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THE TENDERING PROCESS

S M Sabnis
Mr Sharad Sabnis, Chief Engineer MSRDC is a Civil Engineer, with both his B.Tech, and M.Tech degrees from IIT, Mumbai. Having opted for a career in the public sector, Mr Sabnis joined the Maharashra PWD and when the Maharashtra State Road Development Corporation Limited was created in 1996, he moved there to work on road and infrastructure projects. Mr Sabnis has worked on many successful infrastructure projects in the State, but the feather in his cap must surely be the planning and execution of the Bandra-Worli Sea-link Project considered one of the most prestigious public sector projects in modern India. This article was written by Mr Sabnis as part of the material prepared by YASHADA for the Ministry of Urban Development, under its Rapid Training Programme initiative.

Civil works carried out by various central or state departments e.g. PWDs, Governmental organisations or urban local bodies are usually classified into two groups viz. Original Works: These require capital investment and are generally funded from Plan allocations. Maintenance and Repairs: These are in the nature of routine or periodic renewal or maintenance works and are generally funded from non- plan allocations.

Original works that are carried out by various central or state departments, Governmental organisations or urban local bodies are of, but not limited to, the following categories: Dams, Head-works and Hydraulic Structures, Highways and Roads, Bridges, Flyovers and Subways, Runways, Airports and affiliated facilities, Water Supply, Sewerage and Pipeline, Power and Transmission Lines, Buildings and Housing (residential, offices, hospitals, schools etc. However, only the following components of civil works are considered admissible for assistance under the JNNURM. (Details may be obtained from the Modified Guidelines of JNNURM.) Urban Renewal i.e redevelopment of inner (old) city areas Water Supply and sanitation Sewerage and Solid Waste Management Construction and improvement of drains/storm water drains Urban Transport, including roads, highways/expressways/ MRTS/metro projects.
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Parking lots/spaces on Public Private Partnership basis Development of heritage areas Prevention and rehabilitation of soil erosion/landslides only in case of Special Category States where such problems are common, and Preservation of water bodies.

The land acquisition component of the cost of the projects is not eligible for assistance except in case of acquisition of private lands in the schemes in the north-eastern states and the hilly states of Himachal Pradesh, Uttaranchal and Jammu and Kashmir. The following components are not admissible for assistance under the JNNURM: Power, Telecom, Health, Education, Wages of Staff etc. and e The basic principles that need to be followed by public bodies undertaking civil works are as follows3: No new works should be sanctioned without careful assessment of the assets or facilities already available and time and cost required to complete the new works. As budgetary resources are limited and granted on annual basis, adequate provisions should be ensured for works and services already in progress before new works are undertaken. The construction period and sanctioned cost stipulated in the sanction of Project will not be exceeded as far as possible. The competent financial authority according administrative approval should be kept informed of the progress of the work till their completion through regular periodical reports. No project or work will be split up to bring it within the sanctioning powers of a lower authority. Any anticipated or actual savings from a sanctioned estimate for a definite project, shall not, without special authority, be applied to carry out additional work not contemplated in the original project.

Further, no works should generally be commenced or liability incurred thereon unless i) Administrative approval has been obtained from the appropriate authority. ii) Sanction to incur expenditure has been obtained from the competent authority. iii) A properly detailed design has been sanctioned. iv) Estimates containing the detailed specifications and quantities of various items has been prepared and sanctioned on the basis of the applicable schedule of rates e.g. PWDs District Schedule of Rates etc. v) Funds to cover the charge during the year have been provided by competent authority. vi) Tenders have been invited and processed in accordance with rules.

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vii) A work order has been issued after following acceptance of tenders and obtainment of Performance Security as stipulated If on grounds of urgency or otherwise, it becomes necessary to carry out a work or incur a liability under circumstances when the provisions set out above cannot be complied with, the concerned executive officer may do so on his own judgement and responsibility However, simultaneously, he should initiate action to obtain approval from the competent authority and also to intimate the authorities concerned with accounts and audits as may be relevant.

Processing of Works
Project development and implementation goes through the following steps Inclusion in the Plans (CDP) Feasibility Studies Preparation of Preliminary Project Report (PPR) Acceptance of PPR and Go Ahead Sanction Detailed Engineering Detailed Project Report (DPR) Administrative Approval and Budget Provision Technical Sanction / Approval Preparation of Draft Bid Documents Approval to Draft Bid Documents Tendering (Procurement) Process Acceptance of Tenders and Award of Work Implementation

In case of works considered for implementation on the Public Private Partnership model, the following steps usually have to be traversed while developing and executing works: Inclusion in the Plans (CDP) Feasibility (Technical Feasibility and Financial Viability) Preparation of Preliminary Project Report (PPR) Acceptance of PPR and Go Ahead Sanction Detailed Engineering including financial viability study and determining Viability Gap Detailed Project Report (DPR) Administrative Approval and Budget Provision Technical Sanction/ Approval
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Preparation of Draft Bid Documents Approval to Draft Bid Documents Tendering (Procurement) Process Acceptance of Tenders and Award of Work Formation of SPV Concession Agreement Financial Close Implementation (Construction followed by Operations Phase) Transfer to the owner department as stipulated

Steps in Preparation of Project Reports

Preparation of Project Reports is an important step in the project development cycle in respect of any civil work implemented by a ULB or a state department or a Governmental organisation. The preparation of project report usually involves the following three stages: a) Pre- Feasibility Study b) Feasibility Study / Preliminary Project Report c) Detailed Project Report containing detailed engineering and plan of construction In the first instance, a feasibility study for the project is to be carried out, either in-house or more commonly through a consultant. In some cases, especially for large projects where external funds are sought or for projects to be implemented on the PPP model, it may be necessary to prepare a pre-feasibility report to enable a funding agency or private financier to appreciate the broad features of the project, the study of financial involvement and possible returns. The feasibility study establishes the scope of the work, brings out the requirement of land, prepares social and environmental assessments, carries out preliminary economic and financial analysis, examines different options, works out their merits and costs, and recommends the most suitable one. In case the project is already identified, or its utility is well established, or an existing asset is to be improved/ upgraded/ replaced, feasibility study may be dispensed with. In another situation, it may be found more practical as well as expedient to combine feasibility report with detailed project report. Decision regarding these aspects may be taken in individual project situations. The studies and recommendations of feasibility generally form the Preliminary Project Report (PPR). On approval of PPR, or otherwise if it has been dispensed with, a Detailed Project Report (DPR) is prepared. In this, standards, design parameters and specifications will be precisely laid down along with technology and quality standards to be followed. Detailed drawings, bill of quantities, detailed cost estimates form essential components of the DPR. The DPR is to be approved by the competent authority. Sanctions to the DPR are usually in the form of Administrative Approval and Technical Sanction/ Approval by authorities empowered to accord such approvals.
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Administrative approval is generally accorded by the competent Financial authority to the execution of work after due examination of Detailed Project Report and detailed estimates. Technical sanction / Approval to detailed cost estimates is accorded by the technical authority empowered to do so. This sanction ensures that proposals are structurally sound and that the estimates are accurately calculated based on adequate data. In case the work is to be executed through a Public Works Organisation as a deposit contribution work, technical sanction is accorded by that organisation. During preparation of DPR, or at tender processing stage, or during execution of work, or after the completion of work, if it is felt that the project cost has or is likely to vary significantly (by more than 10%) over the sanctioned cost, then a Revised Project Report taking into account various possible reasons for variation like change in scope, design of work, material/ labour cost, time overrun etc. shall be prepared and sanction of competent authority needs to be obtained3.

Projects to be implemented on the PPP model

These involve private investment, wholly or in part, and which may be domestic or foreign. They may use various routes such as: BOT (User Fee Based) (or BOOT, BOLT, DBFO) and BOT (Annuity), etc. Bridges, Flyovers or Bypass roads can be implemented by offering rights of the toll revenue to the private entities. In other sectors too, the private entities can be invited to implement the project by offering the rights to collect user charges in full or in part. The involvement of the private sector can be looked at both during the entire project life cycle of construction and Operations and Maintenance or purely in the O&M Phase. In such projects, the ULB or the state department or Governmental organisation implementing the project may have to carry out the preparatory work, arrange environmental and other clearances, and meet the cost of land, feasibility studies, relocation of utilities, resettlement and rehabilitation, etc. In order to improve the viability of a private funded project, the governmental body or the ULB may, within defined limits, provide capital grants (termed as the viability gap funding), participate in equity and offer bridge loans, besides agreeing to periodic revision of user fees, etc. For some projects, which may be taken up on the PPP model e.g. BOT (User Fee) basis, carrying out complete Detailed Project Report may not be necessary. Instead only Feasibility- cumPreliminary Design of the project may be adequate to invite bids on PPP pattern. Feasibilitycum-Preliminary Project Report (PPR) may be prepared including the financial viability study to reflect a reasonable assessment of project costs and project revenues and determination of viability gap, which the project authority may have to provide to the private entity in case of adoption of this route for the implementation of the project. These feasibility studies need to be got carried out through consultants who have the competence to deal with the technical demands of the project as well as the financial viability analysis of such projects. The Feasibility-cum-Preliminary Project Report should, as a minimum, establish and evaluate the following: a) The basic characteristics of the project b) Sources and availability of the project input
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c) Location, geological and soil conditions and access to site d) Environmental and social impacts and land acquisition if any e) Utility relocation plans f) Preliminary design and detailing of the project g) Financial appraisal of the project profitability, including h) Sensitivity analysis i) Preliminary estimation and costing The following format can be used for reference while preparing a PPR. Modifications may be made to suit the requirement of individual projects. Volume-I: Preliminary Design Report (a) Executive summary (b) Project description (c) Environmental Impact Assessment and Environmental Management Action Plan (d) Summary of Resettlement Plan (e) Updated cost estimates (f) Updated economic and financial analyses (g) Suggested methods of procurement and packaging (h) Conclusions and recommendations Volume II: Design Report (a) Available Facilities Inventory (b) Summary of survey and investigations data (c) Proposed design basis, standards and specifications (d) Preliminary designs Volume III: Drawings (a) Location map (b) Layout plans (c) Other relevant drawings (d) Indicative land acquisition plans VolumeIV: Environment Impact Assessment or Initial Environmental Examination and Environment Management Plan. Volume V: Resettlement Plan and Resettlement Action Plan.
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Contents of the DPR

The Detailed Engineering covers detailed surveys and investigations e.g. soil and materials surveys, detailed design studies, all the relevant studies e.g. drainage studies, environment management plan based on environment impact assessment studies, detailed drawings, estimates and implementation schedules and documents. JNNURM Toolkit provides reference format for the preparation of a Detailed Project Report. The project report is expected to contain the following sections2. 1. Sector background context and broad project rationale 2. Project definition, concept and scope 3. Project cost 4. Project institution framework 5. Project financial structuring 6. Project phasing 7. Project O&M framework and planning 8. Project financial viability/sustainability 9. Project benefits assessments The key issues that need to be addressed and other relevant details are outlined in the JNNURM Detailed Project Report Toolkit.

Objectives of Public Procurement

Procurement process is an important step in the implementation of civil works. It can be defined as a process of acquiring goods, services or works or a combination thereof. The objective of Public Procurement is to procure work, goods or services, of the specified quality, within the specified time, at the most competitive prices, in a fair, just and transparent manner. The five key parameters that must be associated with a public procurement process, are: transparency, fairness, value for money, quality, and time. While procurement deals with the entire gamut of activities pertaining to works, goods and services, the discussion in this chapter restricts itself to construction works. Construction contracts fall within the following types:

Percentage Rate Tenders

For percentage rate of tenders, the contractors are required to quote rate as overall percentage above or below the total estimated cost. This form of tender can be used in respect of construction and maintenance works, where the quantities of various items are based on design of works carried out by the department/ULB. Such percentage rate contracts are usually confined to relatively smaller works.
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Item rate Tenders

For item rate tenders, contractors are required to quote rate for individual items of work on the basis of schedule of quantities. The contractor has to quote the rates against each item of work. As in the case of Percentage Rate Tenders, the quantities in respect of all items of work are based on designs prepared by the department/ ULB (as opposed to tenders where the works are based on Contractors own designs.)

Piece Work
This form is to be used mainly in cases of routine maintenance activities and usually restricted to very small works. The contract is based on calling quotations and the conditions of contract are not as rigid as in the case of percentage rate or the item rate type of contracts. This form is resorted to in cases where it is necessary to start the work in anticipation of formal acceptance of contract, an agreement on piece work form may be drawn and the contract may be cancelled as soon as regular contract is signed. In cases of running contracts e.g. for pipes, laying of sewerage etc. quotations are called periodically and a running rate contract is drawn up as a result of those quotations usually for one year. The piecework form provides for payment of stipulated rates only when it refers to such quantity of time and also stipulates that the procuring entity may put an end to the agreement at his option at any time.

Lump sum Contracts

This form is used for work in which contractors are required to quote a lump sum figure for completing the works in accordance with the given designs, specifications and functional requirements. Such contracts need also to include a schedule of variations, which determines the payment to the contractor in the event of changes such as increase or decrease in quantities or changes in the scope of works.

Design-Build Contracts
These are contracts where the works are executed on the designs prepared by the Contractor based on the design criteria and specifications stipulated. These are usually lump sum contracts. Being lump sum contracts these also need to include a schedule of variation, which determines the payment to be made to the contractor in the event of changes in the scope of works.

Contracts based on PPP

Contracts based on the PPP model aim at implementing the works through a private entity that executes the work on its own finances and is allowed to operate the facility for a specific period during which revenues from toll/user fee collection etc. are vested either fully or partially in the private entity. This mechanism helps Governments or ULBs to tap private finance for relatively more viable projects and save their precious capital for other less viable projects. The mechanism also helps risk sharing between parties in a manner that the risks get allocated to parties that are best equipped to carry them. The project delivery and O&M can be expected to improve from the efficiency of the private sector. The benefit allowed to the private entrepreneur to compensate
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him towards costs borne by him is called Concession. The common form of concession is in the form of rights to collect user fees for a specific period called the Concession Period. Usually the concession period includes the period of construction in addition to the period of Operation and Maintenance of the facility. Various forms of this concession can be contemplated and the types of contracts that are in vogue are as follows. The private entrepreneur who gets the concession is called the Concessionaire. Build, Operate and Transfer (BOT) This is the most commonly used form especially in highway projects. The concessionaire builds the facility, operates the facility till the end of the concession period and hands the project facility back to the owner department. Build, Own and Operate (BOO) This is similar to the BOT except that the project facility continues to be with the concessionaire who owns and operates the facility. Usually power plant projects and telecom projects are implemented through this mechanism. Build, Operate, Lease and Transfer (BOLT) This is similar to BOT except that the transfer is carried out over the years through lease adjustments. Projects involving power plants or development and operation of port terminals are implemented through this mechanism.

Contract Forms evolved by FIDIC and the World Bank

FIDIC Forms FIDIC i.e. FEDERTION INTERNATIONALE DE INGENIEURS-CONSEILS (International Federation of Consulting Engineers) is an international organisation based in Geneva that has been instrumental in the evolution of various standard forms of contracts used worldwide in civil engineering works. The World Bank has also adopted the FIDIC standard forms with suitable modifications for applications in the works carried out with its assistance. The key differentiator of the FIDIC based contract is the role assigned to the Engineer who is an impartial and independent expert who administers the contract between the parties viz. the Employer (i.e. the public body e.g. ULB) and the Contractor. The conventional PWD forms used in our country did not adequately provide for the role of project management and supervision to be carried out by a consultant. The FIDIC form is eminently suitable for adoption in cases where the project management of the work is to be entrusted to an expert consultant, who functions as the Engineer to administer the contract. FIDIC has developed the following forms10 Conditions of Contract for Construction: These are forms used for construction contracts and are usually item rate type of contracts, although the form can also be used for lump sum contracts.

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Conditions of Contract for Plant Design and Build: These forms are suitable where the works are executed on Contractors own designs. These are lump sum contracts Conditions of Contract for EPC/ Turnkey Contracts: These forms are to be used for EPC or Turnkey contracts where the contractor carries out the design and also finances works e.g. in the BOT type of contracts. The standard contract documentation on individual works, using the FIDIC forms has two parts Part I: General Conditions of Contract: These are the standard conditions of the FIDIC form of the type above as may be suitable to the work Part II: Particular Conditions: These are amendments to the General Conditions as may be appropriate for the specific work and other work-specific conditions e.g. special conditions of contract, drawings, specifications etc. World Bank Standard Forms of Contracts The World Bank9 has evolved standard bidding documents applicable for each of the following types of bidding. International Competitive Bidding (ICB): This standard form is used for the World Bank aided projects where international bidding is resorted. The objective of International Competitive Bidding (ICB) is to provide all eligible prospective bidders with timely and adequate notification of the Employers requirements and an equal opportunity to bid for the required works. Limited International Bidding (LIB): This is essentially ICB by direct invitation without open advertisement. It may be an appropriate method of procurement where (a) there is only a limited number of suppliers, or (b) other exceptional reasons may justify departure from full ICB procedures. National Competitive Bidding (NCB): This is the competitive bidding procedure normally used for public procurement within the country and may be the most appropriate way of procuring goods or works which, by their nature or scope, are unlikely to attract foreign competition. Request for Proposals for Selection of Consultants: These are the guidelines and the standard documentation evolved by the World Bank for procurement of consultancy services. Pre-qualification Document for Procurement of Works: This is the document provided by the World Bank for adoption in World Bank aided works where the bidding process stipulates the pre-qualification of the intending bidders. While the documentation developed by the World Bank is meant for adoption in works aided by the bank, various departments and organisations in the country have used these as guidelines for developing standard contract documentation for their procurement of works.

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Steps in Procurement
Public Procurement procedure usually follows the following steps 1. Preparation of Bid Documents 2. Approval of Bid Documents by Competent Authority 3. Public Invitation for Pre-qualification (where relevant) 3.1. Issue of Instructions and Pre-qualification criteria 3.2. Pre-Application Meeting and Issue of Clarifications to Applicants 3.3. Receipt of PQ applications and scrutiny 3.4. Approval to PQ 4. Invitation for Bids 5. Issue of Bid documents to prospective bidders 6. Pre Bid Meeting and Issue of Minutes, Clarifications and Common Set of Deviations 7. Receipt of Bids 8. Scrutiny 9. Negotiations, where warranted 10. Acceptance of Bids

Preparation and Approval to Draft Bid Documents

Draft Bid Documents have to be prepared before the invitation of the bids is commenced. The Draft Bid Documents can be based on standard documentation mentioned in the paragraphs above. The documents have also to be approved by the authority empowered to approve such documents. While approving the Bid documents it should be inter alia ensured that: (a) there is no ambiguity, contradiction, or duplication in the nomenclature of items, conditions of contract, specifications and drawings; (b) the specifications and drawings are capable of implementation at site; and (c) the time stipulated to complete the job is adequate. There is also a practice in some organisations for the official approving the bid documents to affix his signature on every page of the bid document as a token of approval and a certificate of approval.

Bid Advertisements in Newspapers in Web sites

Wide publicity must be given to the Bid Invitation Notice. Tenders must be invited in the most open and public manner possible, by advertisement in the Press and by notice in English/Hindi and regional language newspapers of the concerned District/ State or National Levels as may be applicable. Many departments/ organisations/ ULBs have well-managed web sites with the practice of hosting the notices on the web site in addition to the invitation in the press. It is now common to provide the invitation in the newspaper in a window format where the important or

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core information is provided while leading the intending bidders to the detailed tender notice on the web site of the organisation.

CVC Guidelines on Tender Publicity:

The Central Vigilance Commissions (CVC) communication no. OFF/CTE/ dated 4.2.2002 stipulates : (a) In order to have wider, fair and adequate competition, it is important that sufficient time, say 4-6 weeks in case of Advertised/Global tenders is allowed. (b) The tenders should preferably be kept open for sale till the date of tender opening or just one day prior to the date of tender opening. (c) With the widespread use of Information Technology, the tender notices should also be put on the website and e-mail address of the organisation should be indicated in the tender notice.

Time Period for Bids

Period given for submission of Bids should be adequate to enable the bidder make his investigations, visit the site, carry out his costing, and quote realistically. For domestic Bids this period may be 30 to 60 days. For smaller works the period could be less than 30 days. For very short works the period could be about 15-20 days. For large and complex works, this period will depend on the demands of the work/ stipulation imposed by the funding institution (e.g. World Bank). Usually the period is reckoned from the publication to the last date of sale of bid documents. Some organisations prescribe a time gap of four to seven days between the last date of sale and the receipt of bids so as to allow some time for the bidders to study the bid documents and prepare their bids. The time period for bids is reduced for the second or subsequent calls, in case re-bidding is resorted to.

Sale of Tenders
Tender documents must be kept ready for sale before the issue of Invitation for Bids. The intending bidders desiring to tender should generally make a written application and pay the price of the bid documents in the specified format. An official is designated to see that tender documents with complete set of drawings are made available to the bidders as soon as their applications are received. Bidders need to acknowledge receipt of the bid documents for purposes of record.

Pre Bid Meeting

A Pre Bid Meeting is held at a specified place and time, in respect of relatively large works to enable prospective bidders to seek clarifications about the provisions of the bid and make suggestions to the organisation/ULB (Employer) about the work and the bidding conditions. It is to be noted that non-attendance at the Pre Bid Meeting does not constitute a disqualification of the bidder. A senior official connected with the bid process usually chairs the meeting. Minutes of this meeting are prepared along with clarifications to the bidders to respond to their queries. In case there are amendments to the bid conditions proposed at this stage ensuing from the suggestions made by the bidders or otherwise, the same are issued in the form of Common Set of Deviations (CSD) to the bidders. The minutes of the Pre Bid Meeting, Clarifications and the
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CSD as above need to be supplied to the bidders without delay. A minimum gap of about ten to fifteen days is usually allowed between the Issue of these minutes and the clarifications/CSD and the last date of sale of the bid documents primarily with a view to enable bidders who are attracted to the bid process on account of these deviations, to purchase the bid documents and participate in the bid.

Bid Validity
Bid documents require the bids to be valid for a stipulated period after the submission. This period is usually 120 days. The process of scrutiny and evaluation of the bids has therefore to be completed and acceptance communicated well within the validity period. If for some reason, the process of scrutiny and evaluation is delayed, either the successful bidder or all the bidders could be requested to extend their validity for a suitable period. It must be noted that extension to the bid validity is entirely discretion of the bidder and such a request may not be responded favourably.

Bid Security
A bid security (Normally 1% of the estimated cost of the work put to tender) is to accompany the bids. This is also called Earnest Money Deposit. The format of the bid security as well as the time frame and manner of its refund in case of unsuccessful bids is stipulated in the bid documents. The successful bidders are allowed usually to convert the bid security into their performance security.

Submission and Opening of Bids

The Organisation/ULB (Employer) needs to fix a place and a specific date and time as the deadline for the submission of tenders. The Employer may, prior to the deadline for the submission of tenders; extend the deadline, if necessary on account of reasons e.g. to afford bidders reasonable time to take the clarification or modification of the minutes of Pre Bid Meeting into account in their tender. The Employer may, in its absolute discretion, prior to the deadline for the submission of tenders extend the deadline, if it is not possible for one or more suppliers or contractors to submit their tenders by deadline owing to any circumstance beyond their control. Notice of any extension of the deadline needs to be given promptly to each bidder. The tender must be submitted in writing, signed and in a sealed envelope as per stipulations contained in the Bid documents. The employer may provide to the bidders a receipt showing the date and time when its tender was received, especially when asked for. The tender received after the deadline for the submission of tender, shall be returned unopened to the bidders who submitted the same. On the due date and appointed time, as mentioned in the bid document, the Employer needs to open the bids in the presence of the intending bidders or their representative. The bidders name, the bid prices and discount, if any will be announced by the procuring entity during opening of bids. A record of opening of bids is to be maintained. Where the bidding follows a two envelope bid submission, the first envelope of the bidders containing the documents to ascertain eligibility/qualification of the bidders and/ or technical proposals is opened on the bid
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submission date. The documents in the first envelope are scrutinized in due course. The financial bids in respect of those bidders who qualify and whose technical proposal meets the requirements in the bid documents are opened. The qualifying bidders are intimated about the date on which the financial bids are to be opened. Bid documents should clearly spell out the procedure of opening and scrutiny of the bid documents.

Responsive Bids
Scrutiny of the 'Financial Bids' is carried out to determine whether each bid has been properly signed and is substantially responsive. For this purpose, a substantively responsive bid is one that conforms to all the terms, conditions and specifications of the tender documents without material deviation and reservation. A material deviation or reservation is one: (a) which affects in any substantial way the scope, quality, or performance of the works; or (b) which limits in any substantial way the Employer's rights or the bidder's obligations; or (c) whose rectification would affect unfairly the competitive position of other bidders which are substantially responsive. If a bid is not substantially responsive to the requirements of the bid documents, it shall be rejected with the approval of the authority empowered to accept the bid in the first instance, and may not subsequently be made responsive by correction or withdrawal of the non-conforming stipulation. In this context, conditional bids may be considered as non-responsive. The provisions regarding determination of responsiveness of bid documents generally form part of the Instructions to Bidders (ITB) incorporated in the bid documents.

Correction of Errors
Substantially responsive financial bids are checked for any arithmetic errors. Arithmetic errors are to be rectified on the basis of the standard procedure stipulated in the ITB which is as follows: (a) If there is a difference between the amount of rate in figure and in words of an item, and the total amount is worked out, then the rate which corresponds to the amount worked by the bidder shall be taken as correct. (b) If the bidder has not worked out the amount of an item, or the same does not correspond with the rates written either in figures or in words, then the rate quoted by him in words shall be taken as correct. (c) If the rate quoted by the bidder in figures and in words tallies, but the amount is not worked out correctly, the rate quoted by the contractor shall be taken as correct and not the amount.

Clarifications from Bidders

To assist the process of examination, evaluation and comparison of bids a procedure is stipulated in the bid documents whereby, the Employer may ask the bidder individually for clarification, if any, of their bids, including breakdown of unit rates and price. The request for clarification and the response must be in writing, but no change in the price or substance of the bid will be sought, offered or permitted, except as required to confirm the correction of arithmetical errors discovered by the Employer in the course of scrutiny.

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Evaluation and Comparison of Bids

The evaluated bid Prices will be adjusted after taking into account (i) correction for errors; (ii) adjustments for any acceptable variations, deviations and, (iii) adjustments to reflect any discounts or other modifications offered. Variations, deviations, or alterative offers and other factors which are in excess of the bidding documents or otherwise result in unsolicited benefits for the Contractor should not be taken into account in bid evaluation. Duties, taxes and other levies will not be considered in evaluation of bids. If the bid of the successful bidder is seriously unbalanced in relation to the estimate of the cost of the work, the Employer may ask the bidder to produce detailed price analysis for any or all the items of Bill of Quantities, to demonstrate the internal consistency of those prices with the construction methods and schedule proposed. After evaluation of this analysis, the Employer may require that the amount of performance security be increased to a level sufficient to protect the Employer against financial loss in the event of default of the successful bidder under the Contract.

Confidentiality Considerations
The ITB shall usually provide for the confidentiality of the process by stipulating that information relating to the examination, clarification, evaluation and comparison of bids, and recommendations for the award of a contract shall not be disclosed to bidders or any other person not officially concerned with such process, until the award to the successful bidder is announced. Additionally, Bidders are not to contract the Employer or his officials from the time of bid opening to the time contract award on any matter related to the bid, except on request and prior written permission and that any effort by the Bidder to influence the Employer in bid evaluation, bid comparison or contract award decisions will result in the rejection of the Bidder's bid.

Acceptance of Bids
At the end of its scrutiny and evaluation of the buds a comparative statement of tenders is prepared to compare the tenders and in order to ascertain the successful tender in accordance with the procedures and criteria set forth in the bid documents. No criteria shall be used that has not been set forth in the tender document. Based on the acceptance criteria stipulated in the Bid documents, the competent authority shall accept the tender that meets the requirements of the bid documents and the acceptance criteria stipulated. The usual criterion stipulated in bid documents, is to regard a bidder successful if his bid quotes the lowest price subject to any margin of preference applied pursuant to Government policy. The Bid documents should incorporate the stipulation that the Employer shall reserve the right to accept or reject any bid or all bids, recall the tender and to annul the bidding process, at any time before the award of its work, without thereby incurring any liability to the affected bidder(s) or any obligation to inform the affected bidder(s) of the grounds for this action. However, while exercising this right the competent official of the Employer must base his action of rejection on clear, logical reasons and keep these reasons for rejection/recall of tenders on record.

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Negotiations: CVC Guidelines

As a general rule, negotiations should not be resorted to. However, they may become necessary in certain situation. CVC guidelines in this regard stipulate as under: a) There should not be any negotiations. Negotiations, if at all, shall be an exception and only in the case of proprietary items or in the case of items with limited source of supply. Negotiations shall be held with L-1 only. Counter offers are tantamount to negotiations and should be treated at par with negotiation. b) Negotiations can be recommended in exceptional circumstances only after due application of mind and recording valid, logical reasons justifying negotiations. In case of inability to obtain the desired results by way of reduction in rates and negotiations prove infructuous. Satisfactory explanations are required to be recorded by the Officials/Committee who recommended the negotiations. The Officials/Committee shall be responsible for lack of application of mind in case its negotiations have only unnecessarily delayed the award of work/contract. c) In case of L-1 backing out there should be re-tendering as per extant instructions. d) The original terms and conditions of the bid should not be varied while negotiating. A record of the negotiations will be kept, which will form part of the agreement along with undertakings given by the contractor.

Guidelines for Acceptance of Single Tenders

The acceptance of single tender poses difficulty and is not encouraged. Acceptance of a single tender is to be an exception and not a general rule. The following guidelines adopted by NHAI for its works, may be used for guidance.4. In case only a single bid is received by the due date of receipt, normally the bid process may be cancelled and re-bidding done by giving a shorter notice (say of four weeks) except in cases where due to other reasons like difficult conditions, law and order etc., the tender response is expected to be poor. In case of re-bidding, change from pre-qualification to post-qualification may also be considered and resorted to, if that would help increase response of tender. In case re-bidding/change to post-qualification also results in receipt of single bid then it should be opened and the bid amount should be compared with the estimated project cost. In case the bid amount is within 15% of the estimated cost, then acceptance of the bid may be considered with proper justification and reasons. For EPC contracts such single tenders can be considered for acceptance provided if bid is reasonable and sufficient justifications exist for acceptance. In cases where due to reasons like difficult conditions, law and order, likelihood of poor response etc., it is decided to open the single bid without going for re-bidding, then for

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acceptance, the above guidelines shall be applicable as are prescribed for acceptance of tenders where re-bidding is resorted to.

Communication of Acceptance
Acceptance of the bid is communicated to the successful bidder well before the expiry of the bid validity period, in a standard format of acceptance letter. The bidder is requested to submit a performance security (Usually 5 % to 10% of the contract price) within the stipulated period so as to issue a notice to proceed with the work (Work Order)

Performance Security
The successful bidder is required to furnish to the Employer a performance security after the receipt of Letter of Acceptance, within the time stipulated, usually of an amount equivalent to 5% to 10% of the contract price plus additional security for unbalanced bids. The Performance Security to be provided by the successful bidder is in the form of a bank guarantee as per prescribed format issued from any nationalized Indian bank/IDBI/ICICI/Export Import bank/Foreign bank with counter guarantee from any nationalized Indian Bank or other bank as may be acceptable to Employer (The bid documents need to provide clear stipulations in this regard). The Bank Guarantee for performance security shall remain valid for a sufficient period (as specified in the Contract) after expiry of Defects Liability Period. After the successful bidder furnishes the performance security towards the work as stipulated in the bid documents, the notice to proceed with the work (Work Order) is issued and the agreement is signed.

Eligibility and Qualification of Bidders

Pre-qualification: The successful execution of contracts for large buildings, civil engineering, supply and installation, turnkey, and design and build projects requires that contracts be awarded only to firms, or combinations of firms, that are suitably experienced in the type of work and construction technology involved, that are financially and managerially sound, and that can provide all the equipment required in a timely manner. The assessment by an implementing agency of the suitability of firms to carry out a particular contract prior to being invited to submit a bid is a process called pre-qualification.6 Post-qualification:Where the assessment by the implementing agency of the suitability of the firm to carry out the contract is carried out after the submission of bids, the process is called post-qualification. The post-qualification process comprises scrutiny of the credentials of the firm from the first envelope of the two envelopes bidding process and considering the financial bids in the second envelope only of those bidders who conform to the stipulated qualification criteria.

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Pre-qualification 1 The process enables prospective bidders, who may be insufficiently qualified on their own, to avoid the expense of bidding. Conversely it is an incentive for these potential bidders to form a joint venture that may give them a better chance of success. 2 After being pre-qualified, well-qualified firms will price their bids with the knowledge that they are competing against other qualified bidders meeting realistic minimum competence criteria; the assurance that inadequately qualified competitors will be excluded from submitting unrealistic low bids thus encourages leading contractors to bid.

Post-qualification Insufficiently qualified bidders enter the bid process and incur the expense of bidding. There is no incentive to form a joint venture that may give them a better chance of success. Since the bid process is open to all, and since there is no assurance that inadequately qualified bidders will be kept out, leading contractors are relatively less keen to bid in this process.

3 It reduces the amount of work and time involved by The Employer is compelled to Employers in evaluating bids from unqualified scrutinize and evaluate all the bids contractors. 4 Procurement lead-time may increase, although this can Procurement Lead-time is relatively be minimized by good procurement scheduling, e.g., less. undertaking the pre-qualification process while Bidding Documents are being prepared. 5 Collusion (and the possibility of price-rigging) is easier Collusion less likely. among a limited number of identified bidders.

Strategy towards Pre/Post Qualification: Considering the relative merits and demerits of prequalification and post-qualification, it may be desirable to resort to pre-qualification in cases of large and complex projects where the ability to deliver the project is a key requirement. For the relatively medium and small jobs, the strategy of post qualification may be adopted. The criteria to be used for pre or post qualification could be more or less similar. Pre-qualification Process: The pre-qualification process includes four main phases: advertising, preparation and issuing of the pre-qualification document, application preparation and submission by bidders, and application evaluation, and pre-qualification of applicants. Advertising: The advertisement for pre-qualification should conform to the guidelines for the publicity of bids whereby wide publicity is accorded to the pre-qualification process. In case of international bids, the publicity may have to be made in appropriate international newspapers. Preparation and Issue of Pre-qualification Document: Pre-qualification documents have to be got prepared and approved from the competent authority in a manner identical to preparation and
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approval to bid documents. The typical pre-qualification document has usually the following sections Instructions to Applicants: Specifies the procedures to be followed by Applicants in the preparation and submission of their Applications for Pre-qualification as well as information on opening and evaluation of applications. Work Specific Data: Consists of provisions that are specific to each pre-qualification and supplement the information or requirements included in the section covering Instructions to Applicants. Qualification Criteria and Requirements: Highlights the methods and the criteria used for carrying out the pre-qualification of applicants. Forms and Formats: The forms and formats in which the applicants are expected to furnish their information for pre-qualifications Scope of Works: Specifies the scope of the work including drawings and specifications as well as the delivery schedule in respect of the work for which the pre-qualification applications are sought.

Application Preparation and Submission by Applicants: This is the stage where the intending applicants study the pre-qualification documents and prepare their applications in the form and formats stipulated. During this time the Employer is required to respond promptly to the queries that the applicants might raise. This process could be facilitated through a Pre-Application Meeting. Application Evaluation and Pre-qualification of Applicants: This is the stage where the Employer evaluates the applications and pre-qualifies the bidders based on the qualification criteria stipulated in the application documents.

Eligibility Criteria
Eligibility criteria generally stipulated in the bid documents comprises the following: Conflict of Interests: A firm that has provided consultancy services to the Employer in the preparation of the project or bid documents etc. or affiliates of such a firm are not eligible to provide services or goods and thus not eligible for bidding. Government owned enterprises are not eligible for bidding unless they are legally and financially autonomous and operate under the commercial law. A firm declared ineligible for having indulged in corrupt or fraudulent practices by the Employer shall not bid. Firms that have been debarred from participating in the bid processes of the Employer for non- performance shall be ineligible for bidding in the period so applicable.

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Qualification Criteria
Generally, the following qualification criteria are specified in the pre-qualification document for qualification of bidders. The criteria may also be used to carry out post-qualification of bidders. The criteria could be modified and expanded to include other conditions to meet the requirements of individual works. Registration of Contractors in Appropriate Class: The Qualification criteria usually stipulates that the bidders must be registered in appropriate class with the Employer or the CPWD or State PWDs or Railways etc, The registered contractors would be eligible to tender for the class (es) of work(s) for which they are registered and up to the limits of their registration and area of operation. General Construction Experience: The qualification criteria stipulates that bidders should have been actively engaged in civil works construction business for similar work at least for 5/ 10 years immediately prior to the date of submission of application. Particular Construction Experience: The qualification criteria stipulation may provide that the bidder should have successfully completed or substantially completed, within the last 5/10 financial years, at least one contract of the specified percentage (e.g. 75 %) of the contract value in question and which is similar to the one now being proposed and (ii) The bidder should also have achieved the minimum annual production rates of the key construction activities stipulated. Turnover: The minimum average turnover of the bidder during the preceding 5 to 7 years should be more than the specified value. This is usually two times the estimated cost of the work put to tender divided by the time in years allowed for the work. While working out the turnover of the preceding years, a compounding factor (e.g. 10% per year) may be specified. Bid Capacity: The qualification criteria invariably provide that the bidder should possess the bidding capacity as calculated by the specified formula. The formula generally adopted is: Bid Capacity = A x N x F -B, where :

A = Maximum value of works executed in any one year during the last 5 years (updated at the current price level by a compounding factor e.g. 10% per annum), taking into account the completed as well as works in progress. N = Number of years prescribed for completion of the work in question. B = Value (updated at the current price level) of the existing commitments and ongoing works to be completed in the next 'N' years. F = A multiplier factor (Usually 1.5 to 2) Financial Capability: With a view to ensure that the bidder has access to or possesses adequate liquid assets and other financial assets to meet the cash flow requirements for the contract in question, the qualification criteria provides that (i) The bidder must possess a specified minimum value of liquid assets (Generally 10% of the annual turnover) (ii) The bidder should have adequate sources of finance to meet the cash flow requirements of works
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currently in progress and for future contract commitments and (iii) The bidder should possess financial soundness as established by audited balance sheets and/or financial statements. Towards this the bidder may be required to produce these details such as Profit and Loss Statements and Balance Sheets for the preceding five or seven years. The bid documents may also provide that the Employer may seek reference from the bidders bankers to establish his financial soundness. Equipment Capability: The qualification criteria may provide that the bidders should demonstrate the availability of key equipment necessary for the contract work. This may be through ownership of the equipment of through hire or lease. The prime consideration in this regard would be to assure the availability of the equipment at the time when it is required to be deployed in the contract work. Personnel Capability: The qualification criteria may require the bidder must demonstrate the availability of key personnel of the requisite qualification and experience for deployment in the contract work. Litigation History and Past Performance: With a view to weed out bidders with a history of unsuccessful or bad litigation or poor performance in past contracts, e.g. unsuccessful completion, or excessive delays the criteria may require the bidders to provide details of previous works and litigations. The Employer may, in this regard insist on certificates/ independent verification from the previous Employers to ensue that the past history of the bidder does not create a doubt about his performance in the present contract. A decision to disqualify has to be based on solid evidence (references) from the previous Employers to substantiate that non-performance resulted from a default by the bidder.

Joint Ventures
Intending bidders forge joint ventures to bring together their technical, financial, personnel and equipment capabilities to meet the requirements of a contract work. For large and complex works (say costing more than Rs. 100 Cr.), joint ventures are, therefore, permitted.4 While qualifying joint ventures, the memorandum of understanding forming the joint venture agreement should be carefully scrutinized. The MOU between the joint venture partners should contain details such as Management structure of the J/V, share of individual partners in the J/V, Lead Partner and his empowerment to incur liabilities and enter negotiations, responsibilities of individual partners in furnishing bid security, performance security etc., their joint and several liability and remedy in case of abdication of responsibility by one or more parties etc. While considering qualification of a Joint Venture, some of the criteria specified above could be met collectively and some by the Lead Partner. Some of the criteria could be applied to the individual partners to the extent of their share in the J/V. For smaller contracts it may be desirable to disallow joint ventures.

Consultancy Contracts/Assignments
Considering the magnitude and complexity of works faced by the Central/ State departments, Governmental organisations or the ULBs, it is inevitable that services of high quality consultants
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are deployed at all stages of the project life cycle. Consultants have to be engaged for conducting feasibility studies, project preparation, preparation of bid documents and project management during the construction stage as well as supervision during the O&M stage.

Types of Consultancy Contracts

Lump Sum Type: Lump sum contracts are used mainly for assignments in which the content and duration of the services and the required output of the consultants are clearly defined. Areas of application will be simple planning and feasibility studies, environmental studies, detailed design of standard or common structures, preparation of data processing systems, and so forth. Payments will be linked to outputs (deliverables), such as reports,' drawings, bills of quantities, bidding documents and software programs. Time Based Contracts: This type of contract will be an appropriate choice when it is difficult to define the scope and length of services. Areas of application will he complex studies, supervision of construction, advisory services, and most training assignments. Payments will be based on agreed hourly, daily, weekly, or monthly rates for staff (who are normally named in the contract) and on reimbursable items using actual expenses and/or agreed unit prices. The rate for staff include salary, social costs, overheads, fee (or profit), and where appropriate, special allowances. This contract should specify the maximum amount to be paid to the consultants. This ceiling amount should include a contingency allowance for unforeseen work and duration, and provision for price adjustments, where appropriate. Time based contracts need to be closely monitored and administered in order that the assignment is progressing satisfactorily and that payments claimed by the consultants are appropriate. Percentage Contracts: These contracts will be relevant for architectural services. This can also be used for procurement, inspection agents, or work supervision. In these, the fees paid to the consultant should be related to the estimated or actual project construction cost, or the cost of the goods procured or inspected. The contracts will be negotiated on the basis of market norms for the service and/or estimated staff-month costs for the services, or competitive bid. These contracts may encourage the consultants to provide proposals that are not economical. Retainer and/or Contingency (Success) Fee Contracts: Retainer and contingency fee contracts are widely used when consultants (e.g. financial firms) are preparing companies for sales or mergers of firms, notably in privatization operations. The remuneration of the consultant includes a retainer and a success fee, the latter being normally expressed as a percentage of the sale price of the assets Indefinite Delivery Contracts (Price Agreement): These contracts will be used when there is a need to have 'On call' specialized services to provide advice on a particular activity, the extent and timing of which cannot be defined in advance. These may be used to retain advisers for implementation of complex projects, expert adjudicators for dispute resolution panels, institutional reforms, procurement advice, and technical trouble shooting etc. The client and the firm agree on the unit rates to be paid for the experts, and the payments are made on the basis of the time actually used.

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Selection of Consultant: Methods

The consultants may be drawn from various sources, wherever talent and experience of the relevant kind are available. These may include private and public entities such as consulting firms, engineering firms, construction managers, management firms, procurement agents, inspection agents, investment institutions, research bodies, government agencies, individuals. Different methods of selection and the areas to which a particular method is most appropriate, and also the detailed procedure of evaluation, selection and appointment of consultants are: a) Quality-and Cost-Based Selection (QCBS) b) Quality-Based Selection (QBS) c) Fixed Budget Selection d) Least- Cost Selection e) Selection Based on Consultant's Qualification f) Single Source Selection

Quality and Cost Based Selection (QCBS)

QCBS uses a competitive process among firms that takes into account the quality of the proposal and the cost of the services in the selection of the successful firm. Cost, as a factor of selection, is to be used judiciously. The relative weight to be given to the quality and cost will be determined for each case, depending on the nature of the assignment. The weight associated with Quality i.e. Technical Proposal may be as high as 80% and that associated correspondingly with cost i.e. Financial Proposal may be 20%. This method is the preferred method for many of the consultancy assignments relating to works to be undertaken for World Bank aided projects. The process of service procurement is in the following steps: a. b. c. d. e. f. g. Preparation of Terms of Reference (TOR); Preparation of cost estimate of the services and the budget; Advertising to seek expression of Interest (EOI); Preparation of the short list of consultants; Preparation and issuance of the Request for Proposals (RFP); Letter of Invitation (LOI); Information to Consultants (ITC); Proposed contract; Receipt of proposals; Evaluation of technical proposals; consideration of quality;
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h. i. j.

Evaluation of financial proposal; Final evaluation of quality and cost; and Negotiations and award of the contract to the selected firm.

Quality Based Selection (QBS)

QBS is used in the following types of assignments: a. Complex or highly specialized assignments for which it is difficult to define precise TOR and the required input from the consultants, and for which the client expects the consultants to demonstrate innovation in their proposal b. Assignments that have a high downstream impact and in which the objective is to deploy the services of the most eminent expert; and c. Assignments that can be carried out in substantially different ways, such that proposals will not be comparable. In QBS, the RFP comprises submission of a technical proposal and the financial proposal in two separate envelopes. The selection involves the selection of the consultant based on quality whose financial bid is opened and considered for acceptance.

Fixed Budget Selection

This method will be used when the assignment is simple and can be precisely defined, and when the budget is fixed. The RPF should indicate the available budget and request the consultants to provide their best technical and financial proposals in separate envelopes, within the budget. TOR should be particularly well prepared to make sure that the budget is sufficient for the consultants to perform the expected tasks. Evaluation of all technical proposals shall be carried out first as in the QCBS method followed by public opening of the financial bid envelopes. Proposals that exceed the indicated budget shall be rejected. The consultant submitting the highest ranked technical proposal among the rest shall be selected and invited to negotiate the contract.

Least Cost Selection

This method is used for assignments of a standard or routine nature, where well-established practices and standards exist and in which the contract amount is small. Under this method, minimum inputs required will be specified and certain minimum qualifying marks for the quality, established. Proposals to be submitted in two envelopes will be invited from a short list. Envelopes containing the technical proposal are opened first and evaluated. Those securing less than the minimum will be rejected and the financial proposals of the rest opened publicly. The firm with the lowest price shall then be selected. The minimum inputs required and the minimum qualifying marks shall be stated in the RFP.

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Selection Based on Consultants Qualification

This method is used for very small assignments for which the need for preparing and evaluating competitive proposals is not justified. In such cases, The TOR is prepared and expression of interest requested and information on the consultants experience and competence relevant to the assignment is obtained to establish a short list of consultants. The firm with the most appropriate qualifications and references is then selected. The selected firm shall be asked to submit a combined technical- financial proposal and then be invited to negotiate the contract.

Single Source Selection

Single-source selection of consultants does not provide the benefits of competition in regard to quality and cost, lacks transparency in selection, and could encourage unacceptable practices. Therefore, single-source selection is to be used only in exceptional cases. Single-source selection may be appropriate only if it presents a clear advantage over competition: (a) for tasks that represent a natural continuation of previous work carried out by the firm (b) in emergency cases, such as in response to disasters and for consulting services required during the period of time immediately following the emergency, (c) for very small assignments, or (d) when only one firm is qualified or has experience of exceptional worth for the assignment.

Standard Provisions in Consultancy Contracts

Price Adjustment: Adjustment of the remuneration for foreign and/ or local inflation will be done as per price adjustment provision included in the contract if its duration is expected to exceed 18 months. In exceptional cases, contracts of shorter duration may include a provision for price adjustment when local or foreign inflation is expected to be high and unpredictable. Payment Provisions: Payment provisions, including amounts to be paid, schedule of payments, and payment procedures, currencies of payment in case of foreign consultants, shall be clearly defined in the contract agreement. Payments may be made at regular intervals (as under time based contracts) or for agreed outputs (as under lump sum contracts). Performance Security: Bid and performance securities are generally not recommended for consultants services.5 Their enforcement is often subject to judgment calls, they can be easily abused, and they tend to increase the costs to the consulting industry without evident benefits, which are eventually passed on to the Borrower. However, in specific cases, performance security amounting to about 5% of the consultancy contract may be stipulated in the form of bank guarantee to be valid well beyond the tenure of the consultancy assignment.4 Conflict of Interest: The consultant shall not receive any remuneration in connection with the assignment, except as provided in the consultancy contract. The consultant and its affiliates shall not engage directly or indirectly in activities that conflict with the interest of the Employer under the contract, and shall be excluded from downstream supply of goods or construction of works or purchase of any asset or provision of any other service related to the assignment other than a continuation of the 'Services' under the ongoing contract not connected with the job concerned.

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Professional Liability: Professional liability is a term used to recognize the obligation of a person or firm to compensate those who suffer loss or damage as a result of the negligent performance of the professional services provided by them. The consultant will be expected to carry out the assignment with due diligence and in accordance with prevailing standards of the profession. He will always act, in respect of any matter relating to the Contract or the Services, as faithful adviser to the Employer and will at all times support and safeguard the Employer's legitimate interests in any dealings with the subcontractors or third parties. The Consultant shall be responsible for accuracy of data (whether collected directly by him or procured from other agencies/authorities), the designs, drawings, estimates and all other details prepared by him as part of the Services. He shall indemnify the Employer against any negligence, deficiency in services, or inaccuracy/deficiency in the work that might surface during implementation of the project. The consultant will also be responsible for correcting at his own cost, the drawings including any re-survey/investigation and correcting layout, if required. Professional Indemnity Insurance: Professional Liability Insurance, more commonly referred to as Professional Indemnity Insurance, is a mechanism to transfer all or part of the risk to an insurance company for payment to those who are entitled to be compensated for their losses to the negligent performance of the duty by a the professional. The consultant shall provide to the Employer a Professional Liability Insurance (PLI) for a period of five (5) years or as per applicable law, whichever is higher, after completion of services.4 The liability to the Employer shall be limited to the total payments expected to be made under the consultant's contract, or the proceeds the consultant is entitled to receive under its insurance, whichever is higher. Termination: If the consultant is found to be not performing satisfactorily during the course of the consultancy assignment, or refuses to re-do part of the work which is found unacceptable, or fails to comply with any decision reached as a result of arbitration proceedings, or becomes bankrupt, or is found to indulge in corrupt and fraudulent practices, or knowingly submits a false statement which has a material effect on the rights, obligations or interests of the Employer, may terminate the contract after giving due notice. Upon termination, the Employer shall, after offsetting any advances, pay for the services satisfactorily done before the effective date of termination, and also of reimbursable expenditures which have been actually incurred before the said date Staff Substitution Provisions: During an assignment, if substitution is necessary (for example, because of ill health or because a staff member proves to be unsuitable), the consultant shall propose other staff of at least the same level of qualifications for approval by the Employer. Such substitution may be allowed only in respect of a proportion of the staff proposed, and provisions towards penalties for such substitution may also be included in the consultancy contract. The contract may also contain provisions for replacement of personnel found unsuitable by the Employer. Dispute Resolution Provisions: Consultancy contracts need to include a clause for settlement of disputes. The dispute resolution mechanism usually provides for amicable settlement failing which the dispute is referable to an arbitration proceeding.

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References: 1. JNNURM: Modified Guidelines 2. JNNURM Detailed Project Report Preparation Toolkit 3. Manual on Policies and Procedures for Procurement of Works issued by GOI, Ministry of Finance (2006) 4. National Highway Authority of India : NHAI Works Manual-(2006) 5. Guidelines: Selection and Employment of Consultants by World Bank Borrowers (2006) 6. World Bank- Pre-qualification Document for Procurement of Works and Users Guide (2006) 7. World Bank- Standard Request for Proposals for Selection of Consultants (2004) 8. World Bank- Standard Bidding Document for Procurement of Works and Users Guide (2007) 9. World Bank- Guidelines Procurement under IBRD Loans and IDA Credits (2004) 10. FIDIC Contracts Guide to the Construction, Plant and Design-Build and EPC/Turnkey Contracts (1st Edition, 2

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