E1-E2 - Text - Chapter 15. Tendering Process, Arbitration and Conciliation

E1-E2 Core Rev.
Date: 31-03-2021
Chapter-15
Tendering Process, Arbitration & Conciliation
©BSNL, India For Internal Circulation Only 1

E1-E2 Core Rev. Date: 31-03-2021
Tendering Procedures:
A CONTRACT means...
The promises, agreements, transactions between two parties based on which commercial
activities are carried out are called contracts. Section 2 (h) of the Indian Contract Act, 1872
defines the term Contract as “An agreement enforceable by law”. An agreement means a set
of promises forming the consideration for each other.
There must be two parties to a contract. In practice, if some one wants some work to be
executed, he approaches a person for the said purpose. The other person on receiving the
proposal quotes his price or charges, which are a consideration and other terms and
conditions, are finalized. An agreement in relation to it comes into force. If this agreement is
liable to be enforced by law, it is called a CONTRACT.
The principles of Govt. Contract are...
1. The terms of a contract must be precise and definite and there must be no room for
ambiguity.
2. Standard forms of contracts should be adopted wherever possible.
3. In cases where standard from of contracts are not used, legal and financial advice
should be taken in drafting the contracts before they are finally entered into.
4. No relaxation of specifications agreed upon in a contract or relaxation of the terms of
an agreement entered into by Government should be made without proper
examination of the financial effect involved in such relaxation.
5. Save in exceptional circumstances, no work of any kind should be commenced
without prior execution of contract documents.
6. Provision must be made in contracts for safeguarding Government property entrusted
to a contractor and for recovery of hire charges, if any, there for.
7. All contracts should have provisions for recovery of liquidated damages for defaults
on the part of the contractor, unless any special instructions are issued by the
competent authority.
8. 'Cost Plus' contracts should be avoided except where they are inevitable.
9. The term of contract for the purchase of perishable stores should invariably include a
(separate) warranty clause.
10. 'Lump sum' contracts should not be entered into except in case of absolute necessity.
11. A schedule of quantities with their issue rates of such materials, which are supplied
departmentally, and used in the contract work, should form an essential part of the
contract.
12. The question whether any sales tax, service tax, octroi and terminal taxes and other
local taxes and duties are to be paid and is so, by which party, should be settled and
cleared up before entering into any contract.

13. No work should be done under and agreement/ contract beyond the date of expiry of
its tenure. Wherever it is considered that the work has to be continued beyond the date
of expiry of the tenure timely action should be taken for renewing the
contract/agreement for the further period required, after a suitable review of the
provisions of the old agreements/ contract to see whether any modifications therein
are required.
14. While awarding contracts or entering into any agreement full consideration should be
given by the competent authority to the element of foreign exchange involved therein
and subject to other conditions being equal, the offer involving the least expenditure
on foreign exchange should be preferred.
(vide para 419.1 P & T Man Vol. II and GID(i) below Rule 12 of GFR)
4.1 Monetary limits for Tenders/Quotations (As per GFR):
1.1.1 No Tenders/No Quotations: Purchase of an article or group of articles
costing up to Rs.1000 on each occasion may be made without inviting
tenders/quotations.
TDM/ DGM (Mtce/Proj) up to Rs.2,500 (BSNL HQ

No.6-15/2000-EB dt. 4-10-2001)
CGMT up to Rs.15,000 GMTD up to Rs.10,000
The following certificate to be recorded by the competent authority “I,---------------------, am

personally satisfied that these goods purchased are of the requisite quality and specification
and have been purchased from a reliable supplier at a reasonable price.”
(BSNL HQ No. 6-15-2000-EB (Pt. XII) dt. 23-1-2008)
4.1.2 Where quotations only are required : Purchase of stores costing between Rs.1001 and
Rs.10000 can be made by the heads of departments without calling tenders. However in such
cases, quotations must be invited.
With quotations on the recommendations of Local Purchase Committee
CGMT Rs.15,001 to Rs.1,00,000

GMTD Rs.10,001 to Rs.50,000
The committee will survey the market to ascertain the reasonableness of rate, quality and
specifications and identify the appropriate supplier. Before recommending placement of the
purchase order, the members of the committee will jointly record a certificate as under.
“Certified that we------------------------, members of the purchase committee are jointly
and individually satisfied that the goods recommended for purchase are of the requisite

specification and quality, priced at the prevailing market rate and the supplier recommended
is reliable and competent to supply the goods in question.”
(BSNL HQ No. 6-15-2000-EB (Pt. XII) dt. 23-1-2008)
4.1.3 Where limited tender is to be floated: The limited tender system should
ordinarily be adopted in the case of all orders the estimated value of which is less
than Rs.25,00,000 for procurement of goods/materials/equipments (Less than
Rs.10 lakhs for hiring of services).
4.1.4 This system may, however, be adopted instead of the open system even in cases
where this condition of monetary limit viz., Rs.25,00,000/Rs.10,00,000 is not
satisfied, in the following circumstances:
a) When sufficient reasons exist which indicate that it is not in the public
interest to call for tenders by the advertisement. In every such case reasons
must be recorded by the procurement officer and communicated to the
Accounts Officer concerned, confidentially, if necessary.
b) When the indenting officer certifies that the demand is urgent and any
additional expenditure involved by the elimination of open competition
must be incurred. In all such cases the indenting officer must place on
record the nature of urgency and why the demand could not be anticipated.
c) When sources of supply are definitely known and possibility of fresh
source, beyond those being taped is remote. In all such cases approval of
the competent authority to dispense with advertisement should be taken.
Where Open Tender is to be floated:
In all cases where the estimated value of the orders to be placed with the contractor is
Rs.25,00,000 or more for procurement of goods/materials/equipments. (for hiring of
services Rs.10 lakhs or more)
(BSNL HQ No.3-2/2007-MMT dt. 12-6-2009)

The Contracts in BSNL are...
Centralised items by
BSNL Hq.
Procurement Tenders Circle Purchases of de-
centralised items
Local purchases of de-
centralised items
Lines & wires
constructions
Cable Laying
MAJOR CONTRACTS
Engineering A & P Installations

Works Works DP & SI works
contracts Towers construction
Building works
Civil works Electrical works
Ancillary works
Cable
Internal Plant
External Plant
Engineering Equipment or
Mtce. instruments repair
Maintenance Civil
contracts Bldg. Mtce. Electrical
Horticulural
Computers
Annual Mtce. Office equipment
Software mtce.
Security
Housekeeping
Labour Date entry and business
processing
delivery of bills
Service Advertisement and
Contracts Publicity
MINOR CONTRACTS
Marketing of services
OTHER contracts Printing & publications
Catering services
Stationery
Consumable material
Miscellaneous Purchases Spares

Contracts Machinery & equipment
Open vs. Limited...

The purchase contracts can be classified broadly into two categories i.e., Limited tenders and
open tenders.
The term 'limited' means that the purchase is limited by value or by source or by area. The
Open tenders means the purchases made by making wide publicity which will be open to
registered or recognized suppliers, indigenous suppliers or to global suppliers.
The terminology...
Some of the terms frequently used with reference to tenders and contracts are...
1. Bidder: A Person, firm, company (or any other legal person) who has submitted an
offer in response to a notice inviting tender.
2. Contractor: The bidder whose tender (offer) has been accepted, and who has entered
into an valid agreement.
3. Supplier means the individual or firm supplying the goods on contract.

4. Goods means all the equipment, machinery or other material which the supplier is
required to supply under the contract.
5. Advance purchaser Order means the intention of purchaser to place the purchase
order on the bidder.
6. Purchase Order means the order placed by the purchaser on the supplier signed by the
purchaser including all attachments and appendices thereto and all documents
incorporated by reference therein. The purchase order shall be deemed to be a
'Contract'.
7. Work Order means the order issued to the contractor by the officer in charge of the
works.
8. Contract Price means the price payable to the supplier under the purchase order for
the full and proper performance of its contractual obligations.
9. Bid documents/ Tender documents means all the documents consisting of
1. Specifications of the materials or work
2. Terms and conditions of the contract and
3. Plans and detailed diagrams, if any, and other related documents forming part
of contract.
10. Notice Inviting Tender (NIT) means any publication or notice issued to the public
through press or otherwise expressing the intention of the corporation to get the
supplies or work done and requesting the bidder to make offers.

11. Earnest Money Deposit (EMD)/ Bid Security means an amount required to be
deposited by the bidder/ tenderer along with his offer as a security against his default
of entering into contract.
12. Security Deposit/ Performance Guarantee means an amount fixed as security for
ensuring the performance of the contract and compliance to the other conditions of
contract by the contractor.
What is the management of a 'contract'?
Level playing: In the changed economic environment of today, it is necessary to see that the
costs that burden the Public Sector transactions as well as other decision making costs are
reduced to the minimum and the Public Sector organization is placed on a level playing field
with the private sector so that they can compete effectively and operate profitably.
Objective: Objectives of the management must be basically be to provide good quality and
cost. And the most fundamental of objective of audit is to assure that this actually happens.
Therefore, there must not be any conflict between the objectives of the Audit and the
Management. Both try to see that the Government gets good value for the money spent.
Procurement Policy: A good procurement policy is one that is clearly understood by all.
There must be economy, speed, simplicity and transparency in all procurement related
functions. Accountability is a basic attribute of a good procurement policy.
In the fast changing scenario in the Telecom sector, it appears impossible to conceive that the
organization, based on Government set of rules, would be able to compete in the market with
the players who have adopted latest technologies not only in the work place but also in their
decision making mechanism. If the pressure of cut-throat competition puts in making the
wrong decisions, it would be treated as management failure and invites questions from all
quarters like audit and media and MPs.
In these circumstances BSNL has to play a vital role with the constraints on the working of
Public Sector and change is required in procurement methods. In order to achieve the goal,
the challenges are to be identified.
Purchases : General Guidelines
The following general guidelines can be kept in view in procurement and call of tenders
therefore.
a. Procurement should be done following transparent tendering procedure in consistence
with the overall procurement policy of the Dept./Organization.

b. While procuring, the existing inventory and inventory in the pipeline should also be
accounted for. Utmost care should be taken to ensure that pilling up the inventory is
avoided. Care is also to be exercised in assessing the requirement of items where no
norms are prescribed.
c. Procurement will be as per technical specifications applicable at the time of calling of
the tenders. The applicable specifications with Amendment No. of any should be
indicated in the tender.
Demands of Public Accountability:

• Constitutional Provisions
• Government / Audit Instructions
• Compliance to Procedures
• Supervision of Parliament, CVC.
Demands of Commercial Organization:

• New Technologies and business areas
• Necessity of speed and alertness in taking quick decisions
• Role of competitors
• Compliance to various tax and regulatory laws
• Lack of knowledge and training
ATTENTION may be given on the following issues:

• Need of flexibility in decision making process
• De-centralization of administrative & financial powers
• Correct assessment of requirements
• Market survey and vendor identification & rating
• Introduction of new management techniques in supply chain management,
inventory control and cost analysis etc.
• Imparting training in tax, commercial and regulatory laws
• Improving communication channels and liasoning with contractors
• Effective supervision of contractors in implementation of contract and adherence
of time schedules through progress reports, PERT technique etc.
• Quality consciousness and evaluation of loss on account of sub-standard work or
material to relate with procurement costs.

GUIDELINES OF CENTRAL VIGILANCE COMMISSION ON PROCUREMENT

OF MATERIALS – IMPROVEMENT IN PROCUREMENT SYSTEM
The cardinal principle of any public buying is to procure the materials/services of the
„specified‟ quality, at the most competitive prices and, if a fair, just and transparent manner.
To achieve this end, it is essential to have uniform and well documented policy guidelines in
the organization so that this vital activity is executed in a well- coordinated manner with least
time and cost overruns.
Provisioning: It has been noticed that in certain cases excessive, fraudulent and infructuous
purchases were made without taking into consideration the important aspects like available
stocks, outstanding dues/supplies, past consumption pattern and average like of equipment
/items etc. This excessive/infructuous purchases were at times made in collusion with the
firms. This resulted in not only the material lying unutilized for years together with no
residual like but also a lot of extra expenditure was incurred on the inventory carrying cost.
The provisioning of the stores needs to be done with utmost care taking into account the
available stock, outstanding due/supplies, the past consumption pattern, average life of the
equipment / spares. The requirements also need to be properly clubbed so as to get the most
competitive and best prices. The requirements should not be intentionally bifurcated /split so
as to avoid approval from higher authorities.
Estimated Rates: It was observed that the estimated rates are being worked out in an un-
professional and perfunctory manner, at times by extrapolating the price of the lowest
capacity equipment or by applying a uniform yearly compounded escalation over the prices
of similar equipment purchased few years ago. Consequently, the inflated estimated rates
prepared by the organizations resulted in acceptance and payment of higher prices to the
firms.
As the estimated rate is a vital element in establishing the reasonableness of prices, it is

important that the same is worked out in a realistic and objective manner on the basis of
prevailing market areas, lat purchase prices, economic indices for the raw material/ labour
other input costs, wherever applicable and assessment based on intrinsic value etc.
Notice Inviting Tender : Against the most preferred and transparent mode of Global tender
enquiry/ Advertised tender enquiry, some of the Organizations are generally issuing limited
tender inquiry to select vendors, irrespective of the value of purchase. Further, the credentials
of the firms and the criteria adopted for selection of such vendors, in most of the cases, are
not put on record. This is not result in lack of competition bust also favoritism to the select
vendors. It has been noticed that even in cases where advertised/global tender inquiries were
issued, the same were published in the local dailies and not in any National Newspaper and
particularly in Indian Trade Journal, Calcutta is a Government publication

and is regarded as the standard medium for advertising tender notices in India. The main
purpose of issuing advertised/global tender is to give wide publicity . It has been noticed that
the organizations do not forward the copies of the tender notices to registered/past / likely
suppliers and while in case of imported stores, the copies of the tender notices are not being
forwarded to Indian Missions/Embassies of major trading countries.
In order to give wide publicity, generate enough competition and to avoid favoritism, as far
as possible, issue of advertised/global tender inquiries should be resorted to an published in
ITJ and select National Newspapers. The copies of the tender notices should be sent to all the
registered/past/likely suppliers by UPC and also the Indian Missions/Embassies of major
trading countries in case of imported.
With a view to have wider, fair and adequate competition, it is important the sufficient time
of say 4 – 6 weeks in case of advertised/global tender and 3 – 4 weeks in case of limited
tenders is allowed, except, in cases of recorded emergencies, wherein also , a reasonable time
should be permitted and tenders
Tender/Bid document: The terms and conditions being stipulated in the bid documents by
some of the Organizations are quite insufficient and sketchy. Sometimes, the bid document
contains obsolete, unwanted matter and conflicting and vague provisions, resulting in wrong
interpretation, dispute and time & cost overruns. Even the date/time for receipt and opening
of tenders is not being incorporated in the documents. The important clause relating to
Earnest Money, Delivery Schedule, Payment terms, performance/warranty Bank Guarantee,
Liquidated Damages, Arbitration etc. are not being incorporated in the bid documents. All
these clauses are important for safeguarding the interest of the purchaser and also have
indirect financial implications in the evaluation of offers and execution of the contracts.
All the important clauses as brought out above need to be incorporated in the bidding
documents so as to fully safeguard the interest of the Govt. and for evaluation of bids on
equitable and fair basis and in transparent manner.
Receipt of Tenders: Some of the organizations do not have proper arrangement for receipt of
tenders. There is no Tender Box for receipt at scheduled date and time fixed for tender
opening. Instead of trade representations leave the tenders with the receptionist or the
concerned Purchase officer(s). This procedure is highly objectionable as the possibility of
tampering and interpolation of offers cannot be ruled out.
A proper arrangement for receipt of tenders at scheduled date and time through tender box
needs to be adopted.
Opening of Tenders: Some of the organizations are not opening the tenders in public i.e. in
presence of the trade representatives. The system of not opening the tenders in public is
against the sanctity of tender system, and is a non-transparent method of handling tenders.
There could be a possibility of tampering and interpolation of offers in such cases. The rates
at times are not quoted in figures and words, cuttings/over-writings are not attested by
bidders. Some of the organizations justify such opaqueness in tendering system by making a
reference to their manuals. This is not acceptable.
The opening of tenders in presence of trade representatives needs to be scrupulously

followed. While, opening the tenders by the tender opening officer/committee, each tender
should be numbered serially, initialled and dated on the first page. Each page of the tender
should also be initialled with date and particularly, the prices, important terms and conditions
etc. should be encircled and initialled in red ink by the tender opening officer/committee.
Alterations in tenders, if any, made by the firms, should be initialled by legibly to make it
perfectly clear that such alteration were present on the tenders at the time of opening.
Wherever any arising or cutting is observed, the substituted words should be encircled and
initialled and the fact that such erasing/cutting of the original entry was present on the tender
at the time of the opening be also recorded. The tender opening officer/committee should also
prepare on the spot statement giving details of the quotations received and other particulars
like the prices, taxed, duties and EMD etc. as read out during the opening the tenders.
Reasonableness of Prices: It has been noticed that the purchases are being made by some of
the organizations in an adhoc and arbitrary manner without satisfying the prime requirement
of establishing the reasonableness of rates in relation to the estimate rates, last purchase
prices or the prevailing market rates.
Advance payment : As per CVC guidelines it has been brought out that payment of
mobilization advance should be made only in cases of select works and that the advance
should be interest bearing so that the contractor does not draw undue benefit. However, it has
been noticed that some the organizations are quite liberal in allowing the advance payments.
Even to the extent of 30-40% and that too, totally interest free. In some organizations the
payment of advance is being stipulated in the bid document itself. The payment of interest
free advance is in contravention of the guidelines issued by CVC.
The advance payment need to be generally discouraged except in specific cases, wherever
payment of advance is considered unavoidable, the same should be interest bearing and be
allowed after getting an acceptable Bank Guarantee for an equivalent amount with sufficient
validity so as to fully protect the Govt. interest.
Performance Bank Guarantee: Most of the organizations are not stipulating the
requirements of Performance Bank Guarantee while others are stipulating different amount of
Security deposit/performance bond . It has been noted that the amount of PBG is too low in
comparison to the contract value. The validity of Bank Guarantee is also not being
scrupulously monitored and the extension in the Bank Guarantees commensurate with the
©BSNL, India For Internal Circulation Only

11
delivery period extensions is not being sought resulting in loss to the Govt. in the event of
non performance of the contract.
In order to safeguard the Govt. Interest, it would be appropriate to take reasonable amount of
Performance Bank Guarantee valid upto warranty period for due performance of the contract.
The validity of the Bank Guarantees needs to be carefully monitored and whenever extension
in the delivery period is granted, the validity of Bank Guarantee should also be appropriately
extended so as to protect the Govt. interest. The genuineness of the BGs should be checked
form the issuing bank.
Stipulation of delivery period in the contract : Delivery period is the essence of any
contract. It has been observed that in some of the cases, specific delivery period with
reference to the terms of delivery is not being incorporated It is noticed that in some cases
only the date of offering the equipment for pre-dispatch inspection is stipulated as the
delivery period, thought the terms of delivery are on CIF basis/FOR destination basis.
In some cases the date of completion of supply of the equipment is stipulated as the delivery
period even though the installation and commissioning of the equipment is also to be carried
out by the supplier. For installation and commissioning no specific date is mentioned. In
absence of any contractual binding in this regard, the suppliers claim the full payment for
supplies of equipments and then tend to behave in an irresponsible manner and do not bother
to take up timely installation/commissioning resulting in equipment remaining uninstalled for
months/years together.
The specific delivery period for supply as per the terms of delivery such as FOR station of
dispatch/destination and for completion of installation with the necessary provision for
Liquidated damages/penalty clause in the event of delay in supplies / installation needs to be
incorporated in the contract.

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TENDERS
What are the stages in processing a tender...
There are different stages in processing a tender.
Preparation of Tender Documents: Tender documents are to be prepared very carefully to

avoid disputes with the contractors during the time of execution of the contract. As far as
possible, standard forms of documents should be prepared for various types of contracts.
Wherever required, legal opinion or assistance of consultants should be obtained in drafting
tender documents. Tender documents of previous 'successful' contracts of similar nature may
be adopted by making suitable amendments / modifications. The tender documents of DGS
& D, CGM-TS and the procurement manual of BSNL may be taken as model documents for
purchase contracts. Similarly standard documents of CPWD and other construction wings of
Government bodies may be consulted for drafting contract documents of works.
1. Notice Inviting Tender

2. Opening of tenders
3. Tender Evaluation and Acceptance
4. Letter of Intent/Advance Purchase orders
5. Agreements, Work orders/ Supply orders
6. Payment of Contractors or Final Bills
Tendering Systems:
1. Competitive Bidding
The bidding would be either International Competitive Bidding or Domestic Competitive

Bidding.
Tendering in “Domestic competitive Bidding” with reference to procurements will be made
a. Through Advertisement (Open Tender)

b. By Direct invitation to a Limited no. of firms. (Limited Tender)
c. Through Expression of Interest
d. By invitation to only one firm (Single Tender-Proprietary Item)

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Tendering Methodology for Procurement
a. Through Open Tenders: Open Tenders are to be called for where the total
estimated value is more than Rs. 25 lakhs in case of procurement of goods and 10
lakhs in case of works or services.
b. Limited Tender: The Limited Tender System will ordinarily be adopted in case of
all orders, the estimated value of which is less than Rs. 25 lakhs in case of
c. procurement of goods and 10 lakhs in case of works or services.
d. The Single Tender System may be adopted in case of articles which are
specifically certified as of proprietary nature by the indenting Department (and
approved by Head of the Dept.) or when it is to the knowledge of the procuring
agency than only a particular firm is the manufactures of the stores in demand.
An item of stores which is of specialized nature and is being manufactured or

stocked by only a particular firm, it is termed as Proprietary item.
d. Through Expression of Interest : In situations where Dept./Organization proposes
to induct new technology/equipment/new service and the specifications for such
new technology/equipment/new service are not firmed up, the Department may
invite Expression of Interest (EOI) from the available vendors of that
technology/equipment/new service. Based on the offers received from the bidders
who choose to participate in the EOI, the bidders satisfying the terms of EOI will
be short-listed.
e. By Educational/Development orders: In case where there is a large demand of a
particular type of equipment , but where the supply base is meager and required to
be augmented, Educational/Developmental Tendering system is being adopted by
some organizations such as BSNL to ensure better competition and to increase the
potential base for supply.
f. Through Call of Quotations : Small purchases can be made without call of
quotations upto certain powers by unit officers. Similarly purchases can also be
made with proper quotations upto delegated powers. For this “Notice Inviting
Quotations” (NIQ) are to be called for and register of quotations to be maintained
for the purpose.
PURCHASE CONTRACTS / TENDERS
1. Introduction
The important aspect of purchase by Govt. Organizations is the public accountability in the
sense that those who spend public money must be accountable to the public representatives.
Therefore, in the case of Govt. purchases, system and procedure have been adopted which try
to ensure that all purchases on contract basis are made without any favour and from the most
competitive bidders. The very nature of purchase activities places the officials concerned in
contact with the suppliers and call for judgement and decision which are very important not
only from the point of view of purchasing but also from the fact that the officials concerned
have to display the highest sense of fair play.
2. Types of Purchase Contracts / Tenders:

Fixed Quantity Contract: - This type of contract is generally entered into where firm are
called upon to offer for supplying a definite quantity by a specified date.
Rate Contract: - These are contracts for the supply of stores at specified rates during the
period covered by contract. No fixed quantities are mentioned in the contract and the
contractor is bound to accept any order from the purchaser or other parties specified in the
contract which may be placed on him at the rates specified within the contract period. The
purchaser, however, agrees to place order for a minimum quantity.
Running Contract: - These are contracts for the supply of an approximate quantity of stores
at a specified price during certain period of time. The approximate requirement of number of
parties for the period in question are combined and provision is made in the contract that
during its currency such parties may demand their requirements at any time or at specified
periods either direct from the contractor or through the purchasing organization which has
entered into the contract. In such cases, a provision is generally made to the effect that the
purchaser shall have the right to like a certain percentage more or less than the approximate
quantity mentioned.
Price Agreement: - Price agreement is entered into with a firm for making supplies of certain
stores during a given period at agreed rate specifying the monthly rates of supply as a
standing offer to the purchaser or meeting any requirements of that store on an adhoc basis
during that period.
Firm Price and Variable Price Contract:- In some cases contracts are also entered into on firm
price as well as on variable price basis. Contracts providing for increase on account of
increase in the price of raw materials and wages are called variable price contracts.
Lump Sum Contract:- This form, as its name indicates is used for works in which contractors
are required to quote a lump sum figures for completing works in accordance with the given
specifications, designs, drawings etc. Lump sum contract should be entered into in
exceptional cases.
Cost Plus Contract:- A “Cost Plus” contract means a contract where in the price payable for
supplies or services under the contract is determined on the basis of the actual cost of
production of the suppliers or services concerned plus profit either at a fixed rate per unit or
at a fixed percentage on the actual cost or production.
3. Notice Inviting Tenders:

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The NIT is not an offer or proposal. It is in fact an invitation to offer or proposal. It is not
addressed to any one in particular and is generally open. It gives the details of the thing for
which tenders are invited.
Tenders should be invited in order to obtain adequate competition and to ensure economical
purchase.
Being a government undertaking, in order to ensure FAIR PLAY IN ACTION as per the
constitutional provision a tender notice –
(a) should be given wide publicity so as to enable all eligible persons to submit
tenders
(b) should give sufficient time to enable the tenderer to submit tenders.
Tenders, should be invited in the most open and public manner possible. The Indian Trade
Journal published by the Director General of Commercial Intelligence and Statistics, Calcutta
which is a Govt. Publication should be regarded as the standard medium of public
advertisement in India. Where necessary advertisements may also be inserted in one or more
principal newspapers in India (both English and Hindi). Global tenders, wherever practicable
and advantageous, should be invited in the case of purchase of plant and machinery and
equipment from foreign countries. All the tenders floated by the BSNL units should also be
posted on the BSNL web-site.
When it is decided to call for limited tenders the N.I.T. may be issued only to those parties
who have proved experience in manufacture and supply of such equipment and who have
prototype approval and production clearance.
For such a limited tender it is a pre-requisite that the reasons for limiting the tenders to certain
suppliers need to be brought out in the N.I.T. itself, so that such action would stand justified
later. In respect of purchases of small value not exceeding Rs. 2 lakhs limited tenders are
called for in BSNL.
Contents of N.I.T.: The N.I.T. in all cases state –
(a)the estimated cost of the work or the quantity of items to be purchased.

(b)the place where and the time when the contract documents can be seen, and the
blank forms of tender obtained, also the amount , if any, to be paid for such
forms of tender.
(c) the place where, the date on which and the time when tenders are to be
submitted and are to be opened (in the case of large contracts, this should be at
least one month after date of first advertisement or notice).
(d) the amount of earnest money deposit to accompany the tender, and the amount
and the nature of security deposit required in the case of the accepted tender.
(e) with whom, or on what authority, the acceptance of the tender will rest.
4. Tender Documents:
The tender documents generally specify the following points:
Definition of terms (e.g.) purchaser, supplier, contract, purchase order.
Cost of Tender Documents:
Pricing of Tender Documents

S. No. Estimated Cost of the Tender Bid Document Price
1 Upto Rs.50,000 Nil
2 Above Rs.50,000 & upto Rs. 1 Lakh Rs.100
3 Above Rs. 1 Lakh & upto Rs.50 Lakhs Rs.500
4 Above Rs.50 Lakhs & upto Rs. 1 Crore Rs.1000
5 Above Rs. 1 Crore & upto Rs. 10 Crores Rs.2000
6 Above Rs.10 Crores & upto Rs. 50 Crores Rs.4000
7 Above Rs. 50 Crores & upto Rs. 150 Crores Rs.8000
8 Above Rs. 150 Crores Rs.10000
(BSNL HQ No.3-2/99-MMT/pt dt. 1-1-2003 & 30-4-2003)
Note: Sale price of document is exclusive of Sales Tax. The Sales Tax (VAT) is to be
charged @ prescribed rates extra and accounted for separately.
The payment of tender document will be accepted in the form of Crossed Demand Draft in
any Scheduled Bank. The fee for tender documents may also be paid in Cash.
Eligibility for bidding
Nature of work/specification of stores to be supplied with quantity, specification/ schedule of

works to be enclosed with the tender documents.

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Tender submission and date and time of opening.

a. Mode depositing in Tender box, Registered post etc.
b. Double cover with inner cover with tender particulars and outer cover containing
name and address.
c. Sealing
In respect of procurement of material the Bidders shall submit the following documents in the
bid as proof of their eligibility.
(a) Proof of successful execution of Education/Commercial orders of DoT

ND/CGMTS-CA/CMDs of MTNL/CGMS of Telecom Circles. For this purpose of
Inspection Certificate issued by Q.A is to be enclosed.
(b) Valid and Current Type Approval Certificate/Technical Specification Evaluation

Certificate for the tendered item as per Technical Specification mentioned in the
Tender Document.
(c) Bid Security in the form of Bank Guarantee/NSIC registration as applicable.
1. Date and Time of opening

• Tenders received after due date and time will not be considered.
• If the date of opening mentioned in the tender happens to be holiday the tender
will be opened on the next working day.
2. The venue of opening:

At the time of opening of tenders, the tenderers or their authorized representatives will be
allowed to attend. Particulars of Documents required to be submitted.
The tenderer should accompany the following essential documents

a. Past supply record (Experience certificate)
b. Type approval certificate.
c. GST Registration No. (VAT / CST)
d. PAN (Income Tax).
e. Trade licence.
f. Registration certificate with NSIC
g. For EMD, Cash receipt or demand draft drawn in favour of Accounts Officer etc.
The tenders received without EMD may not be considered.

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EMD:
• Mode of payment
• Submission of documentary evidence
• Rejection of tender if EMD not paid or documentary evidence not submitted.
Specifications of Signatory:
• Sole proprietor
• Partnership firm
• Company
Pricing
The tenderer should quote their rates specifically in case of supply of stores etc. on the
following.
(i) Unit Price/Total Price – Basic rates of stores/equipment
• Taxes..... Excise duty/sales tax etc.

• Freight/Transportation if any
• Delivery including packing & forwarding changes if any.
(ii) Installation & Training etc.
• Warranty period
• Annual Maintenance contract after expiry of warranty.
(iii) Instruction regarding writing figure in words.
• Attestation for corrections or over writing

• Instruction regarding discount
• Information on statutory Levy.
Validity of offer
• Delivery
• Essence of Contract
• Delivery Period
• Delivery schedule

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Payment Terms
• Documents for payment

• Address of the office of payment
• Mode of payment
• On proof of despatch
• Advance payment
• Balance payment
Inspection
• Right of inspection of raw material

• Right of inspection during process
• Right of inspection of finished goods
• Particulars of authority to inspect
• Submission of prototype materials
• Disposal of rejected materials
Packing Instructions
The contractor shall ensure that the stores are strongly and adequately packed to ensure safe
arrival at destination.
Warranty Clause
Warranty as to quality: The contractor shall warranty that all stores to be supplied shall be
new and free from all defects and faults in materials. Workmanship and manufacture shall be
of the highest grade. The contractor shall be responsible for any defects that may develop
under the conditions (i.e. time period etc.) provided by him and under proper use arising from
faulty materials, design or workmanship. Normally the warranty period is 12 months after the
stores have been taken by consignee. Replacement under warranty clause shall be made by
the supplier free of all charges at site including freight, insurance and other incidental
charges. Normally the warranty period is 12 months after the stores have been taken by
consignee. Replacement under warranty clause shall be made by the supplier free of all
charges at site including freight, insurance and other incidental charges.

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Risk Purchase/General damage:
The department is at liberty to recovery any loss sustained for the lapse on the part of a
contractor from his bills due to payment on any contract/supply bill.
Liquidated Damages:
Should the supplier fails to deliver the stores or any consignment thereof within the period
prescribed and agreed for delivery, the purchaser without prejudice to other remedies
available to the purchaser shall be entitled to recover as agreed to the LD per breach of
contract, a sum equivalent to 0.5% of the value of the delayed supply and/or undelivered
material supply for each week of delay or part thereof for a period upto 10(Ten) weeks and
thereafter at the rate of 0.7% of the value of the delayed supply and/or undelivered material
supply for each week of delay or parte thereof for another 10(Ten) weeks of delay. The total
value of the LD as per this shall be limited to a maximum of 12% (Twelve percent) i.e. L.D
shall be levied upto 20 weeks only.
The DP extension beyond 20 weeks would not generally allowed. In special cases the
extension is given beyond 20 weeks subject to following conditions.
(a) 90% of firm prices (approved final prices) will be given as provisional price
during extension period.
(b) If any tender is finalized during this period the price finalized as per new tender
will be applicable for the extension period of delivery schedule.
(c) The benefit of reduction in taxes during the extended delivery schedule shall be to
purchaser account and any increase in taxes will be suppliers account.
Arbitration Clause
The disputes arise out of contract with the BSNL and the contractor the case will be referred
to arbitrator appointed by the BSNL.
Force Majure
If at any time, during continuance of the contract, the work/supply is prevented or delayed by
reason of any war, or hostility, acts of public enemy civil commotion, Sabotage, fire, flood
explosions, epidemics, quarantine restrictions, strikes, lock-outs, or act of GOD are informed
by either party within a period fixed up under tender, no damage can be claimed for non
performance or for delay in performance.
Security Deposit/Performance Security

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o Mode
o Percentage or fixed amount
o Forfeiture condition to be indicated
Miscellaneous Conditions/Right Reserved

• Right to increase or decrease the quantity
• Right to reject any or all the tenders without assigning any reason
• Right to accept full or part quantity
• Right for repeal order
• Binding on Contractor to accept all conditions specified in the tender.
• The purchaser reserves the right to disqualify such bidders who have a record of no
meeting the contractual obligations against earlier contracts entered into with the
purchaser.
Earnest Money Deposit
Earnest money has to accompany every tender in order to prevent the tenderer backing out
from his offer before the validity period of the tender and once the tender is accepted the
tenderer furnishes required security and commence the work without any delay.
The amount of earnest money to be deposited should be sufficiently large to be securities

against loss, in case of the contractor failing to furnish the required security within the
appointed time after the acceptance of his tender, or until the sums due to him form a
sufficient guarantee, as the case may be.
No earnest money is required to be deposited by –
• Small Scale Industries units which are registered with National Small Scale Industries
Corporation
It may also be ensured that the S.S.I. Units are registered with the N.S.I.C. for those particular
items for which they have submitted the tenders and the registration is current. If necessary
the currency of registration may be got verified directly from N.S.I.C. for procurement of
stores the earnest money should ordinarily be 2% of the estimated value of the tender. The
exact amount of earnest money may be indicated in the tender. (For tenders of the value of Rs
One lakh or less, no earnest money need be insisted upon.)
The Earnest Money will be liable to be forfeited, if the tenderer withdraws or amends,
impairs or derogates from the tender in any respect within the period of validity of his tender.

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The Earnest Money of the successful tenderer shall be refunded after the security deposit as
required, is furnished. The Earnest Money can be adjusted against the S.D. required to be
furnished by the successful tenderer.
If the successful tenderer fails to furnish the security deposit as required, then Earnest Money
shall be liable to be forfeited by the tenderer.
The Earnest Money of all the unsuccessful tenderers will be returned as early as possible after
the expiration of the period of the bid-validity but not later than 30 days of the award of
contract. The competent authority shall ensure that the Earnest Money is refunded within the
stipulated period to avoid any litigation by the unsuccessful tenderers. The tenderers may be
advised to send a pre-receipted challan alongwith their bid so that the refund of Earnest
Money after the bids have been rejected, is made within the stipulated period.
The Bidders (Small Scale Unit) who are registered with National Small Scale Industries
Corporation under Single Point Registration Scheme are exempted from payment of Bid
Security upto the amount equal to their monetary limit or Rs. 50 lakhs whichever is lower.
6. Security Deposit
Security Deposit should in all cases be taken for the due fulfillment of a contract, in advance,
from a private person or firm contracting with the Govt. organization. Security to the
purchaser for an amount equal to 5% of the value of the purchase order within 14 days from
the date of issue of Advance Purchase Order by the purchaser.
"All suppliers (including Small Scale Units who are registered with National Small Scale
Industries Corporation under Single Point registration Scheme) shall furnish Performance
Security to the purchaser for an amount equal to 5% of the value of the purchase order within
14 days from the date of issue Advance Purchase Order by the purchaser.
The Security taken from a contractor shall be in one of the forms given in Rule-274 of GFR
1963.
(i) Cash
(ii) P.O. Cash certificates/NSC, etc. transferred to the President.
(iii) P.O. S.B. Pass Books.
(iv) Bonds/Deposit receipts of Scheduled Banks.
(v) Fidelity Bonds of Insurance Companies etc.
But in DOT/BSNL, the Security Deposit also called Performance Guarantee is in the form of
Demand Draft in favour of the DOT/BSNL or Bank Fixed Deposits mortgaged or Bank
Guarantees for the entire contract period. Part of Security Deposit may also be in the form of
recoveries from Running Account Bills.
The Security Deposit will be refunded only after due fulfilment of the contract as per the
agreement and all the dues against the contractors are recovered.
7. Tender Opening:
The bids have to be opened at the prescribed place and time in the presence of those bidders
who chose to witness the bid opening. Normally from department side there will be 3
members preferably one from the finance side. The bids received should be signed by all the
departmental officers witnessing. Any corrections in the quotations have to be attested and all
details of the bids received and rates quoted etc. has to be entered in a tender register and
signed by all the members of the opening committee. The rates quoted by the various bidders
may be readout to the bidders for their information. However, no queries can be entertained.
A comparative statement will be prepared and signed by all the members. The comparative
statement and bid documents have to be handed over to the tender evaluation committee.
Duties of the officer on opening a tender

1. Dated initial of the officer is must on each corrections, conditions and additions in
schedule of quantities, schedule of materials to be issued and specification and other
essential parts of the contract document and also date and initial on pages of the
tendered documents irrespective of fact that they contain or do not contain any
corrections or over writings etc.
2. Each of these corrections, additions etc. should be allotted independent numbers

serially. The rates should be written a fresh in the hand of the officer opening the
tender with proper attestation with date.
3. The total number of such correction, omissions, and over writings must be already
mentioned at the end of each page of schedule attached to the tender paper and
properly attested with the date.
4. Any ambiguities in rates quoted by tenders, in words or figures, must be clearly

indicated on each page of the schedule with proper dated attestation.
5. In case where the contractor has quoted rates in rupees and no paisa is mentioned the
word „only‟ should invariably be added after the words rupees with dated initial.
6. Where the contractors have omitted to quote the rates in figures or in words, the
omissions should be recorded by officer opening the tender on each page of the
schedule.
7. The Divisional Officer should see that the contractors quote entire rates in words
including paisa to avoid chances of tempering in rates and if the contractor fails to
do so, the tender opening officer should himself write the rates in words and if
necessary, initiate action against the contractor.

8. A tender opening register has to be maintained in which name of Tender, Tender

Opening date & time, Name of officers and contractors present, number of tenders
received with the names of the bidders and amounts quoted have to be entered and
signed by the tender opening officer and the witnesses.
8. Tender Evaluation and Tender Acceptance
After opening the tenders in presence of the representatives of the bidders it is necessary to
concentrate on the evaluation of the various offers received from the bidders.
Evaluations of offers are sub-divided into two categories:
1. Preliminary Evaluation:
The evaluation process begins with the scrutiny of the basic requirements in the Tender
Conditions-(i) Fulfilment of eligibility criteria by the bidder & (ii) Fulfilment of the Bid
Security clause.
The offer of a firm can be declared INVALID if any of the above two basic conditions are
not fulfilled.
The scrutiny of the enclosed documents is also carried out in respect of the Type Approval
Certificate produced by the bidder, the NSIC Registration Certificate, the Income-Tax
Clearance Certificate, Power of Attorney in favour of the authorised signatory in the Tender
and certified copy of the Partnership Deed/Memorandum of Association in case of Private
Limited or Public Limited Companies.
The above points are scrutinised basically by a team comprising of one SDE, one DE, one
AO or one CAO. After the scrutiny of the documents, the formal permission for the Internal
Financial Advisor, Deputy General Manager or General Manager In charge of procurement &
finally Chief General Manager is obtained for putting up the same for consideration by the
Tender Evaluation Committee.
If the above conditions are fulfilled, evaluation in detail is carried on for Rates, Discount, and
quantum of Excise Duty, GST (Central/State), Total price payable, delivery schedule and
quantity offered by the firm.
The Evaluation of all bids is done as under:-
1. Preliminary Evaluation
2. Evaluation in detail already discussed in foregoing Paras
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3. The Technical Evaluation & preparation of comparative statement is to be carried

out by Technical branch representatives of the TEC.
4. The Commercial Evaluation including the check of eligibility criteria is to be carried
out by the Commercial/Financial branch and
5. The vetting of the comparative statement of the bids and commercial evaluation
statement is to be done by the Finance representative of the TEC.
Recommendation of TEC
• The TEC should clearly spell out its recommendation in its report about
technically acceptable bids; listed in order starting from lowest technically
acceptable bids (L-1) upwards.
• The report should contain complete technical, commercial and financial appraisal,
the logic leading to the recommendations themselves and reasons for rejecting
bids lower than the lowest technically acceptable bids.
• The tender shall be evaluated for the quantities indicated in the schedule of
requirements. In normal purchase procedure, the orders will go in favour of the
lowest acceptable bidder for the full quantity. Apportioning the quantity may arise
due to certain limitations or considerations. As most of the items procured by the
DOT are specialized products it become sometime necessary to sustain multiple
vendors suppliers through distribution of quantities.
• All the pages and enclosures of the TEC report should be numbered consecutively
and signed by all the TEC members.
In some of the major contracts where the material and equipment has to meet the required
specifications, the bid evaluation is done in two stages. First and the preliminary evaluation
include the technical evaluation in addition to eligibility of the bidders. The second stage is
financial evaluation. In such cases the technical bids and financial bids are called for in
separate sealed covers and financial bids are opened only after technical evaluation and short
listing of contractors.
Tender Acceptance:
The broad guidelines in connection with acceptance of tenders are as follows:
1. The tender should not be arbitrarily accepted or rejected.
2. The approach of the authority while considering tenders should not be irrational and
everyone should be judged by the same standards.
3. No irrelevant consideration should be enter into consideration.

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4. A time schedule for scrutiny & disposal of tender has to be prescribed so as to

ensure speedy disposal of the tenders. In case of rare circumstances where the
tenders could not be accepted within the maximum period of 150 days, action
should be taken to get the tender validity period extended from the tenderers.
5. In case of tender where validity period has already expired, decision to accept the
same should be taken only after validity period is got extended. Also conditional
tenders cannot be accepted ignoring the conditions.
6. Usually the lowest tender should be accepted unless there is some objection -
• to the capacity of the tenderer,
• to the security offered by the tenderer,
• to his execution of some former works.
7. While deciding the lowest tender the following points may be kept in view :-
Some contractors are in the habit of stipulating number of conditions while
submitting their tenders. Generally the conditions stipulated by the tenderers have
financial effect which has to be evaluated in an appropriate manner. The financial
effect of all such conditions which have financial bearings has to be added to the
tendered amount while deciding on the question as who the lowest tenderer is. At
that time the lowest tenderer would be the one whose tendered amount after
adding/subtracting the financial effect of all mandatory conditions which have
financial effect (whether such conditions may or may not be acceptable), is the
lowest.
8. When a single tender is received, Rule 441-C of P&T Manual Vol II stipulates that
the heads of Circles and Divisional Officer are required to obtain prior approval of
the next higher authority for acceptance of a single tender. The rule further says that
it should however be left to the discretion of the competent authority to whom local
conditions are known, to call for tenders for second time, in case of receipt of a
single tender.
BSNL Instructions on acceptance of single Tender

• Single tender cases should be decided as per the MM Cell instructions
issued vide letter no. 51-1/04-MMC/696 dated 11-10-04 which clarified
that “A limited or single response to an open tender will not be viewed as a
case of single tender”, subject to condition that the competent authority
will approve the tender with the concurrence of his IFA after satisfying
himself/herself that the Tender Evaluation Committee recommended the
case after verifying the following conditions:
(a) Wide publicity was given for the subject tender

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(b) Tender specifications are generic in nature

(c) Qualified bidder meets all the tender specifications, terms & condition
(d) Rates are reasonable
(e) All the guidelines/policies regarding procurement of telecom equipment
and stores in BSNL are observed
In all such cases approval of single tender will be reported to the next higher authority
for information.
This letter supersedes our earlier letter of even no. dt. 10/2/2005. All the field units
requested to follow the above instructions strictly for deciding the single tender cases.
(BSNL HQ NO.6-15/2000-EB (Pt.III) dt. 8-4-2005)
9. Negotiations: - Rule 426.1 of P&T Manual Vo II prohibits negotiation with a

particular tenderer to modify the terms of his tender in order to reduce them to the
level or below that of any other competitor. However, there may arise some
occasions on which negotiations may be found necessary. Such negotiations, should
however, be restricted to the lowest tenderer only and with a view to bring down the
prices in respect of only such items for which he quotes unduly high rates compared
to other tenderers. For such negotiations, it is necessary that a provision should be
invariably be made in the tender inquiry from to the effect that acceptance of all
items or any of items mentioned in the tender would be optional.
Tenders can be accepted by the various authorities who are vested with the powers under the
Schedule of Financial Powers. When it is proposed to accept a bid other than the lowest, the
concerned authority has to submit the proposal to his next higher authority for acceptance.
The guidelines issued by Central Vigilance Commission of Tendering Process

- Negotiations with L-1 are furnished below.
(a) As post tender negotiations could often be a source of corruption, it is directed that
there should be no post-tender negotiations with L-1 except in certain exceptional
situations. Such exceptional situations would include procurement of proprietary
items, items with limited sources of supply and items where there is suspicion of a
cartel formation. The justification and details of such negotiations should be duly
recorded and documented without any loss of time.
(b) In cases where a decision is taken to go for re-tendering due to the unreasonableness
of the quoted rates, but the requirements are urgent and a re-tender for the entire
requirement would delay the availability of the item, thus jeopardizing the essential
operations, maintenance and safety, negotiations would be permitted with L-1
bidder(s) for the supply of bare minimum quantity. The balance quantity should
28
however, be procured expeditiously through a re-tender following the normal

tendering process.
(c) Counter offers to L-1 in order to arrive at an acceptable price shall amount to
negotiations. However , any counter-offer thereafter to L-2 and L-2 etc. (at the rates
accepted by L-1) in case of splitting of quantities as pre-disclosed in the tender shall
not be deemed to be a negotiation.
(d) It is re-iterated that in case L-1 backs-out, there should be a re-tender.
10. Letter of Intent / (Advance Purchase Orders) and Agreements:
After acceptance of tenders for supply of materials, formally an agreement has to be entered
with the contractor incorporating all terms and conditions of tender, additional points which
have been agreed upon at the time of tender acceptance, schedule of rates and conditions of
payments etc. In some cases a letter called Advance Purchase Order (APC) is issued by the
Tender Accepting Authority to the contractor incorporating all the conditions of contract. The
acceptance of Advance Purchase Order by the contractor is treated as an agreement.
Letter of Intent or Advance Purchase Order should essentially contain: -
1. equipment/service required with quantities/prices

2. file number & reference
3. commercial conditions governing the contract
4. amount of security deposit in cash/bank guarantee etc.
5. delivery schedule
6. period within which the bidder has to confirm acceptance of APO along with SD/BG
The purchaser reserves the right to limit the number of technically and commercially
responsive tenders from the list of such tenderers arranged in ascending order of evaluated
price starting from the lowest for the purpose of ordering against this tender. The L -1 bidder
will be determined by the purchaser. When it is proposed to distribute the quantity for more
than 1 bidder the ratio to be given to each bidder will be as follows.
No. of bidders on whom the Proposed quantity

Order is proposed to be placed distribution
2 L-1-70%, L-2-30%
3 L-1-50%, Remaining
quantity to other two selected
bidders In inverse ratio of
their Evaluated price
4 L-1-40%, Remaining quantity

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to other selected bidders In

inverse ratio of their
Evaluated price
5 to 9 L-1-30%. Remaining
quantity to other selected
10 and above L-1-20%. Remaining
quantity to other selected
11. Purchase Orders:
Purchase orders are placed by the Tendering Authority or other subordinate officers
authorized by Tender Accepting Authority, as stipulated in the agreement or APC. The
purchases may be one time transaction where a single or few items are purchased at a t time
and a single and final bill is submitted by the supplier. Sometimes 5% or 10% payment is
withheld as per stipulations in contract, as a performance guarantee or warrantee of the
material, which will be released after warrantee period or installation and testing of the
equipment. This withheld amount will be released only after obtaining take over certificate or
certificate of due performance issued by the user.
Where the purchase orders are issued periodically by the approved intending officers at the
rates approved, bills are submitted by the contractors as and when supplies are made and duly
acknowledged by the consignees.
12. Checking of Bills

• The following checks are to be carried out while processing purchase contract bills.
• The supply of stores involved in the bills is in accordance with the relevant
Purchase order.
• The consignee particulars are in accordance with the purchase order.
• Quantity is as per the challan and not in excess of that ordered in the P.O.
• Rate per unit of quantity claimed, rates of Sales Tax, Excise Duty are in accordance
with the relevant clause in the P.O. and necessary Excise Gate Pass produced along
with the bill.
• Necessary Security Deposit is available in the form of cash or Bank Guarantee or
the firm has been exempted from S.D. due to registration with DG S&D/NSIC.
• Inspection certificate issued by the Q.A. wing is enclosed.

30
• Proof of despatch like copy of Railway Receipt or parcel way bill is produced (In
the case of road transport necessary certificate of receipt of stores from the
consignee is to be enclosed in the bill).
• The supply has been made within the due date/extended due date of delivery. The
date of offering the stores for testing will be criteria for this purpose. If the stores
have been supplied during the extended due date Liquidated Damages at the rate
prescribed in the purchase order is to be recovered.
• Certificate of warranty and guarantee is enclosed.
• Stores have been despatched in accordance with the terms and conditions of the
purchase order. It has to be ensured that in case of supplies where freight is to be
borne by the supplier the material has been sent on “Freight Paid” basis and the
amount is not claimed in the bill.
• Documentary evidence towards the cost of raw materials has been produced
whenever price variation is involved as per the P.O.
• If the payment is for the First Bill against a purchase order, necessary Indemnity
bond is produced in the prescribed proforma and accepted by the competent
authority and the latest Income Tax clearance certificate is produced if not done
earlier.
Payment terms:
(A) 95% Payment shall be made on proof of dispatch of goods by the consignee. For
claiming 95% payment the following documents are to be produced before paying
authority.
(a) Invoice
(b) Delivery Challan
(c) Suppliers certificate for dispatch
(d) Excise Gate pass
(e) Inspection certificate issued by QA
(f) Consignee Receipt
(g) The Sea freight receipt as per the rates approved by the Ministry of water and
surface transport , if any.
(h) Proof of payment of Octroi/entry tax etc. if any which will be paid extra as per
actual, wherever applicable.
(B) The balance 5% payment shall be released within 6 months from the date of supply
of the equipment in case there are no damages/shortages.
(C) 100% payment (in place of 95%) may be made on delivery, provided that an
additional bank guarantee for an amount equivalent to 5% of the value of supplies

31
valid for a minimum period of seven months countable from the date of last delivery
schedule.
(D) Form –C and also a certificate stating that tendered item are meant for the use of
BSNL shall be provided by the purchaser on the request of the bidder as and when
asked for.
In the case of final bills it should also be ensured that-

1. The bill is accompanied with the Bill Copy payable challan issued by the consignee.
2. The bill has been claimed for the actual quantity received by the consignee in good
condition.
13. Advance Payment to Contractors

In some contracts, a stipulation is made in the agreements that a part payment say 50% or
90% will be made on proof of despatch of stores. In case of some PSUs, ITI etc. 90%
payment is made on proof of despatch of stores. In such cases invoices inspection reports,
Railway or Lorry receipts etc. are received by the paying officer, even before the stores
reaches consignee or stores is received, but the packing cases have to yet to be opened. In
such cases, terms and conditions in purchase orders/agreement, indents issued by the
purchasing officers, consignee particulars, contract period, documents received with the
invoice or proforma bill, Inspection Report of Q.A. or departmental officer issued before
packing etc. have to checked properly before authorizing payment. This payment has to be
treated as Advance Payment to contractor under the concerned schedule. Whenever material
is acknowledged by the consignee and goods received note (GRN) or necessary intimation is
received by the Store Accounts Section, necessary adjustment has to made in the Accounts
debiting the concerned head like Inventories, Works in Progress etc. and crediting Advance
Payment to Contractor. The clearance of APC should be reviewed every month and follow up
action taken by making reference to the suppliers and Intending Officers.
Transparent Tender Processing : Instructions
As per DoT instructions issued vide Lr. No. 26-450/92 MMC(Pt. ) dated 12.09.1996 :
a. The tender conditions should be clear and unequivocal. The Technical specifications
should be firm and clear. The technical specifications should be clearly marked
„mandatory‟ and „desirable‟ as per the requirement.
b. In two bidding system ( Technical bid, financial bid) , price bids of only those
bidders who are qualified on technical and other prescribed conditions to participate
in the tender are only to be opened. The price bids of those bidders who do not
qualify must be returned unopened by registered post.

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c. The processing of tenders has to be completed within a time frame mostly not more
than 3 months in any circumstances.
d. The report of the Tender Evaluation Committee should be unequivocal and its
recommendations must be clear. The report must bear certification that there is no
deviation from the tender conditions and provisions laid down by the Dept.
e. The tender conditions should clearly indicate the share of orders which successful
bidders are likely to get.
f. Norms and procedure for vendor rating should be formulated and published will in
advance.
ARBITRATION
The Arbitration & Conciliation Act - 1996 was passed in 1996 replacing the Arbitration Act -
1940, on the lines of UNICITRAL model law as recommended by the UNO, providing a
legal frame work for settlement of disputes by mutual settlement through conciliation and for
settlement of International commercial disputes.
Concepts:
1. Arbitration means referring the present or future dispute to private tribunal for
settlement by an agreement by the parties where the rights and liabilities determined
in a quasi-judicial manner, outside the court, decision of which is binding on the
parties concerned. The arbitration is an arrangement agreed upon by the parties to
refer the dispute present or future to a third party for settlement outside the court.
2. Arbitrational tribunal means a sole arbitrator or a panel of arbitrators.
3. Arbitration award means the decision of the arbitral tribunal.
4. Court means the Principal Civil Court of original jurisdiction in a District and
includes High Court having Jurisdiction to decide.
5. Legal Representative means a person representing a estate of a deceased person.
6. Arbitration Agreement is a written agreement between the parties that they will be
bound by the decision of an arbitral tribunal regarding present or future dispute in
regard to the agreed matter in the agreement or contract. Agreement shall be in
writing and signed by the parties. Telegrams, Telex, Letter or any other
telecommunication means which provide for agreement shall also be considered as
agreement. The existence such an agreement claimed by one party and not denied
by the other while exchanging the claims and defence leads accept the existence of
such an agreement. A clause in a contract agreement is treated as arbitration
agreement.
Appointment of ARBITRATOR parties may determine the number of arbitrators in the

tribunal which shall be odd number. By default to determine, the Arbitral tribunal shall
consist of sole arbitrator. The Arbitrator can be of any Nationality.
If the parties fails to appoint their/ sole arbitrator within 30 days of such request by any one
party, the Chief Justice of High Court shall appoint suitable arbitrator on the request of the
party. If the appointed arbitrator fails to perform, the court may replace him by the suitable at
the request of the party.
The Arbitrator, on appointment, shall disclose in writing any circumstances likely give doubt
about his independence and impartiality. The party may challenge appointment of Arbitrator
on the above points. Unless agreed upon the challenge or the Arbitrator himself withdraws,
the Tribunal shall decide on the issue and proceed with the proceedings.
The mandate of an Arbitrator terminates, when

a. He is not able to perform.
b. He withdraws from office.
c. Parties agree to terminate him.
The parties may appoint in a replacement as per the agreement in such cases of change in
Constitution unless parties agree otherwise. Tribunal may decide on the repeating of the
hearings.
Arbitral Tribunal decides its own jurisdiction and in regard to existence/validity of the
agreement. The parties may put up plea in his first defence in the case of Tribunal exceeding
its authority. The tribunal shall decide on the matter and proceed. The aggrieved party may
apply for setting aside of the award, on its issuance, to the Court.
ARBITRATION PROCEEDINGS:
Proceedings commence from the date of communication for reference of the matter to the
Tribunal is received by the respondent. All the parties shall be treated with equality and be
given full opportunity to present their case.
The procedure, methods, place of hearing, language, time limit for production of
documents/evidence etc., can be agreed upon by the parties otherwise decided by the
Tribunal. It is not bound to follow Civil Procedure Code (Cr.P.C) or Evidence Act (EA) but
only observe the spirit of natural justice.
The statements of evidences documents/defences and remedies sought etc., shall not be
amended unless agreed upon with the parties or allowed by the Tribunal. All the statements,
documents, information supplied by one party and expert opinion/report obtained by the
Tribunal shall be communicated to the other party on application.

34
DEFAULT BY A PARTY:
If the claimant fails to communicate his statement of claim etc., in time, the arbitration
proceedings shall be terminated. If the respondent fails to communicate his defence or fails to
appear for oral hearing / fails to produce documents, Tribunal shall treat it as admission by
the defaulting party but proceed with the evidences before it and made award.
The arbitral tribunal may appoint an expert/institution to examine the case/sample/spot etc., to
give expert report. The parties shall extent all cooperation to the expert. Tribunal may request
the Court for assistant to secure evidence/production of records relevant to the subject matter,
which will be provided by the Court, by ordering the concerned to produce/appear before the
Tribunal directly.
Arbitration award will be decided as per the substantive law in force in India, taking into
account the terms of contract and usage of trade. The majority decision of the tribunal will be
the award or as agreed to amicably settle the issue by the parties.
The Tribunal may direct the parties to deposit an amount towards cost etc., as decided by it
during the course of proceedings. The Arbitration tribunals may encourage the mutual
settlement of the dispute among the parties by mediating/conciliation methods. If the parties
arrive at a settlement agreement and request the tribunal to give award accordingly and if
tribunal has no objection, it may give award accordingly which will have the same effect of
the award.
The tribunal shall fix the cost, fee of arbitration, witness, administrative charges, and for
experts etc. It decides cost payable by each party and also decides the cost payable to one
party by another.
The arbitral award is issued under the signature of all or majority of arbitrators on the
decision or stating it as mutually agreed upon by the parties. Signed copy shall be delivered
to all the parties. On issuance of award arbitration proceedings shall terminate. The Tribunal
is empowered to issue corrections to the clerical errors set in the award issued, without
effecting the decision concluded.
Normally the award is binding on all the parties. Award is enforceable as if it were a decree
of a Court. However, the Court may set aside arbitral award, on examining the case in detail,
on application by the parties in time, if
a. The party was under incapacity to participate in the arbitral proceedings,

b. Arbitration agreement is invalid,

35
c. Non-receipt of proper notice of arbitral proceedings, non-adoption of proper

procedure, partiality shown by the Tribunal or exceeding the jurisdiction by the
Tribunal.
CONCILIATION
This part of the act is introduced on par with 'Unicitral Conciliation Rules'. The purpose of
this act is to provide a legal frame and to encourage voluntary compromise / conciliation of
disputes arising out of legal relationship connected with commercial disputes.
Commencement: The party initiating conciliation invites in writing the other party identifying
the subject of the dispute. The conciliation proceedings shall commence when the other party
accepts in writing the invitation to conciliate. If the other party rejects or does not reply
within 30 days or within time limit stated in the offer, there will be no conciliating
proceedings.
Conciliators: There shall be one Conciliator unless parties agree to have two or three
conciliators who shall act jointly. Sole Conciliator is to be appointed by the mutual agreement
and in case of two or three conciliators; each party may appoint one and the third be
appointed by the parties as presiding person. Institutions may also be appointed as
Conciliators.
The Conciliators shall request to the parties to give the dispute, point of issue and their plea
in writing. Thereafter, he may request them to give more details/information as and when
required.
Role of Conciliator: He shall assist the parties in an independent/impartial manner to reach a

amicable settlement. Conciliator is not bound by civil procedure Court/evidence act etc. He is
guided by the trade practices, fairness, natural justice, rights and obligations of the parties. He
may conduct proceedings in a reasonable manner and oral statements/hearing etc., at the
request of the parties. He may make proposals for settlements, which need not be in writing
or with stated reasons, he may be given administrative/office assistance by a suitable
person/institution by the parties concerned.
Conciliator may invite parties to meet him, communicate with them orally or in writing. He
may meet the parties together or separately each of them, hold the meeting at the place agreed
upon the parties with sole aim of reaching an amicable settlement. The information given by
one party shall be made available to the other unless information given is with the condition
to keep it confidential.
He may call for suggestions for settlement from each party. When it appears to the
conciliators that element of settlement exists, he will formulate draft terms of settlement and
sent it to each party for their observation. On receipt of their observation, he re -formulates
the terms for possible settlement.
If the parties agree on a settlement, they may draw up and sign a written settlement
agreement. If requested by the parties, the conciliator may draw up or assist in drawing up the
agreement.
When settlement is signed by the parties, it is authenticated by the Conciliator and is binding
on the parties. This settlement agreement will have the same status as of the arbitral award by
mutual settlement. The proceedings and settlement agreement shall be kept confidential by
the parties and conciliators except its part required for implementation.
The conciliation proceedings are terminated on:
a. Signing the settlement agreement,

b. Conciliator or any party declares the termination, from the date of such declaration.
Parties shall not resort to arbitral or judicial proceedings when subject matter is under
conciliation.
Cost of Conciliation: Fee for conciliation, cost of administration, fee payable to expert
opinion etc., are to be borne by the parties equally unless parties agree to pay in other ratio.
Conciliator may also ask to deposit the probable cost in advance in equal share by the parties
concerned.
Central Government may make rules for carrying out the provisions of this act subjected to
the approval of Parliament.

37
Questions for “Procedures and Precautions in Tendering”.

.
1. What is a contract? Explain.

2. Explain the following:
a) EMD.
b) SD.
c) P.O.
3. What do you understand by NIT? What are the contents of a NIT?
4. What are the demands of a) Public Accountability b) Commercial Organizations?
5. Mention the different types of Purchase Contracts/Tenders.
6. What do you understand by the term “Liquidated Damages”?
7. What are the duties of an officer on opening of a Tender?
8. Who are exempted from furnishing EMD?
9. Contract
What is Performance Guarantee? Why it is taken?
Management.pdf
10. Write Notes on “Force Majurie”.

38

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Tendering Process, Arbitration & Conciliation

©BSNL, India For Internal Circulation Only 1

The principles of Govt. Contract are...

©BSNL, India For Internal Circulation Only 2

TDM/ DGM (Mtce/Proj) up to Rs.2,500 (BSNL HQ

CGMT up to Rs.15,000 GMTD up to Rs.10,000

The following certificate to be recorded by the competent authority “I,---------------------, am

With quotations on the recommendations of Local Purchase Committee

CGMT Rs.15,001 to Rs.1,00,000

©BSNL, India For Internal Circulation Only 3

©BSNL, India For Internal Circulation Only 4

The Contracts in BSNL are...

Engineering A & P Installations

©BSNL, India For Internal Circulation Only 5

Contracts Machinery & equipment

Open vs. Limited...

3. Supplier means the individual or firm supplying the goods on contract.

©BSNL, India For Internal Circulation Only 6

What is the management of a 'contract'?

Purchases : General Guidelines

©BSNL, India For Internal Circulation Only 7

Demands of Public Accountability:

Demands of Commercial Organization:

ATTENTION may be given on the following issues:

©BSNL, India For Internal Circulation Only 8

GUIDELINES OF CENTRAL VIGILANCE COMMISSION ON PROCUREMENT

As the estimated rate is a vital element in establishing the reasonableness of prices, it is

©BSNL, India For Internal Circulation Only 9

The opening of tenders in presence of trade representatives needs to be scrupulously

©BSNL, India For Internal Circulation Only

©BSNL, India For Internal Circulation Only

What are the stages in processing a tender...

There are different stages in processing a tender.

Preparation of Tender Documents: Tender documents are to be prepared very carefully to

1. Notice Inviting Tender

The bidding would be either International Competitive Bidding or Domestic Competitive

Tendering in “Domestic competitive Bidding” with reference to procurements will be made

a. Through Advertisement (Open Tender)

©BSNL, India For Internal Circulation Only

Tendering Methodology for Procurement

An item of stores which is of specialized nature and is being manufactured or

PURCHASE CONTRACTS / TENDERS

2. Types of Purchase Contracts / Tenders:

3. Notice Inviting Tenders:

©BSNL, India For Internal Circulation Only

Contents of N.I.T.: The N.I.T. in all cases state –

(a)the estimated cost of the work or the quantity of items to be purchased.

Pricing of Tender Documents

Eligibility for bidding

Nature of work/specification of stores to be supplied with quantity, specification/ schedule of

©BSNL, India For Internal Circulation Only

Tender submission and date and time of opening.

(a) Proof of successful execution of Education/Commercial orders of DoT

(b) Valid and Current Type Approval Certificate/Technical Specification Evaluation

(c) Bid Security in the form of Bank Guarantee/NSIC registration as applicable.

1. Date and Time of opening

2. The venue of opening:

The tenderer should accompany the following essential documents

The tenders received without EMD may not be considered.

©BSNL, India For Internal Circulation Only

(i) Unit Price/Total Price – Basic rates of stores/equipment

• Taxes..... Excise duty/sales tax etc.