Conditions of Contract

Definitions
CONTRACT
1)Documents forming the tender and
acceptance thereof
2)Formal agreement executed between parties.
3) Documents referred to therein agreement.
4)Specifications, designs, drawings and
instructions issued from time to time by the E-
in-C.
 Conditions of Contract
WORK
1)Work to be executed as per contract.
2)Includes temporary, permanent, original, altered,
substituted or additional.
CONTRACTOR
1)Individual
2)Firm or company whether incorporated or not.
3)Includes legal personal representatives
4)Successors
5)Permitted assignees
 Conditions of Contract
ENGINEER IN CHARGE
1)Engineer officer who shall supervise and be in
charge of work.
2)Who shall sign the contract.
Excepted Risks
Risks due to
•Riots, war, invasion, act of foreign enemies,
hostilities, civil war, rebellion revolution,
insurrection, military or usurped power, Acts of
Government, damages from aircraft, acts of God.
•Other causes over which contractor has no control
 Conditions of Contract
Market Rate
Rate as decided by E-in-C in the basis of cost of
materials and the labour at the site + overhead
and profits.

Schedule
•The relevant schedule/ SR mentioned in
contract.
•Upto date amendments issued upto date of
Receipt of Tender.
 Signing of the Contract

1.Contract to be signed with in 15 days.

2.NIT, all drawings, standard CPWD form.
3.No payment unless contract is signed by the
contractor.
 Clauses Related to Payment
Clause (1)
Performance Guarantee
1.Irrevocable P.G. @ 5% within specified period from date of issue of
letter of acceptance (LoA).
2.May be extended as per schedule ‘F’ by E-in-C at the request of
contractor.
3.Cash (<10,000), Deposited at call receipt, Banker’s cheque DD, pay
order (<1,00,000), FDR, Govt. Securities, Guarantee Bond of Scheduled
Bank.
4.Valid upto completion Date +60 days.
5.Extend validity of P.G. in case of Extensions.
6.50% of PG to be retained as so far maintenance work. To be released
proportionately.
7.Contract determined or rescinded PG is forfeited.
 Clauses Related to Payment
Clause 1(A)
SECURITY DEPOSIT
1.@2.5% of the Gross amount of each running/
final bill till the amount deducted becomes 2.5%
of the tendered value.
2.Cash/ Govt. Securities/ FDR
3.May be released against Bank Guarantee
minimum of Rs. 5 lacs (except last BG)
4.B.G. to be extended.
 Clause – 6
• Measurement of work done

1. The value of work due to be determined by measurements entered in

MBs/ level books..
2. All measurements to be recorded jointly & signed with date.
3. If contractor is not present despite of advance notice (3 days) or fails to
counter sign or to record objection with in a week. Measurements
deemed to be accepted by contractor.
4. Contractor to provide labour + all assistance for measurements.
5. Procedure for measurement as per specification/ BIS standard/ mutually
agreed method in that order.
6. Contractor to give 7 days notice before covering of the work.
7. E-in-C may cause to check the measurements recorded jointly.
8. Recording of measurements in MBs are not conclusive evidence as to
sufficiency of work nor shall it relieve the contractor from its liabilities.
 Clause – 6A
• Computerized MB
• Contractor to record measurement in CMB having A-4 sized
pages.
• Measurements are to be got checked from E-in-C as per
prefixed program.
• E-in-C to make correction and return it to the contractor.
Resubmission by contractor after correction. Measurements
then to be signed jointly.
• E-in-C to test check measurements and record necessary
certificates.
• Final measurements should be 100% correct, no further
cutting or overwriting.
• If any error, the contractor has to submit a fresh
computerized MB.
• MB shall be taken in record of division and allotted a
number. Two spares copies of MBs also to be submitted.
 Clause 6A continued
8. Contractor to submit computerized abstract of cost and the
bill.
9. Bill will be processed in the division and allotted a number.
10. Measurements to be recorded as per specifications/ BIS
orders/ mutually agreed method.
11. Contractor to give 7 days notice to cover the work.
12. E-in-C to cause checking of measurements.
13. Recording of measurements in MB is not conclusive evidence
as to sufficiency of work/ material. It does not relieve the
contractor from its liabilities till completion of defect liability
period
 Clause – 7, Running Bills
1. No running bills for work upto Rs. 20,000/.
2. Running bills to be submitted by contractor in the format of
department in the triplicate on the fixed date.
3. In case of failure by the contractor, the Department will prepare
and no claim by the contractor due to delay and claim for interest.
4. Amount admissible is to be paid by 10th working days. Out side
work it is 15 days.
5. Delay in payment of running bills after 45 days (Bills are in order)
simple interest @7.5% per annum shall be paid after expiry of
prescribed time limit. Interest to be compounded on annual basis.
6. Interim bills are not conclusive evidence work wrt sufficiency/
quality of work. All such interim payments shall be regarded as
payments by way of advances against final payment.
7. Pending EOT, interim payment shall continue to be made.
 Clause -7 Advance payment,
Pending Measurements
• E-in-C in his sole discretion on the form of
certificate from the AE make interim advance
payment without detailed measurements
(Except foundation and finishing lines) @
75% of assured value.
• The advance payment to be adjusted in
subsequent bill by taking detailed
measurements.
 Clause 7 ,Payment in Composite
Contracts
1. Running payment of the major component shall be
made by EE of major discipline to the main
contractor.
2. Running payment for minor component shall be
made by the E-in-C of the discipline of minor
component to main contractor.
3. EE of minor component may make payment to the
contractor associated with minor component
1) Main contractor fails to make payment.
2) Complaint by other contractor of minor discipline.
3) No reply/ non satisfactory reply of the main
contractor.
 Clause -8 (Completion certificate &
Plans
• Contractor shall give notice of completion with in 10
days.
• E-in-C to inspect work with in 30 days.
• If there is no defect, record final completion
certificate indicating defects (a) to be rectified by
contractor/ (b) payment to be made at reduced
ratios.
• No completion to be recorded until contractor clears
the site & E-in-C records the measurements.
• In case of failure by contractor the E-in-C will cause
the site cleaned at cost of the contractor and cause
disposal as fit. Contractor will be entitled only for
proceeds of sale.
 Clause – 8A.
Contractor to keep site clean
1. In annual repairs and maintenance work splashes & droppings
shall be removed and surface cleaned simultaneously with the
completion of terms in rooms/ quarters/ premises.
2. E-in-C has the right to get the work done at the cost of the
contractor.
Clause 8B
Completion plan to be submitted by contractor
1. Contractor to submit completion plan as per General
specifications for Electrical work (Part-I internal) 2005 and (Part-II
external) 1994 with in 30 days.
2. Contractor is liable to pay 2.5% of the work upto Rs. 15,000/- as
fixed by SE.
3. Contractor shall submit completion plan for water, sewerage and
drainage lines with in 30 days.
4. Incase the contractor fails, the dependent get it done at cost of
contractor and actual expenses + Rs. 15,000/- recovered from
contractor.
 Clause – 9. Payment of Final Bill

1. Final bill to be submitted with in 3 months of physical

completion/ one month of record of completion
certificate, whichever is earlier.
2. No further claims. Claims waived & extinguished.
3. Schedule of payment of undisputed items –
- Tendered value upto Rs. 45 laces - 2 months
- More than 45 lacs & upto 2.5 crores - 3 months
- Tendered value exceeds 2.5 crores - 6 months
4. In case of delay simple interest @ 7.5% compounded
on annual basis after expiry of prescribed period if bill
was in order
 Clause – 9A
Payment of contract or bills to Banks
• Payment to bank, registered financial,
cooperative or thrift societies or recognized
financial institutes.
- on proper authorization in legally valid form.
- His own acceptance to correctness of the
amount/ signature in bill form.
- Receipt given by bank constitute a full &
sufficient discharge for payment.
 Clause -10A, Materials to be
provided by Contractor.
• The contractor to provide material at his own
expenses.
• The contractor shall get approved samples in
advance at his expenses.
• E-in –c to intimate in writing within 30days regarding
approvals. Tests to be conducted.
• Materials are to be used on work after testing and
approval of E in c.
• No claim or compensation for delay due to corrective
measures to be taken on testing.
 Clause 10-A continued
• Contractor to bear expenses for collection,
preparation, cost of testing.
• E-in-C/Representative will have right to access
works, workshops from where material and
machinery is procured.
• E in C will cause removal of defective items
from the site at contractor’s expenses.
• The contractor shall provide field testing lab.
 Clause – 10B, Secured Advance on Non
Perishable materials
.
• Contractor to sign indenture form.
• Upto 90% of the assessed value of material.
• Non perishable, non- fragile, non – combustible
materials.
• In accordance with contract.
• Brought to the site
• Adequate by stored and/ or protected.
• Not incorporated in the works.
• On incorporation, the amount shall be
recovered from the next payment.
 Clause – 10B, Perishable Materials
• Contractor provides comprehensive
insurance cover for the full cost of such
materials.
• Decision of E-in-C is final & binding.
• No advance on high risk materials such as
ordinary glass, sand, petrol and diesel.
 Clause – 10B, Mobilization Advance
- Not exceeding 10% of contract value.
- On request by the contractor
- With in one month of order to commence the
work. May be extended by E-in-C on
circumstances.
- Advance in two or more installments to be decided
by E-in-C.
- Next installment on submission of proof of
utilization of earlier installment.
- Guarantee Bond from Scheduled Bank for the
amount equal to 110% of the advance amount
valid for the contract period
- Applicable if provision is made in schedule ‘F’
 Clause – 10B, Plant, Machinery &
shuttering Material Advance
,
General.
-Tools & plants to be necessary for works.
-Are in working order and are maintained.
-Hypothecated to Govt.
-Contractor will not be permitted to remove from site without
permission.
-Plant & machinery to be insured.
Amount
-5% of the tendered value.
-For new material 90% price of such new T & P.
-50% of the depreciated value for second hand
-Contractor to furnish evidence/ valuation certificate by a Registered
valuer by CBDT.
-Not for perishable nature or value less than Rs. 50,000/-.
-75% of advance on arrival and 25% on commissioning.
 Clause – 10B
Interest & Recovery
- Mobilization advance & T&P advance bear
simple interest @ 10% per annum.
- Calculated from date of payment date of
recovery both days inclusive.
- Recovery starts from running bills after first 10%
of the gross value of the work is executed &
paid.
- On pro-rata basis beyond 10% of the gross
value of work done
- Entire advance is recovered by the time 80% of
gross value of work is executed & paid together
with interest.
Clause 10-D, Dismantled Materials
• All materials obtained during dismantling of a
structure, excavation shall be treated Govt
Property
• Such materials shall be disposed off to the
best advantage of Govt.
• Instructions in writing for disposal
 Clause – 16 Work not done as per
specifications
• All works under execution accessible for inspection of –
 E-in-C & his authorized representative.
 All superior officers
 Officers of QA unit
 Any other organisation engaged by the Deptt. for QA
 CETO
• Contractor/ representative to be present for receiving instructions.
• If work observed to be unsound, imperfect, unskillful workmanship, inferior material,
not as per contract/ specifications
• Contractor on demand in writing which shall be made with in 12 month of
completion( six months < 10 lacs), shall remove materials/ articles at his own charge/
cost.
• In the event of failure, contractor liable to pay compensation under article – 2
• E-in-C may accept it at reduced rates if it is not detrimental to the safety and utility.
• Get it and other connected and incidental items rectified or removed and re-
executed at the risk and cost of the contractor.
• Decision of E-in-C is final & binding.
 Clause – 17 , Contractor liability during
defect laibility period.
1. 6 months < work costing up to Rs. 10 lacs except road work
2. 12 months for other works
3. If any damage to work from any cause whatever or if any defect,
shrinkage or other faults appear in the work with in DL period(after
recording of completion period) arising out of defect/ improper material
or workmanship
4. E-in-C to give notice in writing and contractor to make good the defect
at his own expenses.
5. On default E-in-C cause the rectification of defect by other workmen and
deduct the expense from any sums that are due/ may become due/
from SD/ proceeds of sale there of
6. SD to be released after DL period or till the final Bill is prepared and
passed whichever is later.
7. In road work half of the SD will be released after six months at discretion
of E-in-C. Remaining half after DL period or final bill is prepared and
passed whichever is later.
8. Incase O & M works of E & M Services. SD is refunded with in one month
from the date of final payment/ contract whichever is earlier.
Clause – 18, Contractor to supply Tools &
Plants
1. Contractor to provide at his cost all materials,
machinery tools and plants as per schedule F/
appliances, plants, ladders, scaffolding and temporary
works which may be necessary for the purpose
whether included in the specifications/ contract or
not.
2. Includes carriage to & from the work.
3. Contractor to provide number of persons with the
means & materials for the purpose of setting out
works, counting, weighing and assisting the
measurement/ examination of work & materials.
4. E-in-C will get done at expenses of contract in case of
failure/ SD/ proceeds of sale.
Implementation of Labour welfare
Measures , Clause 18,19
• Contractor to comply provisions of
 Contract labour(regulation and abolition)Act-1970 and rules
1971 thereunder.(labour license)
 Child labor (prohibition and regulation) Act 1986(no labour
below age of 14)
 Construction workers (regulation of Employment and
conditions of service) Act,1996
 Buildings and other Construction Workers welfare cess Act,
1996
 CPWD contractor’s Regulations
 Labour welfare
 Payment of wages Act 1936
 Minimum wages Act,1948
 Employees liability Act 1938
 Workmen’s compensation Act 1923
 Industrial disputes act,1947
 Maternity Benefits Act,1961
 CPWD Safety Code
 Clause 19L, EPF and ESI
• ESI and EPF on the part of employer wrt
contract shall be paid by Contractor.
• These shall be reimbursed by the E-in -C
 Violations of Labour welfare
• E in C to implement labour laws and cost
recoverable from contractor/SD/other sum
due.
• Penalty of Rs 200/ for each default of CPWD
safety code
• liability of Rs 200 for each default for
not/incorrect statement in labour reports
• Liability of Rs 200 for each default of health
and sanitary arrangements.
 Clause 19I
• Contractor shall remove from the site
,person(s) who may be incompetant or
misconduct himself.
• Contractor shall issue identity cards to the
labourers employed for maintenance works
who have access to individual houses.
• AE/JE will display list of contractors working in
the colony on the Notice board at the service
centre.
 Clause 19J
• Building under construction shall not be
occupied unauthorizedly. It is responsibility of
contractor.
• E in C shall have the option to refuse to take
possession (accept) in that position.
• It amounts to delay in completion.
• Levy upto 5% of tendered value may be
imposed by SE.
 Clause – 21
Work not to be sublet
1) Contract shall not be assigned or sublet without
written approved of E-in-C.
2) Any attempt do so including insolvency/ in
solvency proceedings, bribe, gratuity, gift, loan,
perquisite, rewards, pecuniary advantage entail
action under clause-3.
 Clause – 22, Compensation
clarified
1) Compensation under contract in reasonable
compensation and not actual loss/ damage
sustained.
2) And whether or not any damage shall have
been sustained
Clause – 23, Changes in firm’s constitution
Changes in firm’s constitution to be intimated
1. In case of partnership firm, previous approval
of E-in-C is required before any change in the
constitution of firm.
2. In case of individual/ Hindu undivided family
business prior approved is required to enter
into partnership firm.
3. Action under clause 21 is taken for non
compliance (Action under clause-3)
 CLAUSE -24
• All works to be executed under the contract
shall be executed under the direction of E-in-
C.
• All works subject to approval in all respects
of E-in-C
• E-in-C is entitled to direct at what point/
points and in what manner works to be
commended and carried on from time to
time
 Clause – 26, Contractor to indemnify
Govt. against patent rights
1. Contractor will indemnify the Govt. against any
claim or proceeding relating to –
(a) Infringement or use of any patent or design
(b) Pay any royalties which may be payable.
(c) Such disputes will be notified to contractor and
contractor will at his expenses will settle.
(d) Such Infringements if any is of direct result of an
order passed by E-in-C will not be covered by
the contractor.
 Clause – 27
Lump Sum provision
• If any part of work is not payable of
measurement, E-in-C at his discretion pay
Lump-sum amount entered in the
estimate(estimate on which tender is made)
• Certificate of E-in-C will be final & conclusive.
 Clause-28, No specifications
Action where no specifications are specified.
1) In case of no specifications, work to be
carried out as per BS specification/
manufacture’s specifications/ district
specifications/ instructions of E-in-C
 Clause – 29(i) Withholding and lien in
respect of sum due from contractor
1)whenever any claim/ claims arises out of contract against contractor.
2)E-in-C or Government shall be entitled to withhold/ lien to retain
such sum/ sums in whole/ part from SD further pending finalisation or
adjudication of any such claim.
3)E-in-C/ Government shall be entitled above course from any sum/
sums found payable/ any time thereafter payable under sum/ other
contract with E-in-C/ Government or any contracting person through
E-in-C pending finalisation of claim.
4)Contractor is not entitled for interest.
5)E-in-C/ Government shall be entitled to withhold/ lien against any
partner/ Limited company whether in his individual capacity or
otherwise
 Clause – 29(ii)
1) Government shall have the right to cause an
audit/ technical examination of the works and
the final bills of the contractor after payment of
final bill.
- Any over payment shall be liable for refund.
- It shall be lawful for Government to recover in
the manner of 29(i) or any legally permissible
manner
- If it was found that contractor was paid less,
amount of under payment is to be paid to the
contractor.
Clause – 29 A, Lien in respect of claims in other
contracts

• in respect of payment of a sum of money

arising out of or under any other contract
made by the contractor with the E-in-C or
the Government or with such person/
persons.

• Same provision as 29(i)

 Clause – 31
Unfiltered water supply
-contractor shall make his own arrangement for
water. Nothing exra payable.
-Water shall be fit for costruction.
-If unsatisfactory, alternative arrangement at
risk & cost of contractor.
.
 Clause 31-A, Departmental Water
Supply
• Water if available may be supplied.
- Water charges @ 1% of gross work done.
- Contractor to make arrangement for water
connection & pipe lines.
- No claim or damage or refund of water
charges an account of temp break down
Clause – 32, Alternative water arrangement
- When water is taken by the contractor from wells/
hand pumps by Govt, no charge shall be recovered.
- Contractor is assure normal usage through hand
pumps/ wells. Not to interfere with the normal use.
- Responsible for damage & repairs.
- Contractor shall be allowed to construct temp wells in
Govt. Land after obtaining permission.
- No charges are recoverable.
- Necessary safety arrangements by contractor to avoid
accidents/ damages to buildings/ persons.
- Restore the ground after construction/ dismantling
 TAXES , Clause 37
Levy/ taxes payable by contractor.
1. Sales tax/ VAT (except service tax), building and other
construction worker welfare cess/ any other tax/ cess is
respect of contract shall be payable by contractor.
2. No claim to be entertained.
3. Service tax to be paid by the contractor to the concerned
department and same shall be reimbursed by the E-in-C.
4. Contractor shall deposit royalty and obtain necessary
permit for supply of bajri, stone, kankar from local
authorities.
5. In pursuant to or under any law/ notification/ order any
royalty, cess or the like becomes payable by the
Government (not by the contractor) to state Govt., Local
authorities in respect of materials used by the contractor
in works, Govt. will have right to recover if from
contractor.
 Clause – 38 Reimbursement of levy/ taxes
Conditions for reimbursement of levy/ taxes if levied
after receipt of tenders.
-all tender rates shall be inclusive of all taxes and
levies(except service tax) under respective statutes.
-Any further taxes/ levy/ cess imposed by statute after
last date of receipt of tender shall be reimbursed to the
contractor. However it will not attributable to delay in
work with in the control of contractor, in the opinion of
SE.
-The contractor to keep necessary books and accounts
and shall allow inspection of the same to E-in-C and
furnish information to E-in-C as required.
-Contractor to furnish notice to E-in-C within 30 days of
imposition of any such further tax/ levy/ cess together
with all necessary information.
 Clause – 39
Termination of contract on death of contractor.
-E-in-C has option of termination of contract
without compensation to contractor.
Clause -40, Near relatives working
- If his near relative working in CPWD then the contractor is
not allowed to tender in circle/ Division (Horticulture).
- Near relative means – wife, husband, parents, grand
parents, children, grand children, brothers/ sisters, uncles,
aunts and cousins and their corresponding in laws.
- Near relative is to be posted as Divisional Accountant/ or JE
to SE.
- Give the names of employees who are near relatives to any
Gazetted Officer in CPWD/ MUD.
- Any breach will result in removal from the approved list/
debarred.
 Clause – 41
- No gazetted engineer to work as contractor or
employee of a contractor with in the year of
retirement without the previous permission of
the Govt. in writing.
- Contractor is liable to be cancelled for breach.
 Clause 43
Compensation during war like situations
• He will be paid for the work executed before the warlike
operation/ hostilities.
• He will further be paid for removal of damaged work and
reconstruction.
• If work was not measured. The compensation upto Rs. 5000/
by EE and by SE for higher amount.
• Certificate of E-in-C, final & binding.
• Contractor has to take all such precautions against air raid as
necessary for any material/ machines not on site/ not
intended for work. No compensation in such cases.
• EOT
 Clause – 45
Labour officer clearance certificate
- Contractor to produce clearance certificate from
labour officer before SD is released.
- If no complaint is pending till after 3 months
from DOC and no communication from the
Labour Officer till six months from DOC. SD will
be released if otherwise due.