our tender is accepted, we will obtain the guarantee of a bank in a sum equivalent to ...... percent of the Contract Price for the due performance of the Contract, in the form prescribed by the Purchaser. We agree to abide by this tender for the Tender validity period specified in Clause 12.1 of the ITT and it shall remain binding upon us and may be accepted at any time before the expiration of that period. Until a formal contract is prepared and executed, this tender, together with your written acceptance thereof and your notification of award, shall constitute a binding Contract between us. We undertake that, in competing for (and, if the award is made to us, in executing) the above contract, we will strictly observe the laws against fraud and corruption in force in India namely “Prevention of Corruption Act 1988”. We understand that you are not bound to accept the lowest or any tender you may receive. We clarify/confirm that we comply with the eligibility requirements as per ITT Clause 1 of the tender documents. Dated this ....... day of ............................ 19 ..... _________________________________ ___________________________________ (signature) (in the capacity of) Duly authorized to sign Tender for and on behalf of _____________________________________________________


25

PRICE SCHEDULE

Price for each Unit Schedule

No.

Item

Description

Quantity

and Unit Ex-

factory/Ex-

warehouse/Ex

-

showroom/off

the shelf

Excise

duty if

any

Inland

transportation

, insurance

and other

local costs

incidental to

delivery

Sales

and

other

taxes

payable

if

contract

awarde

d

Unit Price

(4+5+6+7)

Total

Price

3x5

1 2 3 4 5 6 7 8 9

Note: In case of discrepancy between unit price Total tender price in Rs (Words)……………………..

and total price, the unit price will prevail ……………………………………………………….

Signature of Tenderer ………………………………

Name and address: …………………………………


26

SECTION X: CONTRACT FORM

THIS AGREEMENT made the .......day of.................................., 20... Between .......................... (Name of

purchaser) of .............. (Country of Purchaser) (hereinafter called "the Purchaser") of the one part and

..................... (Name of Supplier) of ......................... (City and Country of Supplier) (hereinafter called "the

Supplier") of the other part :

WHEREAS the Purchaser is desirous that certain Goods and ancillary services viz., ..................................... (Brief

Description of Goods and Services) and has accepted a tender by the Supplier for the supply of those goods and

services in the sum of .............................. (Contract Price in Words and Figures) (hereinafter called "the Contract

Price").

NOW THIS AGREEMENT WITNESSETH AS FOLLOWS:

1. In this Agreement words and expressions shall have the same meanings as are respectively assigned to them in the Conditions of Contract referred to.

2. The following documents shall be deemed to form and be read and construed as part of this Agreement, viz.:

(a) the Tender Form and the Price Schedule submitted by the Tenderer;

(b) the Schedule of Requirements;

(c) the Technical Specifications;

(d) the General Conditions of Contract;

(e) the Special Conditions of Contract; and

(f) the Purchaser's Notification of Award. 3. In consideration of the payments to be made by the Purchaser to the Supplier as hereinafter mentioned, the

Supplier hereby covenants with the Purchaser to provide the goods and services and to remedy defects therein in conformity in all respects with the provisions of the Contract.

4. The Purchaser hereby covenants to pay the Supplier in consideration of the provision of the goods and

services and the remedying of defects therein, the Contract Price or such other sum as may become payable under the provisions of the Contract at the times and in the manner prescribed by the Contract.

Brief particulars of the goods and services which shall be supplied/provided by the Supplier are as under: __________________________________________________________________________________________ SL. BRIEF QUANTITY TO UNIT Total DELIVERY TERMS NO. DESCRIPTION OF BE SUPPLIED PRICE Price GOODS & SERVICES __________________________________________________________________________________________

__________________________________________________________________________________________

TOTAL VALUE:


27DELIVERY SCHEDULE:


28 IN WITNESS whereof the parties hereto have caused this Agreement to be executed in accordance with their respective laws the day and year first above written. Signed, Sealed and Delivered by the said ..................................................... (For the Purchaser) in the presence of:....................................... Signed, Sealed and Delivered by the said ..................................................... (For the Supplier) in the presence of:.......................................

SECTION XI. PERFORMANCE SECURITY FORM To: (Name of Purchaser) WHEREAS ................................................................... (Name of Supplier) hereinafter called "the Supplier" has undertaken , in pursuance of Contract No................. dated,........... 20... to supply...................... .................................................(Description of Goods and Services) hereinafter called "the Contract". AND WHEREAS it has been stipulated by you in the said Contract that the Supplier shall furnish you with a Bank Guarantee by a recognized bank for the sum specified therein as security for compliance with the Supplier's performance obligations in accordance with the Contract. AND WHEREAS we have agreed to give the Supplier a Guarantee: THEREFORE WE hereby affirm that we are Guarantors and responsible to you, on behalf of the Supplier, up to a total of ................................... ........................................ (Amount of the Guarantee in Words and Figures) and we undertake to pay you, upon your first written demand declaring the Supplier to be in default under the Contract and without cavil or argument, any sum or sums within the limit of ................................ (Amount of Guarantee) as aforesaid, without your needing to prove or to show grounds or reasons for your demand or the sum specified therein. This guarantee is valid until the ........day of...................20...... Signature and Seal of Guarantors ................................ ................................ ................................ Date......................20.... Address:........................ ................................ ................................



30

SECTION XII (Please see Clause 9.2 (b) of the Instructions to Tenders)

Proforma for Performance Statement for the last three years

IFT No………………. Date of Opening…………………. Time ……… Hours Name of the Firm: …………………………………………………………………………………………….. Orders placed by (Full address of Purchaser)

Order No and Date

Description and Quantity of Goods ordered

Value of Order

Date of Completion of Delivery As per contract/Actual

Remarks indicating reasons for late delivery, if any

Has the goods/ equipment been satisfactorily functioning. (Attach a Certificate from the Purchaser)

1 2 3 4 5 6 7 Signature and Seal of the Tenderer:-----------------------------------------------------------------------------


31

SECTION XIII:- MANUFACTURERS' AUTHORIZATION FORM* (Please see Clause 9.2 (a) of Instructions to Tenderers)

No. dated To Dear Sir:

IFT No. We who are established and reputable manufacturers of (name and description of goods offered) having factories at (address of factory) do state that: (a) M/s (Name and address of Agent) is hereby authorized to submit a tender, and sign

the contract with you for the goods manufactured by us against the above IFT; OR (b) M/s -------------------------------(Name and address of the Authorized Dealer) is our accredited/authorized

Dealer We hereby extend our full guarantee and warranty as per Clause 12 of the General Conditions of Contract for the goods and services offered for supply by the above firm against this IFT.

Yours faithfully, (Name)

(Name of manufacturers)

Note: This letter of authority should be on the letterhead of the manufacturer and should be signed by a person competent and having the power of attorney to legally bind the manufacturer. It should be included by the Tenderer in its tender.

* Modify this format suitably in case where manufacturer’s warranty and guarantee are not applicable for the

items for which tenders are invited.

Annexure II K/G - 2

GOVERNMENT OF KARANATAKA

——————————————— (Name of organization) ——————————————— ——————————————— (Address) Telephones:———— Fax: ————


TENDER REFERENCE : DATE OF COMMENCEMENT OF SALE OF TENDER DOCUMENT : LAST DATE FOR SALE OF TENDER DOCUMENT : * LAST DATE AND TIME FOR RECEIPT OF TENDERS : TIME AND DATE OF OPENING OF TENDERS : PLACE OF OPENING OF TENDERS : ADDRESS FOR COMMUNICATION :

* Should be the same as for the deadline for receipt of tenders or promptly thereafter

K/G-2 Goods/Equipment/Open tender/> Rs.10 lakhs,<50 lakhs

K/G-2 Goods/Equipment/Open tenders/ > Rs. 10 lakhs,<50 lakhs

2


SECTION I. INVITATION FOR TENDERS (IFT) Date : IFT No. : 1. The .................................... (Purchaser) invites tenders from eligible tenderers for the supply of the goods listed below: 2. The tenderers may submit tenders for any or all of the goods given above. Tenderers are advised to note the qualification criteria specified in Section VII to qualify for award of the contract. 3. Tender documents (and additional copies) may be purchased from the office of.............. ................................ from ...........to..........,during office hours, for a non-refundable fee (two sets)of Rs………….. (Rupees ……………………………………………………………….), in the form of cash or Demand Draft/Pay Order on any Nationalized/ Scheduled bank payable at................ in favour of...... .................... Interested tenderers may obtain further information at the same address. Tender documents requested by mail will be dispatched by registered/speed post on payment of an extra amount of Rs........... The .......................... will not be held responsible for the postal delay if any, in the delivery of the documents or non-receipt of the same. 4. Tenders must be accompanied by security of the amount specified in the tender document, drawn in favour of.......................... Earnest money deposit will have to be in any one of the forms as specified in the Tender document and shall have to be valid for 45 days beyond the validity of the tender. 5. Tenders must be delivered to................................................................. on or before.........hours on ............. (date) and will be opened on the same day at...........hours, in the presence of the tenderers or their authorized representatives who wish to attend. If the office happens to be closed on the date of receipt of the tenders as specified, the tenders will be received and opened on the next working day at the same time and venue. 6. Other details can be seen in the tender documents.

SECTION II: INSTRUCTIONS TO TENDERERS

TABLE OF CLAUSES Clause Topic Page No. Number No. A. Introduction 1. Eligible Tenderer 4 2. Cost of Tendering 4 B. Tender Documents 3. Contents of Tender Documents 4 4. Clarification of Tender Documents 4 5. Amendment of Tender Documents 4 C. Preparation of Tenders 6.. Language of Tender 5 7. Documents Comprising the Tender 5 8.. Tender Form 5 9. Tender Prices 5 10. Tender Currency 6 11. Documents Establishing Tenderer’s Eligibility and Qualifications 6 12. Documents Establishing Goods Eligibility and Conformity to Tender Documents 7 13. Earnest Money Deposit 7 14. Period of Validity of Tenders 8 15. Format and Signing of Tender 8


16. Sealing and Marking of Tenders 8 17 Deadline for submission of Tenders 9 18. Late Tenders 9 19 Modification and Withdrawal of Tenders 9

E. Tender Opening and Evaluation of Tenders

20 Opening of Tenders by the Purchaser 9 21 Clarification of Tenders 10 22 Preliminary Examination 10 23 Evaluation and Comparison of Tenders 10 24 Contacting the Purchaser 12

F. Award of Contract

25 Post-qualification 13 26 Award Criteria 13 27 Purchaser’s Right to Vary Quantities at Time of Award 13 28 Purchaser’s Right to Accept any Tender and to Reject any or all Tenders 13 29 Notification of Award 13 30 Signing of Contract 13 31 Performance Security 14 32 Corrupt and Fraudulent Practices 14

K/G-2 Goods/Equipment/Open tenders/> Rs.10 lakhs,<50 lakhs


4SECTION II: INSTRUCTION TO TENDERERS

A. Introduction

1. Eligible Tenderers 1.1 Tenderers should not be associated, or have been associated in the past, directly or indirectly, with a firm or any

of its affiliates which have been engaged by the Purchaser to provide consulting services for the preparation of the design, specifications, and other documents to be used for the procurement of the goods to be purchased under this Invitation of Tenders.

1.2 Bidders shall not be under a declaration of ineligibility for corrupt and fraudulent practices issued by

Government of Karnataka 2. Cost of Tendering: 2.1 The Tenderer shall bear all costs associated with the preparation and submission of its tender, and ............,1

hereinafter referred to as "the Purchaser", will in no case be responsible or liable for these costs, regardless of the conduct or outcome of the tender process.

B. The Tender Documents 3. Contents of Tender Documents 3.1 The goods required, tendering procedures and contract terms are prescribed in the tender documents. In addition

to the Invitation for Tenders, the tender documents include:

(l)

(a) Instruction to Tenderers (ITT) ; (b) General Conditions of Contract (GCC) ; (c) Special Conditions of Contract (SCC) ; (d) Schedule of Requirements; (e) Technical Specifications; (f) Tender Form and Price Schedules; (g) Earnest Money Deposit Form; (h) Contract Form; (i) Performance Security Form; (j) Performance Statement Form; (k) Manufacturer’s Authorization Form; and

Equipment and Quality Control Form 3.2 The Tenderer is expected to examine all instructions, forms, terms, and specifications in the tender documents.

Failure to furnish all information required by the tender documents or submission of a tender not substantially responsive to the tender documents in every respect will be at the Tenderer’s risk and may result in rejection of its tender.

4. Clarification of Tender Documents 4.1 A prospective Tenderer requiring any clarification of the tender documents may notify the Purchaser in writing

or by telex or cable or fax at the Purchaser's mailing address indicated in the Invitation for Tenders. The Purchaser will respond in writing to any request for clarification of the tender documents which it receives no later than 15 days prior to the deadline for submission of tenders prescribed by the Purchaser. Written copies of the Purchaser's response (including an explanation of the query but without identifying the source of inquiry) will be sent to all prospective tenderers which have received the tender documents.

5. Amendment of Tender Documents

1 Give the designation of the Purchaser.


55.1 At any time prior to the deadline for submission of tenders, the Purchaser may, for any reason, whether at its

own initiative or in response to a clarification requested by a prospective tenderer, modify the tender documents by amendment.

5.2 All prospective tenderers who have received the tender documents will be notified of the amendment in writing

or by cable or by fax, and will be binding on them. 5.3 In order to allow prospective tenderers reasonable time in which to take the amendment into account in

preparing their tenders, the Purchaser, at its discretion, may extend the deadline for the submission of tenders.

C. Preparation of Tenders 6. Language of Tender 6.1 The tender prepared by the Tenderer, as well as all correspondence and documents relating to the tender

exchanged by the Tenderer and the Purchaser, shall be written in English language. Supporting documents and printed literature furnished by the Tenderer may be in another language provided they are accompanied by an accurate translation of the relevant passages in the English language in which case, for purposes of interpretation of the Tender, the translation shall govern.

7. Documents Constituting the Tender 7.1 The tender prepared by the Tenderer shall comprise the following components: (a) A Tender Form and a Price Schedule completed in accordance with ITT Clauses 8, 9 and 10; (b) Documentary evidence established in accordance with ITT Clause 11 that the Tenderer is eligible to

tender and is qualified to perform the contract if its tender is accepted; (c) Documentary evidence established in accordance with ITT Clause 12 that the goods and ancillary

services to be supplied by the Tenderer are eligible goods and services and conform to the tender documents; and

(d) Earnest money deposit furnished in accordance with ITT Clause 13. 8. Tender Form 8.1 The Tenderer shall complete the Tender Form and the Price Schedule furnished in the tender documents,

indicating the goods to be supplied, a brief description of the goods, their country of origin, quantity and prices. 9. Tender Prices 9.1 The Tenderer shall indicate on the Price Schedule the unit prices and total tender prices of the goods it proposes

to supply under the Contract. To this end, the tenderers are allowed the option to submit the tenders for any one or more schedules specified in the ‘Schedule of Requirements’ and to offer discounts for combined schedules. However, tenderers shall quote for the complete requirement of goods and services specified under each schedule on a single responsibility basis, failing which such tenders will not be taken into account for evaluation and will not be considered for award

9.2 Prices indicated on the Price Schedule shall be entered separately in the following manner:

(i) the price of the goods, quoted (ex-works, ex-factory, ex-showroom, ex-warehouse, or off-the-shelf, as applicable), including all duties and sales and other taxes already paid or payable


6 a. on components and raw material used in the manufacture or assembly of goods quoted ex-works

or ex-factory; or b. on the previously imported goods of foreign origin quoted ex-showroom, ex-warehouse or off-the-

shelf. (ii) any Indian duties, sales and other taxes which will be payable on the goods if this Contract is awarded; (iii) the price for inland transportation, insurance and other local costs incidental to delivery of the goods to

their final destination; and

(iv) the price of other incidental services listed in Clause 4 of the Special Conditions of Contract. 9.3 The Tenderer’s separation of the price components in accordance with ITT Clause 9.2 above will be solely for

the purpose of facilitating the comparison of tenders by the Purchaser and will not in any way limit the Purchaser's right to contract on any of the terms offered.

9.4 Prices quoted by the Tenderer shall be fixed during the Tenderer’s performance of the Contract and not subject

to variation on any account. A tender submitted with an adjustable price quotation will be treated as non-responsive and rejected, pursuant to ITT Clause 22.

10. Tender Currency 10.1 Prices shall be quoted in Indian Rupees: 11. Documents Establishing Tenderer's Eligibility and Qualifications 11.1 Pursuant to ITT Clause 7, the Tenderer shall furnish, as part of its Tender, documents establishing the

Tenderer’s eligibility to tender and its qualifications to perform the Contract if its tender is accepted 11.2 The documentary evidence of the Tenderer's qualifications to perform the Contract if its tender is accepted, shall

establish to the Purchaser's satisfaction: (a) that, in the case of a Tenderer offering to supply goods under the contract which the Tenderer did not

manufacture or otherwise produce, the Tenderer has been duly authorized (as per authorization form in Section XIII) by the goods' Manufacturer or producer to supply the goods in India.

(The item or items for which Manufacturer’s Authorization is required should be specified) [Note: Supplies for any particular item in each schedule of the tender should be from one

manufacturer only. Tenders from agents offering supplies from different manufacturer's for the same item of the schedule in the tender will be treated as non-responsive.]

(b) that the Tenderer has the financial, technical, and production capability necessary to perform the Contract

and meets the criteria outlined in the Qualification requirements specified in Section VII. To this end, all tenders submitted shall include the following information:

(i) The legal status, place of registration and principal place of business of the company or firm or

partnership, etc.; (ii) Details of experience and past performance of the tenderer on equipment offered and on those of

similar nature within the past three/five years2 and details of current contracts in hand and other commitments (suggested proforma given in Section XII);

2 Choose either three or five depending on the goods/equipment to be procured and the value of procurement.


712. Documents Establishing Goods' Eligibility and Conformity to Tender Documents 12.1 Pursuant to ITB Clause 7, the Tenderer shall furnish, as part of its tender, documents establishing the eligibility

and conformity to the tender documents of all goods and services which the tenderer proposes to supply under the contract..

12.2 The documentary evidence of conformity of the goods and services to the tender documents may be in the form

of literature, drawings and data, and shall consist of : (a) a detailed description of the essential technical and performance characteristics of the goods ;

(b) a list giving full particulars, including available sources and current prices, of spare parts, special tools, etc., necessary for the proper and continuing functioning of the goods for a period of two years, following commencement of the use of the goods by the Purchaser; and

(c) an item-by-item commentary on the Purchaser's Technical Specifications demonstrating substantial responsiveness of the goods and services to those specifications or a statement of deviations and exceptions to the provisions of the Technical Specifications.

12.3 For purposes of the commentary to be furnished pursuant to ITT Clause 12.2(c) above, the Tenderer shall note

that standards for workmanship, material and equipment, and references to brand names or catalogue numbers designated by the Purchaser in its Technical Specifications are intended to be descriptive only and not restrictive. The Tenderer may substitute alternative standards, brand names and/or catalogue numbers in its tender, provided that it demonstrates to the Purchaser's satisfaction that the substitutions ensure substantial equivalence to those designated in the Technical Specifications.

13. Earnest Money Deposit 13.1 Pursuant to ITT Clause 7, the Tenderer shall furnish, as part of its tender, earnest money deposit in the amount

as specified in Section-V - Schedule of Requirements. 13.2 The earnest money deposit is required to protect the Purchaser against the risk of Tenderer's conduct which

would warrant the security's forfeiture, pursuant to ITB Clause 13.7. 13.3 The earnest money deposit shall be denominated in Indian Rupees and shall: (a) at the tenderer’s option, be in the form of either a certified check, pay order, letter of credit, a demand

draft, or a bank guarantee from a Nationalized/Scheduled Bank located in India or specified small savings instruments;

(b) the bank guarantee be substantially in accordance with the form of earnest money deposit included in

Section VIII or other form approved by the Purchaser prior to tender submission;

(c) be payable promptly upon written demand by the Purchaser in case any of the conditions listed in ITT Clause 13.7 are invoked;

(d) be submitted in its original form; copies will not be accepted; and

(e) remain valid for a period of 45 days beyond the original validity period of tenders, or beyond any period

of extension subsequently requested under ITT Clause 14.2. 13.4 Any tender not secured in accordance with ITT Clauses 13.1 and 13.3 above will be rejected by the Purchaser

as non-responsive, pursuant to ITT Clause 22. 13.5 Unsuccessful Tenderer's earnest money deposit will be discharged/returned as promptly as possible but not later

than 30 days after the expiration of the period of tender validity prescribed by the Purchaser, pursuant to ITT Clause 14.

13.6 The successful Tenderer's earnest money deposit will be discharged upon the Tenderer signing the Contract,

pursuant to ITT Clause 30, and furnishing the performance security, pursuant to ITB Clause 31.


8 13.7 The tender security may be forfeited: (a) if a Tenderer (i) withdraws its tender during the period of tender validity specified by the Tenderer on

the Tender Form; or (ii) does not accept the correction of errors pursuant to ITT Clause 22.2; or (b) in case of a successful Tenderer, if the Tenderer fails: (i) to sign the Contract in accordance with ITT Clause 30; or (ii) to furnish performance security in accordance with ITT Clause 31. 14. Period of Validity of Tenders 14.1 Tenders shall remain valid for 90 days after the deadline for submission of tenders prescribed by the Purchaser,

pursuant to ITB Clause 17. A tender valid for a shorter period shall be rejected by the Purchaser as non-responsive.

14.2 In exceptional circumstances, the Purchaser may solicit the Tenderer's consent to an extension of the period of

validity. The request and the responses thereto shall be made in writing (or by cable or telex or fax). The earnest money deposit provided under ITT Clause 13 shall also be suitably extended. A Tenderer may refuse the request without forfeiting its earnest money deposit. A Tenderer granting the request will not be required nor permitted to modify its tender.

15. Format and Signing of Tender 15.1 The Tenderer shall prepare two copies of the tender, clearly marking each "Original Tender" and "Copy

Tender", as appropriate. In the event of any discrepancy between them, the original shall govern. 15.2 The original and all copies of the tender shall be typed or written in indelible ink and shall be signed by the

Tenderer or a person or persons duly authorized to bind the tenderer to the Contract. The latter authorization shall be indicated by written power-of-attorney accompanying the tender. All pages of the tender, except for unamended printed literature, shall be initialed by the person or persons signing the tender.

15.3 Any interlineations, erasures or overwriting shall be valid only if they are initialed by the persons or persons

signing the tender. 15.4 The Tenderer shall furnish information as described in the Form of Tender on commissions or gratuities, if any,

paid or to be paid to agents relating to this Tender, and to contract execution if the Tenderer is awarded the contract.


16. Sealing and Marking of Tenders 16.1 The Tenderers shall seal the original and each copy of the tender in separate inner envelopes, duly marking the

envelopes as "original" and "copy". He shall then place all the inner envelopes in an outer envelope. 16.2 The inner and outer envelopes shall: (a) be addressed to the Purchaser at the following address: (b) bear the Project Name, the Invitation for Tenders (IFT) title and number, and a statement "Do not open

before —— hours on ——." 16.3 The inner envelopes shall also indicate the name and address of the Tenderer to enable the tender to be returned

unopened in case it is declared "late".


916.4 If the outer envelope is not sealed and marked as required by ITT Clause 16.2, the Purchaser will assume no

responsibility for the tender’s misplacement or premature opening. 16.5 Telex, cable or facsimile tenders will be rejected. 17. Deadline for Submission of Tenders 17.1 Tenders must be received by the Purchaser at the address specified under ITT Clause 16.2 (a) no later than the

time and date specified in the Invitation for Tenders (Section I). In the event of the specified date for the submission of Tenders being declared a holiday for the Purchaser, the Tenders will be received upto the appointed time on the next working day.

17.2 The Purchaser may, at its discretion, extend this deadline for submission of tenders by amending the tender

documents in accordance with ITB Clause 5, in which case all rights and obligations of the Purchaser and Tenderers previously subject to the deadline will thereafter be subject to the deadline as extended.

18. Late Tenders 18.1 Any tender received by the Purchaser after the deadline for submission of tenders prescribed by the Purchaser,

pursuant to ITT Clause 17, will be rejected and/or returned unopened to the Tenderer. 19. Modification and Withdrawal of Tenders 19.1 The Tenderer may modify or withdraw its tender after the tender's submission, provided that written notice of

the modification or withdrawal is received by the Purchaser prior to the deadline prescribed for submission of tenders.

19.2 The Tenderer's modification or withdrawal notice shall be prepared, sealed, marked and dispatched in

accordance with the provisions of ITT Clause 16. A withdrawal notice may also be sent by telex or cable or fax but followed by a signed confirmation copy, post marked not later than the deadline for submission of tenders.

19.3 No tender may be modified subsequent to the deadline for submission of tenders. 19.4 No tender may be withdrawn in the interval between the deadline for submission of tenders and the expiration

of the period of tender validity specified by the Tenderer on the Tender Form. Withdrawal of a tender during this interval may result in the Tenderer's forfeiture of its earnest money deposit, pursuant to ITT Clause 13.7.

E. Tender Opening and Evaluation of Tenders 20. Opening of Tenders by the Purchaser 20.1 The Purchaser will open all tenders, in the presence of Tenderers’ representatives who choose to attend, at ——

hours on —— and in the following location: The Tenderers' representatives who are present shall sign a register evidencing their attendance. In the event of

the specified date of Tender opening being declared a holiday for the Purchaser, the tenders shall be opened at the appointed time and location on the next working day.

20.2 The Tenderers’ names, tender modifications or withdrawals, tender prices, discounts, and the presence or

absence of requisite tender security and such other details as the Purchaser, at its discretion, may consider appropriate, will be announced at the opening. No tender shall be rejected at tender opening, except for late tenders, which shall be returned unopened to the Tenderer pursuant to ITT Clause 18.

20.3 Tenders (and modifications sent pursuant to ITT Clause 19.2) that are not opened and read out at tender

opening shall not be considered further for evaluation, irrespective of the circumstances.


1020.4 The Purchaser will prepare minutes of the tender opening. 21. Clarification of Tenders 21.1 During evaluation of tenders, the Purchaser may, at its discretion, ask the Tenderer for a clarification of its

tender. The request for clarification and the response shall be in writing and no change in prices or substance of the tender shall be sought, offered or permitted.

22. Preliminary Examination 22.1 The Purchaser will examine the tenders to determine whether they are complete, whether any computational

errors have been made, whether required sureties have been furnished, whether the documents have been properly signed, and whether the tenders are generally in order. Tenders from Agents, without proper authorization from the manufacturer as per Section XIII, shall be treated as non-responsive.

22.1.1 Where the Tenderer has quoted for more than one schedule, if the tender security furnished is inadequate for all

the schedules, the Purchaser shall take the price tender into account only to the extent the tender is secured. For this purpose, the extent to which the tender is secured shall be determined by evaluating the requirement of tender security to be furnished for the schedule included in the tender (offer) in the serial order of the Schedule of Requirements of the Tender document.

22.2 Arithmetical errors will be rectified on the following basis. If there is a discrepancy between the unit price and

the total price that is obtained by multiplying the unit price and quantity, the unit price shall prevail and the total price shall be corrected. If there is a discrepancy between words and figures, the lowest of the two will prevail. If the supplier does not accept the correction of errors, its tender will be rejected and its tender security may be forfeited.

22.3 The Purchaser may waive any minor informality or non-conformity or irregularity in a tender which does not

constitute a material deviation, provided such a waiver does not prejudice or affect the relative ranking of any Tenderer.

22.4 Prior to the detailed evaluation, pursuant to ITB Clause 23, the Purchaser will determine the substantial

responsiveness of each tender to the tender documents. For purposes of these Clauses, a substantially responsive tender is one which conforms to all the terms and conditions of the tender documents without material deviations. Deviations from or objections or reservations to critical provisions such as those concerning Performance Security (GCC Clause 6). Warranty (GCC Clause 14), Force Majeure (GCC Clause 24), Limitation of liability (GCC Clause 28), Applicable law (GCC Clause 30), and Taxes & Duties (GCC Clause 32) will be deemed to be a material deviation. The Purchaser's determination of a tender's responsiveness is to be based on the contents of the tender itself without recourse to extrinsic evidence.

22.5 If a tender is not substantially responsive, it will be rejected by the Purchaser and may not subsequently be

made responsive by the Tenderer by correction of the non-conformity. 23. Evaluation and Comparison of Tenders 23.1 The Purchaser will evaluate and compare the tenders which have been determined to be substantially

responsive, pursuant to ITT Clause 22 for each schedule separately. No tender will be considered if the complete requirements covered in the schedule is not included in the tender. However, as stated in ITT Clause 9, Tenderers are allowed the option to tender for any one or more schedules and to offer discounts for combined schedules. These discounts will be taken into account in the evaluation of the tenders so as to determine the tender or combination of tenders offering the lowest evaluated cost for the Purchaser in deciding award(s) for each schedule.

23.2 The Purchaser's evaluation of a tender will exclude and not take into account: (a) any allowance for price adjustment during the period of execution of the Contract, if provided in the

tender.


1123.3 The Purchaser's evaluation of a tender will take into account, in addition to the tender price (Ex-

factory/ex-warehouse/off-the-shelf price of the goods offered from within India, such price to include all costs as well as duties and taxes paid or payable on components and raw material incorporated or to be incorporated in the goods, and Excise duty on the finished goods, if payable) and price of incidental services, the following factors, in the manner and to the extent indicated in ITT Clause 23.4 and in the Technical Specifications:

(a) cost of inland transportation, insurance and other costs within India incidental to the delivery of the

goods to their final destination; (b) delivery schedule offered in the tender; (c) deviations in payment schedule from that specified in the Special Conditions of Contract; (d) the cost of components, mandatory spare parts and service; (e) the availability in India of spare parts and after-sales services for the goods / equipment offered in the

tender; (f) the projected operating and maintenance costs during the life of the equipment; and (g) the performance and productivity of the equipment offered. 23.4 Pursuant to ITT Clause 23.3, one or more of the following evaluation methods will be applied: (a) Inland Transportation, Insurance and Incidentals: (i) Inland transportation, insurance and other incidentals for delivery of goods to the final destination

as stated in ITT Clause 9.2 (iii).

The above costs will be added to the tender price. (b) Delivery Schedule: (i) The Purchaser requires that the goods under the Invitation for Tenders shall be delivered at the

time specified in the Schedule of Requirements. The estimated time of arrival of the goods at the project site should be calculated for each tender after allowing for reasonable transportation time. Treating the date as per schedule of requirements as the base, a delivery "adjustment" will be calculated for other tenders at 2% of the ex-factory price including excise duty for each month of delay beyond the base and this will be added to the tender price for evaluation. No credit will be given to earlier deliveries and tenders offering delivery beyond ..... 3months of stipulated delivery period will be treated as unresponsive.

(c) Deviation in Payment Schedule: The Special Conditions of Contract stipulate the payment schedule offered by the Purchaser. If a tender

deviates from the schedule and if such deviation is considered acceptable to the Purchaser, the tender will be evaluated by calculating interest earned for any earlier payments involved in the terms outlined in the tender as compared to those stipulated in this invitation, at a rate of .......4 percent per annum.

(d) Cost of Spare Parts: (i) Appendix ..... to the Technical Specifications lists the items and quantities of major assemblies,

components and selected items of spare parts, likely to be required during the initial .... year period of operation of the plant. The total cost of these items and quantities at the unit prices quoted in each bid will be added to the tender price.

3 Specify a period which is not more than twice the desired delivery period. 4 Specify commercial Bank rate of interest plus 2%


12 OR (ii) The Purchaser will draw up a list of high usage and high value items of components and spare

parts along with estimated quantities of usage in the initial .... year period of operation. The total cost of these items and quantities will be computed from spare parts unit prices submitted by the Tenderer and added to the tender price.

OR (iii) The Purchaser will estimate the cost of spare parts usage in the initial .... year period of operation,

based on information furnished by each tenderer as well as on past experience of the Purchaser or other Purchasers in similar situations. Such costs shall be added to the tender price for evaluation.

(e) Spare Parts and After Sales Service Facilities in India: The cost to the Purchaser of establishing the minimum service facilities and parts inventories, as outlined

elsewhere in the tender documents, if quoted separately, shall be added to the tender price. (f) Operating and Maintenance Costs: Since the operating and maintenance costs of the equipment under procurement form a major part of the

life cycle cost of the equipment, these costs will be evaluated as follows: (i) fuel costs shall be based on ...... kms/hours of operation per year for .... years at a fuel price of

Rs.......; (ii) spare parts costs shall be based on ...... kms/hours of operation based on the guaranteed figures

provided by the Tenderer in response to ...... of the Technical Specifications or based on past actual figures for similar equipment already in use with the Purchaser; and

(iii) all future costs will be discounted to present value at a discount factor of .10 percent. (g) Performance and Productivity of the Equipment: (i) Tenderers shall state the guaranteed performance or efficiency in response to the Technical

Specification. For each drop in performance or efficiency below the norm of 100, an adjustment of Rs.......... will be added to the tender price, representing the capitalized cost of additional operating costs over the life of the plant using the methodology specified in the Technical Specifications; OR

(ii) Goods offered shall have a minimum productivity specified under the relevant provisions in

Technical Specifications to be considered responsive. Evaluation shall be based on the cost per unit of the actual productivity of goods offered in the bid and adjustment will be added to the tender price using the methodology specified in the Technical Specifications.

24. Contacting the Purchaser 24.1 Subject to ITT Clause 21, no Tenderer shall contact the Purchaser on any matter relating to its tender, from the

time of the tender opening to the time the Contract is awarded. If the tenderer wishes to bring additional information to the notice of the purchaser, it should do so in writing.

24.2 Any effort by a Tenderer to influence the Purchaser in its decisions on tender evaluation, tender comparison or

contract award may result in rejection of the Tenderer's tender.


13F. Award of Contract

25. Postqualification 25.1 In the absence of prequalification, the Purchaser will determine to its satisfaction whether the Tenderer that is

selected as having submitted the lowest evaluated responsive tender meets the criteria specified in ITT Clause 11.2 (b) and is qualified to perform the contract satisfactorily.

25.2 The determination will take into account the Tenderer's financial, technical and production capabilities. It will

be based upon an examination of the documentary evidence of the Tenderer's qualifications submitted by the Tenderer, pursuant to ITT Clause 11, as well as such other information as the Purchaser deems necessary and appropriate.

25.3 An affirmative determination will be a prerequisite for award of the Contract to the Tenderer. A negative

determination will result in rejection of the Tenderer's tender, in which event the Purchaser will proceed to the next lowest evaluated tender to make a similar determination of that Tenderer's capabilities to perform the contract satisfactorily.

26. Award Criteria 26.1 Subject to ITT Clause 28, the Purchaser will award the Contract to the successful Tenderer whose tender has

been determined to be substantially responsive and has been determined as the lowest evaluated tender, provided further that the Tenderer is determined to be qualified to perform the Contract satisfactorily.

27. Purchaser's right to vary Quantities at Time of Award 27.1 The Purchaser reserves the right at the time of Contract award to increase or decrease by up to 25 percent of the

quantity of goods and services originally specified in the Schedule of Requirements without any change in unit price or other terms and conditions.

28. Purchaser's Right to Accept Any Tender and to Reject Any or All Tenders 28.1 The Purchaser reserves the right to accept or reject any tender, and to annul the tendering process and reject all

tenders at any time prior to contract award, without thereby incurring any liability to the affected Tenderer or Tenderers.

29. Notification of Award 29.1 Prior to the expiration of the period of tender validity, the Purchaser will notify the successful tenderer in

writing by registered letter or by cable/telex or fax, to be confirmed in writing by registered letter, that its tender has been accepted.

29.2 The notification of award will constitute the formation of the Contract. 29.3 Upon the successful Tenderer's furnishing of performance security pursuant to ITT Clause 31, the Purchaser

will promptly notify the name of the winning Tenderer to each unsuccessful Tenderer and will discharge its earnest money deposit, pursuant to ITT Clause 13.

29.4 If, after notification of award, a Tenderer wishes to ascertain the grounds on which its tender was not selected, it

should address it’s request to the Purchaser. The Purchaser will promptly respond in writing to the unsuccessful Tenderer.

30. Signing of Contract 30.1 At the same time as the Purchaser notifies the successful tenderer that its tender has been accepted, the

Purchaser will send the Tenderer the Contract Form provided in the tender documents, incorporating all agreements between the parties.


1430.2 Within 21 days of receipt of the Contract Form, the successful Tenderer shall sign and date the Contract

and return it to the Purchaser. 31. Performance Security 31.1 Within 21 days of the receipt of notification of award from the Purchaser, the successful Tenderer shall furnish

the performance security in accordance with the Conditions of Contract, in the Performance Security Form provided in the tender documents or in another form acceptable to the Purchaser.

31.2 Failure of the successful Tenderer to comply with the requirement of ITT Clause 30.2 or ITT Clause 31.1 shall

constitute sufficient grounds for the annulment of the award and forfeiture of the earnest money deposit, in which event the Purchaser may make the award to the next lowest evaluated Tenderer or call for new tenders.

32 Corrupt or Fraudulent Practices 32.1 The Government requires that Tenderers/ Suppliers/ Contractors observe the highest standard of ethics during

the procurement and execution of Government financed contracts. In pursuance of this policy, the Government :

(a) defines, for the purposes of this provision, the terms set forth as follows : (i) “corrupt practice” means the offering, giving, receiving or soliciting of any thing of value to

influence the action of a public official in the procurement process or in contract execution; and (ii) “fraudulent practice” means a misrepresentation of facts in order to influence a procurement

process or the execution of a contract to the detriment of the Government, and includes collusive practice among Tenderers (prior to or after tender submission) designed to establish tender prices at artificial non-competitive levels and to deprive the Government of the benefits of free and open competition;

(b) will reject a proposal for award if it determines that the Tenderer recommended for award has engaged

in corrupt or fraudulent practices in competing for the contract in question; (c) will declare a firm ineligible, either indefinitely or for a stated period of time, to be awarded a

Government financed contract if it at any time determines that the firm has engaged in corrupt or fraudulent practices in competing for, or in executing, a Government-financed contract.

32.2 Furthermore, Tenderers shall be aware of the provision stated in sub-clause 4.4 and sub-clause 23.1 of the

General Conditions of Contract.


15 SECTION III: GENERAL CONDITIONS OF CONTRACT

TABLE OF CLAUSES Clause Number Topic Page Number 1. Definitions 16

2. Application 16

3. Standards 16

4. Use of Contract Documents and Information; Inspection and Audit by 16

Government

5. Patent Rights 17

6. Performance Security 17

7. Inspection and Tests 17

8. Packing 18

9. Delivery and Documents 18

10. Insurance 18

11. Transportation 18

12. Incidental Services 19

13. Spare Parts 19

14. Warranty 19

15. Payment 20

16. Prices 20

17. Change Orders 20

18. Contract Amendments 21

19. Assignment 21

20. Subcontracts 21

21. Delays in Supplier's Performance 21

22. Liquidated Damages 21

23. Termination for Default 21

24. Force Majeure 22

25. Termination for Insolvency 22

26. Termination for Convenience 22

27. Settlement of Disputes 23

28. Limitation of Liability 23

29. Governing Language 23

30. Applicable Law 23

31. Notices 23

32. Taxes and Duties 23


16

SECTION III – GENERAL CONDITIONS OF CONTRACT

General Conditions of Contract 1. Definitions 1.1 In this Contract, the following terms shall be interpreted as indicated: (a) "The Contract" means the agreement entered into between the Purchaser and the Supplier, as recorded in

the Contract Form signed by the parties, including all the attachments and appendices thereto and all documents incorporated by reference therein;

(b) "The Contract Price" means the price payable to the Supplier under the Contract for the full and proper

performance of its contractual obligations; (c) "The Goods" means all the equipment, machinery, and/or other materials which the Supplier is required to

supply to the Purchaser under the Contract; (d) "Services" means services ancillary to the supply of the Goods, such as transportation and insurance, and

any other incidental services, such as installation, commissioning, provision of technical assistance, training and other obligations of the Supplier covered under the Contract;

(e) “GCC” means the General Conditions of Contract contained in this section. (f) “SCC” means the Special Conditions of Contract. (g) “The Purchaser” means the organization purchasing the Goods, as named in SCC. (h) “The Purchaser’s country” is the country named in SCC. (i) “The Supplier” means the individual or firm supplying the Goods and Services under this Contract. (j) “The Government” means the Government of Karnataka State. (k) “The Project Site”, where applicable, means the place or places named in SCC. (l) “Day” means calendar day. 2. Application 2.1 These General Conditions shall apply to the extent that they are not superseded by provisions in other parts of the

Contract. 3. Standards 3.1 The Goods supplied under this Contract shall conform to the standards mentioned in the Technical

Specifications, and, when no applicable standard is mentioned, to the authoritative standard appropriate to the Goods' country of origin and such standards shall be the latest issued by the concerned institution.

4. Use of Contract Documents and Information; Inspection and Audit by the Government 4.1 The Supplier shall not, without the Purchaser's prior written consent, disclose the Contract, or any provision

thereof, or any specification, plan, drawing, pattern, sample or information furnished by or on behalf of the Purchaser in connection therewith, to any person other than a person employed by the Supplier in performance of the Contract. Disclosure to any such employed person shall be made in confidence and shall extend only so far as may be necessary for purposes of such performance.


17

7.1

4.2 The Supplier shall not, without the Purchaser's prior written consent, make use of any document or information enumerated in GCC Clause 4.1 except for purposes of performing the Contract.

4.3 Any document, other than the Contract itself, enumerated in GCC Clause 4.1 shall remain the property of the

Purchaser and shall be returned (in all copies) to the Purchaser on completion of the Supplier's performance under the Contract if so required by the Purchaser.

4.4 The supplier shall permit the Government to inspect the Supplier’s accounts and records relating to the

performance of the Supplier and to have them audited by auditors appointed by the Government, if so required by the Government.

5. Patent Rights 5.1 The Supplier shall indemnify the Purchaser against all third-party claims of infringement of patent, trademark or

industrial design rights arising from use of the Goods or any part thereof in India. 6. Performance Security 6.1 Within 21 days of receipt of the notification of contract award, the Supplier shall furnish Performance Security to

the Purchaser for an amount of 5% of the Contract Value, valid up to 60 days after the date of completion of performance obligations including Warranty obligations. In the event of any correction of defects or replacement of defective material during the Warranty period, the Warranty for the corrected/replaced material shall be extended to a further period of 12 months and the Performance Bank Guarantee for proportionate value shall be extended 60 days over and above the initial Warranty period.

6.2 The proceeds of the performance security shall be payable to the Purchaser as compensation for any loss

resulting from the Supplier's failure to complete its obligations under the Contract. 6.3 The Performance Security shall be denominated in Indian Rupees and shall be in one of the following forms: (a) A Bank guarantee or irrevocable Letter of Credit, issued by a Nationalized/Scheduled bank in the form

provided in the tender documents or another form acceptable to the Purchaser; or

(b) A cashier's check or Banker’s certified check, or crossed demand draft or pay order drawn in favour of the Purchaser.; or

(c) Specified small savings instruments pledged to the Purchaser. 6.4 The Performance Security will be discharged by the Purchaser and returned to the Supplier not later than 60 days

following the date of completion of the Supplier's performance obligations, including any Warranty obligations, under the Contract.

6.5 In the event of any contract amendment, the Supplier shall, within 20 days of receipt of such amendment, furnish

the amendment to the Performance Security, rendering the same valid for the duration of the Contract as amended for 60 days after the completion of performance obligations including Warranty obligations.

7. Inspections and Tests

The Purchaser or its representative shall have the right to inspect and/or to test the Goods to confirm their conformity to the Contract specifications at no extra cost to the Purchaser. SCC and the Technical Specifications shall specify what inspections and tests the Purchaser requires and where they are to be conducted. The Purchaser shall notify the Supplier in writing in a timely manner of the identity of any representatives retained for these purposes.

7.2 The inspections and tests may be conducted on the premises of the Supplier or its subcontractor(s), at point of

delivery and/or at the Goods final destination. If conducted on the premises of the Supplier or its subcontractor(s), all reasonable facilities and assistance, including access to drawings and production data - shall be furnished to the inspectors at no charge to the Purchaser.


187.3 Should any inspected or tested Goods fail to conform to the specifications, the Purchaser may reject

the goods and the Supplier shall either replace the rejected Goods or make alterations necessary to meet specification requirements free of cost to the Purchaser.

7.4 The Purchaser's right to inspect, test and, where necessary, reject the Goods after the Goods' arrival at Project

Site shall in no way be limited or waived by reason of the Goods having previously been inspected, tested and passed by the Purchaser or its representative prior to the Goods shipment.

7.5 Nothing in GCC Clause 7 shall in any way release the Supplier from any warranty or other obligations under this

Contract. 7.6 Manuals and Drawings

7.6.1 Before the goods and equipment are taken over by the Purchaser, the Supplier shall supply operation and maintenance manuals together with drawings of the goods and equipment. These shall be in such detail as will enable the Purchaser to operate, maintain, adjust and repair all parts of the equipment as stated in the specifications.

7.6.2 The manuals and drawings shall be in the ruling language (English) and in such form and numbers

as stated in the contract. 7.6.3 Unless and otherwise agreed, the goods and equipment shall not be considered to be completed for

the purpose of taking over until such manuals and drawings have been supplied to the Purchaser. 8. Packing 8.1 The Supplier shall provide such packing of the Goods as is required to prevent their damage or deterioration

during transit to their final destination as indicated in the Contract. The packing shall be sufficient to withstand, without limitation, rough handling during transit and exposure to extreme temperatures, salt and precipitation during transit and open storage. Packing case size and weights shall take into consideration, where appropriate, the remoteness of the Goods' final destination and the absence of heavy handling facilities at all points in transit.

8.2 The packing, marking and documentation within and outside the packages shall comply strictly with such special

requirements as shall be provided for in the Contract including additional requirements, if any, specified in SCC and in any subsequent instructions ordered by the Purchaser.

8.3 Packing Instructions: The Supplier will be required to make separate packages for each Consignee. Each Package

will be marked on three sides with proper paint/indelible ink the following:

i) Project, ii) Contract No., iii) Suppliers Name, and iv) Packing List Reference number. 9. Delivery and Documents 9.1 Delivery of the Goods shall be made by the Supplier in accordance with the terms specified by the Purchaser in

the Notification of Award. The details of shipping and/or other documents to be furnished by the supplier are specified in SCC.

10. Insurance 10.1 The Goods supplied under the Contract shall be fully insured in Indian Rupees against loss or damage incidental

to manufacture or acquisition, transportation, storage and delivery. For delivery of goods at site, the insurance shall be obtained by the Supplier in an amount equal to 110% of the value of the goods from “warehouse to warehouse” (final destinations) on “All Risks” basis including War risks and Strikes.

11. Transportation 11.1 Where the Supplier is required under the Contract to transport the Goods to a specified place of destination

within India defined as Project site, transport to such place of destination in India including insurance, as shall be


19specified in the Contract, shall be arranged by the Supplier, and the related cost shall be included in the Contract Price

12. Incidental Services 12.1 The supplier may be required to provide any or all of the following services, including additional services, if any,

specified in SCC: (a) performance or supervision of the on-site assembly and/or start-up of the supplied Goods; (b) furnishing of tools required for assembly and/or maintenance of the supplied Goods; (c) furnishing of detailed operations and maintenance manual for each appropriate unit of supplied Goods; (d) performance or supervision or maintenance and/or repair of the supplied Goods, for a period of time agreed

by the parties, provided that this service shall not relieve the Supplier of any warranty obligations under this Contract; and

(e) training of the Purchaser's personnel, at the Supplier's plant and/or on-site, in assembly, start-up, operation,

maintenance and/or repair of the supplied Goods. 12.2 Prices charged by the Supplier for incidental services, if not included in the Contract Price for the Goods, shall

be agreed upon in advance by the parties and shall not exceed the prevailing rates charged to other parties by the Supplier for similar services.

13. Spare Parts 13.1 As specified in the SCC, the Supplier may be required to provide any or all of the following materials,

notifications, and information pertaining to spare parts manufactured or distributed by the Supplier: (a) such spare parts as the Purchaser may elect to purchase from the Supplier, providing that this election shall

not relieve the Supplier of any warranty obligations under the Contract; and

(b) In the event of termination of production of the spare parts: (i) advance notification to the Purchaser of the pending termination, in sufficient time to permit

the Purchaser to procure needed requirements; and (ii) following such termination, furnishing at no cost to the Purchaser, the blueprints,

drawings and specifications of the spare parts, if requested. 13.2 The Supplier shall carry sufficient inventories to assure ex-stock supply of consumable spares for the Goods,

such as gaskets, plugs, washers, belts etc. Other spare parts and components shall be supplied as promptly as possible but in any case within 3 months of placement of order.

14. Warranty 14.1 The Supplier warrants that the Goods supplied under this Contract are new, unused, of the most recent or current

models and that they incorporate all recent improvements in design and materials unless provided otherwise in the Contract. The Supplier further warrants that all Goods supplied under this Contract shall have no defect arising from design, materials or workmanship (except when the design and/or material is required by the Purchaser's Specifications) or from any act or omission of the Supplier, that may develop under normal use of the supplied Goods in the conditions prevailing in the country of final destination.

14.2 This warranty shall remain valid for ….. 5hours of operation or 12 months after the Goods or any portion thereof

as the case may be, have been delivered to and accepted at the final destination indicated in the Contract, or for 15 months after the date of shipment from the place of loading whichever period concludes earlier. The Supplier shall, in addition, comply with the performance and/or consumption guarantees specified under the Contract. If

5 Specify appropriate figure depending on the type of equipment.


20for reasons attributable to the Supplier, these guarantees are not attained in whole or in part, the Supplier shall at its discretion either:

(a) make such changes, modifications, and/or additions to the Goods or any part thereof as may be necessary in

order to attain the contractual guarantees specified in the Contract at its own cost and expense and to carry out further performance tests in accordance with SCC Clause 2; OR

(b) pay liquidated damages to the Purchaser with respect to the failure to meet the contractual guarantees. The rate of these liquidated damages shall be as specified in the Technical Specifications.6

14.3 The Purchaser shall promptly notify the Supplier in writing of any claims arising under this warranty. 14.4 Upon receipt of such notice, the Supplier shall, within the period of …… 7days and with all reasonable speed,

repair or replace the defective Goods or parts thereof, free of cost at the ultimate destination. The Supplier shall take over the replaced parts/goods at the time of their replacement. No claim whatsoever, shall lie on the Purchaser for the replaced parts/goods thereafter. In the event of any correction of defects or replacement of defective material during the Warranty period, the Warranty for the corrected or replaced material shall be extended to a further period of 12 months.

14.5 If the Supplier, having been notified, fails to remedy the defect(s) within …. 8days, the Purchaser may proceed to

take such remedial action as may be necessary, at the Supplier's risk and expense and without prejudice to any other rights which the Purchaser may have against the Supplier under the Contract.

15. Payment 15.1 The method and conditions of payment to be made to the Supplier under this Contract shall be specified in the

SCC. 15.2 The Supplier's request(s) for payment shall be made to the Purchaser in writing, accompanied by an invoice

describing, as appropriate, the Goods delivered and the Services performed, and by documents, submitted pursuant to GCC Clause 9, and upon fulfillment of other obligations stipulated in the contract.

15.3 Payments shall be made promptly by the Purchaser but in no case later than sixty (60) days after submission of

the invoice or claim by the Supplier. 15.4 Payment shall be made in Indian Rupees. 16. Prices 16.1 Prices payable to the supplier as stated in the contract shall be firm during the performance of the contract. 17. Change Orders 17.1 The Purchaser may at any time, by written order given to the Supplier pursuant to GCC Clause 31, make changes

within the general scope of the Contract in any one or more of the following: (a) drawings, designs, or specifications, where Goods to be furnished under the Contract are to be specifically

manufactured for the Purchaser; (b) the method of shipping or packing; (c) the place of delivery; and/or

(d) the Services to be provided by the Supplier.

6 The rate shall be higher than the adjustment rate used in the bid evaluation under ITT Clause 23.4 (f) or (g) 7 Specify an appropriate figure keeping in view the type of equipment. 8 Specify an appropriate figure keeping in view the type of equipment.


2117.2 If any such change causes an increase or decrease in the cost of, or the time required for, the Supplier's

performance of any provisions under the Contract, an equitable adjustment shall be made in the Contract Price or delivery schedule, or both, and the Contract shall accordingly be amended. Any claims by the Supplier for adjustment under this clause must be asserted within thirty (30) days from the date of the Supplier's receipt of the Purchaser's change order.

18. Contract Amendments 18.1 Subject to GCC Clause 17, no variation in or modification of the terms of the Contract shall be made except by

written amendment signed by the parties. 19. Assignment 19.1 The Supplier shall not assign, in whole or in part, its obligations to perform under the Contract, except with the

Purchaser's prior written consent. 20. Subcontracts 20.1 The Supplier shall notify the Purchaser in writing of all subcontracts awarded under this Contract if not already

specified in the tender. Such notification, in his original tender or later, shall not relieve the Supplier from any liability or obligation under the Contract. Sub-contracts shall be only for bought out items and sub-assemblies.

20.2 Subcontracts must comply with the provisions of GCC Clause 2. 21. Delays in the Supplier's Performance 21.1 Delivery of the Goods and performance of the Services shall be made by the Supplier in accordance with the

time schedule specified by the Purchaser in the Schedule of Requirements. 21.2 If at any time during performance of the Contract, the Supplier or its sub-contractor(s) should encounter

conditions impeding timely delivery of the Goods and performance of Services, the Supplier shall promptly notify the Purchaser in writing of the fact of the delay, its likely duration and its cause(s). As soon as practicable after receipt of the Supplier’s notice, the Purchaser shall evaluate the situation and may, at its discretion, extend the Supplier’s time for performance with or without liquidated damages, in which case the extension shall be ratified by the parties by amendment of the Contract.

21.3 Except as provided under GCC Clause 24, a delay by the Supplier in the performance of its delivery obligations

shall render the Supplier liable to the imposition of liquidated damages pursuant to GCC Clause 22, unless an extension of time is agreed upon pursuant to GCC Clause 21.2 without the application of liquidated damages.

22. Liquidated Damages 22.1 Subject to GCC Clause 24, if the Supplier fails to deliver any or all of the Goods or to perform the Services

within the period(s) specified in the Contract, the Purchaser shall, without prejudice to its other remedies under the Contract, deduct from the Contract Price, as liquidated damages, a sum equivalent to 0.5% of the delivered price of the delayed Goods or unperformed Services for each week or part thereof of delay until actual delivery or performance, up to a maximum deduction of 10% of the Contract Price.. Once the maximum is reached, the Purchaser may consider termination of the Contract pursuant to GCC Clause 23.

23. Termination for Default 23.1 The Purchaser may, without prejudice to any other remedy for breach of contract, by written notice of default

sent to the Supplier, terminate the Contract in whole or part: (a) if the Supplier fails to deliver any or all of the Goods within the period(s) specified in the Contract, or

within any extension thereof granted by the Purchaser pursuant to GCC Clause 21; or (b) if the Supplier fails to perform any other obligation(s) under the Contract.


22 (c) If the Supplier, in the judgement of the Purchaser has engaged in corrupt or fraudulent practices in

competing for or in executing the Contract. For the purpose of this Clause : “Corrupt practice” means the offering, giving, receiving or soliciting of any thing of value to influence the

action of a public official in the procurement process or in contract execution. “fraudulent practice” means a misrepresentation of facts in order to influence a procurement process or the

execution of a contract to the detriment of the Borrower, and includes collusive practice among Bidders (prior to or after bid submission) designed to establish bid prices at artificial non-competitive levels and to deprive the Borrower of the benefits of free and open competition.

23.2 In the event the Purchaser terminates the Contract in whole or in part, pursuant to GCC Clause 23.1, the

Purchaser may procure, upon such terms and in such manner as it deems appropriate, Goods or Services similar to those undelivered, and the Supplier shall be liable to the Purchaser for any excess costs for such similar Goods or Services. However, the Supplier shall continue the performance of the Contract to the extent not terminated.

24. Force Majeure 24.1 Notwithstanding the provisions of GCC Clauses 21, 22, 23, the Supplier shall not be liable for forfeiture of its

performance security, liquidated damages or termination for default, if and to the extent that, its delay in performance or other failure to perform its obligations under the Contract is the result of an event of Force Majeure.

24.2 For purposes of this Clause, "Force Majeure" means an event beyond the control of the Supplier and not

involving the Supplier's fault or negligence and not foreseeable. Such events may include, but are not limited to, acts of the Purchaser either in its sovereign or contractual capacity, wars or revolutions, fires, floods, epidemics, quarantine restrictions and freight embargoes.

24.3 If a Force Majeure situation arises, the Supplier shall promptly notify the Purchaser in writing of such conditions

and the cause thereof. Unless otherwise directed by the Purchaser in writing, the Supplier shall continue to perform its obligations under the Contract as far as is reasonably practical, and shall seek all reasonable alternative means for performance not prevented by the Force Majeure event.

25. Termination for Insolvency 25.1 The Purchaser may at any time terminate the Contract by giving written notice to the Supplier, if the Supplier

becomes bankrupt or otherwise insolvent. In this event, termination will be 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 the Purchaser.

26. Termination for Convenience 26.1 The Purchaser, by written notice sent to the Supplier, may terminate the Contract, in whole or in part, at any time

for its convenience. The notice of termination shall specify that termination is for the Purchaser's convenience, the extent to which performance of the Supplier under the Contract is terminated, and the date upon which such termination becomes effective.

26.2 The Goods that are complete and ready for shipment within 30 days after the Supplier's receipt of notice of

termination shall be accepted by the Purchaser at the Contract terms and prices. For the remaining Goods, the Purchaser may elect:

(a) to have any portion completed and delivered at the Contract terms and prices; and/or

(b) to cancel the remainder and pay to the Supplier an agreed amount for partially completed Goods and for materials and parts previously procured by the Supplier.

27. Settlement of Disputes


23 27.1 The Purchaser and the supplier shall make every effort to resolve amicably by direct informal negotiation any

disagreement or dispute arising between them under or in connection with the Contract. 27.2 If, after thirty (30) days, the parties have failed to resolve their dispute or difference by such mutual consultation,

then either the Purchaser or the Supplier may give notice to the other party of its intention to commence arbitration, as hereinafter provided, as to the matter in dispute, and no arbitration in respect of this matter may be commenced unless such notice is given.

27.2.1 Any dispute or difference in respect of which a notice of intention to commence arbitration has been

given in accordance with this Clause shall be finally settled by arbitration. Arbitration may be commenced prior to or after delivery of the Goods under the Contract.

27.2.2 Arbitration proceedings shall be conducted in accordance with the rules of procedure specified in the SCC.

27.3 Notwithstanding any reference to arbitration herein, (a) the parties shall continue to perform their respective obligations under the Contract unless they

otherwise agree; and (b) the Purchaser shall pay the Supplier any monies due the Supplier. 28. Limitation of Liability 28.1 Except in cases of criminal negligence or willful misconduct, and in the case of infringement pursuant to

Clause 5, (a) the Supplier shall not be liable to the Purchaser, whether in contract, tort, or otherwise, for any indirect or

consequential loss or damage, loss of use, loss of production, or loss of profits or interest costs, provided that this exclusion shall not apply to any obligation of the Supplier to pay liquidated damages to the Purchaser; and

(b) the aggregate liability of the Supplier to the Purchaser, whether under the Contract, in tort or otherwise,

shall not exceed the total Contract Price, provided that this limitation shall not apply to the cost of repairing or replacing defective equipment.

29. Governing Language 29.1 The contract shall be written in English language. Subject to GCC Clause 30, English language version of the

Contract shall govern its interpretation. All correspondence and other documents pertaining to the Contract which are exchanged by the parties shall be written in the same language.

30. Applicable Law 30.1 The Contract shall be interpreted in accordance with the laws of the Union of India. 31. Notices 31.1 Any notice given by one party to the other pursuant to this Contract shall be sent to other party in writing or by

cable, telex or facsimile and confirmed in writing to the other Party’s address specified in SCC. 31.2 A notice shall be effective when delivered or on the notice's effective date, whichever is later. 32. Taxes and Duties 32.2 Suppliers shall be entirely responsible for all taxes, duties, license fees, octroi, road permits, etc., incurred until

delivery of the contracted Goods to the Purchaser.


24

SECTION IV: SPECIAL CONDITIONS OF CONTRACT

TABLE OF CLAUSES Item No. Topic Page Number 1. Definitions (GCC Clause 1) 25 2. Inspection and Tests (GCC Clause 7) 25 3. Delivery and Documents (GCC Clause 9) 25 4. Incidental Services (GCC Clause 12) 25 5. Payment (GCC Clause 15) 26 6. Settlement of Disputes (GCC Clause 27) 26 7. Notices (GCC Clause 31) 26 8. Progress of Supply 27 9. Right to use defective equipment 27

10 Supplier Integrity 27 11 Supplier’s Obligation 27 12 Patent Rights 27


25SECTION IV: SPECIAL CONDITIONS OF CONTRACT

Special Conditions of Contract

The following Special Conditions of Contract shall supplement the General Conditions of Contract. Whenever

there is a conflict, the provisions herein shall prevail over those in the General Conditions of Contract. The corresponding clause number of the General Conditions is indicated in parentheses.

1. Definitions (GCC Clause 1) (a) The Purchaser is ...............................................

(b) The Supplier is ................................................ 2. Inspection and Tests (GCC Clause 7)9 The following inspection procedures and tests are required by the Purchaser: _________________________________________________________ _________________________________________________________ _________________________________________________________ _________________________________________________________ 3. Delivery and Documents (GCC Clause 9) Upon delivery of the Goods, the supplier shall notify the purchaser and the insurance company by

cable/telex/fax the full details of the shipment including contract number, railway receipt number and date, description of goods, quantity, name of the consignee etc. The supplier shall mail the following documents to the purchaser with a copy to the insurance company:

(i) .Four10 Copies of the Supplier invoice showing contract number, goods' description, quantity, unit price,

total amount;

(ii) Railway receipt/acknowledgment of receipt of goods from the consignee(s);

(iii) Four11 Copies of packing list identifying the contents of each package;

(iv) Insurance Certificate;

(v) Manufacturer's/Supplier's warranty certificate;

(vi) Inspection Certificate issued by the nominated inspection agency, and the Supplier's factory inspection report; and

The above documents shall be received by the Purchaser before arrival of the Goods (except where the Goods

have been delivered directly to the Consignee with all documents) and, if not received, the Supplier will be responsible for any consequent expenses.

4. Incidental Services (GCC Clause 12) The following services covered under Clause 12 shall be furnished and the cost shall be included in the contract

price: ________________________________________________________ ________________________________________________________ ________________________________________________________

9 If third party inspection is proposed, give details here. 10 Modify if need be. 11 Modify if need be.


26

(ii)

5. Payment (GCC Clause 15) (i) On Delivery: Eighty percent of the contract price shall be paid on receipt of Goods and upon

submission of the documents specified in SCC Clause 3 above; and

On Final Acceptance: the remaining twenty percent of the Contract Price shall be paid to the supplier within 30 days after the date of the acceptance certificate issued by the Purchaser’s representative for the respective delivery

Note: (i) Where payments are to be effected through Letter of Credit (LC), the same shall be subject to the latest

Uniform Customs and Practice for Documentary Credit, of the International Chamber of Commerce; (ii) The LC will be confirmed at Supplier’s cost if requested specifically by the Supplier; (iii) If LC is required to be extended/reinstated for reasons not attributable to the Purchaser, the charges

thereof shall be to the Supplier’s account. 6. Settlement of Disputes (Clause 27) The dispute settlement mechanism to be applied pursuant to GCC Clause 27.2.2 shall be as follows: (a) In case of Dispute or difference arising between the Purchaser and a domestic supplier relating to any

matter arising out of or connected with this agreement, such disputes or difference shall be settled in accordance with the Arbitration and Conciliation Act, 1996, by a Sole Arbitrator. The Sole Arbitrator shall be appointed by agreement between the parties; failing such agreement, by the appointing authority namely the 12Indian Council of Arbitration/President of the Institution of Engineers (India)/The International Centre for Alternative Dispute Resolution (India). A certified copy of the appointment Order shall be supplied to each of the Parties.

(b) Arbitration proceedings shall be held at Bangalore Karnataka, and the language of the arbitration

proceedings and that of all documents and communications between the parties shall be English. (c) The decision of the of arbitrators shall be final and binding upon both parties. The cost and expenses of

Arbitration proceedings will be paid as determined by the Arbitrator. However, the expenses incurred by each party in connection with the preparation, presentation etc. of its proceedings shall be borne by each party itself.

7. Notices (Clause 31)

For the purpose of all notices, the following shall be the address of the Purchaser and Supplier. Purchaser: ............................................. ............................................. ............................................. ............................................. Supplier: (To be filled in at the time of Contract signature) ............................................. ............................................. ............................................. .............................................

12 Delete whichever is not desired.


278. Progress of Supply: Supplier shall regularly intimate progress of supply, in writing, to the Purchaser as under13: - Quantity offered for inspection and date;

- Quantity accepted/rejected by inspecting agency and date;

- Quantity despatched/delivered to consignees and date;

- Quantity where incidental services have been satisfactorily completed with date;

- Quantity where rectification/repair/replacement effected/completed on receipt of any communication from consignee/Purchaser with date;

- Date of completion of entire Contract including incidental services, if any; and

- Date of receipt of entire payments under the Contract

(in case of stage-wise inspection, details required may also be specified).

9. Right to use defective equipment: If after delivery, acceptance and installation and within the guarantee and warranty period, the operation or use

of the equipment proves to be unsatisfactory, the Purchase shall have the right to continue to operate or use such equipment until rectifications of defects, errors or omissions by repair or by partial or complete replacement is made without interfering with the Purchaser’s operation.

10. Supplier Integrity: The supplier is responsible for and obliged to conduct all contracted activities in accordance with the Contract

using state-of-the-art methods and economic principles and exercising all means available to achieve the performance specified in the Contract.

11. Supplier’s Obligations: The Supplier is obliged to work closely with the Purchaser’s staff, act within its own authority and abide by

directives issued by the Purchaser and implementation activities. The Supplier will abide by the job safety measures prevalent in India and will free the Purchaser from all demands or responsibilities arising from accidents or loss of life the cause of which is the Supplier’s negligence. The Supplier will pay all indemnities arising from such incidents and will not hold the Purchaser responsible or obligated. The Supplier is responsible for managing the activities of its personnel or sub-contracted personnel and will hold itself responsible for any misdemeanors. The Supplier will treat as confidential all data and information about the Purchaser, obtained in the execution of his responsibilities, in strict confidence and will not reveal such information to any other party without the prior written approval of the Purchaser.

12. Patent Rights: In the event of any claim asserted by a third party of infringement of copyright, patent, trademark or industrial

design rights arising from the use of the Goods or any part thereof in the Purchaser’s country, the supplier shall act expeditiously to extinguish such claim. If the supplier fails to comply and the Purchaser is required to pay compensation to a third party resulting from such infringement, the supplier shall be responsible for the compensation including all expenses, court costs and lawyer fees. The Purchaser will give notice to the supplier of such claim, if it is made, without delay.

13 Delete whichever is not applicable.


28 SECTION V: SCHEDULE OF REQUIREMENTS (To be inserted in the Tender Documents by the Purchaser, as applicable. The Schedule should cover, at a minimum, the required items, quantities, services, delivery period(s) and earnest money deposit (EMD).) Part - I Serial Brief Unit Quantity Delivery EMD Number Description Schedule in Rupees ____________________________________________________________________________________________ Schedule I Delivery in _____ weeks/ months from ________* at destination (project site) Schedule II Part – II (Incidental Services) ** * The Purchaser must specify here the date from which the date of delivery schedule will start. That date

should be either the date of contract award, or the date of contract signature, of the date of opening of letter of credit, or the date of confirmation of the Letter of Credit, as appropriate. The Tender Form should include only a cross reference to this Schedule.

** Specify the required Incidental Services

SECTION VI - TECHNICAL SPECIFICATIONS [Notes:* 1. Text of Technical specifications to be inserted in the Tender Documents by the Purchaser, as applicable 2. The Specifications should be drafted to permit the widest possible competition and, at the same time,

present a clear statement of the required standards of workmanship, materials, and performances of the goods to be procured. Only if this is done will the objectives of economy, efficiency and fairness in procurement is realized, responsiveness of tenders be ensured, and the subsequent task of tender evaluation facilitated.

3. Where ever the goods are covered by Bureau of Indian Standards, the references to the Standards should

be given. 4. Reference to brand name and catalogue number should be avoided as far as possible; Where un avoidable,

they should be followed by the words “or at least equivalent”] * Delete the Notes in the final document.

K/G-2 Goods/Equipment/Open tender/> Rs.10 lakhs, <50 lakhs

SECTION VII : QUALIFICATION CRITERIA (Referred to in Clause 11.2(b) of ITT) 1. (a) The tenderer should be a manufacturer who must have manufactured, tested and supplied the

equipment (s) similar to the type specified in the ‘Schedule of Requirements’ up to at least ........ % 14 of the quantity required in any one of the last 3 years. The equipments offered for supply must be of the most recent series models incorporating the latest improvements in design. The models should have been released on or after .....15 and be in satisfactory operation for ...... 16months as on date of tender opening.

(b) Tenders of tenderers quoting as authorized representative of a manufacturer, meeting with the

above requirement in full, can also be considered provided : (i) the manufacturer furnishes authorization in the prescribed format assuring full guarantee

and warranty obligations as per GCC and SCC; and

(ii) the tenderer, as authorized representative, has supplied, installed and commissioned satisfactorily at least……% 17of the quantity similar to the type specified in the Schedule of Requirements in any one of the last three years which must be in satisfactory operation for at least ….18 months on the date of tender opening.

2. The tenderer should furnish the information on all past supplies and satisfactory performance for both (a)

and (b) above, in proforma under Section XII. 14 Indicate the percentage as considered appropriate – usually not less than 80% of the requirement. 15 Indicate year of model as appropriate 16 Specify an appropriate period. 17 Indicate the percentage as considered appropriate – usually not less than 30% of the requirement


18 Specify an appropriate period.

K/G-2 Goods/Equipment/Open tenders/> Rs.10 lakhs.<50 lakhs

31 SECTION VIII: TENDER FORM Date :........................................ IFT No :.................................... TO: (Name and address of purchaser) Gentlemen and/or Ladies : Having examined the Tender Documents including Addenda Nos............... [insert numbers], the receipt of which is hereby duly acknowledged, we, the undersigned, offer to supply and deliver....................................................... (Description of Goods and Services) in conformity with the said tender documents for the sum of ..................... (Total tender amount in words and figures) or such other sums as may be ascertained in accordance with the Schedule of Prices attached herewith and made part of this tender. We undertake, if our tender is accepted, to deliver the goods in accordance with the delivery schedule specified in the Schedule of Requirements. If our tender is accepted, we will obtain the guarantee of a bank in a sum equivalent to ...... percent of the Contract Price for the due performance of the Contract, in the form prescribed by the Purchaser. We agree to abide by this tender for the Tender validity period specified in Clause 14.1 of the ITT and it shall remain binding upon us and may be accepted at any time before the expiration of that period. Until a formal contract is prepared and executed, this tender, together with your written acceptance thereof and your notification of award, shall constitute a binding Contract between us. We undertake that, in competing for (and, if the award is made to us, in executing) the above contract, we will strictly observe the laws against fraud and corruption in force in India namely “Prevention of Corruption Act 1988”. We understand that you are not bound to accept the lowest or any tender you may receive. We clarify/confirm that we comply with the eligibility requirements as per ITT Clause 1 of the tender documents. Dated this ....... day of ............................ 19 ..... _________________________________ ___________________________________ (signature) (in the capacity of) Duly authorized to sign Tender for and on behalf of _____________________________________________________


32

PRICE SCHEDULE

Price for each Unit Schedule

No.

Item

Description

Quantity

and Unit Ex-

factory/Ex-

warehouse/Ex

-

showroom/off

the shelf

Excise

duty if

any

Inland

transportation

, insurance

and other

local costs

incidental to

delivery

Sales

and

other

taxes

payable

if

contract

awarde

d

Unit Price

(4+5+6+7)

Total

Price

3x5

1 2 3 4 5 6 7 8 9

Note: In case of discrepancy between unit price Total tender price in Rs (Words)……………………..

and total price, the unit price will prevail ……………………………………………………….

Signature of Tenderer ………………………………

Name and address: …………………………………


33

SECTION IX: EARNEST MONEY DEPOSIT BANK GUARANTEE FORM

Whereas ...........................1 (hereinafter called “the Tenderer”) has submitted its tender dated ...................... (date of

submission of tender) for the supply of ................................. (name and/or description of the goods) (hereinafter

called “the Tender”).

KNOW ALL PEOPLE by these presents that WE ..................... (name of bank) of .................. (name of country),

having our registered office at .................. (address of bank) (hereinafter called “the Bank”), are bound unto

............................. (name of Purchaser) (hereinafter called “the Purchaser”) in the sum of

_______________________ for which payment well and truly to be made to the said Purchaser, the Bank binds

itself, its successors, and assigns by these presents. Sealed with the Common Seal of the said Bank this ____ day of

_________ 20___.

THE CONDITIONS of this obligation are:

1. If the Tenderer (a) withdraws its Tender during the period of tender validity specified by the Tenderer on the Tender

Form; or (b) does not accept the correction of errors in accordance with the ITT; or 2. If the Tenderer, having been notified of the acceptance of its tender by the Purchaser during the period of

tender validity: (a) fails or refuses to execute the Contract Form if required; or (b) fails or refuses to furnish the performance security, in accordance with the Instruction to Tenderers; We undertake to pay the Purchaser up to the above amount upon receipt of its first written demand, without the Purchaser having to substantiate its demand, provided that in its demand the Purchaser will note that the amount claimed by it is due to it, owing to the occurrence of one or both of the two conditions, specifying the occurred condition or conditions. This guarantee will remain in force up to and including forty five (45) days after the period of the tender validity, and any demand in respect thereof should reach the Bank not later than the above date. ................................... (Signature of the Bank) _____________________________________________ 1 Name of Tenderer

SECTION X: CONTRACT FORM

THIS AGREEMENT made the .......day of.................................., 20... Between .......................... (Name of

purchaser) of .............. (Country of Purchaser) (hereinafter called "the Purchaser") of the one part and

..................... (Name of Supplier) of ......................... (City and Country of Supplier) (hereinafter called "the

Supplier") of the other part :

WHEREAS the Purchaser is desirous that certain Goods and ancillary services viz., ..................................... (Brief

Description of Goods and Services) and has accepted a tender by the Supplier for the supply of those goods and

services in the sum of .............................. (Contract Price in Words and Figures) (hereinafter called "the Contract

Price").

NOW THIS AGREEMENT WITNESSETH AS FOLLOWS:

1. In this Agreement words and expressions shall have the same meanings as are respectively assigned to them in the Conditions of Contract referred to.

2. The following documents shall be deemed to form and be read and construed as part of this Agreement, viz.:

(a) the Tender Form and the Price Schedule submitted by the Tenderer;

(b) the Schedule of Requirements;

(c) the Technical Specifications;

(d) the General Conditions of Contract;

(e) the Special Conditions of Contract; and

(f) the Purchaser's Notification of Award. 3. In consideration of the payments to be made by the Purchaser to the Supplier as hereinafter mentioned, the

Supplier hereby covenants with the Purchaser to provide the goods and services and to remedy defects therein in conformity in all respects with the provisions of the Contract.

4. The Purchaser hereby covenants to pay the Supplier in consideration of the provision of the goods and

services and the remedying of defects therein, the Contract Price or such other sum as may become payable under the provisions of the Contract at the times and in the manner prescribed by the Contract.

Brief particulars of the goods and services which shall be supplied/provided by the Supplier are as under: __________________________________________________________________________________________ SL. BRIEF QUANTITY TO UNIT Total DELIVERY TERMS NO. DESCRIPTION OF BE SUPPLIED PRICE Price GOODS & SERVICES __________________________________________________________________________________________

__________________________________________________________________________________________

TOTAL VALUE:

DELIVERY SCHEDULE:



35 IN WITNESS whereof the parties hereto have caused this Agreement to be executed in accordance with their respective laws the day and year first above written. Signed, Sealed and Delivered by the said ..................................................... (For the Purchaser) in the presence of:....................................... Signed, Sealed and Delivered by the said ..................................................... (For the Supplier) in the presence of:.......................................

SECTION XI. PERFORMANCE SECURITY BANK GUARANTEE FORM

To: (Name of Purchaser) WHEREAS ................................................................... (Name of Supplier) hereinafter called "the Supplier" has undertaken , in pursuance of Contract No................. dated,........... 20... to supply...................... .................................................(Description of Goods and Services) hereinafter called "the Contract". AND WHEREAS it has been stipulated by you in the said Contract that the Supplier shall furnish you with a Bank Guarantee by a recognized bank for the sum specified therein as security for compliance with the Supplier's performance obligations in accordance with the Contract. AND WHEREAS we have agreed to give the Supplier a Guarantee: THEREFORE WE hereby affirm that we are Guarantors and responsible to you, on behalf of the Supplier, up to a total of ................................... ........................................ (Amount of the Guarantee in Words and Figures) and we undertake to pay you, upon your first written demand declaring the Supplier to be in default under the Contract and without cavil or argument, any sum or sums within the limit of ................................ (Amount of Guarantee) as aforesaid, without your needing to prove or to show grounds or reasons for your demand or the sum specified therein. This guarantee is valid until the ........day of...................20...... Signature and Seal of Guarantors ................................ ................................ ................................ Date......................20.... Address:........................ ................................ ................................

K/G-2 Goods/Equipment/Open tender/> Rs.10 lakhs.<50 lakhs


37

SECTION XII (Please see Clause 11.2 (b) of the Instructions to Tenders)

Proforma for Performance Statement for the last Five years

IFT No………………. Date of Opening…………………. Time ……… Hours Name of the Firm: …………………………………………………………………………………………….. Orders placed by (Full address of Purchaser)

Order No and Date

Description and Quantity of Goods ordered

Value of Order

Date of Completion of Delivery As per contract/Actual

Remarks indicating reasons for late delivery, if any

Has the goods/ equipment been satisfactorily functioning. (Attach a Certificate from the Purchaser)

1 2 3 4 5 6 7 Signature and Seal of the Tenderer:-----------------------------------------------------------------------------


38

SECTION XIII:- MANUFACTURERS' AUTHORIZATION FORM*

(Please see Clause 11.2(a) of Instructions to Tenderers)

No. dated To Dear Sir:

IFT No. We who are established and reputable manufacturers of (name and description of goods offered) having factories at (address of factory) do hereby authorize M/s (Name and address of Agent) to submit a tender, and sign the contract with you for the goods manufactured by us against the above IFT. No company or firm or individual other than M/s are authorized to tender, and conclude the contract for the above goods manufactured by us, against this specific IFT. (This para should be deleted in simple items where manufacturers sell the product through different stockists.) We hereby extend our full guarantee and warranty as per Clause 14 of the General Conditions of Contract for the goods and services offered for supply by the above firm against this IFT.

Yours faithfully, (Name)

(Name of manufacturers)

Note: This letter of authority should be on the letterhead of the manufacturer and should be signed by a person competent and having the power of attorney to legally bind the manufacturer. It should be included by the Tenderer in its tender.

* Modify this format suitably in case where manufacturer’s warranty and guarantee are not applicable for the

items for which bids are invited.


39

SECTION XIV-PROFORMA FOR EQUIPMENT AND QUALITY CONTROL EMPLOYED BY THE MANUFACTURER

IFT NO. ................................... DATE OF OPENING : ....................................

NAME OF THE TENDERER : ...................................................................................................................................

(Note : All details should relate to the manufacturer for the items offered for supply) 1. Name & full address of the Manufacturer 2. (a) Telephone & Fax No Office/Factory/Works (b) Telex No. Office/Factory/Works (c) Telegraphic address : 3. Location of the manufacturing factory. 4. Details of Industrial License, wherever required as per statutory regulations. 5. Details of important Plant & Machinery functioning in each dept. (Monographs & description pamphlets

be supplied if available). 6. Details of the process of manufacture in the factory. 7. Details & stocks of raw materials held. 8. Production capacity of item(s) quoted for, with the existing Plant & Machinery 8.1 Normal 8.2 Maximum 9. Details of arrangement for quality control of products such as laboratory, testing equipment etc. 10. Details of staff: 10.1 Details of technical supervisory staff in charge of production & quality control.

10.2 Skilled labour employed.

10.3 Unskilled labour employed.

10.4 Maximum No. of workers (skilled & unskilled) employed on any day during the 18 months preceding the date of Tender.

11. Whether Goods are tested to any standard specification? If so, copies of original test certificates should be

submitted in triplicate. 12. Is the Manufacturer registered with the Directorate General of Supplies and Disposals, New Delhi 110 001,

India? If so, furnish full particulars of registration, period of currency etc. with a copy of the certificate of registration.

............................................................... Signature and seal of the Manufacturer

Annexure IV K/Q - 1


OFFICE OF ------------------------------------------------- ----------------------------------------------------

INVITATION FOR QUOTATIONS FOR SUPPLY OF GOODS AND

EQUIPMENT

To: M/s………………………………. …………………………………… ………………………………….. ……………………………………. Dear Sirs:

Sub: Invitation of quotation for supply of ………………….. ……………………………………………………………..

1. Sealed competitive quotations are invited by the undersigned for the following

items of goods/equipment. Sl.No

Brief description of goods/equipment

Brief specifications1

Quantity Delivery period

Place of delivery

1 2 3 4 5 6 2. Quoted Price:

(a) The tenderer shall quote for items in the format of quotation attached; 1 (a) The Specifications should be drafted to permit the widest possible competition and at the same time present a clear statement of the required standards of workmanship, materials, and performances of the goods to be procured. Minimum functional specifications should be specified for equipment. Only if this is done will the objectives of economy, efficiency and fairness in procurement is realized, responsiveness of quotations be ensured and the subsequent task of evaluation of quotations facilitated. (b) Wherever the Goods are covered by Bureau of Indian Standards, the reference to the Standards should be given. If ISI marking is available it should be specified. (c) Reference to Brand name and catalogue number should be avoided as far as possible. Where unavoidable, they should be followed by the words “or at least equivalent” Note: Delete the footnote in the final letter inviting quotations.

K/Q-1 Goods and Equipment/Limited tender/Evaluation for all items together/Less than Rs.1 lakh

2

(b) All duties, taxes and other levies payable by the tenderer (including Sales

tax on the finished goods) shall be included in the item rate. (c) The rates quoted for each item shall be fixed for the duration of the

contract and shall not be subject to any adjustment. (d) Rates for supply of partial quantity of an item is not acceptable. (e) Corrections if any shall be made by crossing out, initialing, dating and

rewriting. (f) Cable or Facsimile quotations are not acceptable.

3. Each tenderer must submit only one quotation 4. Validity of quotations:

The quotation shall remain valid for a period not less than 30 days after the deadline fixed for submission of quotations.

5. Evaluation of quotations:

The Purchaser will evaluate and compare the quotations determined to be substantially responsive i.e., which are properly signed, and conform to the terms and conditions and specifications in the following manner: (a) The evaluation will be done including the Sales tax. If the tenderer has not

included the Sales tax in his quotation for the item rate, and has also not indicated the rate of Sales tax applicable, the quoted rate will treated as though it is inclusive of the Sales tax and no extra payment for Sales tax will be made;

(b) The evaluation would be done for all the items put together. The items

for which no rates have been quoted would be treated as zero and the total amount would be computed accordingly. The tenderer who has quoted for partial quantity of any one or more item(s) would be treated as non-responsive. Purchaser will award the contract to the responsive tenderer, whose total cost for all the items put together is the lowest.

6. Award of contract:

(a) The Purchaser will award the contract to the tenderer whose quotation has been determined to be substantially responsive and who has offered the lowest price as per para 5(b) above.

(b) The Purchaser reserves the right at the time of contract award to increase or decrease the quantities of any or all of the items indicated in para 1 above by 25% without any change in the unit price or any other terms and conditions.

K/Q-1 Goods and equipment/Limited tender/Evaluation for all items together/Less than Rs.1 lakh

3

(c) The Purchaser prior to the expiration of the quotation validity period will notify the tenderer whose quotation is accepted of the award of contract. The terms of the accepted offer shall be incorporated in the Purchase order.

(d) Normal commercial warranty/guarantee shall be applicable to the supplied goods;

(e) Payment shall be made immediately after the delivery of the goods and their acceptance.

(f) Notwithstanding the above, the Purchaser reserves the right to accept or reject any quotations and to cancel the quotation process and reject all quotations at any time prior to the award of the contract.

7. Last date and time of receipt of quotations:

You are requested to submit the sealed quotations superscribed on the envelope as “ Quotations for the supply of ………………………………. Due on…………..” latest by ……….. hours on ………… (date). We look forward to receiving your quotations.

Yours Sincerely,

Attachment: (Purchaser)

Name………………………. Address:……………………. …………………………….. …………………………….. Telephone No……………… Fax No……………………..



4

FORMAT OF QUOTATION

Sl.No.

Description of goods/equipment

Brief specifications

Quantity Unit Unit rate (Rs) in Figures

Unit rate(Rs.) in words

Total amount (in

Figures) 1 2 3 4 5 6

Gross Total Cost: Rs…………. (in figures)

Rs……………………………………………… (in words)

1. We agree to supply the above goods in accordance with the technical specifications for a total contract price of Rs. ………. (in figures) (Rs………………………………………… (in words), within the period specified in the Invitation for Quotations. 2. We also confirm that the normal commercial warranty/guarantee of ……… months shall apply to the offered goods.

(Tenderer)

Name: ……………………………….

Signature: …………………………….

Date:………………………………..

Annexure V K/Q - 2


OFFICE OF ------------------------------------------------- ----------------------------------------------------

INVITATION FOR QUOTATIONS FOR SUPPLY OF GOODS AND

EQUIPMENT

To: M/s………………………………. …………………………………… ………………………………….. ……………………………………. Dear Sirs:

Sub: Invitation of quotation for supply of ………………….. ……………………………………………………………..

1. Sealed competitive quotations are invited by the undersigned for the following

items of goods/equipment. Sl.No

Brief description of goods/equipment

Brief specifications1

Quantity Delivery period

Place of delivery

1 2 3 4 5 6

2. Quoted Price:

1 (a) The Specifications should be drafted to permit the widest possible competition and at the same time present a clear statement of the required standards of workmanship, materials, and performances of the goods to be procured. Minimum functional specifications should be specified for equipment. Only if this is done will the objectives of economy, efficiency and fairness in procurement is realized, responsiveness of quotations be ensured and the subsequent task of evaluation of quotations facilitated. (b) Wherever the Goods are covered by Bureau of Indian Standards, the reference to the Standards should be given. If ISI marking is available it should be specified. (c) Reference to Brand name and catalogue number should be avoided as far as possible. Where unavoidable, they should be followed by the words “or at least equivalent” Note: Delete the footnote in the final letter inviting quotations.

K/Q-2 Goods and Equipment/Limited tender/Evaluation for each item separately/Less than Rs. 1 lakh per contract.

2

(a) The tenderer may quote for one or more items in the format of quotation attached;

(b) All duties, taxes and other levies payable by the tenderer (including Sales

tax on the finished goods) shall be included in the item rate. (c) The rates quoted for each item shall be fixed for the duration of the

contract and shall not be subject to any adjustment. (d) Rates for supply of partial quantity of an item is not acceptable. (e) Corrections if any shall be made by crossing out, initialing, dating and

rewriting. (f) Cable or Facsimile quotations are not acceptable.

3. Each tenderer must submit only one quotation 4. Validity of quotations:

The quotation shall remain valid for a period not less than 30 days after the deadline fixed for submission of quotations.

5. Evaluation of quotations:

The Purchaser will evaluate and compare the quotations determined to be substantially responsive i.e., which are properly signed, and conform to the terms and conditions and specifications in the following manner: (a) The evaluation will be done including the Sales tax. If the tenderer has not

included the Sales tax in his quotation for the item rate, and has also not indicated the rate of Sales tax applicable, the quoted rate will treated as though it is inclusive of the Sales tax and no extra payment for Sales tax will be made;

(b) The evaluation would be done for each item separately The tenderer

who has quoted for partial quantity of an item would be treated as non-responsive. Purchaser will award the contract for each item separately to the lowest responsive tenderer for that item.

6. Award of contract:

(a) The Purchaser will award the contract to the tenderer whose quotation has been determined to be substantially responsive and who has offered the lowest price as per para 5(b) above.

(b) The Purchaser reserves the right at the time of contract award to increase or decrease the quantities of the items indicated in para 1 above by 25% without any change in the unit price or any other terms and conditions.

K/Q-2 Goods and Equipment/Limited tender/Evaluation for each item separately/Less than Rs. 1 lakh per contract

3

(c) The Purchaser prior to the expiration of the quotation validity period will notify the tenderer whose quotation is accepted of the award of contract. The terms of the accepted offer shall be incorporated in the Purchase order.

(d) Normal commercial warranty/guarantee shall be applicable to the supplied goods;

(e) Payment shall be made immediately after the delivery of the goods and their acceptance.

(f) Notwithstanding the above, the Purchaser reserves the right to accept or reject any quotations and to cancel the quotation process and reject all quotations at any time prior to the award of the contract.

7. Last date and time of receipt of quotations:

You are requested to submit the sealed quotations superscribed on the envelope as “ Quotations for the supply of ………………………………. Due on…………..” latest by ……….. hours on ………… (date). We look forward to receiving your quotations.

Yours Sincerely,

Attachment: (Purchaser)

Name………………………. Address:……………………. …………………………….. …………………………….. Telephone No……………… Fax No……………………..



4

FORMAT OF QUOTATION

Sl.No

Description of goods/equipment

Brief specifications

Quantity Unit Unit rate (Rs) in Figures

Unit rate(Rs.) in words

Total amount

(in Figures

and words)

1 2 3 4 5 6

1. We agree to supply the above goods in accordance with the technical specifications for the total price shown against the item(s) for which quotations have been submitted, within the period specified in the Invitation for Quotations. 2. We also confirm that the normal commercial warranty/guarantee of ……… months shall apply to the offered goods.

(Tenderer)

Name: ……………………………….

Signature: …………………………….

Date:………………………………..


























Inspection Reports








and irregularity.






















Sl No.

Date of Receipt No and date of Objections slip

Nature of objection

Amount objected

Date of reply

Initials of the Officers

Remarks































Audit Reports.





























quarter.

5

ANNEXURE – 1

Department: DDO:

Compliance Report on Paras Outstanding in Inspection Reports / Local

Audit Reports

Inspection

Report/

Local Audit

for the

Period

Dates of

Audit

Date of

Receipt

of Report

Year

Wise No.

of paras

in Report

No. of

paras for

which

replies

are sent

to Audit

No. of paras

under

Verification

No. of paras

dropped

based on

compliance

No. of paras

marked for

verification

during next

audit

ANNEXTURE – II

(i) Compliance Report on Paras in Inspection Reports / Local Audit

Reports

Department:

No. of

DDO’s

No. of

DDO’s

Audited

No. of

IRs/LARs

received

Year wise

No. of

paras in

IRs/LARs

No. of

paras

for

which

replies

are sent

No. of

paras

settled

No. of paras

outstanding

(ii) Compliance Report on Paras on Audit Reports (Civil) and Audit

Reports (Revenue Receipts)

Department:

Sl.

No.

Reference to para

No. Page No. in the

Audit Report for the

year ended

Audit

comment in

brief

Reply of the

Department

Remarks

6

Public Procurement:

There are three categories of procurement.

1. Supply of goods and services

2. Construction 3. Consultancy services

The government servants are dealing with public, money hence it is

Public Procurement.

The objective of any procurement shall be:

1. Value for money – Economy 2. Equal access and non discrimination 3. Transparency of process and decision 4. Accountability of the officials.

Steps in Procurement:

1. Determine what goods, works and services are to be procured. 2. Identify specification 3. Determine procurement agency capacity 4. Decide on type of contract 5. Decide on quality assurance program 6. Schedule the activity 7. Design the monitoring system.

Procedures to be followed in procurement

Manual of contingent expenditure: As per Rule 55(4a) “Stores” of MCE, every

officer purchasing stores in the open market is responsible for seeing that the

purchase is made in the most economical manner with due regard to quality

and efficiency by inviting competitive tender/ quotations when the purchase is

held to be large i.e. more than Rs.5000/-.

In the case of purchase up to Rs. 5000/- the officers may exercise

discretion to choose most convenient mode of purchase. So in case of

purchases up to of Rs. 5000/- cash purchase may be done.

7

When the cost of the purchase is Rs. above 5000/- and up to Rs. 1.00

lakh in case of goods services and up to Rs.5.00 lakhs in case of works/ 2

lakhs in case of water supply and school building, the procedure is to invite

competitive quotations.

Steps in procurement through quotation:

1. Notification through standard quotation formats KQ1 and KQ2 2. Publicity 3. Use of supply order – KSO 4. Contract management.

Notification: A notification shall be issued calling for quotations from the

competitive bidders. The quotation shall contain:

a) Description of the material b) Specification (Quality) c) Quantity required d) Approximate market cost e) Last date for submission of quotation f) Date, Place and time of opening of quotation.

The most important thing is to arrive at the specification of the material

in detail, which shall include physical and quality of material. ( example

measurement of paper like A4, foolscap & material quality like GSM of the

paper ) The specification shall be generic and minimum depending on the

while framing specification standard specification may also be adopted (ISI).

Where ever specification could not be arrived at, sampling method may be

adopted. Using of Brand name shall be avoided. In case it is inevitable to

quote brand name ‘or equal’ may be added. Approximate market cost of the

specified material has to be mentioned to ensure economy.

Publicity: - The competitive rates for the materials can be had from obtaining

more number of bids. This can be achieving through publicity for the

notification. The notification can be displayed on the notice board of the

important offices like the Gram Panchayat, Taluk Panchayat, Zilla Panchayat,

8

Executive Engineer, Taluk Office, Assistant Executive Engineer, Information

and Public Office in case of quotations.

As the range of quotation is between Rs. 5001 to 100000 depending on

the cost of the procurement, the notification may be published in suitable news

papers as decided by the concerned department heads, the cost of such

advertisement shall be as minimum as possible and the matter be as brief as

possible . The quotation may also be sent to the selected vendors for obtaining

the rates.

Two standard quotation forms KQ1 and KQ2 is prescribed in government

order No. FD 9 PCL 2004(11), Bangalore dated 06-08-2005 and these forms are

to be used. KQ1 is the form where evaluation to be done for all items put

together and KQ2 where in evaluation to be done for each items separately.

In quotations the rates quoted by vendors shall be valid for a minimum

period of 30 days for the purpose of evaluation acceptance and issue of supply

orders. There is no minimum time prescribed for submission of quotations

from the date of notification.

Evaluation of the quotations to be done on the basis of the factors like

the vending of specified material, commercial capability of the supplier who has

quoted the lowest rates. The schedule of activities may be determined and

supply/ work order may be issued accordingly.

When the consignment is received the goods/ materials are to be tested

for quality and specification. Only goods in accordance with the specification

and quality shall be accepted and paid accordingly.

The Karnataka Transparency in Public Procurement Act 1999 is brought

in to force from 4th October 2000. The KTPP rules 2000 are effective from 24th

October 2000. Importance is given to transparency in the Act & rules in all

aspects i.e right from invitation of tender till award of tender.

9

The process involved under KTPP is procurement through open tenders.

The principle adopted is equal opportunity and sharing of risk between the

client and the contractor.

The following are the stages of procurement:

1. Procurement planning 2. Preparation of notification 3. Invitation to tender 4. Scope and value of contract to be included 5. Preparation and issues of tender forms 6. Receipt and opening of tender forms 7. evaluation of tenders received 8. Award of tender 9. Agreement between the client and contractor 10. Work Order 11. Execution/Contract Management 12. Quality Control.

Government in their circular dated 25th October 2002 issued instruction for

procurement planning, packaging and scheduling and making available funds

to match the requirements. Planning of packages is an important activity,

which needs to be finalized before taking up a project for implementation. The

instructions shall be followed strictly in respect of all projects irrespective of

the funding agency. The principle behind packaging is the need for technical

requirement, for speedy execution, preparedness to invite tender and the

expected competition.

The notice inviting tender shall include all the information contained in Rule

9 of KTPP Rules. It shall also include the specification of the material and the

estimated cost. The notification shall be published in District Tender Bulletin.

a. The Deputy Commissioner is the District Tender Bulletin Officer. It shall be also published in the State tender Bulletin if the estimated cost

is more than one crore.

• The Deputy secretary in the administrative department is the state tender Bulletin officer.

• In case of all procurements the estimated cost of which is more than 10

crore, it shall find a place in the National Trade Journal also.

• It shall also be notified in the news paper as per the departmental guidelines. If the notification to be done within the district it shall be

10

through District Information Officer. If it also outside the District through Commissioner Information & Publicity.

• Standard tender documents for all categories of procurement are prescribed by the government and are available in the finance department website: www.kar.ni.in/finance.

The KTPP Act, Rules, Government Orders, Circulars etc., are also available in

the web site.

The minimum period for submission of tenders from the date of

notification of tender bulletin shall be 30 clear days where the cost of tender is

up to 2 crores and 60 clear days where the cost of tender is more than 2 crores.

The tender forms shall be prepared and ready for issue on the date of

notification in the tender bulletin. Taking application, fixing time for issue of

tender forms, issue of tender forms at the end of tender submission period

shall be dispensed as in circular dated 1st September 2003.

The minimum validity period of the rates quoted in tender shall be 90

days from the last date of submission of tender. During this period the tenders

are to be opened, evaluated for its responsiveness both technically and

financially, award of tender, enter in to the agreement and issue of work

order/supply order has to be completed.

The tenderer might be awarded a number of contracts based on the

requirements of registration in a particular class and he may not be capable to

execute them satisfactorily within stipulated time schedule, because of lack of

resources and capability. Hence the necessity for qualification criteria.

The qualification criteria to check the requisite resources required for the

satisfactory performance of the contract should be appropriately incorporated

both in pre-qualification documents and also all other tender documents for

works and goods. The model qualification criteria is also given in the circular

dated 3rd December 2002

Besides the qualification criteria the available tender capacity of the

tenderes are to be assessed before award of contract

To qualify for contracts for which tenders are invited the tenderer must

demonstrate the experience and resources sufficient to meet the aggregate of

the qualifying criteria for the individual contracts.

11

Tenderers who meet the minimum qualification criteria will be qualified

only if their available tender capacity is more than the total tender value.

The tender documents for works /supply estimated to cost more than 20

lakhs, but below Rs. 50 lakhs where single cover system is followed should

have post qualification criteria. Which have to be satisfied by the lowest

evaluated responsive tenderer both for the aggregate qualification criteria as

well as available tender capacity before taking decision on the award of the

contract.

Assessed Available Tender Capacity = (A*N-B)

Where

A=Licensed capacity for the item of supply

N=Number of years prescribed for completion of the for the supplies for which

tenders are invited

B=Number of existing commitments to be supplied during the next year

The tender accepting authority shall cause the evaluation of the

tenderers to be carried out strictly on the basis of the qualification criteria

prescribed in the tender document and also on their available tender capacity.

In view of the above it is reiterated that the contracts should be awarded only

to the lowest technically and commercially responsive tenderer.

When the estimated cost of procurement exceeds Rs. 50 lakhs in value,

the tender inviting authority shall fallow the two-cover tender system. The first

cover shall contain experience and past performance, capabilities with respect

to personnel, equipment, financial status and capacity and other information

relevant the tender including EMD. This cover is known as The Technical bid.

The second cover-financial bid shall contain prices quoted by the tenderers

only.

The tender accepting authority qualify those tenderers who have

submitted a technically responsive tender, who are qualified for considering the

financial bid in the second cover.

12

The award of contracts shall be to the lowest technically and

commercially responsive tenderer. A notice of award of contract be issued to

the awardee to submit the agreement along with 5% performance deposit and a

time 20 days be given to furnish PSD and get in to agreement. If the contractor

fails to do so the EMD shall be forfeited and the contract is treated as non-

responsive.

After the agreement and submission of PSD work/supply order shall be

shall be issued for execution of the contract.

The contract document shall specify the schedule of delivery/ progress

chart of the contract which is binding on the contractor. If the contractor fails

to adhere to the progress shown in the Standard tender documents, Liqudated

damages shall be levied as in contract data.

Standard tender documents are prescribed for all category of

procurement including quotation. These tender documents are mandated and

has to be used invariably. All the tender documents include Instructions to

tenderers, General conditions of contract, special condition of contract, format

for agreement and contractor data. Conditions specific to the contract shall be

included in special condition of contract.

The object of the contract is quality and economy. If the contract is

awarded to the lowest technically and financially evaluated bidder, economy is

ensured but the quality has to be ensured while execution as per specification

by the officer in charge of procurement. This can be ensured by testing the

material/ work for their quality. This is quality control of the procurement.

Instructions are issued in Government order dated 17th February 2005 for

third party quality control.

Procurement of consultancy services is different from that of goods and

works. The following steps shall be followed during hiring of consultants.

1. Preparation of the terms of reference for the assignment (TOR) 2. Preparation of the cost estimate to determine the budget of the

assignment 3. Advertising to invite the expression of interest from consultants 4. Shortlisting to identify consultants qualified for the assignment 5. Preparation and issue of the Request for proposal 6. Preparation and submission of proposals by the consultants 7. Evaluation of the technical proposal. 8. Evaluation of the financial proposal 9. Award of contract

13

The procurement entities shall fallow the procedures laid down to ensure

transparency to get best result in terms of quality and economy.

Since the standard tender documents have been prescribed, any addition

to be made, it has to be made in the special condition of contract.

Those projects which are funded by outside funding agency, such

funding agency issues instruction in their scheme documents regarding

procurements, that shall be followed, which is exempted under Sec.3 of KTPP

Act 1999.

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