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GENERAL The most common mode of executing works for the Army, Navy and Air Force adopted by the Military Engineering Services (MES) is through the agency of contracts.
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Page 1: Indian Contract Act &Types of Contracts Etc

GENERAL

The most common mode of executing works for the Army, Navy and Air Force adopted by the Military Engineering Services (MES) is through the agency of contracts.

Page 2: Indian Contract Act &Types of Contracts Etc

DUTIES

SURVEYOR CADRE OFFICERS AND STAFF MAINLY DEALS WITH MATTERS PERTAINING TO:-

• EVOLVING A FLAWLESS CONTRACT PROCEDURE.

• DRAWING UP SPECIFICATIONS FOR MATERIALS AND WORKMANSHIP.

• PREPARATION OF STANDARD SCHEDULE OF RATES, ANALYSIS OF RATES AND SPECIAL RATES.

• PREPARATION OF COST ANALYSIS DURING THE VARIOUS STAGES OF PLANNING AND DESIGNING TO ENSURE ECONOMY IN CONSTRUCTION.

Page 3: Indian Contract Act &Types of Contracts Etc

DUTIES (Contd)• Preparation, operation and

finalization of contracts including technical check of running account receipts (RARs) and final bills for completed works, settlement of claims, disputes, etc.

• Enlistment of contractors and maintaining up-to-date dossiers of all enlisted contractors.

• Arbitration cases/ Law Suits.

Page 4: Indian Contract Act &Types of Contracts Etc

Contract framing involves the following• PREPARATION OF WELL DEFINED AND

PROPERLY WORDED TENDER DOCUMENTS.

• OBTAINING COMPETITIVE OFFERS FROM TRUSTWORTHY CONTRACTORS.

• ACCEPTING MOST REASONABLE OFFER AND CONCLUDING CONTRACTS.

• OPERATING THE CONTRACT DURING EXECUTION TILL FINALIZATION.

• SETTLING DISPUTES, IF ANY, THROUGH ARBITRATION.

Page 5: Indian Contract Act &Types of Contracts Etc
Page 6: Indian Contract Act &Types of Contracts Etc

E-IN-C`S BRANCHJt.DG (CONTRACTS)

CE COMDJt.DG (CONTRACTS)

ORDIR (CONTRACTS)

CE ZONEDIR(CONTRACTS)

CWE Jt./Asst

DIR(CONTRACTS)

Page 7: Indian Contract Act &Types of Contracts Etc

E-in-C’s Branch

–Policy instructions

– Instructions on contract procedure and related matters.

–Finalization of serious ADGTEs cases

Page 8: Indian Contract Act &Types of Contracts Etc

Chief Engineer Command

• Rendering advice to Comd CE on Contract matters under the Command.

• Upgrading/Enlisting the contractors

• Maintaining contractor’s enlistment documents.

• Scrutiny and follow up action on the performance report of contractors submitted by the Zones

Page 9: Indian Contract Act &Types of Contracts Etc

• MAINTAINING LIAISON WITH STE AND CDA COMMAND WITH REFERENCE TO THE TES OBSERVATIONS AND RECOVERIES

• DISCIPLINARY ACTION ASPECTS OF CONTRACTORS IN THE COMMAND.

• COLLECTION OF DATA FOR REVISION OF SSR AND MAINTENANCE OF LIAISON WITH STATE PWD, CPWD, RAILWAYS AND ANY OTHER AGENCIES

• ASSISTING ZONAL CHIEF ENGINEERS IN THE COMMAND IN VETTING OF PLEADINGS IN DEFENCE & DEFENDING IMPORTANT ARBITRATION CASES.

Page 10: Indian Contract Act &Types of Contracts Etc

CE ZONE• PROJECT ADVISER TO CE ON ALL CONTRACT

MATTERS.

• SUPERVISES PREPARATION OF TENDER DOCUMENTS & ESTIMATION OF BILLS OF QUANTITIES IN THE ZONE

• TECHNICAL CHECK OF STAR RATES ABOVE RS 50000 FINANCIAL EFFECT

• ARBITRATION MATTERS• ENLISTMENT OF CONTRACTORS IN CLASS ‘A’

TO ‘D’

Page 11: Indian Contract Act &Types of Contracts Etc

CWE OFFICE

• PREPARATION OF TENDER/CONTRACT DOCUMENTS

• ENLISTMENT OF CONTRACTORS IN CLASS ‘E’ & ‘F’

• TECHNICAL CHECK OF A PERCENTAGE OF CONTRACTOR’S FINAL BILLS BEFORE PAYMENT

• DEFENDING ARBITRATION CASES,

Page 12: Indian Contract Act &Types of Contracts Etc

INTRODUCTION AND IMPORTANT SECTIONS

OF INDIAN CONTRACT ACT

Page 13: Indian Contract Act &Types of Contracts Etc

THE INDIAN CONTRACT ACT-1872

THE BILL PERTAINING TO ACT 9 OF 1872 WAS PASSED ON 25th APRIL, 1872 AND THE ACT CAME INTO FORCE ON THE FIRST DAY OF SEP, 1872.

THE ACT IS COMPRISING OF CHAPTERS AND SECTIONS :-

CHAPTERS = XI

SECTIONS = 238

IN ADDITION TO CHAPTERS & SECTIONS THE ACT ALSO CONTAINS PRELIMINARY AND SCHDULE

Page 14: Indian Contract Act &Types of Contracts Etc

INTERPRETATION OF CONTRACTWHEN ONE PERSON SIGNIFIES HIS

WILLINGNESS TO DO OR TO ABSTAIN FROM DOING ANYTHING, WITH A VIEW TO OBTAINING THE ASSENT OF THAT OTHER TO SUCH ACT OR ABSTINENCE, HE IS SAID TO MAKE A PROPOSAL;

WHEN THE OTHER PERSON TO WHOM PROPOSAL IS MADE SIGNIFIES HIS ASSENT THERETO, THE PROPOSAL IS SAID TO BE ACCEPTED. A PROPOSAL, WHEN ACCEPTED, BECOMES A PROMISE.

Page 15: Indian Contract Act &Types of Contracts Etc

EVERY PROMISE AND EVERY SET OF PROMISES FORMING THE CONSIDERATION FOR EACH OTHER, IS AN AGREEMENT.

AN AGREEMENT ENFORCABLE BY LAW IS A CONTRACT.

Page 16: Indian Contract Act &Types of Contracts Etc

ESSENTIAL O F A VALID CONTRACT

i. THERE MUST BE FREE CONSENT OF PARTIES;

ii. THE PARTIES MUST BE COMPETENT TO CONTRACT;

iii. THE CONSIDERATION MUST BE LAWFUL;

iv. THE OBJECT MUST BE LAWFUL;

v. THE AGREEMENT MUST NOT BE EXPRESSLY DECLARED TO BE VOID; AND

vi. THE AGREEMENT MUST COMPLY WITH THE PROVISION OF ANY LAW REQUIRING IT TO BE IN WRITING OR ATTESTED OR REGISTERED.

Page 17: Indian Contract Act &Types of Contracts Etc

CONTRACT WITH GOVERNMENT

‘ ALL CONTRACTS MADE BY OR ON BEHALF OF THE GOVERNMENT MUST BE MADE ACCORDING TO THE PROVISIONS OF THE STATUTE APPLICABLE TO THEM’. IN INDIA SUCH CONTRACTS ARE GOVERNED BY ART 299 OF THE CONSTITUTION, ACCORDING TO WHICH ALL CONTRACTS MADE IN EXERCISE OF EXECUTIVE POWERS OF THE UNION OR A STATE SHALL BE EXPRESSED TO BE MADE BY THE PRESIDENT, OR BY THE GOVERNOR OF THE STATE, AS THE CASE MAY BE, AND ALL SUCH CONTRACTS SHALL BE EXECUTED ON BEHALF OF THE PRESIDENT OR THE GOVERNOR BY SUCH PERSONS AND IN THE MANNER AS MAY BE DIRECT OR AUTHORISE.

Page 18: Indian Contract Act &Types of Contracts Etc

IMPORTAN T SECTIONS OF CONTRACT ACT

SECTION – 2

INTERPRETATION OF CLAUSE :-

AN AGREEMENT ENFORCEABLE BY LAW IS A CONTRACT.

Page 19: Indian Contract Act &Types of Contracts Etc

SECTION- 4. WHEN COMMUNICATION OF PROPOSAL

IS COMPLETE:-

THE COMMUNICATION OF A PROPOSAL IS COMPLETE WHEN IT COMES TO THE KNOWLEDGE OF THE PERSON TO WHOM IT IS MADE.

WHEN COMMUNICATION OF AN ACCEPTANCE IS COMPLETE :-

AS AGAINST THE PROPOSER, WHEN IT IS PUT IN A COURSE OF TRANSMISSION TO HIM SO AS TO BE OUT OF THE POWER OF ACCEPTER

AS AGAINST ACCEPTER, WHEN IT COMES TO THE KNOWLEDGE OF THE PROPOSER.

Page 20: Indian Contract Act &Types of Contracts Etc

SECTION – 5. REVOCATION OF PROPOSALS AND

ACCEPTANCE :-

• A PROPOSAL MAY BE REVOKED AT ANY TIME BEFORE THE COMMUNICATION OF ITS ACCEPTANCE IS COMPLETE AS AGAINST THE PROPOSER BUT NOT AFTERWARDS.

• AN ACCEPTANCE MAY BE REVOKED AT ANY TIME BEFORE THE COMMUNICATION OF THE ACCEPTANCE IS COMPLETE AS AGAINST THE ACCEPTOR, BUT NOT AFTERWARDS.

Page 21: Indian Contract Act &Types of Contracts Etc

SECTION – 7.ACCEPTANCE MUST BE ABSOLUTE:-

IN ORDER TO CONVERT A PROPOSAL INTO A PROMISE ,THE ACCEPTANCE MUST BE : –

1)ABSOLUTE AND UNQUALIFIED;

2)EXPRESSED IN SOME USUAL AND REASONABLE MANNER, UNLESS THE PROPOSAL PRESCRIBES THE MANNER IN WHICH IT IS TO BE ACCEPTED.

Page 22: Indian Contract Act &Types of Contracts Etc

• SECTION –10.

WHAT AGREEMENTS ARE CONTRACTS

• ALL AGREEMENTS ARE CONTRACTS IF THEY ARE MADE BY THE FREE CONSENT OF THE PARTIES COMPETENT TO CONTRACT, FOR A LAWFUL CONSIDERATION AND WITH A LAWFUL OBJECT

• SECTION – 23.

WHAT CONSIDERATION AND OBJECTES LAWFUL AND WHAT NOT:-

THE CONSIDERATION OR OBJECT OF AN AGREEMENT IS LAWFUL UNLESS—

IT IS FORBIDDEN BY LAW; OR

Page 23: Indian Contract Act &Types of Contracts Etc

INVOLVES OR IMPLIES, INJURY TO THE PERSON OR PROPERTYOF ANOTHER; OR

THE COURT REGARDS IT AS IMMORAL, OR OPPOSED TO PUBLIC POLICY.

IN EACH OF THESE CASES, THE CONSIDERATION OR OBJECT OF AN AGREEMENT IS SAID TO BE UNLAWFUL. EVERY AGREEMENT OF WHICH THE OBJECT OR CONSIDERATION IS UNLAWFUL IS VOID.

Page 24: Indian Contract Act &Types of Contracts Etc

• SECTION–56.

AGREEMENT TO DO IMPOSSIBLE ACT:-

AN AGREEMENT TO DO AN ACT IMPOSSIBLE IN ITSELF IS VOID.

CONTRACT TO DO ACT AFTERWARDS BECOMING IMPOSSIBLE OR UNLAWFUL:-

A CONTRACT TO DO AN ACT WHICH AFTER THE CONTRACT IS MADE BECOMES IMPOSSIBLE OR UNLAWFUL BECOMES VOID

Page 25: Indian Contract Act &Types of Contracts Etc

VARIOUS TYPES OF CONTRACT

Page 26: Indian Contract Act &Types of Contracts Etc

TYPES OF CONTRACT• BUILDING CONTRACTS CAN BROADLY BE

DIVIDED INTO TWO TYPES AS FOLLOWS:-

LUMPSUM CONTRACTS(WILL GENERALLY USED FOR ALL

ORIGINAL WORKS AND MAINTENCE SERVICES WHICH ARE EXCLUDED FROM TERM CONTRACT)

MEASUREMENT CONTRACTWILL GENERALLY USED FOR SMALL NO

OF ITEMS WITH LARGE QUANTITIES OF ITEM

Page 27: Indian Contract Act &Types of Contracts Etc

LUMP SUM CONTRACTS

• THE AGREEMENT BINDS THE CONTRACTOR TO CARRY TO CARRY OUT THE WORK FOR A FIXED AGREED SUM IN CONTRACT .

• THE SCOPE OF WORK DESIRED TO BE CARRIED OUT UNDER THE LUMPSUM CONTRACT IS CATERED BY WAY OF DETAILED DRAWINGS AND SPECIFICATIONS .

• INTERIM PAYMENTS ARE MADE TO CONTRACTORS ON THE BASIS OF ASSESSMENT OF THE PROGRESS OF WORK ACTUALLY DONE.

Page 28: Indian Contract Act &Types of Contracts Etc

LUMP SUM CONTRACTS (Contd)

• YARD STICK IS PREPARED FOR EACH ITEM OF WORK.

• SUCH CONTRACTS DOES NOT INVOLVE RECORDING OF DETAILED MEASUREMENTS.

• DAY TO DAY SUPERVISION BY MES ENSURES THAT THE WORK IS BEING DONE IN ACCORDANCE WITH THE CONTRACT PROVISIONS

Page 29: Indian Contract Act &Types of Contracts Etc

MEASUREMENTS CONTRACTS

• APPROXIMATE QUANTITIES INVOLVED IN THE SCOPE OF WORK ARE ENTERED IN SCHEDULE ‘A’ (LIST OF WORKS AND PRICES) OF THE CONTRACT.

• THE EXACT AMOUNT PAYABLE TO CONTRACTOR THROUGH RARS AND FINAL BILLS IS DECIDED ONLY AFTER MEASURING QUANTITIES OF ITEMS OF WORK DONE AT SITE AND PRICING EACH ITEM OF WORK AT RATE, QUOTED BY THE CONTRACTOR.

Page 30: Indian Contract Act &Types of Contracts Etc

TYPES OF LUMP SUM CONTRACTS

• BASED ON BILLS OF QUANTITIES(BQ)

• BASED ON PRE-PRICING BY MES

• BASED ON DRAWINGS AND SPECIFICATIONS

Page 31: Indian Contract Act &Types of Contracts Etc

CONTRACTS BASED ON BILLS OF QUANTITIES(BQ)

•THE TENDERER IS SUPPLIED WITH COMPLETE SET OF DRAWINGS, SPECIFICATIONS AND QUANTITIES OF WORK GIVEN IN THE BILLS OF QUANTITIES (BQ), CALCULATED BY THE MES.

•INTERIM PAYMENTS ARE MADE BY ASSESSMENT (BASED ON YARD STICK) AND NOT INVOLVING MEASUREMENTS AT SITE.

Page 32: Indian Contract Act &Types of Contracts Etc

CONTRACTS BASED ON BILLS OF QUANTITIES(BQ) CONTD.

• PREPARATION OF TENDER

DOCUMENTS REQUIRES CONSIDERABLE EFFORT AND EXPERTISE.

• THIS TYPE OF CONTRACT IS SUITABLE FOR WORKS INVOLVING CONSTRUCTIONS OF MANY UNITS OF A PARTICULAR TYPE OF DESIGN VIZ. MARRIED ACCOMMODATION.

Page 33: Indian Contract Act &Types of Contracts Etc

CONTRACTS BASED ON PRE-PRICING BY MES

•THE COST OF EACH BUILDING STRUCTURE ETC, AT PAR WITH THE SSR, IS ESTIMATED IN ADVANCE BY THE MES AND INSERTED IN THE SCHEDULE ‘A’ (LIST OF WORK AND PRICES).

•QUANTITIES OF ITEMS OF WORK ARE NOT SUPPLIED TO THE TENDERER AND THE ACCURACY OF THE PREPRICING DONE BY MES IS ALSO NOT GUARANTEED. A COMPLETE SET OF DRAWINGS AND SPECIFICATIONS IS SUPPLIED TO THE TENDERER.       

Page 34: Indian Contract Act &Types of Contracts Etc

CONTRACTS BASED ON PRE-PRICING BY MES(CONTD).

• THE TENDERER IS REQUIRED TO WORK OUT THE DETAILED QUANTITIES FOR EACH BUILDING / STRUCTURE LISTED IN SCHEDULE ‘A’, APPLY HIS OWN RATES AND QUOTE THE LUMPSUM THAT HE WILL CHARGE FOR THE WORK.

• PURPOSE SERVED BY THE PREPRICING DONE BY MES IS TO ARRIVE AT THE % ON/OFF THE SSR AMOUNT/RATES FOR WORKING OUT THE ADJUSTMENT TO CONTRACT PRICE ON ACCOUNT OF VARIATIONS. A MAJORITY OF LUMPSUM CONTRACTS CONCLUDED IN MES FOR ANY KIND OF BUILDINGS OR STRUCTURE ARE OF THIS TYPE.

Page 35: Indian Contract Act &Types of Contracts Etc

CONTRACTS BASED ON DRGS & SPECIFICATIONS

•TENDERER IS NEITHER SUPPLIED WITH DETAILED QUANTITIES NOR WITH COST OF WORK IS PREPRICED BY MES AT PAR WITH SSR.

•TENDERER IS REQUIRED TO WORK OUT THE QUANTITIES, APPLY HIS OWN RATES AND QUOTE LUMPSUM AGAINST EACH BUILDINGS/ STRUCTURE ETC. LISTED IN SCHEDULE ‘A’.

•TENDERER IS SUPPLIED WITH A COMPLETE SET OF DRAWINGS AND SPECIFICATIONS.

Page 36: Indian Contract Act &Types of Contracts Etc

CONTRACTS BASED ON DRGS & SPECIFICATIONS(CONTD.)

• A SPECIAL CONDITION IS INSERTED IN THE TENDER DOCUMENTS LAYING DOWN A PERCENTAGE ON/OFF THE SSR LEVEL OF RATES AT WHICH VARIATIONS WILL BE PRICED DEPENDING ON THE ASSESSMENT OF MARKET RATES BY MES

• USE OF THIS TYPE OF CONTRACT IS RESTRICTED TO TECHNICAL BUILDINGS OF NON-REPETITIVE NATURE AND WHEN RATES OF MOST OF THE ITEMS ARE NOT AVAILABLE IN SSR

Page 37: Indian Contract Act &Types of Contracts Etc

TYPES OF MEASUREMENT CONTRACTS

• ITEM RATE CONTRACTS

• TERM CONTRACT FOR ARTIFICERS WORK (TC)

• RATE CONTRACT FOR SUPPLY OF STORES AND MATERIALS

• CONTRACT FOR HANDLING AND CONVEYANCE OF STORES.

Page 38: Indian Contract Act &Types of Contracts Etc

ITEM RATE CONTRACTS

•IT IS IDEALLY USED WHERE LARGE APPROXIMATELY ESTIMATED QUANTITIES OF WORK INVOLVING SMALL NUMBER OF ITEMS HAVE TO BE CARRIED OUT, EG: ROADS WORK, EXTERNAL WATER SUPPLY, SEWAGE AND ELECTRICAL MAINS, PERIODICAL SERVICES ETC.

•THE SCHEDULE ‘A’ CONTAINS ITEMS WITH APPROXIMATE QUANTITIES. THE DESCRIPTIONS OF ITEMS COVER SPECIFICATIONS IN BRIEF FOR EACH ITEM.

•THE TENDERER QUOTES HIS RATES FOR EACH ITEM OF WORK, TO BE MEASURED IN DETAIL BEFORE PAYMENT. DETAILED SPECIFICATIONS AND DRAWINGS ARE ALSO SUPPLIED TO THE TENDERER.

Page 39: Indian Contract Act &Types of Contracts Etc

ITEM RATE CONTRACTS IMPORTANT

• THOUGH THE QUANTITIES GIVEN IN THE SCHEDULE ‘A’ ARE STATED TO BE APPROXIMATE, CARE NEED TO BE TAKEN TO ENSURE THAT THEY REPRESENT FINAL REQUIREMENTS WITHIN 10% ACCURACY. THIS IS TO AVOID THE POSSIBILITY OF THE LOWEST TENDER ACCEPTED ON THE BASIS OF APPROXIMATE QUANTITIES TURNING OUT NOT TO BE THE LOWEST TENDER ON THE BASIS OF QUANTITIES ACTUALLY EXECUTED AT SITE.

Page 40: Indian Contract Act &Types of Contracts Etc

PREPARATION AND ISSUE OF TENDERS

Page 41: Indian Contract Act &Types of Contracts Etc

STAGES TILL ISSUE OF TENDER ENQUIRY TO CONTRACTORS

•RECEIPT OF PRELIMINARY INFORMATION PROFORMA (PIP) , ADDITIONAL GROUND DATA / SITE FACTORS

•SCRUTINY OF PIP, ADDITIONAL GROUND DATA / SITE FACTORS & DRAWINGS

•INVITATION TO TENDER

•PREPARATION OF TENDER DOCUMENTS

•SELECTION OF CONTRACTORS FOR ISSUE OF TENDER DOCUMENTS

Page 42: Indian Contract Act &Types of Contracts Etc

INVITATION TO TENDER &PRESS ADVERTISEMENT

•NOTICE OF TENDER MUST BE ISSUED IMMEDIATELY ON RECEIPT OF PIP FROM E-2 SECTION IN EACH CASE IRRESPECTIVE OF THE VALUE OF WORK AT ALL IMPORTANT PUBLIC PLACES VIZ,.BANKS, POST OFFICE BLDGS ETC.

IMPORTANT

WORKS, COSTING MORE THAN RS. 5.00 LAKHS BUT LESS THAN RS 20 LAKHS MUST BE ADVERTISED IN LOCAL NEWS PAPERS

Page 43: Indian Contract Act &Types of Contracts Etc

INVITATION TO TENDER &PRESS ADVERTISEMENT

WORKS COSTING MORE THAN RS. 20 LAKHS SHOULD BE ADVERTISED IN NATIONAL/LOCAL NEWSPAPERS AS ALSO IN INDIAN TRADE JOURNAL THOUGH DIRECTOR OF AUDIO AND VISUAL PUBLICATION (DAVP).

IT TAKES APROXIMATELY 35-40 DAYS TO GET ANY WORK ADVERTISED IN NEWS PAPERS

Page 44: Indian Contract Act &Types of Contracts Etc

VARIOUS PARTS OF TENDER DOCUMENTS

•FORWARDING LETTER TO THE TENDER DOCUMENTS

•AN ‘INDEX’ OR A ‘CONTENTS’ PAGE

•NOTICE OF TENDER – IAFW – 2162

•CONTRACT FORM:–AUTHORISATION PAGE –SCHEDULE ‘A’ (LIST OF WORKS AND PRICES)–SCHEDULE ‘B’ (LIST OF STORES TO BE ISSUED TO CONTRACTOR )

Page 45: Indian Contract Act &Types of Contracts Etc

VARIOUS PARTS OF TENDER DOCOMENTS(CONTD)

– SCHEDULE ‘C’ (LIST OF T AND P TO BE HIRED TO THE CONTRACTOR)

– SCHEDULE ‘D’ (LIST OF TRANS TO BE HIRED TO THE CONTRACTOR)

– TENDER PAGE

– GENERAL SUMMARY (APPLICABLE ONLY FOR LUMP SUM CONTRACT)

– ACCEPTANCE PAGE.

Page 46: Indian Contract Act &Types of Contracts Etc

VARIOUS PARTS OF TENDER DOCOMENTS(CONTD)

•SPECIAL CONDITIONS OF CONTRACT

•GENERAL CONDITIONS OF CONTRACT

•SCHEDULE OF MINIMUM FAIR WAGES

•PARTICULAR SPECIFICATIONS

•SSR

•LIST OF DRAWINGS

•ONE COMPLETE SET OF DRAWINGS

Page 47: Indian Contract Act &Types of Contracts Etc

SPECIAL CONDITIONS•VALIDITY PERIOD OF TENDER•TIME AND PROGRESS CHART•SUPPLY OF ELECTRICITY/ WATER•FACILITIES TO CONTRACTORS- ALLOTMENT OF LAND FOR STORAGE OF MATERIALS, ACCN FOR LABOUR, CANTEEN,LAND FOR FABRICATION WKSHOP ETC

Page 48: Indian Contract Act &Types of Contracts Etc

SPECIAL CONDITIONS (Contd)CONDITIONS OF WORKING (RESTRICTED/UNRESTRICTED).IN CASE RESTRICTED, NORMAL WORKING TIME ALLOWED IN A DAY& EXTENT OF CHECKSACCEPTABLE QUALITY OF WORKS & FINISHESANTECEDENTS OF CONTRACTORS AND THEIR AGENTSMODE OF VALUATION OF DOs FOR Lump Sum CONTRACTS BASED ON DRG & SPC

Page 49: Indian Contract Act &Types of Contracts Etc

SELECTION OF CONTRACTORS FOR ISSUE OF TENDER DOCUMENTS

•TENDER TO BE ISSUED TO CONTRACTORS IN APPROPRIATE CLASS & ABOVE.

•ISSUE OF TENDER TO CONTRACTORS ONE CLASS BELOW APPROPRIATE CLASS.

•ISSUE OF TENDER TO CONTRACTORS TWO CLASS BELOW APPROPRIATE CLASS.

•ISSUE OF TENDER TO UNELISTED CONTRACTORS.

Page 50: Indian Contract Act &Types of Contracts Etc

SELECTION OF CONTRACTORS FOR ISSUE OF TENDER

DOCUMENTS• POINTS TO BE SEEN DURING SELECTIONS:

– CONTRACTOR IS NOTALREADY OVERLOADED.– PERFORMANCE OF THE CONTRACTOR HAD NOT

BEEN UNSATISFACTORY IN THE PAST.– SERIOUS IRREGULARITIES WERE NOT COMMITTED BY

THE CONTRACTOR IN THE PAST.– CONTRACTOR’S FINANCIAL POSITION IF FOUND TO

BE UNSATISFACTORY.– CONTRACTOR IS NOT REMOVED/SUSPENDED/BLACK

LISTED/DECLARED INSOLVENT/CONVICTED ETC.

Page 51: Indian Contract Act &Types of Contracts Etc

TIME INVOLVED IN PREPARATION, ISSUE AND ACCEPTANCE OF TENDER

DOCUMENTSE-IN-C HAS LAID DOWN A TIME SCHEDULE FOR VARIOUS STAGES OF PREPARATION AND ACCEPTANCE OF TENDERS FOR NORMAL WORKS:

•ISSUE OF TENDER NOTICE : 1 WEEK FROM RECEIPT OF PIP OF LETTER WHERE APPLICABLE FOR PRESS ADVERTISEMENT ALSO.

•PREPARATION OF TENDER DOCUMENTS : 3 WEEKS FOR CONTRACTS UP TO RS. 25 LAKHS AND 4-6 WEEKS FOR LARGER CONTRACTS.

Page 52: Indian Contract Act &Types of Contracts Etc

TIME INVOLVED IN SUBMISSION OF TENDER DOCUMENTS

•LUMP SUM TENDER BASED ON PRE-PRICING BY MES : 5 WEEKS plus transit period•LUMP SUM TENDER BASED ON DRAWINGS AND SPECIFICATIONS:6 WEEKS plus transit period•ITEM RATE CONTRACT: 3 WEEKS plus transit period

Page 53: Indian Contract Act &Types of Contracts Etc

• SCRUTINIZING AND ACCEPTANCE OF TENDERS:

• 1 WEEK FOR CONTRACTS UP TO RS. 20 LAKHS AND

• 2 WEEKS FOR LARGER CONTRACTS

Page 54: Indian Contract Act &Types of Contracts Etc

CLASS

UPPER TENDERIN

G LIMITIN LAKH

AMOUNT OF STANDING SECURITY

DEPOSIT

LIMIT OF MINIMUM RESERVES/ TOTAL OF MOVABLE AND / OR IMMOVABLE PROPERTY OR FIXED ASSETS (IN CASE OF COMPANIES)

AUTHORITY COMPETENT TO ENLIST

SS

S ABCDEF

No Limit

75015080 4020 10 5

5,00,000

3,00,0001,50,0001,20,00060,00030,00020,00010,000

50.00

35.0020.0015.0010.00 5.00 3.00 1.50

E-in-C

CE commd

CE Zone/Proj

-do--do--do-CWECWE

VARIOUS CLASSES OF CONTRACTERS IN MES

Page 55: Indian Contract Act &Types of Contracts Etc

ADMINSTRATION OF CONTRACTS

Page 56: Indian Contract Act &Types of Contracts Etc

ADMINSTRATION OF CONTRACTS

CONTRACT ADMINSTRATION MEANS FULFILLMENT OF CONTRACTUAL OBLIGATIONS AND GENERALLY INVOLVES FOLLOWING ACTIONS :-

Page 57: Indian Contract Act &Types of Contracts Etc

ADMINSTRATION OF CONTRACTS

1. IMMEDIATELY ON ACCEPTANCE OF TENDER

• ISSUE OF WORK ORDER NO. 1 AND HANDING OVER OF SITE(S) ;

• NOMINATING ENGINEER IN CHARGE AND ASKING CONTRACTOR TO MAKE PRE-LIMINARY ARRG TO COMMENCE THE WORK;

• TO FINALISE CPM;

Page 58: Indian Contract Act &Types of Contracts Etc

• FINALISATION OF YARD STICK FOR LUMP SUM CONTRACTS;

• TO WORK OUT REQUIREMENT OF SCH’B’ STORES

• TO FINALISE FIRM EXACT QUANTITIES FOR ADD BACK DOs

• OBTAINING SAMPLES OF MATERAIL FROM CONTRACTOR.

Page 59: Indian Contract Act &Types of Contracts Etc

2. DURING EXECUTION OF WORK• THOROUGH STUDY OF CONTRACT

PROVISIONS AND SPECIFICATIONS;

• APPROVAL OF SAMPLES OF MATERIAL AND FITTINGS & FIXTURES;

• PLACING ADD BACK DOs;

• ACCEPTANCE, TESTING OF MATERAILS AND VERIFICATION OF PV & TCs;

Page 60: Indian Contract Act &Types of Contracts Etc

• MAINTENANCE OF WORK SITE DOCUMENTS;

• EXERCISING CHECKS AND QUALITY CONTROL;

• RECORDING MEASUREMENTS IN R/O MEASURABLE SCHEDULES/SERVICES AS THE WORK PROCEEDS;

• TO KEEP CLOSE WATCH ON PROGRESS OF WORK;

• ISSUE NECESSARY NOTICES TO CONTRACTOR AS AND WHEN REQUIRED;

Page 61: Indian Contract Act &Types of Contracts Etc

RAR PAYMENTS• CONTRACTOR’S CLAIMS FOR RAR

PAYMENTS TO BE DEALT WITH EXPEDICIOUSLY AND TO ENSURE TIMELY AND REASONABLE PAYMENTS;

• CONTRACTOR TO BE SUPPLIED WITH STATEMENT OF DEBITS TO ENABLE HIM TO PREFER HIS RAR CLAIMS;

• RECOVERIES ON ACCOUNT OF WATER, ELECTRICITY, T&P, TESTING CHARGES, MINUS DOs ETC TO BE EFFECTED REGULARLY;

Page 62: Indian Contract Act &Types of Contracts Etc

• FINANCIAL REVIEW OF PROJECT

• DEVIATION ORDERS

• AMENDMENTS TO CONTRACT

• ORDERING ADDITIONAL WORK BEYOND DO LIMIT

• VALUATION OF DEVIATIONS

• PROMPT DECISION MAKING

• TIMELY AND CORRECT REPLY TO CONTRACTOR ON ALL POINTS RAISED DURING CURRENCY OF CONTRACT

Page 63: Indian Contract Act &Types of Contracts Etc

• DETAIL INSPECTION OF WORK ONE WEEK BEFORE COMPLETION OF WORK

• COMPLETION OF WORK

• TIMELY INITIATION OF Performance Reports.

• SITE CLEARANCE

• CHECKING OF WORK BY TE/STE

Page 64: Indian Contract Act &Types of Contracts Etc

DEVIATION ORDERSDEVIATION ORDERSDEVIATION LIMIT1) LUMP SUM CONTRACTS BASED ON DRGS &

SPECIFICATION :- 10%10%

2)OTHER CONTRACTS:-

a)EXCEEDING 10 LAKHS:- 10%

b)UPTO 10 LAKHS:- 20%

Page 65: Indian Contract Act &Types of Contracts Etc

APPROVAL OF CEA:-GEs/CsWE contractsEXCESS UPTO 10% BY ZONAL CEEXCESS >10% < 20% BY COMMAND CEEXCESS > 20% BY ENGINEER- IN- CHIEFCE CONTRACTS:- o UPTO 10 % BY COMMAND CEo EXCEEDING 10 % BY ENGINEER-IN-

CHIEFNOTE:- CE ZONE / COMMAND SHALL

APPROVE IN CONSULTATION WITH CDA AND ENGINEER-IN- CHIEF IN CONSULTATION WITH MOF(DEF)

Page 66: Indian Contract Act &Types of Contracts Etc

AMENDMENT TO CONTRACT

AN OFFICER COMPETENT TO ACCEPT A CONTRACT IS ALSO COMPETENT TO AMEND IT, PROVIDED THE CONTRACT AS AMENDED IS WITHIN HIS POWERS OF ACCEPTANCE EXCEPT THAT THE SANCTION OF NEXT HIGHER AUTHORITY MUST BE OBTAINED :-

IF AMENDMENT INVOLVES ENHANCEMENT OF CONTRACT RATES.

TO ANY AMENDMENT AFTER CONTRACTOR HAS THE FINAL BILL

Page 67: Indian Contract Act &Types of Contracts Etc

AMENDMENT TO CONTRACT

IF AN AMENDMENT SHOULD BRING THE VALUE OF CONTRACT ABOVE THE POWERS OF OFFICER WHO ACCEPTED THE CONTRACT, THE AMENDMENT SHALL BE MADE ONLY AFTER OBTAINING SANCTION OF NEXT HIGHER AUTHORITY.

Page 68: Indian Contract Act &Types of Contracts Etc

.

PAYMENT OF FINAL BILLS :-PAYMENT OF THOSE ITEMS OF FINAL BILL

WHERE THERE IS NO DISPUTES SHALL BE PAID AS PER PERIOD SPECIFIED BELOW :-

CA AMOUNT < 5.00 LAKHS---- WITHIN 4 MONTHSCA AMOUNT > 5.0 LAKHS -----WITHIN 6 MONTHS

ALL PAYMENTS TO CONTRACTOR BY CROSSED CHEQUES A/C PAYEE ONLY.

ACK OF RECIPT BY CONTRACTOR.

Page 69: Indian Contract Act &Types of Contracts Etc

TECH EXAMINATION OF PAID FINAL BILLS BY ADGTE BRANCH :-

ALL PAID FINAL BILLS ARE SUBJECT TO TECHNICAL EXAMINATION BY ADGTE ‘S ORGANISATION .

Page 70: Indian Contract Act &Types of Contracts Etc

ADJUSTMENT OF OVER / UNDER PAYMENT UNDER CONDITION 67 OF IAFW – 2249 :-OVER PAYMENT TO CONTRACTOR CAN BE

ADJUSTED WITHIN TWO YEARS FROM PAYMENT OF FINAL BILL.

RECOVERY OF OUTSTANDING AMOUNT CAN BE EFFECTED FROM THE FOLLOWING :-

• AMOUNT AVAILABLE IN SAME CONTRACT• AMOUNT AVAILABLE IN OTHER CONTRACTS.• AMOUNT LIKELY TO BECOME DUE IN SAME CONTRACT.• SECURITY DEPOSIT FOR THE CONTRACT.• SECURITY BOND WITH GOVT.• AMOUNT DUE TO CONTRACTOR IN OTHER DEPTT.

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WHEN CONTRACTOR DISPUTES RECOVERY , HE MAY FURNISH FDR / BGB OF EQUAL AMOUNT , TILL SETTLEMENT OF DISPUTES.

DISPUTED FINAL BILLS :-

A DISPUTED BILL WHERE CONTRACTOR REFUSE TO SIGN FINAL BILL SHOULD BE PROCESSED IN NORMAL WAY AND AFTER PRE-AUDIT TO BE KEPT IN DEPOSIT.

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GENRAL POINTS OF DISPUTES WITH CONTRACTORS

NON HANDING OVER OF SITE(S) OR HANDING OVER PART SITE TO CONTRACTOR FOR ANY REASONS VIZ:-

NON CUTTING OF TREES,

NON VACATION OF BUILDINGS BY USERS WHICH ARE TO BE DEMOLISHED OR WHERE SPECIAL REPAIRS ARE TO BE CARRIED OUT

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• FREQUENT CHANGES IN SITE(S)

• THEFT/DAMAGE OF CONTRACTOR’S MATERIALS BY USER UNITS(APPLICABLE WHERE WORK IS TO BE CARRIED OUT IN RESTRICTED AREAS)

• RADICAL CHANGES IN SCOPE OF WORK/SPECIFICATIONS DURING CURRENCY OF CONTRACT

• IMPOSING RESTRICTIONS ON CONTRACTOR BY USER UNITS BEYOND CONTRACT PROVISIONS

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• DELAY IN DECISIONS

• DELAY IN ISSUE OF STORES (TO BE SUPPLIED BY DEPARTMENT) TO CONTRACTORS

• USE/OCCUPATION OF BUILDINGS BEFORE COMPLETION OF CONTRACT

• STOPPAGE OF CONTRACTOR’S WORK DUE TO INSPECTIONS/VISITS/FUNCTIONS

• NON-SETTELEMENT OF RATES FOR WORK ORDERED UPON CONTRACTOR BEYOND CONTRACT PROVISIONS

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TIME DELAY AND EXTENSION

Page 76: Indian Contract Act &Types of Contracts Etc

TIME, DELAY AND EXTENSION

INTRODUCTION IN ALL OUR CONTRACTS TIME IS MADE OF

ESSENCE OF CONTRACT. IT MEANS TIME IS THE MAIN FACTOR OF PERFORMANCE.

IN ALL CONTRACTS PERIOD OF COMPLETION IS SPECIFIED. IF CONTRACTOR FAILS TO COMPLETE THE WORK BY THE STIPULATED DATE, THEN ACCEPTING OFFICER HAS GOT THE POWERS TO CANCEL THE CONTRACT AND GET THE WORK COMPLETED BY OTHER AGENCY AT RISK AND COST.

Page 77: Indian Contract Act &Types of Contracts Etc

ON EXPIRY OF COMPLETION PERIOD, IF WORK IS NOT COMPLETED, GOVT HAS TWO OPTIONS :-

EITHER TO ACCEPT THE PERFORMANCE WITH PENALTY OR LIQUIDATED DA

OR TO CANCEL THE CONTRACT DUE TO DEFAULT OF CONTRACTOR AND GET THE WORK COMPLETED AT RISK AND CONTRACT.

HOWEVER IF THE REASONS FOR DELAY ARE NOT ATTRIBUTABLE TO CONTRACTOR, THEN SUITABLE EXTENSION FOR COMPLETION OF WORK IS ALLOWED.

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IF THE REASONS FOR DELAY ARE COVERED UNDER CONDITION 11-A AND OR 11-B. THE POWERS FOR GRANTING EXTENSION OF TIME ARE VESTED WITH THE ACCEPTING OFFICER.

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CONDITION 11 OF IAFW – 2249 (TIME, DELAY AND EXTENSION)

CONDITION 11(A):

IF THE WORK BE DELAYED :- BY FORCE MAJEURE, OR BY REASON OF ABNORMALLY BAD

WEATHER, OR BY REASON OF SERIOUS LOSS OR

DAMAGE BY FIRE, OR BY REASON OF CIVIL COMMOTION, LOCAL

COMBINATION OF WORKMEN, STRIKE OR LOCKOUT, AFFECTING ANY OF THE TRADES EMPLOYED ON THE WORK, OR

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CONDITION 11 OF IAFW – 2249 (TIME, DELAY AND EXTENSION)

CONDITION 11(A): BY REASONS OF DELAY ON THE PART OF

NOMINATED SUB CONTRACTORS, OR NOMINATED SUPPLIERS WHICH THE CONTRACTOR HAS, IN THE OPINION OF G.E., TAKEN ALL PRACTICABLE STEPS TO AVOID OR REDUCE, OR

BY REASON OF DELAY ON THE PART OF CONTRACTORS OR TRADESMEN ENGAGED BY GOVT IN EXECUTING WORKS NOT FORMING PART OF THE CONTRACT, OR

BY REASON OF ANY OTHER CAUSE, WHICH IN THE ABSOLUTE DISCRETION OF THE ACCEPTING OFFICER IS BEYOND THE CONTRACTOR’S CONTROL;

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CONDITION 11(B): IF THE WORK BE DELAYED :-

a) BY REASON OF NON-AVAILABILITY OF GOVERNMENT STORES SHOWN IN SCHEDULE ‘B’; OR

b) BY REASON OF NON-AVAILABILTY OR BREAKDOWN OF GOVT. TOOLS AND PLANTS LISTED IN SCHEDULE ‘C’;

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SUSPENSION OF WORKS AND

CANCELLATION OF CONTRACTS

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• CONDITION 9 OF IAFW-2249 DEALS WITH SUCH EVENTUALITY

• SUSPENSION CAN BE DUE TO ANY OF THE FOLLOWING REASONS:-

(a) ON ACCOUNT OF ANY DEFAULT ON THE PART OF THE CONTRACTOR; OR

(B) FOR PROPER EXECUTION OF THE WORKS OR PART THEREOF FOR REASONS OTHER THAN THE DEFAULT OF THE CONTRACTOR; OR

(C) FOR SAFETY OF THE WORKS OR PART THEREOF.

SUSPENSION OF WORKS

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SUSPENSION OF WORKS (Contd)• IF THE WORK IS SUSPENDED ON THE ORDERS

OF GE FOR MORE THAN 4 MONTHS, THE CONTRACTOR CAN ABANDON THE WORK AFTER GIVING NOTICE TO THE GE .

• IN SUCH EVENTUALITY HE SHALL BE ENTITLED TO COMPENSATION AS GE MAY CONSIDER REASONABLE IN RESPECT OF SALARIES/WAGES PAID BY HIM TO HIS EMPLOYEES AND LABOR AT SITE ACTUALLY REMAINING IDLE AS ALSO FOR LOSS ON MATERIALS COLLECTED WHICH COULD NOT BE UTILISED INCLUDING 5% AS OVERHEADS ON MATERIALS, SALARIES AND WAGES.

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CANCELLATION OF CONTRACT• CANCELLATION OF CONTRACT IN

PART OR IN FULL FOR ONTRACTOR'S DEFAULT(CONDITION 54 OF IAFW -2249)

• AS PER CONDITION-54 OF IAFW-2249 ,IF THE CONTRACTOR:-

MAKES DEFAULT IN COMMENCING THE WORK WITHIN A REASONABLE TIME FROM THE DATE OF HANDING OVER SITE, AND CONTINUES IN THAT STATE AFTER A NOTICE FROM THE GE

OR

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MAKES DEFAULT IN PROCEEDING WITH THE WORKS WITH DUE DILIGENCE AND CONTINUES IN THAT STATE AFTER A REASONABLE NOTICE FROM GE.

(OR)

FAILS TO COMPLY WITH TERMS & CONDITIONS OF THE CONTRACT EVEN AFTER REASONABLE NOTICE FROM GE.

(OR)

FAILS TO COMPETE THE WORK ON OR BEFORE THE DATE OF COMPLETION

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Condition-54(Contd) ACCEPTING OFFICER MAY ORDER CANCELLATION OF

CONTRACT IN PART OR IN FULL IN CASE COST OF COMPLETION OF BALANCE WORK IS

LESS THAN THE COST DUE TO CONTRACTOR IN CANCELLED CONTRACT, THE ADVANTAGE SHALL ACCRUE TO THE GOVT.

HOWEVER, IN CASE COST IS MORE, DEFAULTING CONTRACTOR IS REQUIRED TO PAY EXCESS AMOUNT OR SHALL BE RECOVERED FROM THE CONTRACTOR FROM OTHER DUES TO HIM.

GOVT. SHALL ALSO BE AT LIBERTY TO USE MATERIALS, MACHINERY AND OTHER STORES ON SITE LEFT OVER BY CONTRACTOR & NECESSARY CREDIT TO BE ALLOWED IN CONTRACTOR'S FINAL ADJUSTMENTS

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DEFECTS LIABILITY PERIODINTRODUCTION

IN ACCORDANCE WITH CONDITION 49 OF IAFW-2249, THE DEFECTS LIABILITY OF THE CONTRACTOR FOR SATISFACTORY PERFORMANCE DOES NOT END WITH ISSUE OF COMPLETION CERTIFICATE BUT CONTINUES FOR FURTHER PERIOD OF 12 MONTHS FROM DATE OF COMPLETION OF WORK. THIS PERIOD IS KNOWN AS ‘DEFECTS LIABILITY PERIOD’.

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DEFECTS LIABILITY PERIOD (Contd) ALL DEFECTS NOTICED /

DEVELOPED DURING A PERIOD OF 12 MONTHS FROM THE DATE OF COMPLETION SHALL ALSO BE NOTIFIED TO CONTRACTOR FOR ATTENDING TO.

LAST INSPECTION OF WORK BEFORE EXPIRY OF DEFECTS LIABILITY PERIOD SHOUD BE ENSURED

FAILURE TO ATTEND TO DEFECTS NOTIFIED LEAD TO RECTIFICATION OF DEFECTS AT RISK & COST OF CONTRACTER