CHAPTER-VI
Contracts General Principles
Types of contracts, Departments responsible for 601
awarding them
Tender System 602-603
Invitation to tender 604 -606
Opening of Tenders (Deleted) 607-610
Tabulation statement (Deleted) 611-613
Constitution of Tender Committees 614-619
Earnest Money and Security Deposits 620
Contract Agreements 621
Execution of contract prior to Commencement 622-624
of Works or supplies
Contract Documents 625
Conditions of Contract 626-627
Variation of contract Conditions 628
Settlement of Disputes 629
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CHAPTER VI
Contracts-General Principles
601. Within the powers delegated by the competent authority, contracts are
awarded by the officers of the various Departments in the Railway Administration
and the Railway Board for and on behalf of the President of India for supplies,
services and works as per extant delegation of powers. These contracts are broadly
categorized as below unless otherwise specified by Railway Board instructions:-
Contracts Department
responsible for
awarding contract
1 Supplies of stores of all description except Headquarters
those which may form part of a work contract. Stores/Railway Board
2 Fabrication and supply of clothing and Headquarters Stores
uniforms, printing and supply of books and
forms etc.
3 Fabrication and supply of sleepers, points and Engineering/Stores
crossings and other fabricated stores against
items for P. way.
4 Works contracts, including those involving Civil Engineering,
supply and erection/commissioning of Electrical, Mechanical,
machinery and plant. Signal and Tele-
communication and
Stores Departments.
5 All types of 'handling' contracts at Railway Commercial
Stations Transshipment points and goods
sheds, etc. in respect of Public freight and
coaching traffic
6 Catering contracts of all types Commercial
7 Cycle/Scooter/moped stands at Railway Commercial
stations
8 Book stalls and weighing machines at Railway Commercial
Stations
9 Out-agency and City Booking Offices Commercial
10 Lease of plots of land to Railway users Commercial
11 Contracts with siding owners (whether private Engineering and
siding or assisted siding) Commercial
12 Lease of Railways' surplus land for 'grow more Engineering
food' campaign, etc
13 Zonal contracts for civil maintenance and other Engineering
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works
14 Ash-pit cleaning, cinder picking and disposal of Operating/Mechanical
foundry waste in loco sheds and mechanical
workshops
15 Technical Collaboration Concerned Technical
Department
16 Hire of tools and plants materials Concerned Department
17 Hoardings and display of advertisements at Public Relations
Railway stations or on Railway property.
18 Sale of scrap by auction or by inviting tenders. Stores
19 Sanitation contracts Commercial/Mechanical/
Medical
The above list of categories of contracts is by no means exhaustive. The guiding
principles laid down in this Chapter for inviting tenders and conducting their scrutiny,
etc., are generally applicable to all types of Railway contracts and should be treated
as supplemental to the rules prescribed in Charter III and IV of Indian Railway Code
for the Stores Department and Chapter XII of the Indian Railway code for the
Engineering Department. Regarding Contracts for the sale of railway materials,
reference may also be made to Chapter XXIII of the Indian Railway Code for the
Stores Department.
602. Tender System -It is a primary duty of the officers authorised to enter into
contracts to obtain the best value for the money spent, and the tender system
should be given very careful and serious consideration in all cases as one of the most
effective methods of securing competitive rates.
603. Following are amongst the different methods of obtaining tenders –
1) By advertisement (i.e., 'open'- tenders),
2) By direct invitation to a limited number of firms (i.e.,'limited'/bulletin Tenders,)
and
3) By invitation to one firm only (i.e., 'single' tender).
The limits laid down under the orders of the Railway Board from time to time for
sorting to any of the above methods of calling for tenders should be followed.
Procurement of common use Goods and Services through GeM is mandatory for
Goods and Services available in GeM.
604. Deleted.
605.
1) Invitation of tenders -Tenders should be invited sufficiently in advance of
the date of expiry of the existing contract so as to leave adequate time for
negotiation or re-tendering ,if necessary. In all cases ssufficient notice should
be given for the submission of tenders, which in case of large works should
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not be less than 21 days. The above prescribed tender period may be reduced
from 21 days in the exceptional circumstances in consultation with the
Financial Adviser and Chief Accounts Officer. This shall be applicable to Works,
Earnings and Service Contracts with following modification:
For tenders valued upto and including Rs 2 crore (or as modified from time to
time), invited through e-tendering, the tender notice period can be reduced
upto 14 days in consultation with associate finance.
2) For works in remote locations or of specialized nature or amount higher than
Rs.50 crore (or as modified from time to time) adequate tender notice period
(not less than 21 days) should be given for preparation to the potential
bidders in order to ensure competitive and well informed bidding.
3) The minimum tender notice period shall be reckoned from the date the tender
is published on e-tendering website. The publication in newspaper will
continue as per the present practice the effective date of tender notice will be
the date of uploading on e-tendering website.
4) The tender validity period shall be kept three times the tender notice period.
5) In case of Supply Contracts the minimum time limit for tender opening is 21
days and the corresponding time limit for global tender is 30 days from the
date the tender is published on e-procurement website.
6) For GeM procurement, extant instructions should be followed.
606. Standard tender forms are uploaded on IREPS by the concerned Departments
for tendering.
607. Deleted.
608. Deleted.
609. Deleted.
610. Deleted.
611. Deleted.
612. Deleted.
613. Deleted.
614. Constitution of Tender Committees -Tender committees should be
constituted by General Manager in consultation with the Financial Advisor and Chief
Accounts Officer unless otherwise specified by Railway Board.
615. For Open tenders for Works invited through e-tendering:
1. Tenders having value up to and including Rs.50 lakh (or as modified from
time to time) can be directly accepted by concerned executive in Selection
Grade/JAG level or [Link] level holding independent charge. However, in
case the tender notice period is less than 21 days or accepting authority
intend to accept offer other than lowest financial offer; direct acceptance of
tender is not allowed in the tender upto and including Rs 50 lakh (or as
modified from time to time).
2. For e-tenders above Rs 50 lakh (or as modified from time to time) and upto
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and including Rs.5 crore (or as modified from time to time), the Tender
Committee shall be constituted with two members out of which, one should
essentially be from the Finance Department and the other from the concerned
Executive Department.
3. For works e-tender of value more than Rs 5 crore (or as modified from time to
time), three members Tender Committee shall be applicable, except for
Composite Tenders, where Tender Committee can be constituted with four
members.
In case of Supply contracts:
1. For tenders having value upto and including Rs.50 lakh (or as modified from
time to time), can be directly accepted by Depot/Divisional SG/JAG Stores
Officers as per powers delegated.
2. For tenders having value above Rs.50 lakhs (or as modified from time to time)
and upto Rs.1 crore (or as modified from time to time), the tender committee
will consist of two members in [Link], of whom one will be from the
Accounts Department and one from Stores Department.
3. For tenders having value above Rs.1 crore (or as modified from time to time),
the tender committee will consist of three members one from the Stores
Department, one from the Accounts Department and one from the indenting
Department, as per powers delegated.
616. The Tender Committee should be so constituted that the officer recommending
acceptance of a tender in his capacity as a member of the tender Committee shall
not also be the accepting authority for the same tender. In such cases the officer
concerned should put up the Tender Committee's proceedings to the next higher
authority for acceptance notwithstanding the fact that the Tender Committee's
recommendations are within his own powers of acceptance.
617. In the case of open tenders, if the lowest tenderer is not on the approved list of
contractors kept by the Railway, but his tender is otherwise satisfactory, he should be
asked to produce evidence of his capacity to carry out the proposed work or supply
efficiently and of his sound financial position. If he is unable to produce this
evidence, and it is proposed to pass over his tender and consider the next higher
one, the fact of the lowest tenderer having failed to produce necessary evidence of
his capacity and sound financial position should invariably be placed on record.
618. In all cases when a lower offer has been rejected, full reasons should be
recorded on the file for any future reference.
619. In cases where specifications in a tender have under gone any major change
before the tenders are finalised, fresh tenders should be called for giving sufficient
notice to the tenderers.
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620. Earnest Money and Security Deposits -Tenders un-accompanied by the
requisite earnest money should, under no circumstances, be entertained and should
be summarily rejected.
621. Contract Agreements -The basic principles to be always kept in view by
those, who are authorized to enter into contracts or agreements, are given below.-
i) The terms of contract must be precise and definite, and there must be no room
for ambiguity or misconstruction, and the matters to be agreed upon should
include in detail, the following: -
a) What the contractor is to do; when, where, and to whose
satisfaction it is to be done.
b) What the Railway Administration is to do; and on what terms.
c) What payment is to be made; what it is to cover, to whom it is to be
made; and the method and basis of making it.
d) The responsibility of the contractor in respect of adequate
supervision, care of government property, and the protection of
outside interests and those of his staff and workmen.
e) The terms on which variations and modifications, if any, are to be
permitted, the authority competent to order and to assess them,
and the occasion and basis of such assessment.
f) The measures to be adopted in the event of a breach of the contract
by either party thereto; and the method of and grounds for the
determination thereof.
g) The method of settling disputes.
ii) As far as possible, legal and financial advice should be taken in the drafting
of contracts before they are finally entered into.
iii) Standard forms of contracts should be adopted wherever possible, the terms to
be subject to adequate prior scrutiny.
iv) The terms of contract once entered into should not be materially varied except
in consultation with the competent legal and financial authority.
v) No contract involving an uncertain or indefinite liability or any condition of an
unusual character should be entered into without the previous consent of the
competent legal and financial authority.
vi) Provision must be made in contracts for safeguarding Government property
entrusted to a contractor.
vii) In entering into long term agreements or contracts, consideration should be
given to the desirability of reserving for the Railway Administration
unconditional power to cancel the agreement at any time after the expiry of
six months' notice to that effect.
viii) The power to retain and "set off" all claims, whether arising out of the particular
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contract or out of any other transaction or claim whatever against the
contractor should be secured for the Railway Administration.
622. Execution of contract prior to commencement of works or supplies-
i) No contractor should be permitted to commence work or supply materials until
the relevant contract has been signed by the parties competent to do so.
ii) Exceptions to this rule are permissible only in cases of extreme urgency such
as works or supplies necessary to safeguard life or property or to repair
damage to the track caused by flood, accident or other unforeseen
contingency, so as to restore and maintain through communication. Even in
such cases, if circumstances permit, some form of written contract, or at least
an agreed statement of rates to be paid, should be prepared before
commencement of works or supplies; the intention being that the conditions,
specifications, etc., with sufficient items and rates to carry on with, should be
agreed upon beforehand.
iii) In other exceptional but less emergent cases, in which the commencement of
or supply cannot be postponed till the preparation and sanction of the
contract documents, prior consultation with the Financial Adviser & Chief
Accounts Officer shall be necessary.
iv) In all cases of departure from sub-para (i) above, the completion and
execution of the main contract should be proceeded with expeditiously.
623. No authority shall execute a contract-
i) Which is beyond its powers as to either "class" or "amount";
ii) Which relates to a work, the incurrence of expenditure or liability on which is
not authorized under current rules and orders regarding control of
expenditure;
iii) Which involves, in respect of the work to which it relates, an excess over the
estimate greater than is within such authority's competence to sanction; and.
iv) Any provision of which contravenes any standing rule or order of higher
authority; provided always that an authority may sign any contract within its
powers as to "class", with the approval of the authority competent to execute
it.
Note- In cases where materials are supplied by the railways to the contractor for the
execution of a work, the amount of the contract shall for the purpose of determining
the authority competent to execute it, be taken to be the net amount to be paid to
the contractor, exclusive of the cost or value of the materials so supplied.
624. On behalf of the contractor the signature of only such person or persons as are
competent to bind him legally shall be accepted on a contract.
625. Contract Documents -The documents forming integral parts of a 'works'
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contract are the Conditions of Contract, Standard or Special; the Specification,
Standard or Special (and any plans necessary) ; the schedule of Items, Quantities
and Rates; the Agreement Forms; Instructions to Tenderers, and Tender Forms (if
any). The documents constituting a contract or the supply of stores consist of the
following.-
i) The tender;
ii) Supplier's offer;
iii) Advance Acceptance of Tender, including telegraphic acceptances, if any;
iv) Formal Acceptance of Tender;
v) Conditions of Contract (Standard and/or Special), specifications, drawings,
etc.
vi) Any document making any change or deviation in any of the contract
terms as embodied in the Advance Acceptance of Tender or the formal
Acceptance of Tender. This includes a letter cancelling the contract.
626. Conditions of Contract -The Conditions of Contract may be either Standard
or Special. Standard Conditions for stores and works contracts should preferably be
embodied in all contracts to which they are applicable. In the event of such
conditions proving defective in any way, it will be the duty of the General Manager to
report the fact to the Railway Board, if such conditions were prescribed by them, and
in all other cases to arrange, in consultation with his Legal and Financial Adviser &
Chief Accounts Officers, to amend or amplify them suitably.
627. Any unusual conditions of Contract should before they are imposed, be
approved by the General Manager, acting in consultation with his Legal and Financial
Adviser & Chief Accounts Officer; or if the contract to which they relate is beyond his
powers to execute, by the Railway Board.
628. Variation of Contract Conditions -The power to vary the terms of a
contract lies only with the actual parties thereto. The contractor and his sureties, if
any, must, therefore, be consenting parties to all variations, which should be the
subject of a Subsidiary Agreement stating what is to be varied and what will remain
unchanged in the original contract. The drafting of this agreement should be the
subject of very careful scrutiny, to ensure that the conditions, specifications etc., of
the main contract are adequate for and applicable to the variation or that the latter
is made self sufficient in these respects. Such subsidiary agreements should be
regarded as fresh contracts and entered into before effect is given to the variation.
The Contract Conditions may be varied by various authorities competent to do so to
the extent shown below :-
a) i) Variation of the Standard I. R. S. Conditions of Contract and Specifications . -
These may be varied only with the sanction of the General Manager, in
exceptional cases within his powers of placing contracts in consultation with his
Financial Adviser & Chief Accounts Officer and after taking legal advice, if
necessary, in accordance with the extant orders of the Railway Board.
ii) Variation of the conditions of contract other than the I.R.S. Conditions.-
These may be varied with the sanction of the authority that approved the
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original contract acting in consultation with his Financial Adviser & Chief
Accounts Officer and after taking legal advice if necessary.
b) Variation of the Rates of Items-
Contracts in which a price variation clause is included.-The rates may be varied
by the authority which approved the original contract with the concurrence of
his Financial Adviser & Chief Accounts Officer. If the total value of the contract
after allowing for the variation is beyond the powers of the authority which
approved the original contract, the sanction of the higher authority within
whose competence as to amount it lies should be obtained.
c) Variation of the Quantities of any item -These may be varied by the authority
which approved the original contract to the extent deemed necessary provided
that the Indian Railway Code Rules relating to control over expenditure are not
contravened thereby, and provided also that the total value of the amended
Contract shall not exceed the powers of the authority that approved the
original.
Where materials are required during a contract period in excess of the
quantities contracted for, and such excess is not sufficiently large to justify the
invitation of fresh tenders, there is no objection to the quantities under the
existing contract being increased suitably. Effort should, however, be made to
secure more favourable terms for the increased quantity.
d) Variation of the items - These may be varied at discretion by the authorities
which approved the original Contract to the following extent, namely; existing
items may be deleted or additional items inserted at rates, which, agreeable to
any general or specific orders at the time being in force, may be decided by the
authority making the variation ; subject only to the two provisos of the Rule in
sub-paragraph (c) above.
e) Extension of delivery period -The authority within whose powers the value of
the contract falls, is competent to consider requests for extension of delivery
period. Such extensions where granted will, however, be subject to
government's right to levy liquidated damages in terms of the contract being
specifically reserved and likewise. Where higher prices have been paid for
earlier deliveries, government's right to recover the amount paid by way of the
price difference on this account shall also be reserved.
629. Settlement of Disputes -The standard conditions of contract lay down the
procedure for settlement of disputes by arbitration under the ‘Indian Arbitration and
Conciliation Act, 1996’ and the rules made there under. Officers concerned with the
operation of contracts and arbitration proceedings should carefully study the
provisions of the ‘Indian Arbitration and Conciliation Act, 1996’ to ensure speedy
disposal of claims and disputes arising in connection with the operation of contracts.
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