See Full Document Text
MANUAL
FOR
PROCUREMENT OF
WORKS
Second Edition, 2025Manual for Procurement
of
Works
(Second Edition, 2025)
Government of India
Ministry of Finance
Department of Expenditureerr.
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FOREWORD
(SecoEnddi t2i0o2n5,)
Asp arotft hien ittioae tnihvaene caeso efd oibnugs inceosmsp,e tviatlifuooemnr o, n ey,
transpafraeinrcnyae,ns dgs o ogdo vernainnpc ueb lpirco curetmheeDn etp,a rtmoefn t
ExpendiMtiunrioesfF,t i rnya hnacrdee leavsaerdiM oaunsu afloPsrr ocurement.
2. ThiWso rkMsa nuSaelc,o Enddi t(i2o0n2i 5n)c orpsoirgantiepfsoi lcciahcnaytn gseisn ce
itfsi resdti tiino2 n0 1(9u pdaitne2 d0 22-)r esulftrionsmgt akehdoilsdceurs sFiTAo ns,
dialogCuoevsip,do lirceys ponvsaersi,so tuusd ainedrs e poarmtesn,d metnott hsGe e neral
FinanRcuilae(lsG FR2)0 17D,e legaotfFi ionna nPcoiwaelRr usl e(sD FP2R0)2 4a,n dn ew
legisldaetvievleo psmuecnahts st hMee diaAtci-to na sw elalse volvpirnagc tiintc hees
procureemceonsty stem.
3. TheW orkMsa nuiasil n tenpdreidm afroMiril nyi satnrdDi eepsa rtmweintlthis m iitned
houseen ginecearpiancgpi rtoyv,i bdrionapgdr ocedguuriadlaf nocsrem arlelp awiorr kuspt o
�60l akahn,d f orp rocureomfel natr gweorr ktsh routghhea gencoyfP ublWiocr ks
Organis(aPtWiOoo)nrP s u blWiocr kCsP SEMsa.j eonrg ineoerrgianngi swaitteihso tnasb lished
departmpernotcaeldm uaryce osn titnofu oel tlhoewai prp rofvreadm eworks.
4. Iw oulldi kteoa cknowltehddege ed iceaftfeodor ftt hste e alme bdy S hrCih inmay
PundliGkortamoa( rJeo Sienctr etSahrrSyia) n,j Aagyg ar(weaxl- AdPvPiDsa)on rdc omprising
ShrMia niBshha t(iDai reSchtroAirn )iK,lu ma(rD epSuetcyr etSahrrPyir) a,v eKeunj( uUrn der
SecretSahrrSyiu) d,e Ksuhm a(rS ectOifofni cSehrrG)ii, r iBshha tna(gSarCr.o nsulatnadn t)
ShrVii krRaamj van(sPhrio curSepmeecnita Ila ilssteo)x .t emnydg ratittouM dien istries,
Departamneodnt th Oerrg anistahtraietov nised wreadaf ntdps r ovivdaeldu aibnlpeu ts.
5. Iitsh opetdh atthMi asn uwailsl elr avsea p ractaincdda elp endgaubiltdeoae l olf ficers
ando rganiseantgiaoginentsd h per ocureamneednx te cuotfpi uobnwl oirck s.
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(VV.u alnam)
Dat2e3:. 12.2025
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1. Compliance: This Manual adheres to the relevant laws, General Financial Rules (GFR),
and clarifications/ OMs issued by the Procurement Policy Division (PPD), Department of
Expenditure (DoE), Ministry of Finance (‘the Ministry’) up to December 2025. In case of
inconsistencies between this Manual and prevailing law or GFR, the extant law and GFR
shall prevail. However, the provisions of this Manual shall prevail in case of discrepancies
with the clarifications/ OMs issued till December 2025 by the Ministry. Procuring entities
are advised to stay informed about any further changes in the relevant law, GFR,
and clarifications/ OMs from the Ministry.
2. Interpretation:
a) Any mention of writing or written includes matter in digital communications (including
email), manuscript, typewritten, lithographed, cyclostyled, photographed, or printed -
under or over signature or seal or digitally acceptable authentication, as the case may
be.
b) Words in the singular include the plural and vice-versa. Words importing the
masculine gender shall be taken to include other genders. Words importing persons
include any company or any association/ body of individuals/ companies and vice-
versa.
c) Any reference to any legal Act, Government Policies or orders shall be deemed to
include all amendments to such instruments, from time to time, till date.
d) Sentences containing ‘may’ are to be considered desirable or good practices which
procuring entities are encouraged to implement.
e) Sentences containing ‘should’/ ‘shall’ are required to be followed.
f) Sentences containing “allowed” indicate an optional course of action to be decided
upon on merits.
3. Manual for Procurement of Goods as a Comprehensive Reference: The ‘Manual for
Procurement of Goods, Second Edition, 2024’ is written to be a comprehensive reference.
Other Manuals (Works, Consultancy, and Non-consultancy Services) are self-sufficient
from the point of carrying out a procurement; however, common topics relevant for a
deeper understanding of the fundamentals of procurement are included only in brief in
these manuals, giving reference to relevant details in the ‘Manual for Procurement of
Goods, Second Edition, 2024’.
4. Annexures: Voluminous details from various orders/ websites are relegated to annexures
to maintain an uninterrupted flow of text on a topic. Since these orders/ websites undergo
frequent revision, it would be easier to update the annexures than the body of the Manual.
5. An attempt has been made in this edition of Manuals to illustrate some topics with relevant
examples.
vManual for Procurement of Works, Second Edition, 2025
Table of Contents
FOREWORD ........................................................................................................................ iii
Preface ................................................................................................................................. v
Acronyms ........................................................................................................................... xvii
Procurement Glossary ........................................................................................................ xix
Chapter 1: Introduction to Procurement of Works .................................................................. 1
1.1 Procurement Rules and Regulations; and this Manual ............................................ 1
1.2 Clarification, Amendments and Revision of this Manual .......................................... 1
1.3 Applicability of this Manual ...................................................................................... 2
1.4 Categorisation of procurements .............................................................................. 4
1.5 Authorities competent to Incur Expenditure on Procurements and Consultation with
Financial Advisers ............................................................................................................. 6
1.6 Basic Aims of Procurement – Five R’s of Procurement ........................................... 7
1.7 Refined Concepts of Cost and Value – Value for Money ......................................... 7
1.8 Fundamental Principles of Public Procurement ....................................................... 8
1.9 Standards (Canons) of Financial Propriety .............................................................. 8
1.10 Public Procurement Infrastructure at the Centre .................................................. 9
1.11 Preferential/ Restriction on Purchase from certain sources.................................. 9
1.11.1 Public Procurement Policy for Micro and Small Enterprises (MSEs) ............. 9
1.11.2 Procurement Preference to Make in India .................................................... 9
1.11.3 Restrictions/ Prior Registration on Entities from a Class of Countries (Rule 144
(xi)), GFR 2017) .......................................................................................................... 18
1.11.4 Support to Start-up Enterprises: ................................................................. 26
1.11.5 Domestically Manufactured Iron & Steel Products (DMI&SP Policy) - Revised,
2025 – as applicable to EPC tenders. .......................................................................... 27
1.12 Legal Aspects Governing Public Procurement of Works .................................... 31
1.13 The Law of Agency – applicable to Procurement of Works ................................ 32
1.14 The Basic Principles of undertaking works: ....................................................... 32
1.15 Public Procurement Cycle in Procurement of Works ......................................... 34
1.16 Administrative Control and Powers to Sanction ................................................. 35
1.17 Nomenclature Conundrum ................................................................................ 35
Chapter 2: Need Assessment and Procurement Planning ................................................... 37
2.1 Perspective Planning for Works ............................................................................ 37
2.2 Preparation of Preliminary Project Report (PPR) or Rough Cost Estimate ............ 37
2.3 Acceptance of necessity and issue of in-Principle Approval .................................. 38
2.4 Preparation of Detailed Project Report (DPR) /Preliminary Estimates (PE) ........... 38
viiTable of Contents
2.5 Administrative Approval and Expenditure Sanction (A/A and E/S) ........................ 40
2.6 Detailed Designs, Detailed Estimates and Technical Sanction .............................. 41
2.7 Appropriation of funds ........................................................................................... 41
2.8 Reference Documents used in preparation of Estimates ....................................... 42
2.9 Procurement Planning .......................................................................................... 42
Chapter 3: Bidding Design for Works .................................................................................. 47
3.1 Agency for Procurement ....................................................................................... 47
3.1.1 Public Works Organisations ........................................................................... 47
3.1.2 Public Works PSU/ Organisations .................................................................. 47
3.1.3 Procedure for Assigning Work to PWO or PSU/ Organisations ...................... 47
3.2 Types of Contracts ................................................................................................ 48
3.2.1 Lump sum (Fixed Price) Contract ................................................................... 49
3.2.2 Item rate (Unit Rate) Contract ........................................................................ 49
3.2.3 Percentage Rate Contract.............................................................................. 50
3.2.4 Piece Work Agreement .................................................................................. 50
3.2.5 Engineering, Procurement and Construction (EPC) Contracts ....................... 51
3.2.6 Public Private Partnership (PPP) ................................................................... 55
3.2.7 Comparison of Types of Contracts ................................................................. 55
3.3 Systems of Selection of contractors ...................................................................... 56
3.3.1 Price based System - Least Cost Selection (LCS) ......................................... 56
3.3.2 Quality and Cost Based Selection (QCBS) .................................................... 58
3.3.3 Direct Selection: Single Source Selection (SSS) ............................................ 62
3.4 Tendering Systems ............................................................................................... 63
3.5 Channels of Procurement ..................................................................................... 64
3.5.1 Electronic Procurement (e-Procurement – Rule 160 of GFR 2017) ................ 64
3.5.2 Dynamic Price Discovery - Electronic Reverse Auction (eRA) ....................... 65
3.6 Modes of Procurement .......................................................................................... 65
3.7 Open Tender Enquiry (OTE) ................................................................................. 66
3.7.1 Terms and Conditions .................................................................................... 67
3.7.2 OTE - Risks and Mitigations ........................................................................... 67
3.8 Global Tender Enquiry (GTE) ............................................................................... 68
3.8.1 Terms and Conditions .................................................................................... 69
3.8.2 Restrictions on Global Tender up to Rs. 200 crores ....................................... 70
3.8.3 GTE - Risks and Mitigations. .......................................................................... 71
3.9 Pre-qualification Modes of procurement ............................................................... 71
3.9.1 Pre-qualification Bidding (PQB) ..................................................................... 71
viiiManual for Procurement of Works, Second Edition, 2025
3.9.2 Single Stage Pre-qualification ........................................................................ 76
3.9.3 PQB Tendering –Risks and Mitigations .......................................................... 77
3.10 Limited Tender Enquiry (LTE) ............................................................................ 78
3.10.1 Terms and Conditions ................................................................................ 78
3.10.2 LTE - Risks and Mitigations ........................................................................ 79
3.11 Special Limited Tender Enquiry (SLTE) for Procurements more than Rs. 10
(Rupees Ten) Lakh ......................................................................................................... 80
3.11.1 Terms and Conditions ................................................................................ 80
3.11.2 SLTE - Risks and Mitigations ..................................................................... 80
3.12 Single Tender Enquiry (STE) or Selection by Nomination .................................. 81
3.12.1 Terms and Conditions ................................................................................ 81
3.12.2 STE - Risks and Mitigations ....................................................................... 82
3.13 Award of Work through Quotations .................................................................... 82
3.14 Award of works in stalled contracts .................................................................... 82
Chapter 4: Bid Invitation Process ........................................................................................ 83
4.1 Tender Documents ............................................................................................... 83
4.2 Preparation of Tender Documents ........................................................................ 85
4.2.1 Notice Inviting Tender .................................................................................... 85
4.2.2 Instructions to Bidders (ITB) and its Appendix (AITB) .................................... 86
4.2.3 General and Special Conditions of Contract .................................................. 86
4.2.4 Schedule of Requirements ............................................................................. 87
4.2.5 Drawing, Technical Specifications and Quality Assurance Plan ..................... 87
4.2.6 Qualification Criteria ....................................................................................... 87
4.2.7 Evaluation Criteria ......................................................................................... 88
4.2.8 Submission Forms and Formats .................................................................... 89
4.2.9 Financial Bid (BOQ Excel Sheet): .................................................................. 89
4.3 Uploading of Tender Documents: Mandatory e-Publishing .................................... 89
4.4 Amendment of Tender Documents ....................................................................... 90
4.5 Extension of Deadline of Bid Submission .............................................................. 91
4.6 Obtaining Tender Documents and Submitting Bids ............................................... 92
4.6.1 Availability and Cost of Tender Documents .................................................... 92
4.6.2 Participation of Bidders – Eligibility Criteria .................................................... 92
4.7 Pre-NIT and Pre-bid Conference ........................................................................... 93
4.8 Clarification of Tender Documents ........................................................................ 94
4.9 Withdraw/ Amendments / Modifications to Bids by Bidders ................................... 95
4.10 Sealing/ Marking of Bids in off-line Tenders ....................................................... 95
ixTable of Contents
4.11 Uploading/ Submission of Bids by Bidders ........................................................ 95
4.12 Bid Validity ........................................................................................................ 97
4.13 Opening of Bids ................................................................................................. 97
4.14 Transparency and Protecting Third-Party Rights of Bidders .............................. 99
4.15 Bidding Invitation Process- Risks and Mitigations .............................................. 99
Chapter 5: Forms of Securities, Prices, Payment Terms and Price Variations .................. 101
5.1 Forms of Security ................................................................................................ 101
5.1.1 Bid Security/ Earnest Money Deposit (EMD) ................................................ 101
5.1.2 Performance Guarantee .............................................................................. 102
5.1.3 Security Deposit/ Retention Money .............................................................. 103
5.1.4 Verification of Bank Guarantees................................................................... 103
5.1.5 Safe Custody and Monitoring of EMDs, Performance Securities and Other
Instruments ............................................................................................................... 104
5.1.6 Insurances and Indemnities ......................................................................... 105
5.2 Payment Terms .................................................................................................. 105
5.3 Advance Payments ............................................................................................. 107
5.3.1 Mobilisation Advance ................................................................................... 107
5.3.2 Plant, Machinery and shuttering Material Advance ...................................... 108
5.3.3 Secured Advance against Material brought to Site ....................................... 108
5.4 Price Variation .................................................................................................... 109
5.5 Statutory Taxes/ Duties/ Levies........................................................................... 111
5.5.1 Goods and Services Tax (GST) ................................................................... 111
5.5.2 Deduction of Income Tax, etc., from Payments ............................................ 113
5.5.3 Statutory Variation: ...................................................................................... 113
5.6 Recovery of Public Money from Contractor’s Bill ................................................. 113
5.7 Payment against Time Barred Claims ................................................................. 113
Chapter 6: Evaluation of Bids and Award of Work ............................................................. 115
6.1 Bid Evaluation Process ....................................................................................... 115
6.1.1 Evaluation of Bids ........................................................................................ 115
6.1.2 Evaluation of Different Tendering Systems .................................................. 115
6.1.3 Preparation and Vetting of Comparative Statement ..................................... 115
6.1.4 The Stages of Evaluation ............................................................................. 116
6.1.5 Contacting Procuring Entity during the evaluation ........................................ 116
6.2 Composition and Role of Tender Committee (TC)............................................... 116
6.2.1 Composition of Tender Committee ............................................................... 116
6.2.2 Role of Tender Committee ........................................................................... 117
xManual for Procurement of Works, Second Edition, 2025
6.2.3 Handling Dissent among Tender Committee ................................................ 118
6.2.4 Independence, Impartiality, Confidentiality and ‘No Conflict of Interest’ at all
Stages of Evaluation of Bids ...................................................................................... 118
6.2.5 Timely Processing of Tenders ...................................................................... 119
6.2.6 Extension of Tender Validity Period ............................................................. 119
6.2.7 Consideration of Lack of Competition in OTE/ GTE and LTE [Rule 173 (xx), and
(xxi) of GFR 2017] ..................................................................................................... 120
6.2.8 Tender Committee Recommendations/ Report ............................................ 121
6.3 Preliminary Examination ..................................................................................... 122
6.3.1 Unresponsive Tenders ................................................................................. 122
6.3.2 Non-conformities between Figures and Words ............................................. 122
6.3.3 Discrepancies between Original and Additional/ Scanned Copies of a
Tender ...........................................................................................................123
6.3.4 Deviations/ Reservations/ Omissions-Substantive or Minor ......................... 123
6.3.5 Clarification of Bids/ Shortfall Documents .................................................... 124
6.3.6 Evaluation of Eligibility: ................................................................................ 125
6.4 Evaluation of Responsive Bids ............................................................................ 125
6.4.1 Evaluation of Eligible Techno-commercial Bids ............................................ 125
6.4.2 Evaluation of Financial Bids and Ranking of Tenders in General ................. 127
6.4.3 Least Cost Selection (LCS) .......................................................................... 128
6.4.4 Single Source Selection (SSS) .................................................................... 128
6.4.5 Evaluation using Quality-cum-cost based Selection (QCBS) in Works
Procurement .............................................................................................................. 128
6.4.6 Global Tender Enquiry (GTE, International Competitive Bidding) ................. 131
6.4.7 Reasonableness of Prices ........................................................................... 131
6.4.8 Consideration of Abnormally Low Bids ......................................................... 132
6.4.9 Cartel Formation/ Pool Rates ....................................................................... 132
6.4.10 Negotiations for Reduction of Prices......................................................... 134
6.4.11 Cancellation of Procurement Process/ Rejection of All Bids/ Re-tender .... 135
6.5 Award of Work .................................................................................................... 136
6.5.1 LoA to Successful Bidder ............................................................................. 136
6.5.2 Publication of Award of Contract and Return of EMD of Unsuccessful Bidders
[Rule 173 (xviii) of GFR 2017] ................................................................................... 137
6.5.3 Performance Security .................................................................................. 137
6.5.4 Acknowledgement of Contract by Successful Bidder and Execution ............ 138
6.5.5 Framing of Contract ..................................................................................... 138
6.5.6 Audit Trails –Procurement Records ............................................................. 139
xiTable of Contents
6.6 Evaluation of Bids and Award of Contract – Risks and Mitigation ........................ 140
Chapter 7: Execution and Monitoring of Works and Quality Assurance ............................. 143
7.1 Contract Management ............................................................................................. 143
7.2 Contract Administration ........................................................................................... 143
7.2.1 Aligning the interest of the stakeholders ....................................................... 143
7.2.2 Monitoring Team and System: ..................................................................... 144
7.2.3 Ensuring Prerequisites to Commencement of Work ..................................... 147
7.2.4 Commencement of Work ............................................................................. 148
7.2.5 Mobilisation .................................................................................................. 149
7.2.6 Monitoring Resources Deployed by Contractor ............................................ 149
7.2.7 Enforcing Contractor’s Obligations: .............................................................. 150
7.2.8 Issuing Contract Amendments ..................................................................... 153
7.2.9 Safeguarding Assets Handed Over to Contractors ....................................... 154
7.2.10 Environmental, Social, Health, and Safety (ESHS) Concerns ................... 154
7.3 Monitoring Scope of Work and Quality Assurance .............................................. 155
7.3.1 Monitoring Scope of Work ............................................................................ 155
7.3.2 Monitoring Variations/ Extra/ Substituted Items ............................................ 156
7.3.3 Preparation of Revised DPR/ Estimates ....................................................... 157
7.3.4 Quality Assurance (QA) ............................................................................... 158
7.4 Time Monitoring .................................................................................................. 160
7.4.1 Contract Effective Date ................................................................................ 160
7.4.2 Work Program .............................................................................................. 160
7.4.3 Site Management: ........................................................................................ 160
7.4.4 Force Majeure (FM) Clause ......................................................................... 161
7.4.5 Delays in Execution ..................................................................................... 161
7.4.6 Extension of Time (EOT) ............................................................................. 162
7.4.7 Liquidated Damages (LD) and Incentives/ Bonus ........................................ 164
7.4.8 Denial Clause .............................................................................................. 164
7.4.9 Performance Notice .......................................................................................... 165
7.4.10 Compensation Events .............................................................................. 165
7.4.11 Time At Large ........................................................................................... 165
7.5 Financial Monitoring ............................................................................................ 166
7.5.1 Financial Monitoring ..................................................................................... 166
7.5.2 Payments to Contractors ............................................................................. 166
7.5.3 Price Variations ............................................................................................ 168
7.5.4 Payment of Taxes and Duties ...................................................................... 169
xiiManual for Procurement of Works, Second Edition, 2025
7.5.5 Statutory Variation Clause: .......................................................................... 170
7.5.6 Claims by Contractor - Compensation Events .............................................. 170
7.5.7 Handling Securities ...................................................................................... 171
7.5.8 Electronic Bill (e-Bill) Processing System ..................................................... 171
7.6 Closure of Contract ............................................................................................. 172
7.6.1 Completion of Construction .......................................................................... 172
7.6.2 Completion of Contract ................................................................................ 172
7.6.3 Material and Works Reconciliation ............................................................... 173
7.6.4 Reconciliation with the User Department ..................................................... 173
7.6.5 Payment Reconciliation ............................................................................... 173
7.7 Resolving Disputes and Conflicts ........................................................................ 173
7.7.1 Disputes ....................................................................................................... 173
7.7.2 Excepted Matters ......................................................................................... 175
7.7.3 Adjudication ................................................................................................. 175
7.7.4 Mediation ..................................................................................................... 176
7.7.5 Arbitration .................................................................................................... 179
7.7.6 Foreign Arbitration ....................................................................................... 180
7.7.7 Notice for Arbitration .................................................................................... 180
7.7.8 Reference to Arbitration ............................................................................... 180
7.7.9 Appointment of Arbitrator ............................................................................. 180
7.7.10 The Arbitral Procedure ............................................................................. 184
7.7.11 Challenging Arbitration/ Judicial Awards ................................................... 186
7.7.12 Mechanism for Resolution of Commercial Disputes between CPSEs and
Government Agencies ............................................................................................... 187
7.8 Breach and Termination of Contract ................................................................... 188
7.8.1 Breach of Contract ....................................................................................... 188
7.8.2 Termination of Contract for Default .............................................................. 189
7.8.3 Termination of Contract for Insolvency ......................................................... 190
7.8.4 Determination of Contract for Default/ Convenience of Procuring Entity or for
Frustration of Contract ............................................................................................... 190
7.8.5 Frustration of Contract ................................................................................. 191
7.8.6 Limitation of Liabilities .................................................................................. 191
7.9 Execution and Monitoring of Works and Quality Assurance – Risks and Mitigation
...............................................................................................................................191
Chapter 8: Registration/ Enlistment of Contractors and Governance Issues ..................... 195
8.1 Contractor Relationship Management ................................................................. 195
xiiiTable of Contents
8.2 Code of Integrity for Public Procurement (CIPP) ................................................. 195
8.2.1 Introduction .................................................................................................. 195
8.2.2 Code of Integrity for Public Procurement ...................................................... 195
8.2.3 Obligations for Proactive Disclosures ........................................................... 196
8.2.4 Punitive Provisions....................................................................................... 196
8.3 Integrity Pact (IP) ................................................................................................ 197
8.4 Grievances and its Redressal ............................................................................. 198
8.5 Conduct of Public Servants in Public Procurement - Risks and Mitigations ............. 199
8.6 Development of New Sources and Registration/ Enlistment of Contractors ........ 202
8.7 Debarment of Contractors ................................................................................... 206
8.7.1 GFR’s Provisions .............................................................................................. 206
8.7.2 Guidelines on Debarment of firms from Bidding ........................................... 206
8.8 Enlistment of Indian Agents ................................................................................ 211
ANNEXURES ................................................................................................................... 213
Annexure 1: Financial Powers to Sanction Expenditure for Purchases and Execution of
Contracts .......................................................................................................................... 215
Annexure 2: Suggested Structure of Schedule of Procurement Powers (SoPP)................ 217
Annexure 3: Bid Opening Attendance Sheet cum Report .................................................. 219
Annexure 4: Tender Committee Minutes Format ............................................................... 220
Annexure 5: Example of Formula for Price Variation Clause ............................................. 222
Annexure 6: Invitation and Declaration for Negotiations .................................................... 224
Annexure 7: Format of Revised Offer in Negotiations........................................................ 225
Annexure 8: Letter (Notification) of Award (LoA) of Contract ............................................. 226
Annexure 9: No Claim Certificate ...................................................................................... 227
Annexure 10: A Sample MoU ............................................................................................ 228
Annexure 11: Flowchart of Process of Procurement of Works ........................................... 235
Annexure 12: Additional Resources Relating to Procurement of Works ............................ 237
Annexure 13: Template for Qualification Criteria for Joint Ventures .................................. 239
Annexure 14: Integrity Pact Format ................................................................................... 244
Annex-1 to Integrity Pact - Guidelines for Indian Agents of Foreign Suppliers ................... 248
Annex-2 to Integrity Pact – Appointment and Role of IEMs ............................................... 250
Annexure 15: Format for Show-cause Notice for Debarment ............................................ 253
Annexure 16: Format for Debarment Order ....................................................................... 255
Annexure 17: Format of Declaration by the Appointed Arbitrator ....................................... 257
Annexure 18: FAQs About PPP-MII Order, 2017 .............................................................. 258
xivManual for Procurement of Works, Second Edition, 2025
Annexure 19: Model Clause/ Certificate to be inserted in tenders etc. w.r.t Order (Public
Procurement No.4) ............................................................................................................ 261
Annexure 20: Appendix-A, B & C of DMI&SP Policy ......................................................... 264
Annexure 21: Form-1 of DMI&SP Policy ........................................................................... 272
xvManual for Procurement of Works, Second Edition, 2025
Acronyms
The following acronyms are used throughout this Manual1.
AITB Appendix to Instructions to Bidders CVC Central Vigilance Commission
(ITB, also named as BDS,
CVO Chief Vigilance Officer
sometimes, see below)
DFPR Delegation of Financial Power Rules
AMC Annual Maintenance Contract DG Director General
BDS Bid Data Sheet DLC Defect Liability Certificate
BG Bank Guarantee DLP Defect Liability Period
BIS Bureau of Indian Standards DoE Department of Expenditure
BOC Bid Opening Committee DPIIT Department for Promotion of Industry
& Internal Trade
BOQ Bill of Quantities
BRO Border Roads Organisation DPR Detailed Project Report
BSD Bid Securing Declaration DSC Digital Signature Certificate
C&AG Comptroller and Auditor General DSPE Delhi Special Police Establishment
(of India) Act, 1946
CA Competent Authority ECS Electronic Clearing System
CBI Central Bureau of Investigation EIA Environmental impact assessment
CCI Competition Commission of India EMD Earnest Money Deposit
CEO Chief Executive Officer EOI Expression of Interest (Tender)
CIPP Code of Integrity for Public EPC Engineering, Procurement and
Procurement Construction
CMC Comprehensive Maintenance EPF Employee Provident Fund
Contract/ Contract Management
ESI Employee State Insurance
Committee
FA Financial Advisor
CMD Chairman and Managing Director FBS Fixed Budget System
CPCB Central Pollution Control Board FEMA Foreign Exchange Management Act
CPO Central Purchasing Organizations FM Force Majeure
CPPP Central Public Procurement Portal GCC General Conditions of Contract
CPSE Central Public Sector Enterprise, GeM Government e-Marketplace
see PSU also
GePNIC Government e-Procurement
(System) of National Informatics
CPWD Central Public Works Department
Centre
CV Curriculum Vitae GFR General Financial Rules, 2017
GST Goods and Services Tax NIC National Informatics Centre
CGST Central Goods and Services Tax NIT Notice Inviting Tender
IGST Integrated Goods and Services OTE Open Tender Enquiry
Tax
PAN Personal Account Number
SGST State Goods and Services Tax PBG Performance Bank Guarantee
1 The main acronym is listed first, and alternatives are listed in bracket thereafter. Alternative meanings in certain
contexts, if any, are listed in the brackets, after main meaning. Acronyms within brackets is not considered for sort-
order.
xviiAcronyms
GOI Government of India PE Preliminary Estimate
GTE Global Tender Enquiry POL Petroleum Oils and Lubricants
H1 Highest Scoring Bidder PPD Procurement Policy Division
HOD Head of the Department PPP Public Private Partnership
HUF Hindu Undivided Family PPP-MII Public Procurement (Preference
to Make in India), Order
ICT Information & Communications
Technology
PPR Preliminary Project Report
IEM Independent External Monitor PQB Prequalification Bidding
IP Integrity Pact PQC Pre-qualification Criteria
ISO International Organization for (C)PSU/ (Central) Public Sector
Standardization PSE Undertaking/ Enterprise
IT Information Technology PWO Public Works Organisations
ITB Instructions to Bidders (may in QA Quality Assurance
some instance be called
QCBS Quality and Cost Based Selection
Instructions to Tenderers - ITT)
(S)RFP (Standard) Request for Proposals
(Document)
JV Joint Venture (Consortium)
L1 Lowest Bidder RFQ Request for Qualification
LCC Life Cycle Cost RTI Right to Information (Act)
LCS Least Cost System SBD Standard Bidding Document
LD Liquidated Damages SCC Special Conditions of Contract
LoA Letter of Acceptance SD Security Deposit
LOI Letter of Invitation SLA Service Level Agreement
LTE Limited Tender Enquiry SoPP Schedule of Procurement Powers
MB Measurement Book SOR Schedule of Rates
MES Military Engineering Services SSS/ Single Source Selection/ Single
STE Tender Enquiry
MoF Ministry of Finance
MoU Memorandum of Understanding STP Simplified Technical proposal
(of JV) TC Tender Committee also called
Tender Purchase or Evaluation
MoHUA Ministry of Housing and Urban
Committee (TPC/ TEC) or Tender
Affairs
Scrutiny Committee
MSA Mediated Settlement Agreement
MSTC Metal Scrap Trading Corporation TCO Total Cost of Ownership
TOC Taking Over Certificate VAT Value Added Tax
TOR Terms of Reference VfM (Best) Value for Money
URDG Uniform Rules for Demand WOL Whole of Life (Cost) or Total Cost
Guarantees of Ownership above
xviiiManual for Procurement of Works, Second Edition, 2025
Procurement Glossary
In this Manual and in the ‘Procurement Guidelines’, unless the context otherwise requires:
1. “Agent” is a person employed to do any act for another or represent another in dealings
with a third person. In the context of public procurement, an Agent is a representative
participating in the Tender Process or Execution of a Contract for and on behalf of its
principals;
2. “Allied firm” (‘affiliates’/ ‘affiliated firm’, ‘sister concern’, ‘associated firm’, or ‘related party’)
of a bidder/ contractor (Principal firm, including Joint Venture Company) is a firm/ concern
(including Joint Venture Company) that comes within the sphere of effective control/
influence of the principal firm, wherein the Principal Firm –
a) being a proprietary firm, owns the Allied Firm,
b) being a partnership firm, has common (all or majority of) partners, or any one of its
partners has profit share of 20% or more, in the Allied Firm
c) has common Management (say majority of director) with the Allied firm;
d) its partners or directors have a majority interest in the management of the Allied Firm;
e) has a controlling voice by owning substantial (20% or more) shares in the Allied Firm;
f) directly or indirectly controls or is controlled by or is under common control, by way of
any agreement/ MoU or otherwise with the Allied Firm,
g) has the Allied Firm as its successor/ subsidiary or vice-a-versa;
h) has common offices/ manufacturing facilities with the Allied Firm;
3. "Bid" (‘tender’, ‘offer’, ‘quotation’ or ‘proposal’) means an offer to supply goods, services
or execution of works made in accordance with the terms and conditions set out in a
document inviting such Bids;
4. "Bidder" (‘tenderer’, ‘consultant’, ‘contractor’ or ‘service provider’) means any eligible
person, firm, or company, including a consortium (that is an association of several persons,
firms or companies) participating in a procurement process with a procuring entity;
5. "Bidder enlistment document" means a document issued by a procuring entity, including
any amendment thereto, that sets out the terms and conditions of enlistment proceedings
and includes the invitation to enlist;
6. "Bid security" (‘Earnest Money Deposit’(EMD), or ‘Bid Security Declaration’) means a
security from a bidder securing obligations arising from its Bid, i.e., to avoid: the withdrawal
or modification of its Bid within the validity, after the deadline for submission of such Bids;
failure to sign the resulting contract or failure to provide the required security for the
performance of the resulting contract after its Bid has been accepted; or failure to comply
with any other condition precedent to signing the contract specified in the solicitation
documents;
7. “Bill of Quantities” (including the term Price Schedule or BOQ) means the priced and
completed Bill of Quantities forming part of the bid;
8. “Central Public Sector Enterprise/ Undertaking” (CPSE or CPSU) means a body
incorporated under the Companies Act or established under any other act in which the
Central Government directly or indirectly owns more than 50 (fifty) per cent of the issued
share capital;
xixProcurement Glossary
9. “Class-I local supplier” means a supplier or service provider, whose goods, services or
works offered for procurement, meet the minimum local content as prescribed for ‘Class-I
local supplier’ under the Public Procurement (Preference to Make in India), Order 20172;
10. “Class-II local supplier” means a supplier or service provider, whose goods, services or
works offered for procurement, meets the minimum local content as prescribed for ‘Class-
II local supplier’ but less than that prescribed for ‘Class-I local supplier’ under the Public
Procurement (Preference to Make in India) Order 20173;
11. “Competent authority” (Competent Financial Authority) in respect of the powers of approval
in a procurement process or execution of a resultant contract means an authority to which
such power is delegated by or under General Financial Rules (GFR) 2017, Delegation of
Financial Power Rules 2024 (DFPR), Schedule of Procurement Powers (SoPP) or any
other general or special orders issued by the Government of India;
12. “Consultancy services” means a one-off (that is, not repetitive and not routine) services
involving project-specific intellectual and procedural processes using established
technologies and methodologies, but the outcomes – which are primarily of a non-physical
nature – may not be standardised and would vary from one consultant to another. It may
include small works or supply of goods that that are consequential to such services; (Rule
177 of GFR 2017)
13. “Contract” (Procurement Contract', ‘Purchase Order’, ‘Supply Order’, ‘Withdrawal Order’,
‘Work Order’, ‘Consultancy Contract’, ‘Contract for Services’, ‘Rate Contract’, ‘Framework
Agreement’, ‘Letter of Award – LoA’ (letter or memorandum communicating to the
contractor the acceptance of his bid), ‘Agreement’, ‘Repeat Order’, or a ‘formal
agreement’), means a formal legal agreement in writing relating to the subject matter of
Procurement, entered into between the Procuring Entity and the supplier, service provider
or contractor on mutually acceptable terms and conditions and which are in compliance
with all the relevant provisions of the laws of the country;
14. “Contractor” (‘Supplier’ or ‘Service Provider’ or ‘Consultant’ or ‘Firm’ or ‘Vendor’ or
‘Manufacturer’ or ‘Successful Bidder’ ) means the person, firm, or company, including a
consortium (that is, an association of several persons or firms or companies - Joint
Venture/ consortium) with whom the contract is entered into and shall be deemed to
include the contractor's successors (approved by the Procuring Entity), agents,
subcontractor, representatives, heirs, executors, and administrators as the case may be
unless excluded by the terms of the contract;
15. “Contract Value” (or Contract Price) means the full and final monetary amount that the
procuring entity is obligated to pay to the contractor under the terms of the contract,
ensuring that no additional costs are incurred beyond the agreed sum. It is an all-inclusive
figure that covers the base price of the goods, services, or works being procured, along
with all applicable taxes/ surcharges (such as Goods and Services Tax – GST etc.),
custom duties, freight, transportation, installation, commissioning, warranties,
maintenance, and any other incidental charges;
16. “e-Procurement” means the use of information and communication technology (specially
the internet) by the procuring entity in conducting its procurement processes with bidders
2Notified vide Order No. P-45021/2/2017-PP (BE-II)-Part (4)Vol.II issued by Department of Promotion of Industry
and Internal Trade dated 19.07.2024
3Notified vide Order No. P-45021/2/2017-PP (BE-II)-Part(4)Vol.II issued by Department of Promotion of Industry
and Internal Trade dated 19.07.2024
xxManual for Procurement of Works, Second Edition, 2025
for the acquisition of goods (supplies), works and services with the aim of open, non-
discriminatory and efficient Procurement through transparent procedures;
17. "Enlisted Contractor" means any contractor who is on a list of enlisted contractors of the
procuring entity or a Central Purchase Organisation (Please refer to “Registration” to
appreciate the differentiation);
18. “Enlisting authority” means an authority which enlists bidders for different categories of
procurement (Please refer to “Registration” to appreciate the differentiation);
19. “Enlistment” means including the name of the contractor in the list of enlisted bidders after
verification of credentials. (Please refer to “Registration” to appreciate the differentiation);
20. "Goods" (‘Stores’, Item(s) or ‘Material(s)’) includes all articles, materials, commodities,
livestock, medicines, furniture, fixtures, raw materials, consumables, spare parts,
instruments, hardware, machinery, equipment, industrial plant, vehicles, aircraft, ships,
railway rolling stock, assemblies, sub-assemblies, accessories, a group of machines
comprising an integrated production process or intangible products (e.g. technology
transfer, licenses, patents, software or other intellectual properties) but excludes books,
publications, periodicals, etc., for a library, procured or otherwise acquired by a procuring
entity. Procurement of goods may include certain small work or some services that are
incidental or consequential to the supply of such goods, such as transportation, insurance,
installation, commissioning, training, and maintenance; (Rule 143 of GFR 2017)
21. “Indentor” (‘User (Department)’) means the entity and its officials assessing the need for
procurement and initiating a procurement indent, that is, a request to the procuring entity
to procure goods, works or services specified therein;
22. “Inspection” means activities such as measuring, examining, testing, analysing, gauging
one or more characteristics of the goods or services or works, and comparing the same
with the specified requirement to determine conformity;
23. “Inspecting Officer” means the person or organisation stipulated in the contract for
inspection under the contract and includes his/ their authorised representative;
24. “Intellectual Property Rights” (IPR) means the rights of the intellectual property owner
concerning a tangible or intangible possession/ exploitation of such property by others. It
includes rights to Patents, Copyrights, Trademarks, Industrial Designs, Geographical
indications (GI);
25. “Inventory” means any material, component or product that is held for use later;
26. "Invitation to (pre-)qualify" means a document including any amendment thereto published
by the Procuring Entity inviting offers for pre-qualification from prospective bidders;
27. "Invitation to Enlist" means a document including any amendment thereto published by the
procuring entity inviting offers for bidder enlistment from prospective bidders;
28. “Letter of Award” (‘Letter of Intent’ or ‘Notification of Award’) means the letter or
memorandum communicating to the contractor the acceptance of his bid for award of the
contract;
29. “Local Content” means the amount of value added in India which shall, unless otherwise
prescribed by the Nodal Ministry, be the total value of the item procured (excluding net
domestic indirect taxes) minus the value of imported content in the item (including all
customs duties) as a proportion of the total value, in percent4;
4Notified vide Order No. P-45021/2/2017-PP (BE-II)-Part (4)Vol.II issued by Department of Promotion of Industry
and Internal Trade dated 19.07.2024
xxiProcurement Glossary
30. "Model Tender (Bidding) Document(s)" (including the term ‘tender (enquiry) documents’ or
‘Request for Proposal Documents’ – RfP documents, or ‘Standard Bidding Documents’ -
SBD in certain contexts) means a document issued by the procuring entity, including any
amendment thereto, that sets out the terms, conditions of the given procurement, and
includes the invitation to bid. A Model (Standard) Tender (Bidding) Document is the model
template to be used for preparing Tender Document after making suitable changes for
specific procurement;
31. “Non-Consultancy Services” (‘Outsourcing of Services’) are defined by exclusion as those
services that cannot be classified as Consultancy Services. These involve routine,
repetitive physical, procedural, and non-intellectual outcomes for which quantum and
performance standards can be clearly identified and consistently applied and are bid and
contracted on such basis. It may include small works or a supply of goods or Consultancy,
which are incidental or consequential to such services; (Rule 197 of GFR 2017)
32. “Non-Local supplier” means a supplier or service provider, whose goods, services or works
offered for procurement, has local content less than that prescribed for ‘Class-II local
supplier’ under the Public Procurement (Preference to Make in India) Order 20175;
33. "Notice inviting tenders" (including ‘Invitation for Bids (IFB)’ or ‘Letter of Invitation in
Request for Proposals’) means a document and any amendment thereto published or
notified by the Procuring Entity, which informs the potential bidders that it intends to
procure the subject goods, services, works or a combination thereof;
34. “Parties”: The parties to the contract are the "Contractor" and the Procuring Entity, as
defined therein;
35. “Performance Security” (includes the terms ‘Security Deposit’ or ‘Performance Bond’ or
‘Performance Bank Guarantee’ or other specified financial instruments in specific contexts)
means a monetary guarantee to be furnished by the successful Bidder or Contractor in the
form prescribed for the due performance of the contract;
36. “Place of Supply” means the specific location where Goods are delivered to the Buyer,
taken on board a conveyance, or otherwise supplied; and where Services or Works are
performed or executed during the term of the Contract. This location is crucial not only for
determining the time of completion of such delivery, performance, or execution but also
for ensuring compliance with relevant tax laws and other regulations applicable to its
jurisdiction;
37. "Pre-qualification (bidding) Procedure" means the procedure set out to identify, prior to
inviting bids, the bidders that are qualified to participate in the procurement;
38. "Pre-qualification Document" means the document including any amendment thereto
issued by a procuring entity, which sets out the terms and conditions of the pre-
qualification bidding and includes the invitation to pre-qualify;
39. "Procurement" (or "Public Procurement" or ‘Government Procurement/ Purchase’
including an award of Public-Private Partnership projects ) means acquisition by way of
purchase, lease, license or otherwise, either using public funds or any other source of
funds (e.g. grant, loans, gifts, private investment etc.) of goods, works or services or any
combination thereof, by a procuring entity, whether directly or through an agency, but does
not include any acquisition of goods, works or services without consideration, and the term
"procure" or "procured" or “purchase”/ “purchased” shall be construed accordingly;
5Notified vide Order No. P-45021/2/2017-PP (BE-II)-Part (4)Vol.II issued by Department of Promotion of Industry
and Internal Trade dated 19.07.2024
xxiiManual for Procurement of Works, Second Edition, 2025
40. “(Public) Procurement Guidelines” means guidelines applicable to Public Procurement,
comprising a hierarchy of Statutory framework, Rules and Regulations, Manuals of
Procurement and Procurement Documents as detailed in Annexure 1 of Manual for
Procurement of Goods, Second Edition, 2024;
41. “Procurement Officer” means the officer signing the Letter of Award (LoA) and/or the
contract on behalf of the Procuring Entity;
42. "Procurement process" means the process of procurement extending from the
assessment of need; issue of invitation to pre-qualify or to enlist or to bid, as the case may
be; bid evaluation, award of contract, execution of contract till closure of the contract;
43. "Procuring Entity" (or Public Authority or Employer) means the entity in any Ministry or
Department of the Central Government or a unit thereof or its attached or subordinate
office or CPSE to which powers of Procurement have been delegated and handles the
entire procurement process, ensuring efficiency, transparency, fair treatment of suppliers,
and the promotion of competition. It may partly or fully outsource its procurement process
to ‘Procurement Agent/ Agency’ or ‘Project Management Consultant/ Agency’;
44. “Procuring Organisation” (or Public Entity/ Authority) means the Organisation for which the
procurement is done to fulfil its stated objectives, assigned duties/ obligations/
responsibilities/ functions, and activities in alignment with desired policy outcomes;
45. “Project” means one-time, short-term expenditure resulting in creation of capital assets,
which could yield financial or economic returns or both. A project may comprise one or
more related but independent task-oriented ‘Works’. Projects may either be approved as
individual projects within an approved scheme envelope or on a stand-alone basis. They
may be executed through budgetary, extra-budgetary resources, or a combination of both;
46. "Prospective bidder" means anyone likely or desirous to be a bidder;
47. "Public Private Partnership" means an arrangement between a public entity on one side
and a private sector entity, on the other, for the provision of public assets or public services
or both, or a combination thereof, through investments being made or management being
undertaken by the private sector entity, for a specified period, where there is predefined
allocation of risk between the private sector and the public entity and the private entity
receives performance-linked payments that conform (or are benchmarked) to specified
and predetermined performance standards, deliverables or Service Level agreements
measurable by the public entity or its representative;
48. "Rate contract" (‘framework agreement’) means an agreement between a Central
Purchase Organisation or a procuring entity with one or more bidders, valid for a specified
period, which sets out terms and conditions under which specific procurements can be
made during the term of the agreement and may include an agreement on prices which
may be either predetermined or be determined at the stage of actual Procurement through
competition or a predefined process allowing their revision without further competition;
49. “Registration” means simply registering the bidder/ supplier/ service provider/ contractor,
say on a website etc. (Please refer to “Enlistment” to appreciate the differentiation);
50. “Registering authority” is an authority that registers bidders for various procurement
categories;
51. "Registered Contractor" means any contractor who is on a list of registered contractors of
the procuring entity or a Central Purchase Organisation;
52. "Scheduled Bank" means a bank listed in the Second Schedule of the Reserve Bank of
India Act, 1934;
xxiiiProcurement Glossary
53. "Service" means any subject matter of Procurement that has non-tangible outputs, as
distinguished from goods or works, except those incidental or consequential to the service,
and includes physical, maintenance, professional, intellectual, training, Consultancy and
advisory services or any other service classified or declared as such by a procuring entity
but does not include the appointment of an individual made under any law, rules,
regulations or order issued in this behalf. It includes ‘Consultancy Services’ and ‘Other
(Non-consultancy) Services’;
54. “Special Conditions of Contract” (SCC) means Special Conditions that override the
General Conditions of Contract (GCC) if and to the extent of the conflict between the two;
55. "Subject Matter of Procurement" means any object of Procurement, whether in the form of
goods, services or works or a combination thereof;
56. “Tender Document” means the document (including all its sections, appendices, forms,
formats, etc. and various terms prevalent for such documents) published by the Procuring
Entity to invite bids in a Tender Process. The Tender Document and Tender Process may
be generically called ‘Tender’ or ‘Tender Enquiry’, which would be evident from context
without ambiguity;
57. “Tender Process” is the entire process from the publishing of the Tender Document to the
resultant award of the contract;
58. ‘Total Cost of Ownership’ - TCO (Life Cycle Costing - LCC, Whole of Life Costing - WOL)
encompasses all costs associated with acquiring (including the price paid to the supplier),
operating, maintaining, and disposing of a product or service. Essentially, the three terms
refer to the cost incurred on a product during its lifetime. However, LCC has evolved
beyond that to consider the cost of the impact of the product on the environment and,
therefore, is mostly used as a tool in Sustainable Public Procurement. WOL is used mostly
in capital-intensive assets, infrastructure projects, and long-term investments, and TCO is
used mostly in procurement of Goods;
59. "Works" refer to any activity with a tangible and physical output sufficient in itself to fulfil
an economic or technical function involving construction, fabrication, repair, overhaul,
renovation, decoration, installation, erection, excavation, dredging, and so on, which make
use of a combination of one or more of engineering design, architectural design, material
and technology, labour, machinery, and equipment. Supply of some materials or certain
services may be incidental or consequential to and part of such works. The term “Works”
includes:
a) civil works for roads, railways, airports, shipping ports, bridges, buildings, irrigation
systems, water supply, sewerage facilities, dams, tunnels, and earthworks; and so on,
and
b) mechanical and electrical works involving fabrication, installation, erection, repair, and
maintenance of a mechanical or electrical nature relating to machinery and plants.
xxivManual for Procurement of Works, Second Edition, 2025
Chapter 1: Introduction to Procurement of Works
1.1 Procurement Rules and Regulations; and this Manual
1. Various Ministries, Departments, attached and subordinate offices, local urban bodies,
public sector enterprises and other Government (including autonomous) bodies
(hereinafter referred as ‘Procuring Entities’) spend a sizeable amount of their budget on
the Procurement of goods, works and services to fulfil their stated objectives, assigned
duties/ obligations/ responsibilities/ functions, and activities in alignment with desired
policy outcomes.
2. The Ministries/ Departments have been delegated powers to make their own
arrangements for procurement of works under the Delegation of Financial Power Rules,
which have to be exercised in conformity with the ‘Procurement Guidelines’ described
below.
3. To ensure that these procurements are made by following a uniform, systematic, efficient
and cost-effective procedure and also to ensure fair and equitable treatment of bidders/
contractors, there are guidelines comprising a hierarchy of Statutory framework, Rules and
Regulations, Manuals of Procurement and Procurement Documents as detailed in
Annexure 1 of Manual for Procurement of Goods, Second Edition ,2024 (hereinafter
referred as ‘Procurement Guidelines’).
4. At the apex of the Statutory framework governing public procurement is Article 299 of the
Constitution of India, which stipulates that contracts legally binding on the Government
must be executed in writing by officers specifically authorized to do so. The Constitution
also enshrines Fundamental Rights (In particular Article 14 – ‘Right to Equality before law’
and Article 19 (1) (g) – ‘Right to practice any profession, or to carry on any occupation’,
trade, or business) which have implications for Public Procurement. Further, the Indian
Contract Act of 1872, is a significant legislation governing contracts in general. There are
other mercantile laws (Arbitration and Conciliation Act, 1996, Mediation Act, 2023,
Competition Act, 2002; Information Technology Act, 2000; Indian Stamp Act, 1899, etc. as
amended from time to time) that may be attracted in Public Procurement transactions.
5. In the Central Government, there is no law exclusively governing public procurement.
However, comprehensive Rules and Regulations in this regard are available in the General
Financial Rules (GFR) 2017, (especially chapters 5 to 9); Delegation of Financial Powers
Rules, 2024 (DFPR); Government order regarding purchase preference/ restrictions like
Public Procurement (Preference to Make in India) Order 2017, Restrictions on Entities
from a Class of Countries (Rule 144 (xi), GFR 2017) and relaxation of the conditions of
prior turnover and prior experience for start-up enterprises etc. (Also refer to para 1.12 for
applicable laws)
6. Without purporting to be a comprehensive compendium of all such ‘Procurement
Guidelines’, this Manual is intended to serve as a portal to enter this vast area and draw
attention to basic norms and practices governing public procurement.
1.2 Clarification, Amendments and Revision of this Manual
The Procurement Policy Division, Department of Expenditure, Ministry of Finance would be
the nodal authority for this Manual’s revision, interpretation, and clarification.
1Chapter 1: Introduction to Procurement of Works
1.3 Applicability of this Manual
1. Category of Procurements: This manual is applicable to procurement of all “Works” as
defined in the ‘Procurement Glossary’ section. The Manual for Procurement of Works (and
other Manuals on Procurement of Consultancy Services/ Non-consultancy Services) are
generically based on the Manual for Procurement of Goods, Second Edition, 2024 (Goods
Manual). Hence, for any topic for which guidance cannot be found in this Manual, the
Goods Manual shall apply mutatis mutandis. For the sake of brevity, this Manual refer to
some of the section of the Goods Manual without reproducing them.
2. Classification of Works: The civil works are classified in GFR 2017 (Rule 130) into three
categories: (a) Original Works (b) Minor Works and (c) Repairs Works. “Original works”
means all new constructions, site preparation, additions and alterations to existing works.
It also includes special repairs to newly purchased or previously abandoned buildings or
structures, including remodelling or replacement. “Minor works” mean works which add
capital value to existing assets but do not create new assets. “Repair works” means works
undertaken to maintain building and fixtures. Expenditure on Repair Work does not add to
the value of the asset and only restores the functionality of the asset. Repair Work can be
further categorized as (1) Annual repairs covering routine and yearly operation and
maintenance work on buildings and fixtures (2) Special repairs, which are undertaken as
and when required, covering major repairs to existing buildings or structures. Some types
of the Special repairs may qualify to be categorised as ‘Original Work’ as mentioned
earlier.
3. Procuring Entities:
a) This manual inter-alia covers fundamental provisions relating to the Constitution;
Government instructions relating to Preferential Procurement Policies; GTE; Land
Border restriction; and General Instructions on Procurement and Project Management
(NO.F.1/1/2021-PPD dated 20.10.2021), which are mandatory for all entities of Central
Government.
b) This manual is addressed to Ministries/ Departments, their attached and subordinate
offices, and autonomous bodies whose in-house capabilities are limited to repair works
of up to Rs 60 lakhs and who assign larger repair works (and original works) to third
parties6 (Public Works Organisations or CPSEs). Refer para 3.1 for further details.
c) This Manual may also be useful for Ministries/ Departments, their attached and
subordinate offices, and autonomous bodies who have in-house capabilities for direct
execution of larger works but may not have their own detailed procurement guidelines.
d) The manual does not purport to address procurement of larger works for which major
works procuring Ministries/ Departments (like the Central Public Works Department
(CPWD); Military Engineering Service (MES); Border Roads Organisation (BRO);
Ministries of Railways; Information & Broadcasting and Departments of Posts, and
Space etc.) that already have their own detailed guidelines tailored to unique individual
requirements. They may however ensure that their procurement guidelines comply
with mandatory provisions mentioned in sub-para a) above, which are detailed in this
manual.
4. Statutory Bodies and CPSEs: These guidelines shall also be applicable to bodies
substantially owned or controlled by or receiving substantial financing assistance from the
6 Rule 133 of GFR, 2017 (as amended)
2Manual for Procurement of Works, Second Edition, 2025
Central Government (inter-alia, Central Public Sector Enterprises (CPSEs or
undertakings, including their subsidiary companies/ Ventures), Public Sector Banks
(PSBs), Public Sector Insurance Companies (PSICs); Public Sector Financial Institutions
(Fis); Constitutional or Statutory Bodies, Public Academic Institutions (National/ Central
institutes), and Commissions that have been created under the Constitution of India or
specific legislations), except to the extent deviations7 that have been approved by their
competent authority (e.g. Board of Directors in CPSEs).
5. Indian Missions and CPSE Units Abroad: While the applicability of the Manual in the
case of Indian Missions abroad and CPSE Units abroad shall be as per sub-para 3) and
4) above, respectively – the following is clarified:
a) Adopting Financial Limits/ Thresholds in Local Currency: For procurements
done and for use outside India, in the host country’s local currency, Indian Missions
and CPSE units abroad may adopt General Financial Rules (GFR) financial limits/
thresholds of procurements (as mentioned in this Manual at various instances, e.g.,
selection of mode of Procurement etc.) by using latest INR-PPP conversion rates for
the local currency as published by the IMF (International Monetary Fund). For
convenience, such converted limits/ thresholds may be reviewed annually. Even if
the Procurement is to be done in a currency other than the local currency, the
applicable financial limits/ thresholds of procurements shall be in terms of the INR-
PPP conversion rate for the local currency only. If the IMF does not publish the PPP
conversion rate for local currency, then the conversion may be done to the currency
most relevant to that mission/ unit in consultation with the Financial Advisor.
The following illustration may be used as guidance:
Financial limits in GFR are to be calculated for the Indian Mission in Bangladesh,
where the relevant local currency is Bangladesh Taka (BT). Let the PPP
conversion rate (as per international dollar) published by the IMF for INR and BT
in a particular year be as follows:
Rs. 22.947 = 1 USD = 31.98 BT
The PPP-based conversion rate for BT/ INR may be calculated as 31.98/ 22.947
= 1.394. Thus, a threshold of INR. 25,00,000 (say the threshold for OTE) would
be then 34,85,000 BT.
b) Exemptions: For exemptions from restrictions relating to Global Tenders, bidders
from Land-border countries, and eProcurement for bona-fide procurements and use
outside India by Indian Missions and CPSE Units abroad, please refer to paragraphs
4.3.2-4-h), 1.11.4-3-f-ii), and 4.17.1-5, respectively, in the 'Manual for Procurement
of Goods, 2024'.
6. Portals: Central Public Procurement Portal (CPPP of NIC, eproc.gov.in), and various such
platforms of different Organisations carry out a substantial proportion of Public
Procurement. Hence the procedures of such platforms should conform to these
‘Procurement Guidelines’.
7. Procurements financed by Loans/ Grants extended by International Agencies:
a) For projects funded by the World Bank, Asian Development Bank, and other
International Funding Agencies (IFA), the Article of Agreement, with the approval of
the Ministry of Finance, stipulate the Indian (or State) Government’s own
7 They may however ensure that their procurement guidelines comply with mandatory provisions mentioned in para
1.3-3 a) above, which are detailed in this manual.
3Chapter 1: Introduction to Procurement of Works
procurement procedures or IFA’s specific procurement procedures to be followed by
the borrowers.
b) These guidelines would not be applicable to projects funded by the World Bank using
the Investment Project Financing (IPF) instrument and similar instruments of other
International Funding Agencies (IFA), as stipulated under Articles of Agreement, as
mentioned under sub-para -a) above. IFA’s specific procurement procedures shall be
applicable as permitted under Rules 264 of GFR, 2017.
c) However, for the projects financed using instruments such as Program-for-Results
(PforR) of the World Bank, and Results-based lending (RBL) of the Asian
Development Bank, and similar instruments of other International Funding Agencies,
the application of these guidelines as expressly agreed in the legal agreements shall
be allowed.
8. Outsourced Procurement: These procurement guidelines shall continue to apply if
entities to whom these are applicable (as brought out above) outsource the procurement
process or bundle the procurement process with other contractual arrangements or utilise
the services of procurement support agency or procurement agents to carry out the
procurement on their behalf.
9. Customisation: This Manual is to be taken as generic guidelines, which are necessarily
broad in nature. Procuring Entities are advised to customise these manuals, with the
approval of competent authority and financial concurrence, to suit their local/specialised
needs by issuing their own detailed Manuals (including customised formats); Model
Tender Documents; Schedule of Procurement Powers and Checklists to serve as practical
instructions for their officers and to ensure completeness of examination of cases. For
procuring organisations that have their own detailed manuals or procedure orders, the
initiation, authorisation, Procurement, and execution of contracts undertaken by them shall
be regulated by detailed rules and orders contained in their respective regulations and by
other special order applicable to them.
10. Exemptions: These procurement guidelines would not apply to procurements by
procuring entities mentioned above for their own use from their subsidiary companies,
including Joint Ventures, where they have a controlling share. Moreover, by a general or
special notification, the Government may permit certain ‘Procuring Entities’ mentioned in
sub-para 3) and 4) above, considering unique conditions under which they operate, for all
or certain categories of procurement, to adopt detailed approved guidelines for
procurement, which may deviate in some respects but conform with all other essential
aspects of these ‘Procurement Guidelines.’
1.4 Categorisation of procurements
1. Categorisation of Procurements helps in preparing guidelines for Procurements and Model
Tender Documents, which cater to peculiar contractual conditions of the categories of
procurements. Following are the categories of procurements (please refer to their
definition in the ‘Procurement Glossary’ section):
a) Goods.
b) Services
i) Consultancy Services and
ii) Non-consultancy services
c) Works
4Manual for Procurement of Works, Second Edition, 2025
2. Distinctive Features: Normally, such categorisation is clear as per their definition, and
procurement should be done accordingly, following the relevant guidelines and Model
Tender Documents. The boundaries between such categorisation may not be clear-cut
and may overlap. It may neither be possible nor necessary to precisely distinguish
between the categories in overlapping areas. Though simplistic, the main distinguishing
factors between these are:
a) While both Goods and Works lead to tangible outputs (with some exceptions like IPR
materials), yet the main Difference between Goods and Works is that the
manufacture of goods is done in the supplier’s own premises (other than installation/
commissioning), while ‘Works’ is done on the premises of the procuring entity (other
than pre-fabricated components). Works may include incidental ‘Goods’ and vice-
versa.
b) Main Difference Between ‘Goods’ and ‘Works’ on the one hand and ‘Services’ on the
other is the intangibility of outputs of Services.
c) The main difference between consultancy and non-consultancy services is the level
of intellectual inputs, which are predominant in consultancy and not central to non-
consultancy. Another difference is that Non-consultancy services are repetitive and
routine, with measurable and standardised outputs, while Consultancy services are
one-off and non-routine, with outputs that are neither exactly measurable nor
standardised.
3. In case of Doubt: Procurement in cases of doubts about categorisation may be done as
follows:
a) A simpler procurement procedure should be followed in the case of blurred border
lines and grey areas. In case of doubt between:
i) Goods and works/ NC services/ consultancy, it should be processed as
procurement of goods.
ii) Works and NC service/ consultancy, it should be processed as procurement of
works.
iii) Non-consultancy and Consultancy services, it should be processed as
procurement of non-consultancy services.
b) Procurement of IT Projects should normally be carried out as Procurement of
Consultancy services, as the outcomes/ deliverables vary from one service provider
to another. The IT Projects may include:
i) Bespoke software development;
ii) Cloud-based services and
iii) Composite IT system integration services involving design, development,
deployment, and commissioning of an IT system, including hardware supply,
software development, bandwidth, and operation/maintenance of the system for
a defined period after go-live, etc.
c) Composite Contracts8: Composite contracts may involve mixed elements of Goods,
Works, and Services. For example, in the Procurement of large machinery, some
works and services like Installation, Commissioning, Training, Annual Maintenance
Contract (AMC) or a Comprehensive Maintenance Contract (CMC), and so on may
be incidental to the supply of goods. The relationship of primacy between the goods
8 PPD’s OM No. F6/2/2023-PPD dated 13.01.2023
5Chapter 1: Introduction to Procurement of Works
element and the works/ services element may be examined, irrespective of the
relative values. A possible alternative approach could be to have separate but linked
contracts for such elements of Goods, Works, and Services, but implementation may
become challenging. If the primary objective is the Procurement of goods with
services/ works being incidental to it, it may be processed as procurement of Goods.
However, if the primary objective is Procurement of Works/ services with
Procurement of goods being incidental, then it should generally be processed as
Procurement of works/ services (as the case may be), irrespective of the relative
values.
i) Procurement of “new product” viz. Mechanical, Electrical or ICT assets, etc, of
the nature of Machinery and Plant with incidental works/ services like fabrication,
installation, erection, commissioning, AMC/ CMC should be handled as
procurement of goods, except for procurement of IT Projects as specified above.
ii) AMC/ CMC of existing Mechanical, Electrical or ICT assets of the nature of
Machinery and Plant should be treated as procurement of Non-Consultancy
Services.
Notes:
1. If the NC services primarily involve construction, fabrication, repair,
maintenance, overhaul, renovation, decoration, installation, erection, excavation,
dredging, and so on, of Civil assets, then it should be handled as procurement
of Works.
2. Procurement of new mechanical and electrical works (not in the nature of
Machinery and Plant) involving fabrication, installation, or erection of a
mechanical or electrical nature should be treated as procurement of Works if
elements of procurement of Goods are incidental.
3. Repair, renovation, maintenance, overhauling, decoration, AMC/ CMC or
similar work for existing Mechanical, Electrical or ICT assets NOT of the nature
of Machinery and Plant etc., should normally be handled as procurement of
services.
d) It is possible that, depending on the nature and complexity of the assignment, a task
could be dealt with either as a consultancy or non-consultancy service. In essence, if
the intellectual and advisory part of services is the primary objective (irrespective of
the relative value of this component), the selection needs to be dealt with in
Consultancy mode. For example, if the task is looking at the condition of a dam (for
dam safety) by physically inspecting a dam through underwater observation, this task
is a collection of data using technologies and photography, but the actual analysis is
an intellectual and advisory task and is the primary objective of the assignment.
Therefore, the entire task needs to be dealt with as the selection of a consultant.
1.5 Authorities competent to Incur Expenditure on Procurements
and Consultation with Financial Advisers
1. The first step in procurement to procure goods, services, or works involves a formal
decision to procure something along with the exact or approximate expenditure to be
incurred. A Competent authority that is competent to incur expenditure may accord
administrative sanction/ approval to incur expenditure on a specific procurement in
accordance with the Delegation of Financial Rules (DFPR – extracted in Annexure 1) by
following the ‘Procurement Guidelines’ described in this Manual (Rule 145 of GFR 2017).
6Manual for Procurement of Works, Second Edition, 2025
Each ‘Procuring Entity’ may issue a Schedule of Procurement Powers (SoPP), adding
further details to the broad delegations in the DFPR based on the assessment of risks
involved in different decisions/ approvals at various stages of the Procurement Cycle. A
suggested structure of such SoPP is enclosed as Annexure 2.
2. Being a decision with a financial bearing, hence, invariably requires consultation of the
Financial Adviser (unless validly re-delegated within permissible limits or otherwise
permitted by DoE through specific orders). The extent of involvement of the Financial
Adviser and the Integrated Finance (IFD) in subsequent stages of procurement matters
may be based on one of the following procedures (Para 19, Charter for FA, 2023):
a) Normal Procedure: Under this procedure, the concurrence of the Financial Adviser/
IFD shall be required on all procurement matters, except for matters where re-
delegation has been done within the limits permissible under the rules/ general
orders/ general instructions of the DoE. Unless a special procedure is approved by
the Secretary of the Department with the concurrence of the DoE, this procedure shall
be followed.
b) Special Procedure: With the prior concurrence of Secretary Expenditure, the
Secretary of the Department may decide on a different level of involvement of the
Financial Adviser /IFD specific to the Department. The procedure will lay out the
types/ classes of cases where the Financial Adviser/ Integrated Finance Division’s
(IFD) consultation would be required, which may be in terms of threshold financial
limits, stages in procurement or types of procurement and contracts, viz. consultancy,
goods and works contracts etc. or any permutation thereof.
3. In all procedures, payments under approved contracts shall not require IFD consultation
except in cases where the payments are in relaxation/variation to approved contract
conditions.
1.6 Basic Aims of Procurement – Five R’s of Procurement
In every procurement, public or private, the basic aim is to achieve just the right balance
between costs and requirements concerning five parameters called the five R’s of
procurement. The entire process of procurement (from the time that need for an item, facility
or services is identified till the need is satisfied) is designed to achieve following basic aims.
Although couched in jargon of procurement of Goods, it’s equally applicable to procurement
of Works. The term ‘Right’ is used here in the sense of being optimal:
1. Right quality;
2. Right quantity;
3. Right price;
4. Right time and place; and
5. Right source.
(For more details on the basic aims of procurement, please refer to Chapter 1 and ‘Appendix
1: Advanced Concepts of Value for Money’ of the Manual for Procurement of Goods, 2024).
1.7 Refined Concepts of Cost and Value – Value for Money
The concept of price or cost has been further refined into Total Cost Of Ownership (TCO), Life
Cycle Cost (LCC) or Whole-of-Life (WOL) to consider not only the initial acquisition cost but
also the cost of operation, maintenance, and disposal during the lifetime of the external
resource procured. Similarly, the concept of quality is linked to the need and is refined into the
concept of utility/ value. These two, taken together, are used to develop the concept of Value
7Chapter 1: Introduction to Procurement of Works
for Money (VfM, also called Best Value for Money in certain contexts). VfM means the
effective, efficient, and economical use of resources, which may involve the evaluation of
relevant costs and benefits, along with an assessment of risks, non-price attributes (e.g., in
goods and/or services that contain recyclable content, are recyclable, minimise waste and
greenhouse gas emissions, conserve energy and water and minimise habitat destruction and
environmental degradation, are non-toxic etc.) and/or life cycle costs, as appropriate. Price
alone may not necessarily represent VfM. In public Procurement, VfM is achieved by attracting
the widest competition by way of optimal description of need; development of value-
engineered specifications/ Terms of Reference (ToR); appropriate packaging/ slicing of
requirement; selection of an appropriate mode of Procurement and tendering system. These
advanced concepts are explained in Chapter 1 and ‘Appendix 1: Advanced Concepts of Value
for Money’ of the Manual for Procurement of Goods, 2024.
1.8 Fundamental Principles of Public Procurement
Over and above the basic aims of procurement, the obligations of procuring authorities can
be grouped into following five fundamental principles of public procurement, which all
procuring authorities must abide by and be accountable for:
1. Transparency principle;
2. Professionalism principle;
3. Broader obligations principle;
4. Extended legal principle; and
5. Public accountability principle.
(For more details on fundamental principles of public procurement, please refer Para 1.8 of
Chapter 1 of the Manual for Procurement of Goods, 2024).
1.9 Standards (Canons) of Financial Propriety
Public Procurement like any other expenditure in Government must conform to the Standards
(also called Canons) of Financial Propriety. It may be useful to refer to the relevant provisions
in the General Financial Rules, 2017
Rule 21. Standards of financial propriety: Every officer incurring or authorizing
expenditure from public moneys should be guided by high standards of financial propriety.
Every officer should also enforce financial order and strict economy and see that all
relevant financial rules and regulations are observed, by his own office and by subordinate
disbursing officers. Among the principles on which emphasis is generally laid are the
following: -
i) Every officer is expected to exercise the same vigilance in respect of expenditure
incurred from public moneys as a person of ordinary prudence would exercise in
respect of expenditure of his own money.
ii) The expenditure should not be prima facie more than the occasion demands.
iii) No authority should exercise its powers of sanctioning expenditure to pass an
order which will be directly or indirectly to its own advantage.
iv) Expenditure from public moneys should not be incurred for the benefit of a
particular person or a section of the people, unless -
a) a claim for the amount could be enforced in a Court of Law, or
b) The expenditure is in pursuance of a recognized policy or custom.
8Manual for Procurement of Works, Second Edition, 2025
v) The amount of allowances granted to meet expenditure of a particular type should
be so regulated that the allowances are not on the whole a source of profit to the
recipients.”
1.10 Public Procurement Infrastructure at the Centre
Public Procurement is a complex function, and the infrastructure needed to execute it is
equally complex. In India, the following administrative, oversight, and Digital infrastructure
exist for Public Procurement.
1. Procurement Policy Division
2. Central Public Procurement Portal
3. Government e-Marketplace (GeM)
4. Comptroller and Auditor General (CAG) of India
5. Lokpal/ Lokayukta – Anti-corruption Ombudsman
6. Central Vigilance Commission (CVC)
7. Central Bureau of Investigation (CBI)
(For details about these, please refer to Chapter 1 of the Manual for Procurement of Goods,
2024).
1.11 Preferential/ Restriction on Purchase from certain sources
The Central Government may, by notification, provide for mandatory procurement of any
goods or services from any category of bidders or provide for preference to bidders on the
grounds of promotion of locally manufactured goods or locally provided services. (General and
Financial Rules, 2017, Rule 153 (ii)). Presently following policies are in vogue:
1.11.1 Public Procurement Policy for Micro and Small Enterprises (MSEs)
(Rule 153 (ii) of GFR 2017): From time to time, the Government of India lays down
procurement policies to help inclusive national economic growth by providing long-term
support to micro, small and medium enterprises, and disadvantaged sections of society. The
Procurement Policy for Micro and Small Enterprises, 2012 [amended 2018 and 2021] has
been notified by the Government. Under the amended Public Procurement Policy for MSEs,
Order 2012, the Central Government Ministries/ Departments/ Public Sector Undertakings
shall procure a minimum of 25 per cent of their annual value of goods or services from MSEs.
1.11.2 Procurement Preference to Make in India
(Rule 153 (iii) of GFR, 2017)
1. Purpose: To encourage ‘Make in India’ and promote manufacturing and production of
goods and services in India with a view to enhancing income and employment, Department
of Promotion of Industry and Internal Trade (DPIIT), Ministry of Commerce and Industry,
Government of India, issued Public Procurement (Preference to Make in India) Order
20179. The order is issued pursuant to Rule 153 (iii) of GFR, 2017. The Order is applicable
to the procurement of Goods, Works, and Services.
2. Definitions: For the purpose of this Order: -
9Latest revision to the Order notified vide OM No. P-45021/2/2017-PP (BE-II)-Part(4)Vol.II issued by DPIIT, dated
19.07.2024.
9Chapter 1: Introduction to Procurement of Works
a) ‘L1’ means the lowest tender or lowest bid, or the lowest quotation received in a tender,
bidding process or other procurement solicitation as adjudged in the evaluation
process as per the tender or other procurement solicitation.
b) ‘Local Content’ means the amount of value added in India which shall, unless
otherwise prescribed by the Nodal Ministry, be the total value of the item procured
(excluding net domestic indirect taxes) minus the value of imported content in the item
(including all customs duties) as a proportion of the total value, in percent.
Explanatory notes for the calculation of local content:
i) Imported items sourced locally from resellers/ distributors shall be excluded from
the calculation of local content.
ii) The license fees/ royalties paid/ technical charges paid out of India shall be
excluded from local content calculation
iii) Procurement/ Supply of repackaged/ refurbished/ rebranded imported products,
as understood commonly, shall be treated as reselling of imported products and
shall be excluded from the calculation of local content. The definition of
repackaged/ refurbished/ rebranded imported products is as follows:
1) ‘Refurbishing’ means repair or reconditioning of an imported product does
not amount to manufacture because no new goods come into existence.
2) ‘Repackaging’ means repacking of imported goods from bulk pack to smaller
packs would not ordinarily amount to manufacture of a new item.
3) ‘Rebranding’ means relabelling or, renaming, or change in symbol or logo/
makes or corporate image of a company/organisation/ firm for an imported
product would amount to rebranding.
iv) To ensure that imported items sourced locally from resellers/ distributors are
excluded from the calculation of local content, procuring entities to obtain from
bidders, the cost of such locally-sourced imported items (inclusive of taxes) along
with break-up on license/ royalties paid/ technical expertise cost etc. sourced from
outside India/ for items sold by bidder as reseller, OEM certificate for country of
origin to be submitted.
v) For contracts involving the supply of multiple items, a weighted average of all
items is to be taken while calculating the local content
c) 'Class-I local supplier' means a supplier or service provider, whose goods, services or
works offered for procurement, meets the minimum local content as prescribed for
'Class-I local supplier' under this Order.
d) 'Class-II local supplier' means a supplier or service provider, whose goods, services
or works offered for procurement, meets the minimum local content as prescribed for
'Class-II local supplier' but less than that prescribed for 'Class-I local supplier' under
this Order.
e) 'Non - Local supplier' means a supplier or service provider, whose goods, services or
works offered for procurement, has local content less than that prescribed for 'Class-
II local supplier' under this Order.
f) ‘Margin of purchase preference’ means the maximum extent to which the price quoted
by a “Class-I local supplier” may be above the L1 for the purpose of purchase
preference. It has been fixed as 20 (twenty) percent.
g) ‘Nodal Ministry’ means the Ministry or Department identified pursuant to this order in
respect of a particular item of goods or services or works.
10Manual for Procurement of Works, Second Edition, 2025
h) ‘Procuring entity’ means a Ministry or department or attached or subordinate office of,
or autonomous body controlled by, the Government of India and includes Government
companies as defined in the Companies Act.
i) ‘Works’ means all works as per Rule 130 of GFR- 2017 and will also include ‘turnkey
works’.
2A. Special treatment for items covered under the PLI Scheme: The manufacturers
manufacturing an item under the PLI scheme shall be treated as deemed Class II local
supplier for that item unless they have minimum local content equal to or higher than that
notified for Class-I local supplier for that item, provided the manufacturer has received
incentive from the concerned PLI Ministry for the item. The above shall be applicable for
the specific time period only, as notified by the concerned PLI Ministry.
3. Eligibility of ‘Class-I local supplier’/ ‘Class-II local supplier’/ ‘Non-local suppliers’ for
different types of procurement
a) In the procurement of all goods, services or works in respect of which the Nodal
Ministry / Department has communicated that there is sufficient local capacity and
local competition, only ‘Class-I local supplier’ shall be eligible to bid irrespective of
purchase value.
b) Only ‘Class-I local supplier’ and ‘Class-II local supplier’ shall be eligible to bid in
procurements undertaken by procuring entities, except when a Global tender enquiry
has been issued. In global tender enquiries, ‘Non-local suppliers’ shall also be eligible
to bid along with ‘Class-I local suppliers’ and ‘Class-II local suppliers’. In procurement
of all goods, services or works not covered by sub-para 3-a) above, and with estimated
value of purchases less than Rs. 200 Crore, in accordance with Rule 161(iv)(b) of
GFR, 2017, Global tender enquiry shall not be issued except with the approval of
competent authority as designated by Department of Expenditure.
c) For the purpose of this Order, works include Engineering, Procurement and
Construction (EPC) contracts, and services include System Integrator (SI) contracts.
3A. Mandatory sourcing of items, with sufficient local capacity and competition, from
Class-I local suppliers in SI/ EPC/ Turnkey Contracts/ Service Tenders
a) The items, notified as having sufficient local capacity and competition, shall mandatory
be sourced from Class-I local suppliers in SI/ EPC/ Turnkey Contracts/ Services
tenders. This provision will be applicable only for those items that have been notified
by the Nodal Ministry as Class-I, i.e. having sufficient local capacity and competition
with specific HSN codes.
b) Notwithstanding the above, if in any project, it is considered that it is not practically
feasible to source such items from Class I local suppliers, it may take a relaxation from
such stipulation with the approval of the Secretary of the administrative Ministry/
Department concerned or with the approval of the Competent Authority specified by
the Administrative Ministry/ Department, on a case-specific basis.
4. Purchase Preference:
a) Subject to the provisions of the Order and to any specific instructions issued by the
Nodal Ministry or in pursuance of the Order, purchase preference shall be given to
‘Class-I local supplier’ in procurements undertaken by procuring entities in the manner
specified here under.
b) In the procurements of goods or works, which are covered by sub-para 3-b) above
and which are divisible in nature, the ‘Class-I local supplier’ shall get purchase
11Chapter 1: Introduction to Procurement of Works
preference over the ‘Class-II local supplier’ as well as the ‘Non-local supplier’, as per
following procedure:
Note:
1. If the procuring entity negotiates with the L1 bidder, who is not a Class-I Local
Supplier, the margin of purchase preference (L1+20%) should be calculated based
on the original L1 price, not the lower negotiated price, and such eligible Class-I
Local Suppliers shall be called to match the new negotiated L1 price as per
procedure mentioned above for placement of 50% quantity.
2. Since as per sub-para c) below, MII order is applicable ‘where the bid is
evaluated on price alone’ – MII purchase preference would not be applicable
where evaluation is based inter-alia on non-price criteria, e.g., QCBS or FBS in
Services and Works.
i) Among all qualified bids, the lowest bid will be termed as L1. If L1 is a ‘Class-I
local supplier’, the contract for full quantity will be awarded to L1.
ii) If the L1 bid is not a ‘Class-I local supplier’, 50 (fifty) per cent of the order quantity
shall be awarded to L1. Thereafter, the lowest bidder among the ‘Class-I local
supplier’ will be invited to match the L1 price for the remaining 50 (fifty) per cent
quantity subject to the Class-I local supplier’s quoted price falling within the
margin of purchase preference (L1+20%) and contract for that quantity shall be
awarded to such ‘Class-I local supplier’ subject to matching the L1 price. In case
the lowest eligible ‘Class-I local supplier’ fails to match the L1 price or accepts
less than the offered quantity, the next higher ‘Class-I local supplier’ within the
margin of purchase preference (L1+20%) shall be invited to match the L1 price
for the remaining quantity and so on, and the contract shall be awarded
accordingly. In case some quantity out of the 50% (for the eligible Class-I Local
Suppliers) is still left uncovered, then such balance quantity may also be ordered
on the L1 bidder.
c) In the procurements of goods or works, which are covered by sub-para 3-b) above
and which are not divisible in nature, and in the procurement of services where the
bid is evaluated on price alone, the ‘Class-I local supplier’ shall get purchase
preference over ‘Class-II local supplier’ as well as ‘Non-local supplier’, as per following
procedure:
i) Among all qualified bids, the lowest bid will be termed L1. If L1 is a ‘Class-I local
supplier’, the contract will be awarded to L1.
ii) If L1 is not a ‘Class-I local supplier’, the lowest bidder among the ‘Class-I local
suppliers’ will be invited to match the L1 price subject to the Class-I local
supplier’s quoted price falling within the margin of purchase preference(L1+20%),
and the contract shall be awarded to such ‘Class-I local supplier’ subject to
matching the L1 price.
iii) In case the lowest eligible ‘Class-I local supplier’ fails to match the L1 price, the
‘Class-I local supplier’ with the next higher bid within the margin of purchase
preference (L1+20%) shall be invited to match the L1 price and so on, and the
contract shall be awarded accordingly. In case none of the ‘Class-I local suppliers’
within the margin of purchase preference matches the L1 price, the contract may
be awarded to the L1 bidder.
d) “Class-II local supplier” will not get a preference for any procurement undertaken by
procuring entities.
12Manual for Procurement of Works, Second Edition, 2025
4A. Applicability in tenders where the contract is to be awarded to multiple bidders:
In tenders where the contract is awarded to multiple bidders subject to matching of L1
rates or otherwise, the ‘Class-I local supplier’ shall get purchase preference over ‘Class-
II local supplier’ as well as ‘Non-local supplier’, as per following procedure:
a) In case there is sufficient local capacity and competition for the item to be procured,
as notified by the nodal Ministry, only Class I local suppliers shall be eligible to bid. As
such, the multiple suppliers who would be awarded the contract should be all and only
‘Class I Local suppliers.’
b) In other cases, ‘Class II local suppliers’ and ‘Non-local suppliers’ may also participate
in the tender process along with ‘Class I Local suppliers’ as per provisions of the
Order.
c) If ‘Class I Local suppliers’ qualify for the award of contract for at least 50 (fifty) per
cent of the tendered quantity in any tender, the contract may be awarded to all the
qualified bidders as per award criteria stipulated in the tender documents. However,
in case ‘Class I Local suppliers’ do not qualify for the award of contract for at least 50
(fifty) per cent of the tendered quantity, purchase preference should be given to the
‘Class I local supplier’ over ‘Class II local suppliers’/ ‘Non-local suppliers’ provided that
their quoted rate falls within 20 (twenty) per cent margin of purchase preference of the
highest quoted bidder considered for award of contract so as to ensure that the ‘Class
I Local suppliers’ taken in totality are considered for award of contract for at least 50
(fifty) per cent of the tendered quantity.
d) The margin of purchase preference shall be 20%. Only those ‘Class-I local suppliers’
would be eligible for purchase preference whose quoted rates fall within the margin of
purchase preference, subject to its meeting the prescribed criteria for award of
contract as also the constraint of maximum quantity that can be sourced from any
single supplier. First, purchase preference must be given to the lowest quoting eligible
‘Class-I local supplier.’ If the lowest quoting ‘Class-I local supplier’ does not qualify for
purchase preference because of aforesaid constraints or does not accept the offered
quantity, an opportunity may be given to the next higher eligible ‘Class-I local supplier,’
and so on. In case the quantity thus allocated to eligible ‘Class-I local suppliers’ is
short of 50% of the tendered quantity, then this shortfall quantity may be distributed
among all other qualified bidders as per award criteria stipulated in the tender
documents.
e) To avoid any ambiguity during the bid evaluation process, the procuring entities may
stipulate their own tender-specific criteria for the award of contracts amongst different
bidders, including the procedure for purchase preference to ‘Class-I local supplier’
within the broad policy guidelines stipulated in the sub-paras above.
5. Exemption of small purchases: Notwithstanding anything contained in sub-para 1
above, procurements where the estimated value to be procured is less than Rs. 5 lakhs
shall be exempt from the Order. However, it shall be ensured by procuring entities that
procurement is not split for the purpose of avoiding the provisions of this Order.
5A. Exemption in the sourcing go spares and consumables of closed system:
Procurement of spare parts, consumables for closed systems and Maintenance/ Service
contracts with Original Equipment Manufacturer/ Original Equipment Supplier/ Original
Part Manufacturer shall be exempted from this Order.
6. Minimum local content: The ‘local content’ requirement to categorise a supplier as a
‘Class-I local supplier’ is a minimum of 50 (fifty) per cent. For ‘Class-II local suppliers,’ the
13Chapter 1: Introduction to Procurement of Works
‘local content’ requirement is a minimum of 20 (twenty) per cent. Nodal Ministry/
Department may prescribe only a higher percentage of the minimum local content
requirement to categorise a supplier as a ‘Class-I local supplier’/ ‘Class-II local supplier.’
For the items for which the Nodal Ministry/ Department has not prescribed higher
minimum local content notification under the Order, it shall be 50 (fifty) per cent and 20
(twenty) per cent for ‘Class-I local supplier’/ ‘Class-II local supplier’ respectively. It may be
noted that local content is not related to the nationality of the firm – a foreign-owned firm
may also become a Class-I or Class-II local supplier by adding local value addition.
7. Requirement for specification in advance: The minimum local content, the margin of
purchase preference and the procedure for preference to Make in India shall be specified
in the notice inviting tenders or other form of procurement solicitation and shall not be
varied during a particular procurement transaction.
8. Government E-marketplace: In respect of procurement through the Government E-
marketplace (GeM), shall, as far as possible, specifically mark the items that meet the
minimum local content while registering the item for display and shall, wherever feasible,
make provision for automated comparison with purchase preference and without
purchase preference and for obtaining consent of the local supplier in those cases where
purchase preference is to be exercised.
9. Verification of local content:
a) The ‘Class-I local supplier’/ ‘Class-II local supplier’ at the time of tender, bidding or
solicitation shall be required to indicate percentage of local content and provide self-
certification that the item offered meets the local content requirement for ‘Class-I local
supplier’/ ‘Class-II local supplier’, as the case may be. They shall also give details of
the location(s) at which the local value addition is made.
b) In cases of procurement for a value in excess of Rs. 10 crores, the ‘Class-I local
supplier’/ ‘Class-II local supplier’ shall be required to provide a certificate from the
statutory auditor or cost auditor of the company (in the case of companies) or from a
practicing cost accountant or practicing chartered accountant (in respect of suppliers
other than companies) giving the percentage of local content.
c) The bidder shall give self-certification for local content in the quoted item (goods/
works/ services) at the time of tendering. However, at the time of execution of the
project, for all contracts above INR 10 Crore, the contractor/ supplier shall be required
to give local content certification duly certified by cost/ chartered accountant in
practice. For cases where it is not possible to provide certification by Cost/ Chartered
Accountant at the time of execution of project, the supplier shall be permitted to
provide the certificate for local content from Cost/ Chartered Accountant after
completion of the contract, within the limit acceptable to the procuring entity. In case
the contractor/ supplier does not meet the stipulated local content requirement and
the category of the supplier changes from Class-I to Class-II/ Non-local or from Class-
II to Non-local, a penalty upto 10% of the contract value may be imposed. However,
contract once awarded shall not be terminated on this account.
d) Decisions on complaints relating to implementation of this Order shall be taken by the
competent authority which is empowered to look into procurement-related complaints
relating to the procuring entity.
e) Nodal Ministries may constitute committees with internal and external experts for
independent verification of self-declarations and auditor’s/ accountant’s certificates on
random basis and in the case of complaints.
14Manual for Procurement of Works, Second Edition, 2025
f) Nodal Ministries and procuring entities may prescribe fees for such complaints.
g) False declarations will be in breach of the Code of Integrity under Rule 175(1)(i)(h) of
the General Financial Rules for which a bidder or its successors can be debarred for
up to two years as per Rule 151 (iii) of the General Financial Rules along with such
other actions as may be permissible under law.
h) A supplier who has been debarred by any procuring entity for violation of the Order
shall not be eligible for preference under the Order for procurement by any other
procuring entity for the duration of the debarment. The debarment for such other
procuring entities shall take effect prospectively from the date on which it comes to
the notice of other procurement entities in the manner prescribed above.
i) The Department of Expenditure shall issue suitable instructions (please refer to para
8.7 of this manual) for the effective and smooth operation of this process, so that:
i) The fact and duration of debarment for violation of the Order by any procuring
entity are promptly brought to the notice of the Member-Convenor of the Standing
Committee and the Department of Expenditure through the concerned Ministry
/Department or in some other manner;
ii) on a periodical basis such cases are consolidated and a centralized list or
decentralised list of such suppliers with the period of debarment is maintained
and displayed on the website(s);
iii) in respect of procuring entities other than the one that has carried out the
debarment, the debarment takes effect prospectively from the date of uploading
on the website(s) in such a manner that ongoing procurements are not disrupted.
10. Specifications in Tenders and other procurement solicitations:
a) Every procuring entity shall ensure that the eligibility conditions in respect of previous
experience fixed in any tender or solicitation do not require proof of supply in other
countries or proof of exports.
b) Procuring entities shall endeavour to see that eligibility conditions, including on
matters like turnover, production capability, and financial strength, do not result in
unreasonable exclusion of ‘Class-I local supplier’/ ‘Class-II local supplier’ who would
otherwise be eligible beyond what is essential for ensuring quality or creditworthiness
of the supplier.
c) Procuring entities shall review all existing eligibility norms and conditions with
reference to sub-paragraphs (a) and (b) above.
d) Reciprocity Clause:
i) When a Nodal Ministry/Department identifies that Indian suppliers of an item are
not allowed to participate and/ or compete in procurement by any foreign
government due to restrictive tender conditions which have direct or indirect effect
of barring Indian companies such as registration in the procuring country,
execution of projects of specific value in the procuring country etc., it shall provide
such details to all its procuring entities including CMDs/CEOs of PSEs/PSUs,
State Governments and other procurement agencies under their administrative
control and GeM for appropriate reciprocal action.
ii) Entities of countries that have been identified by the nodal Ministry/Department
as not allowing Indian companies to participate in their Government procurement
for any item related to that nodal Ministry shall not be allowed to participate in
Government procurement in India for all items related to that nodal Ministry/
15Chapter 1: Introduction to Procurement of Works
Department, except for the list of items published by the Ministry/ Department
permitting their participation.
iii) The stipulation in sub-para ii) above shall be part of all tenders invited by the
Central Government procuring entities stated in sub-para 2-h) above. All
purchases on GeM shall also necessarily have the above provisions for items
identified by the nodal Ministry/ Department.
iv) State Governments should be encouraged to incorporate similar provisions in
their respective tenders.
v) The term ‘entity’ of a country shall have the same meaning as under the FDI
Policy of DPIIT as amended from time to time.
e) Specifying foreign certifications/ unreasonable technical specifications/ brands/
models in the bid document is a restrictive and discriminatory practice against local
suppliers. If foreign certification is required to be stipulated because of non-availability
of Indian Standards and/or for any other reason, the same shall be done only after
written approval of the Secretary of the Department concerned or any other Authority
having been designated such power by the Secretary of the Department concerned.
f) "All administrative Ministries/Departments whose procurement exceeds Rs. 1000
Crore per annum shall notify/update their procurement projections every year,
including those of the PS Es/PS Us, for the next 5 years on their respective website."
10A. Action for non-compliance of the Provisions of the Order: In case restrictive or
discriminatory conditions against domestic suppliers are included in bid documents, an
inquiry shall be conducted by the Administrative Department undertaking the
procurement (including procurement by any entity under its administrative control) to fix
responsibility for the same. Thereafter, appropriate action, administrative or otherwise,
shall be taken against erring officials of procurement entities under relevant provisions.
Intimation on all such actions shall be sent to the Standing Committee.
11. Assessment of supply base by Nodal Ministries: The Nodal Ministry shall keep in view
the domestic manufacturing / supply base and assess the available capacity and the
extent of local competition while identifying items and prescribing the higher minimum
local content or the manner of its calculation, with a view to avoiding cost increase from
the operation of this Order.
12. Increase in minimum local content: The Nodal Ministry may annually review the local
content requirements with a view to increasing them, subject to availability of sufficient
local competition with adequate quality.
13. Manufacture under license/ technology collaboration agreements with phased
indigenization: While notifying the minimum local content, Nodal Ministries may make
special provisions for exempting suppliers from meeting the stipulated local content if the
product is being manufactured in India under a license from a foreign manufacturer who
holds intellectual property rights and where there is a technology collaboration agreement/
transfer of technology agreement for indigenous manufacture of a product developed
abroad with clear phasing of increase in local content.
13A. In the procurement of all goods, services or works in respect of which there is a
substantial quantity of public procurement and for which the nodal ministry has not
notified that there is sufficient local capacity and local competition, the concerned nodal
ministry shall notify an upper threshold value of procurement beyond which foreign
companies shall enter into a joint venture with an Indian company to participate in the
tender. Procuring entities, while procuring such items beyond the notified threshold
16Manual for Procurement of Works, Second Edition, 2025
value, shall prescribe in their respective tenders that foreign companies may enter into
a joint venture with an Indian company to participate in the tender. The procuring
Ministries/Departments shall also make special provisions for exempting such joint
ventures from meeting the stipulated minimum local content requirement, which shall be
increased in a phased manner.
14. Powers to grant exemption and to reduce minimum local content:
a) The administrative Department undertaking the procurement (including procurement
by any entity under its administrative control), with the approval of their Minister-in-
charge, may by written order, for reasons to be recorded in writing,
i) reduce the minimum local content below the prescribed level; or
ii) reduce the margin of purchase preference below 20 (twenty) percent; or
iii) exempt any particular item or supplying entities from the operation of this Order
or any part of the Order.
b) The Administrative Department, while seeking exemption under this para, shall certify
that such an item(s) has not been notified by Nodal Ministry/ Department concerned
under sub-para 3A-a) above.
c) A copy of every such order shall be provided to the Standing Committee and
concerned Nodal Ministry / Department. The Nodal Ministry / Department concerned
will continue to have the power to vary its notification on Minimum Local Content.
15. Directions to Government companies: In respect of Government companies and other
procuring entities not governed by the General Financial Rules, the administrative Ministry
or Department shall issue policy directions requiring compliance with this Order.
16. Standing Committee:
a) A standing committee is hereby constituted with the following membership
i) Secretary, Department for Promotion of Industry, and Internal Trade-Chairman
ii) Secretary, Commerce-Member
iii) Secretary, Ministry of Electronics and Information Technology-Member
iv) Joint Secretary (Public Procurement), Department of Expenditure-Member
v) Joint Secretary (DPIIT)-Member-Convenor
b) The Secretary of the Department concerned with a particular item shall be a member
in respect of issues relating to such item. The Chairman of the Committee may co-opt
technical experts as relevant to any issue or class of issues under its consideration.
17. Functions of the Standing Committee: The Standing Committee shall meet as often as
necessary but not less than once in six months. The Committee
a) shall oversee the implementation of this order and issues arising therefrom and make
recommendations to Nodal Ministries and procuring entities.
b) shall annually assess and periodically monitor compliance with this Order.
c) shall identify Nodal Ministries and the allocation of items among them for issue of
notifications on minimum local content.
d) may require the furnishing of details or returns regarding compliance with this Order
and related matters.
e) may, during the annual review or otherwise, assess issues, if any, where it is felt that
the manner of implementation of the order results in any restrictive practices,
cartelisation or increase in public expenditure and suggest remedial measures.
f) may examine cases covered by paragraph (xiii) above relating to manufacture under
license/ technology transfer agreements with a view to satisfying itself that adequate
17Chapter 1: Introduction to Procurement of Works
mechanisms exist for enforcement of such agreements and for attaining the
underlying objective of progressive indigenisation.
g) May consider any other issue relating to this Order which may arise.
18. Removal of difficulties: Ministries /Departments and the Boards of Directors of
Government companies may issue such clarifications and instructions as may be
necessary for the removal of any difficulties arising in the implementation of the Order.
19. Ministries having existing policies: Where any Ministry or Department has its own
policy for preference to local content approved by the Cabinet after 1st January 2015, such
policies will prevail over the provisions of the Order. All other existing orders on preference
to local content shall be reviewed by the Nodal Ministries and revised as needed to
conform to this Order, within two months of the issue of this Order.
20. Please refer to the FAQs related to the PPP-MII order issued by DPIIT, placed in
Annexure 18.
1.11.3 Restrictions/ Prior Registration on Entities from a Class of Countries
(Rule 144 (xi)), GFR 2017)
1. Requirement of registration: Rule 144 of GFR, 2017, has been amended to include a
new sub-para (xi) as follows:
“Notwithstanding anything contained in these Rules, Department of
Expenditure may, by order in writing, impose restrictions, including prior
registration and/ or screening, on procurement from bidders from, or bidders
having commercial arrangements with an entity from, a country or countries, or
a class of countries, on grounds of defence of India, or matters directly or
indirectly related thereto including national security; no procurement shall be
made in violation of such restrictions.”
2. Detailed provisions in this regard have been notified by the Department of Expenditure's
OM No. F.7/10/2021-PPD (1) dated 23.02.2023 (Public Procurement Order No. 4 –
hereinafter referred to in this section as the ‘Order’), are as follows.
a) Any bidder from a country which shares a land border with India will be eligible to bid
in any procurement, whether of goods, services (including consultancy services and
non-consultancy services) or works (including turnkey projects) only if the bidder is
registered with the Competent Authority. The information on Competent Authority is
given in sub-para 10 below.
b) Any bidder (including an Indian bidder) who has a Specified Transfer of Technology
(ToT) arrangement with an entity from a country that shares a land border with India
will be eligible to bid in any procurement, whether of goods, services (including
consultancy services and non-consultancy services) or works (including turnkey
projects) only if the bidder is registered with the Competent Authority, specified in
sub-para 10 below.
c) The requirement of registration for cases covered by sub-para a) above has been
applicable since 23.07.2020. The requirement of registration for bidders covered by
sub-para b) above will be applicable for all procurements where tenders are issued/
published after 01.04.2023.
d) In tenders issued after 23.07.2020 or 01.04.2023, as the case may be, the provisions
of the requirement of registration of bidders and of other relevant provisions of this
Order shall be incorporated in the tender conditions.
18Manual for Procurement of Works, Second Edition, 2025
3. Applicability:
a) Apart from Ministries/Departments, attached and subordinate bodies, notwithstanding
anything contained in Rule 1 of the GFR 2017, the Order shall also be applicable to:
i) all Autonomous Bodies;
ii) all public sector banks and public sector financial institutions;
iii) all Central Public Sector Enterprises;
iv) all procurement in Public Private Partnership projects receiving financial support
from the Government or public sector enterprises/ undertakings; and
v) all Union Territories, National Capital Territory of Delhi, and all agencies/
undertakings thereof.
b) The Order will not be applicable to:
i) projects that receive international funding with the approval of the Department of
Economic Affairs (DEA), Ministry of Finance, the procurement guidelines
applicable to the project shall normally be followed, notwithstanding anything
contained in this order and without reference to the Competent Authority.
Exceptions to this shall be decided in consultation with DEA.
ii) procurement made by Indian missions and by offices of government agencies/
undertakings located outside India.
iii) bidders (or entities) from those countries (even if sharing a land border with India)
to which the Government of India has extended lines of credit or in which the
Government of India is engaged in development projects. Updated lists of
countries to which lines of credit have been extended or in which development
projects are undertaken are given on the website of the Ministry of External
Affairs10.
iv) procurement of spare parts and other essential service support like Annual
Maintenance Contract (AMC)/ Comprehensive Maintenance Contract (CMC),
including consumables for closed systems, from Original Equipment
Manufacturers (OEMs) or their authorized agents.
4. Definitions:
a) “Bidder" for the purpose of the Order (including the term ‘bidder’, ‘consultant’ ‘vendor’
or ‘service provider’ in certain contexts) means any person or, firm or company,
including any member of a consortium or joint venture (that is an association of several
persons, or firms or companies), every artificial juridical person not falling in any of the
descriptions of bidders stated hereinbefore, including any agency, branch or office
controlled by such person, participating in a procurement process.
b) “Tender” for the purpose of the Order will include other forms of procurement, except
where the context requires otherwise.
c) “Transfer of Technology” means dissemination and transfer of all forms of
commercially usable knowledge, such as transfer of know-how, skills, technical
expertise, designs, processes and procedures, and trade secrets, which enables the
acquirer of such technology to perform activities using the transferred technology
independently. (Matters of interpretation of this term shall be referred to the
Registration Committee constituted by the Department for Promotion of Industry and
Internal Trade, and the interpretation of the Committee shall be final.)
10https://mea.gov.in/Lines-of-Credit-for-Development-Projects.htm
19Chapter 1: Introduction to Procurement of Works
d) “Specified Transfer of Technology” means a transfer of technology in the sectors and/
or technologies specified in sub-para 5 below, occurring on or after 23.07.2020.
e) “Bidder (or entity) from a country which shares a land border with India” for the
purpose of the Order means:
i) An entity incorporated, established, or registered in such a country; or
ii) A subsidiary of an entity incorporated, established, or registered in such a country;
or
iii) An entity substantially controlled through entities incorporated, established, or
registered in such a country or
iv) An entity whose beneficial owner is situated in such a country or
v) An Indian (or other) agent of such an entity; or
vi) A natural person who is a citizen of such a country; or
vii) A consortium or joint venture where any member of the consortium or joint venture
falls under any of the above
f) “Agent” for the purpose of the Order is a person employed to do any act for another
or to represent another in dealings with third persons.
Note
1. A person who procures and supplies finished goods from an entity from a
country that shares a land border with India will, regardless of the nature of
his legal or commercial relationship with the producer of the goods, be
deemed to be an Agent for the purpose of this Order.
2. However, a bidder who only procures raw material, components, etc., from
an entity from a country that shares a land border with India and then
manufactures or converts them into other goods will not be treated as an
Agent.
g) Beneficial owner for the purposes of point e(iv) will be as under:
i) In the case of a company or Limited Liability Partnership, the beneficial owner is
the natural person(s) who, whether acting alone or together or through one or
more juridical person(s), has a controlling ownership interest or who exercises
control through other means.
Explanation: -
1) “Controlling ownership interest” means ownership of, or entitlement to, more
than twenty-five per cent of shares or capital or profits of the company;
2) “Control” shall include the right to appoint the majority of the directors or to
control the management or policy decisions, including by virtue of their
shareholding or management rights or shareholders agreements or voting
agreements;
ii) In the case of a partnership firm, the beneficial owner is the natural person(s)
who, whether acting alone or together or through one or more juridical persons,
has ownership of entitlement to more than fifteen percent of capital or profits of
the partnership;
iii) In the case of an unincorporated association or body of individuals, the beneficial
owner is the natural person(s), who, whether acting alone or together or through
one or more juridical persons, has ownership of or entitlement to more than fifteen
percent of the property or capital or profits of such association or body of
individuals;
20Manual for Procurement of Works, Second Edition, 2025
iv) Where no natural person is identified under sub-para g(i) or g(ii) or g(iii) above,
the beneficial owner is the relevant natural person who holds the position of senior
managing official;
v) In the case of a trust, the identification of beneficial owner(s) shall include
identification of the author of the trust, the trustee, the beneficiaries with fifteen
per cent or more interest in the trust and any other natural person exercising
ultimate effective control over the trust through a chain of control or ownership.
vi) To determine nationality while assessing the beneficial ownership of the bidder,
the nationality mentioned in the beneficiary owner's passport should be
considered. In case of the possibility of dual citizenship, nationality on all the
passports should be considered through a suitable declaration. If nationality in
any of the passports of the person whose beneficial ownership is being assessed,
is recorded to be from a country sharing a land border with India, the provisions
contained under this Order shall apply. Hong Kong and Macau are to be
considered as part of China for the purpose of this Order.
5. Sensitive Sectors/ Technologies (relevant only for the provisions on ToT arrangements;
please refer to sub-para 2-b) above):
a) Certain sectors and technologies have been identified as sensitive from the national
security point of view. The sectors listed in Schedule I to the Order are considered
Category-I sensitive sectors. The sectors listed in Schedule II to the Order are
considered Category-ll sensitive sectors. The technologies listed in Schedule III are
considered sensitive technologies.
List of Category-I Sensitive sectors (Schedule-I)
S. No Sectors
1 Atomic Energy
2 Broadcasting/ Print and Digital Media
3 Defence
4 Space
5 Telecommunications
List of Category-II Sensitive sectors (Schedule-II)
S. No Sectors
1 Power and Energy (including exploration/ generation/ transmission/
distribution/ pipeline)
2 Banking and Finance, including Insurance
3 Civil Aviation
4 Construction of ports and dams & river valley projects
5 Electronics and Microelectronics
6 Meteorology and Ocean Observation
7 Mining and extraction (including deep sea projects)
8 Railways
9 Pharmaceuticals & Medical Devices
10 Agriculture
11 Health
12 Urban Transportation
21Chapter 1: Introduction to Procurement of Works
List of Sensitive Technologies (Schedule-III)
S. No Sectors
1 Additive Manufacturing (e.g., 3D Printing)
2 Any equipment having electronic programmable components or autonomous
systems (e.g., SCADA systems)
3 Any technology used for uploading and streaming of data, including
broadcasting, satellite communication, etc.
4 Chemical Technologies
5 Biotechnologies, including Genetic Engineering and Biological Technologies
6 Information and Communication Technologies
7 Software
b) For Category-I sensitive sectors, bidders with ToT arrangement in any technology with
an entity from a country that shares a land border with India shall require registration.
c) For Category-ll sensitive sectors, bidders with ToT arrangement in the sensitive
technologies listed in Schedule III, with an entity from a country which shares a land
border with India shall require registration.
d) In Category-ll sensitive sectors, the Secretary (or an officer not below the rank of Joint
Secretary to Government of India, so authorised by the Secretary) of the Ministry/
Department of the Government of India is empowered, after due consideration, to
waive the requirement of registration for a particular item/ application or a class of
items/ applications from the requirement of registration, even if included in Schedule
III. The Ministry/ Department concerned shall intimate the Department for Promotion
of Industry and Internal Trade (DPIIT) and National Security Council Secretariat
(NSCS) of their decision to waive the requirement of registration. Ministries/
Departments of the Government of India are not required to consult the DPIIT/ NSCS
before deciding and are only required to intimate the decision to DPIIT/ NSCS. If any
point is raised by DPIIT/ NSCS, it should be considered in future procurements;
ongoing procurement for which the waiver was granted need not be interrupted or
altered.
e) Based on security considerations, a Ministry/ Department in a Category II sensitive
sector or other Ministries/ Departments may recommend to DPIIT the inclusion of any
other technology in the list of sensitive technologies, either generally or for their
Ministry/ Department.
6. Sub-contracting in works contracts: In works contracts, including turnkey contracts,
contractors shall not be allowed to sub-contract works to any contractor from a country
that shares a land border with India unless such contractor is registered with the
Competent Authority. The definition of “contractor from a country which shares a land
border with India” shall be as in sub-para 4-(e) above. This shall not apply to sub-contracts
already awarded on or before 23.07.2020.
(Note: Procurement of raw material, components, etc. does not constitute sub-
contracting)
7. Model Clauses/ Certificate regarding compliance: A certificate shall be taken from
bidders in the tender documents that the extant guidelines for participation in the tenders
(which should include conditions for implementation of this Order) have been complied
with. If such a certificate is given by a bidder whose bid was accepted is found to be false,
this would be a ground for debarment and further legal action in accordance with the law.
Model Clauses and Model Certificates, which may be inserted in tenders / obtained from
22Manual for Procurement of Works, Second Edition, 2025
Bidders, are given in Annexure-19. While adhering to the substance of the Order,
procuring entities are free to appropriately modify the wording of these clauses based on
their past experience, local needs, etc.
8. Validity of registration: In respect of tenders, registration should be valid at the time of
submission of bids and at the time of acceptance of bids. In respect of supply otherwise
than by tender, registration should be valid at the time of placement of order. If the bidder
was validly registered at the time of acceptance / placement of order, registration shall
not be a relevant consideration during contract execution.
9. Government e-Marketplace: GeM shall remove non-compliant entities from GeM
unless/ until they are registered in accordance with this Order.
10. Competent Authority and Procedure for Registration:
a) The Competent Authority for the purpose of registration under this Order shall be the
Registration Committee constituted by the Department for Promotion of Industry and
Internal Trade (DPIIT) (Notified vide OM No. F.6/18/2019-PPD issued by Department
of Expenditure dated 23.07.2020)
Note:
1. In respect of application of the Order to procurement by/ under State
Governments, all functions assigned to DPIIT shall be carried out by the State
Government concerned through a specific department or authority designated
by it. The composition of the Registration Committee shall be as decided by
the State Government. However, the requirement of political and security
clearance as per para 10 (d) shall remain, and no registration shall be granted
without such clearance.
2. Registration granted by State Governments shall be valid only for
procurement by the State Government and its agencies/ public enterprises,
etc., and shall not be valid for procurement in other states or by the
Government of India and their agencies/ public enterprises, etc.
b) The Registration Committee shall have the following members:
i) An officer not below the rank of Joint Secretary, designated for this purpose by
DPIIT, who shall be the Chairman;
ii) Officers (ordinarily not below the rank of Joint Secretary) representing the Ministry
of Home Affairs, Ministry of External Affairs, and of those Departments whose
sectors are covered by applications under consideration;
iii) Any other officer whose presence is deemed necessary by the Chairman of the
Committee.
iv) With effect from 01.04.2023, an officer (ordinarily not below the rank of Joint
Secretary) representing the National Security Council Secretariat.
c) DPIIT has laid down the method of application, format etc. for such bidders as covered
by the Order.
d) On receipt of an application seeking registration from a bidder covered by sub-para
2(a) and 2(b) above, the Competent Authority shall first seek political and security
clearances from the Ministry of External Affairs and Ministry of Home Affairs, as per
guidelines issued from time to time. Registration shall not be given unless political and
security clearance have both been received.
e) The Ministry of External Affairs and Ministry of Home Affairs may issue guidelines for
internal use regarding the procedure for scrutiny of such applications by them.
23Chapter 1: Introduction to Procurement of Works
f) The decision of the Competent Authority to register such bidder may be for all kinds
of tenders or for a specified type(s) of goods or services and may be for a specified
or unspecified duration of time, as deemed fit. The decision of the Competent
Authority shall be final.
g) Registration granted by the Competent Authority of the Government of India shall be
valid not only for procurement by the Central Government and its bodies specified in
sub-para 3 above but also for procurement by State Governments and their agencies/
public enterprises, etc. No fresh registration at the State level shall be required.
h) The Competent Authority is empowered to cancel the registration already granted if it
determines that there is sufficient cause. Such cancellation by itself, however, will not
affect the execution of contracts already awarded. Pending cancellation, it may also
suspend the registration of a bidder, and the bidder shall not be eligible to bid in any
further tenders during the period of suspension.
i) For national security reasons, the Competent Authority shall not be required to give
reasons for rejection/ cancellation of registration of a bidder.
11. Clarifications regarding the applicability of the restrictions under Rule 144 (xi) of
the GFR:
a) The proprietary purchases are not excluded from the provisions of the Rule 144 (xi)
of GFR, 2017.
b) The rule is applicable on all purchases irrespective of the order value.
c) The provisions of Rule 144 (xi) are not applicable in the case of selling of raw materials
by a Government agency (like a CPSE/ Autonomous Bodies, etc.).
d) The provisions of Rule 144 (xi) are not applicable on the export to the countries
sharing land border with India.
e) Sub-contracting is not permitted to any contractor from a country sharing a land border
with India unless registered with the competent authority. However, it is to be noted
that procurement of raw materials, components, etc., does not constitute sub-
contracting. In case a bidder has proposed to supply finished goods procured directly/
indirectly from vendors from the countries which share a land border with India, such
vendor will be required to be registered with the Competent Authority as per the
provisions of Rule 144 (xi) of GFR, 2017.
f) There is no bar on the contractor from procuring raw material from a firm that has
been acquired by another firm belonging to a country that shares a land border with
India.
g) Contract Manufacturing outside India: If the bidder is getting the subject product
manufactured outside India, this is treated as contract manufacturing, and beneficial
ownership of the foreign manufacturing entity must be verified. If the foreign
manufacturer is covered by the beneficial ownership criteria (para 4-g above) – then
the bidder must submit DPIIT registration of such manufacturer to participate in the
procurement.
h) Hiring of Services: Suppose a Bidder (Indian/ Foreign), who is not from a country
sharing a land border with India, offers services to a procuring entity by arranging
equipment from another company; then the following scenarios may appear:
S. No Scenario Applicability of Rule 144 (xi)
a) The equipment/ goods have been The bidder has procured certain goods to
purchased or will be purchased offer the requisite services to a procuring
from a company (manufacturer) entity. In such case, the bidder does not
24Manual for Procurement of Works, Second Edition, 2025
S. No Scenario Applicability of Rule 144 (xi)
from a country which shares a land fall within the definition of the terms
border with India. “bidder” as defined under sub-para 4-e)
above. Hence, the provisions of Rule 144
(xi) of GFR, 2017 do not apply to this
case.
b) By entering into a MOU/ lease Here, the bidding vendor proposes to hire
agreement with the company (who services from a company that belongs to
owns the equipment/ goods) from a country that shares a land border with
a country that shares a land border India. This prima facie becomes the case
with India of an indirect supply of services by a
company that owns the equipment/
goods by introducing an intermediary.
The intermediary merely acts as an agent
to the company providing services of the
equipment. In such a case registration of
company owning the equipment and
indirectly supplying the services shall
require to be registered with the
competent authority, thereby requiring
the need to fulfil the provisions of Rule
144 (xi).
c) By entering into an MOU/ lease In this case, the actual supplier of
agreement with the company (say services, prima facie, shall be ‘X.’ The
‘X’, who is the present owner of the status of ‘X’ in this case does not attract
equipment) from a country that the provisions of Rule 144 (xi).
does not share a land border with
India. The equipment has been
purchased from the manufacturer
of the company (say ‘Y’), which is
from a country that shares a land
border with India.
12. Illustrative examples of the applicability of the Restrictions under Rule 144 (xi) of
GFR 2017
a) A vendor, say, ‘Party A’ from India, is procuring an item from their sister company,
say, ‘Party B,’ which is registered in a country not sharing a land border with India.
Both the parties, Party A and B, are owned by an entity that does not belong to a
country sharing a land border with India. Party B has its production facility in a country
sharing land border with India. The manufactured item will be procured by Party A
from its sister concern, i.e., Party B from the above-mentioned production facility. The
production unit is wholly owned by Party B. The Party A now claims that the provisions
of Rule 144 (xi) of GFR 2017 do not apply on it because:
i) Both Party A and B are not an entity incorporated, established, or registered in
such a country, since Party A is registered in India and Party B is registered in a
country not sharing land border with India;
25Chapter 1: Introduction to Procurement of Works
ii) Both Party A and B are 100% owned subsidiary of an entity, which is incorporated,
registered, and established in a country not sharing land border with India;
iii) The beneficial owner of Party A and B is not situated in a country sharing land
border with India since they are owned by an entity belonging to country not
sharing land border with India;
iv) Both Party A and B are not an Indian (or other) agent of such an entity;
v) Both A and B are not a natural person who is a citizen of such a country;
vi) Both A and B are not a consortium or joint venture where any member of the
consortium or joint venture falls under any of the above. Though, Party B has a
wholly owned subsidiary in a country that shares a land border with India but is
not a JV or consortium (a subsidiary does not qualify as a JV or consortium)
vii) In addition to the above, Party A claims that they are not procuring finished goods
directly/ indirectly from the vendors from the countries sharing a land border with
India as the item is being manufactured in their own production units.
viii) In light of the above facts and the claims put forth by Party A, it is important to
clarify to the procurers that Party A acts as an agent for Party B, which
manufactures goods in a country sharing a land border with India. Party B
supplies goods manufactured at premises established in a country that shares a
land border with India. In such a case, registration is required for Party B (and not
necessarily for Party A, who is only an agent and not from a country sharing a
land border with India).
b) Taking an example of IT goods and services:
i) if the contractor is only supplying the servers as it is from an OEM that belongs to
a country sharing a land border with India, and there is no value addition done by
the contractor, then the contractor acts as an agent for the OEM and registration
of the OEM and the agent (contractor) both are required as per the provisions of
Rule 144 (xi) of GFR 2017.
ii) In case the contractor supplies value added services on a hardware, the
contractor outsources, in that case the registration of OEM is not required.
iii) Where there is deployment of IT services that includes both hardware and
software customization, and the contractor has sourced hardware, which is made
in the country sharing land border with India, the requirement of registration as
per the provisions of Rule 144 (xi) are not applicable.
1.11.4 Support to Start-up Enterprises:
1. Definition of Start-up Enterprises:
a) As defined by DPIIT, an entity shall be considered as a 'Start-up':
i) Upto a period of ten years from the date of incorporation/ registration, if it is
incorporated as a private limited company (as defined in the Companies Act,
2013) or registered as a partnership firm (registered under section 59 of the
Partnership Act, 1932) or a limited liability partnership (under the Limited Liability
Partnership Act, 2008) in India, and
ii) Turnover of the entity for any of the financial years since incorporation/
registration has not exceeded one hundred crore rupees, and
iii) The entity works towards innovation, development or improvement of products or
processes or services or a scalable business model with a high potential for
employment generation or wealth creation.
26Manual for Procurement of Works, Second Edition, 2025
b) Provided that an entity formed by splitting up or reconstructing an existing business
shall not be considered a ‘Start-up’.
c) Provided further that in order to obtain benefits a Startup so identified under the above
definition shall be required to be recognized as Startup by DPIIT.
2. Support to Start-ups: The Government of India has ordered the following support to
Start-ups (as defined by the Department for Promotion of Industrial and Internal Trade -
DPIIT).
a) Exemption from submission of Bid Security: Such Start-ups shall be exempted
from submission of Earnest Money Deposit/ Bid Security.
b) 11Relaxation in Prior Turnover and Experience: The Procuring Entity reserves its
right to relax the condition of prior turnover and prior experience for start-up
enterprises recognized by the Department for Industry & Internal Trade (DPIIT),
subject to meeting quality & technical specifications. Startups may be MSEs or
otherwise. Such relaxation can be provided in the case of procurement of works as
well. It is further clarified that such relaxation is not optional but normally has to be
ensured, except in case of procurement of items related to public safety, health,
critical security operations and equipment, etc) where adequate justification exists for
the Procuring Entity not to relax such criteria12. The decision of the Procuring Entity
in this regard shall be final. The benefits under Startup policy will be applicable only
for the particular industry/ sector for which they are registered with DPIIT (necessary
certificate to be obtained from the bidder in this regard). Please also refer to para
3.9.1-6 and 4.2.6-4 (Rule 173 (i) of GFR 2017).
1.11.5 Domestically Manufactured Iron & Steel Products (DMI&SP Policy) - Revised,
2025 – as applicable to EPC tenders.
1. Background
a) This policy issued by Ministry of Steel vide notification no: G.S.R. 341(E) dated 26th
May 2025 provides preference for Domestically Manufactured Iron and Steel Products
(DMI&SP) in Government procurement.
b) The policy applies to procurement of iron & steel products notified in Appendix A. In
Appendix B, the minimum domestic content and an exempted list of capital goods for
manufacturing iron & steel products which can be imported have been listed.
Appendix C contains the policy for promoting the procurement of technology from the
indigenous technology suppliers.
2. Definitions
a) Bidder may be a domestic/ foreign manufacturer of iron & steel or their selling agents/
authorized distributors/authorized dealers/ authorized supply houses, or any other
company engaged in the bidding of projects funded by Government agencies.
b) Domestically Manufactured Iron & Steel Products are those iron and steel products
that are manufactured by entities that are registered and established in India, including
in Special Economic Zones (SEZs).
c) Domestic Manufacturer is a manufacturer of iron & steel products conforming to
guidelines in section 7 and the definition of ‘manufacturer’ as per the Central Excise
Act.
11 Such relaxation can be partial – e.g., 25% relaxation over specified turn-over and experience.
12 Notified vide OM No.F.20/2/2014-PPD(Pt.) issued by Department of Expenditure dated 29.09.2016.
27Chapter 1: Introduction to Procurement of Works
d) Domestic value addition means the amount of value added in India which shall be the
total value of the item to be procured (excluding net domestic indirect taxes) minus
the value of imported content in the item (including all custom duties) as a proportion
of the total value of the item to be procured, in percent. The ‘domestic value addition’
definition shall be in line with the DPIIT guidelines and shall be suitably amended in
case of any changes by DPIIT in the future. For the purpose of this policy document,
domestic value addition and local content have been used interchangeably.
% Domestic value addition = {Total value of the item to be procured (excluding net
domestic indirect taxes) – The value of imported content in the item (including all
customs duties)} X 100/ {Total value of the item to be procured}
e) Finished Steel shall mean flat and long products, which can be subsequently
processed into manufactured items.
f) Government for the purpose of the Policy means Government of India.
g) Government agencies include Government PSUs, Societies, Trusts, and Statutory
bodies set up by the Government of India.
h) Indigenous Technology: A technology shall be deemed to be Indigenous technology
if, at least 51 % of the entity’s equity is held by Indian residents and the IPR is owned
or co-owned by an Indian entity or licensed exclusively to them and the core
engineering R&D, and project execution capabilities reside in India.
i) L1 means the lowest tender or the lowest bid, or the lowest quotation received in a
tender, bidding process, or other procurement solicitation as adjudged in the
evaluation process as per the tender or other procurement solicitation.
j) MoS shall mean Ministry of Steel, Government of India.
k) Margin of purchase preference means the maximum extent to which the price quoted
by a domestic supplier may be above L1 for the purpose of purchase preference. In
the case of DMI&SP policy, the margin of purchase preference shall be 20% for items
in Appendix B.
l) Melt & Pour is defined as the steel that has been produced in a steel-making furnace
and poured into its first solid shape. The location where this process takes place is
called the country of melt and pour (COM). The COM is the original location where
crude steel is first produced in a liquid state and poured into its first solid shape. The
first solid shape can be a semi-finished product, like a slab, billet, ingot, or a finished
steel mill product.
m) Net Selling Price shall be the invoiced price excluding net domestic taxes and duties.
2.14. Semi-Finished Steel shall mean Ingots, billets, blooms, and slabs, which can be
subsequently processed into finished steel.
3. Exclusions
a) Waivers may be granted by the Ministry of Steel to all such Government procurements
subject to the below conditions:
b) Where specific grades of steel are not manufactured in the country, or
c) Where the quantities as per the demand of the project cannot be met through domestic
sources.
d) Exemption requests shall be submitted to the Standing Committee along with
sufficient proof of unavailability of iron & steel products domestically.
4. Standing Committee
a) A Standing Committee chaired by the Secretary (Steel), shall oversee the
implementation of the policy.
28Manual for Procurement of Works, Second Edition, 2025
b) The Committee shall comprise of experts drawn from Industry/ Industry Association/
Government Institution or Body/ Ministry of Steel. The said Committee in MoS shall
have the mandate for the following:
i) Monitor the implementation of the policy.
ii) Review and notify the list of Iron & Steel products, the domestic content
requirement criteria and policy directives as mentioned in Appendix A, Appendix
B and Appendix C.
iii) Issue necessary clarifications for implementation of the policy including grant of
exclusions to procuring agencies as per Para 3.
iv) Constitute a grievance redressal committee for preliminary examination of
complaints related to implementation of this policy.
v) Issue directions for suitable action to Ministries/Departments concerned in case
of non-compliance with this policy by the procuring agency and advise.
c) Wherever a procuring entity concludes that an unreasonably high price has been
quoted by the sole bidder/manufacturer, the matter may be referred to the Committee.
In such cases, the procuring entity would be required to substantiate its case with
complete and thorough documentation.
d) Specifying foreign certifications/unreasonable technical specifications in bid
document is a restrictive and discriminatory practice against local suppliers. If foreign
certification is required to be stipulated because of non-availability of Indian Standards
and/or for any other reason, the same shall be done only after written approval of the
Committee.
5. Applicability
a) The policy applies to every Ministry or Department of Government and all
agencies/entities under their administrative control and to projects funded by these
agencies for the purchase of iron & steel products for government projects. All Central
Sector Schemes (CS)/Centrally Sponsored Schemes (CSS) for which procurement is
made by States and Local Bodies, come within the purview of this Policy if that project/
scheme is fully/partly funded by the Government of India.
b) The policy applies to public sector steel manufacturers and agencies/entities under
their administrative control for purchase of capital goods (Appendix-B) for
manufacturing iron & steel products.
c) Appendix-B contains the exemption list of capital goods used in manufacturing iron &
steel products which can be imported, and the minimum domestic content requirement
for respective packages. The domestic value addition for Capital Goods, as indicated,
is subject to change; for example, if some capital goods components can be
manufactured in the country, the domestic value addition percentage may go up.
d) A purchase preference of 20% is applicable for capital goods used in steel
manufacturing. For example, if the lowest bidder (L1) for an importable capital good
is a foreign company with a quoted price of INR 100 crores for the product package,
under the policy, procurement preference of 20% will be applicable to a domestic
supplier of the same capital good.
e) Appendix-C contains directives and methodology for steelmaking CPSEs to procure
from indigenous technology suppliers.
f) The policy shall apply to projects and non-projects where the total procurement value
of iron and steel products (Appendix-A) in a contract is greater than Rs. 5 lakhs, on
itemised basis.
29Chapter 1: Introduction to Procurement of Works
g) No Global Tender Enquiry (GTE) shall be invited for tenders related to the
procurement of iron and steel products (Appendix-A of the DMI&SP Policy). No Global
Tender Enquiry (GTE) shall be invited for tenders related to the procurement of Capital
Goods for manufacturing iron & steel products (Appendix-B of the DMI&SP Policy)
having estimated value up to Rs. 200 Crore except with the approval of competent
authority as designated by Department of Expenditure.
h) The policy applies to the purchase of iron & steel products by private agencies for
fulfilling an EPC contract and/or any other requirement of a Ministry or Department of
Government or their PSUs.
6. Tender procedure for procurement
a) Procuring agencies shall follow standard procurement procedures, in accordance with
instructions of the Ministry of Finance and CVC while adhering to DMI&SP policy.\
b) The tender document, for procurement of both Goods as well as for EPC contracts,
should explicitly outline the qualification criteria for adherence to the requirement as
mentioned in Appendix A and Appendix B.
c) Domestic manufacturers of products under Appendix-A and Appendix-B shall self-
certify the local content as per form-1 placed in the policy, at the time of bidding.
d) Bidders who are selling agents/authorized distributors/authorized dealers/authorized
supply houses of the domestic manufacturers of iron & steel products, covered by
Appendix-A, are eligible to bid with self- certification on behalf of the domestic
manufacturers under the policy, subject to the bidder furnishing an authorisation
certificate issued by the domestic manufacturer at the time of delivery.
e) For products covered under Appendix B of the DMI&SP policy, the bidder shall furnish
certification issued by the statutory auditor or cost auditor of the company (in the case
of companies) or from a practicing cost accountant or practicing chartered accountant
(in respect of suppliers other than companies) declaring that the capital goods to be
used in iron & steel industry are domestically manufactured in terms of the domestic
value addition prescribed.
f) If Indian suppliers of an item are not allowed to participate and/ or compete in
procurement by any foreign government, due to restrictive tender conditions which
have direct or indirect effect of barring Indian companies such as registration in the
procuring country, execution of projects of specific value in the procuring country etc.,
it shall provide such details to the procuring entities for appropriate reciprocal action.
g) Entities of countries that have been identified by the Ministry of Steel as not allowing
Indian companies to participate in their Government procurement for any item related
to the Ministry of Steel shall not be allowed to participate in Government procurement
in India for all items related to Ministry of Steel, except for the list of items published
by Ministry of Steel permitting their participation.
h) The stipulation above shall be part of all tenders including those on GeM portal invited
by the Central Government procuring entities.
i) In case restrictive or discriminatory conditions against domestic suppliers are included
in bid documents, an inquiry shall be conducted by the Administrative Department
undertaking the procurement (including procurement by any entity under its
administrative control) to fix responsibility for the same. Thereafter, appropriate action,
administrative or otherwise, shall be taken against erring officials of procurement
entities under relevant provisions. Intimation on all such action shall be sent to the
Standing Committee under the DMI&SP policy.
30Manual for Procurement of Works, Second Edition, 2025
j) A supplier debarred by any procuring entity for violation of this Order shall not be
eligible for preference under this Order for procurement by any other procuring entity
for the duration of the debarment. The debarment for such other procuring entities
shall take effect prospectively from the date on which it comes to the notice of other
procurement entities.
k) In case, the matter is referred to the Ministry of Steel, the grievance redressal
committee set up under the MoS shall dispose of the complaint within 4 weeks of its
reference and receipt of all documents from the bidder after taking into consideration,
the view of the Government Agency. The bidder shall be required to furnish the
necessary documentation in support of domestic value addition claimed in iron & steel
products to the grievance redressal committee under MoS within 2 weeks of the
reference of the matter.
l) Procuring agency shall define the penalties, in case of a wrong declaration by the
bidder of the prescribed domestic value addition, in the tender document. The
penalties may include forfeiting of the EMD, other financial penalties, and blacklisting
of such manufacturer/service provider etc., in terms of extant rules.
7. Implementation monitoring by the Ministry of Steel
a) The policy provisions shall be applicable for 5 years from the date of publication and
may further be extended at the discretion of the Ministry of Steel.
b) MoS shall be the nodal ministry to monitor the implementation of the policy.
c) Agencies covered under DMI&SP policy shall send declaration on a quarterly basis
indicating the extent of compliance to the policy and reasons for non-compliance
thereof, during the preceding financial year.
8. Conclusion - Applicability to EPC Tenders
Para 6-b) of the policy above makes it explicitly applicable to both Goods and EPC tenders.
Except for the rare cases of EPC tenders for setting up of Steel Manufacturing facilities (where
Appendix B and C shall also be applicable), normally only Appendix A shall be applicable in
EPC tenders, and these products can only be procured from domestic sources. Purchase
preference of 20% is applicable only to capital goods as per Appendix B and not to Appendix
A. Appendix A, B & C and Form 1 of this policy are given in Annexure 20 and 21 respectively.
1.12 Legal Aspects Governing Public Procurement of Works
A public procurement contract, besides being a commercial transaction, is also a legal
transaction. There are several laws that may affect various commercial aspects of public
procurement contracts. A public procurement professional is expected to be generally aware
of the implications of following basic laws affecting procurement of works; however, he or she
is not expected to be a legal expert. In different contexts of the scope of work, an additional
set of laws may be relevant.
1. The Constitution of India.
2. Indian Contracts Act, 1872.
3. Arbitration and Conciliation Act, 1996 as amended with The Arbitration and Conciliation
(Amendment) Act, 2015, 2019 and 2021.
4. Competition Act, 2002 as amended with Competition (Amendment) Act, 2007 and 2023.
5. The Information Technology Act, 2000 (IT Act, regarding e-procurement and e-auction,
popularly called the Cyber Law) as amended with Information Technology (Amendment)
Acts 2008 and 2015 and as modified by Jan Vishwas (Amendment of Provisions) Act,
2023.
6. Right to Information (RTI) Act 2005.
31Chapter 1: Introduction to Procurement of Works
7. Central Vigilance Commission Act, 2003.
8. Delhi Special Police Establishment Act, 1946 (DSPE – basis of the Central Bureau of
Investigation).
9. Prevention of Corruption Act, 1988 as amended with Prevention of Corruption
(Amendment) Act, 2018.
10. Bharatiya Nagarik Suraksha Sanhita, 2023 (BNSS) (replaces Code of Criminal Procedure,
1973, Section dealing with sanction for prosecution §218).
11. Insolvency and Bankruptcy Code, 2016 as amended with Insolvency and Bankruptcy Code
(Amendment) Acts 2018, 2019, 2020 and 2021 (Governs insolvency and liquidation of
business enterprises) and Other allied laws applicable to business entities participating in
works contracts
12. Various labour laws applicable at the works’ site.
13. Various building and safety acts, codes, standards applicable in the context of the scope
of work; and
14. Various environmental and mining laws, codes, standards applicable in the context of the
scope of work.
(For salient features of key laws applicable to public procurement, please refer to Appendix 2
provided in Manual for Procurement of Goods, 2024)
1.13 The Law of Agency – applicable to Procurement of Works
In addition to Laws which are applicable to Public Procurement of Works referred above, the
Law of Agency (Section 182 to section 238, of the Indian Contract Act, 1872) implies that
Contractor would be an Agent of the Procuring Entity, to execute the works on its behalf.
Hence, there exists a Principal/ Employer and Agent relationship between Procuring Entity
and such Contractor. As per this law, the principal/ employer is vicariously, legally and
financially liable for actions of its Agents. For example, a violation of certain labour laws in
deputing staff for Procuring Entity’s contract by the agents may render the Procuring Entity
legally and financially liable for such violations, under certain circumstances. The Procuring
Entities need to be aware of such eventualities. Standard Bidding Documents should take care
of this aspect.
1.14 The Basic Principles of undertaking works:
1. No new works should be sanctioned without
a) Careful assessment of the assets or facilities already available and time and cost
required to complete the new works;
b) A concept plan/ preliminary drawing has been approved by the Authority competent
to accord sanction. While designing projects to the extent possible, principles of Life
Cycle Costing may also be considered;
2. As budgetary resources are limited and granted on annual basis, adequate provisions
should be ensured for works and services already in progress before new works are
undertaken.
3. No project or work will be split up to bring it within the sanctioning powers of a lower
authority.
4. 13For purpose of approval and sanctions, a group of works which forms one project, shall
be considered as one work. The approval or sanction of the higher authority for such a
13 Rule 137, GFR, 2017
32Manual for Procurement of Works, Second Edition, 2025
project which consists of such a group of work should not be circumvented by resorting to
approval of individual works using the powers of approval or sanction of a lower authority.
5. 14If the component parts of a project are mutually independent of each other and are not
dependent on the execution of one or more such component parts, each such part should
be treated as a separate project.
6. In case the functioning of a project is dependent on the execution of one or more other
projects, the entire group of such projects should be taken as a single scheme/ project and
provision made accordingly. If however, a scheme consists of revenue component, capital
expenditure and loan content, etc. the provision for which is required to be exhibited
separately under respective Heads of Account, there is no objection to the provision being
made in the relevant Heads of Account; but the authorities concerned should ensure that
the sanction of the Competent Authority is obtained for the integrated scheme as a whole
depending on the total cost of the scheme. It will not be permissible in such cases to split
up a scheme treating each part as a scheme in order to avoid the sanction of a higher
authority.
7. 15Any anticipated or actual savings from a sanctioned estimate for a definite project, shall
not, without special authorisation, be applied to carry out additional work not contemplated
in the original project.
8. 16Any development of a project considered necessary while a work is in progress, which
is not contingent on the execution of work first sanctioned, shall have to be covered by a
supplementary estimate.
9. The construction period and sanctioned cost stipulated in the sanction of Project will not
be exceeded as far as possible.
10. 17Ministry or Department shall put in place, as far as possible, empowered project teams
for all large value projects and these teams should be tasked only with project execution
and not given other operational duties.
11. The competent financial authority according the administrative approval should be kept
informed of the physical and financial progress of the work till their completion through
regular periodical reports.
12. 18Subject to the observance of general rules (Rule 130 – 141, Rule 144 of GFR, 2017),
the initiation, authorization, procurement and execution of works allotted to a particular
Ministry or Department shall be regulated by detailed rules and orders contained in the
respective departmental regulations and by other special orders applicable to them. The
detailed procedure relating to expenditure on such works shall be prescribed by
departmental regulations framed in consultation with the Accounts Officer, generally based
on the procedures and the principles underlying the financial and accounting rules
prescribed for similar works carried out by the Central Public Works Department (CPWD).
13. No works shall be commenced or liability incurred19 in connection with it until: -
a) Feasibility Study Report/ Preliminary Project Report (PPR) has been prepared in case
of works of substantial value;
14 MoF OM No. F.1(26)-E-II(A)/66 dated 04.01.1967 & 27.10.1967
15Rule 138, GFR, 2017
16Rule 136(3), GFR, 2017
17Rule 135(2), GFR, 2017
18Rule 135(1), and 139(i), GFR, 2017
19Rule 136(1) and 139(vi), GFR, 2017
33Chapter 1: Introduction to Procurement of Works
b) A proper Detailed Project Report (DPR) has been prepared by a competent agency;
c) Administrative approval (A/A) has been obtained from the appropriate authority, in
each case;
d) Expenditure Sanction (E/S) to incur expenditure has been obtained from the
competent authority;
e) Technical approval has been obtained of the detailed and coordinated design of all
the Architectural, Civil, Electrical, Mechanical, Horticulture and any other services
included in the scope of the sanction and of the Detailed Cost Estimates containing
the detailed specifications and quantities of various items prepared on the basis of the
schedule of rates maintained by CPWD or other Public Works Organizations;
f) Funds to cover the work, which will be executed, at least during the current year, have
been provided by competent authority;
g) Tenders have been invited and processed in accordance with rules;
h) Award of work and execution of Contract Agreement;
i) A work order has been issued;
j) Time taken in grant of statutory and other clearances also contributes to the time and
cost overrun in public projects. These clearances are required to achieve specific
objectives like concern for the environment, aviation safety, preservation of national
heritage, conservation of forest and wildlife etc. Public Authorities/ Project Executing
Authorities should plan for obtaining all necessary clearances quickly and proper
efforts be made for the same, which also should be duly recorded. The progress
regarding follow up of obtaining the statutory clearances should be closely monitored;
k) The process of land acquisition shall be started by the Procuring Entity, well ahead
and completed entirely, or at least substantially, before the work is started. Availability
of auxiliary services has been ensured - like roads/access, power, water, solid & liquid
waste disposal system, street lighting and other civic services shall be ensured. It is
desirable to have 100% of the required land in possession before award of contract;
however, it may not always be possible to have the entire land due to prevailing
circumstances. Also, it may not be prudent to put the entire process of award of
contract on hold for want of the remaining portion of land, which in the assessment of
public authority or the project executing authority, could possibly be acquired in a
targeted manner after award of the contract, without affecting progress. Minimum
necessary encumbrance free land should be available before award of contract. The
minimum may be determined based on the circumstances of each case or general
guidelines, issued by the concerned authorities. Such land, non-availability of which,
will prevent essential components of work from execution, should be insisted upon.
Public Authorities/ Project Executing Authorities should plan for acquiring balance
land quickly and proper efforts be made for the same, which also should be duly
recorded. The progress regarding land acquisition should be closely monitored.
1.15 Public Procurement Cycle in Procurement of Works
Following are the stages in planning, sanctioning and execution of work.
1. Need Assessment:
a) Perspective Planning for works;
b) Preparation of Preliminary Project Report (PPR) or Rough Cost Estimate;
c) Acceptance of necessity and issue of in-Principle Approval;
34Manual for Procurement of Works, Second Edition, 2025
d) Preparation of Detailed Project Report (DPR) or Preliminary Estimate (PE);
e) Administrative Approval and Expenditure Sanction (A/A&E/S) or ‘Go ahead’ Approval;
f) Detailed Design, Estimate and Technical Sanction;
g) Appropriation/ re-appropriation of funds;
2. Bid Invitation Process: Preparation of Bid documents, Publication, Receipt and Opening
of Bids;
3. Bid Evaluation and Award of Contract:
a) Preliminary Examination and Evaluation of technical proposals: consideration of
quality;
b) Evaluation of financial proposals;
c) Selection of winning proposal and award of the contract to the selected firm; and
4. Contract Management: Execution and Monitoring of works and Quality Assurance.
Details and procedures of various stages of the procurement cycle would be described in
following Chapters of the manuals.
Note: For repair works up to Rs. 60 (Sixty) lakh, expenditure sanction may be given on the
basis of Preliminary Project Report itself. Annexure 11 shows the above-mentioned process
of procurement of Public Works as a flow-chart.
1.16 Administrative Control and Powers to Sanction
1. 20Administrative control of works includes. —
a) assumption of full responsibility for construction, maintenance and upkeep;
b) Proper utilization of buildings and allied works;
c) Provision of funds for execution of these functions.
2. 21Powers to Sanction Works: The powers delegated to various subordinate authorities
to accord administrative approval, sanction expenditure and re-appropriate funds for works
are regulated by the Delegation of Financial Powers Rules (DFPR) and other orders
contained in the respective departmental regulations. The powers of the Department
relating to works are detailed in Rule 133 (1) and 133(2) of GFR, 2017 (Refer para 3.1.1
and 3.1.2 for details).
3. 22Work under the administrative control of the Public Works Departments- Works not
specifically allotted to any Ministry or Department shall be included in the Grants for Civil
Works to be administered by Central Public Works Department. No such work may be
financed partly from funds provided in departmental budget and partly from the budget for
civil works.
1.17 Nomenclature Conundrum
1. There is no standardised nomenclature in Public Procurement in India, and a mix of
American, European, and British/ Indian nomenclature has become common. ‘Tender’ is
taken to mean (i) ‘Tender Document’ or ‘Tender Process’ as well as (ii) the ‘Bid’ submitted
by the ‘bidders.’ The Tender Document floated by Procuring Entity is also called a Bid (or
Bidding) Document. Similarly, participants in a ‘tender’ are alternatively called bidders and
20Rule 131, GFR, 2017
21Rule 132, GFR, 2017
22Rule 134, GFR, 2017
35Chapter 1: Introduction to Procurement of Works
tenderers. This duality is reflected in “Notice Inviting Tenders’ and ‘Instructions to Bidders’
etc.
2. An attempt is made to standardise the term ‘Tender’ for ‘Tender Document’ (document
prepared and published by the Procuring Entity, instead of bid/ bidding document) or
‘Tender Process’ and Bid for the ‘bid’ submitted by the ‘bidders’ and hence ‘bidder’ is used
instead of tenderer. Similar attempts are made to standardise other nomenclature in this
document without disturbing the nomenclature (e.g., Pre-qualification Bidding) embedded
in the CPP Portal.
36Manual for Procurement of Works, Second Edition, 2025
Chapter 2: Need Assessment and Procurement Planning
2.1 Perspective Planning for Works
1. Each Ministry/ Department shall prepare a perspective plan for undertaking different types
of works. There shall also be a provision for annual review of the plan for making
modifications, if any.
2. During procurements, in place of considering only the initial acquisition cost, other costs
like cost of operation, maintenance, and disposal during the lifetime of the external
resource procured should also be considered. This practice refers to the concept of Total
Cost of Ownership (TCO) or Life Cycle Cost (LCC) or Whole-of-Life (WOL) as mentioned
under para 1.7 above. These advanced concepts are explained in Appendix 1 in Manual
for Procurement of Goods, 2024).
2.2 Preparation of Preliminary Project Report (PPR) or Rough Cost
Estimate
In case the work is to be executed under its own arrangement by the Ministry/ Department, a
preliminary project report (PPR) or Rough Cost Estimate shall be prepared by the Works
Committee (refer to para 3.1.3-7) based on Land, Site Details, functional and space
requirements (or Various Facilities, Special Requirements/ Features and Broad Specifications
for specialised Equipment and Plants), Layout Plans etc, with the technical details/ documents
mentioned below being prepared by (or under the guidance of) the technical member(s) of the
Works Committee. In case of execution of Work through Public Works Organisation (PWO) or
the Public Sector Undertaking (PSU – refer Para 3.1 below), on requisition from Ministry/
Department for procurement of works, PWO or the PSU to whom work is entrusted for
execution shall prepare such PPR or Rough Cost Estimate and submit it to the requiring
Department/ Ministry. Based on PPR and Rough Cost Estimate, the competent authority in
Administrative Ministry/ Department grants in Principle approval indicating approval of the
concept and scope of the project at the rough cost assessed. Ministry of Finance (DoE) has
issued detailed instructions regarding appraisal and approval of Public Funded projects/
schemes2324. The preliminary project report shall provide the following details:
a) Background of the work/ project justifying the need for the work;
b) Details of scope of the project;
c) Exclusions (if any) - This will cover part of the work, which is not included in this
particular project estimate;
d) Availability of land - There should be a clear indication about the availability of land
required for completion of whole project. The land shall be made available free of all
encumbrances;
e) Availability of auxiliary services - like roads, power, water, solid & liquid waste
disposal system, street lighting and other civic services shall be ensured;
23No. 24(35)/PF-II/2012 dated 05/08/2016 (where Schemes refers to a collection of Projects/Works of either Central
Sector Schemes or Centrally Sponsored Schemes and Project refers to work which can be standalone or part of a
scheme). The OM can be downloaded from:
http://doe.gov.in/sites/default/files/GuidelinesAppraisal_Approval_Schemes_Projects.pdf
24 It is suggested that the website of Department of Expenditure may be checked for the latest instructions in this
regard (https://doe.gov.in/appraisal-and-approval)
37Chapter 2: Need Assessment and Procurement Planning
f) Reference to Concept Plans/ Preliminary Drawings, if any and their acceptance - This
shall indicate the details of Concept Plans/ Preliminary Drawings prepared and their
approval by the requisitioning authority;
g) Agency of Procurement – through direct procurement, outsourcing to PWO/ PSUs or
otherwise (Refer Para 3.1 below);
h) Rough Cost Estimate: Ministries/ Department may carefully assess alternative
technological options, their area requirements and obtain Rough Cost on the basis of
prevailing Plinth Area rates (or any other reliable basis) without preparation of
drawings to enable the competent authority to accord in principle approval;
i) If relevant, Cost benefits analysis of the project, including evaluation of options for
cost sharing/ recovery (user charges) for infrastructure/ services. Principles of Life
Cycle Cost may also be considered, to the extent feasible;
j) Cash flow: This will show year-wise requirement;
k) Source & availability of funds - The manner of transferring the fund to the executing
agency to be spelt out;
l) Appendices:
i) Requisition of the Department/ Ministry;
ii) Concept Plans/ Preliminary Drawings;
iii) Reference to approval of Concept Plans/ Preliminary Drawings.
m) Any other relevant documents;
n) As directed in the Department of Expenditure’s General Instructions on Procurement
and Project Management25 a presentation on the findings of the feasibility study/ PPR
may be made by a team (which may include engineers/ consultants/ outside experts,
finance officers etc.) before the public authority/ or designated competent authority.
This is to provide an opportunity to the public authority to have an overall assessment
of the situation, appraisal of various options as well as likely challenges and mitigation
measures. In the case of very large projects, such presentation may be made to the
head of the public authority. The record of discussions during the presentation may
become part of the Detailed Project Report (DPR) and tender file/ project record.
2.3 Acceptance of necessity and issue of in-Principle Approval
Approval of competent financial authority for accepting the necessity of works and its Scope
should be sought on the basis of PPR or Rough Cost Estimate and in Principle Approval of
the concerned Ministry/ Department shall be made available for preparation of Detailed Project
Report or Preliminary Estimates.
2.4 Preparation of Detailed Project Report (DPR) /Preliminary
Estimates (PE)
1. On receipt of in-Principle Approval of the project, the procuring entity shall finalize the
Detailed Project Report with due care and accuracy, using latest technological tools
collecting all relevant ground information, including consultation with the field units,
wherever applicable, giving reference to the documents mentioned below. The DPR
should provide a level playing field to the bidders and should ensure as far as feasible, the
widest possible competition:
25 OM No.F.1/1/2021-PPD dated 29.10.2021
38Manual for Procurement of Works, Second Edition, 2025
a) Reference to Concept plan/ preliminary drawings and their acceptance - This shall
indicate the details of Concept plan/ preliminary drawings prepared and their approval
by the requisitioning authority;
b) Details of scope of the project indicating clearly the list of Engineering Services
(Mechanical/ Electrical/ Plumbing) as well as Operation and Maintenance included or
not included in the DPR/PE;
c) Preliminary estimated cost – This will also include the expected escalation for the
period of completion of the project and also the departmental or lump sum charges
to be paid to the executing agency (Public Works Organization or PSUs). Cash flow
projection should show year-wise requirement. While designing the projects etc, if
and to the extent possible, principles of Life Cycle Cost may also be considered;
d) Time of the completion – This will consist of two parts, one for pre- construction
activity till award of the work and the other one for the execution;
e) Details of land required along with land plan schedule to implement timely land
acquisition procedures;
f) Environmental impact assessment (EIA) of the project and approval thereof,
wherever applicable;
g) Social Impact Assessment and Resettlement and Rehabilitation: Social Impact
Assessment needs to be done, based on baseline socio-economic survey and
census survey data, to identify the Project Affected People (PAPs). A Resettlement
and Rehabilitation Plan should be prepared for the PAPs in accordance with the
LARR Act 2013 or National Policy on Resettlement and Rehabilitation (NPRR), and
State Governments framework of resettlement policies and other social safeguard
policies designed to protect the rights of the affected persons and communities as
applicable;
h) List of Approval of Statutory Bodies required;
i) Annual plan allocation and cash flow;
j) Systems to be adopted for project monitoring;
k) Works accounting system;
l) Quality assurance system/ mechanism;
m) Bidding Systems - Single, two parts, pre-qualification, Post - qualification;
n) In case the work is being executed by the Ministry/ Department themselves, DPR and
PE will be prepared by the Ministry/ Department itself. In case the Work is assigned
to Public Works Organisation or the Public Sector Undertaking, that agency shall
prepare the DPR and PE;
o) For repair works costing up to Rs. 60 (sixty) lakhs, preparation of DPR and PE may
be dispensed with, since repair work does not need detailed designing. Sanction may
be accorded by the competent authority based on PPR itself.
2. Major reasons for the problem in works contracts (in particular relating to construction of
roads, highways, ports, runways, dams etc. on item-rate or percentage rate basis) is the
out-sourcing of preparation of Detailed Project Reports to consultants without sufficient
relevant experience or giving them sufficient time to do so. It is therefore essential to
stipulate & ensure successful project design/ supervision experience while selecting
consultants, especially for large works contracts. DPR in such contracts is required to be
based on proper ground investigation at each specified stretch (normally 50 metres), called
“reach”, and the Consultant be directed to exercise such due diligence. Wherever
39Chapter 2: Need Assessment and Procurement Planning
consultants are appointed for preparation of DPR, field units of the public authorities
should also be associated with the process. The inputs from these field units can be useful
in proposing best solutions for design and execution of the work as they are the custodian
of legacy data, which may not be available with the consultants, as they may not be
operating regularly in that geographical region.
3. The involvement of the Ministry/ Department in providing proper inputs including user
requirements during the preparation of the DPR and before accepting the draft DPR is
paramount in ensuring successful implementation. Proper field surveys and investigations
of ground conditions are critical in preparation of a reliable DPR. Providing scientifically
valid data to bidders will depend on the quality of the investigations done by the DPR
consultant. As a corollary, the Ministry/ Department must insist on a qualified team of
engineers with experience for carrying out DPR studies. It is also essential that the
Ministry/ Department insists that the Consultant offers them technology options at the early
stage of preparation of the DPR, so that a cost-efficient choice may be made using
principles of Life Cycle Costing.
4. In case the deviations between actual ground situation and the situation recorded in such
DPR results in significant cost and time over-runs, the engineer, while doing valuation of
variations (refer to Para 7.3.2-6), must bring to Procuring Entity‘s notice the reach-wise
differences and the Ministry/ Department may consider stringent action against the
consultant who has prepared such DPRs, including debarment from future consultancy
contracts, after following due procedure. Such clauses may be included in the contracts
for preparation of DPR. Wherever consultants are appointed for preparation of DPR, field
units of the public authorities should also be associated with the process. The inputs from
these field units can be useful in proposing best solutions for design and execution of the
work as they are the custodian of legacy data, which may not be available with the
consultants, as they may not be operating regularly in that geographical region.
5. Presentation may be made about the DPR before the public authority, for projects above
a threshold value, as decided by Project Executing Authorities. The presentation may
include salient features of the project including general layout, architectural drawings,
broad specifications, cash flow (over the life of the project), composition of the project
team, quality management plan for the project, important milestones in the project
execution, obligations of the authority and the contractor/ concessionaire (hereinafter
referred to as "contractor'') and possible risks and mitigation measures. In the case of very
large projects such presentation may be made to the head of the public authority. The
record of discussions during the presentation shall become part of tender file/project
record.
2.5 Administrative Approval and Expenditure Sanction (A/A and
E/S)
1. Administrative approval and Expenditure Sanction (A/A and E/S) will be accorded to the
execution of work by the competent Financial authority in the Ministry/ Department after
due examination of Detailed Project Report and Preliminary estimates. Post Sanction
changes in scope and specification lead to delay, loss of quality and contractual penalties
therefore such A/A and E/S shall be accorded after carefully assessing their requirements.
The estimates framed by a PWO or other engineering organisation may be modified for
such sanction only with their concurrence.
40Manual for Procurement of Works, Second Edition, 2025
2. The sanction order should contain scope of work, estimated cost, and time schedule for
completion of work and funding sources along with the breakup of the share of each
funding agency.
3. A Department of Government of India may sanction expenditure on any scheme, projects,
as per the powers delegated from time to time by the Finance Ministry26, subject to its
outlay having been approved by the Competent Authority in accordance with the appraisal
and approval process prescribed by the Finance Ministry from time to time. (Rule 16,
DFPR 2024)
2.6 Detailed Designs, Detailed Estimates and Technical Sanction
1. Except where the work is to be undertaken in the EPC (Turnkey) mode, on receipt of
sanction of the project, based on DPR or PE and assurance of funds, the procuring entity
in consultation with the Works Committee (as mentioned in para 3.1.3-6 below) shall
prepare and accord Technical Sanction to detailed and coordinated design of all the
Architectural, Civil, Electrical, Mechanical, Horticulture and any other services included in
the scope of the sanction and of the Detailed Cost Estimates containing the detailed
specifications and quantities of various items prepared on the basis of the schedule of
rates maintained by CPWD or other Public Works Organizations - so as to ensure that
proposals are structurally sound and that the estimates are accurately calculated based
on adequate data. In case the work is to be executed through a Public Works Organization
or Public Sector Undertaking, preparation of detailed design/ estimates and technical
sanction shall be done/ accorded by that organization.
2. Architectural and structural drawings: Architectural and structural drawings (fit for
construction) are among the core requirements for projects. Finalization of these drawings
at the earliest, preferably at the time of preparation of the cost estimate itself, can help to
determine quantities of various items of the work. Adverse consequences of not preparing
these drawings before invitation of tenders may manifest in the form of delay in execution
of the work and deviations in quantities of the items of work. Hence, approved architectural
and structural drawings should be available before invitation of tenders. Fit for construction
(sometimes called Good for construction) drawings means the architectural and structural
drawings approved by the project executing authority as well as by the authority governing
the extant rules/ laws, including byelaws, such as local authorities.
3. Endeavour may be made to enlarge the base of the ‘Schedule of Rates’ published by
various organizations to bring a maximum number of items under its ambit. For non-
scheduled items, rates may be finalized by a committee constituted by the organization
concerned/ consultants as the case maybe.
2.7 Appropriation of funds
Before taking up the execution of work, it shall be ensured that proper funds are available to
meet out the expenditure on the work. It should also be emphasized that the DPR consultant
is able to provide realistic year wise requirement of funds. This information is necessary so
that concerned Ministries/ organizations may be intimated regarding the same. This will enable
them to include such funds projection in their budget.
26 DoE’s O.M. No. 24(35)/PF-II/2012 dated 05.08.2016
41Chapter 2: Need Assessment and Procurement Planning
2.8 Reference Documents used in preparation of Estimates
For preparation of estimates and during execution of work following reference documents are
used by PWOs. These may be separate for different regions, various types of works - Building,
Electrical and Mechanical. Annexure 12 lists further resources regarding Procurement of
Works.
1. Plinth Area Rates which provide a quick but fairly accurate method of estimation of cost
of buildings (e.g. CPWD DPAR – Delhi Plinth Area Rates).
2. Schedule of Rates for each kind of work commonly executed to facilitate the preparation
of estimates, as also to serve as a guide in settling rates in connection with contract
agreements, maintained up-to-date (e.g. CPWD DSR - Delhi Schedule of Rates).
Endeavour may be made to enlarge the base of the 'Schedule of Rates' published by
various organizations to bring a maximum number of items under its ambit. For non-
scheduled items, rates may be finalized by a committee constituted by the organization
concerned/ consultants as the case may be.
3. Analysis of Rates by taking market rates of labour, materials, cartage etc and their
quantities for each kind of work commonly executed (e.g. CPWD Analysis of Rates)
4. Specifications describing inputs, processes, tests and mode of measurement for each
kind of work commonly executed (e.g. CPWD Specifications)
2.9 Procurement Planning
1. Works as Part of a Larger Project: The Works may be part of a larger project in which
there be other components of work, Goods or Consultancy/ NC services. Once a project
or a program is identified, the Procuring Entity needs to develop a synchronised
procurement plan for all the various components of the project. This will also require
planning of the sequence and contents of the different components, including Works,
adoption of the most appropriate method of selection and type of contract and ensuring
that selection of contractor is initiated and completed to meet the overall requirements of
the project implementation. For example, if a contractor is required for housekeeping
services for a hostel still under construction, the entire sequence of preparation of
feasibility report, detailed design and bidding document, the time required for inviting bids
for construction work, and award of contract has to be considered so that the
housekeeping contractor is mobilised at the right time when the hostel is ready for
occupation. Procurement planning is a crucial stage of decision-making in procurement
planning for a better outcome and for VfM considerations.
2. Packaging, Bundling and Slicing: The procuring authority shall normally neither
package nor divide its procurement or take any other action to limit competition among
bidders or to avoid the necessity of obtaining the sanction of higher authority required with
reference to the estimated value of the total demand (Rule 157 of GFR 2017). Provided
that in the interest of efficiency, economy, timely completion or supply, wider competition,
or access to smaller contractors, a procuring authority may, for reasons to be recorded in
writing, divide its procurement into appropriate packages or club requirements of other
users for procurement. Packaging of the contract and procurement planning should be
done keeping in view the availability and possibility of eliciting the interest of the qualified
firms, effective competition for the type and size of the contract, and access to smaller
contractors. For example, for a particular contract, material to be procured may constitute
more than 50 (fifty) per cent of the total cost of works, or there are services that are a mix
of consultancy services with substantial elements of goods, such as procurement of an IT
42Manual for Procurement of Works, Second Edition, 2025
system. Such procurement could be done as a single composite contract comprising all
components or divided into separate contracts for each category of procurement. In all
such situations, the dominant aspect of the requirement and value for money aspects of a
composite all-inclusive contract versus dividing the contract into respective categories
should be carefully examined at the time of Need assessment/ Procurement Planning.
This is a crucial stage of decision-making in procurement planning for a better outcome
and for VfM considerations.
3. Eligibility for Participation in Tender: Determine and declare in documents any
limitation on participation of bidders as per the Government’s procurement policy regarding
preference to certain sections of industry, if any. The procuring entity shall not establish
any requirement aimed at limiting the participation of bidders in the procurement process
that discriminates against or amongst bidders or against any category thereof except to
lay down a reasonable and justifiable eligibility or pre-qualification criteria for the bidders.
4. Type of Contract, System of Tendering and Mode of Procurement:
a) Decide upon type of contract suitable to the procurement requirement (Lump sum;
Item Rate; Percentage Rate; Piece Work, EPC or PPP)
b) Selection of a system of tendering (single/two stage; single/two bids; suitability for e-
procurement or reverse auction);
c) Select the mode of procurement (open tenders, limited tenders, single tenders, and
so on).
5. Time Frame: Decisions on the timeframe for completing various stages of procurement,
which should be declared in the pre-qualification/ bidder registration or tender documents.
The procuring entity should endeavour to adhere to the time limit so decided and record
reasons for any modification of such limits. (Rule 144(ix), GFR 2017); and
6. Availability of Land and Statutory Clearances
a) It is desirable to have 100% of the required land in possession before award of
contract; however, it may not always be possible to have the entire land due to
prevailing circumstances. Also, it may not be prudent to put the entire process of
award of contract on hold for want of the remaining portion of land, which in the
assessment of public authority or the project executing authority, could possibly be
acquired in a targeted manner after award of the contract, without affecting progress.
b) Minimum necessary encumbrance free land should be available before award of
contract. The minimum may be determined based on the circumstances of each case
or general guidelines, issued by the concerned authorities. Only such land, non -
availability of which, will prevent essential components of work from execution, should
be insisted upon.
c) Time taken in grant of statutory and other clearances also contributes to the time and
cost of public projects. These clearances are required to achieve specific objectives
like concern for the environment, aviation safety, preservation of national heritage,
conservation of forest and wildlife etc. Public Authorities/ Project Executing
Authorities should plan for obtaining all necessary clearances quickly and closely
monitor the progress.
7. Architectural and structural drawings: Architectural and structural drawings (fit for
construction) are among the core requirements for projects. Finalization of these drawings
at the earliest, preferably at the time of preparation of the cost estimate itself, can help to
determine quantities of various items of the work. Adverse consequences of not preparing
43Chapter 2: Need Assessment and Procurement Planning
these drawings before invitation of tenders may manifest in the form of delay in execution
of the work and deviations in quantities of the items of work. Hence, approved architectural
and structural drawings should be available before invitation of tenders. Fit for construction
(sometimes called Good for construction) drawings means the architectural and structural
drawings approved by the project executing authority as well as by the authority governing
the extant rules/ laws, including byelaws, such as local authorities.
8. Annual Procurement plans: GFR 2017 [Rule 144 (x)] mandates that All
Ministries/Departments shall prepare Annual Procurement Plan within 30 (thirty) days of
Budget approval, before the commencement of the year and the same should also be
placed on their website. An integrated annual procurement plan should be prepared for
Goods, Works, and Services for the ensuing financial year based on the latest cost
estimates and realistic time schedule for procurement activities and contract
implementation and thus schedule and stagger the procurements over the year with a view
to ensure an even load on the procuring entity and the market and to co-ordinate matching
procurements of Goods, Works, and Services for a project. The procuring entity may
publish information regarding the planned procurement activities for the forthcoming year
or years on CPPP and website/ e-procurement portal used by the procuring entity with a
caveat that such publication shall not be construed as the initiation of a procurement
process and cast any obligation on the procuring entity to issue the tender document or
confer any right on prospective bidders.
9. Mitigating Cartel Formation: Need Assessment and Procurement Planning is the main
stage where this menace can be addressed effectively:
a) Inadequate competition, due to an inadequate number of Contractors in the list/ panel
of registered contractors, may empower bidders to conspire against the Procuring
Entity:
i) New firms may be encouraged to register themselves for the subject category.
ii) Various items in the BOQ may be reviewed (using packaging/ slicing) so that
more contractors become eligible. Insisting on costly machinery to be used may
reduce competition and encourage cartel formation.
b) Processes, e.g., pre-bid conferences (where a considerable number of competing
bidders come together on a platform), may facilitate such cartel formation. This may
be avoided as far as feasible or be held only virtually. However, a physical pre-bid
conference may be advantageous in the case of turnkey contract (s) and
sophisticated and costly equipment, large works, and complex service assignments,
as detailed in para 4.7-2 below.
c) Tendering similar works with similar conditions, year on year, provides a stable
conspiring environment for the bidders to come to an agreement for quoting prices
and quantities. Therefore, the following action can be considered to vary quantity and
conditions to make it difficult for cartels:
i) Change the mode of procurement - OTE instead of LTE, or GTE instead of OTE;
or bypass the pre-qualification stage and vice versa.
ii) Change the packaging/slicing by clubbing/ slicing works in a tender.
iii) Change the pre-qualification criteria, especially in the case of slicing/ packaging,
to broaden the target bidders.
10. Strategizing Large Procurement: Large procurements warrant strategies to achieve
competition and VfM. Large procurements require the application of mind during need
assessment, cost estimation and procurement planning, where the blind application of
44Manual for Procurement of Works, Second Edition, 2025
rules may not bring VfM. Formal market research can reveal important parameters of the
market that can be used for designing optimal procurement strategies (alternative methods
of procurement, slicing/ packaging, mitigating cartels, optimising various features/
specifications of the work) to maximise VfM and competition. Some of the market
parameters to look for are:
a) Total Production Capacities and total demand for similar Works in the region or the
State. Is there an unbalanced demand/ supply?
b) Volumes of procurement: How significant is our requirement vis-à-vis the market?
Would clubbing demands increase bargaining power? Can we collaborate with
another large public-sector buyer? Has there been a recent major procurement that
may constrict available capacity?
c) Level of competition – location-wise number of contractors, co-ordination/
cartelisation among them, major contractors/ buyers controlling the market
d) Manpower constraints, Skills/Manpower bottlenecks, logistics, geopolitical issues.
e) Statutory Constraints: patents, Construction processes, pollution, and other legal
restrictions, etc. Should we tinker with specifications to get VfM?
45Manual for Procurement of Works, Second Edition, 2025
Chapter 3: Bidding Design for Works
3.1 Agency for Procurement
1. Rule 133 of the GFR, 2017, permits Ministries/ Departments at its discretion to assign
execution of their original and repair works as follows: -
a) Directly by the Ministry/ Department
b) Public Works Organisations (PWO)
c) Public Sector Undertaking (PSU)/ Organisations setup to execute Works
2. Directly by the Ministry/ Department: A Ministry or Department at its discretion may
directly execute repair works estimated to cost up to Rupees sixty (60) lakh after following
due procedure ‘laid down for Execution of Works’ (Rule 139, 159 and 160 of GFR 2017).
3.1.1 Public Works Organisations
A Ministry or Department may, at its discretion, assign repair works estimated to cost above
Rupees Sixty (60) lakh and original/ minor works of any value to any Public Works
Organisation (PWO) such as Central Public Works Department (CPWD), State Public Works
Department, others Central Government organisations authorised to carry out civil or electrical
works such as Military Engineering Service (MES), Border Roads Organisation (BRO), etc. or
Ministry/ Department’s construction wings of Ministries of Railways, Defence, Environment &
Forests, Information & Broadcasting and Departments of Posts, and Space etc.
3.1.2 Public Works PSU/ Organisations
As an alternative a Ministry or Department may assign repair works estimated to cost above
Rupees Sixty (60) lakh and original works of any value to:
a) any Public Sector Undertaking (PSU) set up by the Central or State Government to
carry out civil or electrical works; or
b) to any other Central/ State Government organisation/ PSU which may be notified by
the Ministry of Housing and Urban Affairs (MoHUA) for such purpose after evaluating
their financial strength and technical competence.
3.1.3 Procedure for Assigning Work to PWO or PSU/ Organisations
1. For the assignment of work under provisions of para 3.1.2 above to PSUs, the Ministry/
Department shall ensure competition among all such eligible PSUs/ organisations. This
competition shall be essentially on the lump sum service charges to be claimed for
execution of work. The award of work to a PSU should be taken as Project Management
Consultancy (PMC) and the concerned PSU shall be treated as consultancy firm. Relevant
methods (QCBS, LCS etc) for procurement of consultancy will be applicable. For better
understanding of selection methodology of consultant(s), Rule 192 to Rule 194 of GFR
2017 and Manual for Procurement of Consultancy Services, 2025 may be referred.
2. In exceptional cases, for assignment of work on nomination basis under provisions of para
3.1.2 above to PSU, the conditions for nomination basis would apply (refer to para 3.6-3-
d) below). The work under these circumstances shall also be assigned only on the basis
of lump sum basis.
47Chapter 3: Bidding Design for Works
3. 27For original works and repair works entrusted under the provisions of Para 3.1.1 and
3.1.2 above, the administrative approval and expenditure sanction shall be accorded and
funds allotted by the concerned authority in accordance with the Paras 2.5, 2.7 above. The
Public Works Organisation or the Public Sector Undertaking or any organisation allotted
work shall then execute the work entrusted to it in accordance with the rules and
procedures prescribed in their own organisation.
4. A Memorandum of Understanding (MoU) may be drawn with the Public Works
Organisation or the Public Sector Undertaking for proper execution of work. The MoU
should spell out the obligations on the part of Public Works Organization or PSU regarding
execution of works as per proper specifications and for maintaining proper quality and
speed of execution of works. Different stages at which funds shall be released to the Public
Works Organization should also be clearly spelt out. Such MoU would normally be for a
specific standalone work but could also be for a Project consisting of a collection of related
works.
5. In case of MoU with Public work Organisations (PWOs) it could also be as a long-term
framework MoU. A Sample MOU delineating complete procedure of assignment of work
to PWO/ PSUs and its monitoring is shown in Annexure 10. Procuring entity may change
the MOU format suiting to their requirement, and If felt necessary may also get the MOU
document vetted from the Ministry of Law or its own legal cell.
6. For execution of any work, under the provisions of Para 3.1.1 and 3.1.2 above, the Ministry/
Department shall constitute a “Works Committee”, whether on ad hoc or standing basis;
comprising of representatives of administrative wing and Finance wing and an officer
possessing technical skills and experience of framing estimates and execution of works.
If need be, members may be co-opted from User Department; CPWD/ PWOs/ PSUs or
any technically sound Government agency such as a relevant National Institute of
Technology (NIT)/ Indian Institute of Technology (IIT) or a relevant National Research
Institute etc. The Works Committee shall ensure observance of due process in the
planning and execution of works, check the reasonability of the estimates and other
technical details and monitor the execution of the works.
3.2 Types of Contracts
1. There are various alternative basis for linking payments to the performance of Contract
(called types of contracts) – each having different risks and mitigation measures. Bids are
called and evaluated based on the type of contract. The choice of the type of contract
should be based on Value-for-Money (VfM) with due regard to the nature of Work.
Adoption of an inappropriate type of contract could lead to a situation of lack of competition,
contractual disputes and non-performance/ failure of the contract. Standard forms for all
the types of contracts mentioned below are available with Public Works Organizations like
CPWD and the same may be used for calling the tenders.
2. Each type of contract is described briefly in subsequent paras, and criteria are suggested
for their adoption. The most commonly used types of contracts are:
a) Lump sum (Firm Fixed Price) contract;
b) Item Rate (Unit Rate) contracts;
c) Percentage Rate contract;
27Rule 140, GFR, 2017
48Manual for Procurement of Works, Second Edition, 2025
d) Piece Work contract.
e) Engineering, Procurement and Construction (EPC) contract
f) Public Private Partnership (PPP)
3.2.1 Lump sum (Fixed Price) Contract
1. This type of contract, bidders are required to quote a lump sum fixed price figure for
completing the works in accordance with the given designs, specifications and functional
requirements. Bidder’s price is deemed to include all elements of cost - no arithmetical
correction or price adjustments are allowed during evaluation and execution. Lump sum
contracts are easy to administer because it is a fixed price for a fixed scope, and payments
are linked to clearly specified outputs/ milestones.
2. There may be tendency for the Contractor to cut corners on quality and scope of work by
saving on resources employed. Disputes may arise due to different possible interpretations
of quality and scope of work. The contract should include provision for evaluation of quality
and scope of work and certificate for its acceptability may be recorded.
3. As time is not linked to the payment, there may be tendency for the Contractor to save on
deployment of resources which may result in time-over-run. While the payments are not
linked to time, the assignment should be monitored per month to ensure that the progress
of work per month is in line with planned and estimated time-line.
4. Lump sum service contracts should be used mainly for assignments in which the quality,
scope and the timing of the Work are clearly defined. Lump sum contracts may be used
where the Works can be defined in their full physical and qualitative characteristics and
risk for change in quantity or specification, and unforeseen difficulties and site conditions
(for example, hidden foundation problems) are minimal. Thus, is suitable for stereotype/
repetitive residential buildings or other structures for which standard drawings are normally
available. It is also suitable for minor bridge works, chimneys, bins/ silos, overhead tanks,
etc. whether on Department's design or that of the contractor. In the latter case, the
Department shall spell out the requirements in detail to enable the contractor to prepare
his designs and drawings accordingly and submit them to the Procuring Entity for check
and approval before construction.
5. A Schedule of Rates (SOR) may still be specified in order to regulate the amounts to be
added to or deducted from the fixed sum on account of additions and alterations to
drawings, designs and specifications not covered by the contract.
6. The contractor shall be paid from time to time as per the schedule specified in the contract
or the full amount on completion of the work. The billing schedule shall be commensurate
with the actual work done, and the risk of front-loading strictly guarded against.
7. Detailed measurements of work done in a lump sum contract are not required to be
recorded, except in respect of additions and omissions. No reference is made in the
contract to the departmental estimate of the work, prevailing SOR or the quantities of work
to be done. Payment of additions and omissions is regulated by prevailing SOR as agreed
upon while approving the tender or the rates.
3.2.2 Item rate (Unit Rate) Contract
1. For item rate tenders, contractors are required to quote rate for each individual items
(detailed sub-activity) comprising a work on the basis of Bill of quantities (BOQ) provided
by the Procuring Entity in the Bid Documents. This is the most commonly used contract
type for civil works.
49Chapter 3: Bidding Design for Works
2. The payment is made at the rate set out in the contract for the measured quantity.
Reasonable variations (typically ±10% to ±15%) in BOQ quantities can be allowed during
the execution in terms of the contract. For slightly larger variation (Typically ±25% to ±30%)
competent authority’s sanction is required. Where the variation in quantity exceeds the
prescribed limit, the contract generally provides that either (a) the Procuring Entity may
revise the rate with mutual agreement (often based on analysis of current market rates),
or (b) the work beyond the limit may be treated as a new item, requiring approval at
appropriate levels.
3. This type of contract is suitable for all types of major works such as buildings, bridges,
culverts, roads, sewer lines, irrigation works and carries the least risk of uncertainty for the
parties.
4. Specifications, design, drawings and contract conditions (including availability of land,
forest clearance, social and environmental impact assessment, where applicable) have to
be critically appraised before the initiation of procurement process, in order to minimise
the incidence of internal inconsistencies, variations, and situation of claims/ disputes or
contract failure.
3.2.3 Percentage Rate Contract
1. For percentage rate contract, the contractors are required to quote rate as overall
percentage above or below the total estimated cost.
2. This type of contract works best when the work does not involve major design process and
directions, and simple drawings are sufficient for execution. It saves on the time and effort
of detailed design before the procurement process. This type of tender can be used in
respect of for small and routine types of original works for which estimates can be made
based on available schedule of rates and all repair works e.g. levelling and development
works including such works as storm water drainage, water supply and sewer lines.
3. Bills for percentage rate contracts shall be prepared at the estimated rates for individual
items only and the percentage excess or less shall be added or subtracted from the gross
amount of the bill. The payment is made for the measured quantity. Contract provisions
are made to determine the price of the items not included in SOR. In the absence of a
standard schedule of rates, a project-specific schedule of items and their rates is drawn.
Note: Percentage rate contracts should not be confused with lump-sum contracts since the
pricing structure in both the cases is fundamentally different.
3.2.4 Piece Work Agreement
1. In Piece Work Agreement bidders quote and are paid for each piece (or unit) of a work
element (neither the complete work as in lumpsum contract nor as granular work element
as in item rate contract), without necessarily providing detailed quantities upfront. The
Procuring entity has flexibility to put an end to the piece work agreement at his option at
any time. It incentivises productivity of the Contractor and cost control for the procuring
entity.
2. Piece Work Agreement is used mainly in following cases:
a) Anticipatory Work Commencement: The cases, in which it is necessary to start the
work in anticipation of formal acceptance of detailed contract, a piece work
agreement may be drawn, and the agreement may be cancelled as soon as regular
contract is signed.
50Manual for Procurement of Works, Second Edition, 2025
b) For Ongoing Requirements: For ongoing requirements i.e. those for pipes, laying
of sewerage, maintenance of colonies/ facilities etc. quotations are called
periodically, and a running piece work agreement is drawn up as a result of those
quotations usually for a period of one year. The piece work agreement provides for
payment of stipulated rates only when it refers to such quantity of time and also
stipulates that the procuring entity may put an end to the agreement at his option at
any time.
3. Important Provisions of such contracts are:
a) Quality Assurance: Contractor might prioritize speed over quality to maximize
earnings. Therefore, contract must clearly define the quality standards each unit of
work must meet to be acceptable. Implement processes for inspecting and approving
completed work before payment. Define the scope of work meticulously to prevent
misunderstandings. Maintain open lines of communication with contractors to
address issues promptly. Establish KPIs (Key Performance Indicators) to monitor
progress and quality.
b) Payment Terms: Specify the payment rate per unit of work and any conditions that
might affect this rate. Outline when payments will be made (e.g., upon completion of
each unit, weekly, monthly).
c) Termination Clauses: Include a clause that allows the procuring entity to terminate
the contract at their option at any time. Specify any notice period required and
obligations upon termination.
d) Labour Laws: There's a potential for unfair labour practices if not properly managed.
Therefore, contract must stipulate strict compliance with local labour regulations,
including minimum wage requirements and worker protections.
e) Documentation: Keep thorough records of work completed and payments made for
transparency and legal purposes.
3.2.5 Engineering, Procurement and Construction (EPC) Contracts
1. The Engineering, Procurement and Construction (EPC) (also called ‘Design & Build’
Contracts) approach relies on assigning the responsibility for investigations, design and
construction to the contractor for a lump sum price determined through competitive
bidding. The objective is to ensure implementation of the project to specified standards
with a fair degree of certainty relating to costs and time while transferring the construction
risks to the contractor.
2. On the recommendations of National Institution for Transforming India (NITI Aayog) the
Cabinet Committee on Economic Affairs (CCEA)28 has recommended that Item Rate
contracts may be substituted by EPC contracts wherever appropriate.
3. Unlike the normal practice of construction specifications, the technical parameters in the
EPC Agreement are based mainly on output specifications / performance standards.
Procuring Entity specifies only the core requirements of design and construction of the
project that have a bearing on the quality durability, reliability, maintainability and safety of
assets and enough room is left for the contractor to add value. The Contractor has full
freedom to design and plan the construction schedule using best practices to achieve
quality, durability, reliability, maintainability, and safety as specified along with efficiency
and economy.
28Niti Aayog OM No. N-14070/14/2016-PPPAU dated September 05, 2016
51Chapter 3: Bidding Design for Works
4. Projects risks such as soil conditions and weather or commercial and technical risks
relating to design and construction are assigned to the Contractor. The Procuring Entity
bears the risk for any delays in handing over the land, approvals from local authorities,
environment clearances, shifting of utilities and approvals in respect of engineering plans.
5. Selection of the contractor is based on open competitive bidding. All project parameters
such as the contract period, price adjustments and technical parameters are to be clearly
stated upfront, and short-listed bidders are required to specify only the lump sum price for
the project. The bidder who seeks the lowest payment is awarded the contract. The
contract price is subject to adjustment on account of price variation during the contract
period as per a specified formula. It also lays down a ceiling of 10 (Ten) per cent of contract
price to cater for any changes in the scope of project, the cost of which the Procuring Entity
will bear. Once this ceiling is reached, no further variations shall be issued under the
existing contract. Any additional requirement beyond this limit must be procured separately
through a competitive bidding process, so as to preserve transparency, fairness, and value
for money. In exceptional cases where continuity of work demands that the existing
contractor execute such additional scope, this shall be permitted only through a formally
approved supplemental agreement, with revised price and timelines duly concurred by the
competent authority and finance. The original contractor shall, however, be required to
extend reasonable cooperation to ensure coordination with any other agency engaged for
excess works. Given below are the suggested technical and financial eligibility criteria for
EPC tenders.
a) Technical Capacity: The bidder has received payments for construction of eligible
projects over the past five financial years preceding the bid due date. The payment
amounts should be at least:
i) 60% of the estimated project cost from one eligible project, or
ii) 40% of the estimated project cost from each of two eligible projects, or
iii) 30% of the estimated project cost from each of three eligible projects.
b) Financial Capacity: The bidder should possess a minimum net worth of at least 15%
of the estimated project cost at the close of the preceding financial year. If the bid
due date falls within three months of the closing of the latest financial year, that year
can be ignored for calculation purposes.
c) Eligible works, as defined for EPC tenders, specifically refer to construction projects
that have been directly awarded by either a Government Ministry or Department or
by a Public Listed Company. The latter should be listed on major Indian stock
exchanges, such as the National Stock Exchange (NSE) or the Bombay Stock
Exchange (BSE). In the case of awards from public listed companies, the tender
documents need to clearly outline specific financial requirements. This includes
detailing the average annual turnover of the company over a defined period, typically
the past three or five years. Additionally, the tender should specify a minimum
duration for which the company must have been registered, for example, a period of
five years. This stipulation is aimed at ensuring that the awards considered for
eligibility come from established and financially sound entities.
6. The selected Contractor carries out survey and investigations and also develops designs
and drawings in conformity with the specifications and standards laid down in the
Agreement. Procuring Entity's engineer (also called owner’s engineer) reviews the design
and drawings to ensure that these conform to the scope of the project, design standards
and specifications. Any comments by the Procuring Entity on the design proposals
52Manual for Procurement of Works, Second Edition, 2025
submitted by the contractor are to be communicated in totality once in a time-bound
manner as indicated in the schedule. The contractor is free to proceed with construction
after the expiry of specified period in case no remarks/ clearances are given by the
Procuring Entity.
7. The contractor is also responsible for shifting of any utility (like electric lines, water pipes,
telephone cables etc.) to an appropriate location or alignment, if the utilities are under the
purview of the procuring entity and adversely affect or infringes the execution of Works.
This requirement should be part of the tender document, so as to avoid such a requirement
at latter stage that may lead to amending the scope of work. For those utilities, that are not
owned by the procuring entity, the concerned organization, under whose ambit such
utilities fall, shall be intimated by the procuring entity for shifting of utilities, and the price
shifting shall be paid to the organization by the procuring entity. If there is delay in shifting
of the utilities, for which the contractor is not accountable, reasonable time extension may
be given to the contractor by the procurer.
8. The Contractor is liable to pay Liquidated Damages (LD) for each day of delay beyond the
specified date of completion, subject to the total amount of Damages not exceeding 10
(ten) per cent of the Contract Price. However, the Contractor is entitled to time extension
arising out of delays on account of change of scope and force majeure or delays caused
by or attributable to the Procuring Entity. If so, provided in the Bid Document, Procuring
Entity is also liable to pay bonus (normally should not exceed ten percent) to the Contractor
for completion of the project before the scheduled completion date, if so, provided in the
contract documents. If the delays have happened in achieving the individual milestones,
however, the overall project completion is within time, then LD deducted should be
refunded (without any interest).
9. Monitoring and supervision of construction are undertaken through Procuring Entity’s
engineer, (a qualified firm that will be selected through a transparent process) acting as a
single window for coordination with the contractor.
10. Each item of work is further sub-divided into stages and payment based on output
specifications and performance standard is to be made for each completed stage of work.
Defects liability period of two years may be specified in the Agreement in order to provide
additional comfort to the Procuring Entity. Grace period of say 30 days for achieving the
individual project milestones as per payment schedule may be provided in the tender
document, so that any unavoidable delay, may be covered during the grace period. The
applicability of liquidated damages would be beyond the grace period.
11. Federation Internationale Des Ingénieurs-Conseils (FIDIC - an International Federation of
Consulting Engineers, known by its French acronym) has also published such contractual
frameworks. Model EPC contract documents have been developed for Highways and
Railways and published by the erstwhile Planning Commission. National Highways
Authority of India (NHAI) has already adopted these documents, and all construction
contracts are currently being structured on this model. Ministry of Railways has also
started using such documents. Model bidding documents and Model EPC contracts
suitably revisited or modified wherever required to suit the requirements of particular
sectors, may be adopted.
12. The selected Procuring Entity’s Engineer (Consultant) has to have good experience in
design, project supervision and works management. The Procuring Entity organisation
must have an experienced team with (works committee) to super check the quality of
supervision exercised by the owner’s engineer, including quality of design review, site
53Chapter 3: Bidding Design for Works
supervision, quality audits, etc. Periodic audits of the Procuring Entity’s Engineer
functioning are desirable in ensuring that the Procuring Entity’s Engineer carries out his
tasks professionally.
13. In complex projects, a third-party consultant be deployed for specific tasks like design
audit, quality audits, safety audits, etc., to cross-check the Procuring Entity’s Engineer’s
diligence in the process.
14. The tender document should consist of provisions of Change of Scope in terms of
specifications, omission of any work from the Scope of the Project, or any additional work,
however, the total value of all change of scope order should be limited (say 10%) of the
contract price. In the event, the parties are unable to agree to the proposed change of
scope, the Procuring entity may award such works or services to any other party,
preferably on the basis of open competitive bidding. Contractor should have the option of
matching the first ranked bid in terms of the selection criteria, subject to payment of certain
percentage (say 2%) of the bid amount to the Procuring entity. Such an option is possible
when the contractor also participated in the bidding process and its bid did not exceed the
first ranked bid by more than 10%.
15. Sub-Contracting: Sub-contracting by the EPC contractor must be limited and should not
exceed 50% of the contract price. Any work, to be sub-contracted by the main contractor,
must be brought to the notice of the procuring entity.
16. Qualification of Sub-contractor: Preceding 3 years, at least one work of a similar nature
with a contract value exceeding 40% of value of the sub-contract to be awarded and
received payments I respect thereof for an amount equal to at least 80% of such contract.
Provided, however, that in any event the Contractor shall communicate the name and
particulars to the procuring entity for any sub-contract including the relevant experience
prior to entering into any such sub-contract. Overall responsibility of all Works lies on the
contractor.
17. General Instructions on Procurement and Project Management29 on EPC
a) In EPC contracts, since primary responsibility to execute the work lies with the EPC
contractor, success of the project also depends upon the quality of the tender
document wherein enough clarity on the broad framework for execution of the work
and the obligations of the contractor needs to be built in.
b) Milestones for payment to the contractor should be fixed in a manner that facilitates
smooth cash flow for the contractor as well as for progress of the work. Milestones
fixed should avoid excessive front loading or back loading, i.e., amount of payment
should be commensurate with stage-wise quantum of work/ cost incurred. Milestones
for payment to the contractor should also be linked with the deliverables.
c) In case of EPC contracts, only general arrangement drawings and architectural
control parameters should be part of the EPC tender document. In case of EPC
contracts, timelines for submission of drawings by the contractors and approval
thereof by the competent authority should be clearly prescribed in the tender
document, wherein, damages for non-adherence of such timelines ins this regard
may also be incorporated.
d) EPC contracts shall specify broad technical specification and key output parameters.
Over-specification of design may lead to increase in cost. Technical specifications
29 OM No.F.1/1/2021-PPD dated 29.10.2021
54Manual for Procurement of Works, Second Edition, 2025
shall be framed in such a manner to allow sufficient freedom to the contractor to
optimize design. Provisions on the following should be included in commercial
conditions:
i) Limitation of liability for procuring entity as well as contractor.
ii) Deviation limits and procedure for change of scope.
iii) Contract closing timelines and procedure to ensure timely closing of contract.
iv) Performance parameters and liquidated damages for shortfall in performance
v) Risk matrix and responsibilities of the contractor and the procuring entity.
e) In addition, a latent defect period beyond the defect liability period may be included
to protect the procuring entity and public authority interest in case of any design/
engineering defect after the defect liability period is over, wherever appropriate.
f) To mitigate the risk involved in the methodology proposed by the contractor, the
project executive authority shall either have an in-house engineering, quality
assurance and project management expert or alternatively hire an experienced
engineer to intensively examine the proposal submitted by the contractor. Project
executing authorities are to ensure that optimal technological solutions are provided
by the contractor.
g) To ensure equality, regular inspection and quality checks must be carried out. The
Project, executing authority shall carry out stage inspections in manufacturing of
critical equipment/critical activities of the project.
Note: In this sub -para 17) instructions containing “shall” are mandatory; any deviation
from these instructions shall require relaxation from Ministry of Finance (for Ministries/
Departments etc.) or from the Board of Directors (for Central Public Sector Enterprises).
3.2.6 Public Private Partnership (PPP)
PPP means an arrangement between a government/ statutory entity/ government owned
entity on one side [Sponsoring (PPP) authority – or simply the Authority] and a private sector
entity (a legal entity in which 51% or more of equity is with the private partner/s -
concessionaire) on the other, for the creation and/ or management of public assets and/ or
public services, through investments being made and/ or management being undertaken by
the concessionaire, for a specified period of time (concession period) on commercial terms,
where there is well defined allocation of risk between the concessionaire and the Authority;
and the concessionaire (who is chosen on the basis of a transparent and open competitive
bidding), receives performance linked payments that conform (or are benchmarked) to
specified and pre-determined performance standards, measurable by the Authority or its
representative. For further information, PPP instructions issue by Department of Economic
Affairs (DEA), Ministry of Finance from time to time, may be referred. The provisions contained
within this Manual are also applicable to works procurement carried out under PPP mode.
3.2.7 Comparison of Types of Contracts
Following table summarises the properties of various types of contracts:
Contract Payment Structure Scope Risk to Common Use
Type Flexibility Contractor Cases|
Lump Sum Fixed price for the Low High (if costs are Simple, well-
Contract entire project underestimated) defined projects
55Chapter 3: Bidding Design for Works
Contract Payment Structure Scope Risk to Common Use
Type Flexibility Contractor Cases|
Item Rate Payment based on High Medium Projects with
Contract rates for units of variable
work/materials quantities
Percentage Payment based on Medium Medium Projects with
Rate Contract a percentage of a standardized
standard schedule rates
Piece Work Fixed rate per unit Medium Depends on discrete unit
Contract of work completed productivity work as in repair
works
EPC Contract Payment for design, Low High (responsible Large, complex
procurement, and (complete for entire project) projects
construction facility
delivery)
PPP Contract Payment based on Medium Shared between Infrastructure
performance and public and private projects, public
availability of entities services
services
3.3 Systems of Selection of contractors
1. The relative importance of Quality and Price aspects may vary from contractor to
contractor depending on the complexities/ criticality of quality requirements, the internal
capability of Procuring Entity to engage and supervise the contract, as well as the value of
procurements. Hence different systems of selection of contractors are designed to achieve
appropriate relative importance (weightage) of Quality and Price aspects. Decision on the
system of selection is normally preceded by an assessment of the capacity of the user to
engage and supervise the implementation of the proposed contract. The selection method
chosen depends to some extent on this assessment. Selection of system of selection also
should consider the likely field of Bidders.
2. The nomenclature of various selection methods below is in line with generally prevalent
practice:
a) Price based System - Least Cost Selection (LCS);
b) Quality and Cost Based Selection (QCBS);
c) Direct Selection: Single Source Selection (SSS)
3. In the procurement of Works, the normal system of selection used is Price-based – Least
Cost Selection (L1) as in the procurement of Goods/ works for technically responsive
offers. Under very special circumstances, Single Source Selection may also be used.
However, the QCBS method of selection has been allowed to be used for procurement of
Works for highly technically complex and critical assignments where it is justifiable to pay
appropriately higher prices for a higher quality proposal.
3.3.1 Price based System - Least Cost Selection (LCS)
1. In this method of selection, bidders submit both a technical proposal and a financial
proposal at the same time. Minimum qualifying marks for the quality of the technical
proposal are prescribed as a benchmark (normally 75 (seventy-five) out of a maximum of
100 (hundred)) and indicated in the Tender Document along with a scheme for allotting
marks for various technical criteria/ attributes. Alternatively, since in LCS selection,
technical offers do not require to be ranked (or to be added of weighted technical score to
financial score – as in QCBS selection), it would suffice in appropriately simple cases if
56Manual for Procurement of Works, Second Edition, 2025
the evaluation criteria is only a fail/ pass criteria prescribing only the minimum qualifying
benchmark. Thus, in LCS, simplified evaluation criteria may also be used where instead
of a marking scheme, a minimum fail/pass benchmark of technical evaluation may be
prescribed (i.e. must have completed at least two similar assignments; must have a
turnover of at least Rs 10 (Rupees Ten) Crore etc). Any bidder that passes these
benchmarks is declared as technically qualified for the opening of their financial bids. The
technical proposals are opened first and evaluated, and the offers that qualify as per these
technical evaluation criteria will only be considered as technically responsive, and the rest
will be considered technically nonresponsive and will be dropped from the list. Financial
proposals are then opened for only eligible and responsive offers (Financial bids of other
unresponsive bidders remain unopened) and ranked. L-1 offer out of the responsive offers
is selected on price criteria alone without giving any additional weightage to marks/ ranking
of Technical proposal. This system of selection is roughly the same as the price-based
selection of an L-1 offer (among the technically responsive offers) in the procurement of
Goods/ Works. (Rule 193 of GFR 2017, also see para 6.4.3 below)
2. LCS is considered suitable for engaging contractors in most works procurement
assignments that are of a standard or routine nature (such as construction works or non-
complex engineering projects) where well-established practices and standards exist.
3. It is the simplest and the quickest system of selection, and under normal circumstances,
this method of evaluation shall be used as default since it allows for minimum satisfactory
technical efficiency with the economy. Justification must be provided if a selection method
other than LCS is to be used.
4. Least Cost Selection - Risks and Mitigations:
Risk Mitigation
a) Technical criteria may not be relevant Technical criteria selected should be relevant
to the realisation of the quality of the and proportional to the requirement of quality
assignment. of assignment, and the selection process
should be rigorous enough to ensure that, on
the one hand, no technically unsatisfactory
bids should be able to get past a loose
criterion and, on the other hand, no technically
satisfactory offer should get ruled out by tight
criteria.
b) Marking Subjectivity: The scheme of It is important to lay down as objective a
marking or its application may be scheme of marking as possible. Cases where
subjective. subjectivity is unavoidable (as in evaluation of
methodology etc), a system of grading
responses and their marking may be laid
down in the bidding documents. Procuring
Entity should also have a system of
conciliation and moderation of widely
disparate markings by different members of
evaluation committee. As mentioned above in
most works procurement, a fail/ pass criteria
is sufficient, and it avoids subjectivity.
57Chapter 3: Bidding Design for Works
3.3.2 Quality and Cost Based Selection (QCBS)
1. In the QCBS system of selection, both the quality of the proposal and the cost of the
executing the work are considered as deciding factors. This approach is employed when
the quality of deliverables is crucial, but the cost of work cannot be ignored.
2. Quality/ Technical scores are assigned to proposals based on specified quality criteria.
Minimum qualifying marks (normally 70-80 (seventy – eighty) out of a maximum of 100
(hundred) marks) as a benchmark for the quality of the technical proposal is prescribed,
and proposals below this benchmark are not considered for Financial evaluation. The
Financial Proposals are also given cost-score based on the relative ranking of prices, with
100 (hundred) marks for the lowest and pro-rated lower marks for higher priced offers. The
total score shall be obtained by weighting the quality and cost scores and adding them.
For example, the weightage given to the cost score may be 80% (Eighty percent), and the
technical score may be given a weightage of 20% (twenty percent, but should never be
more than 30%), etc. However, the weight for the “quality” shall be chosen, considering
the complexity of the assignment and the relative importance of quality. The proposed
weightings for quality and cost shall be specified in the RfP. The firm obtaining the highest
total score shall be selected. It may be noted that theoretically QCBS system with weight
of 100% (hundred percent) for the ‘cost’ approximates the price based LCS system. This
method of selection shall be used for highly technically complex and critical assignments
where it is justifiable to pay appropriately higher price for higher quality of proposal.
3. Procuring entities are allowed30 to use QCBS for procurement of works in the following
cases31. In this para 3.3.2, instructions containing “shall” are mandatory; any deviation
from these instructions shall require relaxation from the Ministry of Finance (for Ministries/
Departments, etc.) or from the Board of Directors for CPSEs):
a) where the procurement has been declared to be a Quality Oriented Procurement
(QOP) by the competent authority or
b) QCBS shall not be used in the procurements planned to be done through two-stage
bidding (Procuring Entity is unable to define the technical specifications or
performance parameters with adequate clarity) or through Reverse Auction or through
Limited tenders.
4. The principles of QCBS shall be as provided in Rule 192(i), (ii), and (iii) of the GFR (Please
refer to Manual for Procurement of Consultancy services, second edition, 2025 for such
principles). However, the maximum weight of the non-financial parameters shall in no case
exceed 30%.
5. The Competent Authority: the Competent Authority for allowing the QCBS method in the
procurement of works shall be as follows: -
a) For declaring a procurement as QOP:
i) 32Where the procuring entity/ project executing authority is covered by Rule 1 of
GFR:
1) Secretary of the Ministry/ Department to which the procuring entity belongs
or
30 General Instructions on Procurement and Project Management - DoE’s OM NO.F.1/1/2021-PPD dated
29.10.2021.
31 QCBS is allowed to be used for procurement of Non-Consultancy Services as well. For details, please refer to
Manual for Procurement of Non-Consultancy Services, 2025.
32 As amended by OM No.F.1 /1/2021-PPD dated 08.03.2024
58Manual for Procurement of Works, Second Edition, 2025
2) Secretary of Public Authority33 with the concurrence of the procuring entity/
project executing authority34 or
Note: Procuring entity/ project executing authority will themselves decide the
level at which such concurrence is to be given. Such concurrence need not be
obtained at the level of Secretary in charge of Procuring entity/ project executing
authority.
3) Where the public authority is any Indian Institute of Technology (IIT) or Indian
Institute of Science (IISc), Director of such IIT/ IISc (This provision is
applicable for Procurement declared as Q.O.P. on or before 31.03.2027 and
will be reviewed thereafter).
ii) Where the procuring entity is a CPSE, the Board of Directors of the CPSE.
iii) In case the authority to approve procurement on a nomination basis is lower than
the Secretary of the Ministry/ Department (or Board of Directors in case of
CPSEs), such authority will also be competent to approve the procurement as
QOP.
6. Special Technical Committee (STC):
a) In all cases of QOP, a Special Technical Committee (STC) shall be constituted with
the following composition: -
i) Two or more persons who have expert knowledge and/or long experience
relevant to the procurement in question;
ii) One or more persons with extensive experience in handling public projects and/or
public finance in the Government or State/ Central Public Sector;
iii) One or more persons with experience in financial management/ financial
administration/ audit/ accountancy;
iv) Not more than one member representing the procuring entity who may inter alia
provide administrative support to the Committee.
v) Any person who is a member of the STC shall not associate himself in any
manner with any bidder for the procurement concerned.
b) The names of members of the Special Technical Committee shall be decided either
by the Competent Authority specified in sub-para 5) above or by any other authority
to whom such power is delegated by the competent authority; however, powers shall
not be delegated to the officer or authority competent to finalise the particular
procurement. Sitting fee may be paid to the members of the STC. Incidental costs
including travel shall be paid by the procuring entity.
c) The STC shall make specific recommendations on the following matters: -
i) The weight to be given to non-financial parameters (not exceeding 30%).
However, the weight for the “technical” shall be chosen, considering the
complexity of the assignment and the relative importance of quality. The proposed
weightings for quality and cost shall be specified in the Tender Document. It may
33 “Public Authority” means the client organization, which may be asking a “Procuring Entity” or “Project Executing
Authority” or “Project Executing Agency” to execute a project or work on their behalf. For example, in case a
university executes the works through Central Public Works Department (CPWD), then the said university will be
the public authority, and CPWD will be the Procuring Entity or Project Executing Authority or Project Executing
Agency. (The public authority and the project executing authority may also be the same.)
34 “Procuring Entity” or “Project Executing Authority” or “Project Executing Agency” means Central Government
Ministries/ Departments, Attached/ Subordinate bodies including Autonomous Bodies or Central Public Sector
Enterprises (CPSEs) (etc) executing projects/ works.
59Chapter 3: Bidding Design for Works
be noted that theoretically QCBS system with weight of 100% (hundred percent)
for the ‘cost’ is same as the price based LCS system.
ii) The specific quality/ technical parameters, their weights, their scoring
methodology, the minimum qualification score, etc. and other relevant criteria
necessary for ensuring fair and transparent quality/ technical evaluation of the
bids.
d) The recommendations of the STC shall be followed except where there are special
grounds in public interest for deviating from them. However, every case of deviation
from the recommendations of the STC shall require approval of the Competent
Authority specified in sub-para 5) above who approved the declaration of the
procurement as QOP.
7. Grounds for Declaring a Procurement to be Quality Oriented Procurement: A
procurement should be declared as a QOP only if there is enough justification in terms of
value addition or enhancement of delivery or paramount importance of quality. Reasons
for not adopting two cover/ pre-qualification-based/ least cost system shall be
documented.
8. Tender Documents - Fixing/ Selection of the Evaluation/ Qualification Criteria: To
ensure quality, some of the criteria used in marking may be made mandatory and if a
bidder does not meet those, then bids shall not be evaluated further. Weightage may also
be given for the timely completion of past projects of a similar nature by the bidder.
9. Pre-bid Meeting: In all cases of QOP, a pre-bid meeting shall be held in which the
technical criteria including the marking scheme shall be discussed with the potential
bidders. If any changes in the criteria are necessitated by such consultation, such changes
shall require the recommendation of the STC.
10. Fixing of Scoring/ Marking Criteria:
a) The scoring should not be a variable that relies on the subjective opinion of the
evaluating panel. The marking scheme should enable the achievement of almost
similar scores irrespective of the persons/ experts involved in the evaluation process.
When the outcomes are consistent with the available information, the QCBS
parameters are more reliable. Unambiguous descriptions and criteria help to avoid
grey areas so as to ensure that there is only one possible score for the item. As far as
possible, the criteria should be so specific and clear that bidders can self-mark their
own bids.
b) It is better to specify minimum marks for meeting the qualifying criteria specified. In
QCBS selection, minimum qualifying marks (normally 70-80 (seventy – eighty) out of
a maximum of 100 (hundred) marks) as qualifying benchmark for the quality of the
technical proposal shall be prescribed and indicated in the Tender Document along
with a scheme for allotting marks for various technical criteria/ attributes. Bids scoring
less than the minimum threshold shall not be considered for further evaluation. Since
the weightage of the cost element adopted is as high as 70 (seventy) percent, financial
considerations would dominate the selection, though to a lower extent as compared
to LCS (Least Cost Selection – L1 basis). In such cases, it is essential to ensure that
the minimum qualifying benchmark in the technical evaluation is set sufficiently high
to weed out low-quality bids with low prices.
c) Examples of fixed quality parameters that ought not to be considered for relative
scoring include organisations’ ISO/ standards’ accreditation, etc. These are required
60Manual for Procurement of Works, Second Edition, 2025
to establish the credentials of the Contractor but cannot be used for relative
comparison between various bidders.
d) Bidders should be asked to produce certificates for the past performance. A format
may be given in the tender itself outlining the contract details, completion,
sustainability etc, and bidders may be asked to fill it and give evidence to that effect.
e) Bidders may be asked to submit a detailed presentation on their proposals in the form
of soft copy along with the bid so as to facilitate better understanding of their proposal
and to ensure commitment.
f) Besides the Bill of Quantity (BOQ) output criteria for payment, Key Performance
Indicators (KPIs) may be specified with minimum achievement levels for payment so
as to ensure quality compliance.
11. Evaluation of QCBS Bids: Please refer to para 6.4.5 for evaluation of QCBS bids
12. Caution against Joint Ventures (JVs)/Consortium in QCBS Procurements:
a) Since quality is given weightage in the evaluation itself, in QCBS procurement,
therefore, JVs may be avoided as far as possible. JVs could, however, become
necessary in high technology or innovative projects where a single entity may not be
able to execute the work alone.
b) If JVs are allowed, measures should be taken to ensure that all the JV partners are
present and execute work all through the contract period. An Implementation Board
with the participation of all JV partners may be provided for wherein the Project
Manager from the procuring entity shall also be allowed an audience when required.
Meeting of JV partners with the project executing authority for quarterly progress
review may be made as a criterion linked to the achievement of key dates or even
payment.
13. QCBS - Risks and Mitigations:
Risk Mitigation
a) Inappropriate Selection of QCBS: The selection of QCBS should be justified
There is a possibility that the QCBS and applied only under the circumstances
system is selected where LCS or other mentioned above.
systems would have been more
appropriate considering the quality
requirements or the capability of the
Procuring Entity to monitor the
assignment.
b) Weightage of Technical: Cost may not Weightage different from 70:30 (seventy:
be proportional to quality requirements thirty) should be adequately examined and
justified.
c) Technical criteria may not be relevant to Technical criteria selected should be
the realisation of the quality of the relevant and proportional to the requirement
assignment. of quality of assignment, and the selection
process should be rigorous enough to
ensure that, on the one hand, no technically
unsatisfactory bids should be able to get
past a loose criterion and, on the other hand,
no technically satisfactory offer should get
ruled out by tight criteria.
61Chapter 3: Bidding Design for Works
Risk Mitigation
d) Marking Subjectivity: The scheme of It is important to lay down as objective a
marking or its application may be scheme of marking as possible. Cases
subjective. where subjectivity is unavoidable (as in
evaluation of methodology etc), a system of
grading responses and their marking may be
laid down in the bidding documents. The
procuring Entity should also have a system
of conciliation and moderation of widely
disparate markings by different members of
the evaluation committee.
3.3.3 Direct Selection: Single Source Selection (SSS)
1. Under some special circumstances, it may become necessary to select a particular
Contractor where adequate justification is available for such single-source selection in the
context of the overall interest of the Procuring Entity. (Rule 194 of GFR 2017, also see
para 6.4.4). Direct selection is also called the Nomination mode of procurement (Please
refer to para 3.6-3-d) below). The selection by SSS/ nomination is permissible under
exceptional circumstances such as:
a) tasks that represent a natural continuation of previous work carried out by the firm;
b) in case of an emergency situation, situations arising after natural disasters, situations
where timely completion of the assignment is of utmost importance;
c) situations where execution of the assignment may involve the use of proprietary
techniques or only one Contractor has the requisite expertise. At times, other PSUs
or Government Organizations are used to provide technical expertise. It is possible to
use the expertise of such institutions on an SSS basis;
d) Under some special circumstances, it may become necessary to select a particular
Contractor where adequate justification is available for such single-source selection
in the context of the overall interest of the Ministry or Department. Full justification for
single source selection should be recorded in the file and approval of the competent
authority obtained before resorting to such single-source selection.
2. The Procuring Entity shall ensure fairness and equity and shall have a procedure in place
to ensure that:
a) the prices are reasonable and consistent with market rates for tasks of a similar nature
and
b) the required work is not split into smaller sized procurement.
3. All works/purchase/ consultancy/ Non-consultancy contracts awarded on a nomination
basis should be brought to the notice of the following authorities for information-
a) The Secretary, in the case of ministries/departments.
b) The Board of directors or equivalent managing body, in case of Public Sector
Undertakings, Public Sector Banks, Insurance companies, etc;
c) The Chief Executive of the organisation where such a managing body is not in
existence.
i) The report relating to such awards on a nomination basis shall be submitted to
the Secretary/Board/Chief Executive /equivalent managing body every quarter.
62Manual for Procurement of Works, Second Edition, 2025
ii) The audit committee or similar unit in the organisation may be required to check
at least 10% of such cases.
4. SSS - Risks and Mitigations:
Risk Mitigation
a) Inappropriate Selection of SSS: Full justification for single source selection
There is a possibility that SSS system is should be recorded in the file and approval of
selected where LCS or other systems the competent authority (schedule of
would have been more appropriate Procurement Powers – SoPP should severely
considering the quality requirements or restrict powers for SSS selection) obtained
the capability of Procuring Entity to before resorting to such single-source
monitor the assignment. The selection. In direct selection, the Procuring
assignment may be split into parcels to Entity should ensure fairness and equity, and
avoid competitive selection systems or the required work is not split into smaller sized
to avoid obtaining higher level approvals procurement to avoid competitive processes.
for SSS.
b) Cost may be unreasonably High: The Procuring Entity must have a procedure in
single contractor is likely to charge place to ensure that the prices are reasonable
unreasonably high prices. and consistent with market rates for tasks of a
similar nature. If necessary, negotiations may
be held with the contractors to examine
reasonableness of quoted price.
3.4 Tendering Systems
1. Tendering systems are designed to achieve an appropriate balance between the
countervailing needs for the ‘Right Quality’ and the ‘Right Price’ (while the Mode of
Procurement addresses the ‘Right Source’, and the Tender Document addresses the Right
quantity and ‘Right Time and Place’) under different complexities/ criticality of Technical
requirements and value of procurements. Depending on the complexity and criticality of
technical requirements, as well as the value of procurement, the following types of
tendering systems may be used. Please note that the selection of a Tendering System has
to be based on the two factors mentioned above; hence, just a value threshold for their
use is discouraged. Selection should be based on professional judgement of the two
factors mentioned above. The various Tendering Systems that are used in public
procurement are:
a) Single Stage Tendering System:
i) Single Stage Single Envelop System
ii) Single Stage Two Envelops System (Two Bid System) (Rule 163 of GFR 2017)
b) Two Stage Bidding - Expression of Interest Tenders – Market Exploration/ Short-
listing (Rule 164 of GFR 2017)
2. Details of these Bidding Systems are explained in Chapter 4 of the Manual for
Procurement of Goods, 2024, which may be referred to. For the sake of brevity, these are
not repeated here.
63Chapter 3: Bidding Design for Works
3.5 Channels of Procurement
Public Procurement can be channelled by way of Manual Bids, eProcurement Platforms, GeM
Portal or through third-party agencies.
3.5.1 Electronic Procurement (e-Procurement – Rule 160 of GFR 2017)
1. Electronic procurement (e-procurement) is the use of information and communication
technology (specially the internet) by the buyer (through a third-party e-Procurement
portal) in conducting procurement processes with the vendors/ contractors for the
acquisition of goods (supplies), works and services aimed at open, non-discriminatory, and
efficient procurement through transparent procedures. A generic description of how e-
Procurement is conducted is detailed in ‘Appendix 3: Electronic Procurement (e-
Procurement) and e-Auction’.
2. It is mandatory for ministries/departments to receive all bids through e-procurement portals
that are GCQE35 compliant for all procurements. This condition will not be applicable for
the procurement made through purchase committee (under Rule 155 of GFR, 2017).
3. Normally, in e-procurement, no physical/ off-line tender documents are provided, nor are
any manual bids accepted. It is not a good practice to call both electronic and manual bids
in the same tender. Sub-paras below allow exemptions in specific situations mentioned
therein, from e-Procurement, in cases where it is not convenient or feasible.
4. In Global Tender Enquiry (by any mode – Open Tender, Limited Tender or Single Tender),
e-procurement may not be mandatorily insisted upon; however, e-publishing would still be
mandatory. (refer to para 4.3-1 below).
5. In individual cases where national security and strategic considerations demand
confidentiality, Ministries/ Departments may exempt such cases from e-procurement after
seeking the approval of the concerned Secretary and with the concurrence of Financial
Advisers. In case of tenders floated by Indian Missions and CPSE units abroad, the
Competent Authority for deciding the tender may exempt such cases from e-procurement.
6. The National Informatics Centre (NIC) has an e-Procurement portal called Government e-
Procurement of NIC (GePNIC). There are other service providers in the Public Sector (e.g.,
MSTC) and Private sector that can be utilized for e-procurement. Details about the process
of e-procurement are available from the service providers. Appendix 3 under the Manual
for Procurement of Goods, Second Edition, 2024, also gives such generic details of the e-
procurement process.
7. Ministries/ Departments that do not have a large volume of procurement or carry out
procurements required only for the day-to-day running of offices and have not initiated e-
procurement through any other solution provided so far may use e-procurement solution
developed by NIC. Other Ministries/ Departments may either use an e-procurement
solution developed by NIC or engage any other service provider (GCQE36 compliant)
following due process.
8. These instructions will not apply to procurements made by Ministries/ Departments
through Government e-Marketplace (GeM). (Rule 160 of GFR 2017)
35 Guidelines for Compliance to Quality Requirements of eProcurement (GCQE), July 2021 issued by Systems
Standardisation Testing and Quality Certification (STQC) Directorate (an attached office of the Ministry of
Electronics and Information Technology (MeitY), Government of India).
36 Guidelines for Compliance to Quality Requirements of eProcurement (GCQE), July 2021 issued by Systems
Standardisation Testing and Quality Certification (STQC) Directorate (an attached office of the Ministry of
Electronics and Information Technology (MeitY), Government of India).
64Manual for Procurement of Works, Second Edition, 2025
3.5.2 Dynamic Price Discovery - Electronic Reverse Auction (eRA)
Electronic Reverse Auction (eRA, a type of auction classified as a dynamic procurement
mode) is an online real-time purchasing technique used to select a successful bid. eRA is an
iterative process with automatic evaluation of bids, where bidders can offer successively more
favourable bids to displace the lowest bid at any given moment within the duration of the eRA.
The starting price, minimum bid decrement, duration of the auction, and the maximum number
of automatic extensions are announced before the start of the online reverse auction. If a new
lower bid is received within the last few minutes (pre-announced, say five minutes) of closing
time, the closing time may get automatically extended by a few minutes (pre-announced, say
ten minutes) for others to respond. A maximum number of such extensions may be pre-
announced (say 50). The most favourable bid at the end of the stipulated/ extended time is
declared as successful. It has, however, to be ensured that the entire process is conducted
transparently and fairly. Electronic reverse auctions can be a powerful tool for procuring goods
and services, but they also come with potential risks and drawbacks. Procedure, applicability
and counter-indications for eRA are detailed in para 4.16.2 of the Manual for Procurement of
Goods, 2024, which are not being repeated here for the sake of brevity.
3.6 Modes of Procurement
1. Offers from prospective bidders in public procurement must be invited according to a
procedure that achieves a balance between the need for the widest competition, on one
hand, and complexity of the procedure, on the other hand. Different modes of procurement
and tendering systems are used to suit various procurement circumstances to achieve this
balance. Various modes of procurement vary the extent of competition (width and
specificity of catchment area of bidders) to suit different procurement situations. Mode of
Procurement addresses the ‘Right Source’ of the 5Rs.
2. There are laid down procedures for delegation of powers of procurement to various
competent authorities under different modes as shown in DFPR (Annexure 1). Each
procuring entity may also publish its own Schedule of Procurement Powers (SOPP)
delegating such powers within the entity. A suggested format for SoPP is given at
Annexure 2
3. The various modes of procurement that can be used in public procurement of works are
(GFR 201737):
a) Advertised Modes: These modes of procurement aim for the widest possible
competition through wide publicity (Rule 161 GFR 2017):
i) Open Tender Enquiry (OTE, also known as National Competitive Bidding – NCB,
or simply Advertised Tender Enquiry, but this manual would stick to OTE)38;
ii) Global Tender Enquiry (GTE, also known as International Competitive Bidding –
ICB, but this manual would stick to GTE)
b) Pre-Qualification Modes: These modes of procurement are restricted to shortlisted
pre-qualified bidders. The shortlisting is done transparently, based on qualification
criteria to identify bidders who have the capability to perform the contract. Shortlisting
itself is done through wide publicity akin to advertised tenders.
37 Various thresholds for these Modes of procurements have been revised upwards vide PPD’s OM No. F.1/3/2014-
PPD dt. 10.07.2024
38 Please also refer to Rule 139 of GFR 2017 regarding the thresholds for modes of procurement pertaining to
Works.
65Chapter 3: Bidding Design for Works
i) Pre-Qualification Bidding Mode (PQB)
ii) Approved Vendor Lists (AVL): Procurement is restricted to contractors who have
been pre-approved and included on a long-term multi-use list based on their
demonstrated ability to meet the required standards (Please refer to Para 4.7 of
the Manual for Procurement of Goods, 2024 for details on the AVL).
c) Restricted Modes: These modes of procurement are restricted to known, selected
bidders. Unlike the Pre-qualification mode, the shortlisting is not based on rigorous
qualification criteria through wide publicity. The shortlisting/ registration of bidders (as
per para 8.6 below) is based on less rigorous checks of capability and past
experience. (Rule 162, GFR 2017).
i) Limited Tender Enquiry - LTE (up to Rs. 10 (Rupees Ten) lakh39);
ii) Special Limited Tender Enquiry (SLTE above Rs. 10 (Rupees Ten) lakhs under
exceptional circumstances)
d) Nomination Modes: Procurement in this mode of procurement is done from a single
source in special circumstances (Rule 166 GFR 2017)
i) Single Tender Enquiry (STE) or selection by nomination
e) Award of Work through Quotations/ Shopping Modes: Procurement in these
modes of procurement is done without tendering or calling for formal bids for small
value procurements. (Rule 154, 155 GFR 2017)
i) Procurement of Works through Quotations;
f) Framework Agreements: Also known as Rate Contracts, are agreements with
contractors to execute works at pre-agreed rates during a specified validity period.
4. Applicability, Terms and Conditions, Risks, and mitigations of these modes of
procurements (including restrictions regarding GTE mode for procurements below Rs 200
Crore) are detailed in Chapter 4 of the Manual for Procurement of Goods, 2024 which may
be referred to. For the sake of brevity, these are not repeated here.
3.7 Open Tender Enquiry (OTE)
1. In OTE40, an attempt is made to attract the widest possible competition by publishing the
NIT simultaneously on the designated websites. This is the default mode of procurement
and gives the best value for money, but the procedure is relatively complex and prolonged.
The systemic cost of this procedure may be high enough to be unviable for smaller value
procurements.
2. OTE procedures through e-procurement or through traditional tendering should be
adopted in the following situations:
a) Procurements exceeding the threshold of Rs. 10 lakhs (Rupees Ten Lakh) in works
procurement;
b) All requirements with clear technical specifications;
c) For requirements that can ordinarily be fulfilled by the players available in the open
market, it is necessary to evaluate competitive offers to decide the most suitable and
economical option available and;
d) When the requirement cannot be fulfilled from known contractors or contractors are
presently limited, and the requirement is to be made broad based. In such situations,
39 Rule 139, GFR 2017
40Rule 161, GFR 2017
66Manual for Procurement of Works, Second Edition, 2025
even for procurements below Rs. 10 (Rupees Ten) lakhs, the OTE mode may be
used if warranted.
3.7.1 Terms and Conditions
1. Participation should not be restricted to only Bidders enlisted with the Procuring Entity.
Bidders already enlisted are also free to participate. However, a requirement that
successful un-enlisted Bidders may have to get enlisted with the Procuring Entity, before
contract is placed on them, may be mentioned in the tender document.
2. Advertisements in such cases should be given on the GeM- Central Public Procurement
Portal (GeM-CPPP) at www.eprocure.gov.in. An organization that has its own website
should also publish all its advertised tender enquiries on the website. The procuring entity
should also post the complete tender document on its website and GeM- CPPP to enable
prospective bidders to make use of the document by downloading it from the website/ the
advertisements for the tender invitations should give the complete web address from which
the tender documents can be downloaded. While it is no longer mandatory to issue
advertisements in newspapers, there is no bar to issuing such advertisements if the
procuring entity consider the necessary. To promote wider participation and ease of
bidding, no cost of tender documents may be charged for the tender documents
downloaded by the bidders.
3. The tender documents should be prepared on the basis of the relevant approved Model
Tender Document (MTD) for the category of procurement. Further details on preparing
tender documents are provided in Chapter 4.
4. The sale/ availability for downloading of tender documents against NIT should not be
restricted and should be available freely. Tender documents should preferably be sold/
made available for download up to the tender closing date and time.
5. In offline tenders, the procuring entity shall maintain proper records about the number of
tender documents sold, list of parties to whom sold, details of the amount received through
sale and, also, the number of unsold tender documents, which are to be cancelled after
the opening of the tenders.
6. In domestic tenders, bid can be submitted only in INR, and any bid in foreign currency
should be summarily rejected. Foreign bidders can also participate if they submit a bid in
INR. However, purchase preference for local content as per the PPP-MII shall apply
(please refer to para 1.11-2)
7. In case of domestic open tender for projects (including turnkey projects), allowing
consortium bidding, a foreign bidder can be a consortium member, subject to the condition
that the consortium as a whole meets the minimum local content criteria, as per the Make
in India Order, 2017. The leader of the consortium can be a foreign party, and the bids are
to be solicited in Indian Rupee only i.e., no payment can be made in foreign currency to
the foreign consortium member.
3.7.2 OTE - Risks and Mitigations
Risk Mitigation
a) The crux of this mode of procurement It should be ensured that the NIT on the website
is attracting bids from all possible is easily searchable and visible, not hidden
perspective bidders. The risk is that under layers of clicks. The matter should not be
this may not be achieved, even after left entirely to the website or media publicity
67Chapter 3: Bidding Design for Works
Risk Mitigation
incurring extra cost of open tendering. alone. Due diligence should be done to locate
This could be due to: likely bidders. All registered contractors
i) Insufficient publicity; (including past successful contractors) should
ii) Hindrances in availability of bid be given intimation about forthcoming tenders
documents; via SMS/mail/email.
iii) insufficient time for bid Further a limited or open tender which results
preparation; or in only one effective offer shall be treated as a
iv) Due to onerous cost of bid- single tender enquiry situation, with relevant
documents or EMD powers of approval etc.
It should be also ensured that there is no
impediment to issue/ access of bid documents.
Ordinarily, the due date fixed for opening of the
tender shall be minimum 21 (twenty-one) days
from the date of advertisement, which may
vary, considering the nature of work to be
executed and the timelines required. The due
date may be subsequently extended with the
approval of the CA, only if it is felt necessary to
have better competition.
The tender documents, shall be priced
minimally (if at all priced, refer Para 4.6.1
Availability and Cost of Tender Documents)
keeping in view the value of the tender as also
the cost of preparation and publicity of the
tender documents.
EMD should be sufficient to ensure that bidders
honour their bids but at the same time should
not be large enough to reduce competition.
b) Lack of clarity in description/ Mitigations of such risks can be addressed at
specification of requirement or undue the time of need assessment and procurement
stringency in qualifying criteria or planning (please refer to Chapter 2), so as to
other conditions attract adequate competition.
3.8 Global Tender Enquiry (GTE)
GTE41 is similar to OTE but, through appropriate advertising and provision for payment in
Foreign Currencies through Letter of Credit, it is aimed at inviting the participation of inter-alia
foreign firms. Bids in foreign currency in any other mode of procurement shall be summarily
rejected. Subject to restriction on GTE (para 3.8.2 below), GTE can also be in SLTE, LTE or
STE mode if justified with proper approvals as per SoPP. The point of balance between VfM
and cost/ complexity of procedure is further aggravated as compared to OTE. The
development of local industry also needs to be kept in mind. Hence, it may be viable only in
following situations:
41Rule 161, GFR 2017
68Manual for Procurement of Works, Second Edition, 2025
a) Where required Technology/ specifications/ quality are not available within the
country and alternatives available in the country are not suitable for the purpose, it is
necessary to also look for suitable competitive offers from abroad;
b) Non-existence of a local branch of the global principal of the contractors.
c) Requirement for compliance to specific international standards to technical
specifications.
d) In case the requirement cannot be executed by indigenous contractors at the
reasonable rates
3.8.1 Terms and Conditions
1. Advertisement in such cases should be given on GeM- Central Public Procurement Portal
(GeM-CPPP) at www.eprocure.gov.in. An organisation that has its own website should
also publish all its advertised tender enquiries on the website. The procuring entity should
also post the complete tender document on its website and on GeM-CPPP to enable
prospective bidders to make use of the document by downloading it from the website. The
advertisements for the tender invitations should give the complete web address from which
the tender documents can be downloaded. To promote wider participation and ease of
bidding, no cost of tender documents may be charged for the tender documents
downloaded by the bidders.
2. The sale/ availability for downloading of tender documents against NIT should not be
restricted and should be available freely. Tender documents should preferably be sold/
available for download up to the tender closing date and time.
3. The tender documents, shall be priced minimally (if at all priced, refer Para 4.6.1 below),
keeping in view the value of the tender as also the cost of preparation and publicity of the
tender documents.
4. GTE tender documents must contain technical specifications which are in accordance with
national requirements or else based on an international trade standard.
5. In Global Tender Enquiry, e-procurement may not be mandatorily insisted upon.
6. The due date fixed for opening of the tender shall be a minimum of four weeks from the
date of advertisement, which may vary considering the complexity of the project as well as
the time required to prepare the bids. The due date may be subsequently extended with
the approval of the CA only to promote better competition and also considering the project
delivery requirement.
7. For those works procurement that involve supply, installation, commissioning of an
equipment, including civil works, Relevant INCOTERMS (presently 2020 version) should
be included in the tender (Please refer to Para 6.9 of Manual for Procurement of Goods,
2024 for further reading on INCOTERMS 2020).
8. Currency of Bidding: In GTE (Global Tender Enquiry), foreign bidders have the flexibility
to quote prices and receive payments in either Indian Rupees or freely convertible
currencies such as US Dollars, Euros, Pound Sterling, Yen, other relevant currencies42, or
a combination thereof. However, prices for goods, works, or services (including Agency
Commission) performed or sourced in India must be quoted and paid for in Indian Rupees.
42 The Central Board of Indirect Taxes and Customs in India (CBIC) issues Exchange Rate Notification under
Customs Act, 1962, which lists currencies and exchange rates for imported goods in Schedule I – which may
indicate relevant currencies for indicate. The current notification is Exchange Rate Notification No. 30/2024 -
Customs (N.T.).
69Chapter 3: Bidding Design for Works
Indian bidders are required to quote in INR only. During the evaluation, all quoted prices
are converted into Indian Rupees as per the procedure mentioned in para 6.4.6.
9. Agency Commission: The amount of Agency Commission, (normally not exceeding five
percent) payable to the Indian Agent (who shall provide self-attested documentary
evidence about their identity, business details to establish that they are a bonafide
business and conform to regulations) should not be more than what is specified in the
Agency agreement (a certified copy should be submitted along with the financial bid)
between the bidder and the Indian Agent. Agency commission shall be paid by the
Procuring Entity in India in equivalent Indian Rupees on satisfactory completion of the
Project or supplies of Goods and Spares the Indian Agent will be required to submit a
certificate along with their Agency Commission bill, confirming that the amount claimed as
Agency Commission in the bill has been spent/will be spent, strictly to render services to
the foreign Principal, in terms of the Agency Agreement. The Procuring Entity or their
authorized agencies and/or any other authority of the Government of India shall have rights
to examine the books of the Indian Agent and defects or misrepresentations in respect of
the afore indicated confirmation coming to light during such examinations will make the
foreign Principal (i.e. the Contractor) and their Indian Agent liable to be banned/suspended
from having business dealings with the Purchaser, following laid down procedures for such
banning/suspension of business dealings.
3.8.2 Restrictions on Global Tender up to Rs. 200 crores
1. No Global Tender Enquiry (GTE) shall be invited up to Rs. 200 crores43 or such limit as
may be prescribed by the Department of Expenditure from time to time.
2. In exceptional cases where the Ministry or Department feels that there are special reasons
for inviting GTE, for tenders below such limit (including those in SLTE/ LTE mode, or on
Single Tender basis), it may record its detailed justification and seek prior approval for
relaxation from the Competent Authority specified by the Department of Expenditure.
a) The agencies/subordinate offices under the administrative control of a
Ministry/Department that require to float a Global Tender Enquiry (GTE) for
procurement of works shall submit their applications and comments online through
the GTE Portal under the e-Samiksha platform via
https://esamiksha.gov.in/GTE_NFEProposalForm.aspx OR
https://cabsec.gov.in/more/globaltenderenquiryproposal/ starting from 5th May 2022
and no physical application will be received.
b) 'GTE portal', a user-friendly IT application under the e-Samiksha platform, was
developed by Cabinet Secretariate44. For more details on this process, please refer
to GTE Guidelines on the eSamiksha portal - GTE_Guidelines.pdf
(esamiksha.gov.in)
3. Before sending the proposals for approvals of the Global Tenders, the following is to be
ensured: -
a) Domestic open tender must be floated to identify the domestic contractors for the
Works for which approval is being sought for issuance of Global Tenders. In case, if
the Ministry/ Department has not floated a domestic open tender after 15.05.2020 for
the works to be procured through GTE, such proposals will not be entertained. The
43Rule 161 of GFR, 2017 Amended vide DoE OM No. F.12/17/2019-PPD dated 15.05.2020.
44 Issued by Cabinet Secretariat vide ID No. 213/2/1/2021-C.A.IV dated 02.05.2022.
70Manual for Procurement of Works, Second Edition, 2025
proposal must contain the details of domestic open tenders, issued after 15.05.2020.
These details shall cover tender number, date of opening, number of offers received,
details of offers received, reasons why domestic contractors were not considered etc.
b) The proposal must contain the details of deliberations with DPIIT/ relevant industrial
bodies/ construction industries for identification of domestic contractors
(For exemptions/ clarifications for floating GTE even up to Rs 200 Crores please refer
to para 4.3.2-4 of the Manual for Procurement of Goods, 2024. Note that GTE
restrictions upto Rs. 200 crores is not applicable for PPP projects)
3.8.3 GTE - Risks and Mitigations.
Risks Mitigations
a) Risks are same as in OTE Same mitigation as in case of OTE also applies
here.
b) The involvement of agents of For works procurement, procurements should
foreign bidders in GTE preferably be made directly from the contractors.
procurements is also a major Either an agent on behalf of the foreign contractor
risk area.
or the foreign contractor directly could participate
in the tender, but not both. Furthermore, in cases
where agents participate in a tender on behalf of
one contractor, they should not be allowed to
quote on behalf of another contractor along with
the first contractor. The commissions and scope of
services to/by the agents should be explicit and
transparent in the bids/contracts.
3.9 Pre-qualification Modes of procurement
Where the procurement is significantly complex, and the capability of the contractor crucial,
for the successful performance of the contract, it may be necessary to ensure that there is
competition only among bidders equally capable of performing the contract and incapable
bidders don’t queer the pitch by their low quality/ low price bids. In such a situation, a pre-
qualification of bidders may be required to shortlist bidders who are equally capable of
performing the contract. Evaluation of Techno-commercial and Financial bids is restricted to
this shortlist only.
3.9.1 Pre-qualification Bidding (PQB)
1. In situations mentioned above, where the time, effort and money required from the bidder
to participate in a tender is high, a two-phase pre-qualification bidding may be considered.
Pre-qualification Bids (PQBs) should meet the norms of transparency, fairness, and
maintenance of competition. Although there is a separate phase of PQB bidding, it’s not
semantically counted as a two-stage bidding.
2. In the first PQB phase, competent, qualified bidders are shortlisted by using a Pre-
qualification Criterion (PQC covering - i) past experience of similar contracts, ii)
performance capability and iii) financial strength). No Techno-commercial or Financial
details are asked for in the first phase pf PQB. In the second phase, tender documents
(Techno-commercial and Financial) are issued as usual through eProcurement/
ePublishing; bids only from shortlisted qualified bidders are evaluated, and others are
rejected.
71Chapter 3: Bidding Design for Works
3. Where PQB is not Desirable: Since the two phase PQB system may strain the
transparency principle and there is a heightened risk of Anti-competitive practices, two
phase PQB should be done only as an exception under specified circumstances. Hence,
the procuring entities may lay down restricted powers to approve such modes at
sufficiently high levels in SoPP. It should not be a routine/ normal mode of procurement of
works, and qualification criteria as part of a single/ two/ multiple envelopes system should
suffice in such situations. PQB bidding as a separate phase is contraindicated in the
following circumstances:
a) Where procurement is being done through limited tender enquiries;
b) Where the requirement is technically and commercially not complex enough that pre-
qualification of the bidder is not crucial for the performance of the contract;
c) Where the procurement is significantly complex and the time, effort and money
required from the bidder to participate in a tender is not significant, clear-cut, fail-pass
pre-qualification criteria can be specified in single-stage tendering (instead of two-
phase tendering) as per para 3.9.2 below.
4. Pre-qualification Criteria: PQC should be unrestrictive enough not to leave out even one
capable contractor. Otherwise, it can lead to higher goods/works/services prices.
However, on the other hand, these criteria should be restrictive enough so as not to allow
even one incapable contractor and thus vitiate fair competition for capable contractors to
the detriment of the buyer’s objectives. A misjudgement in either direction may be
detrimental. Due consideration should be given while framing PQC to its effect on the
adequacy of competition. PQC should not result in unreasonable exclusion of ‘Class-I local
supplier’/ ‘Class-II local supplier’ who would otherwise be eligible beyond what is essential
for ensuring the quality or creditworthiness of the supplier. (please refer to para 1.11.3-9
of the Manual for Procurement of Goods, second edition, 2024). PQC should therefore be
carefully decided for each procurement with the approval of competent authority (CA). It
should be clarified in the PQB documents that bidders have to submit authenticated
documents in support of qualification criteria. Specific criteria of 'pass' for each attribute
will be as specified in the standard pre-qualification document. A bidder may be awarded
more than one contract in a Tender if he: (a) meets the PQC of each of them; (b)
demonstrates having the resources in respect of financial, personnel and equipment
capabilities to meet the aggregate of the specified capabilities for each contract; and (c)
has available bid capacity at the time of bidding, as calculated by formula in sub-para f)
below, more than the total estimated cost of these works. The attributes PQC should cover
inter-alia:
a) General Construction Experience: Annual Turnover
The applicant should have achieved minimum annual value of general construction
work (as certified by Chartered Accountant, and at least 50(fifty) percent of which is
from Engineering (Civil/ Electrical/ Mechanical as relevant to the work being
procured) construction works, carried out in any of the year over a stated period
(normally five to seven years, ending 31st March of previous year), calculated by
applying an appropriate multiplier to the projected annual construction expenditure
on the subject contract. The multiplier of 2 may be used, but for very large contracts
should not be less than 1.5.
72Manual for Procurement of Works, Second Edition, 2025
b) Particular Construction Experience and Key Production Rates
i) The applicant should have successfully completed or substantially completed
similar works during last seven years ending last day of month previous to the
one in which applications are invited should be either of the following: -
1) Three similar completed works costing not less than the amount equal to
40(forty) percent of the estimated cost; or
2) Two similar completed works costing not less than the amount equal to 50
(fifty) percent of the estimated cost; or
3) One similar completed work costing not less than the amount equal to 80
(eighty) percent of the estimated cost; and
3.1 “Substantially completed works “means an ongoing work in which
payment equal to or more than 90% of the present contract value has
been made to the contractor in that ongoing contract, and the work or
a major part of it is in a usable condition for its intended purpose. No
proceedings for termination on account of the contractor’s default
should be pending in such cases. The Engineer-in-Charge or the
Employer shall issue a certificate of substantial completion containing
two parts. Part -I shall contain both the financial value of the work
executed and certified for payment as a percentage of total current
contract value, and part-II shall contain ‘certificate of functional
completion of the work or a major part of it’. To remain valid for pre-
qualification or tender evaluation, such certificates should have been
issued within sixty days prior to the date of invitation of the tender.
3.2 The pre-qualification criteria specified in the tender document should
neither be made very stringent nor very lax to restrict/ facilitate the
entry of bidders. It is clarified that the guidelines issued are illustrative
and the organizations may suitably modify these guidelines for
specialized jobs/works, if considered necessary. However, it should be
ensured that the PQ criteria are exhaustive, yet specific and there is
fair competition. It should also be ensured that the PQ criteria are
clearly stipulated in unambiguous terms in the bid documents.)
3.3 The similarity of work shall be pre-defined based on the physical size,
complexity, methods/ technology and/ or other characteristics
described, and scope of works. For contracts under which the
applicant participated as a joint venture member or sub-contractor,
only the applicant’s share, by value, shall be considered to meet this
requirement. For arriving at cost of similar work, the value of work
executed shall be brought to current costing level by enhancing the
actual value of work at simple rate of seven percent per annum,
calculated from the date of completion to the date of Bid opening.
3.3 Public authorities should also keep the experience criteria broad
based so that bidders with experience in similar nature of works in
various sectors can participate.
ii) The applicant should also have achieved the minimum annual production value
of the key construction activities (e.g. dredging, piling, or earthworks etc)
stipulated.
73Chapter 3: Bidding Design for Works
c) Financial Capabilities:
The applicant should have:
i) access to or possess available liquid assets and other financial means
(independent of any contractual advance payments) sufficient to meet the
construction cash flow requirements for the subject contract, of the certain
minimum amount specified.
ii) adequate sources of finance to meet the cash flow requirements of works
currently in progress and for future contract commitments; and
iii) financial soundness as established by audited balance sheets and/ or financial
statements. Average Annual Financial Turnover of the bidders during the last
three years ending 31st March of the previous financial year should be at least
30% of the estimated cost.
iv) In the pre-qualification process for bidders, it's essential to consider the financial
capacity not only of the primary bidder but also of any associated partners. The
financial strength of associates will be considered during the evaluation. A valid
experience certificate from private companies that are listed on major stock
exchanges such as the Bombay Stock Exchange (BSE) or the National Stock
Exchange (NSE) will be accepted as proof of capability. Additionally, the
experience or qualifications contributed by subcontractors should represent no
more than 5% of the total project cost. This ensures that the main bidder and their
associates possess the predominant share of expertise and financial stability
required for the project.
d) Personnel Capabilities
The applicant's key personnel, as listed in the pre-qualification document, should meet
the requirements of qualification and experience specified. The pre-qualification
criteria should, refer to a limited number of such key personnel, for instance, the
project or contract manager and those superintendents working under the project
manager who will be responsible for major components (for example, superintendents
specialised in dredging, piling, or earthworks, as required for each particular project).
Criteria of acceptability should be based on:
i) A minimum qualification related to the work, if considered desirable;
ii) A minimum number of years of experience in a similar position; and
iii) A minimum number of years of experience and/ or number of comparable projects
carried out in a specified number of preceding years.
e) Equipment Capabilities
The applicant should own, or have assured access (through hire, lease, purchase
agreement, other commercial means) to the specified key items of equipment, in full
working order, and satisfy that, based on known commitments; it will be available for
timely use on the proposed contract. The pass–fail criteria adopted should be limited
only to those bulky or specialised items that are critical for the type of project to be
implemented (say heavy lift cranes and piling barges, dredgers, asphalt mixing plants),
and so on. Contractors may not own the specialised items of equipment and may rely
on specialist sub-contractors or equipment–hire firms.
f) Available Bid Capacity
The bidder should possess the bidding capacity as calculated by the specified formula.
The formula generally used is:
74Manual for Procurement of Works, Second Edition, 2025
Available bid capacity = A x M x N -B, where
A = Maximum value of engineering (Civil/ Electrical/ Mechanical as relevant to work
being procured) works executed in any one year during the last five years
(updated at the current price level), considering the completed as well as works
in progress.
M = Multiplier Factor (usually 1.5)
N = Number of years prescribed for completion of the work in question.
B = Value (updated at the current price level) of the existing commitments and
ongoing works to be completed in the next 'N' years.
g) Pre-qualification of JV
JV members are “jointly and severally responsible and liable” in a contract. For pre-
qualification, the JV should fulfil the criteria specified in the pre-qualification document.
The attributes to be evaluated will be the same as for individual contractors; however,
certain parameters up to the specified limits have to be essentially met by them
collectively, some by the lead partner, and some by the other partner, as briefly
described below:
i) Qualifying factors to be met collectively:
1) annual turnover from construction;
2) particular construction experience and key production rates;
3) construction cash flow for the subject contract;
4) personnel capabilities; and
5) equipment capabilities.
ii) Qualifying factors for lead partner:
1) Annual Turnover from Construction;
2) particular construction experience;
3) financial capability to meet cash flow requirement of subject contract –not
less than of 50 (fifty) per cent of the respective limits prescribed in case of
individual contractors may be accepted;
4) adequate sources to meet financial commitments on other contracts;
5) financial soundness.
iii) Qualifying factors for other partner: Same as for lead partner except that for the
factors specified in (ii) (3) above, a lower limit of 25 (twenty-five) per cent may be
accepted instead of 50 (fifty) per cent. A suggestive template for Qualification
Criteria for Joint Ventures is placed at an Annexure 13 as used in certain large
organisations.
h) Disqualification
Even if an applicant meets the eligibility criteria (Please refer Para 4.6.2 below) and
PQC, he shall be subject to disqualification if he or any of the constituent partners is
found to have:
i) made misleading or false representations in the forms, statements, affidavits and
attachments submitted in proof of the qualification requirements; and/ or;
ii) Records of poor performance during the last five years, as on the date of
application, such as abandoning the work, rescission of the contract for reasons
which are attributable to non-performance of the contractor, inordinate delays in
75Chapter 3: Bidding Design for Works
completion, consistent history of litigation resulting in awards against the
contractor or any of the constituents, or financial failure due to bankruptcy, and
so on. The rescission of a contract of venture JV on account of reasons other than
non-performance, such as the most experienced partner (major partner) of JV
pulling out.
5. Advertisement and Notification: The invitation for the first phase PQB shall be
processed (advertised, tender document preparation, publicity, evaluation, and so on) in
the same manner as a normal GTE or OTE (as the situation calls for) tender, ensuring the
widest possible coverage. The PQC and evaluation criteria should be clearly noted in the
PQB documents. The PQB documents should also indicate a complete schedule of
requirements for which this PQB is being done, including the work requirement to the
extent possible. A minimum period of 3 weeks (4 weeks in case foreign bidders are also
involved) may be allowed for the submission of PQBs. In the case of urgency duly
approved by CA, the time limit may be reduced to 10 (ten) days.
6. Evaluation: At least in high-value and critical procurements, the credentials regarding
experience and past performance submitted by the successful bidder may be verified as
per pre-qualification criteria (PQC), as far as reasonably feasible, from the parties for
whom work has been claimed to be done. The procuring entity shall evaluate the
qualifications of bidders only in accordance with the PQC specified and shall give due
publicity to the particulars of the bidders that are qualified on the relevant portals/ websites.
Procuring Entity reserves its right to relax the condition of prior turnover and prior
experience for start-up enterprises (MSME or otherwise) recognized by the Department
for Industry & Internal Trade (DPIIT), subject to meeting quality & technical specifications.
It is further clarified that such relaxation is not optional but has to be ensured, except in
case of procurement of items related to public safety, health, critical security operations
and equipment, etc) where adequate justification exists for the Procuring Entity not to relax
such criteria. Please refer to para 1.11-4, 4.2.6-4 and 6.4.1-1-b).
7. Empanelment of contractors: Public authorities may empanel/ register contractors of
those specific goods and services which are required by them regularly. Performance of
such empanelled contractors should be reviewed periodically. The list of registered
contractors shall be updated on a regular basis. The category/ class of contractors
may be upgraded/ downgraded, or contractors may be de-listed based on their
performance. Empanelment of contractors shall be done in a fair and equitable
manner, preferably online after giving due publicity. The practice of inviting bids for
works tenders only from empanelled contractors may be confined to tenders up to
certain threshold value, as decided by the project executing authorities.
8. Subsequent Procurement Tender: The pre-qualification shortlist shall be for a single
subsequent procurement. In this subsequent procurement, bids are invited from these
qualified bidders only, and all other bids may be treated as unsolicited offers, which are
normally rejected. This second phase of the procurement process is handled as a normal
two-envelope tender. The time gap between the pre-qualification approval and the floating
of the linked main procurement tender should normally be less than six months.
3.9.2 Single Stage Pre-qualification
1. In the situation described in para 3.9.1 above, i.e., significantly complex procurement, the
capability of the contractor is crucial, the necessity to ensure competition only among
equally capable bidders, but where the time, effort and money required from the bidder to
76Manual for Procurement of Works, Second Edition, 2025
participate in a tender is not very high, instead of a separate phase of Pre-Qualification
bidding (as described in para 3.9.1 above), a clear-cut, fail-pass Pre-Qualification Criteria
(PQC – please see para 3.9.1-4) above) can be asked to be submitted as the first
(additional) envelope in a single-stage three envelopes system so that a bidder's risk of
having his bid rejected on the grounds of qualifications is remote if he exercises due
diligence. In eProcurement, separate files shall be uploaded by the bidder, mutatis
mutandis.
2. Strictly speaking, this is not a pre-qualification but a post-qualification of bidders (i.e., after
the techno-commercial and financial bids have been received). In respect of pre-
qualification, in the first instance on the pre-announced bid opening date, only the PQB
envelopes (also containing the EMD and other eligibility documents) are opened and
evaluated to shortlist the responsive bidders who pass the Pre-qualification.
3. The rest of the procedure is the same as the two envelope systems (Techno-commercial
and Financial Bids) for only qualified bidders. In e-procurement, the other two envelopes
of unqualified bidders would remain encrypted and unopened. In off-line tenders, the other
two envelopes of unqualified bidders are returned unopened to the respective bidders by
registered acknowledgement due/reliable courier or any other mode with proof of delivery.
3.9.3 PQB Tendering –Risks and Mitigations
Risk Mitigation
a) Pre-qualification criteria: PQB has the Lay down criteria when prequalification in
potential of getting misused or being single-stage or two-stage tendering is
applied without considering the restrictive warranted. Also, model PQC criteria for
nature of competition. PQC should be diverse types of procurements should be laid
relevant to the quality requirements, and down on the lines of para 3.9.1-4.
neither is very stringent nor very lax in
restricting/facilitating the entry of bidders.
These criteria should be clear,
unambiguous, exhaustive, and yet
specific. Also, there should be fair
competition.
b) Dangers of Anti-competitive bidding: Two-stage PQB should be done only in
Since in a two-stage PQB, shortlisted appropriately justified situations.
bidders are announced, there is a Alternatively, a single-stage multiple
heightened possibility of these bidders envelope system may be used for
forming a cartel and quoting anti- prequalification, in which the chances of anti-
competitive prices in the second stage of competitive behaviour and cycle time are
tendering. significantly lower.
c) Two-phase PQB is a time-consuming
process.
d) Contentious and Disputes: Both the In the PQC, a caveat against such
successful and unsuccessful bidders tendencies may be included, asserting the
tend to view the PQB process as a right of the procuring agency to interpret the
means for creating rights/ privileges/ PQC on common usage of terminologies
entitlement for them by way of hair- and phrases in public procurement instead
splitting, contentious or viciously of legalistic and hair-splitting judgements
77Chapter 3: Bidding Design for Works
legalistic interpretations of PQC criteria, and that their decision in this regard would
disregarding the very rationale of the be final.
PQB and PQC.
3.10 Limited Tender Enquiry (LTE)
LTE45 is a restricted competition procurement, where a pre-selected list of bidders (enlisted
with the Procuring Entity along with those enlisted with other Public Works Organisations/
Works PSUs) is directly approached for bidding. Bids from uninvited bidders are treated as
unsolicited and are normally not entertained, except in exceptional circumstances. However,
Ministries/ Department should evolve a system by which request for registration/ enlistment of
interested/ unsolicited firms should be decided before the bid in next round of tendering. This
mode provides a short and simple procedure but may not provide as good a VfM as in case
of open tendering – still a good balance for procurements below a threshold. LTE procedures
should be the default mode of procurement when the estimated value of procurement is upto
Rs 10 lakhs (Rupees Ten Lakh), or when limited numbers of tenderers are known to possess
requisite skills, technology and resources, by reason of their high complex or specialized
nature, or for works of a secret nature
3.10.1 Terms and Conditions
1. The panel of contractors in the list of enlisted/ registered contractors for the subject matter
of procurement, to whom it is proposed to send tender documents shall be got approved
from competent authority, before floating the tender.
2. In case the number of enlisted/ registered bidders for a work is large and unwieldy, a
transparent system of rotation of invitation to bid may be used to keep the invited shortlist
to a manageable number (say 8 to 12).
3. In the off-line tendering, copies of the tender documents should be sent free of cost (except
in case of priced specifications/ drawings) directly by speed post/ courier/ e-mail to the
firms which are enlisted bidders/ contractors. Further, Procuring Entity should also
mandatorily publish its limited tender enquiries on GeM- Central Public Procurement Portal
(GeM-CPPP). Apart from GeM- CPPP, the organisations should publish the tender
enquiries on its own/ Department’s or Ministry’s web site.
4. The minimum number of bidders to whom LTE should be sent is more than three. In case
less than three approved contractors are available, LTE may be sent to the available
approved contractors with the approval of the CA, duly recording the reasons. Efforts
should then be made to identify a higher number of approved contractors by the enlistment/
registration section to obtain more responsive bids on a competitive basis.
5. A simplified Tender Document with brief terms and conditions should be used, instead of
a detailed Tender Document. In any case, all registered contractors, who normally are
invited to quote in such limited tenders, have already acknowledged acceptance of
“general conditions of contract” as part of the registration application, which is applicable
to such procurements, in addition to these brief “terms and conditions” in LTE tender form.
If necessary, specifications and drawings or any other document may be enclosed with
the limited tender form.
6. In domestic tenders, any bid in foreign currency should be summarily rejected.
45Rule 162, GFR 2017
78Manual for Procurement of Works, Second Edition, 2025
7. Since selected bidders are normally enlisted/ registered with the Procuring Entity, Bid
Security/ EMD and Performance Security are normally not taken in LTE.
3.10.2 LTE - Risks and Mitigations
Risk Mitigation
a) Major risk in this mode is that the The e-procurement portal may be programmed
demand may be artificially split to to raise an alert if the same item is attempted to
avoid OTE or higher -level approvals be procured through LTE repeatedly. Audit
should take up a larger percentage of cases in
LTE for review.
b) There is a risk that LTE may not To ensure sufficient response, in addition to
attract sufficient number of bids and mails/emails to selected vendors, web-based
sometimes there may be a single publicity should be given for limited tenders, with
acceptable offer. suitable clarifications that unsolicited bids shall
c) This may be because of an not be considered.
insufficient database of enlisted/ Sufficient time should be allowed for the
known vendors. submission of bids, say two weeks. A shorter or
d) It could also be due to bid longer period, if considered sufficient for the
documents not reaching the submission of bids, could be allowed if justified
targeted bidders – intentionally or according to the urgency/ complexity of the
otherwise. requirement.
e) It could also be due to bidders not Further, a limited or open tender that results in
getting adequate time for only one effective offer shall be treated as a
submission of bids. single tender enquiry situation, with relevant
f) On the other hand, unsolicited powers of approval, etc.
bidders may also quote – causing a See para below for an insufficient database of
transparency dilemma about vendors.
consideration of such offers.
g) There is also a risk that the selection Maintenance of a panel of registered suppliers
of vendors may not be transparent. for each subject matter of procurement is a sine-
At the evaluation stage, some qua-non for LTE (Ref Rule 150 GFR 2017 and
invited bidders may be passed over para 8.6 of this manual). Such panels of vendors
on grounds of being ineligible/ should be reviewed every year to ensure an
unreliable. On the other hand, adequate number of registered suppliers.
unsolicited bidders may also quote, The panel should not be changed after the LTE
causing a dilemma of transparency tender has been published. All past successful
regarding the consideration of such vendors/ bidders should invariably be invited. In
offers. case it is proposed to exclude any registered/
approved vendor/ contractor from being
shortlisted for inviting LTE, detailed reasons,
such as failure in supply, should be duly
recorded, and approval of the CA should be
taken before exclusion. Bidders should be
selected with due diligence to ensure that
bidders who do not meet eligibility criteria are not
shortlisted. At the evaluation stage, in LTE,
passing over of a duly shortlisted bidder on
79Chapter 3: Bidding Design for Works
Risk Mitigation
grounds of poor past performance or eligibility
may raise questions about transparency.
3.11 Special Limited Tender Enquiry (SLTE) for Procurements more
than Rs. 10 (Rupees Ten) Lakh
SLTE mode is permissible in certain special circumstances for values higher than Rs. 10
lakh (Rupees Ten Lakh) (Rule 139 (v) and 162 of GFR 2017), where normally OTE should
have been done. Powers to sanction procurement on an SLTE basis in such exceptional
cases may be laid down in SoPP based on a certificate of urgency signed by the indentor.
This mode has the merit of being quicker, but the VfM obtained may be less than in the case
of OTE; hence, it should be restricted to the following situations:
a) The competent authority in the Ministry / Department certifies that there is an existing
or prospective urgency for operational or technical requirements, and any additional
expenditure involved by not procuring through advertised tender enquiry is justified in
view of urgency. The Ministry/Department should also put on record the nature of the
urgency and reasons why the procurement could not be anticipated earlier.
b) There are sufficient reasons to be recorded in writing by the competent authority,
indicating that it will not be in the public interest to procure the works through
advertised tender enquiry.
c) The sources of supply are definitely known, and the possibility of fresh source(s)
beyond those being tapped is remote.
d) Government policy designates procurement from specific agencies.
3.11.1 Terms and Conditions
1. The tender process would be the same as in the case of a normal LTE described above.
However, the tender documents are more detailed, as in the case of OTE.
2. The indentor should certify that there is an existing or prospective urgency for operational
or technical requirements and that any additional expenditure involved by not procuring
through an advertised tender enquiry is justified in view of urgency. The indentor should
also put on record the nature of the urgency and reasons why the procurement could not
be anticipated.
3. In domestic tenders, any bid in foreign currency should be summarily rejected.
4. Unlike LTE, Bid Security and Performance Security are taken in SLTE as in OTE tenders.
3.11.2 SLTE - Risks and Mitigations
Risk Mitigation
Risks, as applicable in both LTE and OTE, All mitigation strategies of LTE and OTE
are also applicable here. In addition, there is shall also apply here. In addition, the checks
a risk that this mode may be used and balances systems should be tighter by
unjustifiably to avoid open tendering (OTE). way of enhanced and severely restricted
delegation of powers for certification of
urgency and approval of this mode of
procurement. A system of reports from the
authority signing the urgency certificate and
80Manual for Procurement of Works, Second Edition, 2025
post facto review of utilisation of received
goods/works/services to tackle the
expressed urgency may be laid down.
3.12 Single Tender Enquiry (STE) or Selection by Nomination
The selection by direct negotiation/ nomination is called a single tender46. This mode may be
shortest but since it may provide lesser VfM as compared to LTE/ OTE and may also strain
the transparency principle, it should be resorted to only under following conditions:
1. There is an urgent need for the work and engaging in competitive tendering process would,
therefore, be impractical, provided that the circumstances giving rise to the urgency were
neither foreseeable by procuring entity nor the result of dilatory conduct on its part.
2. Works that represent a natural continuation of previous work carried out by the firm when
considering the limited size of the additional work in relation to the original procurement
and the reasonableness of the price it will be cost effective to resort to single source
procurement. However, the incremental work should not be more than 25 (twenty-five)
percent of the original contract value;
3. In case of an emergency situation, situations arising after natural disasters, situations
where timely completion of the work is of utmost importance subject to the reason for such
decision being recorded and approval of the competent authority obtained.
4. Situations where execution of the work may involve use of proprietary techniques or only
one contractor has requisite expertise.
5. The procurement entity engages in procurement involving national defence or national
security and determines that single source procurement is the most appropriate method
of procurement.
6. Under some special circumstances, it may become necessary to select a particular
Agency where adequate justification is available for such single-source selection in the
context of the overall interest of the Ministry or Department.
3.12.1 Terms and Conditions
1. The reasons for a STE and selection of a particular firm must be recorded and approved
by the CA as per the delegation of powers laid down at in DFPR/ SoPP, prior to single
tendering. It is to be understood that powers of procurement of STE are more restricted.
2. The Procuring Entity shall ensure fairness and equity and shall have a procedure in place
to ensure that: the prices are reasonable and consistent with market rates for work of a
similar nature; and the required work is not split into smaller sized procurements.
3. In case of Single Tender procurements:
a) a report relating to such awards on nomination basis shall be submitted every quarter:
i) The Secretary, in case of Ministries/Departments.
ii) The Board of Directors or equivalent managing body, in case of Public Sector
Undertakings, Public Sector Banks, Insurance companies, etc;
iii) The Chief Executive of the organisation where such a managing body is not in
existence.
b) The audit committee or similar unit in the organisation may be required to check at
least 10% of such cases.
46Rule 166, GFR 2017
81Chapter 3: Bidding Design for Works
3.12.2 STE - Risks and Mitigations
Risk Mitigation
Risks as applicable in both LTE and All mitigation strategies of LTE and OTE would
OTE are also applicable here. In apply here also. In addition, the systems of
addition, there is a risk that this mode checks and balances should be tighter by way of
may be used unjustifiably to avoid open enhanced and severely restricted delegation of
tendering (OTE), thereby making the powers in this regard for certification of urgency
selection of the contractor non- and approval of this mode of procurement. A
transparent and unjustified. system of reports from the authority signing the
urgency certificate and post facto review of
utilisation of executed works and receipt of
incidental goods/ services to tackle the
expressed urgency may be laid down. Audit
should take up the bulk of such cases for review
to judge the genuineness of urgency certification.
3.13 Award of Work through Quotations
1. Use of quotations up to Rs Five lakh in each instance shall be adopted for procurement of
minor civil works like construction of boundary walls, installation of safety barriers or
guardrails, repairing/ maintenance/ plumbing works etc. for which there is an established
market. Procuring entity shall not divide its procurement into separate contracts to bring
the amount less than the amount set forth for such purpose.
2. Procuring entity shall request quotations from as many contractors as practicable but
positively from at least three contractors. Each contractor from whom a quotation is
requested, shall be informed whether any elements and other than the charges for the
works to be executed, such as, transportation and insurance charges, duties and taxes
are to be included in the price.
3. Each contractor or contractor is permitted to give only one price quotation and is not
permitted to change its quotation.
4. Award of work through quotations shall be resorted only in emergent cases and suitable
reasons shall be recorded.
3.14 Award of works in stalled contracts
1. Where a contractor abandons or stops the work mid-way, either due to insolvency or a
dispute or other reason, engagement of the new contractor takes considerable time and
in the meanwhile public money is locked up in assets which cannot be utilized, apart from
inconvenience and loss of amenities to the general public due to such half completed
works.
2. Notwithstanding anything in the GFR or the Manual, procuring entities should devise
methods (including limited/ single tenders) to deal with part completed contracts, wherever
the work is abandoned by the contractor mid-way. However, for issuance of limited/single
tenders in such cases, at least 20% of work should have been billed by the contractor who
has abandoned the work. Procurement approval of such limited/single tender should be at
the next higher level, or such level as may be prescribed.
.
82Manual for Procurement of Works, Second Edition, 2025
Chapter 4: Bid Invitation Process
4.1 Tender Documents
1. The tender document is the fundamental document in the public procurement process as
after award of the contract it becomes part of the contract agreement. All necessary
provisions governing the contract should be clearly provided in the tender document.
Examples are technical specifications, drawings, commercial terms and conditions
including payment terms, obligations of the procuring entity and the contractor,
timeframe/milestones for execution of the project, tax implications, compliance framework
for statutory and other norms, reporting on progress/quality of the work, dispute resolution.
Provisions/ clauses in the tender document should be clear, self-contained and
comprehensive without any ambiguity, to avoid differences in interpretation and possible
disputes, time overrun, cost overrun and quality compromises. Comprehensive survey &
soil investigation report, area grading & mapping of underground facilities, where project
is to be executed, may be made available and made part of tender document. A carefully
prepared tender document avoids delays and complaints. This will also attract more
bidders to formulate and submit their competitive bids with confidence. Hence, it is worth
spending time and effort on this even in cases of urgency.
2. While tender document should be complete in themselves and may be slightly different for
various categories of procurement, these must necessarily address the essential aspects
mentioned below47.
a) Description of the subject matter of procurement, its specifications/ drawings
including the quality/ nature/ quality assurance, quantity, time and location where the
construction is to be effective, any incidental services to be performed;
b) The facilities and the inputs which will be provided to the contractor by the Ministry/
Department;
c) Limitation or preference for participation by bidders in terms of the Government
policies;
d) The procedure as well as date, time, and place for obtaining, submitting, and opening
of the bids;
e) The criteria for eligibility and qualification to be met by the bidder (the eligibility criteria
should take care of the contractor’s eligibility to receive such a government contract).
The qualification criteria should take care of the contractor’s past performance,
experience, technical competence, financial strength to handle the contract
successfully, compliance with environmental protection regulations/ Environment
Management System and so on;
f) Requirements as to documentary evidence, which must be submitted by contractors
or contractors to demonstrate their qualifications;
g) Suitable provisions for enabling a bidder to seek clarification/ question the bidding
conditions, bidding process and/ or rejection of its bid. These provisions should
include a time frame in which the procuring entity will address the bidder’s questions;
h) Criteria for determining the responsiveness of bids, criteria as well as factors to be
considered for evaluating the bids on a common platform and the criteria for awarding
47 Rule 173 of GFR, 2017
83Chapter 4: Bid Invitation Process
the contract to the responsive, most advantageous (lowest/ highest48 as the case
may be) bidder should be clearly indicated in the bidding documents;
i) Commercial terms and conditions e.g., payment terms, tax implications, respective
obligations of the procuring entity and the contractors, compliance framework for
statutory and other norms. Provision of price variation wherever considered
appropriate, as well as methodology for calculation of the same shall be clearly
stipulated in the tender document;
j) Tender document should include a clause that “if a firm quotes NIL charges/
consideration, the bid shall be treated as unresponsive and will not be considered;”
k) Procedures for redressal of grievances or complaints from aggrieved bidders;
l) If applicable, Integrity Pact clause and format to be signed, shall be included;
m) Suitable provision for settlement of disputes, if any, emanating from the resultant
contract, should be kept in the tender document; and
n) Essential terms of the procurement contract including a suitable clause mentioning
that the resultant contract will be interpreted under Indian laws.
3. Procuring entities may issue instructions regarding appropriate delegation of authority for
approval of the tender documents before these are floated/ uploaded.
4. Eligibility criteria specify the criteria that a bidder should meet to be considered a
responsive bid to be evaluated further beyond the preliminary evaluation/ screening of
bids. Please refer to para 6.3.6 below.
5. Qualification Criteria: Qualification criteria determine the capability of bidders (who have
passed the eligibility criteria) to perform the contract. Only those bidders who meet the
qualification criteria, go to the next step of evaluation for award of contract. Qualification
criteria should be clear and fair in regard to the specific circumstances of the procurement.
Public authorities should also keep the experience, technical and financial criteria broad-
based so that bidders with experience in execution of works of a similar nature can
participate. Appropriate parameters should be prescribed in the qualification criteria for
bidders to enable the selection of the right type of bidders in the public interest, balancing
considerations of quality, time, and cost. (please refer to para 6.4.1).
6. Evaluation Criteria: Evaluation criteria are the final filter used to select the bidders (who
have passed the qualification criteria) for the award of the contract. Depending on the
requirement and value-for-money (VfM) considerations, the Procuring Entity may consider
including, besides price, in the evaluation criteria in the Tender Document, one or more
additional criteria, e.g., quality of workmanship, technical merit, aesthetic and functional
characteristics, environmental characteristics, period of completion etc. No criteria shall
be used for the evaluation of tenders that cannot be verified.
7. Open online tendering should be the default method to ensure efficiency of procurement.
8. The Procuring Entity should allow enough time to the bidders to prepare their proposals.
The time allowed shall depend on the assignment but normally shall not be less than three
weeks. In cases where participation of international contractors is contemplated, a period
of not less than four weeks should normally be allowed.
48 Highest, here refers to the selection of the contractor using the Quality and Cost Based Selection (QCBS)
methodology, wherein the contractor securing highest marks by combining the technical and financial evaluation
scores is identified as the Highest scorer or the H1 bidder, and is eligible for award of contract. Please refer to para
4.9.2 under this Manual for further clarity.
84Manual for Procurement of Works, Second Edition, 2025
9. Tender documents should invariably reserve the Procuring Entity’s right without assigning
any reason to:
a) reject any or all of the Bids or
b) cancel the tender process, or
c) abandon the procurement of the Works, or
d) issue another tender for identical or similar works.
4.2 Preparation of Tender Documents
The bid documents must be based on relevant Standard Bidding Documents for the Type of
Contract (Lump Sum, Item Rate etc); Estimated Value range, Bidding System (Single
Envelope/ Two Envelope/ PQB) etc. SBD for e-procurement would be slightly different from
the traditional SBD. To ensure uniformity, the standard provisions in most sections of the SBD
are to be used unaltered. Any modification to suit a unique requirement of the specific
procurement in these documents is to be done through variable sections such as Appendix to
Instructions to Bidders or Special Conditions of Contract (these variable sections may have
different nomenclatures in some organisations). Normally, if the organisation does not have
its own SBD, it may follow those of other Public Works Organisation like CPWD. Before
floating the tender, the Bid Document should be got approved by the competent authority. The
contents of Bid Documents would therefore vary, but will generally comprise the following
(some of these sections may be named or organised differently in some organisations):
a) Section I: Notice Inviting Tender (NIT) and its Appendix: Tender Information
Summary (TIS);
b) Section II: Instructions to Bidders (ITB)
c) Section III: Appendix to Instructions to Bidders (AITB)
d) Section IV: General Conditions of Contract (GCC)
e) Section V: Special Conditions of Contract (SCC)
f) Section VI: Schedule of Requirements
g) Section VII: Drawing, Technical Specifications and Quality Assurance
h) Section VIII: Qualification and Evaluation Criteria
i) Submission forms and formats, including Bid Form (Cover letter), bank guarantees
and contract format etc.
j) Financial Bid (BOQ Excel Sheet)
4.2.1 Notice Inviting Tender
1. The Notice Inviting Tender (NIT) has legal importance, since it is this part of tender
document, which is soliciting offers from the bidders. The NIT should be used for publishing
the tender notice.
2. NIT is crucial for attracting wide competition in the tender. The NIT (and its appendix TIS)
must contain sufficient information in brief for a prospective bidder to decide whether to
participate in the tender or not and, if it decides to participate, how to go about it. To ensure
competition, attention of all likely bidders, for example, registered contractors, past
contractors, and other known potential contractors, should be invited to the NIT through
email/ SMSs/ letters. In e-procurement, the website may be programmed to generate
these alerts automatically.
3. In case of procurement through a limited tender, the NIT may be uploaded on GeM- CPPP
Portal and Procuring Entity’s website with a note saying:
85Chapter 4: Bid Invitation Process
“This notice is being published for information only and is not an open invitation
to quote in this limited tender. Participation in this tender is by invitation only
and is limited to the selected Procuring Entity’s registered contractors.
Unsolicited offers are liable to be ignored. However, contractors who desire to
participate in such tenders in future may apply for registration with Procuring
Entity as per procedure.”
4. Time-stamped audit trails for the e-publication shall be maintained by the procurement
portal. Printouts may be taken only in case of off-line tenders, if required, apart from
ensuring maintenance of time stamped audit trail of e-publication. The complete details of
the dates on which advertisements appeared on the website should be indicated when
sending cases to higher authorities.
4.2.2 Instructions to Bidders (ITB) and its Appendix (AITB)
ITB contain all relevant information as well as guidance to the prospective bidders regarding
- obtaining tender documents; preparing and submitting a response, process of establishing
the eligibility/ qualification credentials of the bidders, Code of Integrity in Public Procurement
(CIPP), the process of grievance redressal, as well as evaluation and comparison of tenders
and award of contract but should not contain information on processes after the
announcement of the award which should be covered in GCC, for example, the arbitration
clause, resolution of disputes, and so on. ITB also contains introduction/ overview of the
contents of the tender document. It mentions the type of entities that may participate,
specifically if Consortium/ JV are permitted to participate. It also excludes insolvent, bankrupt,
debarred, and convicted firms with conflict of interest from participation. Restriction of
participation of bidders from certain countries with land borders with India is also applicable.
Instead of modifying ITB every time, any changes warranted by exceptional circumstances
may be indicated with the prior approval of CA in a separate Appendix to ITB (AITB) and ITB
may be included unchanged in every tender document. It should also be indicated therein that
the provisions in the AITB shall supersede the corresponding provisions in the ITB.
4.2.3 General and Special Conditions of Contract
The General Conditions of Contract (GCC) details the terms and conditions that would govern
the resultant contract. GCC covers all information on aspects after the announcement of the
tender award till the closure of the contract and dispute resolution. It should not cover any
aspect up to announcement of award. Instead of modifying the GCC every time, any changes
warranted by exceptional circumstances may be indicated in a separate section - Special
Conditions of Contract (SCC) with the prior approval of the CA and GCC may be included
unchanged in every tender document. Conditions in SCC shall be need based and specific
and the circumstances warranting them shall be duly considered, including but not limited to
the following:
a) Where the wording in GCC specifically requires that further information is to be
included in SCC and the conditions would not be complete without that information;
b) Where the wording in GCC indicates that supplementary information may be included
in SCC, but the conditions would still be complete without that information;
c) Where the type, circumstances or locality of the works requires additional clauses or
sub-clauses; and
d) Where the laws of the country, or exceptional circumstances, necessitate alterations
in GCC. Such alterations are affected by stating in SCC that a particular clause, or
86Manual for Procurement of Works, Second Edition, 2025
part of a clause in GCC, is deleted and giving the substitute clause or part, as
applicable.
4.2.4 Schedule of Requirements
1. For works procurement, this section should detail the scope of work, including the
description of the works to be undertaken, quantities, quality standards, site location, and
delivery requirements/ milestones. If there are no separate sections on Technical
Specifications (TS) and Quality Assurance (QA), these details should be incorporated
here, specifying the standards and methodologies to be employed to ensure the works
meet the required quality and performance criteria.
2. It should be clarified how the evaluation of eligibility, qualifications, and financial bids will
be conducted—whether it will be done item-by-item, by lot, or for the entire scope of work.
Additionally, if the procurement involves multiple lots or sections of work, it should be
stated whether evaluations will be done on a lot-by-lot basis or based on the total of all lots
or sections combined.
3. This ensures transparency and clarity in the procurement process, enabling bidders to
understand the scope fully and submit their bids accordingly. It also facilitates the
procuring entity in evaluating bids effectively and fairly, ensuring that the works are
completed to the required standards and within the specified timeframes.
4. Identification of milestones may be done in an optimal and sequential manner and the
same may be stipulated in the tender document along with enabling provisions.
4.2.5 Drawing, Technical Specifications and Quality Assurance Plan
1. Construction drawings, Technical Specifications and Quality Assurance Plan lay down the
technical specifications and quality assurance requirements of the Works to be executed.
It would also stipulate, if required, any compliance required by Central and State Pollution
Control Boards. Also include following clause in the tender document:
2. The Bidder shall ensure that all products, services, platforms, infrastructure, and other
deliverables under contract must comply with applicable accessibility standards and
guidelines as notified under the Rights of Persons with Disabilities Act, 2016, and the
Rights of Persons with Disabilities Rules, 2017 as amended, including but not limited to:
a) Harmonised Guidelines and Standards for Universal Accessibility in India, issued by
Ministry of Housing and Urban Affairs.
b) IS 17802 (Part 1):2021 -Accessibility for ICT Products and Services Part I:
Requirements; and IS 17802 (Part 2): 2022 -Accessibility for ICT Products and
Services Part 2: Determination of Conformance issued by the Bureau of Indian
Standards; and
c) Any other relevant guidelines, notifications, or instructions time to time by Department
of Empowerment of Persons with Ministry of Social Justice and Empowerment,
Government of India.
4.2.6 Qualification Criteria
1. If it is intended to use qualification criteria to evaluate a tender and determine whether a
bidder has the required qualifications to successfully perform the contract, this point may
be clearly specified in ITB/AITB or as a separate section of the tender document. The
bidder must ensure that he provides convincing proof of having fulfilled these criteria. Any
criteria not specified in the tender cannot be used for evaluation or qualification.
87Chapter 4: Bid Invitation Process
2. Qualification of bidders is done on Pre-qualification Bidding basis (refer Para 3.9.1, PQB)
or on post-qualification basis (refer Para 3.9.2, single stage multiple envelope system). In
both cases Qualification criteria needs to be laid down in the Bid Document (refer para
3.9.1-4). Technical and Financial qualification Criteria for the bidders are important in the
public procurement process. They shall be clear and fair, having regard to the specific
circumstances of the procurement. Appropriate parameters should be prescribed in the
qualification criteria for bidders, to enable selection of the right type of bidders in public
interest, balancing considerations of quality, time and cost. Please refer to para 3.9.1-4 for
details of qualification criteria as described in the context of pre-qualification, but the same
is applicable to post-qualification also. In case of JVs, additional parameters are applicable
in qualification criteria as mentioned in para 3.9.1-4-g.
3. Entry Window for Sub-contractors in smaller contracts: It is of utmost importance to
develop new contractors and also to provide avenues to Sub-contractors, since they may
not get opportunities to accumulate the required credentials to compete in normal tenders.
To enable a window of entry for such sub-contractors, in small value contracts (e.g. repair
contracts upto Rs. 60 lakh) the requirements regarding General Construction Experience,
Particular Construction Experience and Available Bid Capacity may not be insisted upon
provided the bidders fulfil other criteria regarding Financial/ Personnel/ Equipment
capabilities. However, to avoid overstretching of their resources, no such contractors may
be allowed to hold more than 2 contracts under relaxed credentials, at any given time.
4. Relaxation for Start-ups:
a) The condition of prior turnover and prior experience may be relaxed49 for Startups
(only to startups recognized by Department of Industry & Internal Trade (DPIIT))
subject to meeting of quality & technical specifications and making suitable provisions
in the tender document50. Startups may be MSMEs or otherwise
b) Such relaxation can be provided in the case of procurement of works as well. It is
further clarified that such relaxation is not optional, but has to be ensured, except in
case of procurement of items related to public safety, health, critical security
operations and equipments, etc) where adequate justification exists for the Procuring
Entity to not to relax such criteria. Please also refer to para 1.11-4, 3.9.1-6 and 6.4.1-
1b).
5. Demerged entities (by virtue of a corporate restructuring exercise etc.) may be permitted
to participate in the tender by using the credentials of original/ parent entity to satisfy the
eligibility criteria in the tenders, at least, for initial five years from the incorporation of the
demerged entities. Procuring entities may in suitable cases consider the credentials based
on the merit and circumstances of the cases like type of procurement, nature of demerger,
number of eligible bidders available etc. Tender documents must clearly mention if the
credentials of the demerged entity will be considered or not in the specific tender and may
give the conditions under which demerged entities may become eligible51.
4.2.7 Evaluation Criteria
1. These criteria can include the quality of work, cost considerations, technical excellence,
as well as aesthetic and functional attributes of the proposed construction, aligning with
the project's overall goals. Environmental considerations are also critical, reflecting the
49 OM No.F.20/2/2014-PPD (Pt.) dated 20.09.2016.
50 Rule 173 (i) of GFR, 2017
51 Notified vide OM No. F.8/78/2023-PPD dated 12.10.2023
88Manual for Procurement of Works, Second Edition, 2025
commitment to sustainability. Moreover, running costs, cost-effectiveness, and factors
such as defect liability period (DLP), warranty period post-installation and commissioning,
and long-term service agreements, are critical in safeguarding the procuring entity’s
interests, ensuring that any defects identified within a specified period post-completion are
rectified at the contractor's expense, and that the project's integrity is maintained over time
through warranty and service agreements. It’s crucial that the evaluation criteria, including
those for the defect liability and warranty periods as well as long-term service
commitments, are tangible and verifiable. This ensures a transparent, equitable, and
objective assessment process, enabling a holistic evaluation that considers not only the
initial project execution but also its long-term sustainability, operational efficiency, and
maintenance, thereby aligning with the project’s objectives and the procuring entity's
overarching requirements. The inclusion of the projected delivery date and completion
timeline ensures the project adheres to strategic planning and timelines.
2. Conditional discounts, or discounts offered post tender opening, if any, shall not be
considered during evaluation. However, such discounts shall be availed if the bidder
becomes otherwise eligible for award of contract.
4.2.8 Submission Forms and Formats
This section contains the relevant forms for tender submission: various declarations by bidder,
formats for the bank guarantee, financial bid forms (BOQ Excel Sheet), exception and
deviation forms, contract forms and manufacture’s authorisation form, Integrity Pact (if
applicable) and so on.
4.2.9 Financial Bid (BOQ Excel Sheet):
Procuring Entity should select an appropriate format of BOQ from the eProcurement Portal
and upload it after filling up the entries for the complete schedule of requirements and various
price components/ schedule of rates52 to enable the system to automatically calculate all-
inclusive price of a bid to generate a comparative tabulation of all bids. Bidders are to upload
only the downloaded BOQ (in excel format) after entering the relevant fields without any
alteration/ deletion/ modification of other portions of the excel sheet. The quoted price shall be
considered to include all relevant financial implications, including inter-alia the scope of the
Works to be performed, location of the bidder, location of the procuring entity, terms of
delivery, applicable taxes, duties, permits, transportation, environment, and labour costs in
accordance with the prevailing market rates and relevant regulations of India.
4.3 Uploading of Tender Documents: Mandatory e-Publishing
1. It is mandatory for all Ministries/ Departments of the Central Government, their attached
and Subordinate Offices and Autonomous /Statutory Bodies to publish their tender
enquiries, corrigenda thereon and details of bid awards on the GeM- Central Public
Procurement Portal (CPPP)53. If the department has its own website/ e-Procurement
Portal, it should also publish all its advertised tender enquiries on such website/ Portal
also. These instructions apply to all Tender Enquiries, Requests for Proposals, Requests
for Expressions of Interest, Notice for pre-Qualification/ Registration or any other notice
inviting bids or proposals in any form whether they are advertised, issued to limited number
52 For reference CPWD Schedule of Rates (SOR) can be referred which serves as a comprehensive reference
for construction projects. This schedule includes both basic rates and finished rates for various items of work and
can be accessed from https://cpwd.gov.in/Documents/cpwd_publication.aspx
53Rule 159, GFR 2017
89Chapter 4: Bid Invitation Process
of parties or to a single party. These instructions would not apply to Works procurement
through quotation.
2. Individual cases where confidentiality is required, for reasons of national security, would
be exempted from the mandatory e-publishing requirement. The decision to exempt any
case on the said grounds should be approved by the Secretary of the Ministry/ Department
with the concurrence of the concerned Financial Advisor. In the case of Autonomous
Bodies and Statutory Bodies’ approval of the head of the body with the concurrence of the
head of the finance should be obtained in each such case. Statistical information on the
number of cases in which exemption was granted and the value of the concerned contract
should be intimated on a Quarterly basis to the Ministry of Finance, Department of
Expenditure.
3. In order to increase certainty in the procurement process, all Ministries/Departments shall
fix days in every month for issuance of Notice Inviting Tender (NIT), and Tender Opening
across various locations, divisions or levels. For example, the tenders may be released by
the Ministries/Departments three times a month, i.e., on 10th, 20thand 30th of every month
and the bid submission dates are so determined that bids are opened only on fixed
scheduled dates, viz, 7th, 17thand 27th of every month. In case there are practical difficulties
due to large volume of tenders in having fixed days across the whole organisation, the
Ministries/Departments/CPSUs may decide to have region-wise, zone-wise, or division-
wise fixed days for issuance of NIT and Opening of Tenders. For procurement of highly
technological and complex works, tender submission dates may be extended by the
Ministries/Departments/CPSUs in order to reply to queries in the pre-bid meetings or any
other justifiable reason. For example, CPWD, which is a large procurer of works have
region-wise fixed days for issuance of NITs and opening of tenders as per the following
table:
Example 1: Fixation of Days by CPWD
Region Days for Issuance of NITs Days for Tender Opening
Delhi Monday Monday
Northern Tuesday Tuesday
Southern Wednesday Wednesday
Eastern Thursday Thursday
Western Friday Friday
Note:
1. One week in the case of works with estimated cost put to tender up to Rs.2 crore and two
weeks in the case of works with estimated cost more than Rs.2 crore. If there is holiday on a
particular day, the day of inviting/uploading NIT may be proposed to earlier day and opening
of tender may be postponed to next day.
2. However, in case of exigencies of work, the Chief Engineer/Chief Project Manager or
equivalent can allow to call and open tenders on another day instead of specific fixed days.
4.4 Amendment of Tender Documents54
1. At any time prior to the date of submission of bids, the procuring entity may, Suo-moto or
in response to a clarification sought by a prospective bidder (directly or in pre-bid
conference), amend tender documents by issuing a corrigendum. Copies of such
amendment / modification should be uploaded on the E-publishing portal and Procuring
54 Rule 173 (iii) of GFR 2017
90Manual for Procurement of Works, Second Edition, 2025
Entity’s own website. In case of off-line tenders, the copies of such amendment /
modification are to be simultaneously despatched, free of cost, by registered/speed
post/courier/e-mail, to all the parties who have already purchased the tender documents
and copies of such amendments are also to be prominently attached in the unsold sets of
the tender documents (which are available for sale). When the amendment/modification
changes the requirement significantly and /or when there is not much time left for the
bidders to respond to such amendments, and prepare a revised tender, the time and date
of submission of tenders are also to be suitably extended (not less than 3 days) as per
para 4.5 below.
2. When the proposed amendment/ modification, substantially changes the procurement
requirements, originally envisaged, significantly and/ or when insufficient time remains for
the tenderers to respond to such amendments, the time and date of submission of tenders
should also be extended suitably. Normally, the extended time duration shall be 21 days
or consistent with original bid submission duration Depending on the circumstances, such
an amendment may also need fresh publication of revised tender document following the
same procedure as the original tender publication. This is crucial as the amendment may
enable new bidder to meet the qualifying criteria and to ensure a level playing field.
4.5 Extension of Deadline of Bid Submission
1. To give sufficient time to bidders to prepare and submit their bids, the Procuring entity may
suo-moto or based on justifiable request of bidder(s) or due to significant modification of
tender documents (as per para 4.4 above) extend the time and date of submission of
tenders suitably (not less than three (3) days), along with suitable changes in the
corresponding time-frames for receipt of tender, bid validity period etc and validity period
of the corresponding EMD/bid security. Depending on the situation, such an amendment
may also need fresh publication adopting the same procedure as for publication of the
original tender enquiry.
2. Auto-Extension of Bids – in case of lack of Response: The e-Procurement portal
should not provide anybody, including the Procuring Entity, with the bid count before the
tender opening time, even at their request. The e-Procurement portal may facilitate
Procuring Entity to input minimum number of bids considered sufficient and the pre-
specified number of days for automatic extension of bid opening (not less than 7 days) at
the time of tender upload. The system shall declare in the tender details that in case of low
competition (without specifying the number), the tender closing time shall be automatically
extended by specified number of days. If bids received till the bid opening time are less
than the specified minimum bids, the system should automatically extend the tender
opening by specified number of days without seeking any input from or sharing any
information with anyone, including the Procuring Entity. Purchasers and bidders shall only
be informed that due to less competition, the tender closing time has been extended up to
(date and time). If a Procuring Entity wants to go ahead even with low competition (e.g.,
due to urgency), they may mention ‘one’ as the minimum bid. So that if no bid is received,
tender is automatically extended, otherwise, it is not. E-Procurement portals shall update
their systems accordingly.
91Chapter 4: Bid Invitation Process
4.6 Obtaining Tender Documents and Submitting Bids
4.6.1 Availability and Cost of Tender Documents55
1. Tender documents should preferably be sold or available for download after the date and
time of the start of availability till the deadline for availability as mentioned in tender
document (say up to date of opening of tenders) and this should be clearly indicated in the
documents. The organization should also post the complete tender document in its web
site and on GeM- CPPP to enable prospective tenderers to make use of the document
downloaded from the web site. The advertisement for invitation of tenders should give
complete web-address from where bid documents can be downloaded.
2. Normally, no tender document fee should be charged. In exceptional cases, a procuring
entity may fix a bare minimum cost of tender documents to defray the expenses/ effort of
preparing documents, drawings, etc. The cost of the tender document is to be submitted
to the authority nominated therein by the prospective bidder in the form of a demand draft
/banker’s cheque/ pay order/ online payment gateway. Firms that are eligible for exemption
from the tender document cost, such as Procuring Entity’s registered units (for relevant
grades of work and monetary limit), have to submit/ upload scanned copies of documents
in support of this exemption.
4.6.2 Participation of Bidders – Eligibility Criteria
1. Tender document may lay down, eligibility criteria for participating in the tender process
e.g., restrictions on participation by bidders relating to - type of commercial entity,
insolvency, ineligibility/ debarment/ convictions/ conflict of interest, Class of bidders (as
per Make in India Order), bidders from countries having land borders with India etc.
Except for the eligibility criteria participation shall be open to all bidders in an Open/ Global
Tender Enquiries. In the case of the Second Stage (of two Stage Bidding or PQB) or
Limited Tenders, participation shall be open only to such bidders who have been
previously shortlisted or specifically invited. All eligible bidders meeting the eligibility
criteria as defined in ITB can participate in the tender.
2. Legal status of the bidder: Individual bidder - a natural person or a private entity or a
public entity (State-owned enterprise or institution), or a Joint Venture/ Consortium (an
association of several persons, firms, or companies - hereinafter referred to as JV/C).
3. For package size exceeding certain values [say - Rs. 10 (ten) crores], JV/C may be
permitted to participate in the procurement of Works in specific situations where the
credentials required are not likely to be available with an individual bidder. Joint Ventures
may be allowed. Maximum number of partners in JV shall be limited (say – three). In case
of JV, all the partners shall be jointly and severally liable for the successful completion of
the work. Participation of JV/C is specifically discouraged in the case of Quality Oriented
Procurement (QOP) with QCBS evaluation (Please refer to para 3.3.2-12, 3.9.1-4-g) and
Annexure 13).
4. Requirement of various registrations/ licences from various statutory authorities required
for the subject matter of procurement: GSTIN, PAN, EPF, ESI, Labour, Private Security
Agencies (PASARA), etc.
5. Submission of requisite Bid Security (or Bid Security Declaration, if allowed) or proof of
exemption therefrom
55 Rule 161 (v) of GFR 2017
92Manual for Procurement of Works, Second Edition, 2025
6. free from Financial insolvency, Debarment, or Convictions;
7. A consistent history of litigation or arbitration by the bidder may result in disqualification;
8. Restriction on participation as per Government Policies:
a) For Class-II Local Suppliers and Non-Local bidders as per the Make-in-India policy.
b) Any bidder from a country sharing a land border with India (but not in development
partnership with India), or any bidder (including Indian) having a Specified Transfer
of Technology (ToT) arrangement with such a country, shall be eligible subject to
certain conditions.
9. Conflict of Interest among Bidders/ Agents: Bidders having a conflict of interest shall
not be eligible to participate in the tender process unless the conflict stemming from such
relationship has been resolved in a manner acceptable to the Procuring Entity throughout
the tender process and execution of the Contract. Please also refer to para 8.2.2-e). Such
conflict of interest can lead to anti-competitive practices to the detriment of Procuring
Entity’s interests. The bidder shall be considered to have a conflict of interest in the tender
process and execution of the resultant contract in the following situations:
a) If its personnel have a close personal, financial, or business relationship56 with any
personnel of the procuring entity who are directly or indirectly related to the
procurement or execution process of the contract, which can affect the decision of the
procuring entity directly or indirectly.
b) The bidder (or his allied firm57) provided services for the need assessment/
procurement planning58 of the Tender process in which it is participating.
c) Participation in any capacity by a Bidder (including the participation of a Bidder as a
partner/ JV/ consortium member or sub-contractor in another bid or vice-versa) in
more than one bid shall result in the disqualification of the bid in which he is a main/
principal/ lead bidder. However, this does not limit the participation of an entity as a
sub-contractor in more than one bid if he is not bidding independently in his own name
or as a member of a consortium/ JV.
4.7 Pre-NIT and Pre-bid Conference59
1. Pre-Notice Inviting Tender (NIT) Conference (Market Consultation): In complex and
innovative procurement cases or where the procuring entity may not have the required
knowledge to formulate tender provisions, a Pre-NIT conference (before finalising/
publishing NIT) may help the procuring entity in obtaining inputs from the industry. Such
conferences should be widely publicised so that different potential contractors can
attend60. All inputs received from the probable bidders in such conference shall be
compiled/ minuted, and requirements finalised (with the approval of the Technical
committee, if formed, by the competent authority). In a more complex, large, and green-
field/ blue-sky project, Two-Stage Tendering (with EoI) would be more appropriate and
transparent. (Please refer to para 3.4 above).
56 Please refer to para 8.5 for clarification
57 Please see definition in ‘Procurement Glossary” section
58 inter-alia need assessment, preparation of - feasibility/ cost estimates/ Detailed Project Report (DPR), design/
technical specifications, terms of reference (ToR)/ Activity Schedule/ schedule of requirements or the Tender
Document etc.
59 Rule 173 (x) of GFR 2017
60 Notified under para 9.2 vide OM No.F.1/1/2021-PPD issued by Department of Expenditure dated 29.10.2021
93Chapter 4: Bid Invitation Process
2. Pre-bid Conference: In case of turnkey contract(s) or contract(s) of special nature for
procurement of sophisticated and costly work/ services/ equipment or wherever felt
necessary, a suitable provision is to be kept in the tender documents for one or more pre-
bid conference (after the NIT and Tender Documents have been published) , for clarifying
issues and clearing doubts, if any, about the specifications and other allied technical/
commercial details.
a) Participation is not mandatory. However, if a bidder chooses not to (or fails to)
participate in the Pre-bid conference or does not submit a written query, it shall be
assumed that they have no issues regarding the techno/ commercial conditions.
b) The date and time for such a meeting should normally be after 15 to 21 (fifteen to
twenty-one) days of the issue of the Tender Document and should be specified
therein. The date and time by which the written queries for the Pre-bid must reach
the authority and the last date for registration for participation in the Pre-bid
conference are also mentioned in the tender document (7 days before the date of the
conference, if not specified). The pre-bid conference may also be held online at the
discretion of the Procuring Entity.
c) Timelines for response to the pre-bid conference, e.g. Replies to questions, Issue of
Minutes of the pre-bid conference, Corrigenda etc. should be mandatorily mentioned
in the tender document and complied with.
d) Delegates participating in the Pre-bid conference must provide a photo identity and
an authorization letter as per the specified format from their Company/ principals;
otherwise, they shall not be allowed to participate.
e) After the Pre-bid conference, Minutes of the Pre-bid conference shall be published
on the Procuring Entity’s portal within seven days of the conference. If required, a
clarification letter and corrigendum to Tender Document (as per para 4.4) shall be
issued, containing amendments of various provisions of the Tender Document, which
shall form part of the Tender Document. To give reasonable time to the prospective
bidders to take such clarifications into account in preparing their bids, the Procuring
Entity may suitably extend, as necessary, the deadline for the bid submission (as per
para 4.5)
3. Site Visit: The Bidder, at its own cost, responsibility and risk, may visit and examine the
Site of Work and its surroundings and obtain all information that may be necessary for
preparing the Bid and entering into a contract for the Works.
4.8 Clarification of Tender Documents
A prospective bidder requiring clarification on the tender documents may ask questions in
writing/ electronically from the Office/ Contact Person as mentioned in the tender document,
provided the questions are raised before the clarification end date mentioned therein (or if not
mentioned, before 7 days of the deadline for the bid submission). This deadline shall not be
extended in case of any intervening holidays. A response will be sent in writing/ digitally to the
clarifications sought at least 5 days prior to the date of opening of the tenders. Only material
queries and their responses shall be uploaded on the website without revealing the identity of
the bidder making the query. When the response to clarification changes the requirement
significantly and /or when there is not much time left for the bidders to respond to such
responses, the time and date of submission of tenders may also be suitably extended (not
less than 3 days) as per para 4.5 above.
94Manual for Procurement of Works, Second Edition, 2025
4.9 Withdraw/ Amendments / Modifications to Bids by Bidders
The bidder, after submitting its bid is permitted to substitute/ alter/modify it, superseding earlier
bid, so long such revised bid is uploaded/ received duly sealed and marked like original bid,
up to the deadline of submission of bids. Resubmission of a bid shall require uploading of all
documents, including financial bid afresh. The system shall consider only the last bid
submitted as the valid bid. The bidder may withdraw his bid before the bid submission
deadline, and it shall be marked as withdrawn and shall not get opened during the Bid opening.
Any such action after that deadline is not permitted. Withdrawal/ amendment/ modification/
alteration/ impairment/ derogation of a bid, in any respect, by its bidders between the deadline
for submission of bids and expiration of the period of bid validity, his bid security/ EMD shall
be forfeited besides imposition of any other punitive remedy available to the procuring entity.
In such cases, tender evaluation shall be proceeded with in terms of para 6.2.6-3) below.
4.10 Sealing/ Marking of Bids in off-line Tenders
The tender document should indicate the manner of submission/ uploading of bids. In case of
off-line tenders, total number of bid copies (for example, in duplicate or in triplicate, and so on)
required to be submitted should also be indicated. The bidder is to seal the original and each
copy of the bid in separate envelopes, duly marking the same as "original", "duplicate," and
so on, and printing the address of the purchase office and the tender reference number on the
envelopes. Further, the sentence ''NOT TO BE OPENED" before (due date and time of tender
opening) is also to be printed on these envelopes. The inner envelopes are then to be put
inside a bigger outer envelope, which will also be duly sealed marked, and so on, as above. If
the outer envelope is not sealed and marked properly as above, the procuring entity does not
assume any responsibility for its misplacement, premature opening, late opening, and so on.
4.11 Uploading/ Submission of Bids by Bidders
1. Uploading Bids on the e-Procurement portal: Different e-Procurement portals61 may
have different provisions, but the following is the generic description:
a) The Procuring Entity is neither a party nor a principal in the relationship between
Bidder and the organisation hosting the e-Procurement portal (hereinafter called the
Portal). Bidders must acquaint and train themselves with the rules, regulations,
procedures, and implied conditions/ agreements of the Portal. Bidders intending to
participate in the bid, shall be required to register in the Portal. Bidder must comply
with the conditions of the e-Procurement portal, including registration, compatible
Digital Signature Certificate (DSC), etc. In the case of downloaded documents, Bidder
must not make any changes to the contents of the documents while uploading, except
for filling in the required information.
b) Any query/ clarification/ complaint regarding downloading Tender Documents and
uploading Bids on the e-Procurement portal may be addressed to the Help Desk of
the portal.
c) In case of conflict between provisions of the Portal with the Tender Document,
provisions of the Portal shall prevail. Bidders may study the resources provided by
the Portal for Bidders.
61 These portals must be compliant with ‘Guidelines for Compliance to Quality Requirements of eProcurement’
(GCQE), July 2021 issued by Systems Standardisation Testing and Quality Certification (STQC) Directorate (an
attached office of the Ministry of Electronics and Information Technology (MeitY), Government of India).
95Chapter 4: Bid Invitation Process
d) Bids must be uploaded by the submission deadline mentioned in the Tender
Document. If the office happens to be closed on the deadline to submit the bids as
specified above, this deadline shall not be extended.
e) Only one copy of the bid can be uploaded, and Bidder shall digitally sign all
statements, documents, certificates uploaded by him, owning sole and complete
responsibility for their correctness/ authenticity as per the provisions of the IT Act
2000 as amended from time to time.
f) Regarding the protected Price Schedule/ BOQ (excel format, Cover-2), Bidder shall
write his name in the space provided in the specified location only. Bidder shall type
rates in the figure only in the rate column of respective item(s) without any blank cell
or Zero values in the rate column, without any alteration/ deletion/ modification of
other portions of the excel sheet. If space is inadequate, Bidder may upload additional
documents under "Additional Documents" in the "bid Cover Content."
g) The date and time of the e-Procurement server clock, which is also displayed on the
dashboard of the bidders, shall be used as the reference time for deciding the closing
time of bid submission. Bidders are advised to ensure they submit their bid within the
deadline and time of bid submission, taking the server clock as a reference, failing
which the portal shall not accept the Bids. No request on the account that the server
clock was not showing the correct time and that a particular bidder could not submit
their bid because of this shall be entertained. Failure or defects on the internet or
heavy traffic at the server shall not be accepted as a reason for a complaint. The
Procuring Entity shall not be responsible for any failure, malfunction or breakdown of
the electronic system used during the e-Procurement Process.
h) All Bids uploaded by Bidder to the portal shall get automatically encrypted. The
encrypted bid can only be decrypted/ opened by the authorised persons on or after
the due date and time. The bidder should ensure the correctness of the bid before
uploading and take a printout of the system generated submission summary to
confirm successful bid upload.
i) Bidder must upload scanned copies of originals (or self-attested copies of originals –
as specified). Bidder should ensure the clarity/ legibility of the scanned documents
uploaded by him. The Procuring Entity reserves its right to call for verification originals
of all such self-certified documents from the Bidders at any stage of evaluation,
especially from the successful Bidder(s) before the issue of Letter of Award (LoA).
j) If so, specified in the tender document, originals (or self-attested copies of originals
– as specified therein) of specified scanned, uploaded documents must be physically
submitted before the deadline specified for it (before the bid submission deadline, if
not so specified) sealed in double cover, and acknowledgement be obtained before
the bid submission deadline at mentioned venue. Failure to do so is likely to result in
the bid being rejected. If the office is closed on the deadline for physical submission
of originals, it shall stand extended to the next working day at the same time and
venue.
k) No manual Bids shall be made available or accepted for submission in e-Procurement
(except for originals of scanned copies as per sub-para above).
2. Receipt and custody of Bids in offline Tender Process: In offline tenders, receipt and
custody of bids shall be done in a transparent manner to maintain the credibility of the
process. The following guidelines should be adhered to for receipt and custody of bids:
96Manual for Procurement of Works, Second Edition, 2025
a) The technical and financial proposals shall be submitted at the same time. To
safeguard the integrity of the process, the technical and financial proposals shall be
submitted in separate sealed envelopes and kept in an outer sealed envelope.
b) The procuring entity shall maintain tender boxes for receiving the bids at suitable
locations, which would facilitate security and easy access for bidders. If required,
Tender boxes should be separate for each day of the week of tender opening and
should be sealed by the Bid Opening Committee (BOC) of the day. The tender box
shall have two locks. Key of one lock will be with the head of the office, and the other
key with the official nominated by him.
c) Bids received by courier shall be deposited in the tender box by the Dispatch Section
till the date and time of bid opening. Bids sent by telex, cable or facsimile are to be
ignored and rejected.
d) For bulky/ oversized bids which cannot be dropped into tender boxes, the officials
authorised to receive such bids shall maintain proper records and provide a signed
receipt with date and time to the bearer of the bid. He will also sign on the cover, duly
indicating the date and time of receipt of the tender(s). Names and designations of at
least two such authorised officers should be mentioned in the tender documents.
3. Bid security: A self-attested scan of the original Bid Security/ Bid Securing Declaration
(BSD) should be uploaded along with the bids. Bids not complying with these provisions
shall be rejected. In off-line tenders, Bid Security or, if permitted, BSD must accompany
the bid as per instructions in the Tender Document. Please refer para 5.1.1 below.
4.12 Bid Validity
A bid shall remain valid for the period mentioned in the Tender Document (90 days if not so
specified). A bid valid for a shorter period shall be rejected as nonresponsive. In case the day
up to which the bids are to remain valid falls on or is subsequently declared a holiday/ closed
day for the Procuring Entity, the bid validity shall automatically be deemed to be extended upto
the next working day. The validity period should not be unreasonably long as keeping the
tender unconditionally valid for acceptance for a longer period entails the risk of getting higher
prices from the bidders. (Please see para 6.2.6 below for extension of Bid Validity Period)
4.13 Opening of Bids
1. The tender received by the procuring entity after the deadline for the submission of tender,
shall not be opened and shall be returned to the contractors or contractors that submitted
it. No submission is allowed in e-Procurement after the submission deadline.
2. Immediately after the deadline for bid submission, procuring entity shall proceed to the bid
opening. If the specified date of Bid Opening falls on is subsequently declared a holiday
or closed day for the Procuring Entity, the Bids shall be opened at the appointed time on
the next working day. In offline tenders, the Bid Opening Committee (BOC) shall comprise
one officer each from the procuring entity and associated/ integrated finance.
3. In e-procurement, all tenders uploaded by tenderers are received, safeguarded and
opened online on the portal. (Please refer to Appendix 3 on e-Procurement of Manual for
Procurement of Goods, 2024).
4. In offline tenders, receipt and custody of bids shall be done in a transparent manner to
maintain the credibility of the process. The following guidelines should be adhered to for
receipt and custody of bids:
97Chapter 4: Bid Invitation Process
a) The authorised representatives of bidders, who intend to attend the tender opening
in OTE/ GTE/ SLTE, are to bring with them letters of authority from the
corresponding bidder. The prescribed format for the letter of authority for attending
the bid opening should be given in the tender document. All bid-opening activities
should be carried out demonstrably before such a gathering. The prescribed format
for the bid opening attendance sheet and report are given at Annexure 3.
b) At a prescheduled date and time, the BOC of the day should get the tender box
opened, after ensuring and demonstrating that the seal on the box has not been
tampered with. All bids should be collected from the tender box. Bids for tenders not
opening on that day should be put back into the box and the box resealed.
Sometimes, there would be tenders dropped wrongly into this tender box. Such
wrongly dropped tenders with appropriate endorsement should be put into the
appropriate box or sent to the Tender Committee (TC) concerned, if the date of
opening is over. The bids for different tenders opening on the day (including
oversized bids, which were submitted to designated officers) should be sorted, and
a count for each tender should be announced and recorded, particularly noting any
modifying/ altering/ withdrawal of bids. BOC should ensure and demonstrate that
bid envelopes are duly sealed and un-tampered. Late bids should be separately
counted but kept aside and not opened. In the case of an advertised tender enquiry
or limited tender enquiry, late bids (that is, bids received after the specified date and
time for receipt of bids) should not be considered (Rule 165 of GFR 2017).
c) The technical bids will be opened on the pre-announced date, and the financial
proposals shall remain sealed and shall be opened publicly in due course of time
only for those firms that have technically qualified.
d) After opening, every tender shall be numbered serially (say 3/ 14 – if it is the third
bid out of 14 total), initialled, and dated on the first page by the BOC. Each page of
the price schedule or letter attached to it shall also be similarly initialled, particularly
the prices, delivery period, and so on, which shall also be circled and initialled along
with the date. Any other page containing significant information should also be dealt
with similarly. Blank tenders, if any, should be marked accordingly by the BOC.
Blank pages, if any, should be crossed out across and marked accordingly by the
BOC. The original (and duplicate, if any) copies in a tender set are to be marked
accordingly by the BOC.
e) Erasure/ cutting/ overwriting/ use of whitener/ columns left unfilled in tenders, if any,
shall be initialled along with date and time and numbered by the officials opening
the tenders and total number of such noticed alterations (or the absence of any
alteration) should be explicitly marked on the first page of the bid. Wherever
quantity/ amount is written only in figures, the BOC should write them in words. All
rebates/ discounts should be similarly circled, numbered and signed. In the absence
of any alteration/ overwriting/ whitener/ blanks, the remark “no corrections noted”
should be written. Similarly, the absence of discounts should be marked with “no
discounts noted.”
f) The BOC is to announce the salient features of the tenders such as description and
specification, quoted price, terms of delivery, delivery period, discount, if any,
whether EMD furnished or not, and any other special feature of the tender for the
information of the representatives attending the tender opening. No clarifications by
tenderers should be entertained or allowed to be recorded during the bid opening.
98Manual for Procurement of Works, Second Edition, 2025
It should be understood that BOC has no authority to reject any tender at the tender
opening stage.
g) Proper sealing and codification need to be done on reference samples as well for
samples that accompany the bid62. These should be kept for reference under lock
and key. Details should be recorded in the sample register maintained in the
opening section.
h) Financial instruments should be noted in the bid opening report/ register and
handed over to the Finance section for safe custody and monitoring.
i) A bid opening report containing the names of the tenderers (serial number wise),
salient features of the tenders, as read out during the public opening of tenders, will
be prepared by the tender opening officers, and duly signed by them along with the
date and time. The tenders that have been opened, list of the representatives
attending the tender opening, and bid opening report are to be handed over to the
nominated procuring officer, and an acknowledgement obtained for him.
4.14 Transparency and Protecting Third-Party Rights of Bidders
1. Objectives of transparency in e-Procurement are amply served if all data relating to the
Tender and Award of Contract are accessible to public.
2. As far as the bidders who have participated in a tender (participating bidders), for purpose
of transparency, a comparative summary of Technical (compliance details) and of
Financials bids (including QCBS calculations, wherever applicable) should also be
accessible to them, but not necessarily to public at large, unless sought and if permissible
under the RTI act.
3. Bidders may have genuine concern about their Techno-commercial and operational trade
secrets, if their full technical and financial bids are accessible to their competitors or public
at large. This concern may get aggravated in complicated EPC/ PPP procurements.
Technical/ financial bids should not be made accessible to public at large, and a call needs
to be taken based on sensitivity of details in the bids to restrict access of even participating
bidders to full technical/ financial bids of their competitors. Decision of procuring Entity to
share or not share the full technical bids with other participating bidders, should be clearly
brought out in the Tender Documents.
4. However, a clause may be added to the tender documents reserving right of the
Procurement Entity and the e-Procurement portal to provide access to bidders’ technical/
financial bids to other participating bidders, in addition to comparative summary of
Technical and financial bids of all participating bidders.
4.15 Bidding Invitation Process- Risks and Mitigations
Risk Mitigation
a) Exceptions to an open tender process Rigorously follow the conditions under
are abused, leading to single source which open tendering can be dispensed with.
processes.
b) When short lists are used, the process of Registration of bidders/contractors: All
preparation of short lists may be non- major procuring Departments must keep a list
of registered bidders for use in restricted
62 Please note that as detailed in para 2.2.1-9 calling for a sample along with the bid for evaluation is strictly
discouraged.
99Chapter 4: Bid Invitation Process
Risk Mitigation
transparent and all eligible firms may not tendering. Publicise even restricted bids on
be included, and some ineligible firms may your website. Bidders for LTE/ SLTE may be
get included. transparently selected with the approval of
CA.
c) Pre-qualification criteria: PQB has the Lay down criteria when two stage tendering
potential of getting misused or being is warranted. Also lay down model PQC
applied without considering the restrictive criteria for diverse types of procurements.
nature of competition. PQC should be
relevant to the quality requirements, and
neither be very stringent nor very lax to
restrict/facilitate the entry of bidders.
These criteria should be clear,
unambiguous, exhaustive, and yet
specific. Also, there should be fair
competition.
d) Invitation to tender (an open bid) is not Publicity and adequate time for bid
well publicised or gives insufficient time, submission must be ensured. Require a
thereby restricting the number of bidders higher-level approval for short bid submission
that participate. period.
e) Evaluation criteria are not set from the Objective, relevant and clearly stated
beginning or are not objective or not evaluation criteria must be specified in the
clearly stated in the tender documents, tender document.
thereby making them prone to being
abused.
100Manual for Procurement of Works, Second Edition, 2025
Chapter 5: Forms of Securities, Prices, Payment Terms and
Price Variations
5.1 Forms of Security
5.1.1 Bid Security/ Earnest Money Deposit (EMD)63
1. To safeguard against a bidder’s withdrawing or altering its/ his bid during the bid validity
period in the case of advertised (OTE and GTE tenders) or special limited tender enquiry,
Bid Security (also known as Earnest Money Deposit (EMD)) is to be obtained from the
bidders along with their bids64.
2. The amount of bid security should ordinarily range between two (2) to five (5) per cent of
the estimated value of the works to be procured. The amount of bid security, rounded off
to the nearest thousands of Rupees, as determined by the Procuring Entity, is to be
indicated in the tender documents. The Procuring Entity may, if considered justified,
stipulate an upper ceiling on the bid security amount, in larger tenders, so as not to restrict
competition.
3. Bid security may be obtained in the form of insurance surety bonds65, account payee
demand draft, banker's cheque, or bank guarantee (including e-bank guarantee) 66 issued/
confirmed67 by any of the Scheduled Banks (as defined in section 2(e) of the RBI Act 1934)
or payment online in an acceptable form. In case the bid security is more than a threshold
(Rupees five lakh) and in case of foreign bidders in GTE tenders, it may be in the form of
a bank guarantee (in equivalent Foreign Exchange amount, in case of GTE) issued/
confirmed from any of the scheduled banks in India in an acceptable form. The bid security
is normally to remain valid for a period of 45(forty-five) days beyond the final bid validity
period.
4. In place of a Bid security, Procuring Entities, after seeking approval from the competent
authority, may consider asking Bidders to submit a Bid securing declaration (BSD),
accepting that if they withdraw or modify their Bids during the period of validity or if they
are awarded the contract and they fail to submit performance security, or to sign the
contract, before the deadline defined in the tender documents, it shall be considered as a
violation of Code on Integrity and they shall be debarred for the time period specified in
the BSD from being eligible to submit Bids/ Proposals for contracts with the procuring
entity.
5. In appropriate cases, Submission of the bid security may be exempted with the Competent
Authority’s (CA’s) approval, especially in the case of indigenisation/ development tenders,
limited tenders, bidders that are currently registered, and will also continue to remain
registered during the bid validity period with the concerned Ministry/ Department/
Procuring Entity. Registered Startups as recognized by the Department for Promotion of
Industry and Internal Trade (DPIIT) (please refer to para 1.11 -4) are exempt from payment
of EMD. In case the bidder falls into these categories, the bidder should furnish a certified
63 Rule 170 of GFR 2017
64Notified vide OM No F.20/2/2014-PPD(Pt.) issued by Department of Expenditure dated 25.07.2017.
65Notified vide OM No. F.1/1/2022-PPD issued by Department of Expenditure dated 02.02.2022.
66Notified vide OM No. F.1/1/2022-PPD issued by Department of Expenditure dated 02.02.2022.
67 A bank guarantee merely advised by a scheduled bank is not acceptable, in lieu of being confirmed.
101Chapter 5: Forms of Securities, Prices, Payment Terms and Price Variations
copy of its valid registration details. This exemption is valid for the monetary value of
registration only.
6. A bidder’s bid security shall be forfeited if the bidder withdraws or amends its bid or impairs
or derogates from the tender in any respect within the period of validity of the tender or if
the successful bidder fails to furnish the required performance security or to sign the
contract within the specified period.
7. Bid securities of the unsuccessful bidders should be returned to them as soon as possible
after the expiry of the final bid validity period and, at the latest, by the 30th day after the
award of the contract. Bid security should be refunded to the successful bidder upon
receipt of performance security. However, in the case of two-packet or two-stage
tendering, Bid securities of unsuccessful bidders during the first stage, i.e., technical
evaluation, etc., should be returned within 30 days of declaration of the result of the first
stage, i.e., technical evaluation, etc.68
5.1.2 Performance Guarantee69
1. To ensure due performance of the contract, performance security (or Performance Bank
Guarantee (PBG) or Security Deposit (SD)) is to be obtained from the successful bidder
awarded the contract. Performance security should be for an amount of three (3) to ten
(10) per cent of the value of the contract for works70, as specified in the tender documents.
. To ensure competition, in higher value tenders (say > Rs 50 Cr), performance security
amount may be based on appropriate lower percentage from the band of 3% to 10%. The
procuring Entity may, if considered justified, stipulate an upper ceiling on the performance
security amount, in very large tenders. Procuring Entities are free to decide their own
quantum for Performance Security, with the approval of Competent Authority and finance
concurrence, based on their perception of performance risks vis- vis need for competition.
2. Forms of Security: Performance security may be furnished in the form of Insurance
Surety Bond 71 , account payee demand draft, bank guarantee (including e-bank
guarantee72 issued/ confirmed73 from any of the scheduled banks in India, or online
payment in an acceptable form, safeguarding the Procuring Entity's interest.
3. In case of a JV, the BG towards performance security shall be provided by all partners in
proportion to their participation in the project. In case of GTE tenders, the performance
security should be in the same currency as the contract and must conform to Uniform
Rules for Demand Guarantees (URDG 758) – an international convention regulating
international securities74.
4. Securities in the existing contracts in the form of bank guarantee may be permitted by
Procuring Entity to be replaced by the contractors to Insurance Surety Bonds or e-Bank
Guarantee. Adequate safeguards such as requiring prior submission of new forms of
security before releasing the original forms of security should be ensured. (For further
68Notified vide OM No. F.1/2/2022-PPD issued by Department of Expenditure dated 01.04.2022.
69 Rule 171 of GFR 2017
70 Notified vide OM No. F/1/2/2023-PPD issued by Department of Expenditure dated 01.01.2024
71Notified vide OM No. F.1/1/2022-PPD issued by Department of Expenditure dated 02.02.2022
72 Notified vide OM No. F.1/4/2022-PPD issued by Department of Expenditure dated 05.08.2022.
73 A bank guarantee merely advised by a scheduled bank is not acceptable in lieu of being confirmed.
74 A set of rules developed by the International Chamber of Commerce first adopted in 1992. The latest version
URDG 758 provides a framework for harmonising international trading practices and establishes agreed-upon rules
for independent guarantees and counter-guarantees among trading partners for securing payment and
performance in worldwide commercial contracts.
102Manual for Procurement of Works, Second Edition, 2025
details on Insurance Surety Bond and e-bank guarantee, please refer to para 6.1.3 and
6.1.4 of Manual for Procurement of Goods, 2024)
5. Procuring Entity may exempt the following entities (on their specific requests or otherwise)
from submission of Performance Security:
a) 75 Government Ministries, Departments, Attached and Subordinate Offices,
Autonomous bodies.
6. Performance Security is to be furnished by a specified date (generally 14 (fourteen) to 28
(twenty-eight) days after notification of the award) and it should remain valid for a period
of 60 (sixty) days (or any other period mentioned in the tender document) beyond the date
of completion of all contractual obligations of the contractor, including Defect Liability
Period (DLP)/ Warranty period.
7. The performance security will be forfeited and credited to the procuring entity’s account in
the event of a breach of contract by the contractor. It should be refunded to the contractor
without interest, after he duly performs and completes all obligations under the contract
but not later than 60 (sixty, or any other period mentioned in the tender documents) days
of completion of the Defect Liability Period (DLP)/ warranty period under the contract. The
senior officers should monitor the return of Bid/ Performance Securities, and delays should
be avoided. If feasible, the details of these securities may be listed in the e-Procurement
Portal/ website of the Procuring Entity to make the process transparent and visible.
5.1.3 Security Deposit/ Retention Money
In addition to Performance Security, Contracts for works usually provide for a percentage
(usually five percent) of each running bill (periodic/ interim payment) to be withheld as Security
Deposit/ retention money until final acceptance. The earnest money instead of being released
may form part of the security deposit. The contractor may, at his option, replace the retention
amount with an unconditional BG/ Insurance Surety Bonds from a bank acceptable to the
Procuring Entity at the following stages:
a) After the amount reaches half the value of the limit of retention money; and
b) After the amount reaches the maximum limit of retention money. One-half of the
retention money (or BG, which replaced retention money) shall be released on the
issue of the taking-over certificate; if the Taking Over Certificates (TOCs) are issued
in parts, then in such proportions as the engineer may determine, having regard to the
value of such part or section. The other half of the retention money (or BG, which
replaced the retention money) shall be released upon expiration of 60 (sixty, or any
other period mentioned in the tender document) days after the DLP/ warranty period
of the works or final payment, whichever is earlier, on certification by the engineer. In
the event of different defect liability periods/ warranty period being applicable to
different sections or parts or equipment incidental to works, the expiration of defect
liability period/ warranty period shall be the latest of such periods.
5.1.4 Verification of Bank Guarantees
1. Bank Guarantees submitted by the bidders/ contractors as EMD/ Performance Securities
need to be immediately verified from the issuing bank before acceptance. There may not
be any need to get the Bank Guarantee vetted by legal/ finance authority if it is in the
specified format. Guidelines for verification of BGs submitted by the bidders/ contractors
75 There is no bar from taking Performance Security from CPSEs.
103Chapter 5: Forms of Securities, Prices, Payment Terms and Price Variations
against EMD/ Performance Security/ advance payments and for various other purposes
are as follows:
a) BG shall be as per the prescribed formats
b) The BG contains the name, designation and code number of the Bank officer(s)
signing the guarantee(s);
c) The address and other details (including telephone no.) of the controlling officer of the
bank are obtained from the branch of the bank issuing the BG (this should be included
in all BGs);
d) The confirmation from the issuing branch of the bank is obtained in writing though
registered post/ speed post/ courier/ official email-id of the Bank/ SFMS on the official
portal of the procuring entity. The bank should be advised to confirm the issuance of
the BGs specifically quoting the letter of Procurement Entity on the printed official
letterhead of the bank indicating address and other details (including telephone nos.)
of the bank and the name, designation and code number of the officer(s) confirming
the issuance of the BG;
e) Pending receipt of confirmation as above, confirmation can also be obtained with the
help of responsible officer at the field office, which is close to the issuing branch of the
bank, who should personally obtain the confirmation from issuing branch of the bank
and forward the confirmation report to the concerned procurement entity.
2. Bank guarantees, either received in physical form or electronic form, should be verified for
its genuineness following prescribed method for the same and the Organisations should
do due diligence on genuineness of the Bank Guarantees before acceptance of the same.
3. Corporate Guarantee or Indemnity Bond shall not be accepted for Bid Security (EMD) or
Performance Security, or in lieu of any other Bank Guarantee (e.g., for advance payment/
warranty obligations).
4. Please note the ease with which an e-BG can be verified. (For further details on e-bank
guarantee, please refer to para 6.1.4 of Manual for Procurement of Goods, 2024).
5.1.5 Safe Custody and Monitoring of EMDs, Performance Securities and Other
Instruments
1. A suitable mechanism for safe custody and monitoring of EMDs and performance
securities and other instruments should be evolved and implemented by each Procuring
Entity. The Ministries/ Departments shall also make institutional arrangements for taking
all necessary actions on time for extension or encashment or refund of EMDs and
performance securities, as the case may be.
2. Monitoring should also include a monthly review of all bank guarantees and other
instruments expiring in next three months, along with a review of the progress of the
corresponding contracts.
3. Extension of bank guarantees and other instruments, where warranted, should be sought
immediately and implemented within their validity period. Bank Guarantee should never
be handed over to the contractor for the purpose of extending the validity. Such a system
of monitoring of securities and other instruments may be considered to be computerised
with automatic alerts about lapse of validity etc.
104Manual for Procurement of Works, Second Edition, 2025
5.1.6 Insurances and Indemnities
1. Insurances: In Works and Services Contracts, the Contractor must take insurances
against vicarious liabilities that may arise for the procuring entity i.e. under labour laws and
workmen compensation.
2. Indemnity/ Indenture Bonds:
a) Procuring entity is potentially liable for injury, damage, or loss relating to third party
due to actions by the contractor during execution of contract. Violation of laws and
regulations (e.g. environmental issues) also may result in liabilities for the procuring
entity. Procuring entity also needs to be protected against damage to its assets during
contract execution. For such potential liabilities instead of insurance Indemnity Bond
may suffice.
b) Indemnity bonds are defined under Section 124 of the Indian Contracts Act. A
Contract by which one party promises to indemnify the other from loss caused to him
by the conduct of the promisor himself, or by the conduct of any other person, is
called a Contract of indemnity. It is also called Indenture Bond, especially in the
context of secured advance payments in Works Contracts. An Indemnity Bond is a
bond that is intended to provide financial reimbursement to the holder for any actual
or claimed harm/ loss caused by the issuer's conduct or another person's conduct. In
many cases this could be an alternative to a BG, especially where financial
implication of default cannot be estimated. Some government departments (Forest,
Mines, Geology, Environment, Traffic) may also ask for such bonds to allow a
Contractor to carry out work related to their jurisdiction.
c) The bond represents a Contract between the following:
i) Issuer is legally required to obtain a bond.
ii) Holder is the party that imposes the bonding. In some cases, as an added
confidence, a third party ‘surety provider' (usually a bank) is added.
iii) Surety (say a bank or the holding company of the issuer) guarantees the financial
compensation if the issuer dithers or fails to guarantee.
d) When getting indemnity bonds, the issuer signs an indemnity agreement with the
surety provider, naming the holder as the beneficiary and submits it to the holder. It
states that the full financial responsibility in case of bond claims belongs to the issuer
rather than the surety. In case the issuer does not perform his obligations and dithers
or fails to compensate the holder as per the indemnity bond, the only recourse is a
civil case in the courts. Since this a long-drawn and expensive proposition, a BG is
considered a safer option than an indemnity bond.
5.2 Payment Terms
1. Variations in Works Contract: Variations can include changes in the quantity, character,
quality, or kind of work, changes in levels, lines, positions, and dimensions, additional work
necessary for completion, and changes in the sequence or timing of construction. A written
procedure must be part of the contract for issuing variation instructions. The Engineer
needs prior approval from the Procuring Entity before instructing a variation, except in
certain situations specified in the SCC. Variations are tracked using variations register.
The register is updated monthly and summarised to keep all involved agencies informed.
The Engineer must balance the risks of quick finalisation against the costs of delays.
Variations involving extra costs are valued as per the contract's relevant clauses. The
Engineer consults with the Procuring Entity and contractor to agree on suitable rates for
105Chapter 5: Forms of Securities, Prices, Payment Terms and Price Variations
items beyond the SOR. The financial implications of variations are kept up to date, and
any significant cost and time overruns due to deviations must be reported to the Procuring
Entity.
2. Measurement and Payment: All items with financial value shall be recorded in
Measurement Books (MB) or level field books to maintain a complete record of the work
performed under the contract. Measurements and levels are taken and signed jointly by
the designated official and the contractor. The contractor shall, without extra charge,
provide all assistance with every appliance, labour and other things necessary for
measurements and recording levels. The contractor shall not cover (or place it beyond
reach) the work without written consent from the Procuring Entity, otherwise the contractor
shall have to uncover it at their own expense, or they will not be paid for that work.
Organisations are encouraged to implement Electronic Management Books (e-MBs) and
integrate them with IT-based project monitoring systems.
3. Interim Payments: Payment provisions, including amounts to be paid, schedule of
payments, and payment procedures, shall be indicated in Tender Document and also in
the contract. Payment terms prescribed in the tender document should be such that the
payment made to contractors at every stage is commensurate to quantum of work done,
subject to any requirements for initial mobilisation. Each month, the contractor submits a
statement showing the amounts they consider themselves entitled to. The engineer issues
an Interim Payment Certificate (IPC) after verifying the quantity of work completed,
reconciling field measurements, reviewing claims for extra work, checking retention
amounts, and making price adjustments. Interim monthly payments are made based on
the IPC, net of retentions, recovery of advances, and statutory deductions. Recording of
measurements of any item of work in the measurement book and/ or its payment in the
interim, on account or final bill shall not relieve the Contractor from liabilities from any over
measurement or defects noticed till completion of the defects liability period, and IPC or
final completion certificates issued are subject to modification this regard.
4. Delay in Payments to Contractors: Delays in eligible payments to contractors can lead
to project delays, cost overruns, and disputes. Ad-hoc payments of at least 75% of the
eligible running account bill must be made within 10 working days of bill submission. The
remaining payment should be made within 28 working days. If payments are delayed
beyond 10 working days, a written explanation must be submitted to the next higher
authority within three working days. Public authorities may include a provision for interest
payments (at the rate of interest in General Provident Fund) if bills are delayed by more
than 30 working days.
5. Final Bills: The final bill must be submitted by the contractor in the same manner as
interim bills within a specified time after the physical completion of work and the issuance
of the Final Certificate of Completion (FCC) by the Department/Ministry. Payment is made
after verifying the bill on the personal certificate of the officer-in-charge, who confirms that
the work has been executed as per the contract specifications and industry standards.
Final payment should be paid to the contractor within three months after completion of
work.
6. Modes of Payment:
a) Procuring Entities should make payments through the Electronic Clearance System
(ECS), e.g., Real-Time Gross Settlement systems (RTGS), National Electronic Funds
Transfer (NEFT) or Electronic Payment Gateways. As per RBI guidelines, the ECS
106Manual for Procurement of Works, Second Edition, 2025
mandate in RBI’s format may be obtained at the time of contractors’ registration and
in the tender document. The Format is available with all Banks.
b) However, if ECS payments are not feasible, payments may be made in exceptional
circumstances by cheque/demand draft drawn on a Government treasury or branch
of RBI or any Scheduled Bank authorised by RBI for transacting Government
business.
c) Trade Receivables Discounting System (TReDS) is an electronic platform for
facilitating the financing / discounting of trade receivables of Micro, Small and Medium
Enterprises (MSMEs) through multiple financiers. These receivables can be due from
corporates and other buyers, including Government Departments and Public Sector
Undertakings (PSUs). Payments can also be made through this platform to MSE
suppliers/ service providers.
5.3 Advance Payments
5.3.1 Mobilisation Advance
1. If considered justified in certain specialized and capital-intensive works, Contract may
provide for an interest-bearing mobilisation advance to be paid to the contractor
exclusively for the costs of mobilisation at 10 (ten) per cent of the contract price on the
provision by the contractor of an unconditional BG. Such BGs shall remain effective until
the advance payment has been fully repaid, but the amount thereof shall be progressively
reduced by the amount repaid by the contractor, as indicated in the interim payment
certificates.
2. The aforesaid advance of 10 (ten) per cent may be paid in two instalments, each of five
per cent. The first one may be paid on commencement of the work and provision by the
contractor of the unconditional BG in respect of the advance. The second instalment may
be paid on certification by the engineer of the contractor's having achieved a financial
progress of 10 (ten) per cent of the contract price, as also provision of a BG by the
contractor for this part of the advance. Mobilisation expenditure mentioned herein shall not
include the margin money and bank commission, and so on, paid by the contractor for
procurement of BGs against performance security and mobilisation advance.
3. Provision of mobilization advance should essentially be need-based. Suitable delegation
of authority may be done in the Organisation to take decision for grant of the mobilisation
advance, whether interest free or interest bearing.
4. Interest free mobilization advance may also be given wherever the situation warrants in
specific cases, but it should be clearly stipulated in the tender document, and its recovery
should be time based not linked with progress of work. This would ensure that even if the
contractor is not executing the work or executing it at a slow pace, recovery of advance
could commence and scope for misuse of such advance could be reduced.
5. Part ‘Bank Guarantees’ (BGs) against the mobilization advance should be taken in as
many numbers as the proposed recovery instalments and should be equivalent to the
amount of each instalment. This would ensure that at any point of time even if the
contractor’s money on account of work done is not available with the organization,
recovery of such advance could be ensured by encashing the BG for the work supposed
to be completed within a particular period of time.
107Chapter 5: Forms of Securities, Prices, Payment Terms and Price Variations
6. There should be a clear stipulation of interest to be charged on delayed recoveries either
due to the late submission of bill by the contractor or any other reason besides the reason
giving rise to the encashment of BG, as stated above.
7. The amount of mobilization advance, interest to be charged, if any; its recovery schedule
and any other relevant detail should be explicitly stipulated in the tendered document
upfront.
8. Relevant format for BG should be provided in the tender document, which should be
enforced strictly, and authenticity of such BGs should also be invariably verified from the
issuing bank, confidentially and independently by the organization.
9. In case of ‘Machinery and Equipment advance’, insurance and hypothecation to the
employer should be ensured.
10. Utilization certificate from the contractor for the mobilization advance should be obtained.
Preferably, mobilization advance should be given in instalments, and subsequent
instalments should be released after getting satisfactory utilization certificate from the
contractor for the earlier instalment.
5.3.2 Plant, Machinery and shuttering Material Advance
1. Another interest-bearing advance of five per cent of the contract price, depending on the
merits of the case, may be paid against the new key construction equipment purchased
for the work and brought to the site, if so, provided in the Bid Documents and so requested
by the contractor. The advance should normally not be more than 50 (fifty) percent of the
depreciated cost of such plants and machinery should be hypothecated to the Govt.,
before the payment of advance is released. This advance shall be subject to the following
conditions: (i) the contractor shall produce satisfactory proof of payment; (ii) such
equipment is considered necessary by the engineer for the works; (iii) the equipment has
been verified to have been brought to site; (iv) the contractor gives an undertaking on
stamp paper that the equipment will work only on that job and will not be removed from
the site without obtaining written approval from the engineer; and (v) the contractor
furnishes a BG to cover the advance. No advance shall be admissible on equipment
purchased under a hire purchase scheme/ financing arrangement or on hired equipment.
2. The rate of interest shall be stipulated in the bid documents (say 10 (ten) per cent per
annum) or as may be notified by the Procuring Agency from time to time.
3. The repayment of advances shall be done through proportionate percentage deductions
from running bill (periodic/ interim payment). The time of commencement of repayment,
rate of deductions from interim payments, and time by which the advance should be fully
repaid will be as specified in the contract.
4. All advances shall be used by the contractor exclusively for mobilisation expenditure,
including the acquisition of construction-related plant and equipment. Should the
contractor misappropriate any portion of the advance, it shall become due and payable
immediately, and no further advance will be made to the contractor thereafter. In such
cases, the contractor shall also be liable for appropriate action under the contract.
5.3.3 Secured Advance against Material brought to Site
1. Secured advance on the security of materials (which are not combustible, fragile or
perishable in nature) brought to the site but not yet incorporated in the works will be made
up to 75 (seventy-five) per cent of invoice value, or the 75 (seventy-five) per cent of the
corresponding value of the materials determined on the basis of BOQ rates, whichever is
108Manual for Procurement of Works, Second Edition, 2025
less, subject to the condition that their quantities are not excessive and shall be used within
a period of 90 (ninety) days and subject to other stipulations in the contract. The contractor
will be required to sign an indenture bond, hypothecating the goods to the procuring entity,
and also be responsible for their safe custody. Before the advance is released, the
procuring entity may inspect the site to ensure that the Contractor has safeguarded the
materials against pilferage and deterioration. It may be ensured that the contractor has not
taken any loan/ limit from banks against hypothecation of the materials against which the
secured advance is claimed. An undertaking in this regard may also be taken from the
contractor.
2. Generally, as per the provisions of the contracts, the contractors are required to submit
proof of cost of materials and the delivery of material at site while claiming such advances.
The stock register should be maintained from the commencement of the contract and,
unless otherwise prescribed in the contracts, the stock, so considered for advance, should
generally be only paid stock (and not brought on credit). Where the materials are supplied
from a captive source of the contractor, the reasonableness of the valuation of such
materials may be ensured.
3. The advance will be repaid from each succeeding running bill (periodic/ interim payment)
to the extent materials for which advance has been previously paid have been
incorporated into the works. In all cases, the repayment of the advance will be affected
after expiry of a period of 120 days since payment of advance, whether the material is
consumed in the work or not.
5.4 Price Variation
1. To the extent that full compensation for any rise or fall in costs to the contractor is not
covered by the provisions of the contract, the unit rates and prices included in the contract
shall be deemed to include amounts to cover the contingencies of such uncovered portion
of rise or fall of costs.
2. If any statutory regulations or bye-laws come into force after submission of the bids, which
cause additional or reduced cost to the contractor in the execution of the contract, such
statutory additional or reduced cost (except which are covered in cost indices) shall be
added or deducted from the contract price.
3. Provision of price variation wherever considered appropriate, as well as methodology for
calculation of the same shall be clearly stipulated in the tender document. This will deal
with rise and fall of the prices in construction materials, labour and other key inputs.
However, this shall not be applicable in the contracts where period of completion is
eighteen months or less. The provision of price variation clauses enables contractors to
factor this reduced risk and quote more competitive prices.
4. Short-term contracts where the delivery/ completion period does not extend beyond 18
(eighteen) months should normally be concluded with a firm and price fixed by inviting
tenders accordingly. However, even for shorter deliveries, the price adjustment [or Price
Variation Clause (PVC)] may be stipulated for items with inputs (raw material, manpower,
etc.), prone to short-term price volatility - especially for critical or high value works –
otherwise there is a possibility of the contract failing or the purchaser having to pay a
higher price if prices fall.
5. The price variation formulae may be based on weightages of the material/ labour/
Petroleum, Oils and Lubricants (POL) and cost indices/ base prices. Indices shall be
109Chapter 5: Forms of Securities, Prices, Payment Terms and Price Variations
appropriate for their purpose and shall relate to the contractor’s proposed source of supply
of inputs on the basis of which his contract price shall have been computed.
6. Where it is decided to conclude the contract with a variable price, an appropriate clause
incorporating, inter-alia, a suitable price variation formula should also be provided in the
tender documents, to calculate the price variation between the base level and scheduled
delivery date. It is best to proactively provide our own PVC in the tender document to
discourage different bidders quoting different formulae and different base dates, which
may lead to problems on bringing their prices on a common comparable footing.
7. The variations are to be calculated periodically by using indices published by
Governments/ chambers of commerce/London Metal Exchange / any other neutral and
fair source of indices. Suitable weights are to be assigned to the applicable elements, that
is, fixed overheads and profits, material and labour in the price variation formula. If the
delivery of works needs more than one raw material, the input cost of material may be
further sub-divided for different categories of material, for which cost indices are published.
8. The following are important elements of PVC:
a) The price agreed upon should specify the base date, that is, the month and year to
which the price is linked to enable variations being calculated with reference to the
price indices prevailing in that month and year. This base date should be a few weeks/
months (periods is called time-lag) prior to the last date of submission of bids when
the last published price indices would be available. Time lag applies both for base
date and date of supply, and must be specified in the Tender Documents;
b) The price variation formula must also stipulate a minimum percentage of variation of
the contract price, only above which the price variation will be admissible (for
example, where the resultant increase is lower than, say, two per cent of the contract
price, no price adjustment will be made in favour of the supplier);
c) In rare cases prices may go up to such an extent, that it may render the contract
unviable for either party, thus frustrating the contract. Therefore, price variation
clause should provide for a ceiling (a percentage per annum or an overall ceiling or
both, say 20%/ 25%) on price variations, beyond which the price variation would be
capped at this level. As soon as it comes to light that price variations are likely to go
beyond this ceiling, and if the Supplier is not agreeable to the price variation being
capped at that level, he may notify the Purchaser under ‘Frustration of Contract’
provisions in the Tender Document/ Clause, for short-closing the contract;
d) Where advance or stage payments are made there should be a further stipulation
that no price variations will be admissible on such portions of the price, after the dates
of such payment;
e) Where deliveries are accepted beyond the scheduled delivery date subject to levy of
liquidated damages as provided in the contract. The LD (if a percentage of the price)
will be recoverable on the price as varied by the operation of the PVC;
f) No upward price variation will be admissible beyond the original scheduled delivery
date for defaults on the part of the supplier. However, a downward price variation
would be availed by the purchaser as per the denial clause in the letter of extension
of the delivery period;
g) Price variation may be allowed beyond the original scheduled delivery date, by
specific alteration of that date through an amendment to the contract in cases of force
majeure or defaults by Government;
110Manual for Procurement of Works, Second Edition, 2025
h) Where contract execution depends on imported (subject to customs duty and foreign
exchange fluctuations) and/or locally sourced goods/ works/ services (subject to
customs duty and foreign exchange fluctuations) and/or locally manufactured
(subject to excise duty and other duties and taxes), the percentage and element of
duties and taxes included in the price should be specifically stated, along with the
selling rate of foreign exchange element taken into account in the calculation of the
price of the imported item;
i) The clause should also contain the mode and terms of payment of the price variation
admissible; and
j) The buyer should ensure a provision in the contract for the benefit of any reduction
in the price in terms of the PVC being passed on to him;
k) An illustrative PVC clause is available in Annexure 5;
l) Care should be exercised in contracts providing for price variation to finalise the price
before final payment is made, after obtaining data and documents in support of claims
for escalation, if any. Where no such claims are submitted by the suppliers, an
examination of whether there has been a downward trend in the cost, which the
contractor may not bring out, is required. At any rate, an undertaking should be
obtained from the contractor to the following effect in case it becomes necessary to
make the final payment before he has submitted the required data/documents related
to the PVC:
“It is certified that there has been no decrease in the price of price variation indices
and, in the event of any decrease of such indices during the currency of this contract,
we shall promptly notify this to the purchaser and offer the requisite reduction in the
contract rate.”
m) Notwithstanding the above formalities, it should be appreciated that it is in the interest
of the purchaser to be vigilant about downward variation, and it is, therefore, the basic
responsibility of the purchase officers to make sure that the benefits of downward
variation, wherever it occurs, are fully availed of.
5.5 Statutory Taxes/ Duties/ Levies
Please note that Works is treated as Service, and GST rate would vary depending on type of
work
5.5.1 Goods and Services Tax (GST)
1. GST Registration Status and GSTIN (15-digit registration number):
a) All the bidders/ Bidders should ensure that they are GST compliant and that their
quoted tax structure/ rates are as per the GST Act/ Rules.
b) Bidder should be registered under GST and furnish their GSTIN number and GST
Registration Certificate in their offer unless they are specifically exempted from
registration under a specific notification/ circular/ section/ rule issued by statutory
authorities.
c) If the bidder has multiple business verticals in a state and has separate registrations
for each vertical, the GSTIN of each vertical concerned with the supply and service
involved, as per the scope of the Schedule of Requirements and Price Schedule shall
be quoted.
d) If the supply/ service is from multiple states, the bidder should mention GST
registration numbers for each state separately.
111Chapter 5: Forms of Securities, Prices, Payment Terms and Price Variations
e) Composition scheme: If the Bidder has opted for a composition levy under Section
10 of CGST, he should declare the fact while bidding along with GSTIN and GST
registration certificate.
f) Exemption from Registration: If a bidder is not liable to take GST registration, i.e.,
having turnover below threshold, he shall submit undertaking/ indemnification against
tax liability. The bidder claiming exemption in this respect shall submit a valid
certificate from a practising Chartered Accountant (CA)/ Cost Accountant with the
Unique Document Identification Number (UDIN) to the effect that the bidder fulfils all
conditions prescribed in notification exempting him from registration. Such bidder/
dealer shall not charge any GST and/ or GST Cess in the bill/ invoice. In such case,
applicable GST shall be deposited under Reverse Charge Mechanism (RCM) or
otherwise as per GST Act by the Procuring Entity directly to concerned authorities.
Bidder should note that his offer would be loaded with the payable GST under the
RCM. Further, the bidder should notify and submit to the Procuring Entity within 15
days of becoming liable for registration under GST.
g) Bidders must also consider the benefits of input tax credit under the GST legislations,
as amended from time to time, on Input goods/Capital goods / Input Services while
quoting the prices.
h) In their bids, the bidders shall indicate the details of their GST Jurisdictional
Assessing Officers (Designation, address, email ID). In case of a contract award, the
Purchaser shall immediately forward a copy of the LoA/Purchase Order to the
Jurisdictional Assessing Officer mentioned in the bidder’s bid.
i) The Procuring Entity's state-wise GSTINs shall be indicated in Tender Documents.
2. HSN Code and GST Rate:
a) If provided in the Tender Document, the HSN (Harmonized System of Nomenclature)
code for the goods/ services is only indicative. The bidder shall be responsible for
ensuring that they quote the correct HSN Code and corresponding GST rate for the
works they offer.
b) As per the GST Act, the bid and contract must show the GST Tax Rates (and GST
Cess if applicable) and GST Amount explicitly and separately from the bid/ contract
price (exclusive of GST). So, if a Bidder asks for GST (and GST Cess if applicable)
to be paid extra, the rate and nature of such applicable taxes should be shown
separately. Bidders should quote 'GST' if payable extra on the total basic rate of each
cost element and quote GST in ‘%' inclusive of cess.
c) If the price is stated to include GST, the bidder must declare the current GST rate
(and GST Cess, as applicable) included in the price.
d) If GST, other taxes, or duties are not specified, or the column is left blank in the price
schedule, it shall be presumed that no such tax/ levy is applicable or payable by the
Procuring Entity. No Statutory Variation in GST shall be paid in such a case.
3. Refund from Contractor: Sometimes, the contractor, after claiming and receiving
reimbursements for GST, from the purchaser, applies to the concerned authorities for
refunds, on genuine grounds, of certain portions of such duties and taxes paid by it and
receives the allowable refunds. Such refunds contain the purchaser's share also (out of
the payments already made by the purchaser to that contractor). The tender enquiry
document and the contract are to contain suitable provisions for obtaining such refunds
from the contractor.
112Manual for Procurement of Works, Second Edition, 2025
a) Alternatively, a certificate may be taken from the contractor that the contractor has
submitted the bill considering future refunds/ credits/ adjustments.
4. Statutory Duties/ Taxes/ Levies that are to be borne by the bidder:
Following Statutory Duties/ Taxes/ Levies are to be entirely borne by the bidder, including
any statutory variations thereon and the Procuring Entity would not be responsible for
these:
a) Personal and Corporate Tax: Bidder shall bear all Personal/ Corporate taxes imposed
on owners/ company/ Joint Venture/Subcontractors or their employees.
b) Taxes on Sub-Contractors, Vendors: Bidder shall bear all taxes, including GST, as
may be imposed on Contractor or supply-chain (sub-Contractors, Vendors, etc.).
c) Duties/ Taxes on Raw Materials: The Procuring Entity is not liable for any claim from
the contractor on account of fresh imposition and/ or increase (including statutory
increase) of GST, customs duty, or other duties on raw materials and/ or components
used directly in the delivery of the contracted Works taking place during the pendency
of the contract unless such liability is expressly agreed to in terms of the contract.
5.5.2 Deduction of Income Tax, etc., from Payments
Deduction of applicable taxes at source from payments to contractors shall be done as per
the existing law in force during the currency of the contract. As soon as possible, but not later
than the date of submission of tax returns, the procuring entity must provide the statutory
certificates for the taxes deducted from the contractor so that he can claim set-offs and refunds
from the concerned authorities. Detailed payment advice showing the calculations and
reasons for the amounts disallowed and taxes deducted must be issued to the contractor along
with payment.
5.5.3 Statutory Variation:
Contracts may be affected by changes in statutory variations in taxes and duties, particularly
GST. The Procuring Entity will allow relief or recovery, as the case may be, in accordance with
the Statutory Variation Clause as detailed in Para 7.5.5, which governs the treatment of
statutory variations in GST rates during the contract execution.
5.6 Recovery of Public Money from Contractor’s Bill
Sometimes, requests are received from a different Ministry/ Department for withholding some
payment of a contractor out of the payment or Securities due to it against a contract. Such
requests are to be examined by the Procuring Entity (which has received the request) on the
merits of the case for further action. It will, however, be the responsibility of the
Ministry/Department asking for withholding of payment to defend the Government against any
legal procedure arising out of such withholding as also for payment of any interest thereof.
5.7 Payment against Time Barred Claims
Ordinarily, all claims against the Government are time barred after a period of three years
calculated from the date when the payment falls due unless the payment claim has been under
correspondence. However, the limitation is saved if there is an admission of liability to pay,
and fresh period of limitation starts from the time such admission is made. The drill to be
followed while dealing with time barred claims will be decided by the Procuring Entity
concerned in consultation with the paying authority. The paying authority is to ensure that no
payment against such time barred claim is made till a decision has been taken in this regard
by the CA.
113Manual for Procurement of Works, Second Edition, 2025
Chapter 6: Evaluation of Bids and Award of Work
6.1 Bid Evaluation Process
6.1.1 Evaluation of Bids
The evaluation of bids is one of the most significant processes of procurement and must be
transparent. All tenders are to be evaluated strictly on the basis of the terms and conditions
incorporated in the tender document and those stipulated by the tenderers in their tenders.
The Contracting Authority may include quality, price, technical merit, aesthetic and functional
characteristics, environmental characteristics, running costs, cost- effectiveness, after-sales
service and technical assistance, delivery date and delivery period or period of completion etc.
No criteria shall be used for evaluation of tenders that cannot be verified or not stated in the
contract, with the exception of provisions of laws in force. No hearsay information or hitherto
undeclared condition should be brought in while evaluating the tenders. Similarly, no tender
enquiry condition (especially the significant/ essential ones) should be overlooked/ relaxed
while evaluating the tenders. The aim should be to ensure that no tenderer gets undue
advantage at the cost of other tenderers and/ or at the cost of Procuring Entity.
6.1.2 Evaluation of Different Tendering Systems
1. In case of single stage single envelop tendering, the evaluation of eligibility/ qualification
of bidders, technical, commercial, and financial aspect is done simultaneously. The lowest
priced bid that meets the eligibility/ qualification criteria, technical and commercial
conditions laid down in the tender documents is declared as successful.
2. In single stage two envelops, initially only the techno-commercial bids would be opened
and evaluated for bids which successfully meet the eligibility/ qualification criteria and
techno-commercial aspects. Financial bids of such successful bidders only would be
opened. TC shall evaluate financial bids with a view to select the lowest (L1) bidder who
meets the eligibility/ qualification criteria and techno-commercial aspects. Evaluators of
technical proposals shall not have access to the financial proposals until the technical
evaluation is concluded. It is of utmost importance that the authenticity, integrity, and
sanctity of unopened Financial Bids must be ensured before their opening. All the financial
bids may preferably be put in a large envelop, which may be dated, sealed, and signed
(including by some of the bidders present), to show that none of the bids were accessed
during the custody.
3. In two stage bids, the PQB/ EoI stage would have already been evaluated as detailed in
Chapter 8 and this second stage is for evaluation of responses to the second stage two
envelops from the shortlisted qualified bidders, following procedure described in sub-para
2 above.
6.1.3 Preparation and Vetting of Comparative Statement
Except in cases upto Rs 50 Lakh (Rupees Fifty Lakh) the Procuring Entity should prepare a
comparative statement of quotations (Technical and Financial) received in the order in which
tenders were opened. In case of Techno-Commercial bid comparative statement will have
information about deciding responsiveness and eligibility of bids and evaluation of Technical
suitability of offers. In case of Financial bid, it would have information about rates quoted
(including taxes or otherwise), discount, if any, and any other information having implications
on ranking of bids etc. The comparative statement so prepared should be signed by the
115Chapter 6: Evaluation of Bids and Award of Work
concerned officers. It may also be vetted by the associated/ integrated Finance for veracity of
information, however in case the comparative statement is prepared by the eProcurement
portal, vetting by associated/ integrated Finance is not required.
6.1.4 The Stages of Evaluation
The evaluation of the bids shall be carried out in two stages: at the first stage evaluation of
responsiveness and technical bids is taken up. Evaluators of technical bids shall not have
access to the financial bids until the technical evaluation is concluded as the envelope
containing the financial bid is not opened till the technical evaluation is complete. The financial
bid of only such bidders will be opened which obtain minimum qualifying marks/standards
prescribed for the technical bid. The evaluation shall be carried out in full conformity with the
provisions of the tender document.
6.1.5 Contacting Procuring Entity during the evaluation
From the time of bid submission to awarding the contract, no Bidder shall contact the Procuring
Entity on any matter relating to the submitted bid. If a Bidder needs to contact the Procuring
Entity for any reason relating to this tender and/ or its bid, it should do so only in writing or
electronically. Any effort by a Bidder to influence the Procuring Entity during the processing of
bids, evaluation, bid comparison or award decisions shall be construed as a violation of the
Code of Integrity, and bid shall be liable to be rejected as nonresponsive in addition to other
punitive actions for violation of Code of Integrity as per the Tender Document.
6.2 Composition and Role of Tender Committee (TC)
6.2.1 Composition of Tender Committee
1. There are delegations upto a threshold value (called direct acceptance threshold –
normally LTE threshold of Rs 50 Lakhs) below which the evaluation of the Bids may be
entrusted solely and directly to the individual competent authority, without the involvement
of a Tender committee or any evaluation report. He would carry out all the steps in the
evaluation described in this chapter, instead of the TC and directly record reasons and
decisions in the file itself (or online, where such systems exist). He may ask for a Technical
Suitability report from user departments if needed.
2. In procurements (including nomination mode or by special limited tenders mode) above
such a threshold, evaluation of bids is to be done by a Tender Committee (TC or called
Tender Evaluation Committee TEC in some organisations). TC should normally comprise
three members including a finance member (nominated by the Financial Advisor) and a
representative of the user, shall be constituted as per SoPP.
3. As per Rule 173 (xxii) of GFR 2017 no member of the tender committee (or the accepting
authority) should be reporting directly to any other member of such committee in case
estimated value of the procurement exceeds Rs. 50 lakhs. The Tender Committee to
consider bids may be so constituted that an authority holding powers for recommending
the bids by virtue of his position as a member of the Tender Committee shall not also be
the accepting authority for such tenders.
4. The representative of the Procuring Entity will work as a convenor (Member Secretary) of
the TC. The TC should not be very large as it may slow down the evaluation process.
However, suitable domain/technical experts from the user department (or otherwise) may
be included in the committee. There is no need to constitute any other committee for
technical evaluation, preliminary evaluation, etc.
116Manual for Procurement of Works, Second Edition, 2025
5. Tender committees may be constituted with the approval of one level higher than the
competent authority. It is advantageous for organisations doing procurements regularly to
have pre-nominated (by designation) Tender committees and lay down their powers,
jurisdiction, composition and corresponding Competent Authority for various categories of
procurement and different threshold values of procurements. Procuring Entity should lay
down a Schedule of Procurement Powers (SoPP) detailing such thresholds. It can also lay
down the powers, jurisdiction, and composition of various levels of Tender Committee and
corresponding Competent Authority for various categories of procurement and different
threshold values of procurements. A suggested format for SoPP is at Annexure 2,
however, the exact values of thresholds may have to be decided by the Procuring Entity
in conformity with DFPR (Annexure 1).
6.2.2 Role of Tender Committee
1. Member secretary of the Tender Committee (or competent authority, in direct acceptance
cases) shall receive the bids opened along with other documents from the tender opening
officials and are responsible for safe-custody of the documents and for processing involved
at all steps in finalising the Procurement.
2. The TC shall be responsible for all aspects and stages of the evaluation of technical and
financial proposals, negotiations, and final award of contract. There is no need to constitute
any other committee for technical evaluation, preliminary evaluation, etc.
3. TC duties are to be discharged personally by the nominated officers. They may take help
of their subordinate officers by way of reports/ evaluations, but they would still be
answerable for such decisions. TC members cannot co-opt or nominate others to attend
deliberations on their behalf. TC deliberations are best held across the table and not
through circulation of notes.
4. After the proposals have been opened, the evaluation process can begin. Before starting
the evaluation, the TC members should ensure that they
a) have no conflict of interest as defined in the tender document;
b) understand the evaluation criteria;
c) have been provided with evaluation worksheets; and
d) Agree on how to evaluate the proposals.
5. Competent Authority (authority competent to approve the procurement of that value as per
the SoPP)’s written approval must be taken at various stages of procurement, before
proceeding ahead e.g.:
a) Administrative/ financial sanctions/ Issue of tender;
b) Approval of Techno commercial evaluation and Opening of price bids in case of two
packet system;
c) Price Negotiations if permitted under specified circumstances;
d) Approval of Financial Evaluation and Award of contract to the selected bidder(s);
e) Cancellation of Procurement and Re-tendering;
f) In some special cases during Contract execution e.g. - exercise of the option clause
or any variation beyond the laid down %age; forfeiture/ release of performance
securities; premature termination/ foreclosure of Contract etc.
6. Wherever such competent authority is a Minister of the Central Government (or Board of
Director in a CPSE), obtaining approvals at so many stages, may delay the process and
un-necessarily overburden the onerous tasks of such authorities. Therefore, in such cases
117Chapter 6: Evaluation of Bids and Award of Work
their approval may only be taken at the stage of “Approval of Financial Evaluation and
Award of contract”. At other stages approval may be taken from the officer to whom such
powers have been delegated.
6.2.3 Handling Dissent among Tender Committee
1. All members of the TC should resolve their differences through personal discussions
instead of making to and fro references in writing. In cases where it is not possible to come
to a consensus and differences persist amongst TC members, the reasons for dissent of
a member should be recorded in a balanced manner along with the majority’s views on
the dissent note. The final recommendations should be that of the majority view. However,
such situations should be rare. The Competent Authority (CA) can overrule such dissent
notes after recording reasons for doing so clearly. His decision would be final.
2. In cases where the CA does not agree with the majority or unanimous recommendations
of the TC, he should record his views and, if possible, firstly send it back to TC to
reconsider along the lines of the tender accepting authority’s views. However, if the TC,
after considering the views of the CA, sticks to its own earlier recommendations, the CA
can finally decide as deemed fit, duly recording detailed reasons. He will be responsible
for such decisions. However, such situations should be rare.
6.2.4 Independence, Impartiality, Confidentiality and ‘No Conflict of Interest’ at
all Stages of Evaluation of Bids
1. Members of the TC should not have any conflict of interest and should not directly engage
in any communication with bidders from the date of their appointment to the date on which
the contract is awarded.
2. Information relating to the evaluation of bids and the Tender Committee’s (TC’s)
deliberations should be confidential and not be shared with persons not officially
connected with the process until the award of the contract is notified to the successful firm,
except that after technical evaluation, the list of successful bidders may be published, as
required in the Tender document. Under no circumstances should the tender file or
confidential information contained therein be provided for scrutiny or for decision to any
person/ office who is not involved in decision-making.
3. All technical, commercial and finance officials who have contributed to the techno-
commercial or financial evaluation of bids, even though they may not be part of the TC
should deal with the procurement in an independent, impartial manner and should have
no conflict of interest with any of the bidder involved in the procurement. They should also
maintain confidentiality of the information processed during the evaluation process and not
allow it to reach any unauthorised person. They should sign a declaration at the end of
their reports/ notings stating that, “I declare that I have no conflict of interest with any of
the bidder in this tender.” TC members may also make such a declaration at the end of
their reports.
4. During the processing of the tender, all references/grievances/ complaints/ directives/
request for information from any sources including higher level officials/ authorities within
the Ministry or from outside may be forwarded to the TC/Convener of TC for its
examination on merits and action as considered necessary, maintaining independence,
impartiality, confidentiality and ‘No Conflict of Interest.’ An interim reply may be provided
that the Tender is still under consideration and that final response would be given after the
declaration of the award of contract.
118Manual for Procurement of Works, Second Edition, 2025
6.2.5 Timely Processing of Tenders76
1. Delays in finalising procurement deprive the public of the intended benefits and results in
lost revenues and cost over-run. Currently, the Ministries/Departments are generally
awarding the contracts in 90 days from the date of tender opening for which the
Ministries/Departments are asking for a validity of offer by the contractors for 90 days. In
order to further shorten the period for award of contract, the Ministries/Departments should
try to shorten the procurement decision period to 60 days from the date of opening of the
tenders in most of the cases. Only in exceptional cases, like two packet/ two stage bidding
the period may be extended. However, in no case this time period should exceed 75 days.
The Ministries/ Departments may draw guidance from the arrangements made by CPWD,
where the validity of tenders has been fixed in the following manner: -
Example 2: Maximum days for award of contract by CPWD
Procuring Officer Limit of procurement Maximum days for
(in Rs. crore) decision for award of
contract
Assistant Engineer 0.06 10 days
Executive Engineer 1.00 15 days
Superintending Engineer 10.00 30 days
Chief Engineer 30.00 45 days
Additional Director General and More than 30.00 60 days
above
2. Complete Time schedule of finalising the Tender process from the date of issuing the
tender to date of issuing the contract, should be published in the Bid Documents. Every
official in the chain of the procurement operation is accountable for acting in a specified
time so that the tender is finalised on time. Any deviation from the schedule may be
monitored and explained, by way of system of Management Reporting (Appendix 4 and
5). As a check, the proposed schedule of tender process may be printed on the inside
cover of the Procurement File, where actual date of completion of various stages may be
recorded.
3. It has been also noted that delay in decision making after opening of certain tenders is
taking place because the Tender Committee (TC), wherever in place, are not meeting
frequently. In order to ensure that most of the tenders are decided as per the new timelines
as indicated in para above, (to be formally fixed individually by the concerned
Ministries/Departments), it has been decided that the Ministries/Departments may notify
at least one day of every week for the meeting of TC. Instructions may be issued by
concerned organisation that on such pre-fixed days, no member of the TC shall normally
take leave or proceed on tour etc.
6.2.6 Extension of Tender Validity Period
1. The entire process of scrutiny and evaluation of tenders, preparation of ranking statement
and notification of award must be done expeditiously and within the original tender validity
period77.
2. If, however, due to some exceptional and unforeseen reasons, the purchase organisation
is unable to decide on the placement of the contract within the original validity period, it
76 Rule 174 (i) of GFR 2017
77 Rule 174 (iii) of GFR 2017
119Chapter 6: Evaluation of Bids and Award of Work
may preferably request, before expiry of the original validity period, all the responsive
tenderers to extend their tenders up to a specified period. While asking for such extension,
the tenderers are also to be asked to extend their offers as it is, without any changes
therein. They may also be requested to extend the validity of the EMD for the
corresponding additional period (which is to be specified in the request). A tenderer may
not agree to such a request, and this will not lead to forfeiture of its EMD. But the tenderers,
who agree to extend the validity, are to do so without changing any terms, conditions, and
so on, of their original tenders. Reasons for seeking extension of bid validity should be
recorded by the procuring officers.
3. In case such refusal by tenderer(s) to extend validity (hereinafter called not-extended bids)
or withdrawal of offer within validity as per para 4.9 above (hereinafter referred as
withdrawn bids) if happens:
a) before completion of the Techno-commercial evaluation, then the Techno-
commercial evaluation (including the not-extended and withdrawn bids) shall be
completed. If a not-extended or withdrawn bid qualifies in techno-commercial
evaluation, financial bid(s) of such bidders shall also be opened, and action shall be
taken as per sub-para below.
b) After Techno-commercial evaluation but before completion of financial bid evaluation,
financial bid evaluation (including not-extended and withdrawn bids) shall be
completed.
i) If a withdrawn bid happens to be L-1 bidder (lowest acceptable bidder, who is
techno-commercially qualified for the supply of a bulk quantity, and would have
been awarded a contract, but for his refusal to extend validity), the tender must
be re-tendered.
ii) Since this may take some time, Procuring Entity may cover their immediate short-
term needs through an appropriate mode of procurement.
iii) However, such L1 price of the not-extended or withdrawn bids shall not be taken
as precedence for determining price estimates or reasonableness.
c) In case of QCBS system of evaluation, the proposal obtaining the highest total
combined score in evaluation of quality and cost is identified which is ranked as H-1
(please refer to para 6.4.5 for the QCBS evaluation methodology). If a not-extended
or withdrawn bid happens to be the H-1 bidder, the tender must be re-tendered.
6.2.7 Consideration of Lack of Competition in OTE/ GTE and LTE [Rule 173 (xx),
and (xxi) of GFR 2017]
1. The number of bids received, which can indicate adequate competition, depends on the
parameters of procurement (value, specification, mode of procurement, tendering system,
etc.) and the market situation. This has to be judged by the Tender Committee. However,
less than three independent bids (without suspicion of the cartel) may indicate a lack of
competition. TC must record a paragraph in its report about the adequacy or otherwise of
competition in the tender.
2. Sometimes, against advertised/ limited tender cases, the procuring entity may not receive
a sufficient number of bids and/ or after analysing the bids, ends up with only one
responsive bid – a situation referred to as ‘Single Offer’. As per Rule 173 (xxi) of GFR,
2017 [explanation sub-para as per Rule 173 (xxi) of GFR, 2017], such situation of ‘Single
Offer’ is to be treated as Single Tender. The contract may be placed on the ‘Single Offer’
bidder provided the quoted price is reasonable. However restricted powers of Single
120Manual for Procurement of Works, Second Edition, 2025
tender mode of procurement would apply. Before retendering, the procuring entity is first
to check whether, while floating/ issuing the enquiry, all necessary requirements and
formalities such as standard conditions, industry friendly specification, wide publicity,
sufficient time for bidding, and so on, were fulfilled. If not, a fresh enquiry is to be issued
after rectifying the deficiencies. It has become a practice among some procuring entities
to routinely assume that open tenders which result in single bids are not acceptable and
to go for retender as a safe course of action. This is not correct. Re-bidding has costs:
firstly, the actual costs of retendering; secondly the delay in execution of the work with
consequent delay in the attainment of the purpose for which the procurement is being
done; and thirdly the possibility that the re-bid may result in a higher bid. Lack of
competition shall not be determined solely on the basis of the number of bidders. Even
when only one bid is submitted, the process may be considered valid provided following
conditions are satisfied:
a) The procurement was satisfactorily advertised, and sufficient time was given for
submission of bids;
b) The qualification criteria were not unduly restrictive; and
c) Prices are reasonable in comparison to market values
3. However, as far as delegation/ schedule of procurement powers (SoPP, refer to Annexure-
2) is concerned, competent authority would be as in Single tender mode. In case of price
not being reasonable, negotiations (being L1) or retender may be considered as justifiable.
4. Unsolicited offers against LTEs should be ignored; however, Ministries/ Departments
should evolve a system by which interested firms can enlist and bid in next round of
tendering. However, under the following exceptional circumstances, these may be
considered for acceptance at the next higher level of competency:
a) Inadequate competition
b) Non-availability of suitable quotations from registered contractors
c) Urgent demand and capacity/ capability of the firm offering the unsolicited being
known, etc.
6.2.8 Tender Committee Recommendations/ Report
1. The TC has to make formal recommendations (Annexure 4) for the award of the contract
to the bidder whose bid has been determined to be substantially responsive and the lowest
evaluated bid, provided further that the bidder is determined to be qualified to perform the
contract satisfactorily and his credentials have been verified.
2. It is a good practice that TC should spell out salient terms and conditions of the offer(s)
recommended for acceptance. It should also be ensured by the TC that any deviation/
variation quoted by the contractor in his bid are not left un-deliberated and ruled upon in
the TC; otherwise, there may be delay in acceptance of the contract by the contractor.
These recommendations are submitted for approval to the tender accepting authority.
3. Since a nominee of Financial Adviser of the Department is usually a member of the Tender
Committee, there is no need for the CA to consult the FA of the Department before
accepting the TC recommendations. In any purchase decision, the responsibility of the CA
is not discharged merely by selecting the cheapest offer or accepting TC
recommendations but ensuring whether:
a) Offers have been invited in accordance with this manual and after following fair and
reasonable procedures in prevailing circumstances;
121Chapter 6: Evaluation of Bids and Award of Work
b) He is satisfied that the selected offer will adequately meet the requirement for which
it is being procured;
c) The price of the offer is reasonable and consistent with the quality required; and
d) The accepted offer is the most appropriate taking all relevant factors into account in
keeping with the standards of financial propriety.
4. After the acceptance of these recommendations by the tender accepting authority, the
Letter (Notification) of Award (LoA) can be issued.
6.3 Preliminary Examination
(Rule 189 GFR, 2017)
6.3.1 Unresponsive Tenders
A substantively responsive bid is complete and conforms to the Tender Document's essential
terms, conditions, and requirements, without substantive deviation, reservation, or omission.
Only substantively responsive bids shall be considered for further evaluation. Other bids shall
be treated as unresponsive and ignored. All bids received shall first be scrutinised to identify
unresponsive bids, if any. Some important points based on which a bid may be declared as
unresponsive and be ignored during the initial scrutiny are:
a) The tender is not in the prescribed format or is unsigned or not signed as per the
stipulations in the bid document.
b) The required EMD has not been provided or exemption from EMD is claimed without
acceptable proof of exemption.
c) The bidder is not eligible to participate in the bid as per laid down eligibility criteria
(including compliance to Local Content, restrictions on land border countries, conflict
of interest and other provisions of CIPP). In case procurement is on a limited tender
basis or where procurement is restricted to enlisted/ pre-approved vendors, it should
be especially ensured that there is no conflict of interest.
d) The bid departs from the essential requirements specified in the bidding document
(for example, the tenderer has not agreed to give the required performance security).
or
e) Against a schedule in the list of requirements in the tender enquiry, the tenderer has
not quoted for the entire requirement as specified in that schedule (example: in a
schedule, it has been stipulated that the tenderer will supply the equipment, install
and commission it and also train the Procuring Entity's operators for operating the
equipment. The tenderer has, however, quoted only for supply of the equipment).
f) Bidder has quoted conditional bids or more than one bid or alternative bids unless
permitted explicitly in the Tender Document.
g) The bid validity is shorter than the required period. However, in case of STE
procurement, shorter bid validity may be accepted.
h) Non-submission or submission of illegible scanned copies of stipulated documents/
declarations, is so stipulated in the Tender Document.
i) The bid has unresolved substantive deviations (please refer to para 6.3.4 below).
6.3.2 Non-conformities between Figures and Words
Sometimes, non-conformities/errors are also observed in responsive tenders between the
quoted prices in figures and in words. This situation normally does not arise in case of e-
Procurement. This should be taken care of in the manner indicated below:
122Manual for Procurement of Works, Second Edition, 2025
a) If, there is discrepancy between the unit price and total price (which is obtained by
multiplying the unit price by the quantity), the unit price shall prevail and the total price
corrected accordingly;
b) If there is an error in a total corresponding to the addition or subtraction of sub-totals,
the sub-totals shall prevail, and the total shall be corrected;
c) If there is a discrepancy between words and figures, the amount in words shall prevail;
d) Such a discrepancy in an offer should be conveyed to the bidder asking him to
respond by a target date, as per para 6.3.5 below. If the bidder does not agree to
Procuring Entity’s observation, the tender is liable to be rejected.
6.3.3 Discrepancies between Original and Additional/ Scanned Copies of a
Tender
Normally, as far as feasible, no submission of original documents in physical format (other
than Cost of Tender Documents, if any, (refer Para 4.6.1 Availability and Cost of Tender
Documents), Bid Security and statutory certificates if any) should be asked for in e-
Procurement. In e-Procurement, there could be discrepancies between the uploaded scanned
copies and the Originals submitted by the bidder. In offline tenders, discrepancies may be
observed between the original copy and other copies of the responsive bids. If discrepancies
exist between the uploaded scanned or other copies and the originals submitted by the bidder,
the original copy's text, etc., shall prevail. Here, this issue is also to be addressed with the
bidder in the same manner as above, and subsequent actions shall be taken accordingly. Any
substantive discrepancy shall be construed as a violation of the Code of Integrity, and the bid
shall be liable to be rejected as nonresponsive in addition to other punitive actions under the
Tender Document for violation of the Code of Conduct.
6.3.4 Deviations/ Reservations/ Omissions-Substantive or Minor
1. During the evaluation of Bids, the following definitions apply:
a) “Deviation” is a departure from the requirements specified in the Tender Document;
b) “Reservation” is the setting of limiting conditions or withholding from complete
acceptance of the requirements specified in the Tender Document; and
c) “Omission” is the failure to submit part, or all the information or documentation
required in the Tender Document.
2. Substantive Deviations: A deviation/ reservation/ omission from the requirements of the
Tender Document shall be considered as a substantive deviation as per the following
norm, and the rest shall be considered a Minor deviation:
a) which affects in any substantive way the scope or quality of the work;
b) which limits in any substantive way, inconsistent with the Tender Document, the
Procuring Entity's rights, or the Bidder's obligations under the contract; or
c) Whose rectification would unfairly affect the competitive position of other Bidders
presenting substantively responsive Bids.
3. The decision of the Procuring Entity shall be final in this regard. Bids with substantive
deviations shall be rejected as nonresponsive. However, bids with deviations may be
accepted in the case of STE procurement with approval of Competent Financial Authority,
with reasons recorded for accepting such deviations.
4. Variations and deviations and other offered benefits (techno-commercial or financial)
above the scope of works specified in the Tender Document shall not influence evaluation
123Chapter 6: Evaluation of Bids and Award of Work
of Bids. If the bid is otherwise successful, such benefits shall be availed by the Procuring
Entity, and these would become part of the contract.
5. During the preliminary examination, some minor infirmity and/ or irregularity and/ or non-
conformity may also be found in some bids. Such minor issues could be a missing pages/
attachment or illegibility in a submitted document or non-submission of requisite number
of copies of a document.
6. Considering Minor Deviations: There have also been cases where the bidder submitted
the amendment Bank Guarantee but omitted to submit the main portion of the document.
The court has consistently taken the view that the procuring entity is entitled to consider
and allow minor deviations that do not amount to substantive deviations. The procuring
entity reserves the right to accept bids with such minor issues provided they do not
constitute any substantive deviation, do not have fiscal impact, do not prejudice, or affect
the ranking order of the bidders and do not grant the bidder any undue advantage vis-à-
vis other bidders and the Procuring Entity. Wherever necessary, the procuring entity shall
convey its observation, on such ‘minor’ issues to bidder as per para 6.3.5 below. If the
bidder does not reply by the specified date or gives an evasive reply without clarifying the
point at issue in clear terms, that bid shall be liable to be rejected as non-responsive.
6.3.5 Clarification of Bids/ Shortfall Documents
1. During evaluation and comparison of bids, the Procuring Entity may, at its discretion, ask
the bidder for clarifications to remove minor ambiguities or to confirm the authenticity of
documents already submitted. The request for clarification shall be given in writing by
registered/ speed post/ courier/ email, asking the bidder to respond by a specified date,
mentioning therein that, if the tenderer does not comply or respond by the date, his tender
will be liable to be rejected. Depending on the outcome, such tenders are to be ignored or
considered further. No change in prices or substance of the bid including specifications,
which may grant any undue advantage to such bidder, shall be sought, offered, or
permitted. No post-bid clarification at the initiative of the bidder shall be entertained.
2. The procuring entity reserves its right to, but without any obligation to do so, to seek any
shortfall information/ documents only in case of historical documents which pre-existed at
the time of the tender opening, and which have not undergone change since then and
does not grant any undue advantage to any bidder. Provision may be made by e-
Procurement portals for requesting Short-fall documents from the bidders. The system
may further allow shortfall documents to be taken from any bidders only once after the
technical bid opening. (Example: if the Permanent Account Number, registration with GST
has been asked to be submitted and the tenderer has not provided them, these documents
may be asked for with a target date as above). As far as the submission of documents is
concerned regarding qualification criteria, after submission of the tender, only related
shortfall documents should be asked for and considered. For example, if the bidder has
submitted a contract without its completion/ performance certificate, the evaluation team
may request the bidder to furnish such certificate. However, only documents that were
already in existence prior to the bid submission deadline shall be considered for this
purpose. And no new certificate or contract should be asked for so as to qualify the bidder.
3. Certificates or supporting documents created, signed, or issued after the date of bid
opening shall not be accepted, even if they purport to certify historical facts. This restriction
is necessary to prevent post-facto manipulation of records and to ensure a fair,
transparent, and auditable evaluation process. Bidders are, therefore, advised to ensure
124Manual for Procurement of Works, Second Edition, 2025
that all required certificates and supporting documents are collected in advance and
enclosed with their bids.
6.3.6 Evaluation of Eligibility:
Procuring Entity shall determine, to its satisfaction, whether the Bidders are eligible as per the
eligibility criteria in the Tender Document to participate in the Tender Process. Tenders that
do not meet the required eligibility criteria prescribed shall be rejected as unresponsive.
6.4 Evaluation of Responsive Bids
1. Only substantively responsive bids shall be evaluated further.
2. All responsive bids are evaluated by the TC with a view to select the lowest (L1) bidder or
the highest (H1) scorer bidder (when the evaluation is done using the QCBS methodology,
please refer to para below), who meets the qualification criteria and techno-commercial
aspects.
3. In case of single stage, single envelope tendering, the evaluation of qualification of
bidders, as well as technical, commercial and financial aspect is done simultaneously.
4. In single stage multiple envelopes, initially only the techno-commercial bids would be
opened and evaluated for bids that successfully meet the qualification criteria and techno-
commercial aspects. Financial bids of such successful bidders would only be opened for
selecting the L1 bidder among these, and in the case of off-line tenders, financial bids of
unsuccessful bidders would be returned unopened to them. In the case of QCBS system
of evaluation (refer to para below), financial bids of only those bidders are opened for
evaluation that have scored the minimum technical cut-off marks, as specified in the tender
documents. It is of utmost importance that the authenticity, integrity, and sanctity of
unopened Financial Bids must be ensured before their opening. In off-line tenders, all the
financial bids may preferably be put in a large envelope, which may be dated, sealed, and
signed (including by some of the bidders present) to show that none of the bids were
accessed during the custody.
5. In two stage bids, the PQB/ EOI stage would have already been evaluated as detailed in
Chapter 3 and this second stage is for evaluation of responses from the shortlisted
qualified bidders. Evaluation of techno-commercial and financial aspects are, however,
discussed separately below.
6.4.1 Evaluation of Eligible Techno-commercial Bids
1. Evaluation of qualification Criteria:
a) In evaluation of the techno-commercial bid, conformity of the qualification, technical
and commercial conditions to those in the bid document is ascertained. Additional
factors, if any, incorporated in the tender documents may also be considered in the
manner indicated therein. This determination will, inter-alia, consider the bidder’s
financial, technical capability to satisfy all Procuring Entity’s requirements as
incorporated in the tender document. Such determination of qualification criteria shall
be based upon scrutiny and examination of all relevant data and details submitted by
the bidder in its bid, as well as such other allied information as deemed appropriate
by the Procuring Entity. The determination shall not consider the qualifications of
other firms such as the Bidder’s subsidiaries, parent entities, allied firms,
subcontractors (other than specialized subcontractors if permitted in the bidding
document), or any other firm(s) different from the Bidder.
125Chapter 6: Evaluation of Bids and Award of Work
b) As per paras 1.11-4, 3.9.1-6 and 4.2.6-4, Procuring Entity reserves its right to relax
the condition of prior turnover and prior experience for start-up enterprises78 (MSME
or otherwise) recognized by the Department for Industry & Internal Trade (DPIIT),
subject to meeting quality & technical specifications (only to startups recognized by
the Department of Industry & Internal Trade (DPIIT)), subject to meeting quality &
technical specifications. It is further clarified that such relaxation is not optional but
has to be ensured, except in case of procurement of items related to public safety,
health, critical security operations and equipment, etc) where adequate justification
exists for the Procuring Entity not to relax such criteria.
2. Evaluation of Technical Suitability: The description, specifications, drawings and other
technical terms and conditions are examined by TC in general and technical member(s)
of the TC in particular. Nobody outside the TC should be allowed to determine this
evaluation. Even if an external expert’s advice and report is obtained, it is still the
responsibility of the technical member(s) in particular and the TC in general to accept/
reject or modify the evaluation contained in such a report/ evaluation. The tender
document should clearly state whether alternative offers/ makes/ models would be
considered or not and, in the absence of an express statement to the effect, these should
not be allowed. An important document is the exceptions/ deviation form submitted by the
bidder. It is important to judge whether an exception/ deviation is minor or major. Minor
exceptions/ deviations may be waived following the criteria laid down in para 6.3.4-6
above.
3. Evaluation of Commercial Conditions: Bidder must comply with all the Commercial and
other clauses of the Tender Document. The Procuring Entity shall also evaluate the
commercial conditions quoted by the Bidder to confirm that all terms and conditions
specified in the Tender Document have been accepted without substantive omissions/
reservations/ exceptions/ deviation by the Bidder. Deviations from or objections or
reservations to critical provisions identified in the Tender Documents will be deemed to be
a material deviation. (If critical provisions are not explicitly stated in the Tender document,
then these shall be taken to be Governing laws and Jurisdiction, Contractor’s Obligations
and Restrictions of it Rights, Performance Bond/ Security, Force Majeure, Taxes & Duties,
and Code of Integrity). Only minor deviations may be accepted/ allowed, provided these
do not constitute substantive deviations as per para 6.3.4-2 above.
4. Declaration of Techno-commercially Suitable Bidders: In a single envelop/ cover
tender, TC proceeds to evaluate the price aspects without a reference to CA at this stage.
However, in case of a multiple envelope tender, the TC prepares a recommendation of
techno-commercial bid (Annexure 4) to declare successful bidders. For each proposal, the
report also should substantiate the results of the evaluation and indicate technical
weaknesses or deviations from the terms set out in the Tender Documents and comment
on their acceptability. The CA may ask the TC to explain the report but should not request
that evaluation be changed. It should review the TC’s evaluation of each proposal (on
technical, contractual, and other aspects). The CA should decide how any acceptable
deviation in each proposal should be handled during contract formulation, in case that
proposal is ranked first. The technical evaluation report is a confidential document, and its
contents shall not be disclosed. All records relating to the evaluation shall be retained until
completion of the project and its audit. In such cases, after the approval of CA, the results
78 Notified vide OM No.F.20/2/2014-PPD (Pt.) issued by Department of Expenditure dated 20.09.2016.
126Manual for Procurement of Works, Second Edition, 2025
of the Techno-commercial bid evaluation are to be announced (including informing the
failed Bidders). In the case of two-packet or two-stage tendering, Bid securities of
unsuccessful bidders during the first stage, i.e., technical evaluation, etc., should be
returned within 30 days of declaration of result of the first stage, i.e., technical evaluation
etc, in terms of Para 5.1.1. The date/ time and place (or on the portal in case of e-
procurement) are announced for the opening of Financial Bids in the presence of
technically suitable bidders who are willing to attend the bid opening. Such a date should
be two to five (5) days after the announcement.
6.4.2 Evaluation of Financial Bids and Ranking of Tenders in General
1. The financial proposals shall be opened publicly (as per para 4.13 mutatis mutandis)
witnessed by representatives of the technically qualified contractors who choose to do so.
In off-line tenders, the Evaluation Committee demonstrably verifies that the financial
proposals have remained sealed and then opens them.
2. Unresponsive Tenders: Unresponsive tenders may again be identified after Financial Bid
opening, as in case of Technical Bid opening. Unless otherwise stipulated, evaluation of
the financial bids shall be on the price criteria only. If the price bid is ambiguous so that it
may very well lead to two equally valid total price amounts, then the bid should be treated
as unresponsive.
3. Ranking of Bids: Financial Bids of all Techno-commercially suitable bids are evaluated
and ranked to determine the lowest priced bidder (except in case of QCBS selection –
para 6.4.5 below), based on the total outgo from the buyer’s pocket (including GST,
transportation, agency commission, insurance, price of incidental goods/ services etc. as
applicable. For CPSE availing Input Tax Credit, the price shall be “Net of GST”, considering
the Input Tax Credit on the GST portion to be availed by the CPSE.
4. Correction of Bids: Tender document should indicate that the evaluated bid prices will
be adjusted after considering: (a) correction for errors; (b) adjustments for any acceptable
variations, deviations; and (c) adjustments to reflect any discounts or other modifications
offered. Unless announced beforehand explicitly in the tender documents, the quoted price
should not be loaded on the basis of deviations in the commercial conditions. If it is decided
to incorporate such clauses, these should be unambiguous and clear – and thereafter,
there should be no relaxation during evaluation. Variations, deviations, or alternative offers
and other factors which are in excess of the bidding documents or otherwise result in
unsolicited benefits for the contractor should not be considered in bid evaluation. All duties,
taxes and other levies payable by the bidder under the contract or for any other cause
shall be included in the rates, prices and total bid prices, and considered in evaluation of
bids. Bids should be checked for any arithmetical errors. These corrections shall be done
in accordance with the provisions of the bidding document. In cases other than e-
Procurement, the quoted rates in the bids shall be protected with lamination by the
committee, if not done by the bidders. In accordance with the corrections as approved by
the TC, the amount stated in the bid will be adjusted with the concurrence of the bidder
and shall be binding on him. If the bidder does not accept the corrected amount, the bid
will be rejected and the bid security forfeited. The arithmetical corrections will be done by
the representatives of the Finance Division and the concerned (technical) division in the
committee.
5. As per the policies of the Government from time to time, the purchaser reserves his option
to give price/ purchase preferences as indicated in the tender document.
127Chapter 6: Evaluation of Bids and Award of Work
6. Price Variation: If the tenders have been invited on a variable price basis, the tenders will
be evaluated, compared, and ranked based on the positions prevailing on the deadline of
bid submission and not on any future date. The components that may lead to variable price
includes fuel, steel, raw material etc. If a tenderer submits a firm price quotation against
the requirement of variable price quotation, that bid shall be prima-facie acceptable and
considered further, taking price variation asked for by Bidder as nil.
7. Financial Evaluation: All responsive bids are evaluated by the TC with a view to select
the lowest (L1) bidder - the lowest evaluated, substantially responsive, bid which meets
the eligibility/ qualification criteria and techno-commercial aspects. Where QCBS system
of evaluation has been selected in works procurement, all responsive bids are evaluated
by the TC with a view to select the highest (H1) scoring bidder (combined technical and
financial scores) who is substantially responsive, meets the eligibility/ qualification criteria/
techno-commercial aspects for placement of contract.
8. Instances of Multiple L1s: Rarely, there may be a tie at the lowest bid (L-l) position
between two or more start-up/ non-start-up bidders. It must be first determined whether it
is a case of Cartel formation or anti-competitive practices, as per para 7.4.9 below, and if
so, it shall be dealt with accordingly. If this is not a case of cartel formation, in such cases
the order shall be placed on the L1 bidder having a higher turnover in the previous financial
year. In case there is a tie at the lowest bid (L-1) position between only startup bidders
and none of them has past turnover, the order will be placed on the startup that was
registered earlier with the Department for Promotion of Industry and Internal Trade (DPIIT).
9. Sometimes, certain bidders offer suo motu discounts/ rebates after the opening of the
tender (techno-commercial or financial). Such discounts/ rebates should not be considered
for ranking the offer, but if such a firm does become L1 at its original offer, such suo motu
discounts/ rebates must be incorporated in the contracts. This also applies to conditional
rebates, for example, rebates for faster payments, and so on;
6.4.3 Least Cost Selection (LCS)
Under the LCS procedures, the financial proposals will be ranked in terms of their total
evaluated cost. The least cost proposal will be ranked as L-1 and the next higher and so on
will be ranked as L-2, L-3 etc. The least cost proposal (L-1) will be considered for award of
contract. The TC will put up a report on financial evaluation of the technically qualified
Contractors to the competent finance authority along with the recommendation that the least
cost proposal (L-1) can be approved/ invited for negotiation and for final award of contract.
6.4.4 Single Source Selection (SSS)
The Single Source in case of SSS selection may be called for further negotiation, if need be,
after opening and evaluation of its financial proposals.
6.4.5 Evaluation using Quality-cum-cost based Selection (QCBS) in Works
Procurement
1. Please refer to para 3.3.2, for the conditions permitted, for the use of QCBS selection in
procurement of Works. The para also details competent authority and grounds for
declaring a procurement as Quality Oriented Procurement (QOP), for use of QCBS
method. That para also covers the role of STC for fixing parameters of the QCBS selection.
2. Evaluation of QCBS Bids: For evaluation, a suitable committee shall be constituted.
However, members of the STC shall not be involved:
128Manual for Procurement of Works, Second Edition, 2025
a) Joint Ventures: Joint Ventures may be avoided in QCBS system in procurement of
Works. (Please refer to para 3.3.2 above)
b) Since MII order is applicable ‘where the bid is evaluated on price alone’ – MII
purchase preference would not be applicable where evaluation is based inter-alia on
non-price criteria, e.g., QCBS in Works.
c) Weightages: As mentioned in para 3.3.2 above, the proposed weightages for quality
and cost shall be specified in the Tender. Under QCB selection, the technical
proposals will be allotted weightage of not more than 30% (Thirty per cent) while the
financial proposals will be allotted weightages of 70% (Seventy per cent) or more as
declared in the Tender.
d) Qualifying Benchmark: As mentioned in para 3.3.2, in QCBS selection, minimum
qualifying marks (normally 70-80 (seventy – eighty) out of maximum 100 (hundred)
marks) as qualifying benchmark for quality of the technical proposal shall be
prescribed and indicated in the Tender Document along with a scheme for allotting
marks for various technical criteria/ attributes. Bids scoring less than the minimum
threshold shall not be considered for further evaluation. Since the weightage of the
cost element adopted in Works is as high as 70 (seventy) percent, financial
considerations would dominate the selection, though to a lower extent as compared
to LCS (Least Cost Selection – L1 basis). In such cases, it is essential to ensure that
the minimum qualifying mark in the evaluation is set sufficiently high, to weed out low
quality bids with low prices.
e) Evaluation of Quality Score: Proposal with the highest technical marks (as allotted
by the evaluation committee) shall be given a score of 100 (Hundred) and other
proposals be given technical score that are proportional to their marks w.r.t the
highest technical marks.
f) Evaluation of Financial Score: Similarly, proposal with the lowest evaluated cost
may be given a financial score of 100 (Hundred) and other proposals given financial
scores that are inversely proportional to their prices w.r.t the lowest offer.
g) Weighted QCBS Score: The total score, both technical and financial, shall be
obtained by weighing the quality and cost scores and adding them up. On the basis
of the combined weighted score for quality and cost, the contractor shall be ranked
in terms of the total score obtained. The proposal obtaining the highest total combined
score in evaluation of quality and cost will be ranked as H-1 followed by the proposals
securing lesser marks as H-2, H-3 etc. The proposal securing the highest combined
marks and ranked H-1 shall be recommended for award of contract. In the event two
or more bids have the same score in final ranking, the bid with higher technical score
will be H-1.
h) QCBS Formula: In such a case, an Evaluated QCBS Score (B) will be calculated for
each responsive Bid using the following formula, which permits a comprehensive
assessment of the Bid price and the technical merits of each Bid (rounded up to two
decimal points):
Normalized Technical Score
Normalized Financial Score
𝑇𝑇𝑇𝑇 = (𝑇𝑇∗100)/𝑇𝑇ℎ𝑖𝑖𝑖𝑖ℎ
Evaluated Combined Bid Score
𝐹𝐹𝑇𝑇 = (𝐶𝐶𝐶𝐶𝐶𝐶𝐶𝐶∗100)/𝐶𝐶
where
𝐵𝐵 = 𝐹𝐹𝑇𝑇∗(1−𝑊𝑊) +𝑇𝑇𝑇𝑇∗𝑊𝑊
C= Evaluated Bid Price
129Chapter 6: Evaluation of Bids and Award of Work
C = the lowest of all Evaluated Bid Prices among responsive Bids
low
T= the total Technical Marks awarded to the Bid
T = the Technical Marks achieved by the Bid that was scored best among
high
all responsive Bids
Ts= Normalized Technical Score
Fs= Normalized Financial Score
W= weightage for the Technical as specified in the AITB/BDS
B= Evaluated Combined Bid Score
i) The Bid with the best evaluated combined Bid Score (B) among responsive Bids
shall be the Most Advantageous Bid.
j) Example: Following example illustrates the evaluation of QCBS:
i) In a particular case of selection of contractor, it was decided to have minimum
qualifying marks for technical qualifications as 75 (Seventy-five) and the
weightage of the technical bids and financial bids was kept as 30:70 (Thirty:
Seventy). In response to the Tender Document, three proposals, A, B & C, were
received. The technical evaluation committee awarded the following marks as
under:
A: 80 Marks
B: 75 Marks
C: 90 Marks
ii) The minimum qualifying marks were 75 (Seventy-five) thus, all the three
proposals were found technically suitable. The following normalized technical
score are awarded by the evaluation committee:
A: 80*100/90 = 88.89 points
B: 75*100/90 = 83.33 points
C: 90*100/90 = 100.00 points
iii) The financial proposals of each technically qualified contractor were opened
after notifying the date and time of bid opening to the successful participants.
The price evaluation committee examined the financial bids and evaluated the
quoted prices as under:
A: Rs.120.
B: Rs.100.
C: Rs.105.
iv) The committee gave them the following normalized financial score to the Bids:
A: 100*100/120 = 83.33 points
B: 100*100/100 = 100.00 points
C: 100*100/105 = 95.24 points
v) In the combined evaluation, thereafter, the evaluation committee calculated the
combined technical and financial score as under:
A: 88.89x0.30 + 83.33x0.70 = 85.00 points.
B: 83.33x0.30 + 100.00x0.70 = 95.00 points
C: 100.00x0.30 + 95.24x0.70 = 96.67 points.
vi) The three proposals in the combined technical and financial evaluation were
ranked as under:
130Manual for Procurement of Works, Second Edition, 2025
Bid A: 85.00 points: H-3
Bid B: 95.00 points: H-2
Bid C: 96.67 points: H-1
vii) Bid C at the evaluated cost of Rs.105 (Rupees One hundred and Five, second
lowest bid) was, therefore, declared as winner and recommended for
approval, to the competent authority.
6.4.6 Global Tender Enquiry (GTE, International Competitive Bidding)
If stipulated in the TIS/ AITB that this is a Global Tender Enquiry (International Competitive
Bidding), the following additional aspects of the evaluation of the financial offer shall also
apply:
a) Currency of Tender: In GTE tenders, foreign bidders have the flexibility to quote
prices and receive payments in either Indian Rupees or freely convertible currencies
such as US Dollar, Euros, Pound Sterling, Yen, other relevant currencies79, or a
combination thereof. However, prices for incidental goods/ services (including
Agency Commission) performed or sourced in India must be quoted and pad for in
Indian Rupees. Indian Bidders are required to quote in INR only. All offers are to be
converted to Indian Rupees based on the “Bill currency selling” exchange rate on the
bid submission deadline, quoted by a source as specified (if not specified, authorised
exchange bankers approved by RBI) in the tender document.
b) Evaluation of Offers: Import of Goods or services or both, for execution of works or
those that are incidental to the works execution, attracts integrated tax (IGST). The
IGST rate and GST cess shall be applicable on the ‘Custom Assessable Value’ plus
the ‘Basic Customs duty applicable thereon.’ The offers would be compared based
on the principle of the total outgo from Procuring Entity’s pockets, including all
applicable taxes and duties (Customs duty, IGST, and GST Cess).
c) Agency Commission to the contractor: Provisions contained in para 4.3.1-9 of the
Manual for Procurement of Goods, 2024 maybe followed.
6.4.7 Reasonableness of Prices
1. In every recommendation of the TC for award of contract, it must be declared that the rates
recommended are reasonable. The comparison maybe made with the similar contracts
awarded elsewhere. If the rates received are considered abnormally ow or unreasonably
high, action may be taken as per para 6.4.8 and 6.4.10 respectively, reject any or all Bids,
abandon/ cancel the tender process and issue another tender for the works. In case cartel
is suspected action as per para 6.4.9 may be taken.
2. In large value tenders, blind reliance on the cost estimate is not recommended for
assessing reasonableness. More than one method of estimation of cost may be used to
triangulate a reasonable price. Where there is no estimated cost, a comparison with Last
Purchase Price (LPP-the price paid in the latest successful contract) is the basis for judging
reasonableness of rates. The following points may be kept in mind before LPP is relied
upon as a basis for justifying rate reasonableness:
a) The basic price, taxes, etc. should be indicated separately;
79 The Central Board of Indirect Taxes and Customs in India (CBIC) issues Exchange Rate Notification under
Customs Act, 1962, which lists currencies and exchange rates for imported goods in Schedule I – which may
indicate relevant currencies for indicate. The current notification is Exchange Rate Notification No. 30/2024 -
Customs (N.T.).
131Chapter 6: Evaluation of Bids and Award of Work
b) Where the firm holding the LPP contract has defaulted, the fact should be highlighted
and the price paid against the latest contract placed prior to the defaulting LPP
contract, where works have been executed and completed, should be used;
c) Where the work is yet to start against the LPP contract, it should be taken as LPP
with caution, especially if the contractor is new, the price paid against the previous
contract may also be kept in view;
d) Where the price indicated in the LPP is subject to variation or if it is more than a year
old, the updated price or as computed in case of the Price Variation Clause (PVC)
may also be indicated;
e) It is natural to have marginal differences in prices obtained at different cities/offices
for the same work, due to their different circumstances. The prices obtained are
greatly influenced by geographical conditions, available labour, completion period,
terms of the contract, these may be kept in view; and
f) Prices paid in emergencies or prices offered in a distress work completion are not
accurate guidelines for future use. Such contracts and TC proceedings should
indicate that “these prices are not valid LPP for comparison in future procurement.
6.4.8 Consideration of Abnormally Low Bids
1. An Abnormally Low Bid is one in which the Bid price, in combination with other elements
of the Bid, appears so low that it raises material concerns as to the capability of the Bidder
to perform the contract at the offered price. Procuring Entity may in such cases seek written
clarifications from the Bidder, including detailed price analyses of its Bid price in relation
to scope, schedule, resource mobilization, allocation of risks and responsibilities, and any
other requirements of the tender document. If, after evaluating the price analyses,
procuring entity determines that the Bidder has substantially failed to demonstrate its
capability to deliver the contract at the offered price, the Procuring Entity may reject the
Bid/ Proposal, and evaluate the next higher bidder (and so on), at his/ their own quoted
rate (and not by counteroffering the rate of ALB), for award of contract. However, it would
not be advisable to fix a normative percentage below the estimated cost, which would
automatically be considered as an abnormally low bid. Due care should be taken while
preparing the drawings, formulating specifications at the time tender preparation to have
a safeguard against the submission of abnormally low bid from the bidder.
2. In the case of predatory pricing as well, procuring entities may refer to the above
consideration of Abnormally Low Bids to assist themselves in finalization of tenders80.
3. No provisions should be kept in the tender document regarding the ‘Additional Security
Deposit/ Bank Guarantee (BG)’ in the case of Abnormally Low Bids. Wherever there are
compelling circumstances to ask for Additional Security Deposit/ Bank Guarantee (BG) in
case of ALBs, the same should be taken only with the approval of the next higher authority
competent to finalise the particular tender, or the Secretary to the Ministry/ Department,
whichever is lower81.
6.4.9 Cartel Formation/ Pool Rates
1. Sometimes a cartel of tenderers quotes the equal/ marginally different rates (pool rates)
against a works tender whereas possibly:
80 In reference to OM No.F.12/17/2019-PPD issued by Department of Expenditure dated 06.02.2020
81 Notified vide OM No. F.9/4/2020-PPD issued by Department of Expenditure dated 12.11.2020.
132Manual for Procurement of Works, Second Edition, 2025
a) Quoted Prices and Scope of Works: Prices quoted (and their detailed breakdowns)
are suspiciously similar, despite significant differences in the proposed approach to
completing the works. This could indicate a lack of competition or potential collusion
among bidders. Look for variations in methodologies, materials, or timelines that
could justify price differences.
b) The rates quoted by two or more bidders manages to be L1.
c) In a variation, the rates may not be exactly equal but may be close enough to make
the Cartel members as L1, L2, L3 etc.
d) Unexplained Similarities in Bids: Bids from different contractors exhibit unusual
similarities beyond pricing. This might include identical typos, grammatical errors,
formatting, or even the use of uncommon terminology. These similarities could
indicate collusion or a lack of independent effort in preparing bids.
2. In case this rate is unreasonably high, this may be an attempt to force acceptance of higher
rates by undermining negotiating power of the purchaser as per rules.
3. Such pool/ cartel formation is against the basic principle of transparency and competitive
bidding in public procurement and is a violation of the code of Integrity in Public
Procurement. Such and similar tactics to avoid/ control true competition in a tender leading
to "appreciable adverse effect on competition" have been declared as an offence under
the Competition Act, 2002, as amended by the Competition (Amendment) Act, 2007.
4. Such practices needs to be severely discouraged with strong measures. In case of
evidence of cartel formation, detailed cost analysis may be done by associating experts if
necessary. Besides, suitable administrative actions can be resorted to, such as rejecting
the offers, reporting the matter to trade associations, the Competition Commission etc.,
and requesting them, inter-alia, to take suitable strong actions against such firms. New
firms may also be encouraged to get themselves enlisted for the subject works to break
the monopolistic attitude of the firms forming a cartel. Changes in the mode of procurement
(post qualification instead of pre-qualification) and packaging/ slicing of the work may also
be tried.
5. Procuring entity may add the following conditions posing as a warning to discourage the
bidders from indulging in such practices:
a) For those works procurements, where schedules or division of work is possible, the
bidders must bid for at least a quantity that is more than a minimum specified
percentage (say 20% or 30%) of the tendered quantity, otherwise their offer shall be
rejected.
b) Warn that Procuring Entity may take any/ all punitive actions available under the CIPP
against such bidders, including removal from the list/ panel of enlisted/ registered
contractors or debarment, besides reporting the transgression to Competition
Commission, and concerned industrial bodies and trade bodies for suitable punitive
action.
6. Procuring Entity may decide the tender as per one or more of following provisions:
a) Reject all bids from the suspected cartel formation and decide the tender accordingly.
b) place order on any one or more firms (from among the cartel) for any quantity with
exclusion of the rest, with or without negotiation or counteroffering (in case of divisible
works).
133Chapter 6: Evaluation of Bids and Award of Work
Note: The selection of firms for this may be based on a transparent logistics
parameter i.e., nearer location of source, relatively better past performance,
etc.
c) Whenever tender is floated for purchase exclusively from pre-qualified/ approved
sources, and cartel formation is suspected among such sources, Procuring Entity
may place orders on sources outside the pre-qualified/ approved sources for any
quantity.
7. Wherever a specified ratio for splitting of quantities among 2/ 3 sources is stipulated in the
tender document, and cartel formation is suspected among lower 2/3 bidders, place order
on any number of firms beyond such ratios or decide tender as per sub -para-a) or b)
above.
6.4.10 Negotiations for Reduction of Prices82
1. Negotiations with bidders after bid opening must be severely discouraged. Negotiations
should be a rare exception rather than the rule and may be resorted to only in exceptional
circumstances. If it is decided to negotiate for reduction of prices, they should be held only
with the lowest acceptable bidder (L1), who is techno-commercially responsive for the
supply of a bulk quantity and on whom the contract would have been placed but for the
decision to negotiate. In no case, including where a cartel/ pool rates are suspected,
should negotiations be extended to those who had either not tendered originally or whose
tender was rejected because of unresponsiveness of bid, unsatisfactory credentials,
inadequacy of capacity or unworkable rates. The circumstances where negotiations may
be considered could be:
a) Where L1 price is not considered to be reasonable, and
b) Where the procurement is done on nomination basis; or
c) Procurement is from single or limited sources;
d) Procurements where there is suspicion of cartel formation which should be recorded
following provisions of para 6.4.9 above; and
2. Where the requirements are urgent and the delay in re-tendering for the entire requirement
due to the unreasonableness of the quoted rates would jeopardise essential operations,
maintenance and safety, negotiations with L1 bidder(s) may be done for bare minimum
quantum of requirements. The balance bulk requirement should, however, be procured
through a re-tender, following the normal tendering process.
3. The decision whether to invite fresh tenders or to negotiate and with whom, should be
made by the tender accepting authority based on the recommendations of the TC.
Convincing reasons must be recorded by the authority recommending negotiations. The
CA should exercise due diligence while accepting a tender or ordering negotiations or
calling for a re-tender and a definite timeframe should be indicated.
4. Normally all counter -offers are considered negotiations by other means and the principles
of negotiations should apply to such counter offers. For example, a counter -offer to L1, in
order to arrive at an acceptable rate, shall amount to a negotiation. However, any counter
-offer to L2, L3, and so on (at the rates accepted by L1) in case of splitting of quantities
shall not be deemed to be a negotiation.
82 Rule 173 (xiv) of GFR 2017
134Manual for Procurement of Works, Second Edition, 2025
5. After the CA or TC has decided to call a specific bidder for negotiation, the following
procedure should be adopted:
a) Negotiations must be carried out by the CA or TC only;
b) It must be understood that, if the period of validity of the original offer expires before
the close of negotiations, the original offer will not be available for acceptance. The
period of validity of the original offer must, therefore, be extended, wherever
necessary, before negotiations;
c) The tenderer to be called in for negotiations should be addressed as per the format of
letter laid down in Annexure 6, so that the rates originally quoted by him shall remain
open for acceptance in the event of failure of the contemplated negotiation;
d) A negotiations meeting should be started only after obtaining a signed declaration
from the negotiating contractor as per Annexure 6; and
e) Revised bids should be obtained in writing from the selected tenderers at the end of
the negotiations in the format of letter laid down in Annexure 7. The revised bids so
obtained should be read out to the tenderers or their representatives present,
immediately after completing the negotiations. If necessary, the negotiating party may
be given some time to submit its revised offer. In case, however, the selected bidder
prefers to send a revised bid instead of being present at the negotiation, the offer
should be considered. In case a bidder does not submit the revised bid, its original bid
shall be considered.
6.4.11 Cancellation of Procurement Process/ Rejection of All Bids/ Re-tender83
1. The Procuring Entity may cancel the process of procurement or rejecting all bids at any
time before intimating acceptance of successful bid under circumstances mentioned
below:
a) If the scope of work including related quantity and quality of requirements have
changed substantially or there is an un-rectifiable infirmity in the bidding process;
b) when none of the tenders is substantially responsive to the requirements of the
Procurement Documents;
c) none of the technical Proposals meets the minimum technical qualifying score;
d) If effective competition is lacking. However, lack of competition shall not be
determined solely on the basis of the number of Bidders. (Please refer to para 6.2.7
above also regarding receipt of a single offer).
e) the Bids’/ Proposals’ prices are substantially higher than the updated cost estimate
or available budget;
f) In case, the bidder, whose bid has been found to be the lowest evaluated bid (L1) or
in case of QCBS evaluation highest scorer (H-1) withdraws (para 6.2.6-3) or whose
bid has been accepted, fails to sign the procurement contract as may be required or
fails to provide the security as may be required for the performance of the contract
(Para 6.5.3) or otherwise withdraws from the procurement process, the Procuring
Entity shall re-tender the case84.
2. In case where responsive bids are available, the aim should be to finalise the tender by
taking mitigating measures even in the conditions described above. If it is decided to rebid
the tender, the justification should balance the perceived risks in finalisation of tender
83 Rule 173 (xix) of GFR 2017
84 Notified vide OM No. F.1/1/2021-PPD issued by Department of Expenditure dated 21.04.2022.
135Chapter 6: Evaluation of Bids and Award of Work
(marginally higher rates) against the certainty of resultant delays, cost escalations, loss of
transparency in re-invited tender.
3. In the cases of re-tender because of the receipt of the unreasonably high bids, the offers
received against the re-tendered bid are even higher than those received in the original
tender. Hence, it may be opined by the procurers that in such scenarios, if the offers from
the original tender are still valid, they may be reconsidered. This is not to be done. As per
the principles outlined in the Indian Contract Act of 1872, once an offer is rejected—either
explicitly or implicitly—it cannot be revived for acceptance later. This means that by
proceeding to a re-tender, the initial offers are considered rejected, rendering their validity
moot for future consideration. Thus, even if the re-tender results in higher rates, returning
to accept a previously rejected offer is not to be resorted.
4. Approval for re-tendering should be accorded by the CA after recording the reasons/
proper justification in writing. The decision of the procuring entity to cancel the
procurement and reasons for such a decision shall be immediately communicated to all
bidders that participated and bids if not opened would not be opened and in case of manual
tenders be returned unopened.
5. Before retendering, the procuring entity is first to check whether, while floating/ issuing the
enquiry, all necessary requirements and formalities such as standard conditions, industry
friendly qualification criteria, and technical and commercial terms, wide publicity, sufficient
time for bidding, and so on, were fulfilled. If not, a fresh enquiry is to be issued after
rectifying the deficiencies.
6.5 Award of Work
6.5.1 LoA to Successful Bidder
1. Before a final award is announced, the technical and financial credentials of the selected
bidders should be crosschecked to the extent feasible. The Procuring Entity may, at its
discretion, ask Bidder to submit for verification the originals of all such documents whose
scanned copies were submitted online. If so decided, the photocopies of such self-certified
documents shall be verified and signed by the competent officer and kept in the records
as part of the contract agreement. If the Bidder fails to provide such originals or in case of
substantive discrepancies in such documents, it shall be construed as a violation of the
Code of Integrity. Such bid shall be liable to be rejected as nonresponsive in addition to
other punitive actions in the Tender Document. The evaluation of Bids shall proceed with
the subsequent ranked offers.
2. Prior to the expiry of the period of bid validity, the successful bidder will be notified (briefly
indicating therein relevant details such as quantity, specification, prices, and so on) in
writing by a registered letter or any other acknowledgeable and foolproof method that his
bid has been accepted. Legally communication of acceptance of offer is considered
complete as soon as it is submitted to Postal authorities (please refer to Para 2.9-1 of
‘Appendix – 2: Legal Aspects of Public Procurement of Manual for Procurement of Goods,
2024). A template for the Letter of Acceptance (or Notice of Award, or Acceptance of
Tender) is given in Annexure 8. In the same communication, the successful tenderer is to
be instructed to furnish the required performance security within a specified period
[generally 14 (fourteen) to 28 (twenty-eight) days, depending upon the amount]. Letter of
Award (LoA) shall constitute the legal formation of the contract, subject only to the
furnishing of performance security. The Procuring Entity, at its discretion, may directly
136Manual for Procurement of Works, Second Edition, 2025
issue the contract subject only to the furnishing of performance security, skipping the issue
of LoA.
3. In respect of contracts upto Rupees ten lakhs, where tender documents include the
General Conditions of Contract (GCC), Special Conditions of Contract (SCC) and scope
of work, the letter of acceptance will result in a binding contract.
4. In respect of contracts with estimated value more than Rupees ten lakh, a contract
document should be executed, with all necessary clauses to make it a self -contained
contract. If, however, these are preceded by Invitation to Tender, accompanied by GCC
and SCC, with full details of scope and specifications a simple one -page contract can be
entered into by attaching copies of the GCC and SCC, and details of scope and
specifications, offer of the tenderer and letter of acceptance.
5. The value of Contract should include Taxes/ duties/ levies, if any.
6. Contract document should be invariably executed in cases of turnkey works or agreements
for maintenance of equipment, provision of services etc.
6.5.2 Publication of Award of Contract and Return of EMD of Unsuccessful
Bidders [Rule 173 (xviii) of GFR 2017]
1. Mandatory Publication of Award of Contract: The details of award of contract and name
of the successful bidder should be mentioned mandatorily on the CPPP and in the notice
board/ bulletin/ website of the concerned Ministry or Department/ e-Procurement Portal.
2. Exception to Publishing of Award of Contract: In case publication of such information
is sensitive from commercial or security aspects, dispensation may be sought from
publishing of such results by obtaining sanction from the Secretary of the Department with
the concurrence of associated Finance. Open, transparent declaration of price, sub-
vendors, suppliers, technology providers and other associates, and activity schedule of
Central Public Sector Enterprises (CPSEs) contractors as per extant instructions adversely
impacts ability of CPSEs to compete in highly competitive market, thereby denying the
CPSEs a level playing field. At the time of tender formulation, commercial organisations
like CPSEs will disclose whether any component of the subject procurement is for
commercial re-sale. Contract award details of such case may be shared on CPPP etc.,
after six (06) months of realization of procurement. Such a system shall protect financial
data of the CPSEs for a reasonable time while also complying with requirement of
transparency.
3. Bid Securities: Upon the successful bidder furnishing the signed agreement and
performance security, each unsuccessful bidder will be promptly notified, and their bid
security be returned without interest within 30 (thirty) days of notice of award of contract in
terms of para 5.1.1 above. The successful contractor’s bid security shall be adjusted
against the Security Deposit or returned as per the terms of the tender documents.
6.5.3 Performance Security
The contractor receiving the LoA is required to furnish the required performance security, if it
is part of tender conditions, in the prescribed form within period prescribed in the tender
document [generally 14 (fourteen) to 28 (twenty-eight), depending on the amount], as per para
5.1.2 above. In case performance security is not submitted within the stipulated time, procuring
entity may pursue the contractor, upto a reasonable grace period, further for submission. In
case the firm fails to submit the requisite Performance Security even thereafter or fails to sign
the contract, it may be treated as withdrawal of offer by L1 bidder, and the tender may be
137Chapter 6: Evaluation of Bids and Award of Work
reinvited (refer para 6.4.11), besides taking necessary punitive actions including forfeiture of
EMD against such bidders.
6.5.4 Acknowledgement of Contract by Successful Bidder and Execution
1. After the successful bidder is notified that his bid has been accepted, he will be sent an
agreement in duplicate for signature and return, incorporating all agreements between the
parties.
2. The contractor should acknowledge and unconditionally accept, sign, date and return the
agreement within 14 (fourteen) days from the date of issue of the contract in case of OTE
and 28 (twenty-eight) days in case of GTE. Such acknowledgements may not be required
in low value contracts, below Rs two and a half lakh or when the bidders offer has been
accepted in entirety, without any modifications. While acknowledging the contract, the
contractor may raise issues and/ or ask for modifications against some entries in the
contract. Such aspects shall immediately be investigated for necessary action, and
thereafter, the supplier’s unconditional acceptance of the contract obtained. If both parties
(Procuring Entity and the contractor) simultaneously sign the contract across the table,
further acknowledgement from the contractor is not required. It should also be made
known to the successful tenderer that in case he does not furnish the required performance
security or does not accept the contract within the stipulated target dates, such non-
compliance will constitute sufficient ground for forfeiture of its EMD and processing the
case for further action against it (as per para 6.4.11). Procuring Entity may also consider
getting the contract digitally signed.
3. All contracts shall be signed and entered into after receipt and verification of the requisite
performance security, by an authority empowered to do so by or under the orders of the
President of India in terms of Article 299 (1) of the Constitution of India. The words “for
and on behalf of the President of India” should follow the designation appended below the
signature of the officer authorised on this behalf. The various classes of contracts and
assurances of property, which may be executed by different authorities, are specified in
the DFPR (Annexure-1). No contract on behalf of an organisation of Procuring Entity
should be entered into by any authority which has not been empowered to do so under
the orders of the state Government.
6.5.5 Framing of Contract
The following general principles should be observed while entering into contracts:
1. Any agreement shall be issued strictly as per approved TC recommendations, be vetted
by the Associated/ integrated Finance and approved by CA. The terms of contract must
be complete, precise, definite and without any ambiguities. The terms should not involve
an uncertain or indefinite liability, except in the case of a cost -plus contract or where there
is price variation (PVC) in the contract. In other words, 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 Associated/ integrated Finance.
2. All contracts shall contain a provision for
a) Recovery of liquidated damages (LD) for delay in performance of the contract on the
part of the contractor;
b) A warranty clause/ defect liability clause should be incorporated in contracts for plant
and machinery and works, above a threshold value, requiring the contractor to, without
charge, replace, repair or rectify defective goods/ works/ services;
138Manual for Procurement of Works, Second Edition, 2025
c) Payment of all applicable taxes by the contractor; and
d) When a contract is likely to endure for a period of more than two years, it should,
wherever feasible, include a provision for an unconditional power of revocation or
cancellation by the government at any time on the expiry of six months’ notice to that
effect;
e) How the appointed day or day of starting of the work shall be determined.
3. Standard forms of contracts should be invariably adopted, except in following cases:
a) Authorities competent to make purchases may, at their discretion, make purchases
of value upto Rupees Two and a half (2.5) lakhs by issuing purchase orders
containing basic terms and conditions;
b) With respect to contracts for purchases valued from Rupees One Lakh to upto
Rupees Ten lakhs, where tender documents include the GCC, SCC, and schedule of
requirements, the letter of acceptance will result in a binding contract, provided no
performance security is called for or due to be submitted. All delivery liabilities would
be counted from the date of LoA. (Rule 225 iv)b) GFR 2017);
c) In cases where standard forms of contracts are not used or where modifications in
standard forms are considered necessary in respect of individual contracts, legal and
financial advice should be taken in drafting the clauses in the contract and approval
of CAs is to be obtained; and
d) Copies of all contracts and agreements for purchases of the value of Rs. 50 (Fifty)
lakh and above, and of all rate and running contracts entered into by civil departments
of the government should be sent to the Accountant General;
e) Copies of the LoA/Purchase Order should also be sent to the Jurisdictional Assessing
Officer for GST, mentioned in the bidder’s bid.
6.5.6 Audit Trails –Procurement Records
1. The procuring entity must maintain and retain audit trails, records and documents
generated or received during its procurement proceedings, in chronological order, the files
will be stored in an identified place and retrievable for scrutiny whenever needed without
wastage of time.
2. However, many organisations now process procurements on their own e-Procurement
Portals. In such cases, taking printouts and making a physical file just for records may be
counter-productive, provided the portals have provisions for audit trails. The documents
and records to be maintained electronically or physically will include the following:
a) documents pertaining to determination of need for procurement;
b) description of the subject matter of the procurement;
c) Statement of the justification for choice of a procurement method other than open
competitive tendering;
d) Documents relating to pre-qualification and registration of bidders, if applicable;
e) Particulars of issue, receipt, opening of the bids and the participating bidders at each
stage;
f) Requests for clarifications and any reply thereof including the clarifications given
during pre-bid conferences;
g) Bids evaluated, and documents relating to their evaluation; and
h) Contracts and Contract Amendments;
139Chapter 6: Evaluation of Bids and Award of Work
i) Complaint handling, correspondences with clients, consultants, banks.
3. In organisations where physical files are maintained, the Procurement file should start with
the indent and related documents. All subsequent documents relating to procurement
planning; Copy of Bid Document and documents relating to its and formulation, publishing
and issue/ uploading; Bid Opening; Bids received; correspondence and documents
(including Technical Evaluation and TC report) relating to pre-qualification, evaluation,
Award of Contract; and finally, the contract copy, should be kept on the file. In case of
bulky bids received, all bids received may be kept in a separate volume, with a copy of
accepted bids later being put on the main volume. To maintain integrity of the records
relating to procurement, these files should be kept secure and for contract management a
new volume of file may be opened to obviate frequent exposure of sensitive procurement
file. In contract management volume, copies of successful bid, Tender Committee Report
& Contract may also be kept for ready reference, besides correspondence and documents
relating to Contract Management and its closure.
6.6 Evaluation of Bids and Award of Contract – Risks and
Mitigation
Risk Mitigation
a) Evaluation of bids is subjective or leaves TC should give an undertaking at the
room for manipulation and biased appropriate time that none of the members has
assessments. Some TC members may not be any personal interest in the companies/
independent or neutral or may have conflict of agencies participating in the tender process.
interest. Any member having an interest in any
company should refrain from participating in
the TC. Some members of a TC may be
subordinate to or related others in a strictly
hierarchical organisation, so that they are not
free to express independent views – such a
situation must be avoided when constituting the
TC.
b) Discriminating against a Best Value Bid: In Mitigation for each type of risk is mentioned
case a bidder’s bid (not in the good books of the below.
procuring entity) becomes the best value bid as
per the evaluation criteria, some of the following
actions may have risks of misuse. There is also
a reverse risk in these actions if a favourite
becomes best value bid:
c) Unwarranted rebidding: Rejecting all bids In case a procurement is rebid more than
and calling for rebidding on the pretext of prices once, approval of one level above the CA may
being high, change of specifications, budget be taken. Please also see the complaint
not being available, and so on. mechanism.
d) Sudden quantity reduction/ increase or Bid conditions must specify a limit beyond
splitting of quantity work at the time of which originally announced quantity/ scope
award: Many organisations have provisions for cannot be reduced/ increased. If parallel
change/ splitting in the bid quantity at the time contracts are envisaged, clear criteria for the
of award. Some organisations vary quantity splitting may be specified in the bid documents
even without such provisions beforehand.
e) Unwarranted negotiations: negotiations are Normally, there should be no post-tender
called without justification. Sometimes a negotiations. In certain exceptional situations,
140Manual for Procurement of Works, Second Edition, 2025
Risk Mitigation
counter-offer is made to discourage lowest for example, procurement of proprietary items,
acceptable bidder. items with limited sources of supply, and items
where there is suspicion of a cartel formation,
negotiations may be held with L-1. In case of L-
1 backing out, there should be re-tendering.
f) Unwarranted delays in finalizing or varying A target timeline of finalisation of
the terms of preannounce contract procurement should be laid down. Delays and
agreement: even after the TC reasons thereof should be brought out before
recommendations are accepted, signing of the the CA on the file at the time of TC’s
contract is delayed on one pretext or the other. acceptance or contract signing. The contract
Although there is a standard contract form in should be strictly as per the bid conditions and
the bid documents, the contract may be drafted accepted offer.
in a fashion to favour or discourage the
successful bidder.
g) Anti-competitive practices: Bidders, that These strategies, in turn, may result in patterns
would otherwise be expected to compete, that procurement officials can detect, and steps
secretly conspire to frustrate the Procuring can be taken to thwart such attempts. Such
Entity’s attempts to get VfM in a bidding anti-competitive activities come under the
process. Anti-competitive conspiracies can purview of the competition law, where there is
take many forms. Sometimes the officers provision of stringent penalties. Regular
involved in procurement may be part of such training should be held for officers involved in
collusion. procurement to detect and mitigate such
h) Bid coordination: The bidders collude to the practices and also use of the competition law
quote same or similar rates that are much against such bidders.
higher than the reasonable price to force the
Procuring Entity to settle the procurement at
exorbitant prices.
i) Cover bidding: Cover bidding is designed to
give the appearance of genuine competition by
way of supporting bids for the leading bid-
rigger.
j) Bid suppression: Bid suppression means that
a company does not submit a bid for final
consideration in support of the leading bid-
rigger.
k) Bid rotation: In bid-rotation schemes,
conspiring firms continue to bid but they agree
to take turns being the winning (i.e., lowest
qualifying) bidder in a group of tenders of a
similar nature.
l) Market allocation: Competitors carve up the
market and agree not to give competitive bids
for certain customers or in certain geographic
areas.
141Manual for Procurement of Works, Second Edition, 2025
Chapter 7: Execution and Monitoring of Works and Quality
Assurance
7.1 Contract Management
1. Poor management of public funded projects costs the nation in terms of the following, be
it in the owner organization or in construction firms contracted to build a project:
a) Additional expenditure burden due to increased costs, crowding out more deserving
schemes and projects
b) Affect viability of projects due to increase in construction, causing losses to CPSE or
agency concerned
c) Economic burden, due to delayed return in investments
d) Imposes unnecessary economic burden on affected stakeholders
e) Creates a culture of acceptance of delay and avoidable costs – breeding more cases
f) Increased costs of procurement due to monetization of higher risks, perceived by
contractors, of delays and scope creep associated with public funded projects.
2. The purpose of contract management is to ensure that the contract delivers the desired
outcomes as per the terms and conditions of the contract. It also ensures that the
payments made to the contractor match the performance. Implementation of the contract
should be strictly monitored, and notices issued promptly whenever a breach of provisions
occurs. Monitoring should ensure that contractor adhere to contract terms, performance
expectations are achieved (such as timelines, quality of outcomes, discharge of
Contractor’s contracted obligations, and so on) and any problems are identified and
resolved in a timely manner. Without a sound monitoring process, there can be no
assurance that “we get what we pay and contract for and pay for only for what we get.”.
3. Normally, the following issues are handled in management of Works Contracts, which are
detailed in subsequent paras:
a) Contract Administration
b) Monitoring Scope of Work and Quality Assurance:
c) Time Monitoring
d) Financial Monitoring
e) Closure of Contract
f) Resolving Disputes and Conflicts
g) Breach and Termination of Contract
7.2 Contract Administration
7.2.1 Aligning the interest of the stakeholders
1. The incentive structure for all the key stakeholders of public procurement ought to be such
that the system itself will ensure timely delivery of the projects / works in a qualitative
manner within approved cost. A balanced framework and work culture, where risk and
rewards are properly shared amongst stakeholders and timely completion of quality
projects is the common goal, can be the bedrock of efficient project management. An
incentive structure, which may include pecuniary as well as non-pecuniary aspects
(Including public recognition), linked with measurable parameters of outcome / output, can
143Chapter 7: Execution and Monitoring of Works and Quality Assurance
help align the interests of stakeholders. An ethics-based regime, where integrity of all the
stakeholders is nurtured, can help increase efficiency in all aspects of project
management.
2. Public authorities may devise strategies to provide incentives to contractors
/concessionaires/ consultants/ architects/ other stakeholders by various means, including
bonus, better rating and recognition for early/ timely / quality completion of the projects.
Similar strategies may be devised for recognition of engineers/ officers/ other team
members for early / timely and quality completion of the projects. The practice of
mentioning the names of the contractor and the project in charge publicly at work sites
may be implemented. Such recognition may be in a form which has long shelf life so as to
associate the contractor and project In-charge with the life of the project.
3. “Coming together is a beginning; keeping together is progress; working together is
success”. It is an accepted fact that the success of any project is dependent on a well-
coordinated team working towards a common goal. For successful execution of any project
within specified time, cost and quality, the interest of all the stakeholders need to be
aligned. Coordinated efforts of all stakeholders such as contractors, consultants, public
authority and project executing authority and public representatives will bring about the
best possible outcome.
7.2.2 Monitoring Team and System:
1. Principle of Proportionality for Contract Management: The time and resources applied
to manage a Contract should be proportional to its size, scope, complexity, duration, risk,
and strategic importance. One size does not fit all. For example, low-value, too many
checks and balances can delay decision-making, impede the Contractor's payments, and
stifle innovation. Too little control can result in an undisciplined crisis management culture.
Getting the balance exactly right ensures ‘fit-for-purpose' Contract Management.
2. Role of Apex and Management Levels: Procurement and Contract Management require
various levels of authorisation or approvals for technical, administrative, and financial
decisions. Many of these approvals are at apex/ managerial levels, which are responsible
for macro management of the Contract but may not be involved in day-to-day Contract
Management. However, their roles are important for efficiency of the Contract
Management process.
3. Contract Manager: Best practice requires that a nodal person be appointed for
management of each specific contract. Such a nodal person may be called differently
(Engineer, Project Manager, Contract Manager, Supply Manager, Service Manager,
Employer's representative, and so on) in different organisations and in different categories
of Contract. This manual generically refers to him as 'Contract Manager'. For small, routine
Contracts, 'Contract Manager' may be a single person, who has a portfolio of Contracts to
manage. For large, complex, high-value Contracts, this is normally a team or entity. A
competent Project Management Team should be set up including training on Project
Management to the team, if required. A system of project monitoring for each work shall
be prepared before start of the work and same shall be available at site of work. 'Deadlines'
or 'contractual milestones' should be set up and tabulated to facilitate monitoring of the
progress of work. The work shall be monitored quarterly/ monthly basis by the Works
Committee, and a status report should be submitted to the Secretary in charge of the
concerned Ministry/ Department. Execution of the work shall primarily be the responsibility
of the nominated Contract Manager. However, for large contracts senior officers shall also
144Manual for Procurement of Works, Second Edition, 2025
review the progress and quality of the work at various stages of construction. To this effect,
presentations on the project performance may be made periodically before the senior
officers depending upon the value of the project and progress of the project vis-à-vis
schedule. Project executing authorities should put in place detailed instructions in this
regard. It may also be useful to stipulate organizational standards and/or certifications for
project managers/staff, in complex projects, as tender conditions to minimize risk of cost
and time overruns.
4. Progress Reporting & Review:
a) Review of Progress:
i) The quality of project works significantly depends on supervision and monitoring.
For completion of the projects within the stipulated time and cost and with
specified quality standards, periodical review should be done by various levels of
the officers.
ii) Execution of the work shall primarily be the responsibility of the officials
designated with such responsibility. However, for large contracts senior officers
shall also review the progress and quality of the work at various stages of
construction. To this effect, presentations on the project performance may be
made periodically before the senior officers depending upon the value of the
project and progress of the project vis-a-vis schedule. Project executing
authorities should put in place detailed instructions in this regard.
b) Reports: There should be a stipulation in the contract for large value works
(magnitude to be specified), for the contractor to submit project specific monthly
progress report of the work in a computerized form (Management Information System
Reports– MIS reports). The progress report shall contain the following apart from
whatever else may be required to be specified:
i) Project information, giving the broad features of the contract.
ii) Introduction, giving a brief scope of the work under the contract and the broad
structural or other details.
iii) Construction schedule of the various components of the work, through a bar chart
for the next three quarters for as may be specified, showing the milestones,
targeted tasks and up to date progress.
iv) Progress chart of the various components of the work that are planned and
achieved, for the month as well as cumulative up to the month, with reasons for
deviations, if any, in a tabular format.
v) Plant and machinery statement, indicating those deployed in the work, and their
working status.
vi) Man-power statement, indicating individually the names of all the staff deployed
in the work along with their designations.
vii) Financial statement, indicating the broad details of all the running account
payments received up to date, such as gross value of work done, advances taken,
recoveries effected, amounts withheld, net payments, details of cheque payments
received, etc.
viii) A statement showing the extra and substituted items submitted by the contractor,
and the payments received against them, broad details of the bank Guarantees,
indicating clearly their validity periods, broad details of the insurance policies
145Chapter 7: Execution and Monitoring of Works and Quality Assurance
taken by the contractor, if any, the advances received and adjusted from the
department, etc.
ix) Progress photographs, in colour, of the various items/ components of the work
done up to date, to indicate visually the actual progress of the work.
x) Quality assurance and quality control tests conducted during the month, with the
results thereof.
xi) Any hold-up shall be specified.
xii) Dispute, if any, shall also be highlighted.
xiii) Monthly or fortnightly progress review by contract manager and Procuring Entity
with contractor may be necessary to ensure that contractor deploys sufficient
resources to meet the deadlines.
xiv) Project executing authorities should put in place a system for capturing the
photographs and videos of important and critical activities of construction. This
may be implemented in projects above a threshold value or, if possible, in all
projects. Such photos/ videos may be uploaded in IT based project monitoring
system to facilitate monitoring the progress and quality of work as well as
assessment of delay in execution of work by stakeholders and senior
management. Apart from this photographs and videos may serve as permanent
record of the project for posterity in case needed for any eventuality including
litigation or enquiry/ investigation.
c) Project Management Software: All complex assignments require the use of proper
project management tools that enable the contract management team (procuring entity,
contract manager, project manager, etc.) to collaboratively monitor the actual; physical
and financial progress of the contract against the planned physical and financial schedule.
The contract may also specify that the contractor engage certified project management
professionals to train and monitor project progress (e.g.: PMI certified contract managers).
There are many project management tools and software programmes that are extremely
useful for the contract management team. Some of the common software programmes are
(no endorsements are intended; there are many more such software available): Microsoft
Project and Portfolio Management (MS PPM) and Oracle Primavera P6 Professional
Project Management (P6 PPM).
d) Information Technology (IT) enabled project management systems can help in
improving efficiency, transparency and aid faster decision making in execution of projects.
These systems may be used for maintenance of records for the progress of work (including
hindrance register), variations, etc., wherein reasons for delays are also to be captured on
real time basis. Such systems may be used for capturing progress and quality of work, site
records/ photographs/ videos etc. including geo tagging.
e) Project Management Consultant: If requisite skills and expertise for project management
are not adequate within the organisation, the work may be outsourced partially or fully to
a consultant/ consulting firm called 'Project Management Consultant'. The Contracting
Entity should ensure sufficient oversight, checks, and balances over such outsourcing
arrangements. Wherever applicable, the role of the Project Management Consultant
(PMC) should be clearly defined in the contracts. Deployment of the PMC does not absolve
the project executing authority of the responsibility to supervise the quality and timelines
of the project. The credentials and deployment schedule of key and other technical
personnel to be engaged by PMC on the work should be taken along with the bid. During
146Manual for Procurement of Works, Second Edition, 2025
execution, adherence to deployment of key and other technical personnel as per the
schedule of deployment should be ensured.
f) Delays in Taking Timely Decisions
a) Delay in decision making by the officials of the project executing authority on various
changes in the project scheme arising out of emerging situations during execution of
the work is also one of the contributors to the delay in completion of projects.
Sometimes timely decisions on these changes are so crucial that the next step could
only be taken after addressing the change. Delay in decisions by the project
executing authority can also lead to litigation due to inadequate utilization/ idling of
resources of the contractor. There is frequently a feeling among officials that
indecision is safe while a decision may lead to adverse consequences for the decision
maker. Therefore, there is a need for project executing authorities to put in place a
system of resolution of the issues coupled with timelines for various levels to take
decisions.
b) Project executing authorities may review the flow chart of decision making and
remove redundancies for faster decision making. They may also fix timelines for
taking decisions on variations, extra items and changes in scope and specifications,
etc. to avoid delay and litigation arising out of delayed decisions.
7.2.3 Ensuring Prerequisites to Commencement of Work
1. Land Acquisition: The process of land acquisition shall be started by the Procuring Entity,
well ahead and completed entirely, or at least substantially, by the time the contract is
awarded.
2. Permits/ Approvals: The Procuring Entity shall also seek requisite Statutory Approvals/
Permission/ Clearances/ Certificates from the concerned Local Bodies & Statutory
Authorities like District Authorities, Municipal Corporation, Panchayati Raj Institutions,
Town Planning Board, Electricity Board/ Fire Department, State/ Central Pollution Control
Boards, Stale/ Central Environmental Authorities, Forrest and Wild-life authorities etc(for
e.g. removal of trees, re-locating utilities; conversion of railway level crossings, laying of
railway sidings needed by the project; rehabilitation and resettlement of persons affected
by the project; traffic control; mining of earth and stone; interfering protected monuments;
blasting permission, environmental/ forest/ wild-life clearances; and shifting of religious
shrines etc), so that the progress of work is not impeded and incidence of delay claims by
the contractor avoided. The Procuring Entity has to be aware that any delay in fulfilling the
pre-requisites stipulated in the contract will attract delay claims form the contractor,
besides causing time and cost overruns. Hence, all or most pre-requisites shall be fulfilled
before award of the LoA. The contractor shall give all notices and obtain all other
necessary permits and approvals as may be required for the construction of the contract
works and shall pay for all such permits and approvals.
3. Approval of Quarries and Borrow Areas and Materials: The contractor will obtain
approval of the contract manager for each quarry and borrow area to be used in the project,
prior to commencement of quarrying and/ or borrow area excavation activities. All
materials (whether natural, processed, manufactured, or designed) proposed by the
contractor to be used on the works shall be first approved by the contract manager to
comply with the requirements of specifications. Contractor may seek Procuring Entity’s
permission for equivalent brands, if some brands are mentioned for certain materials in
the contract documents.
147Chapter 7: Execution and Monitoring of Works and Quality Assurance
4. Safety at Work Site: The Contractor must ensure safety of workmen as well as safety for
the general public during construction in and around work-site. He must follow the laws,
codes and standards laid down in this regard. The work-men must be trained and provided
protective gear, life-saving equipment and appropriate tools for their jobs. Special
precautions must be used if hazardous chemicals are used or stored at workplace (lead,
silica, asbestos and wood/stone that will be cut and generate dust, construction materials
containing zinc, cadmium, beryllium and mercury).Besides protection from noise and
environmental pollution, public must also be safeguarded from falling through dug-up area,
electrocution, flooding, falling objects, bridge-span dropping/ failures, crane falling/
overturning and damage to building from vibrations/ cave-ins from construction activities.
Contract manager must ensure that contractor does not adopt any short-cut in this regard.
Most large contracts have a well-defined Safety Health & Environment (SHE, also called
Environmental, Social, Health and Safety (ESHS, with addition of social factor) in some
context – refer para 7.2.10) guideline embedded in the agreement. Appointment of site
safety engineer by the contractor is a mandatory requirement in such cases. The contract
manager shall engage safety experts to carry out frequent SHE audits and mandate
correct measures.
5. Advance Payments: To enable mobilisation, advance payment(s) are to be given after
the signing of the Contract, if provided in the Contract, on the Contractor's submission of
an unconditional BG in an acceptable form
6. Insurances: Insurance provisions are valuable risk management tools. The Contracting
Entity must ensure the following:
a) The insurance policies are in place in accordance with the Contract.
b) The coverages are adequate and within the thresholds specified in the Contract.
c) The insurance policies contain the essential information such as coverage, duration,
applicability, and so on.
d) Due diligence is applied to checking the authenticity of the insurance document and
payment of insurance premiums.
7.2.4 Commencement of Work
After the Contract has been signed between the parties and Performance Security is deposited
by the Contractor, he should visit the site along with Contract Manager to identify any potential
problem in relation to site. After reviewing the status of prerequisites, the Contract Manager
issues a ‘Work Order' to the Contractor to 'commence the works'. Work order should be issued
within a reasonable period (say 2 weeks but not later than 6 weeks from the date of the LoA).
Within the stipulated time the Contractor should submit to the Contract Manager for his
consent (a) the Work Program including the measures proposed by him for work zone safety
and mitigation of environmental impact, (b) Methods Statement which the Contractor proposes
to adopt for execution of the works, and (c) the quality assurance plan. The Contract Manager
should, on being satisfied with the Contractor's submission, provide to the Contractor total or
partial possession of the site. The Contractor will update the Work Program at intervals
stipulated (usually every month) and submit it to the Contract Manager for approval. The
updated program should include all variations ordered by the Contract Manager and their
effect, if any, on the program. No work shall be commenced unless the conditions precedent
as laid down in Para 1.14-13 have been fulfilled.
148Manual for Procurement of Works, Second Edition, 2025
7.2.5 Mobilisation
1. The commencement of Works normally begins with a mobilisation or pre-construction
phase during which the site is prepared for construction. The mobilisation period should
be carefully managed by the Contracting parties and given its significance to the
successful execution of a Contract. The mobilisation or pre-construction phase can include
major activities such as land clearance, excavation, building of access roads to the site,
work site establishment, and construction of accommodation for the Contractor's
personnel.
2. Mobilisation of Key Resources: The Contract Manager must ensure that the technical
personnel and key equipment machines as per the Contract are mobilised by the
Contractor and are available on the site in line with the Work Program. This would include
construction of labour huts; establishment of a quality control laboratory; and mobilisation
of labour, project manager, surveyors, and equipment and machinery. If the Contractor
has more than one Contract with the Contracting Entity, it may be ensured that such
deployment is not at the cost of other contracts. If there are delays due to deployment of
such resources to other contracts, this may be treated as an inexcusable delay liable for
imposition of Liquidated Damages (LD).
3. Materials Management: The Contractor also initiates the procurement of materials
required for various stages of the project. All materials (whether natural, processed,
manufactured, or designed) proposed by the Contractor to be used on the works should
be first approved by the Contract Manager, to comply with the requirements of
Specifications.
7.2.6 Monitoring Resources Deployed by Contractor
Contracts are awarded based on qualification criteria, where the Contractor has committed to
deploy required resources for the Contract execution. The Contract document must include
the commitments made by the Contractor in winning the award. The required capabilities are
the following:
1. Technical and performance capabilities: Contractors get awarded several contracts
from different organisations, which require technical and performance capabilities in
parallel. The Contractor may not deploy resources committed by him in his bid or substitute
these with resources unsuitable for execution in a Contract. Hence, its important during
initial mobilisation and execution to ensure that he deploys the capabilities he has
committed to in the Contract. Wherever it is noticed that the Contractor is failing this regard,
a notice of breach should be issued to him mentioning the corrective action and its time
frame.
2. Machinery and Plant: The Contractor should deploy on the Contract, on a day-to-day
basis, adequate Machinery, Plant, equipment, and implements of required specifications
and in good working condition. This is especially important if he has received advance
payment against such Machinery and Plant.
3. Materials Management: The Contractor should ensure timely availability of materials
required for various stages of the project. All materials (whether natural, processed,
manufactured, or designed) proposed by the Contractor to be used on the works should
be first approved by the Contract Manager to comply with the specifications, if such
approval is required under the Contract. All incoming materials should undergo agreed
quality assurance. This can be on-site or off-site lab tests or manufacturer's test certificate
as per the agreed quality assurance plan. The Contractor should proactively monitor the
149Chapter 7: Execution and Monitoring of Works and Quality Assurance
materials management plan so that there is no material shortage during execution of the
Contract.
4. Financial capabilities: Inadequacy of financial resources would become evident from
inadequate deployment of Machinery and Plant, materials, human resources, and Sub-
contractors on site consonant with the Work Program. In such cases, notice should be
issued to the Contractor to show his finance mobilisation. The Contract Manager should
also ensure that the Contractor is always paid on time, and any financial bottleneck is not
due to delays in payments to the Contractor.
5. Human resource capabilities: The Contractor should ensure day-to-day deployment of
sufficient technical, skilled, and unskilled manpower on the project, commensurate with
the current Work Program. Any key technical personnel named in the Contract should be
productively working on their area of expertise. The Contract Manager should verify this
during various site inspections and keep a record of inspection diary. Any replacement of
key personnel will be as per the provisions of the Contract.
6. Sub-contracting:
a) The works contract may provide for the contractor to get specified works executed
from sub-contractors included in the pre-qualification application or later agreed to by
the Procuring Entity, with a caveat that the responsibility for all sub-contract work
rests with the prime contractor. However, the prime contractor will be required to
submit to the procuring entity, the experience certificate issued to the sub-contractor
by a previous employer. Sub-contracting shall generally be for specialized items of
work, such as reinforced earth retaining walls, pre-stressing works, and so on.
Procurement of material, hire of equipment or engagement of labour will not mean
sub-contracting. The total value of sub-contracting work will not exceed the per cent
of the contract price as specified in the contract (say 25 (twenty-five) percent). Sub-
contracting by the contractor without the approval of the Procuring Entity shall be a
breach of contract, unless explicitly permitted in the contract.
b) The Contractor should promptly inform the Contract Manager about the Sub-
contractor moving to the site. Any Sub-contractor other than those mentioned in the
Contract must be approved by the procuring entity before being allowed to enter the
site. All proposals for sub-contracting should be approved by the Contracting Entity.
Intimation of approval for the Sub-contractor should make it clear that the payments
to and monitoring of the Sub-contractor's performance and adherence to applicable
laws is the responsibility of the main Contractor and the approval granted does not
dilute such responsibility.
c) Sub-contracting by the Contractor without the approval of the Contracting Entity
would be a Breach of Contract. If the Contract Manager discovers an unapproved
Sub-contractor working at the site, he should notify the Contractor, in writing, of the
Breach of Contract. A copy of this correspondence should be forwarded to the
Contracting Entity. Upon receipt of this notice from the Contract Manager, the
Contractor is to take immediate steps to remove the Sub-contractor from the site.
Failure by the Contractor to do so will constitute a Breach of Contract on his part.
7.2.7 Enforcing Contractor’s Obligations:
1. Changes in Constitution/ Financial Stakes: The Contractor must proactively keep the
Procuring Entity informed of any changes in its constitution/ financial stakes/
responsibilities during the execution of the contract since that may vitiate the legal basis
150Manual for Procurement of Works, Second Edition, 2025
of the Contract. Where the contractor is a partnership firm, the following restrictions shall
apply to changes in the constitution during the execution of the contract:
a) A new partner shall not be introduced in the firm except with the prior consent in
writing of the Procuring Entity, which shall be granted only upon execution of a written
undertaking by the new partner to perform the contract and accept all liabilities
incurred by the firm under the contract before the date of such undertaking;
b) On the death or retirement of any partner of the contractor firm before the complete
performance of the contract, the Procuring Entity may, at his option, terminate the
contract for default as per the Contract and avail any or all remedies thereunder;
c) In case the contract not terminated as provided in Sub-para (b) above;
i) the remaining partners should give a written undertaking to perform the contract
and accept all liabilities (including those of the expired/ retired partner) incurred
by the firm under the contract before the date of such an event.
d) notwithstanding the retirement of a partner from the firm, that partner shall continue
to be liable under the contract for acts of the firm until a copy of the public notice given
by him under Section 32 of the Partnership Act, has been sent by him to the Procuring
Entity in writing or electronically.
2. Indemnifying Procuring Entity regarding Intellectual Property (IPR): All deliverables,
outputs, plans, drawings, specifications, designs, reports, and other documents and
software submitted by the contractor under this Contract shall become and remain the
property of the Procuring Entity and subject to laws of copyright and must not be shared
with third parties or reproduced, whether in whole or part, without the Procuring Entity’s
prior written consent. The contractor shall, not later than upon termination or expiration of
this Contract, deliver all such documents and software to the Procuring Entity, together
with a detailed inventory thereof. The contractor shall indemnify the Procuring Entity
against any breach of third party’s IPR. The Contractor (and its allied firms) shall maintain
confidentiality and secrecy of Procuring Entity’s information provided to it (or that it comes
across during execution of Contract).
3. Performance Security:
a) The Contractor must maintain the Performance Security of the required amount in
specified format during the currency of the Contract. In the event of any amendment
issued to the contract, the contractor shall furnish suitably amended value and validity
of the Performance Security in terms of the amended contract within twenty-eight
days of issue of the amendment.
b) If the contractor during the currency of the Contract fails to maintain the requisite
Performance Security, it shall be lawful for the Procuring Entity at its discretion at its
discretion to either terminate the Contract for breach of contract and avail any or all
contractual remedies, or without terminating the Contract, recover from the contractor
the amount of such security deposit by deducting the amount from the pending bills
of the contractor under the contract or any other contract with the Procuring Entity or
the Government or any person contracting through the Procuring Organisation or
otherwise.
c) The Procuring Entity shall be entitled, and it shall be lawful on his part, to deduct from
the performance securities or to forfeit the said security in whole or in part in the event
of:
151Chapter 7: Execution and Monitoring of Works and Quality Assurance
i) any default, or failure or neglect on the part of the contractor in the fulfilment
or performance in all respect of the contract under reference or any other
contract with the Procuring Organisation or any part thereof;
4. for any loss or damage recoverable from the contractor which the Procuring Entity may
suffer or be put to for reasons of or due to above defaults/ failures/ neglect;
5. and in either of the events aforesaid to call upon the contractor to maintain the said
performance security at its original limit by making further deposits, provided further that
the Procuring Entity shall be entitled, and it shall be lawful on his part, to recover any such
claim from any sum then due or which at any time after that may become due to the
contractor for similar reasons.
a) The performance security should be refunded to the contractor without interest, after
he duly performs and completes the contract in all respects but not later than 60(sixty)
days of completion of all such obligations including the warranty under the contract.
No claim shall lie against the Procuring Entity regarding interest on cash deposits or
Government Securities or depreciation thereof. Return of Bid/ Performance Securities
should be monitored by the senior officers and delays should be avoided. If feasible,
the details of these securities may be listed in the e-Procurement Portal/ website of
the Procuring entity, to make the process transparent and visible.
6. Obligations under the Labour Codes and Rules: The Contractor is solely responsible
for its obligation under Labour Codes and Rules relating to personnel deployed by it on-
site or off-site for execution of the contract. However, the procuring entity should pro-
actively monitor that such obligations are discharged by the contractor. Contractor shall
be asked to submit relevant reports and returns.
7. Obligations Relating to Occupational Safety, Health, Working Conditions, Social
Security, and Industrial Relations Requirements: Contractor is legally bound to comply
with statutory requirements regarding accommodation, Creche, safety, Hygiene, Health
and Medical facilities, Government Welfare Schemes, etc. He shall be asked to maintain
adequate records in this regard. The Procuring Entity shall proactively monitor that such
obligations are discharged.
8. Obligations relating to Site, Environmental Laws, and Third Parties: The Contractor
has obligations regarding safety and security of the site used by him. He has to comply
with laws relating to environment at the site. He also is liable for any injury/ damage to
third party personnel and properties as a result of his activities at the site.
9. Safeguards for Handing over Procuring Entity Materials/Equipment to Contractors:
For performance of certain contracts, Procuring Entity may have to loan stores, drawings,
documents, equipment, and assets (such as accommodation, identity cards and gate
passes, and so on) to the contractor. In certain situations, the contractor may also be
supplied electricity, water, cranes, and weighing facilities on payment/hire basis.
Whenever stores or prototypes or sub-assemblies are required to be issued to the
firm/contractor for guidance in fabrication, these should be issued against an appropriate
bank guarantee. In addition to the bank guarantee, appropriate insurance may be asked
for if it is considered necessary. For low value items of less than Rs. 1,00,000 (Rupees
One Lakh), or for sending spares for repairs to the OEMs, this stipulation of the bank
guarantee may be waived and, if feasible, an indemnity bond may be taken. The
Contractor shall use such property for the execution of the contract and no other purpose
whatsoever. These assets shall remain the property of the Procuring Entity, and the
contractor shall take all reasonable care of all such assets. The contractor shall be
152Manual for Procurement of Works, Second Edition, 2025
responsible for all damage or loss from whatever cause caused while such assets are
possessed or controlled by the contractor, staff, workers, or agents. As a measure of
transparency, the possibility of provision of such resources by Procuring Entity should
have been announced in the tender document or at least requested by the contractor in
the tender and written in the contract. Before the final payment or release of PBG/SD, a
certificate may be taken from the concerned Department that the contractor has returned
all documents, drawings, protective gear, material, equipment, facilities, and assets
loaned, including all ID cards and gate passes, and so on, in good condition. Further, it
should be certified that payment from the contractor has been received for usage of
electricity, water, crane, accommodation, weighing facility, and so on.
7.2.8 Issuing Contract Amendments
1. There are few contracts of any type that do not require a change at one time or another.
The formal method of making and documenting a change in the Works contract is through
a contract amendment. Contract amendments are issued when there are agreed-upon
changes in the scope of work, personnel inputs, costs, timing of the service delivery, or
out-of-pocket expenditures. Normally, these relate to changes that have a cost implication,
but when there is a significant change in the timing of an activity or a particular output,
these should also be recorded through a contract amendment. No amendment to the
contract should be made that can lead to a vitiation of the original tender decision or
bestow an undue advantage on the contractor. Where it becomes necessary/ inescapable,
any modification shall be carried out with the prior approval of the CA.
2. An amendment has legal implications as it amounts to 'novation' of Contract, that is, it is
treated as a 'substitution of a new Contract for old one' to the extent of these amendments
superseding the corresponding original terms and conditions. Amendment of the contract
can be done only with the consent of both parties, except for those changes for which right
of Purchaser for suo-moto amendment (i.e. penalties etc.) is reserved in the Contract.
Normally, the request for contract amendment is prepared by the Contractor and submitted
to the Procuring Entity. However, these can also be initiated by the Procuring Entity, suo-
moto. If the contractor does not raise objections within 14 days to any suo-moto
modifications/ amendments made by the Procuring Entity, it shall be assumed that the
contractor has consented to the amendment.
3. To take care of any change in the requirement during the contract period, there could be
situations wherein variations in the scope of work becomes necessary. These situations
should be dealt with objectivity and fairness and should not be considered to unduly push
the vendor to undertake work or take risks which was not explicitly communicated in the
tender document. At the same time the Contractor should not consider this as an
opportunity to unduly charge the Procuring Entity due to lack of available options.
Generally, the value of the change request should not be more than plus/minus 15 (Fifteen)
per cent. The Tender document should contain detailed mechanism through which such
change requests would be carried out. The decisions of Contract Manager (both technical
as well as financial) should be considered as final. Wherever amendment is done through
such a committee, all the members should sign the minutes of the recommendations.
4. No amendment shall be binding on the Procuring Entity unless and until the same is written
and signed/ authorised by a competent authority.
5. Any amendment to the contract may have, inter alia, financial/technical/legal implications.
The indentor may be consulted regarding the technical implications. Associated/ integrated
153Chapter 7: Execution and Monitoring of Works and Quality Assurance
Finance’s concurrence should be obtained before issuing any amendment that has
financial implications/repercussions. Further, if considered necessary, legal opinion may
also be sought.
7.2.9 Safeguarding Assets Handed Over to Contractors
For performance of certain contracts, Procuring Entity may have to loan stores, drawings,
documents, equipment, and assets (such as accommodation, identity cards and gate passes,
and so on) to the contractor. In certain situations, the contractor may also be supplied
electricity, water, cranes, and weighing facilities on payment/hire basis. Whenever stores or
prototypes or sub-assemblies are required to be issued to the firm/contractor for guidance in
fabrication, these should be issued against an appropriate bank guarantee. In addition to the
bank guarantee, appropriate insurance may be asked for if it is considered necessary. For low
value items of less than Rs. 1,00,000 (Rupees One Lakh), or for sending spares for repairs to
the OEMs, this stipulation of the bank guarantee may be waived and, if feasible, an indemnity
bond may be taken. The Contractor shall use such property for the execution of the contract
and no other purpose whatsoever. These assets shall remain the property of the Procuring
Entity, and the contractor shall take all reasonable care of all such assets. The contractor shall
be responsible for all damage or loss from whatever cause caused while such assets are
possessed or controlled by the contractor, staff, workers, or agents. As a measure of
transparency, the possibility of provision of such resources by Procuring Entity should have
been announced in the tender document or at least requested by the contractor in the tender
and written in the contract. Before the final payment or release of PBG/SD, a certificate may
be taken from the concerned Department that the contractor has returned all documents,
drawings, protective gear, material, equipment, facilities, and assets loaned, including all ID
cards and gate passes, and so on, in good condition. Further, it should be certified that
payment from the contractor has been received for usage of electricity, water, crane,
accommodation, weighing facility, and so on.
7.2.10 Environmental, Social, Health, and Safety (ESHS) Concerns
1. In Works Contracts attention must be paid to Environmental, Social, Health, and Safety
(ESHS) considerations (also termed Safety, Health, and Environmental [SHE] in certain
contracts). Such considerations must be indicated from the beginning as mandatory skills
or experience in the Bid Documents. The Contractor must ensure that he and his Sub-
contractors comply with legal and regulatory obligations relating to ESHS. It requires
professionals with appropriate skills to be part of the Contract’s Team. Such professionals
may be required on part-time or full-time basis, depending on the nature of the ESHS risks
and impacts and the role they are performing. During Contract implementation, the primary
focus is to ensure that the contractual ESHS provisions are continuously adhered to. This
will involve the timely preparation and/or review of documentation such as the Contractor's
plans and procedures; undertaking of inspection, supervision, and/ or audit; attending of
progress meetings; reporting; and resolving issues that may occur.
2. The safety of all activities (including traffic safety) in and around the site and safety of the
public and labour should be ensured by the Contractor as per prevalent labour
laws/regulations and the conditions of Contract. The workmen must be trained and
provided protective gear, life-saving equipment, and appropriate tools for their jobs.
3. Special precautions must be used if hazardous chemicals are used or stored at the
workplace (lead, silica, asbestos, and wood/stone that will be cut and generate dust and
construction materials containing zinc, cadmium, beryllium, and mercury).
154Manual for Procurement of Works, Second Edition, 2025
4. Besides protecting the public from noise and environmental pollution, they must be
safeguarded from falls in dug-up areas, electrocution, flooding, falling objects, bridge-span
dropping/failures, crane falling/overturning, and damage to building from vibrations/cave-
ins from construction activities. The Contract Manager must ensure that the Contractor
does not adopt any shortcut in this regard.
7.3 Monitoring Scope of Work and Quality Assurance
7.3.1 Monitoring Scope of Work
1. Monitoring Topology and Geological Conditions: Topographical survey, soil
investigation, and such other activities are the basis of Contract design and
documentation. The topographical survey determines the design and the levels of various
buildings and landscaping. The presence of water, including its depth, quality, and
quantity, is also part of the site topology. If actual site topology is different from the
topological survey in the Contract, this would lead to variation in the scope of work and
BOQ. Unexpected discoveries at site could be soil/rock issues or some old infrastructure
or works of religious or archaeological importance. In all these cases, scope and BOQ
would undergo changes and cause variation order to be initiated.
2. Bill of Quantities: The BOQ forms an important part of any Contract. Quantities in a BOQ
are only best estimates and payment is made for actual quantities measured during
Contract implementation. Major errors in items or quantities in the BOQ may result in large
variations, leading to vitiation of the basis on which the Contract is awarded to the
Contractor. Contractors may take advantage of such errors and build their quotation in
such a way that they would be adjudged lowest for quantities in the BOQ but would gain
undue windfall profit when the quantities are corrected. Therefore, Contracting Entities
have special procedures for approving quantity variations above 10 percent.
3. EPC Designs: In case of EPC contracts approval of the designs should be taken from the
appropriate authority, as defined in the tender document, to ensure that the performance
levels are met by the design.
4. Measurements:
a) Measurements of all items having financial value shall be recorded in Measurement
books (MB) and/ or level field books so that a complete record is obtained of all works
performed under the contract. Measurements and levels shall be taken jointly by the
official designated for the purpose and the contractor. The contractor shall, without
extra charge, provide all assistance with every appliance, labour and other things
necessary for measurements and recording levels.
b) The contractor shall not cover (or place it beyond reach) the work without written
consent from the Procuring Entity, otherwise the contractor shall have to uncover it
at their own expense, or they will not be paid for that work.
c) Recording of measurements of any item of work in the measurement book shall not
relieve the Contractor from liabilities from any over measurement or defects noticed
till completion of the defects liability period.
d) Electronic Measurement Books (e-MBs). Organisations as early as possible
implement e- MBs and same should be integrated with IT based project monitoring
system.
5. Quality Assurance: In order to control the quality of work, a Quality Assurance Cell shall
be formed in every work centre comprising of multi- disciplinary professionals/ engineers
155Chapter 7: Execution and Monitoring of Works and Quality Assurance
to cover all types of works, such as civil, mechanical, electrical etc. In case of non-
availability of qualified professionals/ engineers in house for the purpose of quality
assurance cell, then the approval of competent authority shall have to be taken for
deploying professionals from outside agencies. The provision for third party quality check
may also be considered for a work beyond a specified amount.
7.3.2 Monitoring Variations/ Extra/ Substituted Items
1. Variation: It is rare that a construction project proceeds exactly as foreseen in the original
proposals and drawings. In practice, marginal variations of the quantities provided for the
project have a huge potential to vitiate viability of a project if this issue is not diligently
regulated in the Contract.
2. A variation may arise on account of –
a) increase or decrease in the quantity of any work included in the BOQ of the contract;
b) omission of any such work (but not if the omitted work is to be carried out by the
procuring entity by another contractor);
c) change in the character or quality or kind of any such work;
d) change in the levels, lines, position and dimensions of any part of the works;
e) additional work of any kind necessary for the completion of the works; and
f) change of the specified sequence or timing of construction of any part of the works.
g) changes in legislation may relate to taxes, royalties, environmental, mines, social,
and labour requirements.
3. The variation or additional work must be a necessary part within the scope of the original
works and should not completely change the scope/ character and purpose of the original
contract. The variation may result in additional or reduced payments to the contractor or
there may be no price change at all. It is important to have a written procedure as part of
the contract, for the issuing of a variation instruction. Once it is decided that a variation is
required, the instruction should be issued promptly to minimise any adverse effect on the
overall works.
4. Before a variation can be instructed by the Contract manager to the contractor, prior
approval from the Procuring Entity is needed, except for certain situations as may be
specified in SCC. The rate/ price/ valuation do not have to be agreed with the contractor,
although this is preferable. Any change in 'approval for construction' drawings should be
evaluated properly and their full financial implications worked out at that very stage for
submission to the appropriate authority for approval. In case there are changes in ground
levels from those shown in the approved drawings, they shall be agreed in writing, jointly
by the contractor and contract manager and reported to the Procuring Entity for
considering whether any action lies against the design consultant for non-conformity of the
levels as shown by him in the drawings and those actually obtaining.
5. Keeping Track of Variations/ Extra/ Substituted Items: The variations register shall be
used to administer and keep track of the status of a variation. Normally, the contractor
tends to report and claim positive variations (variations causing higher payments) and may
not report negative variations. However, the contract manager and Procuring Entity must
keep track of such negative variations and issue timely letters. This shall cover the
following important steps:
a) The Procuring Entity's prior approval of the issue of the variation instruction;
156Manual for Procurement of Works, Second Edition, 2025
b) The contract manager's instruction to the contractor (this letter creates the variation).
Particular details of a variation are not entered into the variations register until the
day the instruction is issued. Prior to that it is only a 'proposed variation' and is
tracked/ administered in a separate register;
c) The variation instruction letter must be given a unique variation number and details
entered into the variation register;
d) The register is updated at the end of each month and summarised on one sheet as
'variation status', so that the involved agencies are aware as to what work needing
action is held up with each of them; and
e) The financial implications are kept up to date.
6. Valuation of Variations: While taking decision with regards to variations a balance should
be maintained between the perceived risks in quick finalisation of variations against the
opportunity costs of delayed decision making e.g. project delays, cost escalations, loss of
transparency etc. Variation instructions for modified new or additional work involving extra
cost shall be valued as per the procedure set out in the relevant clauses of the contract.
The following are the steps to be taken by the Contract manager:
a) To form an opinion as to the applicability of the rates in BOQ and if considered
applicable, to use BOQ rates;
b) If not considered applicable, to use BOQ rates as the basis for valuation;
c) In the event of a disagreement, to consult with procuring entity and contractor to try
and agree on suitable rates; this means developing new rates from first principles;
d) If there is disagreement, to fix the appropriate rate; and
e) To determine provisional rates to allow monthly certification.
7. In making his recommendations, the contract manager should give the contractor the
opportunity to state his case and, if he considers the BOQ rate to be inappropriate, to
present his proposals as to how the rate should be adjusted or what basis should be used
to assess a new price. For his part, the contractor must support his submission with full
particulars including, where applicable, a detailed cost breakdown of any rate in BOQ. The
Procuring Entity must also be consulted with. The Procuring Entity should ensure that the
above procedure has been duly followed and appropriately explained by the contract
manager in his recommendations, before he approves the variation. Where it is reasonable
to value at the BOQ rate or some modification of it, any stance by the contractor that the
tendered price may be 'wrong' or deliberately set low is irrelevant. The threshold level of
the value/ quantity of a varied item below which a variation will not merit re-fixation of rate
or price should be specified in the SBD. Procuring entities may issue instructions regarding
appropriate delegation of authority for approval of deviations, variations and changes in
the scope of the contract.
8. In case the contract manager, while doing valuation of variations, notices significant cost
and time over-runs due to deviations between actual ground situation and the situation
recorded in DPR, he must bring to Procuring Entity’s notice the reach-wise differences and
the Ministry/ Department may consider stringent action against the consultant who has
prepared such DPRs as per para 2.4.2.
7.3.3 Preparation of Revised DPR/ Estimates
1. As per Rule 141 of GFR, 2017, for project costing Rs. 100 crore or above the
Administrative Ministry or Department will set up a Review Committee consisting of a
157Chapter 7: Execution and Monitoring of Works and Quality Assurance
representative each from the Administrative Ministry, Finance (Internal Finance Wing) and
the Executing Agency to review the progress of the work. The Review Committee shall
have the powers to accept variation within 10% of the approved estimates. For works
costing less than Rs. 100 crores, it will be at the discretion of the Administrative
Ministry/Department to set up a suitable mechanism for review and acceptance of variation
within 10% of the approved estimates.
2. On the lines of provisions in Ministry of Finance (DoE)’s instructions vide OM No.
24(35)/PF-II/2012 dated 05/08/2016 regarding appraisal and approval of Public Funded
projects/ schemes, any increase in costs due to statutory levies, exchange rate variation,
price escalation within the approved time cycle and/ or increase in costs upto 20 percent
due to any other reason, are covered by the approval of the original cost estimates. Any
increase in this regard would be approved by the Secretary of the Administrative
Department concerned with the concurrence of the Financial Adviser.
3. Any increase in costs beyond 20 percent of the firmed-up cost estimates due to time
overrun, change in scope, under-estimation, etc. (excluding increase in costs due to
statutory levies, exchange rate variation and price escalation within the approved time
cycle) should first be placed before a Revised Cost Committee chaired by the Financial
Adviser (consisting of the Joint Secretary in-charge of the program division and
representative of the Chief Adviser Cost as members) to identify the specific reasons
behind such increase, identify lapses, if any, and suggest remedial measures for the same.
The recommendations of the Revised Cost Committee should be placed for fresh appraisal
and approval before the authority as per the extant delegation of powers (It may be noted
that a firmed-up cost estimate here means a cost estimate which has been through the full
appraisal and approval procedure as per the extant delegation of powers).
4. When the variation/ excess occurs at such an advanced period in the construction of a
work85 as to render the submission of a revised estimate purposeless, the completion
report may explain the excess and an Officer of status not lower than that of
Superintending Engineer (of PWO/ PSU) may pass the completion report, if the total
expenditure in question is not greater than that which he is empowered to sanction in the
case of a revised estimate.
7.3.4 Quality Assurance (QA)
Quality assurance (QA) in Works contracts is a systematic process to ensure that Works are
completed to the highest quality standards, minimizing defects and ensuring user satisfaction.
1. Quality Standards and Quality Assurance Plan (QAP): The quality standards, methods,
workmanship, material specifications that the Works work must meet should be clearly
outlined in the contract indicating relevant industry standards and regulations. Quality
Assurance Plan (QAP) may be incorporated in the tender document/ contract. Schedule
of visit by various levels of officials should also form part of the QAP. Develop a
comprehensive quality control plan (QAP) before commencement of work that outlines the
procedures and processes for monitoring and verifying the quality of work. This plan
should include details on inspection and testing methods, frequency of inspections at
different levels of Contractor’s team and contract management team.
2. Quality Assurance - Inputs: Raw Material, Aggregates: To control the quality of work,
a Quality Assurance Cell should be formed in every work centre comprising multi-
85 Rule 78, 104 & 106 of CPWD Departmental Code
158Manual for Procurement of Works, Second Edition, 2025
disciplinary professionals/engineers to cover all types of works such as civil, mechanical,
and electrical. The provision for third-party quality check may also be considered for a
work beyond a specified monetary amount. The Contract may provide that the Contractor
has to set up a lab with specified qualified personnel and instruments to test the quality of
raw material or work in progress. This aspect is to be monitored during the mobilisation
phase. In case of nonavailability of qualified professionals/engineers in-house for the
Quality Assurance Cell, professionals from outside agencies may be deployed. The
Contract Manager should ensure scheduled and surprise inspection of records, processes,
tools, and instruments at the lab to ensure quality control of inputs.
3. Quality Assurance - Methods/Processes/Methodology/ Workmanship: Besides
quality assurance of inputs, the Contract Manager should ensure that the agreed methods,
processes, and methodologies are adhered to on a day-to-day basis. Methods Statement
outlines the detailed procedures and methodologies that will be employed to carry out the
works activities, ensuring that they meet the specified standards and requirements. This
statement includes a step-by-step description of the tasks to be performed, the materials
and equipment to be used, and the sequence of operations. It also addresses safety
measures, environmental considerations, and compliance with relevant regulations. By
ensuring a clear and comprehensive methods statement, the contract manager can ensure
that all parties involved in the construction project understand the expectations and adhere
to the established quality standards. This helps in minimizing errors, reducing risks, and
achieving the desired outcomes efficiently and effectively. The Contractor should submit
Methods Statement which the Contractor proposes to adopt for execution of the works and
the quality assurance plan. Record of these measurements, samples, and test parameters
should be maintained at the site for inspection. The Contract Manager should carry out
scheduled and surprise inspections of work in progress and compare with the site records
and Methods Statement to ensure that quality is being maintained. The level of
competence of workmen, workmanship, machinery, plants, tools, and instruments being
used at site should also be checked for compliance.
4. Inspection and Testing: Regular inspections and testing are crucial to ensure that the
work meets the specified quality standards. This includes checking materials,
workmanship, and compliance with methods and design specifications. No material and
concrete/ bitumen mix should be allowed to be used unless it is tested as per sampling
plan and recorded. In large projects a testing lab with adequate equipments/ instruments
must be set-up at site during mobilisation phase. Inspections should be documented, and
any deviations from the standards should be addressed promptly.
5. Documentation and Reporting: Maintain detailed records of all QA activities, including
inspection reports, test results, and any corrective actions taken. This documentation
provides a traceable history of the project's quality and can be used for future reference or
audits.
6. Corrective Actions: When deviations from the quality standards are identified, implement
corrective actions to address the issues. This may involve rework, additional inspections,
or changes to the Works process. Ensure that corrective actions are documented and
verified for effectiveness.
7. Continuous Improvement: QA is an ongoing process that involves continuous monitoring
and improvement. Regularly review the QA processes and procedures to identify areas
for improvement and implement changes as necessary to enhance the overall quality of
the work.
159Chapter 7: Execution and Monitoring of Works and Quality Assurance
7.4 Time Monitoring
7.4.1 Contract Effective Date
The date of commencement of the obligations under the Contract is referred to as the Contract
Effective Date. Effective Date is either the date (or period after the LoA date) mentioned in the
Special Conditions of Contract or is the date mentioned in the Work Order (say 7 days from
its date) issued by the Contract Manager ‘to commence works'. The Contracting Entities are
advised to set the effective date to be a date after the following:
a) Date of signing of the Contract
b) Furnishing of performance bond in terms of Performance Security
c) Receipt of Bank Guarantee (BG) for advance payment, if applicable.
7.4.2 Work Program
Work Program is the document against which project progress is monitored, and the extent
and cause of delay (and any related extension of time entitlement) is assessed. The Contractor
submits a detailed Work Program for approval to the Contract Manager, including the
measures proposed by him for work zone safety and mitigation of environmental impact as
per the agreed Environmental Management Plan (EMP) that forms part of the Contract, based
on any Project Management System for completion of work. This is to be done within the time
stipulated in the Contract (or four weeks from the issue of the LoA). The Work Program should
be in accordance with the Contract conditions. 'Deadlines' or 'contractual milestones' should
be jointly set up and tabulated by the Contract Manager and Contractor to facilitate monitoring
of the progress of work. The Contractor will update the program at intervals stipulated (usually
every month) in the Contract and submit it to the Contract Manager for approval. The updated
program should include all variations ordered by the Contract Manager and their effect, if any,
on the program.
7.4.3 Site Management:
1. Site Inspections: One of the key responsibilities of the Contracting Entity throughout the
execution of an infrastructure Contract is to maintain a good understanding of what is
happening on site. This cannot effectively be done without inspecting the site. The
Contracting Entity's technical experts should be actively involved in the site inspections,
and it is recommended that the Contractor’s Site Manager undertakes joint site inspections
with the Contract Manager. This will ensure that any issues identified during the site
inspections can be discussed with the Contract Manager and appropriate action agreed.
The Contract Manager should undertake regular site inspections to ensure activities are
progressing in accordance with the Contract requirements. The Contract Manager should
ensure that he has the right skills to inspect the activities being undertaken and that
inspections are regularly carried out jointly with the Contractor. During these inspections,
he must ensure
a) Follow-up of previously agreed action(s);
b) Actual progress of Works against planned/scheduled;
c) Quality of Works (do the Works comply with the quality requirements in the technical
specifications?);
d) Deployment of staff and labour in accordance with the Contract;
160Manual for Procurement of Works, Second Edition, 2025
e) Contractor's materials and equipment (does the Contractor have all necessary
equipment and construction materials to complete the Works as per the specifications
and on time?);
f) Health and safety with regard not only to the Contractor's personnel but also to public
safety (have all necessary health and safety measures been implemented?);
g) Environmental issues (is the Contractor's Environment Management Plan being
enforced appropriately?);
h) Availability of required insurances, indemnities and permits and up-to-date
documentation.
2. Site Documents: The Contract Manager would need to have a set of control documents
available for inspection. At a minimum, these may include the following:
a) Measurement Books.
b) Activity reports: daily, weekly, monthly showing in tabular format quantities of work
done, number of staff and equipment involved, consumption of materials, testing and
samples, and so on. The reports are expected to mention any pending contractual
disputes, specific events, incidents, weather conditions, and so on.
c) Issue log: records of all issues that have occurred during the execution of Works, with
appropriate descriptions and the date, cause, remedial measures taken, responsible
party, status of remediation, and so on.
d) Variation orders: all variation orders showing the justification for the changes in
quantities, prices, and times of completion.
e) Communications: records of all relevant communications with the Contractor and any
third party.
f) Inspection and control logbook: records of technical inspections, lab tests, and so
on which are either conducted by or witnessed by the contract manager; inspections,
audits, and controls performed by any other relevant party (for example, procuring
entity, environmental agency, financial control, local authorities, and so on).
7.4.4 Force Majeure (FM) Clause
Conditions beyond control of either parties like war, hostility, acts of public enemy, civil
commotion, sabotage, serious loss or damage by fire, explosions, epidemics, strikes, lockouts
or acts of God come under the legal concept of Force Majeure (FM). Delays in performance
of contractual obligations under influence of FM conditions are condonable by the other party
without any right to termination or damages, provided, notice of the happening of any such
event is given by the affected party to the other within 30 (thirty) days from the date of
occurrence. Works under the contract shall be resumed as soon as practicable after such
event has come to an end or ceased to exist. However, if such event continue for a period
exceeding 120 days, either party may at its option terminate the contract by giving notice to
the other party.
7.4.5 Delays in Execution
1. A work may be completed ahead of schedule or delayed due to unforeseen fortuitous
circumstances, extra effort or developments beyond the control of the procuring entity, or
the tenderer and it is sometimes difficult to apportion credit or responsibility. The contractor
may experience delay or disruption due to his own actions or inaction, those of his sub-
contractor or other contractors, those of the procuring entity or the contract manager, or
other causes. Such delays expose the non-performing party to various sanctions under
161Chapter 7: Execution and Monitoring of Works and Quality Assurance
the contract. These sanctions include extension of time, damages or default termination
of the contract. While examining the request of the contractor for extension of time, the
contract manager shall consider all circumstances and categorise the delays as follows:
a) Excusable delays - Force Majeure (FM), that is, acts of God, abnormal weather,
floods, and so on, applies;
b) Compensable delays – or Compensation Events, which put full burden of
responsibility on the Procuring Entity as covered in the GCC; and
c) Inexcusable delay (contractor’s own faults), which puts the full burden of
responsibility on the contractor.
d) Concurrent delays - when two or more events responsible for delay overlap each
other. The delays may be attributable to the Procuring Entity or the contractor or none
and fall in above categories. The eligibility for extension of time (EOT) should be
determined by plotting each contributing concurrent delay on the critical path. The
Procuring Entity should see that the concurrent delays do not result in unnecessary
extra extension of time.
2. Once the delay is categorised, it should then be determined not only whether the contractor
is eligible for time extension and/ or monetary relief but also whether sanctions, such as
Liquidated Damage (LD) or default termination, can be imposed on the contractor.
3. Inordinate Delays: Inexcusable delays beyond one-fourth of the completion period
(beyond 3 months in a 12-month Contract) may be treated as inordinate delays, as
confirmed record of poor performance. A show cause notice may be issued to the
Contractor before issuing the final letter of poor performance. Such poor performance may
be considered during qualification assessment while the Contractor bids in future tenders
of the Contracting Authority. In case Procuring Entity decides to allow performance of
contract, after inordinate delays, maximum limit on LD shall be 10% (instead of 5%) of the
total contract value, as per para 7.4.7-3 below.
7.4.6 Extension of Time (EOT)
1. If at any time during the currency of the contract, the contractor encounters conditions
hindering timely completion or any stage of works, he shall promptly inform the concerned
officer in writing. He should mention its likely duration and make a request for extension of
the schedule accordingly. On receiving the contractor’s communication, the procuring
entity shall examine whether the delay is attributable to the contractor or not (Please refer
to para 7.4.5 above). Extension of Time (EOT) must not be left to the end; it should be
dealt with promptly during the progress of the contract and for ongoing critical delay interim
EOT may be awarded. The contract manager shall, after due consultation with the
procuring entity and the contractor, determine the length of such extension and notify the
contractor accordingly, with a copy to the procuring entity. After the final stage of
completion is reached (final taking-over certificate issued), EOT and LD may be reviewed,
if required.
2. If a compensation event occurs during the execution of the contract, the same shall be
dealt with in terms of the GCC. The Contract manager will assess whether and by how
much the intended completion date shall be extended.
3. Refixation of Delivery: In case the delay is not attributable to the contractor (or in case
of Force Majeure) the completion period may be re-fixed with the approval of competent
authority (i.e. a fresh completion period, treated like original completion period), which is
arrived at by recasting the original contractual completion period after taking care of the
162Manual for Procurement of Works, Second Edition, 2025
lost period for which the contractor was not responsible, without LD and without the denial
clause (as defined in Para 7.4.8 below), for completion of the contractor’s contractual
obligations.
4. Extension of Time: In case the delay is attributable (fully or partly) to the contractor, the
completion schedule may be extended, with LD and with the denial clause (as defined in
Para 7.4.7 and 7.4.8 below), for completion of the contractor’s contractual obligations.
5. Extension/ Refixation of time after its expiry: The power to extend the time for
performance under Section 63 of the Indian Contract Act is not inherently limited to
extensions granted before the original deadline. It can be exercised even after the
stipulated time has passed, provided there is consent from both parties. The contract does
not automatically terminate upon the expiry of the initial delivery date, if there is a shared
intention to continue the contractual relationship and fulfil the obligations, albeit under a
revised timeline. Therefore, such extension/ refixation of time can be done, even after
expiry of original period, provided consent of the contractor is obtained. However, it is
prudent to formalize the extension before the original delivery period expires, to avoid any
arguments about the contract's validity or of extension of time after the initial deadline.
6. Extension/ Refixation of the delivery date amounts to amendment of the contract. Such
an extension/ refixation can be only done with the consent of both parties (that is, the
procuring entity and contractor). No extension/ refixation of the delivery date is to be
granted suo motu unless the contractor specifically asks for it. However, in a few cases, it
may be necessary to grant an extension/ refixation of the delivery period suo motu in the
interest of the administration. In such cases, it is legally necessary to obtain clear
acceptance of the extension/ refixation letter from the contractor.
7. No correspondence should be entered into with the contractor after expiry of the contract
completion period or towards the end of it, which has the legal effect of condoning the
delay/ breach of contract. When it is necessary to obtain certain information regarding
portion of work, it should be made clear that calling for such information is not intended to
keep the contract alive and that it does not waive the breach and that it is without prejudice
to the rights and remedies available to the purchaser under the terms of the contract. The
last line of such a communication should therefore be: “This letter is issued without any
prejudice to Procuring Entity’s rights and remedies under the terms and conditions of the
subject contract and without any commitment or obligation.”
8. When it is decided to extend the completion period subject to recovery of LD for delay in
work, contractors must be given a warning to this effect in writing at the time of granting
extensions. It is not correct to grant extensions without any mention of the LD if it is
proposed to recover such charges eventually. It is also not correct to grant an extension
of the delivery period by merely stating that the extension is granted “without prejudice to
the rights of the purchaser under the terms and conditions of the contract” as this would
mean that all the options given in the conditions of the contract would be available to the
purchaser on expiry of the extended delivery period and would not amount to exercise of
the option to recover LD. To take care of complex legalities brought out above, extension
of the delivery period when granted should only be done in writing in a legally vetted format.
9. Organisations may put in place a graded authority structure whereby extension of time for
completion of contract, beyond a specified threshold value of contract, may be granted by
the next higher authority.
163Chapter 7: Execution and Monitoring of Works and Quality Assurance
7.4.7 Liquidated Damages (LD) and Incentives/ Bonus
1. Procuring Entities are encouraged to explore strategies (such as offering bonuses,
improved ratings, or recognition) that may incentivize contractors, service providers and
consultants for early, timely, and quality completion of projects. Provision of incentives for
completion of work before schedule should be after careful assessment of tangible benefits
there from and disclosed in the tender documents in clear monetary terms.
2. Incentives/ Bonus (e.g. one percent of the contract value per month subject to a maximum
of five percent of contract value) for early completion and penalties for delay should,
therefore, be built into the contract very judiciously. To avail of the incentive clause, it shall
be mandatory on the part of the contractor to report the actual date of completion to the
concerned Contract manager (Contract manager herein refers to PWO/ PSU/ Organisation
to which work has been entrusted under Rule 133 of GFR 2017). The Contract manager
shall report the actual date of completion of the works as soon as possible through fax or
email so that the report is received within seven days of such completion by the concerned
CA.
3. In case of delay in completion of the contract, liquidated damages (LD) (for repair works
costing up to Rs. Twenty lakh - one percent (1%) of the contract value (that includes
variations, taxes and duties) per week and for all other works half percent (0.5%) of the
contract value per week of delay subject to a maximum of five percent (5%) of contract
value) should be levied. In case of inordinate delays as per para 7.4.5-3, maximum limit
on LD shall be 10% (instead of 5%) of the total contract value. The penalties proposed for
identified lapses of omission or commission must be disclosed in the tender documents in
clear monetary terms. For purpose of GST, liquidated damages should be shown as
deductions on the invoice value by the contractor. For purpose of GST, LD should be
shown as deduction on the invoice value by the contractor.
4. In contracts governed by any type of variation (PVC or statutory variations), LDs (if a
percentage of the price) will be applicable on the price as varied by the operation of the
PVC. In case of delays for which both procuring entity may be responsible to a different
extent, procuring entity with the approval of CA and concurrence of finance decide a lower
quantum of LD, and consider waiver of denial clause on the merit of the case.
5. LDs accrue only in case of delayed work. Where or as far as no work have been delivered
under a contract, upon cancellation, recovery of only the loss occasioned by breach of
contract can be made, notwithstanding the fact that prior to the cancellation one or more
extensions of the delivery period with reservation of the right to LD are granted.
7.4.8 Denial Clause
If delay in works is attributable to the contractor, the procuring entity should protect itself
against extra expenditure during the extended period by stipulating a denial clause (over and
above levy of LD) in the letter informing the contractor of extension of time. In the denial clause
(applicable for delays attributable to contractor ), any increase in statutory duties and/ or
upward rise in prices due to the PVC clause and/ or any adverse fluctuation in foreign
exchange are to be borne by the contractor during the extended delivery period, while the
purchaser reserves his right to get any benefit of a downward revisions in statutory duties,
PVC, and foreign exchange rate. Thus, in cases of delays attributable to contractor, PVC,
other variations and foreign exchange clauses operate only during the original delivery period
of the work.
164Manual for Procurement of Works, Second Edition, 2025
7.4.9 Performance Notice
A situation may arise where the work has not been completed within the stipulated period due
to negligence/ fault of the contractor; however, the contractor has not made any request for
extension of the delivery period, and the purchaser does not want to cancel the contract at
that stage. In such a case, a performance notice (also known as notice-cum-extension letter)
may be issued to the contractor by suitably extending the time and by imposing LD with denial
clauses, and so on, along identical lines as in para 7.4.6 above. The contractor’s acceptance
of the performance notice and further action thereof should also be processed in the same
manner as mentioned above.
7.4.10 Compensation Events
1. Compensation events are those which cause delays in completion of work (beyond a
threshold specified in Contract) and hence financial loss to the Contractor due to defaults
of the Contracting Entity. These can be due to delays or default by the Contracting Entity
in:
a) Providing of encumbrance-free possession or access to site;
b) Discharging of obligations by the Contracting Entity - drawings, specifications,
instruction, encumbrance-free site, approving of Sub-contractor, payment, and
completion certificates;
c) Infructuous additional or tests, works, delays due to the Contracting Entity's orders,
default, or risks; or
d) Unforeseen adverse conditions than could reasonably have been assumed after due
diligence.
2. If a compensation event occurs during the execution of the Contract, the Contractor must
give an 'early warning' to the Contracting Entity, failing which no compensation would be
granted. If the Contractor proves that a compensation event would delay the completion
of work, the Contract Manager will assess whether and by how much the intended
completion date should be extended without LD. Proposals for grant of EOT should be
considered and approved by the competent authority. The Contracting Entity may finalise
the grant of EOT within a maximum period of two months on receipt of such a proposal
from the Contract Manager.
3. The payment against actual work done and claimed in the monthly bills by the Contractor
and recommended for payment by the Contract Manager may continue to be made to the
Contractor, without recovery of LD where a proposal has been received from the Contract
Manager for grant of EOT. If the EOT proposal is finally rejected, LD must be recovered.
Besides EOT, the Contractor is entitled to claim compensation for any financial loss due
to such events. In each Contract, there are specific provisions defining compensation
events, how to determine the EOT, and/or compensation.
7.4.11 Time At Large
When the Procuring Entity does not explicitly express and reserve its rights and remedies
under the contract for delays in execution, it legally forfeits his right to such remedies. Under
such circumstances Time is said to become at large and the contractor gets freed from his
obligation to complete within the specified time. To avoid such a situation, before the expiry of
originally stipulated date of completion, the Procuring Entity should extend the currency of the
agreement and set a new time limit for completion and make the extended time as essence of
the contract, stipulating that this is being done without prejudice to his right to recover
damages and other remedies as per the contract.
165Chapter 7: Execution and Monitoring of Works and Quality Assurance
7.5 Financial Monitoring
7.5.1 Financial Monitoring
Besides administering the contract with regard to its quality and completion, the contract
manager will regularly assess the financial position and exercise financial control. He will
update, on a quarterly basis, cash flow projections, cost estimates and yearly/ quarterly
milestones, and submit them to the Procuring Entity. Variations should take place with a view
to achieving economical completion of the work, and not to result in avoidable higher rates or
costs. In case of a significant number of variation orders or unexpectedly rapid cost escalation,
updation may be done more frequently. The financial statements should bring out comparisons
of the initial estimated/ tendered cost with the actual cost -- component- and activity --wise --
both with respect of quantities and value. The Procuring Entity should examine these
statements critically. If costs are likely to be exceeded, this should be anticipated, and a
revised estimate of cost prepared, with complete explanations, for approval by the CA.
7.5.2 Payments to Contractors
1. Advance Payment, as per Contract: The terms and conditions of such payments are set
out in the contract wherein the amount of advance payment is specified, as are the timing
of the payment and the amount of advance payment security to be provided by the
contractor (Please refer to para 5.3). The advance payment is set off by the Procuring
Entity in equal instalments against monthly billing statements until it has been fully set off.
Once an advance has been provided, requests for any additional advance are not
considered until the contractor liquidates the previous advance. The advance payment
security is then released.
2. Interim Payments: At a prearranged date each month, the contractor will submit a
statement in such a form as the contract manager from time to time prescribes showing
the amounts to which the contractor considers himself entitled up to the end of the month.
The contract manager's would issue an Interim Payment Certificate (IPC) after following
checks:
a) Quantity of work actually completed as of an agreed 'cut-off’ date;
b) Reconciliation with Field measurements of quantities of work completed or claimed;
c) Inventory of equipment and materials delivered to the site but not yet used in the work
(materials on site);
d) Review of claims for extra work;
e) Checking of retention amount and other recoveries;
f) Review of variations - whether these have been approved by Procuring Entity. If not,
provisional rates are to be used until final valuation sanctioned by Procuring Entity;
and
g) Price adjustments;
h) Following the bills filed by the contractor, Interim monthly payments (net of: (i)
retentions and recovery of advances; and (ii) statutory deductions (works tax, income
tax, others) would be made based on IPC. The contract manager will not be bound
to certify any payment if the net amount thereof, after all retentions and deductions,
is less than the minimum amount of IPC, if any, specified in the contract.
3. Caveat regarding Measurements and Payments: Recording of measurements of any
item of work in the measurement book and/ or its payment in the interim, on account or
final bill shall not relieve the Contractor from liabilities from any over measurement or
166Manual for Procurement of Works, Second Edition, 2025
defects noticed till completion of the defects liability period, and IPC or final completion
certificates issued are subject to modification this regard.
4. Final Bills: 86Final bill shall be submitted by the contractor in same manner as that in
interim bills within a specified time of physical completion of work and of Final Certificate
of Completion (FCC) furnished by the Department/ Ministry. Payment shall then be made
after verification of the bill on the personal certificate of the officer-in-charge of execution
of the work in the format given below:
“I …... Executing Officer of (Name of the Work), am personally satisfied that the work
has been executed as per the specifications laid down in the Contract Agreement and
the workmanship is up to the standards followed in the Industry.”
5. Deductions of Taxes: Deduction of applicable taxes at source from payments to
contractors shall be done as per the existing law in force during the currency of the
contract. As soon as possible, but not later than the date of submission of tax returns, the
procuring entity must provide the statutory certificates for the taxes deducted from the
contractor so that he can claim set-offs and refunds from the concerned authorities.
Detailed payment advice showing the calculations and reasons for the amounts disallowed
and taxes deducted must be issued to the contractor along with payment.
6. Delay in payment to the contractors
a) As cash flow is a critical requirement in a project, payments delays impact the speed
of construction and also the future bid value as this is factored into the bid by way of
an increase in interest carrying cost. Hence, ad-hoc payments of not less than 75%
of eligible running account bill/ due stage payment, shall be made within 10 working
days of the submission of the bill. This period of 10 days is for completion of all
processes including prima facie scrutiny and certification by the contract manager in-
charge (as declared by procuring entities). The remaining payment is also to be made
after final checking of the bill within 28 working days of submission of bill by the
contractor. In case the payment has not been released within 10 working days as
prescribed above, it shall be made as soon as possible, and after payment a written
explanation for the delay shall be submitted to the next higher authority within three
working days.
b) Public authorities may put in place a provision for payment of interest in case of
delayed payment of bills by more than 30 working days after submission of bill by the
contractor. Where interest is to be paid, the rate of interest should be the rate of
interest of General Provident Fund.
c) In case of unwarranted discretionary delays in payments, including failure to
authorise/ make ad hoc payment as prescribed in sub- para 2 above, responsibility
shall be fixed on the concerned officers. Project executing authorities should have a
system to monitor delays in payments and to identify such unwarranted delays.
d) The final bill should also be paid to the contractor within three months after completion
of work.
e) All project executing authorities implementing works contracts involving aggregate
payments of more than Rs.100 crore per annum shall have an online system for
monitoring of the bills submitted by contractors. Such system shall have the facility
for contractors to track the status of their bills. It shall be mandatory for all contractors
86 Rule 139(vii), GFR, 2017
167Chapter 7: Execution and Monitoring of Works and Quality Assurance
bills to be entered into the system with date of submission and date of payment. Such
system shall be put in place within one year of issue of these instructions.)
Note: In this sub-para instructions containing “shall” are mandatory; any deviation
from these instructions shall require relaxation from Ministry of Finance (for Ministries/
Departments etc.) or from the Board of Directors (for Central Public Sector
Enterprises).
7.5.3 Price Variations
1. In case the contract provides for a Price Variation Clause (PVC) or variation on any other
account, the price shall be subject to adjustment on a quarterly basis, as per such clauses,
only during the original Completion Period. With the payment of such variations, no
additional individual claim shall be admissible on account of fluctuations in market rates,
increases in taxes/ any other levies/ tolls, etc.
2. Please refer to para 5.4 for provisions of PVC (formula, base date, delivery date, time lag
for both base/ delivery dates, lower and upper cap on PVC, applicability of PVC during
after original delivery period);
3. Calculations for all variations should be based on the basic price without taxes and duties.
Therefore, contracts involving customs duty, foreign exchange fluctuations, GST, duties
and taxes, the percentage and element of duties and taxes included in the price should be
specifically stated, along with the selling rate of foreign exchange element considered in
the calculation of the price of the imported item. Taxes/ duties chargeable and payable ad-
valorem shall be charged at the nett price after variations.
4. In contracts governed by any type of variation (PVC or statutory variations), LDs (if a
percentage of the price) will be applicable on the price as varied by the operation of the
PVC. For purpose of GST, LD should be shown as deduction on the invoice value by the
contractor.
5. If the Contract provides for some inputs to be provided by the Procuring Entity free or at a
fixed rate, or advance or stage payments have been already made, the value of such
inputs and advance/ stage payments shall be excluded from the value of the work
delivered in the relevant quarter for payment/ recovery of price variation.
6. If there is a downward price trend, the Contractor may tend to hide this fact. Therefore,
while claiming payments where such variations are applicable, the contractor must submit
its calculations for each bill, even if the payment on account of these variations is zero.
Price reductions due to such variations must be passed on to the Procuring Entity. Care
should be exercised to finalise the price variation before final payment is made and after
obtaining data and documents in support of claims for escalation, if any. Where the
contractors submit no such claims, an examination of whether there has been a downward
trend in the cost, which the contractor may not bring out, is required. At any rate, an
undertaking should be obtained from the contractor to the following effect in case it
becomes necessary to make the final payment before he has submitted the required data/
documents related to the PVC:
“It is certified that there has been no decrease in the price because of a
decrease in price variation indices in the price variation formula. In the event of
any decrease of such indices that come to light later regarding the payment
claimed by us, we shall promptly notify the purchaser, and we undertake to
refund and agree to the purchaser deducting from our future payment due any
excess payment made to us in this regard.”
168Manual for Procurement of Works, Second Edition, 2025
7. Notwithstanding the above formalities, it should be appreciated that it is in the interest of
the purchaser to be vigilant about downward variation, and it is, therefore, the basic
responsibility of the purchase officers to make sure that the benefits of downward variation,
wherever it occurs, are fully availed of.
7.5.4 Payment of Taxes and Duties
1. The contractor shall be entirely responsible for all taxes, duties, fees, levies etc., incurred
until delivery of the works to the Procuring Entity.
2. If applicable under relevant tax laws and rules, the Procuring Entity shall deduct required
taxes on account of GST Reverse Charge Mechanism; Tax Deducted at Source (TDS),
and Tax Collected at Source (TCS) relating to Income Tax, labour cess, royalty etc. from
all payments due to the Contractor and deposit these to respective authorities as per the
existing law in force during the currency of the contract. In the case of foreign bidders,
Corporate tax shall be deducted at source from each invoice as per instructions/ orders of
the Government of India, Indian Income Tax Authority.
3. Goods and services Tax: GST shall be paid as per the rate at which it is liable to be
assessed or has been assessed, provided the transaction of the sale is legally liable to
such taxes and is payable as per the terms of the contract subject to the following
conditions:
a) The payment of GST and GST Cess to the contractor shall be made only on the latter
submitting a GST compliant Bill/ invoice indicating the appropriate HSN code and
applicable GST rate thereon duly supported with documentary evidence as per the
provision of relevant GST Act and the Rules made there under. The delivery shall be
shown being made in the name, location/ state, and GSTIN of the consignee only;
the location of the procurement office of the procuring entity has no bearing on the
invoicing.
b) The Procuring Entity shall not pay a higher GST rate if leviable due to any
misclassification of the HSN number or incorrect GST rate quoted mistakenly by the
Contractor. Wherever the contractor invoices the work at GST rate or HSN number,
which is different from that incorporated in the contract, payment shall be made as
per GST rate, which is lower of the GST rates incorporated in the contract or billed.
However, the Procuring Entity shall not be responsible for the contractor's tax
payment or duty under a misapprehension of the law. The Contractor shall be
required to adjust his basic price to the extent required by a higher tax rate billed as
per invoice to match the all-inclusive price mentioned in the contract.
c) In case of undue profiteering by the contractor relating to GST tax, the Procuring
Entity shall treat it as a violation of the Code of Integrity in the contract and avail any
or all punitive actions thereunder, in addition to recovery and action by the GST
authorities under the Act.
d) The contractor should issue Receipt vouchers immediately on receipt of all types of
payments along with tax invoices after adjusting advance payments, if any, as per
Contractual terms and GST Provisions.
e) Liquidated damages (refer to para 7.4.7 above for its quantum) or any other reduction
(Price Variation or Exchange Rate variation, etc.) should be shown as deductions on
the invoice and GST shall be applicable only on the net balance payment due.
Similarly, any increase due to any variation should be shown as added to the invoice
169Chapter 7: Execution and Monitoring of Works and Quality Assurance
value. The Contractor shall be required to adjust his basic price to the extent required
to adjust the applicable GST rate within the nett balance invoice value.
f) While claiming reimbursement of duties, taxes etc. (like GST) from the Procuring
Entity, as and if permitted under the contract, the contractor shall also certify that in
case it gets any refund out of such taxes and duties from the concerned authorities
later, it (the contractor) shall refund to the Procuring Entity, the Procuring Entity’s
share out of such refund received by the contractor. The Contractor shall also refund
the appropriate amount to the Procuring Entity immediately on receiving the same
from the concerned authorities.
g) All necessary adjustment vouchers such as Credit Notes/ Debit Notes for any short/
extra work delivered or revision in prices or any other reason under the contract shall
be submitted to the Procuring Entity in compliance with GST provisions.
4. For Procuring Entities eligible for availing Input Tax Credit:
a) Contractors shall provide necessary documents/ compliances / invoices for enabling
Procuring Entity (for commercially run entities) to avail of Input tax credit benefits
under GST legislation.
b) The successful bidders should upload the details of the invoices raised on Procuring
Entity on the GST Network within the prescribed time limits and undertake to adhere
to all other compliances under the GST regulations/ legislations.
c) In case any credit, refund or other benefit is denied or delayed to the Procuring Entity
due to any non-compliance of GST legislation by the bidder, such as failure to upload
the details of the supply on the GST portal, failure to pay GST to the Government or
due to non-furnishing or furnishing of incorrect or incomplete documents/ information
by the bidder, the bidder would reimburse the loss to the Procuring Entity or it shall
recover may recover the same, but not limited to, the tax loss, interest and penalty.
7.5.5 Statutory Variation Clause:
Unless otherwise stated in the contract, statutory increase in applicable GST rate only during
the original completion period (or refixed completion period – para 7.4.6-3 above) shall be to
Procuring Entity’s account. Any increase in the rates of GST beyond the original completion
date during the extended completion period (for delays attributable to the contractor) shall be
borne by the contractor, however the benefit of any reduction in GST rate must be passed on
to the Procuring Entity during the original and extended completion period. GST rate
amendments shall be considered for quoted HSN code only, against documentary evidence,
provided such an increase of GST rates after the last date of bid submission. The Procuring
Entity is not liable for any claim from the contractor on account of fresh imposition and/ or
increase (including statutory increase) of GST, customs duty, or other duties on raw materials
and/ or components used for the purposes of delivery of the contracted work taking place
during the pendency of the contract unless such liability is expressly agreed to in terms of the
contract.
7.5.6 Claims by Contractor - Compensation Events
1. As mentioned earlier, a compensation event is said to have occurred if due to neglect of
obligations by the Contracting Entity, there is a delay in completion of the work (beyond a
specified threshold), and the Contractor suffers financial losses. He is entitled to not only
claim for financial compensation (including interest, financing charges, overheads, lost
profits, and so on) as well as extension of time without the LD and denial clause. The
170Manual for Procurement of Works, Second Edition, 2025
Contractor must give an 'early warning' to the Contracting Entity before making claims
about such events.
2. A claim is a request or assertion by contractor for an entitlement or relief under any clause
of the conditions of Contract or otherwise in connection with, or arising out of, the Contract
or the execution of the Works. Through good Contract Management practices, the
Contracting Entity and Contract Manager are expected to take measures to avoid
situations that lead to the Contractor's claims. Some of these measures include
a) Understanding the Contract document and its implementation.
b) Ensuring timely payment for successful delivery.
c) Properly defining the scope of works, specifications, and timely provision of design
and drawings.
d) Providing timely possession of the site.
e) Responding promptly to the Contractor's notices.
3. The Contractor's claim should include statements of the contractual or legal basis, timely
notice and submission, and proof of entitlement and damages. The Contract Manager
should ensure the claim is substantiated with an analysis of costs and supporting
documents, such as invoices and reports. The claim must demonstrate contractual
entitlement, incurred additional costs/time, and a cause-and-effect relationship between
the Contracting Entity's default and the Contractor's damages.
4. The Contract Manager should carefully check the determination of any time or associated
costs claimed. Granting a time extension to a Contractor has implications both for the
implementation schedule and Contract price. The following are some examples:
a) Sufficient details, including an updated Contract schedule and impact schedule.
b) Reasonable demonstration of additional labour or equipment costs.
c) Justification for unabsorbed overhead costs.
d) Verification of profit claims based on the Contract.
e) Claims are based on contractual unit rates or actual historical costs.
f) Extra work claims are not improperly characterized as within scope.
7.5.7 Handling Securities
Proper procedures for safe custody, monitoring and return of bank guarantees and other
instruments may be followed. Chapter 5 has more details in this regard. Before making a final
payment or before releasing the performance bank guarantee, a ‘No Claim Certificate’
(Annexure 9) may be insisted upon from the contractor to prevent future claims. Whenever a
bank guarantee is released following due procedure and safeguards, acknowledgement
thereof should also be taken from the contractor.
7.5.8 Electronic Bill (e-Bill) Processing System
Electronic Bill (e-Bill) processing system was announced in Union Budget 2022-23, as part of
‘Ease of Doing Business and Digital India eco-system’ to bring broader transparency and
expedite the process of payments. It will enhance transparency, efficiency, and faceless-
paperless payment system. Contractors shall submit their bills electronically through the e-Bill
portal, wherever such facilities are available. Concerned authorities verify these bills for
discrepancies, authenticity, and adherence to rules. Once verified, the bills shall be approved
for payment. The approved bills are integrated with the electronic payment systems. Funds
171Chapter 7: Execution and Monitoring of Works and Quality Assurance
are allocated from the relevant budget heads. The system generates payment orders. The e-
Bill system allows real-time on-line tracking of bill processing by Contractors.
7.6 Closure of Contract
7.6.1 Completion of Construction
1. When the work has been executed and the assets created commissioned, the Contractor
should request the Contract Manager to issue a 'completion certificate'. The Contractor
may, if so specified, submit the following documents along with his request for completion
certificate: (a) completion drawings of the entire project and (b) videography/photographs
of the works covering various phases of the project. Reasonable advance information of
completion of work should be given to the concerned Ministry/ Department to enable them
to plan for taking over.
2. The Ministry/ Department may carry out detailed joint inspection of the commissioned
project with the contractor to ensure that no deficiencies are there before taking over. “As
built” drawings of the work shall be got prepared through the contractor or otherwise to
facilitate proper maintenance of the assets, additions to the assets at subsequent dates
etc. and to form part of the records of the Ministry/ Department.
3. The Contractor/ PWO/ PSU would be responsible for obtaining Completion/ Occupancy
Certificates/ Clearances and No-Objection-Certificates (NOCs), if applicable, from the
local civic authorities. For completed Work and Facilities before handing over the same to
‘Procuring Entity’ for putting them to functional use.
4. Before the completed work is taken over by the Ministry/ Department, it must ensure that
the Contractor restores to original status - the auxiliary services/ facilities (Roads,
Sewerage, utilities, including removal of garbage and debris) affected during the
construction process.
5. The Contractor/ PWO/ PSU shall hand over to Ministry/ Department concerned or its
Authorized Representative completed Work including all Services and Facilities
constructed in accordance with the Approved Plans, Specifications fulfilling all agreed
techno-functional requirements along with Inventory, As built - Drawings, Maintenance
Manual/ Standard Operating Procedure (SOP) for Equipments and Plants, all clearances
/Certificates from Statutory Authorities, Local Bodies etc.
6. On completion of the work, a Project Completion Report (PCR) shall be submitted by The
Contractor/ PWO/ PSU duly bringing out the Final Project Completion Cost, Total Time
period taken to complete the work and also completed Project Components as against the
approved Cost, Time and Project Components. The PCR shall be submitted along with
Final Project Accounts including return of unspent balance amount to the Ministry/
Department within one month of settlement of final bills of the contractors/ other agencies
deployed on the work.
7. Record keeping should be created at every work centre to facilitate proper stacking of
records pertaining to the completed works. The records should be preserved in such a
manner that the same can be retrieved whenever required.
7.6.2 Completion of Contract
The contract is not to be treated as completed until a Defects Liability Certificate (DLC) has
been issued. There will be only one DLC. It will be issued when the contractor has completed
all his obligations under the contract. While making the final payment to the contractor and
before releasing the PBG, it should be ensured that there is nothing outstanding from the
172Manual for Procurement of Works, Second Edition, 2025
contractor, because it would be difficult to retrieve such amounts after releasing the bank
guarantee/ final payment. Before the bank guarantee is released a “no claim certificate”
(Annexure 9) may be taken from the contractor. At least in large contracts (above Rs. 25
(twenty-five) lakh), it should be ensured that before the release of the bank guarantee (final
payment, if there is no bank guarantee), the following reconciliations should be done across
departments involved in the execution of the contract:
7.6.3 Material and Works Reconciliation
The Ministry/ Department should confirm that all Works ordered in the contract and paid for
have been taken over in good condition and there is no shortcoming. Full reconciliation of all
materials, machinery and assets provided to the contractor should be done including wastages
and return of scrap/ off-cuts.
7.6.4 Reconciliation with the User Department
Besides Works reconciliation, the user department should certify in writing that the following
activities (wherever applicable) have been completed by the contractor, to the department’s
satisfaction, as per the contract:
a) Achievement of performance standards of Work;
b) Installation and commissioning, if any;
a) Support service during the Defect Liability Period which has ended on ______;
b) As Made Drawings;
c) Return of all ID cards, gate passes, documents, drawings, protective gear, material,
equipment, facilities and assets loaned to contractor.
7.6.5 Payment Reconciliation
1. The Ministries/ Departments may reconcile payments made to the contractor to ensure
that there is no liability outstanding against the contractor on account of:
a) LD;
b) Price reduction enforced on account of shortfall in standards of Work;
c) Variations/ deviations from the scope of the contract;
d) Overpayments/ duplicate payments, if any;
e) Services availed from Procuring Entity and vacation thereof such as accommodation,
electricity, water, security, transport, cranes and other machinery, and so on,
f) Demurrage, insurance premiums or claims, and so on;
g) Works reconciliation;
h) Price variations;
i) Statutory duties paid on behalf of the contractor by Procuring Entity; and
2. On satisfactory reconciliation and against a “no claim certificate” (Annexure 9) from the
contractor, the bank guarantee may be released and its acknowledgement taken from the
contractor.
7.7 Resolving Disputes and Conflicts
7.7.1 Disputes
1. Normally, there should not be any scope for dispute between the Procuring Entity and
contractor after entering into a mutually agreed valid contract. However, due to various
unforeseen reasons, problems may arise during the progress of the contract leading to a
173Chapter 7: Execution and Monitoring of Works and Quality Assurance
disagreement between the procuring entity and contractor. Therefore, the conditions
governing the contract should contain suitable provisions for settlement of such disputes
or differences binding on both parties.
2. Avoidance and Minimisation of Disputes: Contractual disputes could be time-
consuming, expensive, and difficult. It is therefore in the interest of contracting parties to
work in a coordinated manner and collaboratively to avoid disputes in the first place. This
can be achieved, among other things, through developing good communications and
working relationship management with the Contractor. To minimise contractual disputes
and complication, all parties would need to effectively carry out their duties in accordance
with the Contract and brainstorm together to manage perceived and actual bottlenecks to
Contract implementation. When they do arise, every attempt should be made to find an
efficient and cost-effective resolution, including through amicable settlement. The dispute
should be managed actively and positively and at the right level/s. A quick resolution saves
time, money, and effort at later stages if the dispute remains unresolved. On the other
hand, delays in resolution can lead to rapid escalation of costs and further damage to
relationships and ultimately termination of the Contract. Sometimes the cost of litigation
exceeds the Contract price.
3. In its directives87 regarding contractual disputes, Department of Expenditure, Ministry of
Finance has stressed that:
“Government departments/ entities/ agencies should avoid and/ or amicably settle
as many disputes as possible using mechanisms available in the contract. Decisions
should be taken in a pragmatic manner in overall long-term public interest, keeping
legal and practical realities in view, without shirking or avoiding responsibility or
denying genuine claims of the other party.”
4. All disputes and differences between the parties, as to the construction or operation of the
contract, or the respective rights and liabilities of the parties on any matter in question;
dispute or difference or any other account whatsoever, but excluding the Excepted Matters
(detailed below); arising out of or in connection with the contract, whether before or after
the completion/ termination of the contract, that cannot be resolved amicably between the
Procurement Officer and the contractor within thirty (30) days from aggrieved Party
notifying the other Party of such matters, shall be hereinafter called the “Dispute”.
5. The aggrieved party shall give a ‘Notice of Dispute’ indicating the Dispute and claims citing
relevant contractual clause to the designated authority and requesting for invoking the
following dispute resolution mechanisms. The Dispute shall be attempted to be resolved
before any recourse to courts, through dispute resolution mechanisms detailed
subsequently, in the sequence as mentioned below, and the next mechanism shall not be
invoked unless the earlier mechanism has been invoked or has failed to resolve it within
the deadline mentioned therein. While processing a case for dispute
resolution/litigation/arbitration, the procuring entity is to take legal advice, at appropriate
stages.
a) Adjudication
b) 88Mediation
c) Arbitration
87 OM issued by PPD, DoE, MoF: No. F. 1/2/2024-PPD dated 03.06.2024
88 The conciliation part of the Arbitration and Conciliation Act, 1996 has been replaced by mediation by the recent
Mediation Act, 2023.
174Manual for Procurement of Works, Second Edition, 2025
7.7.2 Excepted Matters
Matters for which provision has been made in any clause of the contract shall be deemed as
‘excepted matters’ (matters not disputable/ arbitrable), and decisions of the Procuring Entity,
thereon shall be final and binding on the contractor. The ‘excepted matters’ shall stand
expressly excluded from the purview of the Dispute Resolution Mechanism, including
Arbitration. However, where the Procuring Entity has raised the dispute, this sub-clause shall
not apply. Unless otherwise stipulated in the contract, excepted matters shall include but not
limited to:
a) any controversies or claims brought by a third party for bodily injury, death, property
damage or any indirect or consequential loss arising out of or in any way related to
the performance of this Contract (“Third Party Claim”), including, but not limited to, a
Party’s right to seek contribution or indemnity from the other Party in respect of a
Third-Party Claim.
b) Issues related to the pre-award tender process or conditions.
c) Issues related to ambiguity in contract terms shall not be taken up after a contract has
been signed. All such issues should be highlighted before the signing of the contract
by the contractor.
d) Issues related to contractual action/ termination of contract etc., by the Procuring
Entity on account of fraud, corruption, debarment of contractors, criminal or wilful
negligence of the contractor etc.
e) Issues that are already under investigation by CBI, Vigilance, or any other
investigating agency or government.
f) Provisions incorporated in the contract, which are beyond the purview of The
Procurement Entity or are in pursuance of policies of Government, including but not
limited to
g) Provisions of restrictions regarding local content and Purchase Preference to Local
suppliers in terms of Make in India policy of the Government.
h) Provisions regarding restrictions on Entities from Countries having land-borders with
India in terms of the Government’s policies in this regard.
i) Purchase preference policies regarding MSEs and Start-ups
7.7.3 Adjudication
1. After exhausting efforts to resolve the Dispute with the Purchasing Officer executing the
contract on behalf of the Procuring Entity, the contractor shall give a ‘Notice of
Adjudication’ specifying the matters which are in question or subject of the dispute or
difference indicating the relevant contractual clause, as also the amount of claim item-wise
to Head of Procurement or any other authority mentioned in the contract (hereinafter called
the “Adjudicator”) for invoking resolution of the dispute through Adjudication.
2. Where necessary, e.g. matters of high value, Procuring Entity may proceed with
adjudication by a high-level committee as para 7.7.4-3-a) to e) below.
3. During his adjudication, the Adjudicator shall give the contractor an adequate opportunity
to present his case. Within 60 days after receiving the representation, the Adjudicator shall
make and notify decisions in writing on all matters referred to him. The parties shall not
initiate, during the adjudication proceedings, any mediation, arbitral or judicial proceedings
in respect of a dispute that is the subject matter of the adjudication proceedings.
175Chapter 7: Execution and Monitoring of Works and Quality Assurance
4. If not satisfied by the decision in adjudication, or if the adjudicator fails to notify his decision
within the abovementioned time-frame, the contractor may proceed to invoke the process
of Mediation as follows.
7.7.4 Mediation
1. Any party may invoke Mediation by submitting “Notice of Mediation” to the Head of the
Procuring Organisation. A neutral third party, known as the Mediator, facilitates the
mediation process. If the other party is not agreeable to Mediation, the aggrieved party
may invoke Arbitration.
2. The Mediation Act: The Mediation shall be conducted as per The Mediation Act 202389.
3. Guidelines for Mediation: Department of Expenditure, Ministry of Finance has issued
guideline on Mediation90. Government departments/ entities/ agencies are encouraged to
adopt mediation under the Mediation Act 2023 and/ or negotiate amicable settlements to
resolve disputes. Where necessary, e.g. matters of high value, they may proceed in the
manner discussed below:
a) Government departments/ undertakings may, where they consider appropriate, e.g.
in high-value matters, constitute a High-Level Committee (HLC) for dispute
resolution, which may include the following (this composition is purely indicative and
not prescriptive):
i) A retired judge.
ii) A retired high-ranking officer and/ or technical expert.
b) ln cases where a HLC is constituted, the Government department entity/ agency may
either
i) negotiate directly with the other party and place a tentative proposed solution
before the HLC or
ii) conduct mediation through a mediator and then place the tentative mediated
agreement before the HLC or
iii) use the HLC itself as the mediator.
c) This will enable decisions taken for resolving disputes in appropriate matters to be
scrutinized by a high-ranking body at arms-length from the regular decision-making
structure, thereby promoting fair and sound decisions in the public interest, with
probity.
d) There may be rare situations in long-duration works contracts where a renegotiation
of the terms may best serve public interest due to unforeseen major events. In such
circumstances, the terms of the tentative re-negotiated contract may be placed before
a suitably constituted High-Level Committee before approval by the competent
authority.
e) Approval of the appropriate authority will need to be obtained for the final accepted
solution. Section 49 of the Mediation Act 2023 is also relevant in this regard.
f) Mediation agreements need not be routinely or automatically included in procurement
contracts/ tenders. The absence of a mediation agreement in the contract does not
preclude pre-litigation mediation. Such a clause may be incorporated where it is
consciously decided to do so.
89 The Act would be fully notified at a later date. Hence some of the provisions like registration of mediators, and
MSPs/ MCI may get activated later.
90 OM issued by PPD, DoE, MoF: No. F. 1/2/2024-PPD dated 03.06.2024
176Manual for Procurement of Works, Second Edition, 2025
g) Disputes not covered in an arbitration clause and where the methods outlined above
are unsuccessful should be adjudicated by the courts.
h) General or case-specific modification in the application of the above guidelines may
be authorised by the Secretary concerned (or an officer not below the level of Joint
Secretary to whom the authority is delegated by him) in respect of Government
Ministries/ Departments, attached/ subordinate offices and autonomous bodies, or
the Managing Director in respect of Central Public Sector Enterprises including Banks
and Financial institutions etc.
4. Appointment of Mediator(s):
a) Mediators can be of any nationality and must be registered with the Mediation Council
of India (MCI) or empanelled by a court-annexed mediation centre or empanelled by
an Authority constituted under the Legal Services Authorities Act, 1987 or empanelled
by a mediation service provider (MSP) recognised by MCI.
b) Within 30 days of receipt of the “Notice of Mediation”, the Head of the Procuring
Organisation shall propose names of three likely mediators from its panel, asking the
other party to choose one as Mediator. The mutually accepted mediator shall then be
appointed to conduct mediation.
c) If parties do not agree on the mediator, they can approach a mediation service
provider ("MSP", recognised by MCI), who shall appoint a mediator based on the
suitability and preferences of the parties within 7 days.
d) As brought out in Annex-2 of Annexure 14, in contracts having an Integrity Pact,
Independent External Monitors (IEMs) can be appointed as mediators, as per the
Standard Operating Procedure (SOP) issued by the Central Vigilance Commission
(CVC).
e) After a mediator is appointed, they must disclose any conflict of interest. Either party
can seek a replacement of the Mediator after such disclosure.
5. Venue: Mediation must be conducted within the territorial jurisdiction of the Court, which
has jurisdiction to decide the dispute unless both parties agree to do it online or at any
other place.
6. The Process:
a) The Mediator independently and impartially encourages open communication and
cooperation between disputing parties to reach an amicable settlement, but he does
not have the authority to impose a settlement upon the parties to the dispute. The
parties shall be informed expressly by the mediator that he only facilitates in arriving
at a resolution of the dispute and that he shall not impose any settlement nor give
any assurance that the mediation may result in a settlement.
b) Unlike court proceedings, Mediation is informal and flexible and allows for creative
problem-solving and exploration of various solutions. The Code of Civil Procedure or
the Bhartiya Sakshya Adhiniyam (BS), 2023 shall not be binding on the mediator. The
parties can determine the mediation’s venue, manner, and language.
c) Confidentiality: All the acknowledgements, opinions, suggestions, promises,
proposals, apologies, and admissions made during the mediation; acceptance/
willingness to accept proposals in the mediation; documents prepared solely for the
conduct of mediation are strictly confidential. These can neither be relied upon as
evidence in any subsequent court proceedings nor be asked to be disclosed by any
court/ tribunal. No audio or video recording of the mediation proceedings shall be
177Chapter 7: Execution and Monitoring of Works and Quality Assurance
made or maintained by the parties or the participants, including the mediator and
mediation service provider, whether conducted in person or online, to ensure the
confidentiality of the mediation proceedings.
d) Online Mediation: The Act allows parties to opt for online/ virtual Mediation, which
shall be deemed to occur within the jurisdiction of a competent court. The Act also
requires online mediation communication mechanisms to ensure confidentiality.
e) The mediator initially meets the parties separately and communicates the view of
each party to the other to the extent agreed upon by them. He assists them in
identifying issues, advancing better understanding, clarifying priorities, exploring
areas of the parties’ responsibility, identifying common interests, and encouraging
compromise. He then meets them jointly to encourage a mutually acceptable
resolution. At any stage of the mediation proceedings, at the parties’ request, the
mediator may suggest a dispute settlement in writing.
f) Termination of Mediation: The process must be completed within 120 days, though
parties can extend it by another 60 days through mutual consent. If Mediation is not
completed within this timeline, the Mediator shall prepare a non-settlement report
without disclosing the cause of non-settlement or any other matter or thing referring
to their conduct during mediation for the parties or the Mediation Service Provider
(MSP). Mediation shall also stand terminated on a declaration of the mediator, after
consultation with the parties or otherwise, that further efforts at mediation are no
longer justified or on communication by a party(ies) in writing, addressed to the
mediator and the other parties that they wish to opt out of mediation. On termination
of Mediation, if the dispute is still alive, the aggrieved party shall be free to invoke
Arbitration.
g) Mediated Settlement Agreement (MSA): If the parties resolve the dispute and
execute a mediated settlement agreement (“MSA”), then the Mediation is successful.
An MSA is a written agreement settling some or all disputes and may extend beyond
the disputes referred to mediation. It must be valid under the Indian Contract Act,
signed by both parties and duly authenticated by the Mediator for the parties or the
MSP. The Act provides options for MSA registration. During the pendency of
proceedings, parties can also execute other agreements, settling some of the subject-
matter disputes.
h) Challenge to MSA: MSA can be challenged within 90 days on limited grounds of (a)
fraud, (b) corruption, (c) impersonation, and (d) subject matter being unfit for
Mediation.
i) Execution of MSA: If there is no challenge or a challenge is unsuccessful, the Act
ensures that the MSA is binding and enforceable, akin to a judgment or decree. This
means that if one party fails to comply with the MSA, the non-defaulting party has a
right to enforce it through the Court.
j) Costs: The parties shall equally bear all costs of mediation, including the fees of the
mediator and the charges of the mediation service provider.
k) No claim of Interest during Mediation proceedings: Parties shall not claim any
interest on claims/ counterclaims from the date of notice invoking Mediation till the
execution of the settlement agreement if so arrived. If parties cannot resolve the
dispute, either party shall claim no interest from the date of notice invoking Mediation
until the date of Termination of Mediation Proceedings.
178Manual for Procurement of Works, Second Edition, 2025
l) The parties shall not initiate, during the mediation proceedings, any arbitral or judicial
proceedings in respect of a dispute that is the subject matter of the mediation
proceedings.
7.7.5 Arbitration
1. Arbitration Agreement: If an amicable settlement is not forthcoming, provided an
Arbitration clause agreement is included in the contract, recourse may be taken to the
settlement of disputes through arbitration as per the Indian Arbitration and Conciliation Act,
1996 [Amended 201591 and 202192]. For this purpose, when the contract is with a domestic
contractor, a standard arbitration clause (hereinafter called the ‘Agreement’) may be
included in the Tender Document indicating the arbitration procedure to be followed, based
on which the Arbitration Act shall become applicable.
2. This Agreement shall continue to survive termination, completion, or closure of the
Contract for 3 years after that. Unless otherwise stipulated in the Contract, the venue of
arbitration should be the place from where the contract has been issued.
3. The Micro, Small and Medium Enterprises Development (MSMED) Act, 2006 provides
parties to a dispute (where one of the parties is a Micro or Small Enterprise) to be referred
to Micro and Small Enterprises Facilitation Council if the dispute is regarding any amount
due under Section 17 of the MSMED Act, 2006. If a Micro or Small Enterprise, being a
party to dispute, refers to the provisions in MSMED Act 2006, these provisions shall prevail
over this Agreement.
4. Government Guidelines on Arbitration in Contracts93: Department of Expenditure,
Ministry of Finance has issued following guidelines for arbitration in contracts of domestic
procurement by the Government and by its entities and agencies (including Central Public
Sector Enterprises [CPSEs], Public Sector Banks [PSBs] etc. and Government
companies):
a) Arbitration as a method of dispute resolution should not be routinely or automatically
included in procurement contracts/ tenders, especially in large contracts.
b) As a norm, arbitration (if included in contracts) may be restricted to disputes with a
value less than Rs. 10 crores. This figure is regarding the value of the dispute
(inclusive of both claims and counterclaims) not the value of the contract, which may
be much higher. It may be specifically mentioned in the bid conditions/ conditions of
the contract that arbitration will not be a method of dispute resolution in all other
cases.
c) Inclusion of arbitration clauses covering disputes with a value exceeding the norm
specified in sub-para (b) above should be based on careful application of mind and
recording of reasons and with the approval of:
i) Regarding Government Ministries/ Departments, attached/ subordinate offices
and autonomous bodies, the Secretary concerned or an officer (not below the
level of Joint Secretary) to whom authority is delegated by the Secretary.
5. Regarding CPSEs/ PSBs/ Financial institutions etc., the Managing Director.
91 https://lawmin.gov.in/sites/default/files/ArbitrationandConciliation.pdf
92 https://egazette.nic.in/WriteReadData/2021/225832.pdf
93 OM issued by PPD, DoE, MoF: No. F. 11212024-PPD dated 03.06.2024
179Chapter 7: Execution and Monitoring of Works and Quality Assurance
a) In matters where arbitration is to be resorted to, institutional arbitration may be given
preference (where appropriate, after considering the reasonableness of the cost of
arbitration relative to the value involved).
b) General or case-specific modification in the application of the above guidelines may
be authorised by the Secretary concerned (or an officer not below the level of Joint
Secretary to whom the authority is delegated by him) in respect of Government
Ministries/ Departments, attached/ subordinate offices and autonomous bodies, or
the Managing Director in respect of Central Public Sector Enterprises including Banks
and Financial institutions etc.
7.7.6 Foreign Arbitration
1. The Arbitration and Conciliation Act 1996 has provisions for international commercial
arbitration, which shall be applicable if one of the parties has its central management and
control in any foreign country.
2. When the contract is with a foreign contractor, the contractor has the option to choose
either the Indian Arbitration and Conciliation Act, 1996 or arbitration in accordance with
the provisions of the United Nations Commission on International Trade Law (UNCITRAL)
arbitration rules.
3. The arbitration clause with foreign firms should be in the form of self-contained
agreements. This is true especially for large value contracts or those for costly plant and
machinery. The venue of arbitration should be in accordance with UNCITRAL or arbitration
rules of India, whereby it may be in India or in any neutral country.
7.7.7 Notice for Arbitration
1. ‘The Appointing Authority,’ to appoint the arbitrator shall be Head of the Procuring
Organisation named in the contract and includes if there be no such authority, the officer
who is for the time being discharging the functions of that authority, whether in addition to
other functions or otherwise.
2. In the event of any dispute as per para 7.7.1 above, if the Adjudicator fails to decide within
60 days (as referred in para 7.7.3 above), or the mediation is terminated (as referred in
para 7.7.3-4 above) then, parties to the contract, after 60 days but within 120 days of
‘Notice of Dispute” shall request the Appointing Authority through a “Notice for Arbitration”
in writing requesting that the dispute or difference be referred to arbitration.
3. The “Notice for arbitration” shall specify the matters in question or subject of the dispute
or difference indicating the relevant contractual clause, as well as the amount of claim
item-wise.
7.7.8 Reference to Arbitration
After appointing Arbitrator(s), the Appointing Authority shall refer the dispute to them. Only
such dispute or difference shall be referred to arbitration regarding which the demand has
been made, together with counterclaims or set off. Other matters shall be beyond the
jurisdiction of Arbitrator(s)
7.7.9 Appointment of Arbitrator
1. Invalidation of Unilateral Appointment Clauses: On November 8, 2024, the Supreme
Court of India, in a landmark ruling, stemming from the case (2024 INSC 857) Central
Organisation for Railway Electrification (CORE) v. ECL-SPIC-SMO-MCML, ruled that:
180Manual for Procurement of Works, Second Edition, 2025
a) arbitration clauses allowing a government department or PSU to unilaterally appoint
a sole arbitrator or mandate that the private party select an arbitrator from a panel
curated exclusively by the government department or PSU are invalid.
b) PSUs or government departments cannot compel the private party to choose from
their panel of arbitrators. The private party must have the autonomy to nominate its
arbitrator independently, ensuring a balanced and fair process.
c) a private party can waive objections to bias or ineligibility under Section 12(5) of the
Act, but this waiver must be explicit, in writing, and made after the dispute arises—
not at the contract formation stage. Pre-dispute waivers embedded in contracts are
not valid.
2. Therefore, the appointing authority for arbitrators, may ask the contractor to recommend
his nominee arbitrator either from names suggested from approved panel of the Procuring
Organisation or from an approved panel of the Indian Council of Arbitration (ICA) within 30
days from the date of dispatch of the written and valid acceptance of the demand for
arbitration by the appointing authority. Guidelines of ICA Rules for Domestic Commercial
Arbitration are as under: -
a) The contractor may access the ICA's panel of arbitration through the ICA's official
webpage: https://icaindia.co.in/pdf/Engineers.pdf.
b) A formal request for nomination shall be submitted to ICA, accompanied by: -
i) A brief Statement of Claim outlining the nature and quantum of the disputes
3. A copy of the relevant contract and any supporting documents
4. A copy of the notice intimating the other party of the initiation of arbitration proceedings,
with proof of delivery (if any).
a) Ad-hoc appointment fees for the nomination and appointment of arbitrators shall be
as per the ICA Rules for Domestic Commercial Arbitration and revised from time to
time. The fee shall be submitted along with the request.
b) The nomination and appointment of arbitrators from the ICA panel shall be as per the
ICA Rules for Domestic Commercial Arbitration and shall be amended from time to
time.
5. Qualification of Arbitrators:
a) In the case of retired officers of The Procuring organisation, he shall have retired in
the rank of Senior administrative grade (or equivalent) and shall have retired at least
1 years prior and must not be over 70 years of age on the date of Notice for arbitration.
b) In the case of serving officers, they shall not be below JA Grade level.
c) In case of serving or retired officer, he should not have been:
i) involved in current vigilance/ CBI cases or against whom disciplinary or
prosecution proceedings are not in process.
ii) imposed a major penalty or two or more minor penalties or undergone
administrative action three times or more, or
iii) imposed a minor Penalty and undergone two administrative actions due to
vigilance/CBI action while in service.
d) Independence and Impartiality:
i) Retired or serving officers shall not have had an opportunity to deal with the
matters to which the contract relates or who, in the course of his/ their duties as
officers of the Procuring Organisation, expressed views on any or all the matters
181Chapter 7: Execution and Monitoring of Works and Quality Assurance
under dispute or differences. Arbitrator shall make a declaration in this regard as
per Annexure 17. The proceedings of the Arbitral tribunal or the award made by
such Tribunal shall, however, not be invalid merely because one or more
arbitrators had in the course of his service, an opportunity to deal with the matters
to which the contract relates or who in the course of his/ their duties expressed
views on all or any of the matters under dispute.
ii) Arbitrators (including from panel of ICA) shall be independent and impartial
(section 12(1) of the Arbitration Act) and disclose in writing any circumstances
(past or present relationships with parties or counsel) that may give rise to
justifiable doubts about their independence or impartiality. Disclose any direct or
indirect interest in the dispute’s outcome.
iii) Disclosure by all arbitrators shall be in format of Annexure 17.
e) An Arbitrator may be appointed notwithstanding the total no. of arbitration cases in
which he has been appointed in the past.
f) Not be other than the person appointed by The Appointing Authority and that if for
any reason that is not possible, the matter shall not be referred to arbitration at all.
6. Panel of Arbitrators: The procuring Organisation may prepare, with the approval of the
head of the procuring organisation, a panel of serving and retired officers who are willing
and qualified (as per sub-para 3 above) to be empanelled as Arbitrators based on integrity,
ethics, the experience of dealing in contracts/ tenders, temperament of taking fair
decisions, feedback, general image, career profile etc. Such persons should have
vigilance clearance and should not be working in the vigilance wing. The performance of
empanelled arbitrators should be reviewed annually. The empanelment of a retired officer
as arbitrator shall be limited to three procuring entities only, and at any given time, a
maximum of two arbitration cases shall be assigned to any arbitrator in a Procuring entity.
7. Replacement of Arbitrators: If one or more of the arbitrators appointed as above refuses
to act as arbitrator, withdraws from his office as arbitrator, or in the event of the arbitrator
dying, neglecting/ unable or unwilling or refusing to act for any reason, or his award being
set aside by the court for any reason, or in the opinion of The Appointing Authority fails to
act without undue delay, the Appointing Authority shall appoint new arbitrator/ arbitrators
to act in his/ their place in the same manner in which the earlier arbitrator/ arbitrators had
been appointed. Such a re-constituted Tribunal may, at its discretion, proceed with the
reference from the stage at which it was left by the previous arbitrator (s).
8. Appointment of Arbitrator:
a) Appointment of Arbitrator where the applicability of section 12 (5) of the Arbitration
and Conciliation Act has been waived off (refer para 1-c above):
i) In cases where the total value of all claims in question added together does not
exceed ₹ 1,00,00,000/- (Rupees One Crore), the Arbitral Tribunal shall consist of
a Sole Arbitrator who shall be a serving officer of the procuring organisation, not
below Junior Administrative Grade, nominated by the Appointing Authority. The
sole arbitrator shall be appointed within 60 days from the day when a written and
valid demand for arbitration is received by the designated Appointing Authority.
ii) In cases not covered by sub-para i) above, the Arbitral Tribunal shall consist of a
panel of three serving officers not below Junior Administrative Grade or two
serving officers not below Junior Administrative Grade and a retired officer (retired
not below the rank of Senior Administrative Grade Officer), as the arbitrators. For
this purpose, the Appointing Authority shall send a panel of at least four (4) names
182Manual for Procurement of Works, Second Edition, 2025
of Officers, which may also include the name(s) of retired Officer(s) empanelled
to work as Arbitrator, to the Contractor within 60 days from the day when a written
and valid demand for arbitration is received by the Appointing Authority. The
contractor will be asked to suggest at least 2 names out of the panel for
appointment as the Contractor’s nominee within 30 days from the date of dispatch
of the request to him. The Appointing Authority shall appoint at least one out of
them as the Contractor’s nominee and shall also simultaneously appoint the
balance number of arbitrators either from the panel or from outside the panel, duly
indicating the ‘presiding arbitrator’ from amongst the 3 arbitrators so appointed.
The Appointing Authority shall complete this exercise of appointing the Arbitral
Tribunal within 30 days from the receipt of the names of the Contractor’s
nominees. While nominating the arbitrators, it shall be necessary to ensure that
one of them is from the Finance/ Accounts Department (officer of Selection Grade
of the Finance/ Accounts Department shall be considered as of equal status to
the officers in Senior Administrative Grade of other departments for appointment
of an arbitrator).
9. The serving officer working in arbitral tribunal in the ongoing arbitration cases as per sub-
para i) and ii) above can continue as arbitrator in the tribunal even after his retirement.
a) Appointment of Arbitrator where the applicability of Section 12 (5) of the Arbitration
and Conciliation Act has not been waived off:
i) In cases where the total value of all claims in question added together does not
exceed ₹ 50,00,000/- (Rupees Fifty Lakh), the Arbitral Tribunal shall consist of a
sole arbitrator. For this purpose, the Appointing Authority will send a panel of at
least four (4) names of retired Officer(s) (retired not below the rank of Senior
Administrative Grade Officer) empanelled to work as Appointing Authority
Arbitrator duly indicating their retirement dates to the Contractor within 60 days
from the day when a written and valid demand for arbitration is received by the
Appointing Authority. The contractor will be asked to nominate to the Appointing
Authority at least 2 names of arbitrators. These can be out of the panel suggested
by the approving authority or from an approved panel of the Indian Council of
Arbitration (ICA – refer sub-para 2 above) within 30 days from the date of dispatch
of the request by the Appointing Authority. The Appointing Authority shall appoint
at least one out of them as the arbitrator within 30 days from the receipt of the
names of the Contractor’s nominees.
10. In cases where the total value of all claims in question added together exceeds ₹
50,00,000/- (Rupees Fifty Lakh), the Arbitral Tribunal shall consist of a Panel of three (3)
arbitrators. For this purpose, the Appointing Authority will send a panel of at least four (4)
names of retired Officers (retired not below the rank of Senior Administrative Grade Officer)
empanelled to work as Arbitrator duly indicating their retirement date to the Contractor
within 60 days from the day when a written and valid demand for arbitration is received by
the Appointing Authority. The contractor will be asked to nominate to the Appointing
Authority at least 2 names of arbitrators. These can be out of the panel suggested by the
approving authority or from an approved panel of the Indian Council of Arbitration (ICA –
refer sub-para 2 above) within 30 days from the date of dispatch of the request by the
Appointing Authority. The Appointing Authority shall appoint at least one out of them as
the Contractor’s nominee and shall also simultaneously appoint his nominee arbitrator
either from the panel or from outside the panel. The Appointing Authority shall complete
183Chapter 7: Execution and Monitoring of Works and Quality Assurance
this exercise of appointing the Arbitral Tribunal within 30 days of the receipt of the names
of the Contractor’s nominees. Two selected arbitrators are free to select a presiding
arbitrator (3rd arbitrator) within thirty (30) days from their appointment. The presiding
arbitrator may be selected from an approved panel of the procuring organisation or from
an approved panel of the Indian Council of Arbitration (as per mutual agreement), which
will be approved by the appointing authority within 30 days of receipt of such name.
a) If the contractor does not suggest his nominees for the arbitral tribunal within the
prescribed timeframe, or the two appointed arbitrators fail to nominate a presiding
arbitrator, the Appointing Authority shall proceed with the appointment of the arbitral
tribunal within 30 days of the expiry of such time provided to the contractor.
b) Failure to Appoint Arbitrators: If The Appointing Authority fails to appoint an
arbitrator, or two appointed arbitrators fail to agree on the third arbitrator, within 60
(sixty) days, then subject to the survival of this Arbitration Agreement, in international
commercial arbitration, the Supreme Court of India shall designate the arbitral
institution for the appointment of arbitrators. In case of national arbitrations, the High
Court shall designate arbitral institutions. The Arbitration Council of India must have
graded these arbitration institutions. These arbitral institutions must complete the
selection process within thirty days of accepting the request for the arbitrator’s
appointment.
7.7.10 The Arbitral Procedure
1. Effective Date of Entering Reference: The arbitral tribunal shall be deemed to have
entered the reference on the date on which the arbitrator(s) have received notice of their
appointment. All subsequent time limits shall be counted from such date.
2. Seat and Venue of Arbitration: The seat of arbitration shall be the place from which the
Letter of Award or the contract is issued. The venue of arbitration shall be the same as the
seat of arbitration. However, in terms of section 20 of The Arbitration Act, the arbitrator, at
his discretion, may determine a venue other than the seat of the arbitration without in any
way affecting the legal jurisdictional issues linked to the seat of the arbitration. The Arbitral
Tribunal shall decide any matter related to Arbitration not covered under this Arbitration
Agreement as per the provisions of The Arbitration Act.
3. If the Adjudication and/ or Mediation mechanisms had not been exhausted before such
reference to Arbitration, the Arbitrator should ask the aggrieved party to approach
designated authority for such mechanisms before the Arbitration proceedings are started.
4. The claimant shall submit to the Arbitrator(s) with copies to the respondent his claims
stating the facts supporting the claims along with all the relevant documents and the relief
or remedy sought against each claim within 30 days from the date of appointment of the
Arbitral Tribunal unless it has granted an extension.
5. On receipt of such claims, the respondent shall submit its defence statement and
counterclaim (s), if any, within 60 days of receipt of the copy of claims, unless the Arbitral
Tribunal has granted an extension.
6. No new claim shall be added during proceedings by either party. However, a party may
amend or supplement the original claim or defence thereof during arbitration proceedings
subject to acceptance by the Tribunal having due regard to the delay in making it.
7. Statement of claims, counterclaims and defence shall be completed within six months from
the effective reference date.
184Manual for Procurement of Works, Second Edition, 2025
8. Oral arguments to be held on a day-to-day basis: Oral arguments as far as possible shall
be heard by the arbitral tribunal on a day-to-day basis, and no adjournments shall be
granted without sufficient cause. The arbitrator (s) may impose an exemplary cost on the
party seeking adjournment without sufficient cause.
9. Award within 12 (twelve) months: The arbitral tribunal is statutorily bound to deliver an
award within 12 (twelve) months from the date when the arbitral tribunal enters reference.
The award can be delayed by a maximum of six months only under exceptional
circumstances where all parties consent to such extension of time. The court's approval
shall be required for further extension if the award is not made out within such an extended
period. During the period of an application for extension of time is awaiting before the court,
the arbitrator's proceedings shall continue until the disposal of the application.
10. Cost of Arbitration and Fees of the Arbitrators: The concerned parties shall bear the
cost of arbitration in terms of section 31 (A) of The Arbitration Act. The cost shall inter-alia
include fees of the Arbitrator. Further, the fees payable to the Arbitrator shall be governed
by instructions issued on the subject by the Procuring Entity and/ or the Government from
time to time, in line with the Arbitration and Conciliation Act, irrespective of the fact whether
the Arbitrator is appointed by the Procuring Entity or the Government under this clause or
by any court of law unless directed explicitly by Hon'ble court otherwise on the matter.
However, if any of the three arbitrators is selected from the Panel of Indian Council of
Arbitration (ICA), the fee of the arbitrators shall be determined as per the rates
fixed/revised by the Indian Council of Arbitration from time to time and the fee shall be
borne equally by both the parties. A sole arbitrator shall be entitled to a 25% extra fee over
such a prescribed fee. The arbitrator shall be entitled to a 50 percent extra fee if the award
is made within 6 months in terms of provisions contained in section 29(A) (2) of The
Arbitration Act. Besides the above, Arbitrator shall also be entitled to this extra fee in cases
where Fast Track Procedure in terms of section 29 (B) of The Arbitration Act is followed.
11. Fast Track Procedure: The parties to arbitration may choose to opt for a fast-track
procedure either before or after the commencement of the arbitration. The award in fast-
track arbitration is to be made out within six months, and the arbitral tribunal shall be
entitled to additional fees. The salient features of the fast-track arbitration are:
a) The dispute is to be decided based on written pleadings only. Procuring Entities may
encourage Fast Track Procedure based on written pleadings only.
b) Arbitral Tribunal shall have the power to call for clarifications in addition to the written
pleadings where it deems necessary.
c) An oral hearing may be held only if all the parties request or the arbitral tribunal
considers it necessary.
d) The parties are free to decide the fees of the arbitrator(s) for fast-track procedure.
12. Powers of Arbitral Tribunal to grant Interim Relief: The parties to arbitration may approach
the arbitral tribunal for seeking interim relief on the grounds available under section 9 of
the act. The tribunal has the powers of a court while making interim awards in the
proceedings before it.
13. Confidentiality: As provided in Section 42A of The Arbitration Act, all the details and
particulars of the arbitration proceedings shall be kept confidential, except in certain
situations like if the disclosure is necessary for the implementation or execution of the
arbitral award.
185Chapter 7: Execution and Monitoring of Works and Quality Assurance
14. Obligation During Pendency of Arbitration: Performance of the contract shall, unless
otherwise directed by the Procuring Entity, continue during the arbitration proceedings,
and no payment due or payable by the Procuring Entity shall be withheld on account of
such proceedings, provided; however, it shall be open for Arbitral Tribunal to consider and
decide whether or not the performance of the contract or payment therein should continue
during arbitration proceedings.
15. The Arbitral Award: In the case of the Tribunal, comprising of three members, any ruling
on award shall be made by a majority of members of the Tribunal. In the absence of such
a majority, the views of the Presiding Arbitrator shall prevail. The arbitral award shall state
item-wise the sum and reasons upon which it is based. The analysis and reasons shall be
detailed enough so that the award can be inferred from it. It shall be further a term of this
arbitration agreement that where the arbitral award is for the payment of money, no interest
shall be payable on whole or any part of the money for any period till the date on which
the award is made in terms of Section 31 (7) (a) of The Arbitration Act. The award of the
arbitrator shall be final and binding on the parties to this contract. A party may apply for
corrections of any computational errors, typographical or clerical errors, or any other error
of similar nature occurring in the award or interpretation of a specific point of the award to
the Tribunal within 60 days of receipt of the award. A party may apply to the Tribunal within
60 days of receiving the award to make an additional award as to claims presented in the
arbitral proceedings but omitted from the arbitral award.
7.7.11 Challenging Arbitration/ Judicial Awards
1. ln matters covered by arbitration/ court decisions94, the guidance contained in ‘General
Instructions on Procurement and Project Management’ dated 29.10.202195 should be kept
in mind. In cases where there is a decision against the government/ public sector
enterprise, the decision to challenge/ appeal should not be taken routinely, but only when
the case genuinely merits going for challenge/ appeal and there are high chances of
winning in the court/ higher court.
2. In cases where the Ministry/ Department has challenged an arbitral award and, as a result,
the amount of the arbitral award has not been paid, 75% of the arbitral award (which may
include interest up to date of the award) shall be paid by the Ministry/ Department to the
contractor/ concessionaire against a Bank Guarantee (BG). The BG shall only be for the
said 75% of the arbitral award as above and not for the interest which may become payable
to the Ministry/ Department should the subsequent court order require refund of the said
amount.
3. The payment may be made into a designated Escrow Account with the stipulation that the
proceeds will be used first, for payment of lenders' dues, second, for completion of the
project and then for completion of other projects of the same Ministry/ Department as
mutually agreed/ decided. Any balance remaining in the escrow account after settlement
of lenders' dues and completion of projects of the Ministry/ Department may be allowed to
be used by the contractor/ concessionaire with the prior approval of the lead banker and
the Ministry/ Department. If otherwise eligible and subject to contractual provisions,
retention money and other amounts withheld may also be released against BG.]96
94Notified vide OM No. F.1/2/2024-PPD issued by Department of Expenditure dated 03.06.2024
95Notified vide OM No. F.1/1/2021-PPD issued by Department of Expenditure dated 29.10.2021.
96New rule 227A of GFR, 2017 notified vide OM No. F.1/1/2021-PPD issued by Department of Expenditure dated
29.10.2021.
186Manual for Procurement of Works, Second Edition, 2025
4. Arbitration /court awards should be critically reviewed. In cases where there is a decision
against government / public sector enterprise (PSE), the decision to appeal should not be
taken in a routine manner, but only when the case genuinely merits going for the appeal
and there are high chances of winning in the court/ higher court. There is a perception that
such appeals etc. are sometimes resorted to postpone the problem and defer personal
accountability. Casual appealing in arbitration / court cases has resulted in payment of
heavy damages / compensation / additional interest cost, thereby causing more harm to
the exchequer, in addition to tarnishing the image of the Government.
5. The Organisation should monitor the success rate of appealing against arbitration awards.
There should be a clear delegation to empower officials to accept arbitration / court orders.
A special board / committee may be set up to review the case before an appeal is filed
against an order. Arbitration /court awards should not be routinely appealed without due
application of mind on all facts and circumstances including realistic probability of success.
The board / committee or other authority deciding on the matter shall clarify that it has
considered both legal merits and the practical chances of success and after considering
the cost of, and rising through, litigation / appeal / further litigation as the case may be, it
is satisfied that such litigation / appeal / further litigation cost is likely to be financially
beneficial compared to accepting the arbitration / court award.
6. Statistics have shown that in cases where the arbitration award is challenged, a large
majority of cases are decided in favour of the contractor. In such cases, the amount
becomes payable with the interest, at a rate which is often far higher than the government's
cost of funds. This results in huge financial losses to the government. Hence, in aggregate,
it is in public interest to take the risk of paying a substantial part of the award amount
subject to the result of the litigation, even if in some rare cases of insolvency etc. recovery
of the amount in case of success may become difficult.
7. The only circumstances in which such payment need not be made is where the contractor
declines, or is unable, to provide the requisite bank guarantee and/or fails to open an
escrow account as required. Persons responsible for not adhering to are liable to be held
personally accountable for the additional interest arising, in the event of the final court
order going against the procuring entity97.
7.7.12 Mechanism for Resolution of Commercial Disputes between CPSEs and
Government Agencies
1. Introduction: To streamline and ensure the effective resolution of commercial disputes
between Central Public Sector Enterprises (CPSEs) and Government
Departments/Organizations, the Government of India has established the Administrative
Mechanism for Resolution of CPSEs Disputes (AMRCD). This mechanism, effective from
May 22, 2018, supersedes the earlier Permanent Machinery of Arbitration (PMA), and
applies to all commercial disputes concerning the interpretation and application of
provisions in contracts between:
a) CPSEs inter se, and
b) CPSEs and Government Departments/Organizations, excluding disputes related to
Railways, Income Tax, Customs, and Excise Departments.
2. Structure of AMRCD: The AMRCD operates on a two-tier structure:
97 As notified under para 16.1 to 16.5 of OM No.F.1/1/2021-PPD issued by Department of Expenditure dated
29.10.2021.
187Chapter 7: Execution and Monitoring of Works and Quality Assurance
a) First Level (Tier 1): Disputes are initially referred to a Committee comprising the
Secretaries of the respective Administrative Ministries/Departments involved and the
Secretary of the Department of Legal Affairs. The Financial Advisors (FAs) of the
concerned Ministries/Departments represent the issues before this Committee.
b) Second Level (Tier 2): If the dispute remains unresolved at the first level, it is
escalated to the Cabinet Secretary, whose decision is final and binding.
3. Procedure: The claiming party must approach the Financial Advisor of its Administrative
Ministry/Department to initiate the dispute resolution process. Meetings are held to
examine and resolve the dispute on its merits. The Committee is expected to finalize its
decision within three months of receiving the dispute notice. An aggrieved party can appeal
the first-level decision to the Cabinet Secretary within 15 days.
4. Inclusion in Contracts: All CPSEs must include a specific clause in relevant contracts to
ensure that disputes are resolved through the AMRCD as stipulated in the DPE98 O.M.
Ongoing contracts should also be amended to incorporate this clause.
7.8 Breach and Termination of Contract
7.8.1 Breach of Contract
1. In case the contractor is unable to honour important stipulations of the contract or gives
notice of his intention of not honouring or his inability to honour such a stipulation, a breach
of contract is said to have occurred. Mostly, such breaches occur in relation to the
performance of the contract in terms of inability to complete the Work within stipulated time
or to meet other obligations. It could also be due to breach of ethical standards or any
other stipulation that affects Procuring Entity seriously. As soon as a breach of contract is
noticed, a show cause notice should be issued to the contractor, giving two weeks’ notice,
reserving the right to implement contractual remedies. If there is an unsatisfactory
resolution, remedial action may be taken immediately.
2. In the event of a breach of contract by the contractor in a works contract, the procuring
entity can invoke one or more of following options, some of which ensure that the issue
can be resolved, and construction project can proceed smoothly. The procuring entity can:
a) Temporary suspension: order temporary suspension of work at the 'risk and cost'
of the contractor if he is proving to be recalcitrant in meeting its obligations under the
Contract.
b) Withholding Payments: withhold payments to the contractor until the breach is
resolved. This provides leverage to ensure that the contractor addresses the issues
and fulfils their contractual obligations.
c) Imposing Liquidated Damages: impose liquidated damages on the contractor for
delays. These damages are predetermined and specified in the contract, providing a
financial penalty for non-compliance.
d) Rectification of Defects: require the contractor to rectify any defects or issues
arising from the breach. This may involve additional work or corrections to ensure
that the project meets the required standards.
98 No. 4(1)/2013-DPE(GM)/FTS-1835 dated May 22, 2018, with latest amendment issued by Department of Public
Enterprises vide OM No. 05/0003/2019-FTS-10937 dated 14.12.2022.
188Manual for Procurement of Works, Second Edition, 2025
e) Dispute Resolution: initiate dispute resolution mechanisms, such as mediation or
arbitration, to address the breach. These processes can help resolve conflicts and
ensure that the project can continue without termination.
f) Completing the Work Otherwise: upon such terms and in such manner as he
deems appropriate, take over the site to complete the works himself or with another
contractor (at the risk and cost of defaulter) and use the Contractor's materials,
equipment, and temporary works as deemed proper. In small-value contracts, instead
of risk and cost, a prefixed percentage recovery may be provided in the Contract.
This may involve subcontracting specific tasks or hiring additional contractors to
ensure project completion.
g) Performance Security: invoke the performance security provided by the contractor.
This security, often in the form of a bank guarantee, ensures that the procuring entity
can recover costs associated with the breach.
h) Partial or full Termination: terminate contract partially or fully on account of default
by the contractor. In partial termination, the Contractor should continue to fulfil the
contract to the extent not terminated.
3. If termination takes place because of a fundamental breach/ insolvency on the part of the
contractor, the contract manager shall issue a certificate for the value of work done,
deducting from the amounts in respect of: (a) advance payments; (b) any recoveries; (c)
taxes as due; and (d) percentage to apply to the work not completed as indicated in the
contract data. If the total amount due to the procuring entity exceeds that due to the
contractor, the difference will be a debt payable to the procuring entity. The CA may
terminate a contract in the following cases. The Procuring Entity is then free to take over
the site and complete the works himself or with another contractor and use the contractor's
materials, equipment, temporary works as he/ they think proper.
7.8.2 Termination of Contract for Default
1. Without prejudice to any other remedy for breach of contract, such as removal from the list
of enlisted contractors, by written notice of default sent to the Contractor, the contract may
be terminated in whole or in part, if the contractor has:
a) seriously or repeatedly breached the contract, including;
i) failure to complete the work within the time period(s) specified in the contract, or
any extension thereof granted.
2. failure to obey instructions in relation to his progress or defective work, material or plant.
3. breach of the prohibition against sub-contracting.
4. Failure to supply sufficient and suitable constructional plant, temporary works, labour and
material as proposed in the work programme.
5. Substantial suspension of work for more than the specified days without authority from the
contract manager and failure to proceed with the work within the specified days of receipt
of notice from the contract manager.
6. Failure to comply with the requirements regarding JVs.
a) committed fraud;
b) If the contractor fails to perform any other obligation under the contract within the
period specified in the contract or any extension thereof granted;
c) If the contract is terminated in whole or in part, recourse may be taken to any one or
more of the following actions:
189Chapter 7: Execution and Monitoring of Works and Quality Assurance
i) Forfeiture of the performance security.
7. Upon such terms and in such manner as it deems appropriate, taking over the site and to
complete the works himself or with another contractor (risk Purchase) and use the
contractor's materials, equipment, temporary works as he/ they think proper. In small value
contracts, instead of Risk Purchase, a fixed percentage recovery may be provided in the
SBD.
8. However, the contractor shall continue to fulfil the contract to the extent not terminated.
9. Before cancelling the contract and taking further action, it may be desirable to obtain legal
advice.
7.8.3 Termination of Contract for Insolvency
If the contractor informs the procuring entity of his bankruptcy or insolvency or liquidation ,
the contract may be terminated, by giving a written notice to the contractor, without
compensation to the contractor, provided that such termination will not prejudice or affect any
right of action or remedy which has accrued or will accrue thereafter to Procuring Entity.
7.8.4 Determination of Contract for Default/ Convenience of Procuring Entity or
for Frustration of Contract
1. After placement of the contract, there may be an unforeseen situation compelling
Procuring Entity to terminate the contract, in whole or in part for its (the Procuring Entity’s)
convenience, by serving written ‘Notice for Determination of Contract’ on the contractor at
any time during the currency of the contract. The notice shall indicate inter-alia, that the
termination is for the convenience of the Procuring Entity or the frustration of the contract
and also the extent to which the contractor’s performance under the contract is terminated,
and the date with effect from which such termination shall become effective.
2. Such termination shall not prejudice or affect the rights and remedies accrued and/ or shall
accrue after that to the Parties.
3. Unless otherwise instructed by the Procuring Entity, the contractor shall continue to
perform the contract to the extent not terminated.
4. All warranty obligations, if any, shall continue to survive despite the termination.
5. Determining the contract by Procuring Entity for its convenience is not its legal right – and
the contractor must be persuaded to acquiesce. Depending on the merits of the case, the
contractor may have to be suitably compensated on mutually agreed terms for terminating
the contract. Suitable provisions to this effect should be to be incorporated in the tender
document as well as in the resultant contract.
6. The executed Works and incidental Goods/ Services that are complete and ready in terms
of the contract for execution/ performance within thirty days after the contractor’s receipt
of the notice of termination shall be accepted by the Procuring Entity as per the contract
terms. For the remaining Works and incidental Goods/ Services, the Procuring Entity may
decide:
a) To get any portion of the balance completed and delivered at the contract terms,
conditions, and prices; and/ or
b) To cancel the remaining portion of the Works and incidental Goods/ Services and
compensate the contractor by paying an agreed amount for the cost incurred by the
contractor, if any, towards the remaining portion of the Works and incidental Goods/
Services.
190Manual for Procurement of Works, Second Edition, 2025
7.8.5 Frustration of Contract
Upon a supervening cause occurring after the effective date of the contract, including a change
in law, beyond the control of either party whether because of the Force Majeure clause or
within the scope of section 56 of the Indian Contract Act, 1872, that makes it impossible to
perform the contract within a reasonable timeframe, the affected party shall give a ‘Notice of
Frustration Event’ to the other party giving justification. The parties shall use reasonable efforts
to agree to amend the contract, as may be necessary to complete its performance. However,
if the parties cannot reach a mutual agreement within 60 days of the initial notice, the Procuring
Entity shall issue a ‘Notice for Determining the contract’ and terminate the contract as per para
7.8.4 above, due to its frustration, without repercussions on either side.
7.8.6 Limitation of Liabilities
1. Except in cases of criminal negligence or wilful misconduct, the aggregate liability of the
contractor to the Procuring Entity, whether under the contract, in tort or otherwise, shall
not exceed the total Contract Price, provided that this limitation shall not apply to the cost
related to defect liabilities, or to any obligation of the contractor to indemnify the Procuring
Entity concerning legal/ statutory infringement.
2. Neither Party shall be liable to the other Party, whether in contract, tort, or otherwise, for
any indirect or consequential loss or damage, loss of use, loss of production, or loss of
profits or interest costs, which the other Party may suffer in connection with the Contract,
provided that this exclusion shall not apply to any obligation of the Contractor to pay
liquidated damages to the Procuring entity.
7.9 Execution and Monitoring of Works and Quality Assurance –
Risks and Mitigation
Risks Mitigation
a) Substitution of key experts in The Procuring Entity needs to deal with such
implementation: When the contract requests strictly in terms of contract provisions
progresses, over a period of time, the which permit substitution of key experts in
request for substitution of key staff is exceptional circumstances such as “death or
made by the firm citing reasons of medical incapacity”. Substitution of a person
non-availability, health, and so on. “of equivalent or better qualification and
experience” should receive utmost scrutiny
and compliance, as diluting such a provision
leads to loss of quality of work and a serious
integrity issue. Such substitution should not
give any undue financial benefit to the
contractor.
b) Cost overruns in time-based This type of contract should include an upper
contracts: Time and Cost over-run is limit of total payments to be made to the
a major risk in Time-based contracts, contractors for the assignment to safeguard
as the payment is based on time and against excessive prolonging of time and
delay may result in unanticipated payments. After this limit is reached, or the
benefit to the contractor and the period of completion is exceeded, CA should
assignment may get delayed. review justification for extension of the
contract. One of the ways to prevent cost
191Chapter 7: Execution and Monitoring of Works and Quality Assurance
Risks Mitigation
overruns in time-based contract is to require
Procuring Entities acquire contract
management capacity to manage service
contracts before contract is signed. It is
Procuring Entity’s mandate to monitor
contractor’s contracts and also to request
contractors to keep producing progress reports
and highlighting the status of their contract as
it reaches milestones such as 50% and 80%
progress. Procuring Entity must carefully
authorise mobilisation and demobilisation of
key experts and examine the time sheets and
other reimbursable expenditures.
c) Advance payments: This is an area Any mobilisation or other advance payments
of risk in public procurement with should be interest bearing and should be only
undue and unintended benefits to the for justifiable cases. Terms of such advances
contractor, which vitiates the original should be expressly stated in the NIT/tender
selection criteria. documents. The advance payment may be
released in not less than two stages depending
upon the progress of the contract. Advance
should be progressively adjusted against bills
cleared for payment. Interest should be
charged on delayed recoveries irrespective of
the reason stated.
d) Contract changes and Contract modifications and renegotiations
renegotiations: This is also a risk should not substantially alter the nature of the
area, where the procuring entity may contract. It should not vitiate the basis of the
not get what it contracted and paid for selection of the contractor. It should not give
or may pay for what it has not undue or unintended benefits to the contractor.
received. On the other hand, the However, for any changes caused by the
contractor may not get timely or procuring entity, the contractor should be
proper amendments due to changes adequately and timely compensated within the
asked by the procuring entities. contractual terms.
e) Supervising agencies/individuals are A contract management manual or operating
unduly influenced to alter the contents procedure should be prepared for large value
of their reports so changes in quality, contracts. There should be inbuilt systems of
performance, equipment, and checks and balances.
characteristics go unnoticed. All large contracts should be formally
f) Contractor’s claims are false or reconciled for closure to ensure that the scope
inaccurate and are protected by that of the work and warranty/defect liability period
in-charge of revising them. is completed. This should include the dispute
g) Payment to the contractor is resolution forum for resolving disputes in a
delayed intentionally or otherwise.
192Manual for Procurement of Works, Second Edition, 2025
Risks Mitigation
h) Contractor gets final payment, but fixed timeframe with provision of escalation
contract closure has not been formally level.
done. As a result, material/assets All payments/recoveries should also be
loaned to him are not accounted for. reconciled. It should also be ensured that
i) Every dispute lands up in arbitration material/assets loaned to him including
or court cases since the procuring security passes are accounted for.
entity is reluctant to grant
compensation for its own lapses to the
contractor.
j) Agents/ Sub-contractors and Normally Procuring Entity should deal with the
partners, chosen in a non- contractor directly and not though agents. If
transparent way, are unaccountable foreign contractors in GTE contracts use
or are used to channel bribes. agents, then the relationship between
contractor and Agent should be as per the
contract (and Integrity Pact Annexure 14, if
applicable) in conformity with paras 4.6.2-9,
8.2.3 and 8.8. Sub-contracting should be
regulated as per the contract and para 7.2.6-6.
193Manual for Procurement of Works, Second Edition, 2025
Chapter 8: Registration/ Enlistment of Contractors and
Governance Issues
8.1 Contractor Relationship Management
Contractor Relationship Management comprises the following functions:
a) Ensuring compliance of contractors to the Code of Integrity for Public Procurement
and Integrity Pact (CIPP) if stipulated in Bid Documents;
b) Removal from the list of registered/ enlisted contracts and debarment of firms;
c) Development of new sources and registration/ enlistment of contractors.
8.2 Code of Integrity for Public Procurement (CIPP)99
8.2.1 Introduction
Public procurement is perceived to be prone to corruption and ethical risks. To mitigate this,
the officials of Procuring Entities involved in procurement and the bidders/ contractors must
abide by the following Code of Integrity for Public Procurement (CIPP). All Procuring officials
may be asked to sign declarations to this effect periodically and in various Procurement
decisions (including Preparation of Estimates). The bidders/ contractors should be asked to
sign a declaration about abiding by a Code of Integrity for Public Procurement (including sub-
contractors engaged by them) in enlistment applications and in bid documents, with a warning
that, in case of any transgression of this code, its name is not only liable to be removed from
the list of enlisted contractors, but it would be liable for other punitive actions such as
cancellation of contracts, debarment or action in Competition Commission of India, and so on.
8.2.2 Code of Integrity for Public Procurement
Procuring authorities as well as bidders, contractors and consultants should observe the
highest standard of ethics and should not indulge in the following prohibited practices, either
directly or indirectly, at any stage during the procurement process or during execution of
resultant contracts:
a) “Corrupt practice”: making offers, solicitation or acceptance of bribe, rewards or gifts
or any material benefit, either directly or indirectly, in exchange for an unfair advantage
in the procurement process or to otherwise influence the procurement process or
contract execution;
b) “Fraudulent practice”: any omission or misrepresentation that may mislead or
attempt to mislead so that financial or other benefits may be obtained or an obligation
avoided. This includes making false declaration or providing false information for
participation in a tender process or to secure a contract or in execution of the contract;
c) “Anti-competitive practice”: any collusion, bid rigging or anti-competitive
arrangement, or any other practice coming under the purview of The Competition Act,
2002, between two or more bidders, with or without the knowledge of the procuring
entity, that may impair the transparency, fairness and the progress of the procurement
process or to establish bid prices at artificial, non-competitive levels;
99 Rule 175 (1), GFR 2017
195Chapter 8: Registration/ Enlistment of Contractors and Governance Issues
d) “Coercive practice”: any coercion or any threat to impair or harm, directly or
indirectly, any party or its property to influence the procurement process or affect the
execution of a contract;
e) “Conflict of interest” (COI): any personal, financial, or business relationship
between the bidder and any personnel of the procuring entity who are directly or
indirectly related to the procurement or execution process of the contract, which can
affect the decision of the procuring entity directly or indirectly;
f) “Undue Advantage”: improper use of information obtained by the bidder from the
procuring entity with an intent to gain an unfair advantage in the procurement process
or for personal gain. This also includes if the bidder (or his allied firm100) provided
services for the need assessment/ procurement planning101 of the tender process in
which he is participating;
g) “Obstructive practice”: materially impede the procuring entity’s investigation of a
procurement process either by deliberately destroying, falsifying, altering; or by
concealing of evidence material to the investigation; or by making false statements or
by threatening, harassing or intimidating any party to prevent it from disclosing its
knowledge of matters relevant to such investigation or from pursuing the investigation;
or by impeding the procuring entity’s rights of audit or access to information;
8.2.3 Obligations for Proactive Disclosures102
Whether asked or not, in a tender document:
a) Procuring authorities103 as well as bidders, contractors and consultants, should suo-
moto proactively declares any conflicts of interest as per para 8.2.2 (e) above – pre-
existing or as soon as these arise at any stage in any procurement process or
execution of contract (Please also refer to para4.6.2-9).
b) Bidders must declare any previous transgressions with respect to the provisions of
para 8.2.2 above with any entity in any country during the last three years or of being
debarred by any other procuring entity.
c) The bidder/ contractor must disclose any commissions or fees that may have been
paid or are to be paid to agents, representatives, or commission agents concerning
the selection process or execution of the Contract. The information disclosed must
include the name and address of the agent, representative, or commission agent, the
amount and currency, and the purpose of the commission or fee in a format given in
the Tender Document.
8.2.4 Punitive Provisions104
Without prejudice to and in addition to the rights of the procuring entity to other penal
provisions as per the bid documents or contract, if the procuring entity concludes that a
100 Please see definition in ‘Procurement Glossary” section
101 inter-alia need assessment, preparation of - feasibility/ cost estimates/ Detailed Project Report (DPR), design/
technical specifications, terms of reference (ToR)/ Activity Schedule/ schedule of requirements or the Tender
Document etc.
102 To encourage voluntary disclosures, such declarations would not mean automatic disqualification for the bidder
making such declarations. The declared conflict of interest may be evaluated, and mitigation steps, if possible, may
be taken by the procuring entity. Similarly, voluntary reporting of previous transgressions of the Code of Integrity
elsewhere may be evaluated, and barring cases of debarment, an alert watch may be kept on the bidder’s actions
in the tender and subsequent contract.
103 Please refer to example in para 7.5-5 for clarification of COI relating to personnel of procuring Entity.
104Rule 175(2), GFR, 2017
196Manual for Procurement of Works, Second Edition, 2025
(prospective) bidder/ contractor, directly or through an agent, has violated this code of integrity
in competing for the contract or in executing a contract, the procuring entity may take
appropriate measures including one or more of the following (Rule 175 (2) of GFR, 2017):
1. If his bids are under consideration in any procurement:
a) Forfeiture and/ or encashment of bid security;
b) calling off of any pre-contract negotiations; and
c) rejection and exclusion of the bidder from the procurement process.
2. If a contract has already been awarded:
a) Cancellation of the relevant contract and recovery of compensation for loss incurred
by the procuring entity;
b) Forfeiture and/ or encashment of any other security or bond relating to the
procurement;
c) Recovery of payments, including advance payments, if any, made by the procuring
entity along with interest thereon at the prevailing rate.
3. Provisions in addition to above:
a) Removal from the list of enlisted contractors and/ or debarment of the bidder from
participation in future procurements of the procuring entity for a period not less than
six months;
b) In case of anti-competitive practices, information for further processing may be filed
under a signature of the Joint Secretary level officer, with the Competition
Commission of India;
c) Initiation of suitable disciplinary or criminal proceedings against any individual or
staff found responsible.
8.3 Integrity Pact (IP)
1. The Pre-bid Integrity Pact is a tool to help Governments, businesses, and civil society fight
corruption in public contracting. It binds both buyers and sellers to ethical conduct and
transparency in all activities, from pre-selection of bidders, bidding and contracting,
implementation, completion and operation related to the contract. This removes the
insecurity of Bidders, that while they themselves may abjure Bribery, their competitors may
resort to it and win contracts by unfair means.
2. Ministries/ Departments and their attached/ subordinate offices (including autonomous
bodies) should incorporate the Integrity Pact105 in the procurements/ contracts of the
nature and of a threshold value, decided by the Ministries/ Departments with the approval
of the Minister in charge. As guidance, the threshold should cover bulk (80-90% - eighty
to ninety percent by value) of its annual procurement expenditure. The format of the
Integrity Pact is included in Annexure 14. The procuring entities may make suitable
changes in the format, wherever required based on the specific situation, in which pact is
to be used. The pact may also be updated, wherever necessary, to incorporate latest
procurement instructions.
3. CVC issued a revised Standard Operating procedure106 and has further stated107 that in
view of the increasing procurement activities of Public Sector Banks (PSBs), Public Sector
105OM No.14(12)/ 2008- E-ll(A) dated 19th July 2011
106vide CVC Circular No.04/06/23 (015/VGL/091 dated 14.06.2023)
107 vide CVC Circular No.06/05/21 (015/VGL/091 dated 03.06.2021)
197Chapter 8: Registration/ Enlistment of Contractors and Governance Issues
Insurance Companies (PSICs) and Public Sector Financial Institutions (FIs) shall also
adopt and implement the suggested format of Integrity Pact. Please refer to Annex-2 of
Annexure 14 for details.
8.4 Grievances and its Redressal
1. Procuring Entities shall provide a suitable clause in their Tender Documents for the
redressal of grievances of bidders. The following is a suggested mechanism of redressal:
2. Any supplier, contractor, or consultant that claims to have suffered or is likely to suffer loss
or injury as a result of a decision/ action/ omission of the Procurement Entity may make
an application for its review within a period of Five (5) days from its date, to the designated
officer named in the tender documents in this regard (or the Head of the Procuring Entity,
if not so specified), specifying the ground(s) and the relevant clauses of the tender
documents. Unsuccessful Bidders may seek de-briefing regarding the rejection of their
bid, in writing or electronically, within Five (5) days of the declaration of techno-commercial
or financial evaluation results.
3. Only a directly affected bidder can represent in this regard:
a) Only a bidder who has participated in the concerned procurement process, i.e., pre-
qualification, bidder registration or bidding, as the case may be, can make such
representation.
b) In case the pre-qualification bid has been evaluated before the bidding of Technical/
financial bids, an application for review in relation to the technical/ financial bid may
be filed only by a bidder who has qualified in the pre-qualification bid;
c) In case the technical bid has been evaluated before the opening of the financial bid,
an application for review in relation to the financial bid may be filed only by a bidder
whose technical bid is found to be acceptable.
d) The following decisions of the procuring entity in accordance with the provision of
internal guidelines shall not be subject to review:
i) Determination of the need for procurement;
ii) Selection of the mode of procurement or tendering system;
iii) Choice of selection procedure;
iv) Complaints against specifications except under the premise that they are either
vague or too specific to limit competition may be permissible.
v) Provisions limiting the participation of bidders in the procurement process in terms
of government policies.
vi) Provisions regarding purchase preferences to specific categories of bidders in
terms of policies of the Government
vii) The decision to enter into negotiations with the L1 bidder;
viii) Cancellation of the procurement process except where it is intended to
subsequently re-tender the same requirements;
4. Issues related to ambiguity in contract terms shall not be taken up after a contract has
been signed; all such issues should be highlighted before the vendor/contractor
consummates the contract.
5. This grievance redressal is beside the avenue of complaints to the vigilance department
of the procuring organisation.
6. If received during the processing of the tender, the designated officer shall forward the
application to the TC/Convener of TC for its examination on merits and action as
198Manual for Procurement of Works, Second Edition, 2025
considered necessary. An interim reply may be sent that the application will be kept in
view in the tender evaluation, and a final response shall be given only after the declaration
of the award of the contract. The Tender Committee shall place the application on record,
including its analysis and action taken thereon, in the TC minutes/ report to the Competent
Authority. After the award, the TC convener shall respond to the aggrieved party.
7. If such grievance is received after the declaration of the award of the contract, the
designated officer shall forward the application to the Competent Authority of the tender
for his examination on merits and action as considered necessary. Such post award
grievance must be redressed and closed within 30 days of receipt of the grievance. If the
Competent Authority finds the complaint to have substance, appropriate and feasible
remedial measures should be initiated.
8. If the grievance is resolved or if the grievance is found to be unwarranted, the aggrieved
party shall be informed by the TC convener of the final decision without disclosing
confidential details.
9. Based on such representation, if the Competent Authority is satisfied that there has been
a contravention of procurement guidelines in this case, he may initiate such action as, in
his opinion, is necessary to rectify the contravention, including:
a) If the grievance is due to inadequacy of procurement guidelines or a lack of
understanding of the staff, remedial action to address such lacunae may be initiated
without repercussions to the concerned staff;
b) Annulment or reconsideration of the procurement proceedings;
c) cancellation of the resultant procurement contract, if legally feasible;
d) In case any individual staff is found responsible, suitable disciplinary proceedings
should be initiated against such staff under the conduct rules;
e) In case the complicity of any bidder is proved;
i) removal of the concerned firm from the list of registered firms;
f) debarment of the bidders, if warranted;
g) reporting the matter to the Competition Commission of India (CCI) in case of anti-
competitive actions by the bidder.
h) Handing over the case to CVO if there are aspects that require investigations.
8.5 Conduct of Public Servants in Public Procurement - Risks and
Mitigations
Risk Mitigation
Hospitality must never be solicited, directly or
1. Hospitality: Hospitality (including
indirectly. The frequency, scale and number of
facilitation of travel, lodging, boarding and
officials availing hospitality should not be
entertainment during official or unofficial
allowed to identify the recipient in a public way
programs) from suppliers may tend to
with any particular contractor, supplier or
cross the limits of ethical/ occasional/
service provider or raise doubts about its
routine/ modest/ normal business
neutrality. It should not involve significant
practice. Officials sent to firm’s premises
travel, overnight accommodation or trips
for inspections/ meetings may mistakenly
abroad. Particular care should be taken in
presume entitlement to hospitality from
relation to offers of hospitality from firms (say
the firm, even if other arrangements are
participating in current or imminent tenders or
available at the location.
199Chapter 8: Registration/ Enlistment of Contractors and Governance Issues
Risk Mitigation
its execution) who stand to derive a personal or
commercial benefit from their relationship with
the recipient.
In the contracts signed with suppliers by This is not in keeping with need to safeguard
some of the Ministries/ Departments have the independence of the inspecting teams.
clauses of pre-inspection at the firm’s Such provisions in contracts need to be
premises, where there is a provision that discouraged, so that Inspections are not
the suppliers or the vendors will pay for compromised. Necessary steps maybe taken
the travel, stay, hospitality and other to strictly avoid such provisions in the contracts
expenses of the Inspecting officials. with suppliers/ vendors108.
2. Gifts: Gifts from suppliers may tend to Gifts must never be solicited, directly or
cross the limits of ethical/ occasional/ indirectly. An official should not accept and
routine/ modest/ normal business retain gifts more valuable than the limit as laid
practice, especially on festive season. down in the conduct rules. Cash, gift cheques
Since the value of the gift may not be or any vouchers that may be exchanged for
known to the recipient, it may cause cash may not be accepted regardless of the
inadvertent violation of Conduct rules. amount. Particular care should be taken in
relation to gifts from firms (say participating in
current or imminent tenders or its execution)
who stand to derive a personal or commercial
benefit from their relationship with the recipient.
Any gift received inadvertently in violation of
above, must immediately either be returned or
else reported and deposited in Toshakhana/
Treasury.
3. Private Purchases from Official Officials involved in Public Procurement must
Suppliers: Procuring Officials may never indulge in any non-official pecuniary
mistakenly consider it innocuous to seek transaction with the contractors, suppliers or
discounts in private procurements from service providers with whom they have official
contractors having official dealings or its dealings; including seeking or accepting
allied firms. special facilities or discounts on private
purchases.
4. Sponsorship of Events: Procuring Officials involved in Public Procurement must
Officials may mistakenly consider it never indulge in any non-official pecuniary
innocuous to seek financial favours transaction with the contractors, suppliers or
(donations, advertisements for souvenirs, service providers with whom they have official
and contributions in cash or kind) in dealings; including soliciting of sponsorship for
relation to sponsoring of cultural, social, unofficial and private cultural, social, sporting,
charitable, religious, or sporting events, in religious, charitable or similar organisations or
the false belief that since he/ she is events.
personally not benefitted, it would not be
a violation of CIPP.
108 Notified vide OM No.F.11/13/2017-PPD issued by Department of Expenditure dated 24.10.2017
200Manual for Procurement of Works, Second Edition, 2025
Risk Mitigation
5. Conflict of Interest (COI): para 8.2.2- Interpretation of Conflict of Interest would
e) Code of Integrity for Public depend on the organisational structure and its
Procurement has a provision that defines unique circumstances and cannot be laid down
Conflict of Interest as:” universally. However, some illustrative
“…any personal, financial, or business examples are given below to provide context.
relationship between the bidder and a) Officers that can be considered to be
any personnel of the procuring entity related to the tender or execution process
who are directly or indirectly related to would depend on the organisational
procurement or execution process of structure and sensitivity of their role in
the contract, which can affect the procurement. It may cover key officials
decision of the procuring entity directly (and any external consultants/ advisors)
or indirectly……” involved in making a recommendation,
There may be dilemmas regarding the various approvals, or making a major
officers related to the tender or execution decision at any stage in procurement – i.e.,
process and, even if minor, routine during need determination/ indenting,
transactions. Tender Document preparation/
preparation of comparative tabulation;
Technical and Financial evaluation of
Bids; negotiation/ signing of Contract;
execution of the contract; payments to the
contractor.
b) As an illustration - COI (actual, potential,
or perceived) can arise if such officers (or
his close family110109) have:
i) Substantial business interests in the
firm110 (e.g., shares more than 0.1% of
market cap), taken a loan or other
financial obligation (say discounts) from
the firm or its personnel109), etc.
ii) Business relationships with the firm -
say previously worked for the firm or
availed hospitality/ gifts beyond the
limits laid down in the Code of Conduct
of the organisation, etc.
iii) Familial relationship109 with the
personnel of the firm.
iv) close personal friendships or regular
(say, more than once in a quarter)
109 Close family for this purpose shall be officer’s spouse, parents, children, and their families. As far as extended
family - Siblings/ Uncles/ Aunts/ Cousins and their families are concerned, the situation would depend on closeness
of relationships and whether the officer would in normal course be aware of their activities.
110 For purpose of COI, Firm includes its allied firms also. Firm’s personnel for this purpose, shall mean – senior
executives (or team handling the bidding) at the bidding firm. Close family for this purpose shall be officer’s spouse,
parents, children, and their families. As far as extended family - Siblings/ Uncles/ Aunts/ Cousins and their families
are concerned, the situation would depend on closeness of relationships and whether the officer would in normal
course be aware of their activities.
201Chapter 8: Registration/ Enlistment of Contractors and Governance Issues
Risk Mitigation
social interactions (e.g., clubs, games,
social associations) with the Firm’s
personnel, etc.
c) Resolution of COI: It shall be the
responsibility of such officials to declare
COI (to the extent he is aware of, in normal
course) with reference to a procurement
process to the Competent Authority/ next
higher officer. The competent officer may
evaluate the level of COI, and the
sensitivity of the function assigned to the
official. He may either determine
i) COI is insignificant enough to influence
the type of function performed by the
official and ask the officer to continue
his function.
ii) If COI or the type of function is
significant, nominate any alternative
officer to perform the function (partly or
fully) of this official in that procurement
process.
8.6 Development of New Sources and Registration/ Enlistment of
Contractors
1. The terms ‘enlistment’ and ‘registration’ may be differentiated as follows: --
a) Registration: Simply registering the contractor, without any verification.
b) Enlistment: Including the name of the contractor in the list of after verification of
credentials.
2. Registration: All the Ministries/Departments shall register the prospective contractors on
their e-procurement portal or in the CPPP (in case they do not have their own e-
procurement portal) before submitting their bids. The contractor may be an Individual, Sole
proprietorship firm, partnership firm, limited liability partnership, private or public limited
company. For registration, the Ministries/Department/CPSUs shall capture at least–
a) Name of contractor,
b) Address and Contact details,
c) Permanent Account Number (PAN),
d) Details of digital signature certificate (DSC) and
e) GSTIN.
Depending on the requirement of respective procurement portal, the Ministries/Departments
can capture any other information, as may be considered necessary.
3. Enlistment: Some Departments such as Central Public Works Department (CPWD) and
Military Engineering Services (MES) are enlisting the contractors after verification of their
credentials. Public authorities may empanel/ register contractors of those specific types of
work which are required by them regularly. Performance of such empanelled contractors
202Manual for Procurement of Works, Second Edition, 2025
should be reviewed periodically. The list of empanelled/ registered contractors shall be
updated on a regular basis. The category/ class of contractors may be upgraded/
downgraded, or contractors may be de-listed based on their performance. Empanelment
of contractors shall be done in a fair and equitable manner, preferably online after giving
due publicity. The practice of inviting bids for works tenders only from empanelled
contractors may be confined to tenders up to certain threshold value (say Rs 20 Cr), as
decided by the project executing authorities. It is expected that Ministries/Departments will
also develop their own enlistment process, as has been done by CPWD, Ministry of
Railways (MoR) and Ministry of Road Transport & Highways (MoRTH) to reduce the time
required for verification of credentials of the contractors after opening of the bids. The lists
of such enlisted contractors can be used by any Ministry/Department/CPSU.
4. The Ministries/Departments will also share the information of registered and enlisted
contractors with each other through the Central Public Procurement (CPPP). The
Ministries/Departments will also ensure that whenever a contractor is debarred, the
information regarding the same is made available immediately to all the
Ministries/Departments through the CPPP. The reasons for the debarment and order of
such debarment may also be displayed on the CPPP. The National Informatics Centre
(NIC)/ Ministry of Electronics and Information Technology (MeitY) shall make appropriate
changes in the CPPP so that each contractor can be uniquely identified by PAN. All the
Ministries/ Departments may take cognizance of the information regarding debarment of
contractors and use it as an input for the decision -making process as per their own
procurement policies.
5. Ministries/ Departments with a significant volume of procurements may follow their own
policies and procedures for enlistment of contractors, if already existing. The policies and
procedures for enlistment described below is for guidance of Ministries/ Departments, who
do not have their own, laid down policies/ procedures for enlistment. The Ministry/
Department shall notify the authorities competent to deal with the applications and grant
enlistments, along with their jurisdictions. The appellate authority shall be at least one level
above the registering authority or as designated by the Ministry/ Department.
6. All Ministries/ Departments may use such lists prepared by other Ministries/ Departments
as and when necessary. Registered suppliers are ordinarily exempted from furnishing
earnest money deposit/ bid security with their tenders for items, and Monetary Limits for
which they are registered.
7. Categories for Enlistment: In case of procurement of works, the Administrative
Department shall enlist firms as contractors in different types/ categories of works (Civil,
Electrical, Horticulture, Nursery etc). The contractor may be a Private, Partnership, Pvt
Ltd, Corporate, PSU or a Joint Venture company.
8. Class of Enlistment (Tendering Limits): Enlistment should be done by Class of the firms
(Grade A, B, and so on) on their capability for executing contract orders of different
monetary limits in the relevant category of requirements. The monetary limits should be
carefully fixed keeping in view the banker’s reports, capacity and capability of the firm and
other financial information indicated in the balance sheets, profit and loss statements:
203Chapter 8: Registration/ Enlistment of Contractors and Governance Issues
(A sample classification111)
Class Tendering Class Tendering Limit
Limit
Class-I (Super) Rs 650 crore Class-II Rs 15 crore
Class-I (AAA) Rs 260 crore Class-III Rs 4 crore
Class-I (AA) Rs 130 crore Class-IV Rs 1.30 crore
Class-I (A) Rs 75 crore Class-V Rs 40 lakh
Class-I Rs 50 crore
9. Procedure for Enlistment: Enlistment of contractors should be done by any Ministry/
Department in case it desires to enlist contractors for works which are exclusively needed
by it by keeping fundamental principles of public procurement in view (especially the
transparency principle - transparency, fairness, equality, competition and appeal rights)
with the approval of CA after carefully assessing and verifying credentials, capability,
quality control systems, past performance, after-sales service facilities, financial
background, and so on, of the contractor/ service provider(s):
a) Details of the procedure for enlistment of new firms may be uploaded on the website
and also published in the form of a booklet for information of the contractors.
Timeframes and criteria for enlistment of new contractors may be clearly indicated;
b) Possible sources for any category/ group of requirements can be identified based
on internal and external references. Data of new contractors can be obtained from
the response received from contractors, open tender advertisements, pre-
qualification bids, Expression of Interest (EoI), against various enquiries on the
website, dedicated websites, exhibitions, buyer-seller meets, various publications
of BIS, trade journals, and so on. The e-procurement portal does pre-registration of
contractors online. Such data can be a source of information on prospective
contractors;
c) New contractor(s) may be considered for enlistment at any time, provided they fulfil
all the required conditions. For any larger scale or critical enlistment of contractors,
Procuring Entity should call for EOI by publicising its need for development of
sources. The stages to be followed together with the applicable guidelines for EOI
have been detailed in Chapter 3;
d) While registering the firms, an undertaking may be obtained from them that they will
abide by the CIPP enclosed with the application with a clear warning that, in case
of transgression of the code of integrity, their names are likely to be deleted from
the list of enlisted contractors, besides any other penalty or more severe action as
deemed fit; and
e) Along with the new/ renewal application for enlistment, the contractors should also
be asked to declare that, if awarded a contract in any LTE in which they participate,
they bind themselves to abide by the Procuring Entity’s General Conditions of
Contract (GCC). Such GCC should be part of the application
f) Enlisted contractors must participate in relevant limited tenders. In case they do not
respond to at least three (3) tenders in a year on being invited to do so (if there were
at least 6 invitations to them), they may be removed from the list of enlisted
contractors.
111 Source: Rules for Enlistment of Contractors in CPWD, 2024
204Manual for Procurement of Works, Second Edition, 2025
10. Eligibility
a) Any firm, situated in India or abroad, which is in the business of providing goods/
works/ services of specified categories of interest, shall be eligible for enlistment;
b) Contractors should possess valid Digital Signature Certificate (DSCs) Class III with
the company name at the time of enlistment/ renewal, so as to enable them to
participate in e-procurements;
c) The firm should also have good internal governance, such as whistleblower policy,
commitment to ESG (Environmental, Social, and Governance) code of conduct,
code of business ethics, etc.
d) The firm against whom punitive action has been taken, shall not be eligible for re-
enlistment while the punitive action is in effect. Enlistment requests may not be
entertained from such firms, stakeholders of whom have any interest in de-Enlisted/
banned firms;
11. Assessment of Capacity and Capability: The application form, complete in all respects
and accompanied with the requisite processing fee and prescribed documents shall be
submitted by the firms to the enlisting authority. The enlistment application form, duly filled
in, when received from the firms shall be scrutinised carefully for assessing the capacity
‐
and capability of the firms including credentials, capability, quality control system, past
performance, financial background, and so on, of the applicant. References shall be made
to other firms of standing of whom the applicant firm claims to be a contractor. Likewise,
the applicant firm’s bankers may also be requested to advice about the financial standing
of the firm.
12. In cases where the firm is not considered capable and enlistment cannot be granted; the
concerned authority shall communicate the deficiencies and shortcomings direct to the
firms under intimation to the appellate authority. Where a request for re-verification and
review is made by the firm, along with any fee as prescribed and within the period
prescribed by the department (say, within six months), review shall be undertaken.
Requests for re-verification after expiry of the said period would be treated as a fresh
application and processing fee, if any prescribed, charged accordingly.
13. If considered to be capable after carefully assessing and verifying credentials, the firm may
be enlisted with the approval of CA. Enlistment should be for specific category of works.
14. It should be mentioned in the letter of enlistment that the enlistment is valid for a specified
period (say three years) and would be considered for extension based (on application by
the contractor/ service provider) on satisfactory performance of the firm. However, the
enlistment would be initially treated as provisional, and it would be treated as confirmed
only after the firm has satisfactorily executed one contract of the relevant category and
value from Procuring Entity. The extension of validity of enlistment is not a matter of right
and Procuring Entity reserves the right not to extend such enlistment without assigning
any reason.
15. All Enlisted contractors should be allocated a unique enlistment number. The list of
enlisted contractors (indicating the names and addresses of the enlisted contractors with
details of the requirements and monetary value they will execute as well as the validity
period, and so on, for which they are enlisted) shall be exhibited on the websites of the
Procuring Entity.
16. Performance and conduct of every enlisted contractor is to be watched by the concerned
department. Procuring Entity should also reserve the right to remove firms who do not
205Chapter 8: Registration/ Enlistment of Contractors and Governance Issues
perform satisfactorily, even during the validity of enlistment (after giving due opportunity to
the contractor to make a representation) if they fail to abide by the terms and conditions of
the enlistment or fail to execute contracts on time or do substandard work or make any
false declaration to any government agency or for any ground which, in the opinion of the
government, is not in public interest.
17. Procuring Entity shall retain its option to reassess firms already enlisted, at any later date,
to satisfy itself about the current financial soundness/ credit worthiness, facilities available,
and so on. Thereafter, Procuring Entity may decide to retain them as enlisted contractors
for the requirements and monetary limit earlier considered or with necessary changes as
deemed fit. In case of adverse reports from the team of Procuring Entity, officers who
reassess the firm, Procuring Entity shall delete such firm from the enlisted contractors list.
(Rule 150 of GFR 2017)
8.7 Debarment of Contractors
8.7.1 GFR’s Provisions
Registration of Contactors and their eligibility to participate in Procuring Entity’s procurements
is subject to compliance with Code of Integrity for Public Procurement and satisfactory
performance in contracts. Rule 151 of GFR, 2017 states the following regarding the
‘Debarment from Bidding’: -
a) A bidder shall be debarred if he has been convicted of an offence
i) Under the Prevention of Corruption Act, 1988; or
ii) The Bharatiya Nyaya Sanhita or any other law for the time being in force, for
causing any loss of life or property or causing a threat to public health as part of
execution of a public procurement contract.
b) A bidder debarred under sub-section (a), or any successor of the bidder shall not be
eligible to participate in a procurement process of any procuring entity for a period not
exceeding three years 112commencing from the date of debarment.
c) A procuring entity may debar a bidder or any of its successors, from participating in
any procurement process undertaken by it, for a period not exceeding two years, if it
determines that the bidder has breached the code of integrity. The Ministry/
Department will maintain such list which will also be displayed on their website.
d) The bidder shall not be debarred unless such bidder has been given a reasonable
opportunity to represent against such debarment.
8.7.2 Guidelines on Debarment of firms from Bidding
1. PPD DoE did consultations on the issue of Debarment with major procuring Ministries/
Departments and issued the following ‘Debarment Guidelines’ in suppression of all earlier
instructions on this subject113. Public Procurement organisations who have existing
guidelines for Debarment (by any name) should revise their guideline in conformity with
these guidelines issued by PPD, DoE.
2. Guidelines on Debarment of Firms from Bidding:
a) The guidelines are classified under following two types: -
112 Now two years is applicable as mentioned below in para 8.7.2-3-a) below.
113Notified vide OM No. F.1/20/2018-PPD issued by Department of Expenditure dated 02.11.2021.
206Manual for Procurement of Works, Second Edition, 2025
i) In cases where debarment is proposed to be limited to a single Ministry, the
Ministry itself can issue the appropriate Orders, thereby banning all its business
dealing with the debarred firm.
ii) Where it is proposed to extend the debarment beyond the jurisdiction of the
Ministry i.e. covering to all central Ministries/ Departments, the requisite Orders
shall be issued by Department of Expenditure (DoE), Ministry of Finance (MoF).
b) Definitions
i) Firm: The term ‘firm’ or ‘bidder” has the same meaning for the purpose of these
Guidelines, which includes an individual or person, a company, a cooperative
society, a Hindu undivided family and an association or body of persons, whether
incorporated or not, engaged in trade or business.
ii) Allied firm: All concerns which come within the sphere of effective influence of the
debarred firms shall be treated as allied firms. In determining this, the factors
listed in its definition in the ‘Procurement Glossary’ section may be kept in view.
iii) The terms “banning of a firm,” ‘suspension,’ ‘Black-Listing’ etc. convey the same
meaning as “Debarment”.
3. Debarment by a Single Ministry/ Department: Orders for Debarment of a firm(s) shall
be passed by a Ministry/ Department /organizations, keeping in view of the following:
a) A bidder or any of its successors or allied firms, may be debarred from participating
in any procurement process for a period not exceeding two years (along with such
other actions as may be permissible under law) for following reasons:
i) If it is determined that the bidder has breached the code of integrity as per Rule
175 (2) of GFR 2017. (Refer to para 8.2.2 of this Manual for further reading on
Code of Integrity).
ii) False declaration of local content by Class I/ Class II local suppliers under Public
Procurement (Preference to Make in India, Order 2017, dated 16/09/2020 or later,
i.e., the Make in India Order) shall also be treated as a breach of code of integrity.
A supplier/ service provider who has been debarred by any procuring entity as
per this sub-para:
1) The fact and duration of debarment for this reason by any procuring entity
must be promptly brought to the notice of the Member-Convenor of the
Standing Committee (Joint Secretary DPIIT, under the Make in India order)
and the Department of Expenditure through the concerned Ministry/
Department or in some other manner.
2) The Standing Committee shall consolidate such cases, and a centralised list
or decentralised list of such suppliers/ service providers with the period of
debarment must be maintained on a periodical basis and displayed on the
website(s).
3) Such suppliers/ service providers, though debarred by a single Ministry/
Department, shall not be eligible for preference under the Make in India
Order for procurement by any other procuring entity for the duration of the
debarment. This shall be effective from the date of uploading such
debarment to the website(s).
iii) In respect of procuring entities other than the one which has carried out the
debarment, the debarment takes effect prospectively from the date of uploading
on the website(s) in such a manner that ongoing procurements are not disrupted.
207Chapter 8: Registration/ Enlistment of Contractors and Governance Issues
A supplier who has been debarred by any procuring entity as per sub -para ii)
above, shall not be eligible for preference under the Make in India Order for
procurement any other procuring entity for the duration of the debarment. This
shall be effective from the date of uploading of such debarment on the website(s).
iv) for any actions or omissions by the bidder other than violation of code of integrity,
which in the opinion of the Ministry/Department, warrants debarment, for the
reasons like supply of sub-standard material, non-supply of material,
abandonment of works, sub-standard quality of works, failure to abide “Bid
Securing Declaration” etc.
b) The debarment order (please refer to Annexure 16 for a format) shall not be circulated
to other Ministries/ Departments. It will only be applicable to all the attached/
subordinate offices, Autonomous bodies, Central Public Sector Undertakings
(CPSUs) etc. of the Ministry/ Department issuing the debarment Order.
c) The concerned Ministry/ Department before issuing the debarment order against a
firm must ensure that reasonable opportunity (Please refer to Annexure15 for a
format of Notice) has been given to the concerned firm to represent against such
debarment (including personal hearing, if requested by firm).
d) Secretary of Ministry/Department may nominate an officer at the rank of Joint
Secretary/Additional Secretary as competent authority to debar the firms.
e) Ministry/ Department that issued the order of debarment can also issue an Order for
revocation of debarment before the period of debarment is over, if there is adequate
justification for the same. Ordinarily, the revocation of the Order before expiry of
debarred period should be done with the approval of Secretary concerned of
Ministry/Department.
f) The Ministry/ Department will maintain a list of such debarred firms, which will also
be displayed on its website. Such a list on the website shall be automatically binding
on the departments, subordinate and attached offices, autonomous bodies, and
CPSEs under the Ministry, but in case of doubt, it can be confirmed by the issuing
authority.
g) More than one Ministry/ Department may concurrently debar the same firm.
h) Debarment is an executive function and should not be allocated to Vigilance
Department.
i) The period of debarment starts from the date of issue of debarment order; therefore,
the process of debarment should be conducted on an expeditious manner.
Considering the quasi-judicial nature of such proceedings and need to afford a fair
hearing to the firm, following timeline is suggested, which may be suitably modified
considering the specifics of an organisation:
i) Noticing of delinquency of the firm by the Procuring Entity – zero day
ii) Evaluation of evidence and proposal to CA for banning of the firm - 2 Weeks
iii) Issue of Show Cause Notice to the firm calling for written and oral submission. –
1 week.
iv) Time for submission, including reminders etc – 3 weeks.
v) Evaluation of firm’s submission and giving oral hearing to firm – 3 weeks
vi) Final Order, indicating opportunity to the firm 2 weeks’ time to appeal to the
Secretary of Ministry/ Department as appellate authority – 2 weeks.
vii) Total 12 weeks from zero day, after which debarment period starts.
208Manual for Procurement of Works, Second Edition, 2025
viii) Receipt of Appeal and disposal the same by the appellate authority – 4 weeks
4. Debarment by CPSEs, Attached Offices/ Autonomous Bodies: Ministries/
Departments, at their option, may also delegate powers to debar bidders to their CPSEs,
Attached Offices/ Autonomous Bodies, etc. In such cases, broad principles for debarment
in sub-paras 3-a) to h) above are to be kept in mind. Debarments by such bodies shall be
applicable only to the procurements made by such bodies. Similarly, the Government e-
Marketplace (GeM) can also debar bidders for up to two years on its portal.
5. Debarment across All Ministries/ Departments: In the following situations, the Ministry/
Department may consider debarring the firm from taking part in any tendering procedure
floated by all the Central Government Ministries/ Departments:
a) If the bidder has been convicted of an offence (Rule 151 (i) of GFR, 2017), for
debarment upto three years:
i) under the Prevention of Corruption Act, 1988, or
ii) the Bhartiya Nyaya Sanhita (BNS), 2023 or any other law for the time being in
force, for causing any loss of life or property or causing a threat to public health
as part of the execution of a public procurement contract.
b) The Ministry/ Department concerned should, after obtaining the approval of the
Secretary concerned, forward to DoE a self-contained note setting out all the facts of
the case and the justification for the proposed debarment, along with all the relevant
papers and documents.
c) Ministry/ Department, before forwarding the proposal to DoE, must ensure that
reasonable opportunity has been given to the concerned firm to represent against
such debarment (including a personal hearing if requested by the firm). If DoE
realizes that sufficient opportunity has not been given to the firm to represent against
the debarment, such debarment requests received from Ministries/ Departments shall
be rejected.
d) The firm shall remain debarred during the interim period till the final decision is taken
by DoE, only in the Ministry/ Department forwarding such proposal. For this purpose,
the proposing Ministry shall issue an interim order debarring the firm from taking part
in tendering procedures floated by their Ministry/ Department following the procedure
laid down in sub-para 3) above. Such order inter-alia must mention that the
Government reserves its right to further debar the firm from taking part in any
tendering procedure floated across all the Central Government Ministries/
Departments, following due procedure.
e) DoE can also give additional opportunity, at their option, to the firm to represent
against proposed debarment. DoE can also take suo-moto action to debar the firms
in certain circumstances. DoE shall complete the process of Debarment within 12
weeks after receiving the proposal from the concerned Ministry/ Department.
f) DoE will issue the necessary orders for debarment for a period not exceeding three
years for offences mentioned in Rule 151 (i) of GFR, 2017, after satisfying itself that
the proposed debarment across all the Ministries/ Departments is in accordance with
the said rule. This scrutiny is intended to ensure uniformity of treatment in all cases.
g) DoE will maintain a list of such debarred firms, which will be displayed on the Central
Public Procurement Portal (CPPP). This list on CPPP shall be applicable to all
Ministries/ Departments, Attached and Subordinate Offices, CPSEs, and
Autonomous bodies, but in case of doubt, they may confirm it from issuing authority.
209Chapter 8: Registration/ Enlistment of Contractors and Governance Issues
h) No contract of any kind whatsoever shall be placed on the firm debarred by DoE,
including its allied firms, during the period of debarment by any Ministry/ Department/
Attached/Subordinate offices of the Government of India, including autonomous
bodies, CPSEs, etc., after the issue of a debarment order.
6. Review and Revocation of Orders
a) An order for debarment passed shall be deemed to have been automatically revoked
on the expiry of that specified period and it will not be necessary to issue a specific
formal order of revocation.
b) The authorised entity (DoE, Ministry/ Department or CPSEs, Attached Offices/
Autonomous Bodies, GeM, etc.) that issued the order of debarment can review or
revoke the debarment order before the period of debarment is over, suo-moto (based
on new facts that come to light) or on an appeal by the debarred bidder. After a
review, an Order for modification of the period of debarment or revocation of
debarment, if there is adequate justification for the same, can be issued. Ordinarily,
such modification/ revocation of the Order should be done with the approval of the
Secretary concerned of DoE or the Ministry/Department that issued such orders. In
case of debarments done by CPSEs, attached offices/autonomous bodies, GeM, etc.,
such modification/ revocation of the debarment orders should be done ordinarily with
the approval of a competent authority not below a board-level officer.
7. Other Provisions (common to both types of debarments)
a) The debarment order shall mention the reason(s) in brief that led to the debarment of
the firm and the jurisdictional extent to which the order shall be applicable, besides
the validity period of debarment.
b) No contract of any kind whatsoever shall be placed to debarred firm including its allied
firms after the issue of a debarment order by the Ministry/ Department. Bids from only
such firms shall be considered for placement of contract, which are neither debarred
on the date of opening of tender (first bid, normally called as technical bid, in case of
two packet/two stage bidding) nor debarred on the date of contract. Even in the cases
of risk purchase, no contract should be placed on such debarred firms.
c) In case, any debar firms has submitted the bid, the same will be ignored. In case such
firm is lowest (L-1), next lowest firm shall be considered as L-1. Bid security submitted
by such debarred firms shall be returned to them.
d) Contracts concluded before the issue of the debarment order shall, not be affected
by the debarment Orders.
e) The Debarment shall be automatically extended to all its allied firms. In case of joint
venture/ consortium is debarred all partners will also stand debarred for the period
specified in Debarment Order. The names of partners should be clearly specified in
the “Debarment Order”.
f) Debarment in any manner does not impact any other contractual or other legal rights
of the procuring entities.
g) The period of debarment shall start from the date of issue of the debarment order for
the issuing entity. In respect of procuring entities other than the one that has carried
out the debarment, the debarment takes effect prospectively from the date of
uploading on the website(s) in such a manner that ongoing procurements are not
disrupted.
h) Ordinarily, the period of debarment should not be less than six months.
210Manual for Procurement of Works, Second Edition, 2025
i) The GeM portal also has a provision for Suspension (debarring vendors/ service
providers' participation in procurements of all the buyers) under its Incidence
Management Policy114. The reasons and periods for suspension are different than in
the provisions mentioned above. However, if a procuring entity feels that the period
of suspension by GeM is not adequate, it may also debar the firm as per the
procedure mentioned in this section for a more appropriate period, but such
debarment shall be applicable ONLY to procurements by that procuring entity.
j) All Ministries/ Departments must align their existing Debarment Guidelines in
conformity with these Guidelines. Further, bidding documents must also be suitably
amended, if required.
e) Safeguarding Procuring Entity’s Interests during debarment of suppliers: Suppliers
are important assets for the procuring entities and punishing delinquent suppliers
should be the last resort. It takes lot of time and effort to develop, register and mature
a new supplier. In case of shortage of suppliers in a particular group of
materials/equipment, such punishment may also hurt the interest of Procuring Entity.
Therefore, views of the concerned Department may always be sought about the
repercussions of such punitive action on the continuity of procurements. Past records
of performance of the supplier may also be given due weightage. In case of shortage
of suppliers and in cases of less serious misdemeanours, the endeavour should be
to pragmatically analyse the circumstances, reform the supplier and get a written
commitment from the supplier that his performance will improve. If this fails, efforts
should be to see if a temporary debarment can serve the purpose. (Rule 151 of GFR
2017)
8.8 Enlistment of Indian Agents
Ministries/ Departments if they so require, may enlist Indian agents, who desire to quote
directly on behalf of their foreign principals115. (Rule 152 of GFR 2017)
114 https://assets-bg.gem.gov.in/resources/pdf/incident_management_policy_v12.1.pdf
115Rule 152 of GFR, 2017 amended vide OM No. F.26/2/2016-PPD issued by Department of Expenditure dated
25.07.2017.
211Manual for Procurement of Works, Second Edition, 2025
ANNEXURES
213Manual for Procurement of Works, Second Edition, 2025
Annexure 1: Financial Powers to Sanction Expenditure for
Purchases and Execution of Contracts
(Refer Para 1.5-1, 3.6-2, 6.2.1-5, 6.5.4-3)
1. DFPR, 2024, Rule 11, Sub-Rule (1): Subject to the provisions of DFPR 2024 and the
provisions of the General Financial Rules, governing the procurement of goods and
services, a Department of the Government of India shall have full powers to sanction
expenditure for purchases and for execution of contracts.
2. DFPR 2024, Annexure II (General Conditions for incurring expenditure), para 11: In order
to derive the benefit of these delegations optimally, the Departments of the Government
of India should not only make full use of the delegated powers but also further re-delegate
powers to their subordinate organisations to match the latter’s requirements. A complete
review of such re-delegations may be undertaken at least once in three years.
3. Powers to sanction expenditure for purchases or execution of contracts to be exercised by
Secretary of the Department, shall be as follows:
Sub-rule (2) For open or limited tender contracts Rs. 100 crores
Sub-rule (3) For negotiated or single tender or proprietary contracts
Rs. 25 crores
and agreements
4. Sub-Rule (4): Contracts or purchases, the amount of which exceeds the value stated in
sub-rules (2) and (3) above, in the categories stated, shall require the approval of the
Minister in charge of the Department.
5. Sub-Rule (5): Subject to the provisions of DFPR 2024, Secretaries of the Departments of
Government of India may, by general or special order, confer powers not exceeding those
vested in them as specified in Sub-rule (2) and (3) of Rule 11 …... upon an Administrator
or Head of the Department or any other authority subordinate to him in consultation with
the Financial Advisor of the Department or Ministry.
a) Redelegation of Powers: Rule 12, sub-rule (3): The Administrator or Head of the
Department ……. by an order in writing, authorise a Gazetted Officer serving under
him to exercise to such extent, as may be specified in that order, all or any of the
powers conferred on such Administrator or Head of the Department …. The
Administrator or Head of the Department shall, however, continue to be responsible
for the correctness, regularity and propriety of the decisions taken by the Gazetted
Officer so authorised.
b) Charter for FA, 2023, Para 20: Under Rule 12 of the Delegation of Financial Powers
Rules (DFPR), and orders of DoE, certain powers have been given to Departments
and to Heads of Department to decide the financial limits up to which they wish to
further delegate powers for incurring certain types of expenditure. Such cases of re-
delegation of powers may be either with a requirement to consult with Financial
Adviser in individual cases while exercising the re-delegated power or without a
requirement to consult the Financial Adviser in individual cases while exercising the
re-delegated power. All orders of re-delegation of powers require consultation of the
Financial Adviser on both these points, viz. the extent of re-delegation and whether or
not consultation of the Financial Adviser in individual cases will be required.
6. Sub-Rule (6): Notwithstanding anything contained in sub-rules (1), (2), (3) and (4),in cases
where powers to award contract or purchase or consultancy in a Project or Scheme has
215Annexure 1: Financial Powers to Sanction Expenditure for Purchases and Execution of
Contracts
been considered and allowed by Public Investment Board (PIB) or Expenditure Finance
Committee (EFC) or Cabinet, as the case may be, such cases will be processed as per
the financial limits laid down for sanction of such Schemes or Projects by that Authority.
Clarification w.r.t Rule 11 (6) It is clarified that where the award of contract,
purchase or engagement of consultancy services forms part of a Project or
Scheme, which has been appraised by the PIB or EFC, and approved by the
Competent Financial Authority (including the Cabinet), and where financial
limits for such powers have been specifically prescribed in such approval, the
limits allowed by the Competent Financial Authority shall be followed.
7. Explanation: If a contract extends over a period of time, the total value over the entire
period of currency shall be taken for the purpose of applying the limit.
8. These rules shall not apply to:
a) the Ministry of Railways and authorities subordinate to that Ministry;
b) the Ministry of Defence and authorities subordinate to that Ministry in relation to
expenditure debitable to Defence Services Estimates.
c) the Departments of Atomic Energy and Space;
d) the Department of Telecommunications;
e) the Government of India’s representatives abroad whose powers shall be determined
in accordance with the rules or orders issued separately in consultation with the
Finance Ministry.
216Manual for Procurement of Works, Second Edition, 2025
Annexure 2: Suggested Structure of Schedule of
Procurement Powers (SoPP)
(Refer Para 1.5-1, 3.6-2, 6.2.1-5, 6.2.7-3)
A suggested structure of SoPP116 is given below. However individual threshold values
(wherever not given in GFR/ DFPR) would depend on the respective circumstances of various
Organisations.
Threshold Value in Rupees (Lakh)
Five columns for level of officers are just indicative, there would be more levels as per competent
Financial Authorities (CFAs, including Minister or Board of Directors in CPSEs) in organisations.
Competent Financial Authority Level -1 Level-2 Level 3 Level-4 Level-n
> Level 1 is lowest and Level -n
is highest
Acceptance of necessity and issue of in-Principle Approval, Administrative Approval and
Expenditure Sanction (A/A and E/S), Appropriation of funds
Acceptance of necessity and issue
of in-Principle Approval
Administrative Approval and
Expenditure Sanction (A/A and
E/S)
Appropriation of funds
Approval for Floating of Tenders of Various Types including
Approval Selection of System of
Selection of contractors – other
than LCS – QCBS
Approval for Selection by
nomination of Works
Preparation and Approval of
Bidding Documents and floating of
Tenders – EoI/ Tender for Works
Approval of Retendering of a
discharged tender after second
attempt
116 indicate value threshold above which consultations with/ concurrence/ vetting from IFD would be required
217Annexure 2: Suggested Structure of Schedule of Procurement Powers (SoPP)
Competent Authority (CA) for Evaluation and Acceptance of Tenders
Procurement without calling
Quotation
Procurement Through a Purchase
Committee
Direct Approval of Tenders Without
Tender committee
Tender Committee (TC)/ Consultancy Evaluation Committee (CEC) Composition and CA for
Acceptance. Slabs below are suggestive but would depend on the frequency of cases in
various slabs of procurements in an organisation.
Slab 1 (Rs 10 Lakh to 50 Lakh) –
Level 2 officers’ TC, Acceptance by
Level 3 Officer
Slab 2 (Rs 50 Lakh to 2 Crore) –
Level 3Officers’ TC acceptance by
Level 4 Officer
Slab 3 (Rs 2 Crore 25 Crore) – Level
4 officers’ TC acceptance by Level 5
Officer
Higher levels and other type of TC to
suit local requirements, Acceptance
at Sec level
Approval of acceptance of Single
Offer against GTE/ OTE/ LTE and
acceptance of unsolicited Offers in
LTE against urgency certificate by
the indentor
Formulation and Placement of Contracts
Contracts after following Tendering
Process
Acceptance of Special Conditions with concurrence of Finance before Award of Contract as per
recommendation of TC/ CA
Acceptance of Advance Payments
Other Variations demanded by
Bidders in special circumstances.
Post Contract Powers, including
Bill Passing and Payments, Handing over assets/ equipments/ material/ utilities to Contractor;
Extensions with or without LD, or approvals of Variations, Contract Closure, Terminations, Arbitrator
appointment, Accepting and sanctioning Court and Arbitration award
Waiver of Liquidated Damages
Allowing release of Time-barred
claims
Enlistment and Debarment of contractors
Initiation and Approval of
Enlistment of contractors
Initiation and Approval of
Removal from Enlistment of
contractors due to
misdemeanours
Initiation and Approval of
Holiday Listing/ Suspension of
contractors due to
misdemeanours
Initiation and Approval of
Banning of contractors within
the Ministry or
recommendation to Ministry of
Commerce for Country-wide
218Manual for Procurement of Works, Second Edition, 2025
Annexure 3: Bid Opening Attendance Sheet cum Report
(Refer Para 4.13-4-a)
[Name of Procuring Entity]
Bid (Techno-commercial/ Financial) Opening Attendance Sheet cum Report
Attendance Record
Sr Bidder’s Name Bidder’s Bidder’s Represented Contact Signature of
No Address Authorisation by No. Representative
and Date
Bid Opening Report
Tender Title Date of
No Opening
Offer Bidder’s Bidder’s Submissi Submission Rate Signature of Representative
No. Name Ref and on of of other Quoted
Date Requisite Mandatory and
EMD Documents Taxes/
(Y/ N) (Y/ N) Duties
--/ ---
--/ --
--/ --
Total no. of regular tenders taken out from the tender box to be opened as mentioned
above................................................... (in figures and in words)
Signature, Date and Time Signature, Signature, Date and Time
Name and Designation of Tender Opening Officer Name and Designation of Tender Opening Officer
Received total regular tenders....................... (In figures/ words) as above
Signature, Date and Time Signature, Date and Time
Name and Designation of Procuring Entity Officer Name and Designation of Procuring Entity Officer
219Manual for Procurement of Works, Second Edition, 2025
Annexure 4: Tender Committee Minutes Format
(For Techno-Commercial/ Financial Bids)
(Refer Para 6.2.8-1 and 6.4.1-4)
Organisation: _____________________________
Minutes of Tender Committee Meeting
(Techno-commercial/ Financial Bids)
Section I: Top Sheet
File No: Date:
Description Estimated Cost: -
Tender Published Date of
In Publication
Bid Validity Bid Opening Date
Past Procurements
Sr. Supplie Order Reference & Quantity Basic Rate Remarks
No. r Date (Rs.)
Members of the Tender Committee
Sr. Name Designation Sr. Name Designation
No. No.
1 2
3 4
Section II: Salient Feature of the Tender
Review background of indent; technical and financial approvals; estimated cost; budgetary
provisions; urgency of requirement; special technical requirements and other connected
procurements which are part of same package/ project
Review mode of bidding; bidding document contents; bid publication; level of competition
obtained; issues if any noticed during bid-opening (bids not opened due to lack/
unsatisfactory EMD, etc.) and any other procurement of this requirement in process (at
various stages)
Review special conditions, restriction if any, on participation of bidders; purchase
preferences, requirements prescribed in bid documents (EMD, document submission, etc.)
Section III: Preliminary Evaluation
Review handling of any complaints received
Review/ confirmation of quantity and period of delivery required
Discuss preliminary evaluation for determining substantially responsive bids and for minor
corrections and clarifications
Section IV: Evaluation of Responsive Bids
Bid-wise deliberation should be recorded
In case of evaluation of Financial Bids
i). Start with review of techno-commercial evaluation
ii). Insert a summary table of evaluated price in the order of L1, L2, etc.
iii). Deliberations should be in the sequence of L1, L2, etc.
Section V: Summary of Recommendations
Bid-wise recommendation should be recorded
220Annexure 4: Tender Committee Minutes Format
In case of evaluation of financial bids,
a) Comment whether level of competition is considered to be adequate or not. If not,
mention the mitigating actions.
b) Give a summary of recommended bids, award value, bid expiry date and special
conditions, if any.
c) Also, mention that the rates recommended are considered reasonable (and the basis
for such determination).
d) Total value of the recommendations for determining level of acceptance authority.
e) Mention that none of the TC members have any conflict of interest with the bidders
participating in the tender.
Request acceptance of recommendations by competent authority and that it is within
his powers of acceptance as per SoPP/ DFPR.
Signature Name and Designation of the Members
1 2
Date: Date:
(Name & Designation) (Name & Designation)
3 4
Date: Date:
(Name & Designation) (Name & Designation)
Remarks by the Accepting Authority:
_____________________________________________
Signature: ______________________________ Date: __________________
Name & Designation of Accepting Authority___________________________
221Manual for Procurement of Works, Second Edition, 2025
Annexure 5: Example of Formula for Price Variation Clause
[Refer Para 5.4.8-k]
(The formula for price variation should ordinarily include a fixed element, a material element
and a labour element. The figures representing the material element, and the labour element
should reflect the corresponding proportion of input costs, while the fixed element may range
from 10 to 25% (ten to twenty-five percent). That portion of the price represented by the fixed
element and profits and is not subject to variation. The portions of the price represented by
the material element and labour element along will attract price variation.)
The formula for price variation will thus be: -
𝑀𝑀1 𝐿𝐿1
�𝐹𝐹+𝑃𝑃�𝑀𝑀𝑀𝑀�+𝑏𝑏�𝐿𝐿𝑀𝑀��
𝑃𝑃𝑃𝑃 = 𝑃𝑃𝐶𝐶� �−𝑃𝑃𝐶𝐶
100
Where: -
P is then adjustment amount payable to the contractor (a minus figure will indicate a reduction
a
in the contract price) on the date of supply.
P is the contract price on the base date (which is taken as the date on which tender is due to
o
open).
F is the fixed element (as the percentage of the total price) not subject to price variation.
a is the assigned percentage to the material element in the contract price.
b is the assigned percentage to the labour element in the contract price.
(F, a and b being percentages should total 100)
L and L are the average wage indices for the quarter before the quarter in which base month
o 1
falls and for the quarter before the quarter in which date of delivery falls; respectively. For
example, for a tender opening on March 17, 2016 (base date), L would be average wage
o
index for the quarter of Oct-Dec 2015.
M and M are the material prices/ indices as average of the month, two months prior to the
o 1
month in which base month falls and average of the month, two months prior to the month in
which date of delivery falls, respectively. For example, for a tender opening on March 17, 2016
(base date), M would be prices/ index as average of the month of January 2016. All material
o
prices/ indices will be basic prices without excise duty and without any other central, state,
local taxes and duties and Octroi.
If more than one major item of material is involved, the material element can be broken up into
two or three components such as M , M , M .
x y z
The following conditions would be applicable to price adjustment:
1. There is a Time-lag period between the date of delivery/ base date respectively and the
dates on which indices/ prices are to be considered as per above formula. This time lag
can be a few months/ weeks prior to such base date/ date of delivery, depending on the
frequency of publishing/ availability of indices/ prices and the supply chain process of
manufacturing. This must be specified in the definitions of L / L and M /M indices in the
0 1 0 1
formula in the tender document as above.
2. Base date shall be assumed to be the bid submission deadline.
3. No price increase is allowed beyond original delivery period.
222Annexure 5: Example of Formula for Price Variation Clause
4. No price adjustment shall be payable on the portion of contract price paid to the contractor
as an advance/ interim payment after the date of such payment.
5. No price adjustment shall be payable if this is less than or equal to 2% (two percent) of
Po.
6. Total adjustment will be subject to maximum ceiling of ____% (to be specified in tender
document), beyond which the price variation would be capped at this level. As soon as it
comes to light that price variations are likely to go beyond this ceiling, and if the Contractor
is not agreeable to the price variation being capped at that level, he may notify the
Purchaser under ‘Frustration of Contract’ provisions in the Tender Document/ Clause, for
termination of contract.
7. Payments for works would initially be made as per the base price mentioned in the
contract. Price adjustment bill should be submitted only quarterly for the works delivered
during the quarter.
8. In GTE tenders extra care should be taken in selecting the price indices. Preferably the
price indices should be from the same country and of same currency as the country and
currency of the bidder. In case price is in a currency of a country where inflation is low and
the indices are from country with much higher inflation rates, and should be
𝑀𝑀1 𝐿𝐿1
multiplied by a correction factor of exchange rates , where E�0𝑀𝑀 is
𝑀𝑀
�the ex�c 𝐿𝐿h 𝑀𝑀a�nge rate of
𝐸𝐸𝑀𝑀
country of M and L indices with reference to currency of price P. For example, if M&L are
�𝐸𝐸1�
from India and P is in $, then E is Number of Rs. in a $ on base date and E is the exchange
o 1
rate on determination date.
9. Even if there is no price adjustment claim, contractor must submit all relevant data to prove
that there is no downward variation. In any case he must submit a declaration as follows;
“It is certified that there has been no decrease in the price because of decrease
in price variation indices in the price variation formula. In the event of any
decrease of such indices that come to light later regarding the payment claimed
by us, we shall promptly notify this to the purchaser, and we undertake to refund
and agree to the purchaser deducting any excess payment made to us in this
regard, from our future payment due.”
223Manual for Procurement of Works, Second Edition, 2025
Annexure 6: Invitation and Declaration for Negotiations
(Refer Para 6.4.10-5-c), d))
Invitation for Negotiations
(On letterhead of the procuring entity)
No: ______________________________ Dt: ________________
To M/ s_________________________________________ Registered A/ D
Sub: Tender No ---------------- opened on --------------for the execution of -------------------
Dear Sir,
The rates quoted in your tender are considered high. You are therefore, requested to come
for negotiations of rates, on.............. (date) at........... (time) at............. (venue).
You should, however, come for negotiations only in case you are prepared to furnish before
such date the declaration appended herewith.
A copy of the form in which you may submit your revised offer after negotiations is enclosed.
Yours faithfully,
Enclosure: (Authorised Officer)
(1) Form of Declaration
(2) Form of Revised Offer
FORM OF DECLARATION
(To be signed and submitted before start of negotiations)
(On company letterhead)
No:______________________________ Dt:________________
To ____________________________
Sub: Tender No ---------------- Opened on --------------for the execution of ------------------
Ref: Your invitation for negotiations No: dated:
Dear Sir,
I ____________________ duly authorised on behalf of M/ s. _______________ do declare
that in the event of failure of the contemplated negotiations relating to Tender
No.____________________ opened on __________________my original tender shall
remain open for acceptance on its original terms and conditions.
Yours faithfully,
Place:_________________________ Signatures of bidder, or officer
Date: _________________________ authorised to sign the bid documents
on behalf of the bidder
224Manual for Procurement of Works, Second Edition, 2025
Annexure 7: Format of Revised Offer in Negotiations
(Refer Para 6.4.10-5-e)
Revised Offer in Negotiations
(On company letterhead)
From…………………………………………………………………………………..
Full address…………………………………………………………………………
To ................................................
Sir,
Sub: Tender No ---------------- opened on --------------for the execution of ---------------
----------
Ref: Your invitation for negotiations no: dated:
1. On further discussions with your representatives on ………………….in response to your
letter no ……………………………….. dated ……………..
We are not prepared to reduce the rates already quoted in the original tender, which will remain
valid up to……………………………….
Or
1. I/ we reduce my/ our rates as shown in the enclosed schedule of items.
2. I/ we am/ are aware that the provisions of the original bidding document remain valid and
binding on me.
3. I/ we undertake to execute the contract as per following Schedule.........
4. I/ we agree to abide by this tender on the revised rate quoted by me/ us, it is open for
acceptance for a period of 120/ 180 days from this date, i. e., up to ………………………….
and in default of my/ our doing so, I/ we will forfeit the earnest money deposited with the
original tender/ attached herewith. Eligibility as valid tenderers shall be deemed to be the
consideration for the said forfeiture.
Yours faithfully,
Signatures of bidder or
Officer authorised to sign the bid
documents on behalf of the bidder
225Manual for Procurement of Works, Second Edition, 2025
Annexure 8: Letter (Notification) of Award (LoA) of Contract
(Refer Para 6.5.1-2)
Name of the procuring entity__________________________________________________
Letter of Award of Contract
Confidential
Contract No: [Insert date]
Contract Title:
To,
M/ s. [Insert name & address]
Sub: Award of contract for contract no: [insert contract number] and contract title: [insert
contract title]
Reference: Your offer no. [insert offer number] against our tender no. [insert tender no]
opened on [insert date of opening of tender]
Dear Sir/ Madam
I am directed to inform you that after evaluating the bid documents submitted by you on [enter
date] Government of India is pleased to inform you that you have been selected as the
successful bidder for [enter description of the work]. The total contract price shall be [enter
amount] as indicated in your financial bid submitted on [enter date], in accordance with the
procedures intimated in the relevant bid documents.
You/ your authorised representative(s) are requested to be personally present at [insert
address] for the signing of the contract by [enter date].
In this respect, we also request you to submit the performance security of [insert amount of
Rupees in words] by [insert date]. Security deposit being __ % (___ percent) of the total cost
= Rs._______________.
Please apply for refund of EMD deposited over and above the SD of if any.
You are requested to execute necessary agreement within seven days from the date of issue
of this letter in the enclosed agreement form. Special adhesive stamp of Rs.10 (ten) and
revenue stamp of Rs. One shall be affixed on the enclosed agreement form. Treasury receipts
of EMD and SD shall be deposited in office within the stipulated time limit as above.
This notification concludes the legally binding contract between you and the Government of
India, till issue of a formal contract.
Yours truly,
[Authorised Officer]
Enclosure: Agreement Form along with the schedule of delivery
226Manual for Procurement of Works, Second Edition, 2025
Annexure 9: No Claim Certificate
(Refer Para 7.5.7, 7.6.2, 7.6.5-2 )
(On company letterhead)
To,
(Contract Executing Officer)
Procuring Entity_______________________
NO CLAIM CERTIFICATE
Sub: Contract Agreement no. ---------------- dated --------------for the supply of ----------------------
---
We have received the sum of Rs. (Rupees
______________________________________only) in full and final settlement of all the
payments due to us for [mention the details] under the above -mentioned contract
agreement, between us and Government of India. We hereby unconditionally, and without
any reservation whatsoever, certify that with this payment, we shall have no claim
whatsoever, of any description, on any account, against the Procuring Entity, against
aforesaid contract agreement executed by us. We further declare unequivocally, that with
this payment, we have received all the amounts payable to us, and have no dispute of any
description whatsoever, regarding the amounts worked out as payable to us and received
by us, and that we shall continue to be bound by the terms and conditions of the contract
agreement, as regards performance of the contract.
Yours faithfully,
Signatures of contractor or
Officer authorised to sign the contract documents
on behalf of the contractor
(Company stamp)
Date:
Place:
227Manual for Procurement of Works, Second Edition, 2025
Annexure 10: A Sample MoU
(Refer Para 3.1.3-5; The sample is for illustrative purpose only and procuring entity may
change the format suiting to their requirement. If felt necessary, procuring entity may also get
the MoU document vetted from the Ministry of Law/ or procuring entity’s legal cell)
MEMORANDUM OF UNDERSTANDING117
between
[Name of Procuring Entity] and
[Name of Project Management Consultant PWO/ PSU]
For Construction of [Name of Work(s)] at [Name of Location(s) of Work]
This, Memorandum of Understanding (hereinafter called “MoU") signed between [Name of
Procuring Entity] (hereinafter called “Procuring Entity") represented by its Chief Engineer of
one part,
And
[Name of Project Management Consultant PWO/ PSU] (hereinafter called "Project
Management Consultant") represented by its Chief Engineer on other part.
‘Procuring Entity’ and ‘Project Management Consultant’ are also referred to individually as
'Party' and collectively as ’Parties' wherever the context so requires
Whereas ‘Project Management Consultant’ have agreed to undertake the work of Construction
of abovementioned Work(s) at abovementioned location(s) for ‘Procuring Entity’ as a ‘Deposit
Work’ on Project Management Consultant (PMC) basis.
Now, therefore it is agreed between the Parties that:
(A) Assigning of Work by ‘Procuring Entity’ to ‘Project Management Consultant’.
1. {In case of MoU of collection of works or of framework nature ‘Procuring Entity’ will assign
a work to the ‘Project Management Consultant’ through a letter after due approval of the
competent authority. A work specific MoU would be signed along with approval of
Preliminary Estimates.}. ‘Procuring Entity’ will provide all relevant available documents
related to Land, Site Details, functional and space requirements (or Various Facilities,
Special Requirements/ Features and Broad Specifications for specialised Equipments
and Plants), Layout Plans etc for facilitating Project Execution by ‘Project Management
Consultant’ along with A & E Consultants
2. ‘Project Management Consultant’ shall appoint, if any, competent Architectural and
Engineering (A & E) Consultant commensurate with size and nature of the work after
following due process.
(B) Approval of Preliminary Project Report (PPR) & Detailed Project Report (DPR)/
Preliminary Estimate (PE)
3. Preliminary Project Report (PPR) shall be prepared by ‘Project Management Consultant’
based on functional & space requirements as intimated by ‘Procuring Entity’ and
submitted to ‘Procuring Entity’ for its approval. {It would be a joint endeavour on part of
117 The present sample is based on MoU with PWO. Work to PSUs is to be assigned on the basis of competitive
bidding amongst them and the MoU in such cases would be based on the provisions in the bidding documents.
This MoU would normally be for a specific standalone work but could also be for a Project consisting of a collection
of related works. In case of MoU with Public work Organisations (PWOs) it could also be as a long-term framework
MoU. In case of MoU of collection of works or of framework nature, extra provisions are shown in italics within
{brackets}, which can be omitted in standalone MoUs
228Annexure 10: A Sample MoU
both ‘Procuring Entity’ and ‘Project Management Consultant’ in consultation with
consultants & experts to develop Standard Plans & Specifications for Works & Services
including Furniture, Equipments, Plants etc. pertaining to various categories of Works
etc.}118
4. Based on approved PPR, ‘Project Management Consultant’ shall prepare Detailed
Project Report (DPR)/ Preliminary Estimate (PE) consistent with their norms & standards,
containing Milestones and commensurate activities to be accomplished against each
Milestone & Baseline Programme in the form of CPM Network depicting clearly Dates of
Start and Completion of the work {along with Work specific draft MoU}118 and submit it to
‘Procuring Entity’ along with all relevant input information, documents and Drawings etc.
for approval of ‘Procuring Entity’, within 8 (eight) weeks of receipt of approval for PPR.
‘Project Management Consultant’ shall use C.P.W.D. Analysis of Rates119 for Delhi
(DSR) for framing the DPR/ PE. Non - DSR Items shall be incorporated in the Detailed
Estimates only when these are not either readily available in DSR. Detailed reasons and
justifications for including Non-DSR Items shall have to be furnished by ‘Project
Management Consultant’. ‘Procuring Entity’ shall accord approval to DPR/ PE {and Work
specific Draft MOU}118 containing Milestones and commensurate activities to be
accomplished against each Milestone & Baseline Programme in the form of CPM
Network and issue Administrative Approval (A/A) &. Expenditure Sanction (E/S) in about
8 (eight) weeks of its submission by ‘Project Management Consultant’.
5. On receipt of the A/A and E/S, the ‘Project Management Consultant’ shall prepare and
accord Technical Sanction (TS) to detailed and coordinated design of all the
Architectural, Civil, Electrical, Mechanical, Horticulture and any other services included
in the scope of the sanction and of the Detailed Cost Estimates containing the detailed
specifications and quantities of various items prepared on the basis of the schedule of
rates maintained by CPWD or other Public Works Organizations.
(C) Release of Funds, Payment of Bills
6. ‘Project Management Consultant’ has agreed to charge [insert the Fee agreed] for
carrying out the assigned Deposit Work.
7. ‘Procuring Entity’ shall release Initial Deposit of 10% of the approved preliminary estimate
amount to ‘Project Management Consultant’ within 2 (two) weeks of issuing
Administrative Approval and Expenditure Sanction (A/A & E/S) {and signing work specific
MoU along with Milestones & Baseline Programme between Chief Engineers of
‘Procuring Entity’ & ‘Project Management Consultant’, whichever is later}118.
7.1 ‘Procuring Entity’ shall release additional deposit up to 10 (ten) % of approved
estimate amount to ‘Project Management Consultant’ within 2 (two) weeks of award
of first major construction contract on the basis of specific request made by ‘Project
Management Consultant’ in this regard along with proper reasons and justifications
acceptable to ‘Procuring Entity’ for additional requirement of fund over and above
already released initial deposit of 10 (ten) % of approved preliminary estimate
amount in terms of Clause – 7 above.
8. After the Initial and Additional Deposit as per clause 7 and 7.1 above and subsequent
release of Fund shall be in the form of recoupment of the expenditure made by ‘Project
Management Consultant’ on the work as per monthly expenditure statements which shall
118 Applicable to framework MoUs or MoUs for collection of projects
119 Replace by any other relevant Schedule of Rates for the concerned location/ project
229Manual for Procurement of Works, Second Edition, 2025
be submitted in Monthly Expenditure Statement (MES) in a form similar to CPWD Form
– 65 (Account of Deposit works). While submitting MES, and placing demand for release
of fund in the form of recoupment of the monthly expenditure already incurred on the
work, ‘Project Management Consultant’ will also submit a comprehensive report on
progress of physical completion of various activities and Milestones vis-a-vis earlier
planned activities/ Milestones for the overall completion of the specific work mutually
decided between ‘Procuring Entity’ & ‘Project Management Consultant’ {and included as
part of work specific MOU} 118for enabling ‘Procuring Entity’ to keep effective check on
utilization of fund as well as physical progress of the work.
9. The fund subsequent to Initial Deposits shall be released by ‘Procuring Entity’ to ‘Project
Management Consultant’ within 4 (four) weeks of submission of request by ‘Project
Management Consultant’ along with all documents as described in Clause - 8 above. As
per the monitoring of physical and financial progress indicators, ‘Procuring Entity’ will
take necessary steps for recoupment of the monthly expenditure incurred on the basis of
the Fund Utilization Certificate.
10. If any fund requirement is specifically made by ‘Project Management Consultant’ after
the work has been assigned to ‘Project Management Consultant’ for undertaking pre-
construction activities related to the Project Execution etc., the same shall be released
by ‘Procuring Entity’ within 2 (two) weeks of such specific demand provided the amount
is within ceiling limit of Rs 25 (twenty-five) lakh. The amount so released to ‘Project
Management Consultant’ shall he adjusted from, Initial Deposit amount.
11. ‘Project Management Consultant’ shall intimate ‘Procuring Entity’ about any excess
expenditure likely to be incurred over and above the approved Projected Cost and also
about possibility of time overruns, as soon as it comes to the knowledge along with
reasons and justifications thereof for necessary approvals from ‘Procuring Entity’ before
continuing/ incurring the extra/ additional expenditure.
12. The ‘Project Management Consultant’ shall be responsible for certifying and making
payment of Bills of the Contractors/ Agencies engaged by them and make available Final
Statement of Accounts in Standard Format to ‘Procuring Entity’ & also provide copies of
Final Bills for all Contract Packages and other expenditure incurred related to Project
Construction after the Completion of the Work. In addition, should ‘Procuring Entity’ ask
for any other details from ‘Project Management Consultant’ regarding Utilization of Fund
at any stage, Detailed Estimates, Technical Sanctions, Award of Works, Running Bills
etc., the same shall be provided by ‘Project Management Consultant’ readily.
13. The ‘Procuring Entity’ shall settle compensation/ levies, if so required to be paid based
on recommendation by ‘Project Management Consultant’ related to the Project works,
under Workmen's Compensation Act or any other Act or Law of the Central or the State
Government.
(D) Execution of Work
14. The ‘Project Management Consultant’ shall obtain necessary Statutory Approvals/
Permission/ Clearances/ Certificates from the concerned Local Bodies & Statutory
Authorities like District Authorities, Municipal Corporation, Panchayati Raj Institutions,
Town Planning Board, Electricity Board/ Fire Department, State/ Central Pollution Control
Boards, Stale/ Central Environmental Authorities, Forrest and Wild-life authorities etc (for
e.g. removal of trees, re-locating utilities; conversion of railway level crossings, laying of
railway sidings needed by the work; rehabilitation and resettlement of persons affected
by the work; traffic control; mining of earth and stone; interfering protected monuments;
230Annexure 10: A Sample MoU
blasting permission, environmental/ forest/ wild-life clearances; and shifting of religious
shrines etc) to start the work have been obtained. The ‘Procuring Entity’ shall be
responsible for providing all assistance to ‘Project Management Consultant’ in this
process.
15. Works shall not be awarded by ‘Project Management Consultant’ to contractors till all
statutory approvals/ certificates/ permissions required for taking up the work, are in place.
16. ‘Procuring Entity’ shall make the work site available free from encumbrances to ‘Project
Management Consultant’. ‘Procuring Entity’ shall also ensure Availability of auxiliary
services - like roads, power, water, solid & liquid waste disposal system, street lighting
and other civic services. ‘Project Management Consultant’ shall provide necessary
support in this process.
17. ‘Project Management Consultant’ shall permit ‘Procuring Entity’ to inspect or monitor the
works, either itself or through Third party as and when it desires for assessing actual
progress and quality of construction and any other aspects.
18. ‘Procuring Entity’ shall provide security clearance and ensure free access for ‘Project
Management Consultant’ staff/ Employees and their workers working at Work site in case
these are required. ‘Project Management Consultant’ shall provide necessary support in
this process.
19. ‘Project Management Consultant’ shall ensure adequate availability of men & material by
their contractors.
20. ‘Project Management Consultant’ shall ensure that it’s Contractor(s) implement required
Health, Safety & Environmental (HSE) practices at the Construction Sites and they also
comply with all statutory obligations related to workmen deployed at the Construction
Site. ‘Project Management Consultant’ will act as Principal Employer in respect of all
Statutory Obligations related to workmen deployed at the site in execution of the work.
21. ‘Procuring Entity’ shall permit and facilitate to the ‘Project Management consultant’ all
utilities required for construction e.g. drawl of Ground Water, obtaining electricity
connection, putting up Labour Camps/ Huts inside the available space for facilitating
construction by contractors engaged by ‘Project Management Consultant’. ‘Project
Management Consultant’ shall provide necessary support in obtaining permission, if any,
of Local Bodies in this regard. The cost in this regard borne by ‘Procuring Entity’, if any,
should not be duplicated as reimbursement by the ‘Project Management Consultant’.
22. As soon as the work is allocated, ‘Project Management Consultant’ shall prepare and
submit to ‘Procuring Entity’ an Integrated Programme Chart for the execution of work
showing clearly all activities from the start of work to completion with details of manpower
and other input information required for the fulfilment of the timelines given therein.
‘Project Management Consultant’ will intimate ‘Procuring Entity’, Project Team, both on -
site and off-site, starting from Chief Engineer to Junior Engineer associated with
execution of the work. The Programme Chart should inter-alia include descriptive note
explaining sequence of the various activities, CPM Network Milestones etc. This will form
Base Line Programme, and the subsequent progress of the work shall be reviewed with
reference to this during periodic Progress Review Meeting preferably monthly. Any
increase in time period from the Base Line Value shall be construed as Time Overrun
23. ‘Project Management Consultant’ shall be responsible for providing Physical Progress
Reports to ‘Procuring Entity’ in the form of CPM (Critical Path Method) Network on
monthly basis for reviewing of the progress of the work vis - a vis Base Line Programme
231Manual for Procurement of Works, Second Edition, 2025
and taking all necessary remedial actions, after considering ‘Procuring Entity’s
observations made in respect of quality and progress of the work during the monthly/
periodic Project Review Meetings. To ensure timely completion of work as per mutually
agreed time-schedule/ milestones and within agreed Cost.
24. ‘Project Management Consultant’ shall also be responsible for providing to ‘Procuring
Entity’ Financial Progress Reports of the project and up to date Expenditure incurred on
the work on monthly basis along with Certificate of Utilization of Fund against Fund earlier
released to ‘Project Management Consultant’ by ‘Procuring Entity’.
25. ‘Project Management Consultant’ shall be responsible for total Project Management
including day-to-day supervision of works, maintenance of all project records and
executing the works as per prescribed guidelines, their own Works Manual, Codes,
Books of Specifications etc and also in accordance with relevant and extant provisions
of General Financial Rules (GFR), 2017.
(E) Project Management, Cost and Time Control
26. ‘Project Management Consultant’ shall implement a system of ‘Project Team Concept'
with dedicated group of Engineers under single and unified command for implementation
of projects from concept to completion and call composite tenders to reduce the number
of packages for better management. ‘Project Management Consultant’ shall be obliged
to adopt all the above said measures to successful completion of the works within
Approved Cost and agreed Time period.
27. ‘Project Management Consultant’ shall be responsible for managing the Project from
concept to commissioning effectively and efficiently to ensure desired/ proportionate
pace of progress and completion of work is achieved progressively vis-à-vis approved
Plans & Specifications and in Terms and Conditions of the MOUs and mutually agreed
milestones and timelines and approved cost, taking with due diligence all required pro-
active remedial measures including provision of stringent and elaborate enforceable
Clauses to this effect and also making time as the essence of contract in the Bid and
Contract Documents. ‘Project Management Consultant’ shall provide for clauses in the
contract and established procedure to recover liquidated damages from their contractors/
agencies. The liquidated damages recovered from the contractors for delay, if any, shall
be credited to ‘Procuring Entity’ in the project accounts.
28. The approved Initial Project Cost & Timeline should not exceed during execution of the
Project except for reasons like increase in cost index during construction period, revised
specifications or extra work over approved estimate carried out at the request of
‘Procuring Entity’ etc. In case of either increase in earlier approved cost or timeline,
detailed reasons and justifications, based on verifiable facts and figures, shall have to be
provided by ‘Project Management Consultant’ along with comprehensive proposals for
revision in earlier approved Project Cost & Timeline, which shall be intensively examined
by ‘Procuring Entity’ in consultation with ‘Project Management Consultant’ before
approval is accorded to their proposals. No additional expenditure over and above the
earlier approved Project Cost shall be incurred by ‘Project Management Consultant’
without prior approval of ‘Procuring Entity’. Upward Revisions in either Cost or Timeline
should be an exception rather than a rule and for achieving this objective, all required
efforts shall be made by ‘Project Management Consultant’
29. At any time, it appears to ‘Procuring Entity’ that the actual progress of the work does not
conform to the approved programme referred above and intimated to ‘Project
Management Consultant’ by ‘Procuring Entity’, detailed reasons and justifications for
232Annexure 10: A Sample MoU
such delays shall have to be provided by ‘Project Management Consultant’, which shall
be examined by ‘Procuring Entity’ to re-Schedule the Programme, if any. Progress
Review Meetings preferably monthly shall be held between ‘Project Management
Consultant’ and ‘Procuring Entity’ for reviewing the progress of works based on Baseline
Programme/ Milestones etc. and also for resolving co-ordination issues, if any including
fixing priority of some works, facilities and services for their early completion and handing
over to ‘Procuring Entity’ for putting item to use for intended purpose. A&E Consultants
may also participate. ‘Project Management Consultant’ will also designate a nodal officer
in respect of specific work for coordinating with ‘Procuring Entity’ and A & E Consultant.
Such designated nodal officer shall be suitably empowered and authorized to lake
decisions in work related issues so that delays are minimized for achieving timely
completion of work.
(F) Disputes, Enquiries and Queries
30. ‘Project Management Consultant’ shall be responsible for observing due diligence and
adopting all possible measures at various stages of work execution so as to avoid
Arbitration/ Litigation end other hindrances and the work is completed within optimum
cost and time in hassle free environment
31. ‘Project Management Consultant’ shall be responsible for defending all Arbitration and
Court Cases arising out of execution till the works end examining the Arbitration Award/
Decree of Court or Law/ liability by appropriate authority in ‘Project Management
Consultant’ and forwarding the same along with a comprehensive report on the
circumstance leading to the Arbitration/ Court Cases and the reasons and justification as
to why an appeal against such awards/ decree was not considered necessary briefing
out inter-alia details of the award and clear cut recommendations The decision of the
competent authority in ‘Project Management Consultant’ to accept The award or
challenge the same in a Court of Law will be binding on the ‘Procuring Entity’.
32. ‘Procuring Entity’ shall settle and pay the final claims which may be decreed by a Court
of Law, Tribunal or by award of an Arbitration in relation-to the-deposit work, based on
recommendations of ‘Project Management Consultant’.
33. ‘Project Management Consultant’ shall be responsible for redressing and complying with
the observations of CTE/ CVC, Auditors, Statutory Authorities, Local Bodies, Municipal
Corporation etc. pertaining to the work under intimation to ‘Procuring Entity’. Providing
all work -related information promptly to ‘Procuring Entity’ for replying to Parliament
Questions, queries from various Constitutional & Statutory Authorities.
(G) Completion and Handing-over of Completed Work and Facilities
34. ‘Project Management Consultant’ shall obtain work Completion/ Occupancy Certificates
& Clearances for completed Work and Facilities before handing over the same to
‘Procuring Entity’ for putting them to functional use. ‘Procuring Entity’ shall provide all
assistance in this process.
35. ‘Project Management Consultant’ shall hand over to ‘Procuring Entity’ or its Authorized
Representative completed Work including all Services and Facilities constructed in
accordance with the Approved Plans, Specifications fulfilling all techno-functional
requirements agreed with ‘Procuring Entity’ along with Inventory, As built - Drawings,
Maintenance Manual/ Standard Operating Procedure ( SOP) for Equipments and Plants,
all clearances /Certificates from Statutory Authorities, Local Bodies etc.
36. On completion of the work, a Project Completion Report (PCR) shall be submitted by
233Manual for Procurement of Works, Second Edition, 2025
‘Project Management Consultant’ duly bringing out the Final Project Completion Cost,
Total Time period taken to complete the work and also completed Project Components
as against the approved Cost, Time and Project Components. The PCR shall be
submitted along with Final Project Accounts including return of unspent balance amount
to ‘Procuring Entity’ within one month of settlement of final bills of the contractors/ other
agencies deployed on the work by ‘Project Management Consultant’.
(H) Termination of MoU
37. If ‘Procuring Entity’ decides to terminate this MOU or decides to drop/ abandon the work
after substantial preliminary work has been done by ‘Project Management Consultant’ on
the work, both ‘Project Management Consultant’ and ‘Procuring Entity’ shall mutually
decide the loss incurred by ‘Project Management Consultant’ for payment by the latter to
the former. In case of abandonment of project/ work by ‘Procuring Entity’ during
construction stage, ‘Procuring Entity’ shall pay to ‘Project Management Consultant’, after
determining the value of the works, goods and contractor(s) documents and any other
sums clue to them for work executed in accordance with the MOU, to help liquidate only
such liabilities as were squarely needed towards construction/ consultant agencies
engaged on the work, in a fair and reasonable manner.
(I) Miscellaneous
38. Disputes between ‘Procuring Entity’ and ‘Project Management Consultants’: As
dispute resolution mechanism for implementation of the provisions of this MoU, at the
first instance the issues involved shall be brought before Chief Engineer of ‘Procuring
Entity’ and concerned Chief Engineer of ‘Project Management Consultant’ for their
resolution. In case, however, disputes/ differences between the parties do not get
resolved, the matter shall be escalated to higher level in ‘Procuring Entity’, and ‘Project
Management Consultant’, who shall be above the level of CE in the respective
organizations. They shall submit a comprehensive report and recommendation to
‘Procuring Entity’ and ‘Project Management Consultant’ for facilitating final decision in
the matter.
39. Individual and joint responsibilities of the Parties shall be as per clauses mentioned
above.
40. No amendment in Terms & Conditions of the MoU shall be valid and effective unless it is
in writing and duly signed by authorised representatives of ‘Procuring Entity’ and ‘Project
Management Consultant’. Each party shall give due consideration to any proposal for
amendment/ modification made by other party with proper justifications thereof.
41. Provisions, if any, made in respect of deposit works in ‘Project Management Consultant’s
Works Manual or Codes shall stand modified to the extent of the stipulations made in this
MoU for execution of ‘Procuring Entity’ works by ‘Project Management Consultant’.
Signatures and Witnesses
Date:_______________________ Place: _______________________________
234Manual for Procurement of Works, Second Edition, 2025
Annexure 11: Flowchart of Process of Procurement of
Works
(Refer Para 1.15)
Preparation of perspective plan for procurement of works
Para 2.1
Preparation of Preliminary Project Report (PPR) or Rough Cost
Estimate - Para 2.2
Acceptance of Necessity & issue of In-principle Approval
Para 2.3
Preparation of Detailed Project Report (DPR) and Preliminary
Estimates – Para 2.4
Detailed Designs,
Issue of Administrative Approval
Detailed Estimates &
(A/A) & Expenditure Sanction Appropriation of Funds
Technical Sanction
(E/S) – Para 2.5 Para 2.7
Para 2.6
Preparation of Tender document
Open Tender beyond Limited Tender upto Rs. Single Tender cases
Rs.10 lakh Para 3.7 10 lakh or cases covered covered as per Para
as per Para 3.10 3.12
Single Stage System Two Stage System where Pre-qualification
where feasible to work out not feasible to work out Bidding (PQB) Para
schedule of quantity & detailed specifications 3.9
formulate detailed Para 3.4-b)
specifications Para 3.4-a)
First stage solicit proposal relating Second stage Bids are invited from
to technical quality & other these bidders who fulfil prescribed
characteristics of construction technical/ financial criteria
…….Contd: Submission and Evaluation of Bids
235Annexure 11: Flowchart of Process of Procurement of Works
Procedure for Submission and Evaluation of Bids –a flowchart
Submission of Bids
Para 4.11
Opening of Bids & Evaluation
Para 4.13 and Para 6.1
Preliminary examination of Bids to determine Bids which are
responsive Bids Para 6.3
Evaluation of Responsive Bids (to determine L1/ H1) - Para 6.4
Preparation of Tender Committee Recommendations/ Report –
Para 6.2.8
Award of Work Para 6.5
Contract Management – Para 7.1
Execution & Monitoring of Work – Para 7.2
Quality Assurance – Time Monitoring Financial Monitoring
Para 7.3.4 Para 7.4 Para 7.5
Completion and Contract Disputes, Conflicts & Breach and
Closure Para 7.6 Termination of Contract - Para 7.7,
7.8
236Manual for Procurement of Works, Second Edition, 2025
Annexure 12: Additional Resources Relating to
Procurement of Works
(Refer Para 2.8)
1. Department of Expenditure, Ministry of Finance
i) Manuals for Procurement of Goods, Second Edition, 2024
https://doe.gov.in/files/circulars_document/Manual_Goods_2024.pdf
ii) Manual for Procurement of Consultancy Services, Second Edition, 2025:
https://doe.gov.in/files/whats_new_documents/MfPoCS_2025.pdf
iii) Manual for Procurement of Non-Consultancy Services, 2025
https://doe.gov.in/files/whats_new_documents/MfPoNCS_2025_0.pdf
iv) General Financial Rules, 2017 (GFR):
https://doe.gov.in/files/whats_new_documents/06032025.pdf
2. Department of Economic Affairs, Ministry of Finance
i) PPP Cell, Infrastructure Division:
https://www.pppinindia.gov.in/
3. CPWD Publications:
http://cpwd.gov.in/Documents/cpwd_publication.aspx
i) CPWD Works Manual, 2024:
https://cpwd.gov.in/Publication/CPWD_Works_Manual_2024.pdf
ii) Standard Operating Procedure for CPWD Works Manual 2024:
https://cpwd.gov.in/Publication/SOP_2024.pdf
iii) CPWD Maintenance Manual 2023:
https://cpwd.gov.in/Publication/Maintenance_manual_2023.pdf
iv) General Conditions of Contract (GCC) Maintenance Works 2023:
https://cpwd.gov.in/Publication/GCC_CON_Misc_29_Maintenance_Works_2023.pdf
v) General Conditions of Contract (GCC) EPC Projects 2024:
https://cpwd.gov.in/Publication/General_Conditions_of_Contract_2024_EPC_Projects.pdf
vi) General Conditions of Contract (GCC) Construction Works 2023:
https://cpwd.gov.in/Publication/GCC_CON_Misc_30_Construction_Works_2023.pdf
vii) GCC 2014: https://cpwd.gov.in/Publication/GCC-2014-Correction-Slip-CON-302.pdf
4. Plinth Area Rates
i) Supplement for Specialized E&M Works 2014:
https://cpwd.gov.in/Publication/SupplementPAR14_SplEnM.pdf
ii) Plinth Area Rates 2023:
https://cpwd.gov.in/Publication/PLINTH_AREA_RATES_2023.pdf
5. Analysis of Rates for Delhi
i) 2023 Vol I: https://cpwd.gov.in/Publication/CPWD_DAR_Vol_I_14092023-Civil.pdf -
ii) 2023 Vol II: https://cpwd.gov.in/Publication/CPWD_DAR_Vol_II_14092023_Civil.pdf
iii) 2022 -E & M: https://cpwd.gov.in/Publication/DAR_2022.pdf
237Annexure 12: Additional Resources Relating to Procurement of Works
6. Schedules of Rates (Civil)
i) Delhi Schedule of Rates (DSR) 2023 Vol-I:
https://cpwd.gov.in/Publication/DSR_Vol_1_Civil.pdfii)
ii) DSR 2023 Vol-II:
https://cpwd.gov.in/Publication/DSR_Vol_2_Civil.pdf
7. Specifications (Civil)
i) Specifications Volume I 2019: https://cpwd.gov.in/Publication/Specs2019V1.pdf
ii) Specifications Volume II 2019: https://cpwd.gov.in/Publication/Specs2019V2.pdf
8. Other Publications
i) Compendium of High -Rise Buildings 2019:
https://cpwd.gov.in/Publication/Compendium_of_High_Rise_Buildings_December_2019.pdf
ii) Various Local Approvals and Clearances Required For Large Scale Project in Metro
Cities
9. National Building Code of India 2016 issued by Bureau of Indian Standards:
https://www.bis.gov.in/standards/technical-department/national-building-code/?lang=en
10. GeM- Central Public Procurement Portal (CPPP): https://eprocure.gov.in/cppp/
238Manual for Procurement of Works, Second Edition, 2025
Annexure 13: Template for Qualification Criteria for Joint
Ventures
(Refer para 3.9.1-4-g and para 4.6.2-3)
1. As mentioned under para 4.6.2-3 above, in certain cases of high value works procurement,
the Joint venture firms are allowed to participate. The procuring entity may seek for the
following requirements preferably, for the JV firms to meet:
a) Separate identity/ name shall be given to the Joint Venture.
b) Ideally, a Joint Venture (JV) should have no more than three members, but a
maximum of five members can be allowed. Among the members, one must be the
Lead Member, holding at least 51% of the interest in the JV. Other members should
have a share of at least 20% each in JVs with up to three members or 10% each in
JVs with more than three members. If there are foreign members in the JV, the Lead
Member must be an Indian firm/company with a minimum share of 51%.
c) A member of the JV cannot participate in the same tender as an individual or as part
of another JV.
d) The tender form should be obtained and submitted in the name of the JV, not any
individual member. However, the tender form can be submitted by the JV, any of its
constituent members, or a person authorized by the JV through a Power of Attorney.
e) The Bid Security/Earnest Money Deposit (EMD) should be deposited in the name of
the JV by either the JV itself or an authorized representative. If the JV has not been
legally established by the tender submission date, the Bid Security can be submitted
in the name of all JV members as per the MOU, regardless of each member's share
in the JV.
f) The procuring entity should seek the MOU signed between the members of the Joint
Venture (JV) in the tender document. The MOU should include all the important
information about the JV members, like who they are, how they'll share responsibilities
and financial commitments, and what they're responsible for in terms of technical
matters and other obligations.
g) Once the tender is submitted, the Memorandum of Understanding (MoU) should not
be altered during the tender's validity. Failure to comply may result in the forfeiture of
the full Bid Security/Earnest Money Deposit (EMD). Changes to the composition of
the Joint Venture (JV) after tender submission and during the contract are generally
not allowed, except when necessary, due to legal requirements, with the condition that
the minimum eligibility criteria of the JV remain unaltered. The Lead Member of the
JV must remain constant. Non-compliance with these rules will render the offer invalid.
h) When a contract is awarded to a Joint Venture (JV), the JV should provide a single
Performance Guarantee as required by the tender conditions. It's important to note
that all guarantees, such as the Performance Guarantee, Bank Guarantee for
Mobilization Advance, Machinery Advance, etc., should be issued in the name of the
JV as a whole. Dividing or splitting these guarantees among individual JV members
should not be allowed.
i) Upon receiving the Letter of Acceptance (LoA), the Joint Venture (JV) entity to which
the contract has been awarded, with the same ownership structure as declared in the
MOU/JV Agreement submitted with the tender, must be officially registered. The type
239Annexure 13: Template for Qualification Criteria for Joint Ventures
of registration will depend on whether the JV entity is becoming a Company under
'The Companies Act - 2013,' a Partnership Firm under 'The Indian Partnership Act,
1932,' or an LLP under 'The LLP Act 2008.' A separate PAN (Permanent Account
Number) should also be obtained for this entity.
j) All relevant documents, including the PAN, must be provided to the procuring entity
before the contract agreement is signed. Failure to comply with this requirement within
60 (sixty) days of receiving the LoA may result in contract termination. If the contract
is terminated, the procuring entity may forfeit the entire Bid Security/Earnest Money
Deposit and other dues owed to the Contractor under the contract. The registered
entity should include specific clauses as specified in the registered documents.
k) The entity to which the contract is awarded shall have joint and several liability,
meaning that all members are equally responsible for executing the project in
accordance with the General and Special Conditions of Contract. They are jointly and
individually liable for any losses or damages caused to the procuring entity during the
contract's execution or due to non-execution. The registration of the entity remains
valid throughout the contract, including any extensions and the maintenance period
after project completion. The entity must comply with Indian laws and regulations in
all aspects of its operations under the contract.
l) In the context of Joint Ventures, certain authorizations and restrictions apply. The
members of the Joint Venture are required to appoint a Lead Member from within the
JV members, who shall be acting as the authorized member of the JV and will
represent the JV in dealings related to the tender. The Lead member/ authorized
member is responsible for actions such as signing the agreement, entering into the
contract, receiving payments, witnessing joint measurements of work completed, and
signing measurement books pertaining to the contract. All notices and
correspondence regarding the contract will be directed solely to this authorized
member.
m) Furthermore, it's important to note that no member of the Joint Venture has the
unilateral right to assign or transfer their interest, rights, or liabilities within the contract
without obtaining written consent from the remaining member(s) and the procuring
entity, specifically for the respective tender or contract. These provisions help ensure
clarity, accountability, and compliance within the Joint Venture framework.
n) The procuring entity should seek the following documents from the JV along with the
tender in addition to the qualification requirements as stated in the tender document:
i) In case one or more of the members of the JV is/are partnership firm(s), following
documents shall be submitted:
1) A notarized copy of the Partnership Deed or a copy of the Partnership deed
registered with the Registrar,
2) A copy of consent of all the partners or individual authorized by partnership firm,
to enter into the Joint Venture Agreement on a stamp paper,
3) A notarized or registered copy of Power of Attorney in favour of the individual
to sign the MOU/JV Agreement on behalf of the partnership firm and create
liability against the firm.
4) An undertaking by all partners of the partnership firm that they are not
blacklisted or debarred by any Ministry / Department of the Govt. of India from
participation in tenders.
240Manual for Procurement of Works, Second Edition, 2025
ii) In case one or more members is/are Proprietary Firm or HUF, the following
documents shall be enclosed:
1) A copy of notarized affidavit on Stamp Paper declaring that his Concern is a
proprietary Concern, and he is sole proprietor of the Concern OR he who is
signing the affidavit on behalf of HUF is in the position of ‘Karta’ of Hindu
Undivided Family (HUF) and he has the authority, power and consent given by
other members to act on behalf of HUF.
iii) In case one or more members of the JV is/are companies, the following
documents shall be submitted:
1) A copy of resolutions of the Directors of the Company, permitting the company
to enter into a JV agreement;
2) The copies of MOA (Memorandum of Association)/ AOA (Articles of
Association) of the company;
3) A copy of Certificate of Incorporation;
4) A copy of Authorization/copy of Power of Attorney issued by the Company
(backed by the resolution of Board of Directors) in favour of the individual to
sign the tender, sign MOU/JV Agreement on behalf of the company and create
liability against the company.
iv) In case one or more members of the JV is/are LLP firm/s, the following documents
shall be submitted:
1) A copy of LLP Agreement
2) A copy of Certificate of Incorporation of LLP
3) A copy of resolution passed by partners of LLP firm, permitting the Firm to
enter into a JV agreement
4) A copy of Authorization /copy of Power of Attorney issued by the LLP firm
(backed by resolution passed by the Partners) in favour of the individual, to
sign the tender and/or sign the MOU/ JV agreement on behalf of the LLP and
create liability against the LLP.
5) An undertaking by all partners of the LLP that they are not blacklisted or
debarred by Railways or any other Ministry / Department of the Govt. of India
from participation in tenders / contracts as on the date of submission of bids,
either in their individual capacity or in any firm/LLP or JV in which they were /
are partners/members. Any Concealment / wrong information in regard to
above shall make the contract liable for determination under Clause 62 of the
Standard General Conditions of Contract.
v) In case one or more members of the JV is/are Society/s or Trust/s, the following
documents shall be submitted:
1) A copy of Certificate of Registration
2) A copy of Memorandum of Association of Society/Trust Deed
3) A copy of Rules & Regulations of the Society
4) A copy of Power of Attorney, in favour of the individual to sign the tender
documents and create liability against the Society/Trust.
2. Credentials & Qualifying Criteria for JV
Technical, financial eligibility and Bid capacity of the JV shall be adjudged based on
satisfactory fulfilment of the following criteria:
241Annexure 13: Template for Qualification Criteria for Joint Ventures
a) Technical Eligibility Criteria (‘(i)’ or ‘(ii)’ mentioned here under):
i) For Contracts without composite components
The technical eligibility criteria for the contract can be met either by the Joint Venture
(JV) as a whole or by the Lead Member of the JV. For the other non-lead members
of the JV who do not individually meet the technical eligibility criteria as outlined in
the tender document, procuring entity should preferably mention certain percentage
(say 10%) of the total cost of project in the tender document, that each of them must
demonstrate in the form of a technical capacity. This means that every non-lead
member of the JV should have successfully completed or substantially advanced a
similar project within the past years (say 5 years), up to the month preceding the
tender invitation, with a minimum value in percentage as mentioned in the tender
document, of the advertised tender value.
ii) For Contracts with composite components
1) The technical eligibility criteria for the main part of the contract can be met by
either the entire Joint Venture (JV) or the Lead Member. For other components
of the work, the criteria can be met by either the JV as a whole or any individual
member of the JV. However, non-lead members of the JV who do not meet
the technical eligibility for any component of the work must demonstrate a
technical capacity equal to a certain percentage (e.g., 10%) of the cost
specified for that component in the technical eligibility criteria. This means that
each non-lead member should have successfully completed or substantially
progressed in a similar project within the last seven years, ending on the last
day of the month preceding the tender invitation, with a minimum value of a
certain percentage (e.g., 10%) of the cost specified for that component in the
technical eligibility criteria.
2) The Major component of the contract for this purpose shall be the component
of contract having highest value. In cases where value of two or more
component of contract is same, any one work can be classified as Major
component of contract.
3) Value of a completed contract done by a Member in an earlier JV shall be
reckoned only to the extent of the concerned member's share in that JV for the
purpose of satisfying his/her compliance to the above-mentioned technical
eligibility criteria in the tender under consideration.
4) For the purpose of value of work for the past experience of a firm in a JV, credit
shall be given in proportion of the percentage share of the firm in that JV. For
experience of key activities credit shall be given for execution of the quantity
of that specific activity executed by the firm as part of a JV, duly certified by
the Employer. If the Employer’s Certificate does not indicate the specific
quantity of key activity/activities executed by each partner, in such a case
credit for quantity of each key activity shall be given as per following provisions
in order of priority:
4a. As per details given in JV agreement forming part of the relevant Contract
Agreement.
4b. If JV agreement does not provide such details, then credit shall be given in
proportion of the percentage share of the firm in that JV.
242Manual for Procurement of Works, Second Edition, 2025
5) In case a JV quoting for the tender has executed similar work and construction
experience in key activities, with the same constitution of JV, the requirement
specified to be met shall be considered to have been met treating the JV as a
single entity for this purpose
iii) Financial Eligibility Criteria
1) The “financial capacity” of the lead partner of JV shall not be less than 51% of
the financial eligibility criteria mentioned in the tender document.
2) The arithmetic sum of individual “financial capacity” of all the members shall
be taken as JV’s “financial capacity” to satisfy this requirement.
Note: Contractual payment received by a Member in an earlier JV shall be reckoned only to
the extent of the concerned member’s share in that JV for the purpose of satisfying compliance
of the above-mentioned financial eligibility criteria in the tender under consideration.
243Manual for Procurement of Works, Second Edition, 2025
Annexure 14: Integrity Pact Format
(Refer para 8.3-2)
INTEGRITY PACT
Between
[the Procuring Organisation] hereinafter referred to as “The Principal,” and
__________________ hereinafter referred to as “The Bidder/ Contractor.”
Preamble
The Principal intends to award contract/s for__________________, under laid down
organisational procedures, The Principal values full compliance with all relevant laws of the
land, rules, regulations, economical use of resources, and fairness / transparency in its
relations with its Bidder(s) and / or Contractor(s).
To achieve these goals, the Principal shall appoint Independent External Monitors (IEMs) who
shall monitor the tender process and the execution of the contract for compliance with the
abovementioned principles.
Section 1 – Commitments of the Principal:
1) The Principal commits itself to take all measures necessary to prevent corruption and to
observe the following principles: -
a. No employee of the Principal, personally or through family members, shall in
connection with the tender for, or the execution of a contract, demand, take a promise
for or accept, for self or third person, any material or immaterial benefit which the
person is not legally entitled to.
b. The Principal shall treat all Bidder(s) with equity and reason during the tender process.
The Principal shall, in particular, before and during the tender process, provide to all
Bidder(s) the same information and shall not provide to any Bidder(s) confidential /
additional information through which the Bidder(s) could obtain an advantage in the
tender process or the contract execution.
c. The Principal shall exclude from the process all known persons having conflict of
interest.
2) If the Principal obtains information on the conduct of any of its employees which is a
criminal offence under the IPC/PC Act, or if there be a substantive suspicion in this regard,
the Principal shall inform the Chief Vigilance Officer and in addition shall initiate disciplinary
proceedings.
Section 2 – Commitments of the Bidder(s)/ Contractor(s):
1) The Bidder(s)/ Contractor(s) commits themselves to take all measures necessary to
prevent corruption. The Bidder(s)/ Contractor(s) commits themselves to observe the
following principles during participation in the tender process and the contract execution.
a. The Bidder(s)/ Contractor(s) shall not, directly or through any other person or firm,
offer, promise, or give to any of the Principal’s employees involved in the tender
process or the execution of the contract or to any third person any material or other
benefit which they are not legally entitled to, in order to obtain in exchange any
advantage of any kind whatsoever during the tender process or the execution of the
contract.
b. The Bidder(s)/ Contractor(s) shall not enter with other Bidders into any undisclosed
agreement or understanding, whether formal or informal, in violation of the
244Annexure 14: Integrity Pact Format
Competition Act, 2002 (as amended from time to time). This applies in particular to
prices, specifications, certifications, subsidiary contracts, submission or non-
submission of bids or any other actions to restrict competitiveness or to introduce
cartelisation in the tender process.
c. The Bidder(s)/ Contractor(s) shall not commit any offence under the relevant IPC/PC
Act; further, the Bidder(s)/ Contractor(s) shall not use improperly, for purposes of
competition or personal gain, or pass on to others, any information or document
provided by the Principal as part of the business relationship, regarding plans,
technical proposals, and business details, including information contained or
transmitted electronically.
d. The Bidder(s)/Contractors(s) of foreign origin shall disclose the name and address of
the Agents/representatives in India, if any. Similarly, the Bidder(s)/Contractors(s) of
Indian Nationality shall furnish the name and address of the foreign principals, if any.
Further details, as mentioned in the “Guidelines on Indian Agents of Foreign
Suppliers,” shall be disclosed by the Bidder(s)/Contractor(s). Further, as mentioned in
the Guidelines, all the payments made to the Indian agent/representative must be in
Indian Rupees only. Copy of the “Guidelines on Indian Agents of Foreign Suppliers”
is placed on Annex hereto.
e. The Bidder(s)/ Contractor(s) shall, when presenting their bid, disclose any and all
payments made, is committed to, or intends to make to agents, brokers, or any other
intermediaries in connection with the award of the contract.
f. Bidder(s) /Contractor(s) who have signed the Integrity Pact shall not approach the
Courts while representing the matter to IEMs and shall wait for their decision.
2) The Bidder(s)/ Contractor(s) shall not instigate third persons to commit offences outlined
above or be an accessory to such offences.
Section 3 - Disqualification from the tender process and exclusion from future
contracts;
If the Bidder(s)/Contractor(s), before award or during execution, has committed a
transgression through a violation of Section 2, above or in any other form such as to put their
reliability or credibility in question, the Principal is entitled to disqualify the
Bidder(s)/Contractor(s) from the tender process or take action as per laid down procedure to
debar the Bidder(s)/Contractor(s) from participating in the future procurement processes of
the Government of India.
Section 4 – Compensation for Damages:
1) If the Principal has disqualified the Bidder(s) from the tender process before the award
according to Section 3, the Principal is entitled to demand and recover the damages
equivalent to Earnest Money Deposit/ Bid Security.
2) If the Principal has terminated the contract according to Section 3, or if the Principal is
entitled to terminate the contract according to Section 3, the Principal shall be entitled to
demand and recover from the Contractor liquidated damages of the Contract value or the
amount equivalent to Performance Bank Guarantee.
Section 5 – Previous transgression:
1) The Bidder declares that no previous transgressions occurred in the last three years with
any other Company in any country conforming to the anti-corruption approach or with any
Public Sector Enterprise in India that could justify his exclusion from the tender process.
2) If the Bidder makes an incorrect statement on this subject, the Principal shall act like para
2) of Section 4 above.
245Manual for Procurement of Works, Second Edition, 2025
Section 6 – Equal treatment of all Bidders / Contractors / Subcontractors:
In the case of Sub-contracting, the Principal Contractor shall take responsibility for adopting
the Integrity Pact by the Sub-contractor.
a. The Principal shall enter into agreements with identical conditions as this one with all
Bidders and Contractors.
b. The Principal shall disqualify from the tender process all bidders who do not sign this
Pact or violate its provisions.
Section 7 – Criminal charges against violating Bidder(s) / Contractor(s) /
Subcontractor(s):
If the Principal obtains knowledge of the conduct of a Bidder, Contractor, or Subcontractor, or
of an employee or a representative or an allied firm of a Bidder, Contractor or Subcontractor
which constitutes corruption, or if the Principal has substantive suspicion in this regard, the
Principal shall inform the same to the Chief Vigilance Officer.
Section 8 – Independent External Monitor:
1) The Principal shall appoint competent and credible Independent External Monitor(s) for
this Pact after approval by the Central Vigilance Commission. The task of the Monitor is to
review, independently and objectively, whether and to what extent the parties comply with
the obligations under this agreement.
2) The Monitor is not subject to instructions by the parties' representatives and performs their
functions neutrally and independently. The Monitor would have access to all Contract
documents whenever required. It shall be obligatory for them to treat the information and
documents of the Bidders/Contractors as confidential. They report to the Management of
the Principal.
3) The Bidder(s)/Contractor(s) accepts that the Monitor has the right to access without
restriction, all Project documentation of the Principal, including that provided by the
Contractor. Upon their request and demonstration of a valid interest, the Contractor shall
also grant the Monitor unrestricted and unconditional access to their project
documentation. The same applies to Sub-contractors.
4) The Monitor is under contractual obligation to treat the information and documents of the
Bidder(s)/ Contractor(s)/ Sub-contractor(s) with confidentiality. The Monitor has also
signed declarations on ‘Non-Disclosure of Confidential Information’ and ‘Absence of
Conflict of Interest.’ In case of any conflict of interest arising later, the IEM shall inform the
Management of the Principal and recuse themselves from that case.
5) The Principal shall provide the Monitor with sufficient information about all meetings
among the parties related to the Project, provided such meetings could impact the
contractual relations between the Principal and the Contractor. The parties offer the
Monitor the option to participate in such meetings.
6) As soon as the Monitor notices, or believes to notice, a violation of this agreement, they
shall inform the Management of the Principal and request the Management to discontinue
or take corrective action or other relevant action. The Monitor can, in this regard, submit
non-binding recommendations. Beyond this, the Monitor has no right to demand from the
parties that they act in a specific manner, refrain from action, or tolerate action.
7) The Monitor shall submit a written report to the Management of the Principal, within 8 to
10 weeks from the date of reference or intimation to him by the Principal and, should the
occasion arise, submit proposals for correcting problematic situations.
8) If the Monitor has reported to the Management of the Principal a substantiated suspicion
of an offence under the relevant IPC/ PC Act, and the Management of the Principal has
246Annexure 14: Integrity Pact Format
not, within the reasonable time, taken visible action to proceed against such offence or
reported it to the Chief Vigilance Officer, the Monitor may also transmit this information
directly to the Central Vigilance Commissioner.
9) The word ‘Monitor’ would include both singular and plural.
Section 9 – Pact Duration:
This Pact begins when both parties have legally signed it. It expires for the Contractor 12
months after the last payment under the contract, and for all other Bidders, 6 months after the
contract has been awarded. Any violation of the same would entail disqualifying the bidders
and exclusion from future business dealings.
If any claim is made / lodged during this time, the same shall be binding and continue to be
valid despite the lapse of this Pact as specified above, unless it is discharged / determined by
the Management of the Principal.
Section 10 – Other provisions:
1) This agreement is subject to Indian Law. The place of performance and jurisdiction is the
place from where the Tender/ Contract is issued.
2) Changes, supplements, and termination notices must be submitted in writing. Side
agreements have not been made.
3) If the Contractor is a partnership or a consortium, this agreement must be signed by all
partners or consortium members.
4) Should one or several provisions of this agreement turn out to be invalid, the remainder of
this agreement remains valid. In this case, the parties shall strive to come to an agreement
according to their original intentions.
5) Issues like Warranty / Guarantee, etc., shall be outside the purview of IEMs.
6) In the event of any contradiction between the Integrity Pact and its Annex, the Clause in
the Integrity Pact shall prevail.
________________________________ ________________________________
(For & On behalf of the Principal) (For and on behalf of Bidder/ Contractor)
(Office Seal) (Office Seal)
Place -------------- Date --------------
Witness 1: _________________________ Witness 1: _________________________
(Name & Address (Name & Address
247Manual for Procurement of Works, Second Edition, 2025
Annex-1 to Integrity Pact - Guidelines for Indian Agents of
Foreign Suppliers
1.1 There shall be compulsory registration of agents for all Global Tender Enquiries (GTE) and
Limited Tender Enquiries (LTE). An agent not registered with the Procuring Entity shall
apply for registration with them.
1.2 Registered agents shall file an authenticated Photostat copy duly attested by a Notary
Public/Original certificate of the Principal confirming the agency agreement and giving the
status being enjoyed by the agent and the commission/remuneration/salary/ retainer ship
being paid by the Principal to the agent before the placement of an order by the Procuring
Entity.
1.3 Wherever the Indian representatives have communicated on behalf of their principals and
the foreign parties, have stated that they are not paying any commission to the Indian
agents, and the Indian representative is working based on salary or as a retainer, a written
declaration to this effect should be submitted by the party (i.e., Principal) before finalising
the Contract.
2.0 Disclosure of Particulars of Agents/ Representatives in India, if any.
2.1 Bidders of Foreign nationality shall furnish the following details in their offer:
2.1.1 The name and address of the agents/representatives in India, if any and the extent
of authorisation and authority given to commit the Principals. If the
agent/representative is a foreign Company, it shall be confirmed whether it is a real
functioning Company, and details of the same shall be furnished.
2.1.2 The amount of commission/remuneration included in the quoted price(s) for such
agents/representatives in India.
2.1.3 Confirmation of the Bidder that the commission/ remuneration, if any, payable to
his agents/representatives in India, may be paid by the Procuring Entity in Indian
Rupees only.
2.2 Bidders of Indian Nationality shall furnish the following details in their offers:
2.2.1 The name and address of the foreign principals indicating their nationality as well
as their status, i.e., whether manufacturer or agents of manufacturer holding the
Letter of Authority of the Principal specifically authorising the agent to make an
offer in India in response to tender either directly or through the
agents/representatives.
2.2.2 The amount of commission/remuneration included in the price (s) quoted by the
Bidder for himself.
2.2.3 Confirmation of the foreign principals of the Bidder that the
commission/remuneration, if any, reserved for the Bidder in the quoted price (s)
may be paid by the Procuring Entity in India in equivalent Indian Rupees on
satisfactory completion of the Project or supplies of Stores and Spares in case of
operation items.
2.3 In either case, in the event of the contract materialising, the payment terms shall provide
for payment of the commission /remuneration, if any, payable to the
agents/representatives in India in Indian Rupees on expiry of 90 days after the discharge
of the obligations under the contract.
248Annex-1 to Integrity Pact - Guidelines for Indian Agents of Foreign Suppliers
2.4 Failure to furnish correct and detailed information as called for in paragraph - 2.0 above
shall render the concerned bid liable to rejection or, in the event of a contract materialising,
the same liable to termination by the Procuring Entity. Besides this, there would be a
penalty of banning business dealings with the Procuring Entity or damage or payment of
a named sum.
249Manual for Procurement of Works, Second Edition, 2025
Annex-2 to Integrity Pact – Appointment and Role of IEMs
(Refer para 7.7.4-4-d) and 8.3-3)
1. Appointment of IEMs:
i). Integrity Pact would be implemented through a panel of Independent External
Monitors (IEMs) nominated by CVC at an organisation's request from its list of
empanelled IEMs. Three IEMs shall be appointed for Maharatna and Navratna PSUs,
and two IEMs shall be nominated in all other organisations.
ii). The IEMs appointed should be eminent persons of high integrity and reputation. A
periodical notice inviting applications from eligible persons shall be published on the
CVC’s website. After due scrutiny and verification of the applications and
accompanying documents, as may be deemed appropriate, the name(s) would be
included in the panel for nomination as IEM.
iii). The zone of consideration of eminent persons for empanelment as IEMs would consist
of:
a) Officers who have held the post of Additional Secretary to Govt of India or were
in the equivalent or higher pay scale at the time of retirement (whether serving
with Govt of India or any State Govt.).
b) Persons who held the CMD post of Schedule ‘A’ Public Sector Enterprise and
were equivalent to Additional Secretary to Govt of India at retirement.
c) Persons who have held the post of CMD/MD and CEO of Public Sector Banks,
Insurance Companies, and other Financial Institutions at retirement.
d) Chief Executive Officer of an organisation (other than listed above and were
equivalent or higher to Additional Secretary to Govt, of India, at the time of
retirement).
e) Armed Forces Officers in the pay scale equivalent or higher to Additional
Secretaries to Govt of India at retirement.
f) The age of IEM should not be more than 70 years at the time of appointment.
g) If a retired person has accepted a full-time assignment, post-retirement, either in
the government sector, private sector, or elsewhere, he shall not be eligible to
be on the panel of IEMs. All those empanelled persons who accept full-time
assignments elsewhere would cease to remain on the panel from the date they
have taken the assignment. In this regard, it would be incumbent upon the
empanelled persons to immediately inform CVC about the acceptance of full-
time assignment by them.
h) All IEMs should sign non-disclosure agreements with the organisation in which
they are appointed.
i) A person acting as an IEM shall not be debarred from taking up other
assignments, such as consultancy with other organisations or agencies, subject
to his declaring that their additional assignment does not involve any conflict of
interest and is not a full-time assignment. The IEMs must also sign a declaration
of absence of conflict of interest with existing assignments. In case of any conflict
of interest arising later from an entity wherein he is or has been a consultant, the
IEM should inform the CEO and recuse themselves from that case.
250Annex-2 to Integrity Pact – Appointment and Role of IEMs
j) A person may be appointed as an IEM in a maximum of three organisations at a
time. An empanelled person cannot be appointed in one organisation for over
three years.
2. Role of IEMs in Integrity Pact:
i). Bidders or their authorised representative may address to the IEMs all the
representations/grievances/complaints related to any discrimination on account of
lack of fair play in modes of procurement and tendering systems, tendering method,
eligibility conditions, bid evaluation criteria, commercial terms & conditions, choice of
technology/specifications etc.
ii). The entire panel of IEMs should examine the matter jointly, who would investigate the
records, conduct an examination, and submit their joint recommendations to the
Management of the Procuring Entity. If the entire panel is unavailable for unavoidable
reasons, the available IEM(s) shall examine the complaints. Consent of the IEM(s),
who may not be available, shall be taken on record. The IEMs would be provided
access to all documents/records of the tender for which a complaint or issue is raised
before them, as and when warranted.
iii). The role of IEM is advisory, and the advice of IEM is non-binding on the Organization;
however, their advice would help properly implement the Integrity Pact.
iv). IEM should examine the process integrity; they are not expected to concern
themselves with fixing the responsibility of officers. IEMs should not associate CVO
and /or the officials of the vigilance wing during the examination of the complaints in
any manner. A matter being examined by the IEMs can be separately investigated by
the CVO if a complaint is received or directed to them by the CVC.
3. Systemic Improvements:
i). The Procurement wing of the organisation shall hold quarterly meetings with the IEMs.
A summary of contracts awarded in the previous quarter, covered under the Integrity
Pact, shall be shared with the IEMs during the quarterly meeting. Such a summary of
contracts should include details like tender number, mode of tendering, the period
allowed for publicity, number of bids received, number of bidders considered eligible,
and name and address of the successful bidder.
ii). The above summary of contracts is to help the IEMs in analysing whether an
appropriate mode of tendering is being adopted by the organisation, i.e., limited tender
mode or nomination mode is not unduly used, the number of bidders is not too low, a
large number of bidders are not excluded while judging the eligibility or during the
technical bid evaluation stage, and whether particular firm or set of specific firms is
repeatedly getting contracts etc. Based on their analysis, the IEMs can suggest to the
management suitable systemic improvement(s) and measures to improve objectivity
in decision-making, capacity building, etc.
iii). It would be desirable to have structured meetings of the IEMs with the Chief Executive
of the Organization on a half-yearly basis to discuss and review the information on
tenders awarded during the preceding six-month period. Additional such meetings,
however, can be held as per requirement. All such meetings with the Procurement
wing or with the organisation’s Chief Executive should be minuted.
4. Dispute Mediation: In case of any dispute between the management and the contractor
relating to those contracts where an Integrity Pact is applicable, in case both the parties
are agreeable, they may try to settle the dispute through mediation before the panel of
251Manual for Procurement of Works, Second Edition, 2025
IEMs in a time-bound manner. If required, the organisations may adopt any mediation rules
for this purpose. However, no more than five meetings shall be held for dispute resolution.
Both parties shall equally share the fees/expenses on dispute resolution. If the dispute
remains unresolved even after mediation by the panel of IEMs, the organisation may take
further action as per the terms & conditions of the contract.
5. Entitlements of IEMs:
i). IEMs shall be paid fees of ₹ 25,000/- per sitting subject to a maximum of ₹ 3,00,000/-
in a calendar year for the sitting fees.
ii). The travel and stay arrangements for the IEMs for such meetings shall equal their
entitlements at retirement. Booking travel tickets, as per the mode of travel indicated
by the IEM in writing (including email), the organisation shall do local transport and
stay. The organisation concerned shall provide a place for meetings and secretarial
assistance to IEMs for rendering their job. No payment instead of secretarial aid shall
be paid to the IEMs.
iii). As mentioned above, the travel/ stay arrangements and fees for meetings held by
IEMs for mediation between the management and the contractor shall be the same
but in addition to the fees for the regular meetings and would be over and above the
ceiling of 3,00,000/- as per calendar year.
252Manual for Procurement of Works, Second Edition, 2025
Annexure 15: Format for Show-cause Notice for Debarment
(Refer para 8.7-3-c)
[On Department Letterhead]
File No: [….]
[Date]
[DoE/ Ministry/ Department/ CPSE/ Organisation]
[Address]
To,
The [Company Name]
[Company Address]
Subject: Show Cause Notice for debarment of your Company from participation in Tenders
of [Govt. of India/ Ministry/ Department/ CPSE/ Organisation] for the following misdemeanour
References: Relevant Tenders/ Contracts: [……….]
Dear Sir/Madam,
1. As a supplier participating in government tenders/ contracts, you must maintain the
highest standards of ethical conduct and transparency, as laid down in the Code of
Integrity in Public Procurement and other provisions in the relevant Tender Documents/
Contracts.
2. Due to your misdemeanour mentioned below relating to the Tender Document/ Contract
referred to above, you are proposed to be debarred from participation in all tenders/
contracts of [Govt. of India/ Ministry/ Department/ CPSE/ Organisation] for a period not
exceeding two years.
3. Articles of Misdemeanours: As per the imputations detailed in Annexure-1 attached
herewith, it is determined that you have committed the following serious misdemeanours
relating to the tender/ contract referred to above:
a) [You breached the Code of Integrity in Public Procurement as specified in [clause
…...] in the Tender Document/ Contract referred to above (please also see Rule 175
of GFR 2017).
b) [You made a false declaration of local content as Class I/ Class II local suppliers
under Public Procurement (Preference to Make in India, Order 2017, dated
19/07/2024 or later, i.e., the Make in India Order), which is also be treated as a
breach of code of integrity.]
c) [any other actions or omissions120 by the firm that, in the opinion of the Ministry/
Department, warrants debarment].
120 [Supply of substandard material; non-supply of material; abandonment of works; substandard quality of works;
failure to abide by “Bid Securing Declaration”; conviction under the Prevention of Corruption Act, 1988; conviction
under any law for causing any loss of life or property or causing a threat to public health as part of executing a
public procurement contract; employs a government servant who has been dismissed or removed on account of
corruption; employs a non-official convicted for an offence involving corruption or abetment of such an offence in a
position where he could corrupt government servants, or employs a government officer within one year of his
retirement who has had business dealings with him in an official capacity before retirement.]
253Annexure 15: Format for Show cause Notice for Debarment
4. Opportunity to Explain:
a) In light of the above misdemeanours, we hereby grant you a fair opportunity to
explain in writing why you should not be debarred, as mentioned in para 2 above.
b) Your response should include Specific Reasons, Mitigating Factors, and Corrective
Measures that you intend to take to rectify the situation and prevent recurrence.
c) Please also mention if you desire to avail of additional opportunities for an oral
hearing in addition to the written submissions.
d) Please address your response to the undersigned using the contact details
mentioned below.
e) Response Deadline: Please submit your response within 15 days of receiving this
notice. Failure to do so will result in further action, including an order for debarment.
5. You are required to give details of all ‘allied’ firms that come within the sphere of
effective influence based on the following criteria:
a) You, being a proprietary firm, own it,
b) You, being a partnership firm, have common (all or majority of) partners, or any one
of partners having a profit share of 20% or more in it.
c) You have common Management (say the majority of the directors) with it.
d) Your partners or directors have a majority interest in its management;
e) You have a controlling voice by owning substantial or majority (20% or more) shares
in it.
f) You directly or indirectly control it, are controlled by it, or are under common control
through any agreement/ MoU or otherwise.
g) You are a successor/ subsidiary to it or vice-a-versa;
h) You have common offices/ manufacturing facilities with it.
6. Annexure-1 details the imputation based on which these misdemeanours have been
determined.
7. Annexure 2 lists the documents relied upon for establishing such imputation.
Sincerely,
[Name]
[Designation]
[Contact Information]
Annexure 1: [Details of actions/ omissions committed by the firm]
Annexure-2: [List of relied upon documents]
DA: [Copies of documents attached]
254Manual for Procurement of Works, Second Edition, 2025
Annexure 16: Format for Debarment Order
(Refer para 8.7-3-b)
[On Department Letterhead]
File No: [….]
Date: [….]
[DoE/ Ministry/ Department/ CPSE/ Organisation]
[Address]
To,
The [Company Name]
[Company Address]
Subject: Your company has been debarred from participating in Tenders of [Govt. of India/
Ministry/ Department/ CPSE/ Organisation].
References:
a) Relevant Tender/ Contract: [….]
b) This office Show-Cause notice No. [….], dated [….]
c) Your Written reply(ies) to the show-cause notice No [….], dated [….] and
d) [Oral Hearing grant to you on [….] with [….]]
Dear Sir/Madam,
1. After thoroughly evaluating the evidence and your submission mentioned above, it has
been established that your company committed the serious misdemeanour mentioned
below. As a result, this [Govt. of India/ Ministry/ Department/ CPSE/ Organisation] has
decided to debar your company from participating in any of our tenders of all entities
covered under the jurisdiction mentioned below for a period mentioned below.
a) The Debarment shall automatically extend to all your allied firms, listed in Annexure-
2, attached herewith. In the case of a joint venture/ consortium, all partners shall also
stand debarred.
b) Debarment does not impact the procuring entities' other contractual or legal rights.
c) Contracts concluded before the issue of the debarment order shall not be affected by
the debarment Orders.
2. Reasons for Debarment:
a) It is determined that you have committed the following serious misdemeanours
relating to the tender/ contract referred to above. Details of these misdemeanours are
given in Annexure-1, attached herewith:
b) [Please see the format of show-cause notice for possible misdemeanours]
3. Other Consequences of Debarment:
a) During the validity of the debarment order, no contract of any kind whatsoever shall
be placed on your firm, including your allied firms, by any Ministries/ Departments/
Attached/Subordinate offices, including autonomous bodies and CPSEs, covered
under the jurisdiction mentioned above.
b) If your firm, including your allied firms, submitted the bid before this debarment, it shall
be ignored.
255Annexure 16: Format for Debarment Order
c) Your firm, including your allied firms, stands removed from the list of registered/
approved contractors maintained, if any, by all entities covered by the jurisdiction
mentioned above.
d) Your firm's Bid Security/ Performance Security for the subject tender/ contract shall
be forfeited.
4. Jurisdiction of Debarment:
[This debarment applies to this Ministry and all its departments, attached and subordinate
offices, Public Sector Enterprises, and autonomous bodies.
OR
This debarment applies to this Ministry and all its departments, attached and subordinate
offices, Public Sector Enterprises, and autonomous bodies as an interim measure. However,
the Government of India reserves its right to extend this debarment to all its Ministries,
Departments, and their attached and subordinate offices, Public Sector Enterprises, and
autonomous bodies after following due process.]
OR
This debarment applies to the Government of India and all its Ministries and departments, their
attached and subordinate offices, Public Sector Enterprises, and autonomous bodies.]
5. Debarment Duration:
Effective immediately, your company is debarred from participating in any procurement
process of the entities covered by the jurisdiction mentioned above for a period of [six to two
years].
6. Appeal Process:
If your company wishes to appeal against this decision, you may submit an appeal within 15
days of receiving this letter. The appeal, supported by relevant evidence and addressed to the
appellate authority [….], should be sent to the undersigned using the contact details below.
7. Revocation of Debarment:
Upon completion of the debarment period, this debarment shall automatically stand revoked,
and your company may apply for registration again as per procedure.
We trust that your company shall rectify its conduct after the debarment period.
Sincerely,
[Name]
[Designation]
[Contact Information]
Annexure 1: [Details of actions/ omissions committed by the firm]
Annexure-2: [List of Allied Firms that also stand debarred]
Copy To:
1. All Allied Firms as per Annexure-2 – Your firm also stands debarred as above.
2. Ministry/ Department (or GeM-CPPP in case of debarment by DoE) for publication on
the Website
Circulation to Procuring Entities
256Manual for Procurement of Works, Second Edition, 2025
Annexure 17: Format of Declaration by the Appointed
Arbitrator
[Refer para 7.7.9-3-d)]
(On letterhead of the Arbitrator)
1. Name
2. Contact Details:
3. I hereby certify that I have retired from [Organisation/ Unit] w.e.f. _______in______grade.
Or
I hereby certify that I am serving Officer and am presently posted as______ in grade.
Or
I hereby certify that I am currently empanelled as arbitrator by Indian Council for Arbitration
(ICA) in the category of ___________.
4. I have no past or present relationship in relation to the subject matter in dispute, whether
financial, business, professional or other kind.
Or
I have past or present relationship in relation to the subject matter in dispute, whether financial,
business, professional or other kind. The list of such interests is as under:
--------
5. I have no past or present relationship with or interest in any of the parties whether financial,
business, professional or other kind, which is likely to give rise to justifiable doubts as to my
independence or impartiality in terms of the Arbitration and Conciliation Act 1996.
Or
I have past or present relationship with or interest in any of the parties whether financial,
business, professional or other kind, which is likely to give rise to justifiable doubts as to my
independence or impartiality in terms of the Arbitration and Conciliation Act 1996. The details
of such relationship or interest are as under:
-------
6. There are no concurrent circumstances which are likely to affect my ability to devote
sufficient time to the arbitration and in particular to finish the entire arbitration within twelve
months.
Or
There are circumstances which are likely to affect my ability to devote sufficient time to the
arbitration and in particular to finish the entire arbitration within twelve months. The list of such
circumstances is as under:
---------
Signature
(Name____________)
257Manual for Procurement of Works, Second Edition, 2025
Annexure 18: FAQs About PPP-MII Order, 2017
(Refer para 1.11.2-20)
Question 1. How to calculate Local Content?
Answer: Para 2 of the PPP-MII Order, 2017 (as amended on 16.09.2020) defines local
content as
Local content’ means the amount of value added in India which shall, unless otherwise
prescribed by the Nodal Ministry, be the total value of the item procured (excluding net
domestic indirect taxes) minus the value of imported content in the item (including all customs
duties) as a proportion of the total value, in percent.
Mathematically,
Local content = (Sale price - Value of imported content) * 100/ Sale price
Where, “Sale price” means price excluding net domestic indirect taxes and “Value of imported
content” means price of imported content inclusive of all customs duties
Question 2. How to calculate Local Content in bids involving supply of multiple items from
single bidder?
Answer: In case of bids requiring supply of multiple items (say “X ”, “X ” and “X ”) by a single
1 2 3
bidder, the local content in the bid shall be
Local content = ((Sale price of “X ” - Value of imported content in “X ”) + (Sale price of “X ” -
1 1 2
Value of imported content in “X ”) + (Sale price of “X ” - Value of imported content in “X ”)) *
2 3 3
100/ (Sale price of “X ” + Sale price of “X ” + Sale price of “X ”)
1 2 3
Question 3. How to obtain Make in India “MII” certificate?
Answer: No such certificate issued by Government of India. As per para 9 (a) of PPP-MII
Order, 2017 (as amended on 16.09.2020), the bidders are required to self-certify the local
content in their product for purchase value less than Rs.10 crore. For purchases more than
Rs.10 crore, as per para 9 (b) of PPP-MII Order, 2017, a certificate from the statutory auditor
or cost auditor of the company (in the case of companies) or from a practicing cost accountant
or practicing chartered accountant (in respect of suppliers other than companies) is required
to be submitted.
Question 4. What is the meaning of class-I local supplier, class-II local supplier and non-local
supplier?
Answer: PPP-MII Order, 2017 (as amended on 16.09.2020) classifies the suppliers into
following 3 categories:
a. ‘Class-I local supplier’ – Suppliers offering items with equal to or more than 50% local
content
b. ‘Class-II local supplier’ - Suppliers offering items with equal to or more than 20% but
less than 50% local content
c. ‘Non-local supplier’ - Suppliers offering items with Less than 20% local content
Nodal Ministries/ Departments are authorized to notify a higher minimum local content
requirement for any item, i.e., higher than 50/20%, if they deem fit
Question 5. Details of product categories for which nodal Ministry have been notified by DPIIT
for PPP-MII, Order 2017 may be provided?
258Annexure 18: FAQs About PPP-MII Order, 2017
Answer: DPIIT has notified 20 nodal Ministries for different product categories. The details of
such product categories and associated Ministry/ Department are available on DPIIT website.
Refer link: https://dpiit.gov.in/sites/default/files/Approved%20product%20category%20list
%20as%20per%2012th%20SCM.pdf
Question 6. Can an item be procured from non-local suppliers, if there are no Class-I/ Class-
II local suppliers in the country.
Answer: Non-local suppliers can only participate in global tender enquiry. Against domestic/
national tenders, only Class-I and Class-II local suppliers can participate in the bidding
process. Hence, in case item is not available locally from Class-I/ Class-II local suppliers,
global tender enquiry may be floated for procuring item after taking approval of competent
authority, as notified by Department of Expenditure under Rule 161(iv) of GFR.
Question 7. Are provisions of PPP-MII Order applicable only in procurement of the items for
which nodal Ministries have been notified and the items for which nodal ministries have issued
local content notification?
Answer: No. The provisions of PPP-MII Order are applicable on procurement of all the items
by Central Government procurement entities. For the items, for which nodal ministries have
not been designated and the items for which nodal ministries have not issued minimum local
content notification, the default provision of PPP- MII Order shall apply.
Question 8. Will the cost of transportation, insurance, installation, commissioning, training
and after sales service support like AMC/CMC etc. will be considered as a part of local
content?
Answer: The cost of transportation, insurance, installation, commissioning, training and after
sales service support like AMC/CMC etc. will not be taken into account for calculating local
content in any item. DPIIT OM No.P-45021/102/2019-BE-II- Part(1) (E-50310) dated
04.03.2021 refers, available on DPIIT Website. Refer link
https://dpiit.gov.in/sites/default/files/Letter%20to%20All%20Ministries030420
21_clarification.pdf
Question 9. Can administrative Ministries grant exemption/ relaxation for procurement of
imported items with the approval of Hon’ble Minister In-charge under Para 14 of PPP-MII
Order?
Answer: Procurement of imported item is governed by Rule 161 (iv) of GFR. Hon’ble Minister
In-charge of administrative Ministry is not the appropriate authority for any exemption/waiver
in GFR. As such, procuring entities are advised to follow the procedures as prescribed in GFR
Rule 161 (iv) for procurement of imported items. In this regard, minutes of 14th Standing
Committee Meeting held on 20.09.2022 issued by DPIIT, refers. (Agenda point Number 5.)
Question 10. Can administrative Ministry/Departments give exemption for wide range of
product categories for an extended period of time under Para 14 of PPP- MII Order with the
approval of Hon’ble Minister In- charge?
Answer: The administrative Ministries/ Departments shall grant only tender specific
exemptions under Para 14 of the Order. Exemptions granted shall remain valid for a period of
maximum 01 year only. If the same items are procured again within the aforesaid period of
01year, fresh approval of Minister-in-charge is not required. If any administrative Ministry/
Department intends to grant exemption beyond a period of 01 year, it shall do so only with
prior written concurrence of concerned nodal Ministry. In this regard, minutes of 14th Standing
Committee Meeting held on 20.09.2022 issued by DPIIT, refers. (Agenda point Number 5.)
259Manual for Procurement of Works, Second Edition, 2025
Question 11. How do I apply for DPIIT registration under Rule 144 (xi) GFR for entities having
beneficial ownership in land border sharing countries?
Answer: The application format for registration of bidders under Rule 144 (xi) GFR is available
on DPIIT website. Refer link: https://dpiit.gov.in/sites/default/files/Revised-Format-Bidders-
31March2021.pdf. Applicants are required to submit one hard copy in the prescribed format
along with soft copy (pdf), as detailed in the covering letter of the format. The applicant shall
be asked to submit additional hard copies, if required at the later stage.
Question 12. What will be the category of the local suppliers having exactly 20% and 50%
local content?
Answer: Vide its para 5, the Public Procurement (Preference to Make in India) Order, 2017
dated 16.09.2020 stipulates the minimum local content requirement as under:
“The ‘local content’ requirement to categorize a supplier as ‘Class-I local
supplier’ is minimum 50%. For ‘Class-II local supplier,’ the ‘local content’
requirement is minimum 20%. Nodal Ministry/Department may prescribe only
a higher percentage of minimum local content requirement to categorize a
supplier as ‘Class-I local supplier’/’Class-II local supplier.’ For the items, for
which Nodal Ministry/Department has not prescribed higher minimum local
content notification under the Order, it shall be 50% and 20% for ‘Class-I local
supplier’/” Class-II local supplier’ respectively.”
Accordingly, the local suppliers having exactly 20% and 50% local content will be categorized
as "Class-II Local Supplier" and ‘Class-I Local Supplier’ respectively.
Question 13. Whether a Central Government/CPSE Buyer can take cognizance of open
undertakings/ futuristic declarations and treat bidder as Class I/ Class II local supplier through
the present level of local content of the bidder happens to be below 50%/ 20% respectively?
Answer: Detailed Procedure for Verification of local content declared by suppliers
/vendors is elaborated on clause 9 of PPP-MII Order, 2017 dated 16.09.2020 and as per the
Order, futuristic declarations regarding local content is not allowed.
260Manual for Procurement of Works, Second Edition, 2025
Annexure 19: Model Clause/ Certificate to be inserted in
tenders etc. w.r.t Order (Public Procurement No.4)
(Refer para 1.11.3-7)
(While adhering to the substance of the Order, procuring entities and GeM are free to
appropriately modify the wording of the clause/ certificate based on their past experience, local
needs, etc. The conditions relating to specified ToT (as shown in italics) should be
incorporated only in the tenders that attract the restrictions due to specified ToT.)
A. Model Clauses for Tenders (including tenders issued manually or any electronic
portal, including GeM):
I. Any bidder from a country that shares a land border with India will be eligible to bid in any
procurement, whether of goods, services (including consultancy services and non-
consultancy services) or works (including turnkey projects) only if the bidder is registered
with the Competent Authority. Further, any bidder (including bidder from India) having
specified Transfer of Technology (ToT) arrangement with an entity from a country which
shares a land border with India, shall also require to be registered with the same
competent authority.
II. "Bidder" (including the term 'tenderer', 'consultant' or 'service provider' in certain contexts)
means any person or firm or company, including any member of a consortium or joint
venture (that is an association of several persons, or firms or companies), every artificial
juridical person not falling in any of the descriptions of bidders stated hereinbefore,
including any agency branch or office controlled by such person, participating in a
procurement process.
Ill. "Bidder (or entity) from a country which shares a land border with India" for the purpose
of this Order means: -
(a) An entity incorporated, established or registered in such a country; or
(b) A subsidiary of an entity incorporated, established or registered in such a country; or
(c) An entity substantially controlled through entities incorporated, established or
registered in such a country; or
(d) An entity whose beneficial owner is situated in such a country; or
(e) An Indian (or other) agent of such an entity; or
(f) A natural person who is a citizen of such a country; or
(g) A consortium or joint venture where any member of the consortium or joint venture
falls under any of the above
IV. The beneficial owner for the purpose of (iii) above will be as under:
1. In case of a company or Limited Liability Partnership, the beneficial owner is the natural
person(s), who, whether acting alone or together, or through one or more juridical
person, has a controlling ownership interest or who exercises control through other
means.
Explanation-
a. "Controlling ownership interest" means ownership of or entitlement to more than
twenty-five per cent. of shares or capital or profits of the company.
b. "Control" shall include the right to appoint majority of the directors or to control the
management or policy decisions including by virtue of their shareholding or
management rights or shareholders agreements or voting agreements.
261Annexure 19: Model Clause/ Certificate to be inserted in tenders etc. w.r.t Order (Public
Procurement No.4)
2. In case of a partnership firm, the beneficial owner is the natural person(s) who, whether
acting alone or together, or through one or more juridical person, has ownership of
entitlement to more than fifteen percent of capital or profits of the partnership.
3. In case of an unincorporated association or body of individuals, the beneficial owner is
the natural person(s), who, whether acting alone or together, or through one or more
juridical person, has ownership of or entitlement to more than fifteen percent of the
property or capital or profits of such association or body of individuals.
4. Where no natural person is identified under (1) or (2) or (3) above, the beneficial owner
is the relevant natural person who holds the position of senior managing official.
5. In case of a trust, the identification of beneficial owner(s) shall include identification of
the author of the trust, the trustee, the beneficiaries with fifteen percent or more interest
in the trust and any other natural person exercising ultimate effective control over the
trust through a chain of control or ownership.
V. An Agent is a person employed to do any act for another, or to represent another in
dealings with third person.
VI. (To be inserted in tenders for Works contracts, including Turnkey contracts) The
successful bidder shall not be allowed to sub-contract works to any contractor from a
country which shares a land border with India unless such contractor is registered with
the Competent Authority.
VII. The registration shall be valid at the time of submission of bid and at the time of
acceptance of bid.
VIII. If the bidder was validly registered at the time of acceptance/ placement of order,
registration shall not be a relevant consideration during contract execution
B. Model Certificate for Tenders:
"I have read the clause regarding restrictions on procurement from a bidder of a country which
shares a land border with India; I certify that this bidder is not from such a country or, if from
such a country, has been registered with the Competent Authority. I hereby certify that this
bidder fulfils all requirements in this regard and is eligible to be considered. (Where applicable,
evidence of valid registration by the Competent Authority shall be attached.)"
C. Model Certificate for Tenders for Works involving possibility of sub-contracting:
"I have read the clause regarding restrictions on procurement from a bidder of a country which
shares a land border with India and on sub-contracting to contractors from such countries; I
certify that this bidder is not from such a country or, if from such a country, has been registered
with the Competent Authority and will not sub-contract any work to a contractor from such
countries unless such contractor is registered with the Competent Authority. I hereby certify
that this bidder fulfils all requirements in this regard and is eligible to be considered. (Where
applicable, evidence of valid registration by the Competent Authority shall be attached.)"
D. Model additional certificate by Bidders in the cases of specified ToT:
"I have read the clause regarding restrictions on procurement from a bidder having a Transfer
of Technology (ToT) arrangement. I certify that this bidder does not have any To T
arrangement requiring registration with the competent authority. "
OR
"I have read the clause regarding restrictions on procurement from a bidder having a Transfer
of Technology (ToT) arrangement. I certify that this bidder has valid registration to participate
in this procurement."
262Manual for Procurement of Works, Second Edition, 2025
E. Model Certificate for GeM (to be taken by the GeM from the seller during registration
on GeM. GeM should also obtain this certificate from all existing bidders as soon
as possible):
"I have read the clause regarding restrictions on procurement from a bidder of a country which
shares a land border with India; I certify that this vendor/ bidder is not from such a country and
does not have any specified Transfer of Technology (ToT) from such a country or if from such
a country or if having specified ToT from such a country has been registered with the
Competent Authority. I hereby certify that this vendor/ bidder fulfils all requirements in this
regard and is eligible to be considered for procurement on GeM. (Where applicable, evidence
of valid registration by the Competent Authority shall be attached.)"
263Manual for Procurement of Works, Second Edition, 2025
Annexure 20: Appendix-A, B & C of DMI&SP Policy
(Refer para 1.11.5-8)
Appendix-A: List of iron and steel products which can only be procured from
domestic sources
Sl. HS code Condition
No. Iron & Steel Products
1 Flat-rolled products of iron or non-alloy steel, of a width of 600 mm 7208 Melt & Pour
or more, hot rolled, not clad, plated or coated
2 Flat-rolled products of iron or non-alloy steel, of a width of 600 mm 7209 Melt & Pour
or more, cold rolled (cold-reduced), not clad, plated or coated
3 Flat-rolled products of iron or non-alloy steel, of a width of 600 mm 7210 Melt & Pour
or more, clad, plated or coated
4 Flat-rolled products of iron or non-alloy steel, of a width of less than 7211 Melt & Pour
600 mm, not clad, plated or coated
5 Flat-rolled products of iron or non-alloy steel, of a width of less than 7212 Melt & Pour
600 mm, clad, plated or coated
6 Bars and rods, hot-rolled, in irregularly wound coils, of iron or 7213 Melt & Pour
non- alloy steel
7 Other bars and rods of iron or non-alloy steel, not further 7214 Melt & Pour
worked than forged, hot rolled, hot-drawn or hot-extruded, but
including those twisted after rolling
8 Other bars and rods of iron or non-alloy steel 7215 Melt & Pour
9 Angles, shapes and sections of iron or non-alloy steel 7216 Melt & Pour
10 Wire of iron or non-alloy steel 7217 Melt & Pour
11 Flat-rolled products of stainless steel, of a width of 600 mm or more 7219 Melt & Pour
12 Flat-rolled products of stainless steel, of a width of less than 600 7220 Melt & Pour
mm
13 Other bars and rods of stainless steel; angles, shapes and 7222 Melt & Pour
sections of stainless steel
14 Wire of other alloy steel 7229 Melt & Pour
15 Rails, railway or tramway track construction material of iron or steel 7302 Melt & Pour
16 Tubes, pipes and hollow profiles, of cast iron 7303 Melt & Pour
17 Tubes, pipes and hollow profiles, seamless, of iron (other than cast 7304 Melt & Pour
iron) or steel
18 Other tubes and pipes (for example, welded, riveted or similarly 7305 Melt & Pour
closed), having circular cross-sections, the external diameter of
which exceeds 406.4 mm of iron or steel
19 Other tubes, pipes and hollow profiles (for example, open 7306 Melt & Pour
seam or welded, riveted or similarly closed), of iron or steel
20 Tube or pipe fittings (for example connectors/couplings, elbow 7307 Melt & Pour
sleeves), of iron or steel
21 Bars and rods, hot-rolled, in irregularly wound coils, of stainless 7221 Melt & Pour
steel
22 Wire of stainless steel 7223 Melt & Pour
23 Flat-rolled products of other alloy steel, of a width of 600 mm 7225 Melt & Pour
or more, including electrical steel
264Annexure 20: Appendix-A, B & C of DMI&SP Policy
Sl. HS code Condition
No. Iron & Steel Products
24 Flat-rolled products of other alloy steel, of a width of less than 7226 Melt & Pour
600 mm, including electrical steel
25 Bars and rods, hot-rolled, in irregularly wound coils, of other 7227 Melt & Pour
alloy steel
26 Other bars and rods of other alloy steel; angles, shapes and 7228 Melt & Pour
sections, of other alloy steel; hollow drill bars and rods, of alloy or
nonalloy steel
27 Sheet piling of iron or steel, whether or not drilled, punched or 7301 Melt & Pour
made from assembled elements; welded angles, shapes and
sections, of iron or steel
28 Structures (excluding prefabricated buildings of heading 9406) 7308 Melt & Pour
and parts of structures
29 Reservoirs, tanks, vats and similar containers for any material 7309 Melt & Pour
(other than compressed or liquefied gas), of iron or steel of a
capacity exceeding 300 whether or not lined or heat insulated, but
not fitted with mechanical or Thermal equipment
30 Tanks, casks, drums, cans, boxes and similar containers, for any 7310 Melt & Pour
material (other than compressed or liquefied gas), of iron or
steel, of a capacity not exceeding 300L, whether or not lined or
heat-insulated, but not fitted with mechanical or thermal equipment
31 Containers for compressed or liquefied gas, of iron or steel 7311 Melt & Pour
32 Stranded wire ropes, cabled, plaited bands, slings and the like, of 7312 Melt & Pour
iron or steel, not electrically insulated
33 Barbed wire of iron or steel; twisted hoop or single flat wire, barbed 7313 Melt & Pour
or not, and loosely twisted double wire, of a kind used for
fencing, of iron or steel
34 Grill, netting and fencing, of iron or steel wire; expanded metal 7314 Melt & Pour
of iron or steel
35 Chain and parts thereof, of iron or steel 7315 Melt & Pour
36 Anchors, grapnels and parts thereof, of iron or steel 7316 Melt & Pour
37 Articles of iron and steel 7317 Melt & Pour
38 Articles of iron and steel 7318 Melt & Pour
39 Articles of iron and steel 7319 Melt & Pour
40 Springs and leaves for springs, of iron or steel 7320 Melt & Pour
41 Stoves, ranges, grates, cookers (including those with subsidiary 7321 Melt & Pour
boilers for central heating), barbecues, braziers, gas-rings, plate
warmers and similar non-electric domestic appliances, and parts
thereof, of iron or steel
42 Radiators for central heating, not electrically heated, and parts 7322 Melt & Pour
thereof, of iron or steel; air heaters and hot air distributors, not
electrically heated, incorporating a motor-driven fan or blower,
and parts thereof, of iron or steel
43 Tables and similar household articles and parts thereof, of iron or 7323 Melt & Pour
steel
44 Sanitary ware and parts thereof, of iron or steel 7324 Melt & Pour
45 Other cast articles of iron or steel 7325 Melt & Pour
46 Electrical steel and other articles of iron or steel 7326 Melt & Pour
47 Railway or tramway passenger coaches, not self propelled 8605 Melt & Pour
48 Railway or tramway goods vans and wagons, not self-propelled 8606 Melt & Pour
265Manual for Procurement of Works, Second Edition, 2025
Sl. HS code Condition
No. Iron & Steel Products
49 Parts of railway or tramway locomotives or rolling-stock, such as 8607 Melt & Pour
bogies, bissel-bogies, axles and forged wheels and parts thereof
Appendix-B: Indicative list of Capital Goods (non-exhaustive) which can be
imported for Manufacturing Iron & Steel products, and minimum Domestic content
applicable for the package
S. no. Plant /Unit package Minimum Importable Items
domestic
content of
Capital Goods
(%)
1 Raw Material Handling System 95% Barrel Couplings, Heavy Duty Bearings,
(Boundary Limit – from Wagon Crane Rail Lubrication System, Slew
Tippler to respective user units) Ring Bearings, Tongs (Special),
Vibration Isolation System (Spring
Damper).
2 Mineral beneficiation (iron ore and 75% • Wet High Intensity Magnetic
coal) equipment Separator / High Gradient Magnetic
(Boundary Limit: from Receiving Separator
of ROM at the crusher hopper, • Heavy Media Cyclone
comminution, segregation, ore/ • Gyratory Crusher
coal processing up to final • Spiral Concentrator
product preparation) • Online Ash Analyser
3 Mining Machinery (Boundary Limit: 80% Dumper (above 220 tons pay load
Equipment for drilling, raising, capacity), Hydraulic Excavators (above
haulage, and mine preparation) 10.5 Cubic meter bucket capacity)
4 Coke Oven Battery (Both top 90% Springs of the anchorage systems,
charged & stamp charged) COG booster, stamping train, bonding
(From Coal bunker to coke discharge press
bucket)
5 Coke Dry Quenching Plant 90% Mill fan & Motor
(From Hot coke receiving bucket to Special Refractory for Twin Flue of
discharge chute of cooling chamber) Cooling Chamber.
6 By-Product Plant 90% Exhauster & Motor, burner of the clause
(From Primary Gas cooler to clean kiln Catalyst, Tail gas analyzer,
coke oven gas up to the network) Palletization unit.
7 Sinter Plant Equipment (Boundary 75% High Intensive Mixer & Granulator Unit,
Limit – Receiving Bin for Raw Pallet cars, Drive Sprocket, Main Drive
Material to Vibro-Feeder below with Gear Box of sinter machine, slide
Product Sinter Bin) rail & curved rail, Hot Sinter breaker and
Grizzly, Annular Dip Rail Cooler, LCI
Drive system for Sinter Plant Exhauster
application
266Annexure 20: Appendix-A, B & C of DMI&SP Policy
S. no. Plant /Unit package Minimum Importable Items
domestic
content of
Capital Goods
(%)
8 Pellet Plant Equipment (Boundary 85% Pallet car, High Intensive Mixer, Balling
Limit – Receiving Ground Hopper Discs, Vertical roller mill,
for flux & Binder, Belt Conveyor Drive/discharge end Sprocket
feeding IOF to product pellet assembly, Curved rail, Slide rails,
belt conveyor) Single deck roller screen and Double
deck roller screen, Induration Machine
Drive assembly, Level-2 automation
9 Blast Furnace Equipment Boundary 70% • Bell less top gear box, upper seal
Limit: device covering upper material gate
Input: and upper seal valve, lower seal
• Raw material- Top of bunkers device covering lower material gate
of respective material and lower seal valve, Bleeder valve
• Cold Blast- Inlet of the snort • Hearth Refractory (carbon blocks)
• Top Recovery Turbine system (TRT)
valve
• Industrial water- BF pump • Cu-staves
• SGI Staves
house Output
• Cast house equipment (Mud gun,
• Hot Metal- Filled in the
Drilling machine and main trough
torpedo ladle
Manipulator)
• Granulated Slag- to the • Probes, Profilometer & Stock level
granulated slag yard indicator (radar type)
• Gas cleaning plant (AGS system)
• Stove system – ceramic burner &
technological valve
• Waste Heat Recovery system
• Turbo blowers
• Ball Mill
• PCI Injection System
• Level-II automation
10 Gas based Direct Reduction Plant 50% • Reactor charging system
Equipment • Reactor
(Boundary Limit: Receipt of raw • Reactor discharging system
material at the top of the DRI reactor • Pneumatic transfer to EAF
& discharge of hot DRI to EAF) • Discharge route to briquetting
system
• Briquetting feeding system
• Briquetting system
• Reduction gas circuit
• CO2 removal unit
• Process gas heater
• Reformer system
• Heat Recovery System
• Process Gas Compressors
• Blowers
• Seal Gas System
• Flue Gas Fan/ Hot Fan
• Process valves
• Critical bellows
• Critical refractories
• Natural Gas pre-treatment system
• Level-II automation
267Manual for Procurement of Works, Second Edition, 2025
S. no. Plant /Unit package Minimum Importable Items
domestic
content of
Capital Goods
(%)
11 Oxygen Plant 700 tpd & Above 30% • Main Air Compressor
(Boundary limit: Water, Power at • Booster Air Compressor
oxygen plant boundary) • Expansion Turbine
• Reboiler
• Cryogenic Pumps
• Heat exchange elements of ASU
12 Steel Making
12.1 Hot Metal De- De-Sulphurization 75% • Injection Lance and automatic
Station (HMDS) Unit with Co- sampling Unit with auxiliaries
Injection Process • De-slagging Machines (slag raking
(Hot metal from the blast furnace machine) with auxiliaries
(BF) is received in a torpedo ladle or • Temp. measuring and sampling
open-top ladle, undergoes device with auxiliaries
desulfurization treatment to reduce
“Sulphur (S)” content, and is then
transferred to the BOF converter)
12.2 Hot Metal De- De-Sulphurization 70% • Impeller, Impeller lifting & stirring
Station (HMDS) Unit with equipment, Guide Frame with
Mechanical Stirrer (KR) Process auxiliaries
(Hot metal from the blast furnace • De-slagging Machines (slag raking
(BF) is received in a torpedo ladle or machine) with auxiliary facilities
open-top ladle, undergoes • Temp. measuring and sampling
desulfurization treatment to reduce device with auxiliaries
“Sulphur (S)” content, and is then
transferred to the BOF converter)
12.3 Basic Oxygen Furnace / LD Unit 65% • Lance body with clamping, Lance
[Treated hot metal is poured into the carriage, Lance guide, Lance hoist &
BOF converter, where it undergoes trolley, Lance copper tips with
processing to convert it into steel, auxiliaries.
which is then supplied to the ladle • Pneumatic motors for emergency
furnace (LF)] tilting drive.
• Bottom stirring system, valve station &
rotary joint along with auxiliaries
• Valve stations for oxygen/ argon/
nitrogen with auxiliaries
• Sub-lance system with auxiliaries
• Container lab with all auxiliaries.
• Automatic gas coupling (auto coupler)
with auxiliaries.
• Converter wrecking machine.
• Converter tap hole changing
machine
• Refractory monitoring (laser)
machine.
268Annexure 20: Appendix-A, B & C of DMI&SP Policy
S. no. Plant /Unit package Minimum Importable Items
domestic
content of
Capital Goods
(%)
12.4 Electric Arc Furnace Unit (Primary 70% • Electrode regulation system with
materials such as scrap, DRI, pig auxiliaries
iron, and hot metal in Combination • High current system including
are converted into liquid steel using furnace transformer
electrical energy to melt and refine • Oxygen & Carbon Injection System
the raw materials) with auxiliaries
• Manual Temp Measuring & sampling
Lance with auxiliaries
12.5 Ladle Furnace Unit 70% • Electrode regulation system with
[Liquid steel is processed/ treated to auxiliaries
achieve the desired grade and held • Manual Temp Measuring & sampling
as buffer stock before being Lance with auxiliaries
supplied to the continuous casting
machine (CCM)]
12.6 RH/ RH-OB Unit 65% • Gas Stirring System/ Lift Gas Stirring
[The liquid steel is degassed to System Valve Stand with auxiliaries
achieve the required dissolved gas • Oxygen Lance System with auxiliaries
levels and then supplied to the • Hydris Measurement System with
continuous casting machine (CCM)] auxiliaries
12.7 Continuous Casting Unit 65% • Ladle slag detection system complete
(Slab Caster/ Billet/ Bloom Round/ with auxiliaries
Combi/ Beam Blank) • Copper tube and Plate, Mould
[The liquid steel is cast into slabs, oscillation Cylinder.
billets, or blooms in the continuous • Rotary Union.
casting machine (CCM)] • Continuous temperature
measuring system with
auxiliaries.
• Torch cutting machine/ Emergency
torch cutter along with auxiliaries
• Deburrer machine along with electrical
drive system with auxiliaries
• Marking machine .
• Roll gap checker complete with
auxiliaries
• Electromagnetic Stirrer (EMS)/
Electromagnetic Braking (EMBr)
system along with auxiliaries
13 Flat Product Mills
13.1 Hot Strip Mills/ Plate Mill (Boundary 50% • De-scalars, mill stand, bed plates,
Limit: Slab yard to Dispatch Bay, backup rolls, Work Rolls, mill spindles,
including auxiliaries) chocks, AGC cylinders, bending
blocks & cylinders, shears, down
coilers, anti-friction roll neck bearings,
oil film bearings, mill reducers, load
cells,
thickness gauge, profile gauge, width
gauge, levelers, roll grinding
machines, Coil Marking Machine,
Plate Marking Machine, mill stand
motors & mill stand MV drive system,
automation system, etc.
269Manual for Procurement of Works, Second Edition, 2025
S. no. Plant /Unit package Minimum Importable Items
domestic
content of
Capital Goods
(%)
13.2 CRM (PLTCM) 50% • Welding machine, tension leveler, mill
(Boundary Limit: Pickling line entry stands, backup rolls, antifriction
to mill exit) bearings, oil film bearings, roll chocks,
roll force cylinders, roll bending and
roll shifting cylinders, mill spindles,
load cells, position transducers,
Electrostatic Oiler, Side Trimmer,
Steering System, Surface Inspection
System, thickness gauges, laser
speed gauge, tensiometer, Flatness
Gauge, tension reel, mill reducers, mill
stand motors & mill stand MV drive
system, automation system etc.
13.3 CRM (HDGL) 60% • Welding machine, radiant tube
(Boundary Limit: entry to exit of furnaces, jet cooling system,
HDGL including temper mill & coating pot with induction heating,
tension leveler) pot rolls, air knife wiping system,
tension leveler, width gauge,
thickness gauge, coating thickness
gauge, load cells, roll force
cylinders, mill stand motors & mill
stand drive system, automation
system, etc.
13.4 CRM (SPM) 50% • Mill stands, backup rolls, antifriction
(Boundary Limit: entry to exit of bearings, oil film bearings, roll chocks,
SPM) roll force cylinders, mill spindles,
Electrostatic Oiler, Coil Marking
System, load cells, thickness gauge,
mill stand motors & mill stand MV
drive system, automation system, etc.
13.5 CRM (Bell Annealing Furnace) 55% • Furnace, automation system, etc.
(Boundary Limit: From furnace
bases to post cooling equipment)
13.6 CRM (Color Coating Line) 80% • Coater, Coating thickness gauge,
(Boundary Limit: Entry to exit of digital printer, tension leveler,
CCL) automation, etc.
14 Long Product Mills
14.1 Bar Mill/ WRM/MM/ LSM (Boundary 75% • Fast finishing blocks, Roll turning
Limit: From furnace entry to lathes, Profile Gauge, automation
dispatch) systems, etc.
14.2 Rail Mill/ Heavy Structural Mill 45% • straightening machine, NDT
(Boundary Limit: From furnace entry facilities, welding machine, Profile
to exit of the rail welding plant Gauge, Hot Saw, Cold Saw, Hot
excluding material handling) Marking Machine, Roll Turning
Lathe, Saw Grinding Machine,
automation system, etc.
15 Wheel Plant 30% • Circular saw, forging press, wheel
(receipt of round/ingot to finished rolling mill, wheel dishing press,
wheel) wheel stamping machine, rim spaying
machine, mobile chargers, (Handling
Robots),machining facilities, testing
facilities, automation system etc.
270Annexure 20: Appendix-A, B & C of DMI&SP Policy
S. no. Plant /Unit package Minimum Importable Items
domestic
content of
Capital Goods
(%)
16 Refractory Brick (Receipt of raw 50% • Hydraulic Press
material to finished brick)
17 Electrical (Power Quality System) 30% • MVSTATCOM
• (Static Synchronous
Compensator) System
Appendix-C: Promotion of Indigenous Technologies in Iron & Steel Sector
1. Objective:
To promote self-reliance in the Indian iron and steel sector by incentivizing the adoption, development,
and scale- up of indigenous technologies across all stages of steel manufacturing.
2. Scope:
This policy applies to Central Public Sector Enterprises involved in steelmaking or putting up a steel
manufacturing plant.
3. Policy Directives:
3.1 In cases where technology and proof for earlier engineering & supply is available but does
not match the present capacity requirement, following conditions will be applicable for
indigenous technology providers:
3.1.1 Production capacity reference to be 30% of the capacity of the proposed plant
3.1.2 Availability of demonstrable tie ups with the vendors
3.1.3 Experience of detailed engineering of projects for at least 75% of the capacity of the
proposed plant
3.2 In cases where technology is available but no reference for earlier supply is available,
following conditions will be applicable for indigenous technology providers:
3.2.1 The indigenous technology supplier has done detailed engineering of projects
matching at least 75% of the features of the proposed project
3.2.2 The indigenous technology supplier has done detailed engineering matching 100%
of the critical features of the proposed project
3.2.3 Availability of demonstrable tie ups with the vendors
3.2.4 Demonstrable evidence of technology availability (IPR on other sufficient evidence)
4. Implementation Oversight:
The Standing Committee constituted by Ministry of Steel shall monitor implementation, resolve
disputes, and update the eligibility and incentive criteria periodically.
271Manual for Procurement of Works, Second Edition, 2025
Annexure 21: Form-1 of DMI&SP Policy
(Refer para 1.11.5-8)
Format for Affidavit of Self Certification regarding Domestic Value Addition in
Iron & Steel Products/capital goods to be provided on Rs. 100/-Stamp Paper
Date:
I ________________________S/o, D/o, W/o, Resident of_______ Hereby solemnly affirm and declare as
under:
That I will agree to abide by the terms and conditions of the policy of Government of
India issued vide Notification No:__________________________________
That the information furnished hereinafter is correct to the best of my knowledge and belief
and I undertake to produce relevant records before the procuring agency (ies) for the purpose
of assessing the domestic value addition.
That the domestic value addition for all inputs which constitute the said iron & steel products
has been verified by me and I am responsible for the correctness of the claims made
therein.
That in the event of the domestic value addition of the product mentioned herein is found to
be incorrect and not meeting the prescribed value-addition criteria, based on the
assessment of procuring agency (ies) for the purpose of assessing the domestic value-
addition, I will be disqualified from any Government tender for a period of 36 months. In
addition, I will bear all costs of such an assessment.
That I have complied with all conditions referred to in the Notification No___________
wherein preference to domestically manufactured iron & steel products in Government
procurement is provided and that the procuring agency (ies) is hereby authorized to forfeit
and my EMD. I also undertake to pay the assessment cost and pay all penalties as
specified in the tender document.
I agree to maintain the following information in the Company's record for a period of 8
years and shall make this available for verification to any statutory authority.
i. Name and details of the Bidder (Registered Office, Manufacturing unit location,
nature of legal entity)
ii. Date on which this certificate is issued
iii. Iron & Steel Products for which the certificate is produced
iv. Procuring agency to whom the certificate is furnished
v. Percentage of domestic value addition claimed and whether it meets the threshold
value of domestic value addition prescribed
vi. Name and contact details of the unit of the manufacturer(s)
vii. Net Selling Price of the iron & steel products
viii. Freight, insurance and handling till plant
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