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What are Qualifying Requirements?

QRS are the appropriate conditions, depending on the


value and technicality involved, to be stipulated in the
NIT for all open tender cases and are to be fulfilled by
the bidder for becoming eligible to be considered for the
award of a specific package.
Why Qualifying Requirements

In all cases of Open Tender suitable QRs are to be


stipulated in NIT and offers of only those bidder are
considered who qualify

Data/documentary evidences are obtained from


prospective bidder in support of meeting QRs.
QRs are not required where tendering is resorted to
amongst pre-qualified/registered bidders either on
deemed open tender basis or on limited tender
basis.
In order to avoid incompetent tenders, a prequalification procedure may be adopted for selecting
the reliable, resourceful and competent
parties
from whom the
tenders may be invited.
A list of the pre-qualified vendors based on the
qualification criteria shall be valid for three years from
the date of its preparation.

Sending enquiries to all such approved


vendors/pre-qualified vendors shall be treated as
open tender for the purpose of DOP.
Who prepares & finalizes the QRs at site/ region?
QRs framed & proposed by the Indentor.
Proposed QRs from indenting deptt., duly
recommended by the HOD, is to be examined by
the standing QR Committee constituted at Project/
Station level with rep. from Contracts, Finance &
Technical Services at E5/E6 level and its
recommendations to be approved by HOP/HOS

QR for open tender beyond estimated value of Rs


1 crore for region/site will be approved by a QR
committee to be constituted at region with
members at the level of E7/E7A with one
representative each of Engg., Contracts and
Finance at Regional level in addition to one
member from Corporate Engg.
ED of the Region shall be the Chairman of QR
Committee at regional level.

Who prepares & finalizes the QR?


CORPORATE PACKAGES:
After preparation of draft Tech. Specs. for the
package, Corp. Engg. to review the standard QRs
& identify the changes required, based on the
feedback received from Finance, Contracts &
Engg.
Approval of the changes by the Committee
consisting of ED (Engg.), ED(CC&M), ED(F) and
D(T) as the Chairman.

QRs shall be framed in an objective manner & not


left subjective with scope for any discretion
QRs shall further be framed in most realistic
manner so as to ensure that adequate number of
vendor qualify tender and generate healthy
competition.
For multiple Purchases in one NIT a tender may
participate more than one purchase if he qualifies
for individual case separately & specifically.

CVC guidelines for framing the QRs:


As per CVCs Office Memorandum dated
17.12.02, the following points must be kept in
view while fixing the eligibility criteria :
A) For Civil/Electrical Works
i) Average annual financial turnover during the last
3 years, ending 31st March of the previous
financial year, should be at least 30% of the
estimated cost.

ii)

Experience of having successfully completed


similar works during last 7 years ending last day
of month previous to the one in which
applications are invited should be either of the
following :

a) Three similar completed works costing not less


than the amount equal to 40% of the estimated
cost. Or
b) Two similar completed works costing not less than
the amount equal to 50% of the estimated cost.
Or
c) One similar completed work costing not less than
the amount equal to 80% of the estimated cost

iii) Definition of Similar work should be clearly

defined.
In addition to above, the criteria regarding
satisfactory performance of woks, personnel,
establishment, plant, equipment etc. may be
incorporated according to requirement of Project

B) For Store/Purchase Contracts


Prequalification/Post Qualification shall be based
entirely upon the capability and resources of
prospective bidders to perform the particular
contract satisfactorily, taking into account their

(i) experience and past performance on similar


contracts for last 2 years
(ii) capabilities with respect to personnel, equipment
and manufacturing facilities
(iii) financial standing through latest I.T.C.C., Annual
Report (balance sheet and Profit & Loss
Account) of last 3 years.
The quantity, delivery and value requirement shall
be kept in view, while fixing the QR criteria. No
bidder should be denied prequalification/post
qualification for reasons unrelated to its
capability and resources to successfully
perform the contract.

Subsequently CVC vide OM dated 07.05.04 clarified


that the guidelines issued vide OM dated 17.12.02
are illustrative and the organizations may suitably
modify these guidelines for specialized jobs/works, if
considered necessary. However, it should be
ensured that the QR criteria are exhaustive, yet
specific and there is fair competition.
Corporate Contracts vide System Circular No.
615 dated 25.01.08 requested all concerned at
Corporate Centre, Regional Offices and Sites to
ensure strict compliance to the CVC guidelines
issued vide OM dated 17.12.02 & dated 07.05.04.

Financial Criteria to be stipulated in the QRs for the


packages being tendered from Corporate Contracts:
As per guidelines approved by the Committee on
Management Controls (CMC) and issued by GM(IA)
vide IOM dated 12.07.05, the financial criteria to be
stipulated in QRs for future packages to be tendered
from Corporate Contracts should be as follows :
1.Net Worth :
Net worth of bidder as on last day of the preceding
financial year shall not be less than 25% of its paid-up
share capital.

A bidder who does not satisfy net worth criteria on


its own would be required to furnish along with its
bid a Letter of Undertaking from the holding
company pledging unconditional and irrevocable
financial support for execution of contract by
bidder in case of award , provided that net worth of
such holding company should be at least equal to
or more than paid-up share capital of holding co.
In cases where audited results for the last
preceding financial year are not available,
certification of financial statements from a
practicing Chartered Accountant shall also be
considered acceptable.

2. Average Annual Turnover :


The average annual turnover of the bidder in the
preceding three financial years as on the date of bid
opening shall not be less than the amount to be
specified based on following guiding principles
In case of Civil Packages, the amount shall be
equivalent to 1.5 times the average annual
requirement based on cost estimate.
In case of Mechanical/Electrical packages, the amount
shall be equivalent to the average annual requirement
based on the cost estimate.

In composite packages involving both civil as


well as Mechanical/Electrical elements, the
turnover requirement for Civil Portion and
Mechanical/Electrical portion shall be specified
separately in line with the guiding principles as
above.
In certain specific cases, the amount to be
specified may be reviewed by the QR
Committee considering the availability of
bidders for the particular package.

Why QRs?
The very purpose of QRs is to select the
capable bidders.
To assess the technical & financial capability

of the bidders.

At the same time FRS are to be framed in a

realistic manner so as to encourage


competition amongst adequate number of
parties.

How the QRs should be?


QRs should be practicable, purposeful and
objective and not left subjective with scope for
any discretion.
Stringent QR Leads to restricted competition.
Relaxed QR Often leads to favour.
Vague QR Leaves scope for subjective
rejection or acceptance of bids.

STRINGENT QRs:
To see whether the QRs are stringent and
hence to avoid relaxation of QRs,

-it is essential to ensure while framing QRs


that sufficient numbers of prospective
bidders capable of carrying out work
envisaged in tender get qualified
- to generate adequate competition because
no relaxation of QR is permitted after bid is
18
opened.

STRINGENT/RESTRICTIVE QR:
In one of the QRs for purchase of Personal
Computers, average annual turnover was
specified as Rs 50 crores although the total
value of purchase was Rs 15 crores. The QR
criteria also stipulated that the firms should
possess the ISO certification. Such QR
conditions resulted in disqualification of
reputed vendors including a PSU.

19

RESTRICTIVE QR:
The condition Submission of copies of
sales/works tax registration certificate and PF
registration certificate etc if included in the
QR makes it restrictive. These are basically a
part of operational requirements of the
contract and are not required to assess the
technical or financial capability of the bidder.
By specifying such conditions in the QR, the
parties working outside the state (not local)
are being restricted to participate in the tender.
20

RELAXED QR:
At one project QR for procurement of Fire
Resistant (FR) grade Conveyer Belt was
formulated without mentioning FR grade in
the QR. This resulted in qualification of a
vendor who had not earlier manufactured the
FR grade conveyor belt.

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VAGUE QR CONDITIONS:
An organization invited tenders for hiring of
DG Sets with eligibility of having 3 years
experience in supplying DG Sets. The cutoff
dates regarding work experience were not
clearly indicated. Such vague conditions
provide the ground for subjective acceptance
of the experience or in fabricating the record
of having experience of 3 years some long
years back.

22

VAGUE QR CONDITIONS:
Vague QR conditions like Financial
soundness and NTPC reserves the right to
alter the QR are subjective in nature and
hence
create
scope
for
subjective
acceptance or rejection of bids. Such vague
conditions are also not desirable from the
view point of basic ethics of tendering and
transparency.

23

IMPRACTICABLE QR CONDITIONS:
Submission
of
successful
completion/
operation certificate from the client is not a
practicable criteria since obtaining such
certificate from client is not always possible
and authenticity of such certificates from small
clients cannot always be guaranteed.
Moreover, such certificates also do not serve
the genuine purpose to judge the competency
of the bidders who have otherwise performed
the contract successfully.
24

QR should be clear & specific:


The bidder should have designed, supplied,
erected and commissioned at least two (2) fire
detection and protection systems consisting of the
systems in industrial installations.
These systems should have been executed under
two separate contracts i.e. one number fire
detection and protection system per contract.
Contract value for each of these contracts should
have been not less than Rs 35.0 million or
equivalent in foreign currency (exchange rate
applicable as on date of bid opening).

Each of these contracts should have included the


systems as described below:
(a) Fire hydrant system
(b) High velocity water (HVW) spray or medium
velocity water (MVW) spray or sprinkler system.
(c) Fire water pumping & pressurizing arrangement
(d) Fire detection and alarm system.
Systems mentioned above should have been
designed to recommendations of TAC of India or
Oil Industry Safety Directorate (OISD) or any
other International reputed authority (like LPC-U.K.
or NFPA, USA) and these systems should be in
operating condition for a period of not less than two
(2) years as on date of bid opening.

Examples of variant approach in framing the


QR:
(A)
The
bidder
should
have
engineered,
fabricated,
supplied,
erected
and
commissioned low pressure piping system for
thermal power plant(s) and/or the plant(s) such
as fertilizers, petrochemicals etc. The above
piping system should be in successful operation
as on date of bid opening.

(B) The bidder should have engineered/got


engineered, erected, tested and commissioned
at least
one (1) cross country piping system of at least 2
km route in a single contract consisting of mild
steel pipe of diameter 500 mm NB or above
complete with valves, fittings and accessories for
services such as water, oil, gas and
which is in service for at least two (2) years
as on date of bid opening.

Some other examples of QR conditions:


Various routes for meeting the QR.
Sometimes insignificant requirements/
parameters are made part of the QR along with
other major conditions. For example i) Experience of sand chimney in the ash dyke
package only.
ii) Experience of water way tunnel only for a tunnel
package of Hydro project.
iii)Successful completion of the package.

Example of a Sub-QR for supplying the


cathodic protection of underground cross
country piping:
The cathodic protection system shall be
procured from such a firm who has designed,
supplied, erected, tested and commissioned at
least two (2) numbers of impressed current
type cathodic protection systems each of value
not less than Rs 5.0 lacs. The above systems
should be in successful operation for at least
two (2) years as on date of bid opening.

Example of a Sub-QRs for supplying the Trash


Racks for a Hydro Project:
The trash racks shall be sourced from firm(s)
who has designed, manufactured, supplied,
erected/supervised erection and commissioned/
supervised commissioning of trash racks with at
least 200 Sqm area each in one or more
contracts, in a single project and are in
successful operation for at least two (2) years
as on the date of bid opening.

Revised practice
documents:

for

issue

of

tender

As per System Circular No. 580 dated


15.12.04, the bidding documents are to be
issued to all the prospective bidders upon
their depositing the requisite cost of the
bidding documents without prima-facie
examination of qualifying status. The
qualification status shall be examined by the
tender committee only during the process of
evaluation.

Seeking QR related clarifications:


As per System Circular No. 574 dated 17.8.04,
in all packages to be awarded from Corporate
Contracts, the Tender Committee shall
themselves be authorized to seek any QR
related clarifications from the bidders during
evaluation of bids, if required, without the need
for any further approval. Such clarifications on
behalf of the Tender Committee, shall be sought
under the signatures of the Contracts member of
the Tender Committee.

Verification of credentials/experience documents


In order to provide the input data to the C/A for
taking appropriate action in case of less nos. of
qualified bidders and also to ensure approval by the
authority competent for the case of single qualified
bid, the credentials of all the participating bidders
should be verified by the tender committee before
putting up its recommendation.
Also as per System Circular No. 551 dated
15.09.2000, TC should ensure that the veracity of
the credentials submitted by the bidder in support
of their qualification requirements are established.
Action on false/fraudulent information should be
taken and informed to Vigilance also.

Manipulation in approval of sub-vendor:


As per contract the contractor was required to
propose the names of the agencies for each subcontract to the Engineer-in-charge for his approval.
Contractor submitted the names of four Sub
Contractors for the works to be sub contracted, to
Engineer in Charge (EIC). But one of officials of
NTPC requested Contractor to propose the name of
one best agency out of the names of sub-contractors
proposed by them.

Contractor requested NTPC to approve the name of


all four sub-contractors so that they can select one
out of the names of sub-contractors approved by
NTPC. But officials of NTPC further directed
contractor to propose the name of one best agency.
Contractor nominated name of one agency for
approval of NTPC, which was approved by EIC,
NTPC. One of the other agencies whose name was
not put up for approval of NTPC, made a complaint
that by asking contractor to nominate one best
agency as sub contractor was with ulterior motives.

Earlier practice for issue of bid documents:


As per System Circular No. 507 dated 02.12.93, in
all cases where the procurement is financed by
any external financing agency like World
Bank/OECF/SFD/ADB etc., the bid documents be
issued to all intending bidders on their request and
upon their depositing the required cost of the bid
documents without prima-facie examination of
qualification status and without asking for any
details.
The Qualification status shall be
examined by the tender committee only during the
process of evaluation.

However, for all procurement under Domestic


Competitive Bidding not financed by any
financing agency, the guidelines contained in
Contract Circular No. 389 dated 06.07.87 shall
continue to be in force.
As per System Circular No. 389 dated 06.07.87,
bid Documents shall be issued to only those
intending bidders (on their request) who prima
facie meet the qualifying requirements as
specified in the NIT, after scrutiny of the
experience details/documents to be furnished
along with their request for issuance of bid
documents.

These provisions are, however, not intended to


restrict or limit fair competition which is also to
be achieved. Hence while scrutinizing
information
and
asking
for
additional
information and documents, the constraint of
available time as well as fact that the detailed
QRs shall be scrutinized while evaluating the
bids, should also be borne in mind.
Further, refusal to issue bid documents, on the
ground of not meeting the QR based on data
furnished, or inadequate information furnished
by intending bidder, shall be communicated to
concerned firm, with approval of CA.