Contents at a Glance

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A. Preamble
1. The objective is to help in designing a system so that possibility of accident (read it malpractice, irregularities or corruption) is eliminated, either by accident or by intent. (1) To ensure prudence in spending scarce resources to maximum advantage for the company. (2) To ensure that all business transactions are proper and in the best interest of the company (3) To ensure transparency in all transactions involving expenditure. 2. Guiding principles has been, as reiterated in various CVC guidelines, in letter and spirit, (1) Equality (Article 14,15, 16 of Constitution of India ) (2) Fairness (3) Transparency (4) Removing the scope of corruption by putting appropriate checks and controls, (5) If Personal discretion is required to be exercised, prescribe rules to avoid misuse of power. (6) Removing ambiguity in interpretation (7) Looking for loopholes, advantage of which could be taken by mala fide intention (8) Encouraging competition (9) Widest possible publicity (10)Bringing Accountability & Transparency 3. Some of the Important Documents which form the base, apart from others and not limited to: (1) Constitution of India Art 13. Laws inconsistent with or in derogation of the fundamental rights (2)The State shall not make any law which takes away or abridges the rights conferred by this Part and any law made in contravention of this clause shall, to the extent of the contravention, be void. (2) CVC File No. 8(1)(h)/98(1)Dated the 18th November, 1998 SUB: Improving vigilance administration 2. Improving vigilance administration is possible only if system improvements are made to prevent the possibilities of corruption and also encourage a culture of honesty. 2.2.1 One major source of corruption arises because of lack of transparency. they will publish on the notice board and in the organisations regular publication the details of all such cases regarding tenders or out of turn allotments or discretion exercised in favour of an employee/party. . (3) CVC File No.98/ORD/1 Dated the 18th December, 2003 Subject:- Improving Vigilance Administration: Increasing Transparency in Procurement/Sale etc. 1. The Commission is of the opinion that in order to bring about greater transparency in the procurement and tendering processes there is need for widest possible publicity. 4. These imply that no vendor shall be denied equal opportunity of work on any ground other than his own capability. 5. Code of Ethics : All the Executives shall abide by the following Code of Ethics (1) To consider first and always total interest of Hindustan Organic Chemicals Ltd in all transactions without impairing the dignity and responsibility of ones office. (2) To provide level playing field to all bidders / contenders. (3) To award Contract, without prejudice, seeking to obtain optimum bargain in all transactions. (4) To subscribe and work for honesty and truth in awarding and execution of contract, to denounce all forms and manifestations of commercial malpractices and eschew anti-social practices. (5) To accord prompt and courteous reception, to all who call on legitimate business mission. (6) To respect ones obligations and those of ones organisations consistent with good business practice.
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(7) To promote a healthy and harmonious relationship between Contractor and Company. 6. Accountability : (1) Unit in-Charge shall be responsible for implementation for the Works Policy in letter and spirit (2) Approving authority of the contract shall be responsible for observance of the Works Policy and procedure in respect of that particular Contract 7. Whenever in doubt, test the doubt for Guiding principle mentioned above.

B. Summary / Important Issues

The following has been followed while preparing this report a Observation have been listed Para wise. If some subject appears in more than one Para, or it is appropriate to highlight the subject rather than Para, are listed subject wise.

b. In summary, order is kept as per importance felt. The order may be changed, if desired c. If an issue is connected to different paras, or Para and subject both, repletion is possible.

d. 48/90 means Part I Order No 48/90 dt 27th Dec 1990 Formation of Tender Committee e. 18/97 means Part I Order No 18/97 dt 4th June 1997 Works Policy and procedure 1. Consultant appointment : CTE has observed, Consultant for a project costing Rs 25 crore ought to have been done after pre-qualification of firms through open press advertisement. Short listing of firms on pick and choose manner is in contravention to guidelines issued by CVC. The lapse pointed out by CTE has not been resolved. Some other lapses highlighted by CVC (of other organizations) in their Memorandums, are not addressed. Pl see para 16- Engineering Consultancy Contract for further detail 2. Consultants responsibility should not be passed on to contractor : CTEs this observation and lapse pointed out by them has not been taken care of. This may pl be done by adding a clause of that effect This is also mentioned in File No..OFF 1 CTE 1 Dt. the 25TH November 2002 OFFICE MEMORANDUM Subject: Appointment of Consultants para 3(xi) 3. Rate only items should not be included as pointed out by CTE, Such items are quoted high by the contractors and are operated during execution of work to the advantage of agency. Provision to avoid such lapse is not seen. 4. Schedule of rate should should be checked to avoid any flaw (overlapping of scope, part of one scope of one item mentioned as scope of another item) and then extra payment to the contractor 5. Post Tender deviation in any of the Tender clauses be banned : (1) A case in Engg / Civil was detected, in which, after price bids were opened, CST prepared, during proposal to award the contract, concerned Civil Engineer proposed to place order only for 50% quantity, giving reasoning of financial crunch in the co. It was learned that this was done to harass the L1 bidder, because due to CVC guidelines, he could not negotiation and place order to his favoured contractor, which was not L1. After some times (say 2-3 months), when the L1 party fall in line with the Engineer, the same Engineer proposed to place order of balance work also giving reason urgency of work. ( This crunch was not felt till price bid was opened and again within 2-3 months financial crunch of the co. disappeared, and urgency of work came. This urgency has suddenly disappeare for 2-3 months only),This was a tactics to circumvent CVC guidelines to ban negotiation except with L1 and extract gratification from L1 bidder, if not falling in line, to harass him. Reasoning given in such cases appear justified at the outset. Mala-fide motives are covered by sincere looking reasoning. (2) All such conditions to be envisaged before Tender (or at least before opening of the price bid), and scope of work, quantum of work, payment terms etc to be decided accordingly (3) To safeguard against such mal practices, this case was brought to the notice of Management and suggested Post Tender deviation in any of the Tender clauses ( Technical, Commercial, Quantity processing etc) be banned. The then management approved this suggestion to
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implement it from immediate effect, and forwarded a copy (perhaps to Company Secretary) to include this in next Manual updating. (4) This one clause will take care of many scopes of corruption a. b. c. d. Splitting of Contract Repeat order harassing the Contractor Favouring the contractor etc

(5) This suggestion of Vigilance department has not been implemented. On the contrary, two paras has been added, which is against the spirit of this suggestion, and add to the scope of mal practices. It is suggested that these two clauses be removed. (6). Splitting of Jobs (Para 31.6) a This may be used as a tool to bring down the value of the contract below any required limit (i) within the jurisdiction of a Junior Officer (ii) To avoid sanction of the higher authorities. (iii) CVC File No. 98/ORD/1 Dated 04.09.2003 Office Order No.44/9/03 Sub: Irregularities in the award of contracts., 3. It has also observed that the orders were allegedly split in order to bring it within the powers of junior officers and that the proper records of machine breakdown were not being kept. It is therefore, decided that in the matters of petty purchase in emergency items all departments/organisations must keep proper records of all machine breakdown etc. b. By using this Clause, virtually any contract could be split into desired smaller value contracts. As splitting of Job is a Technical matter in nature, such malpractices will be very difficult to detect and prove. (7). Repeat order : This tantamount to 100% variation in quantity. For this also a case was detected. Pl see Para 32. Repeat Orders 6. Responsibility of Committee member : In the above case of Civil, decision to first award only 50% work and then full quantity was taken by a committee. All of them along with forwarding and approving authorities tried to shun off from the responsibility saying that that was a committee decision. (1) But after all, a committee is a formation of individual members. More over forwarding / recommending / approving authorities are not mere a rubber stamp to forward / recommend / approve any decision of a committee. They have power and responsibility to apply their mind judiciously and take a decision accordingly. (2) It was held that that all the individuals are equally responsible for the decision, if they are merely signing the decision. If they do not agree either in part or full, it must be recorded under their hand along with signature and date, otherwise, they will be deemed to be part of the decision, in favour of the decision, and fully accountable for any of the omission / commission / irregularity. (3) To bring accountability in the committee, forwarding , recommending , approving authority, the above clause may be introduced in the Works Manual 7. Acceptance of sub standard work : CTE has found lapse on this account. Therefore, in our Works Manual, suitable clause to avoid such lapses be introduced, Acceptance of Work is the responsibility of the departmental officer. They may appoint consultants and contractors for tests, if they so desire, but the responsibility of acceptance of substandard work could not be passed on to such consultants / contractors CVC File No..OFF 1 CTE 1 Dt. the 25TH November 2002 OFFICE MEMORANDUM Subject: Appointment of Consultants, 4. The role of the consultants should be advisory and recommendatory and final authority and responsibility should be with the departmental officers only. 8. It was seen that CMD has approved a contract of a value, which was not within his / her delegation of power. To regularize this a post facto approval of Board was taken after a month. This omission might have happened due to delegation of power not readily available before the authority at the time of signing.
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(1) Therefore it is suggested that, at the time of approving, reference of clause no and Part I order no of delegation of power may be written. This will avoid inadvertent commission of such error. 9. Checks and controls has been removed substantially in comparison of 18/97 for Contracts value below 3 Lakh (1). viz a. Para 5. Technical and Administrative approval have been mixed, Technical approval upto 3 Lakh to HOD, may be confused with administrative approval also because no detail of Administrative approval is mentioned. b. Para 8.3 Other works, No committee required for works having estimated cost up to 3 Lakhs c. Para 15. Petty Contracts, All works contracts / services, the estimated value which is up to and including Rs. 3 Lakhs shall be classified as Petty Contracts. Petty Contracts can be invited through the modes of Limited Tender or [single tender on nomination basis].

d. Para 15.2 All petty contracts shall be tendered on single bid system. (2) A perusal of some past records reveal that (for detail see Subject: Raising power of HODs from Rs 1 Lakh to Rs 3 lakh) a. 97%, 91%, 97%,90% of Contracts (71%, 40%, 70%, 47% in terms of value) of 05-06, 06-07, 07-08, 09-10 are already covered within 1 Lakh limit b. Raising the limit to 3 Lakh covers 99%, 97%, 100%, 96% of the contract (88%, 57%, 84%, 66% in terms of value). (3) All departments may be asked for the record of the contracts for last 5 years (or at least for last 3 years) in database format to appreciate the impact of this change. 10. Paras has been introduced by which this 3 Lakh limit could go to infinity (1) Para 45. Variation in quantity upto 25%, in value upto 15% makes it 3.15 Lakh (2) Para 32. Repeat order of equal value makes it 6 Lakh. (3) If both are used, limit goes to 6.9 lakh (4) Para 31.6 Splitting of order could make it infinity 11. Single Tender mixed with other type : Single Tender may be justified in some special cases like Emergency / Urgency / Break-down. But this has been mixed with others like Preparatory (Para 12) OEM / ARC / Consultant etc at various places. This could result such contracts being placed on single Tender. 12. Scope of personal discretion has been introduced, like (1) Para 15.2 Invitation of Tender for Petty Contracts by rotation 13. Vendors are prevented from participating in the bidding process in the name of Para 21.e Unsolicited tenders In the case of unsolicited tenders the tenders shall be rejected. This is unfair and will be killing competition. This is a major loop hole and source of corruption, as executing department / HOD has full control over to whom NIT / quotation will be sent in the following cases: Para 11. Limited Tender, Para 12. Single Tender Para 13. Annual Maintenance Contract (AMC) Para 14. Annual Rate Contract Para 15. Petty Contracts Para 16. Engineering Consultancy Contract 14. Following general deficiencies were observed, discussed at C. General (1) spelling errors (2) drafting errors (3) paras not serially numbered
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(4) No reference of previous orders (5) Definition of terms / abbreviations (6) Name etc

C General
It is felt the points, which pertains to procedure of Manual preparation / updation / drafting / reviewing / spelling should have been carefully handled by company secretarial Department.

1. Neutral / unbiased Committee for preparation of the Manual

1. It is gathered that a committee of Head of mechanical / Electrical and Instrument prepared the Manual, perhaps no or very little role of any Senior Finance or Legal person. 2 As a fundamental principle, Rules are not prepared by those, who are intended to be controlled by the rules. ( If Jail inmates are allowed to make rules, they will certainly make rule that all the Locks and doors should be always open, there should be no Guard / restriction on movement etc). ( that is why in our constitution, Legislation / Executive and Judiciary are 3 independent bodies). The legislation branch is responsible for the enactment and revision of laws The executive branch administers and executes the laws passed by the legislative branch The judicial branch enforces the laws and insures that the interpretation of the law is in accordance with the constitutions

3. Therefore a neutral / unbiased committee, preferably of the controllers, be formed to prepare the Manuals, with at least one senior person from Finance and if possible, one Legal person from the field of prevention of corruption in Tender and Contracts. 4. Proper procedure for amendment may be followed. Procedure followed at CPWD is mentioned for reference, 13. Methodology / Concordance Table of Changes

2. What is Works / How it originates / How it is different from Purchase

1. Fundamentally this should be clarified that What is covered into Works Policy, and why it is required to hire contractor for any job? 2. Ideally all the works are to be done departmentally (i.e. company employee). But may be due to Shortage of manpower / economy / urgency etc, it may require to award contract for the Works, which otherwise could have been done by departmentally (Company employee) 3. This will help to understand the very need of awarding contract and to distinguish this Work order from Purchases. Sometimes differences between these are very small 4. This will also clarify, from where the works originates? Similar to Purchase Indent, Work contract starts with a Requisition for agency fixing. Therefore this manual should start from there. 5. Some Servicing Jobs (within the Guarantee period of purchased equipment) are done as a part of Guarantee clause in the Purchase order, and therefore these should not be mixed with Works policy. 6. Such fine care is required to be taken at other places also, where required..

3. Previous Ref
1 Reference to all related Works manual / Policy / Part I Orders / Board Agenda may pl be placed at the top. (1) (Like in Part I order 18/97, reference of previous Part I order no 48/90 dt. 27-12-1990 is given. This may require some effort, but it may give valuable background and base for the new work (2) A board agenda item between Nov 98 to march 99 had directed for implementation of CVC Guidelines. (3) Delegation of Powers.
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4. Paras to be serially Numbered

1 All paras to be numbered, systematically for convenience of referring

5. Name
1 Here only those works are considered which are related to Contract work, therefore, name Contract Works Manual appears more appropriate, rather than only Works Manual, which may mean all the works (whether contractual or departmental etc.

2. In this manual, along with Works, Services are also covered. If suits, this fact also be reflected in the name, but not compulsory, because it is making name complex as Contract Works & Services Manual or Manual for Contract Works and Services 3. In my opinion, Policy is guiding principle / statement of mission / intention, etc stated in a few sentences. Like Quality Policy of the co. (Ref ISO Quality Policy. To achieve this, detailed procedure / manual is prescribed to be followed. These are standard methods and procedures in relation to the provision contained in the Policy

4. Considering the above points, a suitable name may be thought. For suggestion name may be Works Manual / Works Procedure etc rather than Works policy. If at all Policy word is to be used, then Policy of the works may be stated in the beginning in a few sentences, and the whole thing may be named Works Policy and Procedure, similar as done for Previous Manual vide part I order No. 18/97 was named Works Policy and Procedure current Purchase Manual is named Purchase Policy and Procedure current Marketing Manual is named Marketing Manual If required suggestion from suitable person on this topic may be taken

6. Definition of Terms
1 Terms used in the manual must be defined, specifically and unambiguously. viz. (1) HOD is the person heading a department, notified by an office order issued by Unit-in-charge. Register of appointment of HOD and resuming charge of HOD will be kept in the office of Unit-incharge. (2) Unit-in-charge is the 2. Many places Competent Authority is mentioned but not specified. At such places reference of Delegation of power / Part I order / Board directive MUST be given to avoid vagueness, viz Para 4.1,

7. Deviations / Additions to be Justified

1 All deviations, Additions / Deletions / Alternations from the earlier Works Policy (18/97) be explained and a proper justification be annexed in the light of : (1) Whether this makes the system more corruption proof? Or provides opportunities / loopholes / for corruption and malpractice. (2) ensure procurement of the required equipments, materials, works and services in right quality at the right time and at the right and reasonable price after giving fair and equal opportunities (As laid down in the Constitution of India Article 14 : Right to Equality, 14. The State shall not deny to any person equality before the law or the equal protection of the laws within the territory of India.) to Tenderers subject to the policy guide lines laid down herein so as to obtain the optimum value for each unit of expenditure. It is utmost important to keep in mind that transparency is maintained while buying materials / engaging contractors.

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8. Integrity Pact
1. CVC File No 007/VGL/033 Office Order No 41/12/07 04-Dec-2007, 28-Dec-2007, and 5th Aug 2008 Adoption of Integrity Pact in major Government procurement activities. Has been proposed by CVC. Whether HOCL is willing to implement it?

9. Starting point of Contract Procedure

1 Tendering process starts from Requisition for Agency fixing, started by the field Engineer, or a proposal of similar effect. In the present manual, this aspect is not seen touched. All the focus seems to be on Tendering process.

2. It is felt that This manual should also specify procedure / formats etc for such proposals / requisitions, from where any contract originates.

10. Spelling
At following places, contradiction in context and meaning has been felt. It appears that these may be due to spelling errors. Changed words are changing the meaning in the context drastically. There may be other instances also of such errors. The draft may please be reviewed carefully for such spelling errors creeping in. A few noticed one are mentioned below. 1. 16. Engineering Consultancy Contract, Para 2, For consultancy service for a new project [for] major modification a panel of consultants may be prepared by each department and shall be got approved by CMD. a. a new project [for] major modification a new project or major modification b. Due to this changed meaning, a query has arisen. See (A) Para 16. 2. 16. Engineering Consultancy Contract, Para last but one, A scope of work and role of consultant should be clearly defined and the contract should incorporate [causes] having adequate provisions for penalizing the consultant in a. [causes] or Clauses 3. 29 Evaluation of Tender, Para 2, The bid tabulation [also shall] show the Comparative cost with the estimate. a. [also shall] or shall also 4. 29 Evaluation of Tender, Para 3, In case, the quoted price is below 20% of the [post] estimate the workability may be ascertained by the executing department. a. [post] or Cost

11. Drafting
1. Flawed grouping : Para 9.1.1 Inviting Tenders There seems to be flaw in grouping of the items. The followings are Mode / Method of Tendering 1. Open Tender 2. Limited or Restricted Tender 3. Single / Emergency Tender while balance are Type of Works 4. Annual Rate Contracts 5. Annual Maintenance Contract 6. Petty Contracts 7. Engineering Consultancy Contract Such flawed grouping are prone to be misused and may be a source of malpractice. All such groupings to be identified carefully and corrected 2. Para 14. Annual Rate Contract
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Following similar meaning items found in the same list (i). Transportation contracts and Vehicle hiring contracts appearing of almost similar meaning repeated at 2 places (ii). Insulation Jobs and Insulation appearing of almost similar meaning repeated at 2 places

b. It seems that either many documents have been given for just typing, in a hurry to include every thing possible, or the this particular section was sub delegated to a junior person, who does not realize the importance of the Document. 3. 29 Evaluation of Tender, Para 8 to 12 end, It shall be mentioned in the letters approval of competent authority for short listing for opening of the priced bids. a. These pars are under heading, Evaluation of Tender, while these 5 paras seems to be discussing Pre qualification b. Here again it appears that Just typing has been done 4. Para 11 Limited Tender, sub para 2 If the limited orders estimate is more than Rs. 3 Lakhs, the same shall be displayed in web for potential [vendor registration]. Here Process of bidding has been mixed with process of Vendor registration

12. A Provision shall be mention at one place only

1. Care is required to be taken that a provision is not mentioned at more than 1 places, otherwise, there will be a possibility of contradiction, which could be used for some mala-fide intention. For example 2. Acceptance of Bids Criteria appearing at 2 places Para 26a, and Para 27 are contradicting 3 Acceptance of Bids Criteria appearing at 2 places in Para 27, 1st sentence and last sentence is contradicting in them self

4. Single bid appearing at more than one place 5. Emergency / breakdown criteria appearing at more than 1 place 6. If L1 Bidder Backs Out appears at Para 31 sub para 1 and Para 31.3 7. a. Petty Contracts can be invited through the modes of Limited Tender or single tender on nomination basis (Para 15. Petty Contracts,) and b. All petty contracts shall be tendered on single bid system. (Para 15.2)

13. Methodology / Concordance Table of Changes to be prepared. Reference of CPWD is given below
HOCL already have Works Policy and procedure (18/97). For change / addition / deletion, a proper procedure be followed. For example procedure followed at CPWD is to prepare a Concordance Table of Changes. Sample of that is given below. For the reason of Transparency, this may pl be followed. S. No 1 1 Existing Provisions 2 In second line the word For is appearing Proposed Changes 3 The word For appearing in second line has been substituted by the word in due to spelling error. Reasons for changes 4 In the original version of CPWA Code the word in was appearing hence the word for substituted by the word in.

D. Paras Para 3.
1

General Conditions of Contract

General Conditions of Contract (GCC) shall be the binding document and the terms and conditions bearing, shall prevail unless mentioned otherwise in the SPECIAL CONDITIONS OF CONTRACT 20130110 16:37:52 Page : 9 of 27

(SCC) of the tender, schedule of rates and or in the agreed variations of work order. It is therefore advisable that all concerned shall familiarize themselves with the terms and conditions of GCC.a. Where is this? This forms part of the Manual, therefore this must be enclosed with the Manual and got Board approval b This is a Legal document. It is suggested that this must be (i) vetted by a qualified Legal person from Contract field. (ii) Its clauses be verified so that there is no clash in GCC, Works manual, Board rulings and Part I Orders, CVC Guidelines, BPE Guidelines etc. c Under what circumstances an overruling clause could be put in the Special Condition of Contract to be specified. Who will be authorized to do this?

Para 4.1
-

Capital Works

Sub-para 2 Competent authority to be specified

Para 5.

Technical Cum Administrative Approval

1. Technical approval is not defined? 2. In Works Policy vide Part I Order No. 18/97. dt. 4th June 1997, only Administrative approval was mentioned and detailed. Here Administrative approval is mentioned, but Technical approval is detailed. Whether such confusion is created with a purpose to Do administrative approval in the shadow of Technical approval 3. The following is not specified : a. Procedure of Technical approval b. Role (Power and duty) of different rank of officials involved in Technical approval. 4. It is suggested that Technical Approval and Administrative Approval may not be mixed and detailed separately. The following may be referred from www.nic.in/Problem Areas of Corruption in Construction.pdf, CVC Preventive Vigilance Publication on Problem Areas of Corruption in Construction and the lapses mentioned therein. a. 3. Administrative Approval For every work (excluding petty works and repairs), it is necessary to obtain, the concurrence of the competent authority of the administrative department before commencement. The formal acceptance of the proposals by the competent authority is termed as administrative approval. The following are the main purpose of the above approval :

i) To check whether the work is really required. ii) To see whether the estimate is not an inflated one. iii) To see whether yardstick for various provisions are not exeeded. b. Detailed Estimate & Technical Sanction, The detailed estimate supported by complete details such as schedule of all items, quantities, rate, cost, drawings, specifications, rate analysis, measurement details needs to be prepared for each work and technical sanction of competent authority should be obtained. Technical sanction ensures that the proposal is structurally sound and estimate is an economical one. The nomenclature of various items of works should be without ambiguity. The rates should be adopted from standard schedule of rates and for nonschedule items, rates should be based on proper an analysis of rates. If the estimate is prepared by the consultants, the estimate has to be checked and sanctioned by the competent engineers of the organisation which appointed the consultant to ensure economy as well as structural soundness of the project. 5. Even if, both the approval are processed on one proposal sheet, as scope, purpose, issues involved, powers & responsibilities are different, this should be explained in separate paras, and on proposal sheet there should be clear-cut separate para otherwise a confusion may arise and power of Technical may be utilized for administrative purpose or vice versa

Para 8.
1. Heading
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Formation of Committee
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a. Name of committee to be specified. Which Committee? Is it Tender Committee? 2. 8.3 Other works a.- 1st 3 rows are made from 2 rows of 18/97, diluting the control of committee., and bringing jurisdiction to Junior employees. 3. Sub-para after Table 8.3 No committee required for works having estimated cost up to 3 Lakhs a. This was not in 18/97. Above 1 Lakh, committee was required. Now : > > > Para 8 upto 3 Lakh no committee is required. Para 45. Variation in Quantities upto 30% and value upto 15% Para 32. Repeat Orders upto original quantity, operated simultaneously makes Works upto (3 Lakh + 15%) x 2 = 6.90 Lakh without any committee. More than 90% of the contracts may fall below 6.9 Lakh value, which could be placed at the sole discretion of HOD, only. b. If Sec 31.6, 2nd Splitting Of Jobs 2nd Para is utilized, almost all of the work orders could be brought under a value that committee is not required.

Para 9.1.1 Inviting Tenders flaw in grouping of the items.

The followings are Mode / Method of Tendering 1. Open Tender 2. Limited or Restricted Tender 3. Single / Emergency Tender while balance are Type of Works 4. Annual Rate Contracts 5. Annual Maintenance Contract 6. Petty Contracts 7. Engineering Consultancy Contract Such flawed grouping are prone to be misused and may be a source of malpractice. All such groupings to be identified carefully and corrected.

Para 10.1

Pre-Qualification Criteria

1. Average annual financial turnover during the last 3 years, ending 31st March of the previous financial year, should be at least 80% of the estimated cost a In CVC Guidelines No. 12-02-1-CTE-6 dt 17-Dec-02 it was 30%

2. Experience of having successfully completed similar works during last 7 years a. This criteria seems to be reproduced from CVC Guidelines No. 12-02-1-CTE-6 dt 17-Dec-02 Para 5 section A. b. It is felt that 7 years criteria is required to be clarified, otherwise ambiguous interpretations are prone to be misused. (i) It may mean work done more than 7 years before will not be considered for prequalification, to emphasise on current capability. But even if a vendor has only 3 years experience and done work as specified, he may qualify. (ii) If it means minimum 7 year experience, in that case it may block entry of the new vendors of less than 7 years experience, and keep only existing vendors. When only old existing vendors are there, probability of formation of a cartel could not be ruled out 3. Sub-para 3 Definition of Similar Work should be clearly defined a Paras following this heading does not seem to be related to this heading, and discussing something else. The heading is orphaned. Therefore paras may pl be placed at its appropriate place Page : 11 of 27

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4. In addition to above The followings may please be considered for additional prequalification criteria. a CVC Guidelines No. 12-02-1-CTE-6 dt. 7th May, 2004 , Guidelines were prescribed in this office OM of even number dated 17/12/2002, on the above-cited subject to ensure that the prequalification criteria specified in the tender document should neither be made very stringent nor very lax to restrict/facilitate the entry of bidders. CVC Guidelines No. 12-02-1-CTE-6 Dt. 17th December 2002. may be kept in mind (i) The Commission has received complaints regarding discriminatory prequalification criteria incorporated in the tender documents (ii) criteria is either not clearly specified or made very stringent/very lax to restrict/facilitate the entry of bidders. (iii) it is seen that only contractors known to the officials of the organization and to the are placed on the select list. This system gives considerable scope for malpractices, favouritism and corruption. (iv) The purpose of any selection procedure is to attract the participation of reputed and capable firms with proper track records.

Para 11
a b c d e f

Limited Tender

It is not clear whether enquiry will be sent to all the approved vendors for the job, or only to the selected one? If only to selected vendors, then what will be criteria? Again personal discretion comes. What happens if an approved vendor is ready to work, but he was not invited for the bidding? As per present policy he will fall in 26 e. Unsolicited tenders and this bid will be rejected. This is against the spirit of Widest possible publicity and encouraging competition Any clauses, which discourages competition, and restricts widest possible publicity, gives scope for personal discretion, scope for malpractice, may be removed.

1. only competent and suitable a. Who will decide? b. On what basis? c. Whether all approved vendors can Bid or only addressed one? 2. approved vendors list a. What is procedure of Approval? b. Where the Register is maintained? c. On any particular day who are the approved vendors?

d. It is gathered that application of some vendors for vendor Registration are held up and not processed deliberately so that they could not participate in the bidding process. It is alleged that File of one vendor was kept pending till Contract of repairing of valves was finalized. This was to favour a contractor. What is safeguard against such malpractices, if any? It is felt that a procedure, mentioning (i) time frame for approval (ii) provision for acknowledging the vendor the recipt of his documents (iii) If under process, communicating the status on monthly basis (iv) Communication for approval etc be introduced. Page : 12 of 27

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(v) There should not be a long waiting time for approval. Application received in a quarter may be processed in the month following it. Restrictive and discouraging clauses like, Approval will be done every 2 years, or need arises be avoided. 3. A, B & C categories a. What is the criteria and procedure of putting vendors in these A, B, C Classification? b. This to be monitored carefully, otherwise it may be used as tool to allow favoured contractor and disallow unfavoured one. This may become a source of malpractice. 4. Table captioned CLASSIFICATION OF CATEGORIES a. category for what ? b. from the context it appears that it may be for categories of vendors A, B, C . If it is so, the caption of the table must specify the context in full like CLASSIFICATION OF CATEGORIES of approved vendors in Class A, B, C 5. If a vendor who was not addressed and sends his bid ( By collecting information from Web or otherwise) a. it is gathered that such vendors are not allowed to participate and their bids are rejected terming them 21.e unsolicited bid. This discourages and kills competition, against the ethics of web tendering, fairness and transparency. b. It is suggested that even it may be a Limited Tender or even Single Tender process, if a vendor is willing to do the work and he meets the criteria mentioned in the bid, he shall not be denied the opportunity. Criteria specified in the tender document should neither be made very stringent nor very lax to restrict/facilitate the entry of bidders. 6. Sub-para 2 If the limited orders estimate is more than Rs. 3 Lakhs, the same shall be displayed in web for potential [vendor registration]. a. Is it for Vendor Registration or for Bidding? b. From the sentence it appears that for every Contract of more than Rs 3 lakh, it will be displayed on web for Registration. Whereas we understand that web display of tender is for the purpose of transparency and fairness, and any vendor willing may get information from web and can submit his bid. c. Purpose of Web display must be clarified.

d. Vendor Registration is a separate process. Vendors may be already registered and new registration may be done periodically or regularly. But this may not have connection with every Contract of more than Rs 3 lakh.. e. Purpose of mixing it with Tendering Process is not clear. f. If sufficient nos of Registered Vendors are not available for the job, it may be reasonable to call for registration

7. Sub-para 3, For getting better response while floating enquiry, [we can consider] A for B and B for C. a. Can or shall ? b. If Can, what is the criteria for can consider and can not consider?

Para 12 Single Tender

1. Sub-para 1, Whenever contracts are to be awarded without inviting tenders on the ground that it is of an emergency nature due to [ breakdown or proprietary], it is called single tender.

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a. [ breakdown or proprietary] : Breakdown and Proprietary are 2 different Criteria. Emergency could not be due to proprietary. These should not be mixed. Emergency could not be due to proprietary 2. Sub-para 2, This mode of tendering is adopted [mainly] for critical equipments, a. [mainly] or Only ? b. If mainly, then what are others (non mainly). From the context of previous paragraph it appears that this provision is for only those conditions mentioned there. No loophole to be introduced by changing such words. c. Even Critical equipments could be handled by Open Tender or Limited Tender, if there is no emergency. No need to resorting to Single Tender process.

3. Sub-para 2, can be generally a. What is generally? Here also a loose interpretation is prone to be misused. Therefore Intent may be clear 4. Sub-para 2, Original Equipment Manufacturer or Agencies who are experienced in repairing such equipment a. It does not appear justified to compare Original Equipment Manufacturer with Agencies who are experienced in repairing such equipment. OEM is one who has manufactured and may have monopoly over his equipment, where as Agencies who are experienced in repairing such equipment may be many. These may be known through Vendor Registration process or otherwise. For them, no need of Single Tender. b. This phrase, its different interpretation may be studied carefully.

5. Sub-para 2, can be accepted which shall be signed and accepted by HOD of executing Dept.
& HOD of FINANCE Dept a. Why not HOD of user department also? 6. Sub-para 2, Unit in-Charge can approve single tender value up to Rs one Lakh and above that approval from CMD is required. a. This clause was not there in 18/97. b. This is Works Manual or Sub delegation of Power? Whether separate delegation of Power is not required? 7. It is suggested that even it may be a Limited Tender or even Single Tender process, if a vendor is willing to do the work and he meets the criteria mentioned in the bid, he shall not be denied the opportunity 8. Please see suggestion as per CPWD.

Para 13. Annual Maintenance Contract (AMC)

1. Sub-para 4 Fax / e-mail tender and offers can be collected in the case of AMCs and once the tenders are received the executing Dept. and Finance Dept. HOD to accept the tenders after signing on the quotation. a. It is a limited tender and Fax / e-mail tender is not acceptable 2. Sometimes ARC are placed by executing department for users spread in the co. Like a. ARC for computers, contract is awarded by MSS, for Computers spread in all the departments to be maintained. (i) It is seen that computers in some department is breakdown for days and month also. Whether this deficiency in service is reflected somewhere and amount is deducted from the contractor for that.
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(ii) User department do not know the terms and condition of the contract. MSS may say that they do not have any record of deficient service. But whether a system of such record is in place? And user department has been intimated formally of such system. (iii) Normally, if any problem is there, it is intimated on phone. Service engineer may come in one day, 1 week and set the problems. Some times the problem is repeated within hours, or not resolved fully. Virtually that system is utilized for months and months. Is there any criteria for up time. After repairing, how many hours the system should work satisfactorily or In month, more than n hours of breakdown will be considered quality of work not up to the mark and amount deducted. No record is maintained of the downtime and frequency of failure and performance up to the mark or just working below level, but working (iv) Sometimes, Printer is down for months. Because printer is not working, that PC is not utilized. Whether this will be considered a working system or non working system b. Similarly Civil department places contract for maintenance of quarters

Para 14. Annual Rate Contract

1. Sub-para 1. The tenders for such jobs can be invited in the mode of Limited Tenders. a. Mode of Tendering (Open, Limited, Single) shall be based on the criteria stipulated in that section (of Mode of Tendering i.e. Para 10, 11, 12). It shall not be overruled or superseded by any paragraph. Anomaly should not be introduced in the documents by such methods. 2. In the List Some items are repeated a. Transportation contracts and Vehicle hiring contracts b. Insulation Jobs and Insulation 3. Sub-para 3 For Annual Rate Contracts, vendor list may be prepared from the Registered Contractors based on the criteria given for Limited Tenders. a. There should be already a List of Registered vendor, in which it is mentioned for what jobs they are registered and for what category. Then what is this new list is going to be prepared? Its purpose?. b. Which Criteria? Mention Para no 4. Sub-para 3 In the Annual Rate Contracts, the overall L1 party will be awarded the job. a. What is the safeguard that high value item will not be operated more (and vice versa)? If the vendor does not agree to be item wise L1, provision to control operation of such items more than stipulated and less operating items of low value 5. Sub-para 9. In case, the quantum of job is more and [ If it is felt ] L2 party at L1 rate. a. Such situation may be avoided if capable vendors are invited or two2 bid system is followed. b. If at all such situation arises, this should not be decided on once feeling L1 should clearly mention in his bid (before opening, not post Tender., If he backs out post tender, suitable punishment may be decided) that he cant do the full job, he can do only x% of the job, then only other parties should be considered. c. If it is expected that such situation may arise, in the enquiry itself, vendors should be instructed to mention their capability to do What amount of total work they can do? in the bid itself.

Para 15. Petty Contracts

1. Sub-para 1, All works contracts / services, the estimated value which is up to and including Rs. 3 Lakhs shall be classified as Petty Contracts. Petty Contracts can be invited through the modes of Limited Tender or single tender on nomination basis. a. Here All Works below Rs 3 Lakh can be awarded through Single Tender Nomination basis. Add to this 15% Variation in Quantities (Para 45) and Repeat order of equal value (Para 32) makes this amount 6.9 lakh. Add to this Para 31.6 Splitting of Work order allowed makes this limit infinity. 20130110 16:37:52 Page : 15 of 27

b. All Works / Contracts / Services ? Nothing left below 3 Lakh ? Rational Justification backed with last 3 years data of such jobs required to ascertain the reasonableness of the clause. c. nomination basis (iii) Not acceptable al all, personal discretion, major source of corruption, against principle of Fairness, Equality and Transparency (i) CVC Office Order No.23/7/07 ( File No.005/CRD/19 ) Dated the 5th July 2007, Subject:Transparency in Works/Purchase/Consultancy contracts awarded on nomination basis, award of contract on nomination basis, would amount to a breach of Article 14 of the Constitution guaranteeing right to equality, which implies right to equality to all interested parties. d. Mode of Tendering (Open, Limited, Single) shall be based on the criteria stipulated in that section (of Mode of Tendering i.e. Para 10, 11, 12). It shall not be overruled or superseded by any paragraph. Anomaly should not be introduced in the documents by such methods.

Para 15.1 Pre-qualification Criteria

1. Sub-para 2, All the responses shall be evaluated in detail and [additional documents] required shall be called for to ascertain for the responded contractors meet the [qualifying criteria] specified above. The credibility, reliability, capability, competency and financial strength of the responded parties shall be verified. The applicant should have an establishment [near the company] and be registered [during the course] of. a. Additional documents to be specified Specify b. qualifying criteria specified - Is it Sub-para 1 c. Near to company to be specified How much distance will considered Near to company

d. What is course off? How much it will take to register a new vendor 2. Sub-para 3, The performance of the registered contractors shall be continuously [reviewed] contractor shall be [blacklisted] with immediate effect after getting approval from the Unit-in-Charge. They shall not be considered for re-registration also. a. Reviewed : Criteria for reviewing to be specified, be consistent across departments. b. blacklisted : Here blacklisted is used. In 31.3 If L1 backs out, he is placed on Holiday list is mentioned. It is felt that punishment should be consistent and proportionate. A separate section listing all such punishment be there. 3. Sub-para 4 Proceedings for registration for subsequent period shall be initiated by HOD at least 3 months prior to the expiry of the current approved list.

a.

What is the period ?

b. Is it after 2 years? Then it is restrictive to new comers. It should be restrictive to competition. It may be considered every 3 month basis.

Para 15.2 Invitation of Tender for Petty Contracts

1. Sub-para 1, All petty contracts under this category shall be invited by issuing Notice Inviting Tender. The details about the NIT will be informed to the Petty Contractors over [phone / e-mail / fax ]and the representative Special conditions, in addition to the ones specified in the printed format if required shall be attached to the tender form as Annexure,[ with no mention of such annexure in the main tender form at appropriate place.] a. [phone / e-mail / fax ] : Display it on a company notice board also. This will improve be in line with a greater transparency.
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b. [ with no mention of such annexure in the main tender form at appropriate place.] (i) A case was detected in the Civil Engg that for a Tender different Annexures were given to 2 different vendors. In one payment clause was deleted. The vendor was given advantage. (ii) As annexure looks similar, a change or modification could not be detected easily. Therefore a system requires to be in place to avoid such malpractices / errors. Though all annexures may be printed / Xeroxed, All annexures issued to the vendor be signed and stamped by the Tender issuing authority. Only signed copy will be considered valid. For any error in issue, the authority should be responsible. There should not be many versions of the same documents. If at all required their last update date along with the name of the updating authority be mentioned. (iii) All annexures forming part of the bid, must be mentioned on the main bid letter along with their version detail (viz. General Condition of Contract as amended on 07-09-2009) 2. Sub-para 2 All petty contracts shall be tendered on single bid system. a. Not acceptable. All contracts to be processed as specified as per their value and criteria vide Para 9.1.1. As contracts below Rs 3 Lakh qualify for Limited tender, it should be dealt like this. For single Tender, criteria of Breakdown etc should be met 3. Sub-para 6, In case, the number of registered petty contractors is [too high ] in a particular category, the tenders can be issued on [ rotation basis ] and a minimum of 6 parties will be considered each time. However, a. too high : How much? May be quantified. b. rotation basis : Personal discretion. Ideally all should be allowed. 4. Sub-para 7, The response awarded on [ single tender nomination basis ] with the a. single tender nomination basis : Nomination not acceptable

Para 16

Engineering Consultancy Contract

12. Consultant has already been decided despite CTEs objection for even ad-hoc basis and demanding for open press advertisement. Here forget open press advertisement, or Limited tender of registered vendors, or even single tender for emergency, they are already decided in the policy itself by name of the consultants. Even for ad-hoc, some procedure has to be followed. Here that requirement has also been removed altogether. No need to even follow any procedure. They are already appointed by name. Para 16 Engineering Consultancy Contract a. It is Policy or approval for awarding Contract? Summary of Main observations a. Already consultant appointed! ? b. Even no need of any bid c. Restricting competition, ad hoc, single tender, while it should have been through open press advertisement d. No open Tender, no press advertisement, even if the value of the Tender warrants it e. Kill the competition, Limited Tender, personal discretion f. Against CTEs pointed out lapses

g. What are the guidelines for value more than 5 crore Detail 1. CTE has observed, Consultant for a project costing Rs 25 crore ought to have been done after prequalification of firms through open press advertisement. Short listing of firms on pick and choose manner is in contravention to guidelines issued by CVC. The lapse pointed out by CTE has not been resolved
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(1). Till now, even in pick and choose manner also - 9 consultants were called for bid, - 2 bid system was followed, - bids were evaluated - Technical and commercial negotiations were held, - proposals were put up, - approval was taken from CMD and then from Board (2). But in this manual, even this requirement has been got rid off. Consultants has - already been appointed ( sub observation of sub para 3 below) - directly by name. - in this work policy (3) Is it Works Policy or Work order placed (Party decided, scope of work and value to be inserted) (4) Is it not adding insult to injury and blatant disregard to CTE? 2. As per Para 10, For Open Tender the estimated value of work should be more than 25 Lakhs for Revenue Works and above 75 Lakhs for Capital / Minor Projects a. As consultancy services has been classified in Revenue Work(Para 4.2), this should be dealt with procedure specified for that work and value. 3. File No..OFF 1 CTE 1 Dt. the 25TH November 2002 OFFICE MEMORANDUM Subject: Appointment of Consultants Some of the common irregularities/lapses observed in this regard are highlighted. Along with other cares warranted, the lapses mentioned in this memorandum be avoided 4. Sub para 2 For consultancy service [for a new project for major modification]1 a panel of consultants may be [prepared]2 by each department and shall be got approved by CMD. (1). for a new project for major modification : Not for All works? What for others, i.e. new project non-major modification a. for a new project [for] major modification or for a new project [or] major modification Please verify the spelling error, if any, as it is changing the meaning (2). be prepared : Procedure for preparation not specified 5. Sub para 3 For already existing plans services of a consultant who had rendered the services during project stage shall be considered for consultancy services on a [single tender basis]1. For example M/s.Engineers India Ltd: New Delhi shall be hired for consultancy services for PRU, LPG and Hot Oil Sections. [The services of FEDO shall be taken for the consultancy in Phenol Plant and off sites. M/s. Uhde shall be considered for the consultancy service in Hydrogen Peroxide Plant and C.N.A.Plant.]2 Similarly the OEM suppliers can be treated as consultant for any future advice for modifications / improvements. (1) single tender basis : Single Tender in place of Open Press Adv (2) The services of FEDO shall be taken for the consultancy in Phenol Plant and off sites. M/s. Uhde shall be considered for the consultancy service in Hydrogen Peroxide Plant and C.N.A.Plant a. Already consultant appointed ! ? b. Even no need of any bid c. Restricting competition, ad hoc, single tender, while it should have been through open press advertisement 6. Sub para 4 In case vendors are not short listed for a particular consultancy job, expression of interest to be published in newspapers giving pre-qualification criteria. For consultancy service [where vendor list is already there, enquiries / NIT shall be sent to the respective consultants]1 that include scope of work, completion time and other commercial details. On obtaining tenders consultant shall be called for a techno-commercial discussion and the scope of work, completion time etc. shall be firmed up. Unit-in-Charge shall lead the committee for discussion with consultants. (1) where vendor list is already there, enquiries / NIT shall be sent to the respective consultants :
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a. No open Tender, no press advertisement, even if the value of the Tender warrants it b. Kill the competition, Limited Tender, personal discretion c. Against CTEs pointed out lapses 7. Sub para 8 The consultants scope will be limited to preparation of tender documents, vendor evaluation, bid evaluation and technical recommendation, supervision for erection and commissioning. The commercial aspects and price part will be evaluated by HOCL and work order will be placed by HOCL as recommended by the consultants. a. CVC Guidelines No.3L PRC 1 Dt 12.11.1982 - scrutiny of tenders and execution of work should, as far as possible, be done by technical officers directly and fully answerable to the public undertaking 8. Sub para 11 The above guidelines are applicable to consultancy jobs for minor modifications in the existing plant having a total contract value less than 5 crores. In case of any deviations in the scope of work, approval of CMD shall be taken. a. What are the guidelines for value more than 5 crore? b. total contract value less than 5 crores : Here the value of 5 Crore is of Consultancy contract or Civil / Mechanical / etc Engineering contract or Total value combining both. (viz There is a consultancy contract of Rs 80 lakh to do Engineering work of a Civil/ Mech etc work costing Rs 5 Crore, making total Project cost Rs 5.8 Crore. To avoid the confusion, the wording and sentence may be reframed to make its interpretation unambiguous.

Para 17.

Tender Documents

1. Sub-para 1, Each tender document having estimated cost up to 10 Lakhs should have Notice Inviting Tender (NIT), Scope of work, [GCC, SCC,] Schedule of rates, Scope of material supply by HOCL and Contractor. a. [GCC, SCC, : These terms and all other such terms be defined in the beginning 2. 1. Notice Inviting Tender : Must mention the Annexures, which will form the part of NIT along with their version date and sign / stamp of the issuing authority. A case was detected in Engg Civil that 2 different version of GCC / SCC was given to 2 different vendors. In one of them payment clause was deleted. In that case it was found that a contractor was favoured by the manipulation of the annexure.

Para 20 Earnest Money

1. From Rs. 1 Rs. 3 lakhs : NIL

a.

Reconsider. To safeguard against if L1 back outs, If L1 could not do complete work etc.

Para 21.e

Unsolicited tenders

In the case of unsolicited tenders the tenders shall be rejected 1. This seems to be a major loop hole and source of corruption. As executing department / HOD has full control over to whom NIT / quotation will be sent in the following cases: 11. Limited Tender, 12. Single Tender 13. Annual Maintenance Contract (AMC) 14. Annual Rate Contract 15. Petty Contracts 16. Engineering Consultancy Contract 2. In case any vendor, who is registered and not been invited but is willing to participate in the bidding process, his bid will rejected on the ground of 21e Unsolicited bid. 3. It is also gathered that if any vendor bids on the basis of Web Tendering, it is also categorized as 21e Unsolicited bid This seems to be against the spirit for which CVC insisted for the web tendering 4. This is:
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Killing competition Unfair

5. And therefore This clause should be removed.

Para 24 Pre-Bid Conference

1. If the job is complex in nature and it is felt that it is better to enlighten the bidders on the scope of the work and other details then pre-bid meetings shall be conducted by the concerned Head of Department with the approval of Unit-in-Charge. a. Specify the selection criteria of the bidders, following the principle of Fairness, Transparency, and widest possible publicity for better competition

Para 25.1

Procedure for Receipt & Opening of Tender

1. Sub-para 6, [ The indenting department will prepare the tender documents and dispatch to the party through P&A Dept.] The Offers received against the tender will be received by the P&A Department. Offers in E-Mail or Fax shall not be accepted except in the case of [OEM/AMC] / [consultancy] / emergency works. The Offers are forwarded to the concerned executing department after the due date. In case of emergency/ OEM/AMC/Consultancy service, enquiry can be floated by e-mail / fax. a. The indenting department will prepare the tender documents and dispatch to the party through P&A Dept. : This is Dispatch procedure. The Para is for Receipt procedure b. [OEM/AMC]/ : Not allowed on OEM / AMC Criteria. If it is Breakdown or Emergency, this will be governed by Breakdown / emergency criteria stipulated in paras of single tender. No separate provision is required. It may create confusion. In future some body may amend provision at one place creating unsynchronized document. c. Consultancy: Why consultancy. These are for long term project. There is ample time even for open press adv. No need of tender by Fax / email

2. Sub-para 7, The executing department will open the [ Techno commercial ] bids . a. Techno commercial i.e. Un-priced. Make it clear. Somebody may think Commercial as price

Para 26 Acceptance of Bids

1. In the following circumstances the tenders shall be rejected:Bids not received by the due date and time shall be rejected and representative of such tenderer shall not be allowed to attend the tender opening. a. This is in contradiction of Para 27 Delayed / Late Tenders, Late Tender means posted after the due date. Offer posted before due date but received late shall be considered, as delayed tender and if sufficient number of Offers are not received, the same can be considered by the Tender Committee. Make the Rules consistent

Para 26.1 Opening of Price Bids

1 Sub-para 1, Where all the Head of Department. Sub-para 2, When qualification acceptable bids. a. What is the urgent need to change the existing practices. Please spell out the current procedure and make it a rule, amending it with a purpose of making system Corruption proof. In our opinion, presently approval is taken from unit incharge. This seems to be good procedure, safeguarding against any mala fide.addition / deletion 2. Sub-para 3, If rejection / acceptance should be brought out.
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a. No post tender deviation in any bid clause is allowed.

Para 27 Delayed / Late Tenders

1. No late tender will be accepted under any circumstances. If there is no response re-tender shall be resorted to. Late Tender means posted after the due date. Offer posted before due date but received late shall be considered, as delayed tender and if sufficient number of Offers are not received, the same can be considered by the Tender Committee. a. There is a contradiction in its first sentence and last sentence b. There is a contradiction from Para 26a Acceptance of bid A care is required to be taken that a provision is not mentioned at more than 1 places, otherwise, there will be a possibility of contradiction, which could be used for some mala fide intention.

Para 29. Evaluation of Tender

1. Sub-para 2, Evaluation The bid tabulation [also shall] show the Comparative cost with the estimate. a. shall also or also shall 2. Sub-para 3, In case, the quoted price is below 20% of the post estimate the workability .. a. post or cost 3. Sub-para 8 to 12 end, It shall be mentioned in the letters approval of competent authority for short listing for opening of the priced bids. a. These 5 pars are under heading, Evaluation of Tender, while these 5 paras seems to be discussing Pre qualification

Para 31 Award of The Work

1. Sub-para 1, Generally, the work is to be awarded on L1 basis. However, if for reasons, L1 party backs out of the contract citing reasons, then L2 party can be awarded the work persuading to match L1 rates or matching the estimates. In case the L2 party is not willing to match L1 or estimated value the tender shall be refloated.- The party which has backed out should be put in holiday list for a period of 6 months and in case of repetition they should be black listed. a. Criteria for punishment like holiday, blacklist etc may be collected at one place and decided to ensure these are proportionate. (i) if a vendors back out after bidding he will be on holiday list (do not give enquiry for 6 month) (ii) If the performance does not improve in-spite of the communication such contractor shall be blacklisted with immediate effect after getting approval from the Unit-in-Charge. They shall not be considered for re-registration also. Para 15.1 2. Sub-para 2, Work order shall be issued a. All the documents forming part of the work-order / contract must be listed in the main page and annexed, taking care that possibility of removing a page and putting another page in place of that is ruled out.

Para 31.3
a

If L1 Bidder Backs Out

1. If the L1 party backs out of the contract citing reasons then L2 party can be awarded the work Contravention of the No.98/ORD/1 dt 24-Aug-2000, Para 3, such a situation may be avoided if a two-bid system is followed (techno commercial) so that proper assessment of the offers is made before the award of work order. Therefore, if L-1 party backs out, there should be re-tendering in a transparent and fair manner. Page : 21 of 27

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It may be considered, In the interest of the organization, L1 will be decided from both the bids, i.e. original bids (leftover bids after removing the bid of backed out vendor) and bids received from re-tendering

2. The party which has backed out may be put in holiday list or in case of repetition to be blacklisted. a Holiday List (i) What it is ? (ii) Criteria and Procedure of its preparation. (iii) How it will be maintained ? (iv) How it will be used ? (v) What is its purpose ? (vi) How it is different from Black listing ? (vii) What is benefit to the organization of using this? Black list (i) (ii) (iii) (iv) Definition ? Criteria and Procedure of its preparation. How it will be maintained ? How it will be used ?

Para 31.6

Splitting Of Jobs

Sub-para 2 If part/parts of a job covered in a tender are independent of each other and if execution of a part/parts of the job by an agency will not affect the simultaneous execution of other part/parts by other agencies, such part/parts may be awarded to different agencies, who are individual lowest for such part/parts, based on recommendation from executing department. However for such divisions, the conditions for part order shall be suitably specified in the tender conditions 1. This may be used as a tool to bring down the value of the contract below any required limit within the jurisdiction of a Junior Officer To avoid sanction of the higher authorities.

2. By using this Clause, virtually any contract could be split into desired smaller value contracts. As splitting of Job is a Technical matter in nature, such malpractices will be very difficult to detect and prove. 3. Therefore this be banned 4. If at all it is desired, fulfilling the following criterias in letter and spirit: a. that this is being given on item wise L1 basis b c. The job will be split was declared in the original NIT / Enquiry, and way it will be split up is known to all the bidders in advance Fairness and Transparency is maintained and there is no probability of any malpractice. Responsibility of the confirmation will be on the approving authority as mentioned in (f) below, and not be based on note / clarification of junior authority. The approving authority should satisfy himself that there is no probability of malpractice and the organization is benefited by this Then this may be allowed with the following controlling clauses e. Procedure being followed will be as per original value, without splitting f. Approving authority will as per original value, without splitting

Para 32.

Repeat Orders

1. Repeat Orders can be placed on the basis of previously accepted tender under the following conditions:
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(1) This has been found to be a source of corruption In a case in HOCL, fabrication of tanks enquiry was issued for one Tank. a. Information was leaked to a favoured party that there is more than one tank. So he distributed his overhead and mobilization expenses on more than one tank and became L1. b. Other Bidders quoted on the basis of one tank Job and loaded all their expenses on one tank only. c. One vendor did not respond as for his organization value of one tank was not economical. He might have quoted for a value of all the tanks

d. Later the favoured party, who distributed his overhead and mobilization expenses as per insider leaked information and was L1 was awarded the Contract and Repeat order. e. A justification given for repeat order was his manpower and equipments are already at site f. In fact this clause was in the benefit of the contractor, as he saved money on this account

(2) Thus repeat order a. is a source of corruption, against transparency and fairness b. kills competition by discouraging vendors from quoting due to initial low value of the contract c. favours a favoured contractor

(3) This should not be allowed and be banned. 2. Hidden Repeat orders (1) In fact even if executing department may hide the fact that it is a repeat order, and floats another enquiry for the similar job, this also favours to the contractor, who has already done that similar job by saving money on: a. Distributing their overheads b c distributing their mobilization expenses If their man and machinery are al ready at the site / work place, this further results in substantial saving for the contractor

(2) In this case also the contractor may quote somewhere near the 1st job or even less and will be l1, while others bidders will again high and will be out. (3) Such contracts should also be deemed as Repeat order and be banned because If full quantity would have been declared in advance, a better competition and fairness is expected. Such cases should be treated as case of malpractice 3. If at all it is necessary : There may be for technical reason, similar job arises after awarding a contract. Then (1) Proper scrutiny should be there for the genuineness of the reason, similar job arise and to be confirmed that there is no probability of any malpractice. (responsibility of the confirmation will be on the approving authority as mentioned in (2) below, and not be based on note / clarification of junior authority. The approving authority should satisfy himself that there is no probability of malpractice. (2) procedure to be followed and approving authority will be decided by adding the value of the all such job in a. previous 1 year (not calendar year) if the job is to be approved by Unit-in-charge b. previous 2 year (not calendar year) if the job is to be approved by functional Directors

Para 36. Changes in terms of Contract after award of work

a. Post Tender deviation in any of the bid term is not allowed
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E. Subjects Subject : Definition of Work

1. It is not clear whether apart from Engineering work, Contracts given for other works and services are covered in this manual or not ? This may pl be clarified. For example a. Contract for Legal opinion / Legal Consultants / Experts etc by PAD, Co. Secretary etc b. Contract for printing etc c. Contract for Canteen / Laundry / Guest house operations normally given by PAD

d. Contract of other services like previously HOCL School was given to Deccan Education Society, now to Mahatma Education Society e. appointment of Auditors etc. f. Contract of software development. It is normally given by MSS. One of the such contracts to link various departments like Stores , Finance, Purchase, etc are lying in a prt functional , incomplete state. Whenever some information is required, it could not be made available, though it is available in the system. In recent past, when vigilance department sought some data for last a few years, this could not be made available by MSS. Departments has to literary keep 2 computers side by side, looking at one screen, it was typed on another computer.

2. Need of this is felt as word consultancy and services has been added in the definition of works (Para 1), Revenue works (para 4.2). These words were not in 18/97

Subject : Mode of Tendering

1. Apart from mentioning it at its regular paras 10, 11 and 12, it has been mixed at many other places, a. Para 13. Annual Maintenance Contract (AMC), tenders may be received as in the case of Limited Tenders. b. Para 14. Annual Rate Contract Para 1. The tenders for such jobs can be invited in the mode of Limited Tenders. c. Para 15. Petty Contracts Para 1, All works contracts / services, the estimated value which is up to and including Rs. 3 Lakhs shall be classified as Petty Contracts. Petty Contracts can be invited through the modes of Limited Tender or single tender on nomination basis

d. Para 15.2 Invitation of Tender for Petty Contracts, Para 1, The details about the NIT will be informed to the Petty Contractors over [phone / e-mail / fax ]and the representative 2. Mode of Tendering (Open, Limited, Single) shall be based on the criteria stipulated in that section (of Mode of Tendering i.e. Para 10, 11, 12). It shall not be overruled or superseded or rephrased in/by any other paragraph. Anomaly should not be created in the documents by such methods. 3. It is suggested that even it may be a Limited Tender or even Single Tender process, if a vendor is willing to do the work and he meets the criteria mentioned in the bid, he shall not be denied the opportunity. Criteria specified in the tender document should neither be made very stringent nor very lax to restrict/facilitate the entry of bidders. 4. If during Limited Tender Process, only one tender is received, then in CPED it is called a Single Tender. Emergency / specialised are named Restricted Tender (Which we name Single Tender). These naming followed by CPWD appears to be indicating the true nature & intent of the tender. It is suggested that if considered fit, this naming convention may be adopted 5. For criteria of single, CPWD etc may be referred for guidance. From those it is seen that Single Tender (CPWD calls it Restricted Tender) is resorted in a situation of a. Emergency / Speed b. OEM / Specialised
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6. Even in that case also, effort is to make list of vendors as big as possible 16.4.2. There need be no fixed restricted list of contractors but when restricted tenders are to be called the list of contractors should be as big as possible so that competitive tenders are received 7. Therefore for specialised / OEM work also, efforts should be made to find out more suitable vendors so that monopoly ends. Tender for such works are removed from Single Tender (CPED restricted) List and given to Limited Tender list.

Subject : Raising power of HODs from Rs 1 Lakh to Rs 3 lakh

Para 5. Technical Cum Administrative Approval Para 8.3 Other works No committee required for works having estimated cost up to 3 Lakhs Para 15. Petty Contracts - All works contracts / services, the estimated value which is up to and including Rs. 3 Lakhs shall be classified as Petty Contracts. Petty Contracts can be invited through the modes of Limited Tender or single tender on nomination basis. 1. In comparison to previous Works procedure 18/97, HOD authorities have been increased substantially, requirements of Committee has been removed up to 3 lakh (previously it was 1 lakh), HODs power has been increased from 1 Lakh to the 3 Lakh, HOD could proceed with reduced controls. 2. Such substantial change does not seems to be reasonable 3. A study of previous years of Work orders of mechanical reveals (Similar study for contracts awarded by other departments will be helpful. For this data of the Contract Register for last 5 years in Database (Microsoft Access or .dbf ) format may be asked on CD. This data is supposed to be ready as it is Contract Register data. CD is preferred because in case of any error, CD is a proof because it can not be altered. )
01-02
No of Work orders Value of Work Orders

03-04
No of Work orders Value of Work Orders

04-05
No of Work orders Value of Work Orders

A
1 1 Lakh and below 2 3 4 5 3 Lakh and below

C
9 2 1 0

D
96.20% 99.16% 99.58% 100.00%

E
55.34% 80.86% 87.15% 100.00%

F
1 1 1

G
96.54% 99.69%

H
66.18% 89.94%

I
8 1

J
97.95% 99.71%

K
69.31% 85.13%

3 Lakh + 15% = 3.45 Lakh 3 Lakh + Repeat Order = 6 Lakh 3 lakh + Repeat Order + 15% = 6.9 Lakh

100.00%

100.00%

05-06
No of Work orders Value of Work Orders

06-07
No of Work orders Value of Work Orders

07-08
No of Work orders Value of Work Orders No of Work orders

09-10
Value of Work Orders

L
1 2 3 4 5 1 Lakh 3 Lakh 3.45 6 Lakh 6.9

M
9 2 1 0

N
97.34% 99.41% 99.70% 100.00%

O
71.30% 87.83% 92.29% 100.00%

P
19 8 7 5 3

Q
91.77% 96.54% 96.97% 97.84% 98.70%

R
40.12% 55.63% 58.13% 65.46% 76.31%

S
6 1

T
97.24% 99.54%

U
70.11% 84.20%

V
13 6 5 0

W
90.37% 95.56% 96.30% 100.00%

X
47.27% 65.87% 70.42% 100.00%

a. 96%, 97%, 98%,97%, 92%, 97% and 90% of Contracts (55%, 66%, 69%, 71%, 40%, 70%, 47% in terms of value) of 01-02, 03-04, 04-05, 05-06, 06-07, 07-08, 09-10 are already covered within 1 Lakh limit b. Raising the limit to 3 Lakh covers 99%, 100%, 100%, 99%, 97%, 100%, 96% of the contract (89%, 90%, 85%, 88%, 56%, 84%, 66% in terms of value). c. If used with 45. Variation of quantity 15%, 29. Repeat order of 100% and 31.6 Splitting of job, virtually every thing will be under HOD Control.

d. More than this what are envisaged and what is planned?

4. CVC Guidelines No.005/CRD/19 dt 05-Jul 2007

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3. It is needless to state that tendering process or public auction is a basic requirements for the award of contract by any Government agency as any other method, especially award of

contract on nomination basis, would amount to a breach of Article 14 of the Constitution guaranteeing right to equality, which implies right to equality to all interested parties.
4. A relevant extract from the recent Supreme Court of India judgment in the case of Nagar Nigam, Meerut Vs A1 Faheem Meat Export Pvt. Ltd. [arising out of SLP(civil) No.10174 of 2006] is reproduced below to reinforce this point.

Subject : Bank Guarantee

Bank guarantee has been stipulated at (1) Para 13. Annual Maintenance Contract (AMC) (2) Para 17 Tender Documents (3) Para 18Mobilization Advance (4) Para 39.1 Work Orders and wherever required, the following may be followed: (1) CVC Guidelines No 02-07-01-CTE-30 dt 31-Dec-2007 may be incorporated

Subject : Mobilisation Advance

1. Mobilisation advance has been stipulated at (1) Para 13. Annual Maintenance Contract (AMC) Para 2 (2) Para 16 Engineering Consultancy Contract (3) Para 18 Mobilization Advance (Text of CVC File No 4CC-1-CTE dt 10-Apr-2007 reproduced here) 2. At para 18, text of CVC Guidelines No 4CC-1-CTE dt 10-Apr-2007 reproduced has been introduced. But background of this are mentioned in previous circulars, which has not been mentioned. To appreciate the full context, those are required: (1) In CVCs circular No.UU/POL/19 dt. 8 Oct.,1997 ensure stipulation of mobilization advance only for selected works and advance should be interest bearing (2) in No. 4CC-1-CTE-2 Dated: 8.6.2004 certain provisions were added In order to address the problem of misuse of mobilization advance a. If the advance is to be given, it should be expressly stated in the NIT/Bid Documents, indicating the amount, rate of interest and submission of BG of equivalent amount. b. The advance payment may be released in stages depending upon the progress of the work and mobilization of required equipments etc. c. There should be a provision in the contract for adjustment of advance progressively even as the bills are cleared for payment.

3. Policy should be restrictive , rather than liberal in giving advances. In Para 18, only dt 10-04-2007 has been reproduced. Its context is cleared in its previous guidelines dt. 08-10-1997 and 08-06-2004. Texts of these should be included.

F. Suggestion
Apart from issues expressed in the above paras, some important one are listed here. Issues of para are not repeated to save pages.

2. No contractor shall be stopped from participating in the bidding process, even in Limited and Single Tender if he meets the criteria of the bid.
1. This will encourage competition and attract best price for the organization

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2. This will also minimize the scope of corruption from the personal discretion of choosing contractors 3. Meeting the criteria means criteria specified in the bid, viz: Contractor should be Registered for the work and Category (i.e. A, B, C etc) 4. This requires that Registration process and catagorisation of Contractors must be streamlined, so that this may not be used as tool for barring any contractor from participating 5. This will also require process of Black listing and Holiday list to be specified, otherwise Contractors may be harassed by these tools.

3. Power of HOD, Unit-in-Charge etc

1. Basic structure of Part I Order 18/97 must not be changed. 2. If due to change in time, requirement of change in value is felt, it should not be done on an ad-hoc manner. It should be based on some rational formula. 3. One suggested method may be like this : Take data of contracts placed in last 5 years (or if not available minimum3 years). Calculate a value which meets the criteria A and B in Table below. Replace the value mentioned in Part I order no 18/97 by a suitable rounded value of A and B whichever is less In Part I Order No 18/97 For Rs. 1 Lakh For Rs 5 Lakh For Rs. 25 Lakh In the Table, as per 18/97 A 90% of Contract in terms of numbers fall below this limit 99% of Contract in terms of numbers fall below this limit Board should B 60% of Contracts in terms of Value fall below this limit 95% of Contracts in terms of Value fall below this limit

a. Less than Rs 1 lakh is the range in which no committee is required and is in the full jurisdiction of HOD b. Rs 1 to 5 lakh is the range in which committee is required and is in the jurisdiction of HOD c. Rs 5 to 25 lakh is the range in which HOD heads the committee

4. Pre-qualification
Pre-qualification, evaluation/exclusion criteria, etc. be made explicit at the time of inviting tenders so that basic concept of transparency and interests of equity and fairness are satisfied

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