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A. Use of Technology in bringing transparency & competition to determine the right

price in the bidding process
The usage of Information & Communication Technology (ICT) in public procurements/projects
can enhance transparency to a greater level. E-procurement technology and processes can be
used at different appropriate phases of a procurement process, including publication of tender
notices, the provision of tender documents, submission of tenders, the evaluation process,
notification of award, ordering, invoicing and payment. In the initial phase of tendering, the
publication of NIT on website/e-procurement portal can ensure the availability of tender
documents to all prospective bidders. The usage of ICT provides a paradigm shift in
competition as the manual tendering by default allows high probability of restricted circulation of
tender document.
E-procurement systems also allow more efficient integration of supply chains and provide better
organizing and tracking of transaction records for easier data acquisition. Transactions can be
standardized and all bids for products and services can be tracked more easily, allowing business
owners to use such knowledge to obtain better pricing. Even the evaluation on well designed e-
procurement system is fast, hassle free and transparent.
In most cases, the contracting authority is required to publish a contract award notice following
conclusion of a procurement process and the award of a contract. The compliance of the same
can be ascertained easily by e-procurement system. Due to faster exchanges of information and
delivery of goods and services, e-procurement promotes shorter procurement cycle.
E-auctions can also be used when the specification can be established with sufficient precision
(excluding certain service contracts and certain works contracts dealing with intellectual
performances, such as the design of works). In the presence of high number of bids, e-auction
can facilitate the availability of realistic and justifiable rates.
Electronic systems can assist in ensuring that contract managers also have access to the most
recent standard contracts and forms, policies, advices and contract management assistance. They
can also facilitate awareness of new and emerging issues, potential risks and how to manage
them. Electronic systems can also provide a contract management help desk for the provision of
information and advice. The easy availability of information encourages better decision-making
and improved contract management. It can also provide a forum for communication between
contract managers in the entity, enabling them to be aware of other contracts being managed by
the agency, to ask questions of other contract managers in the agency, and to share tips and
lessons learned. The technological advances can further be leveraged in financial transactions

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involved in tender/contract lifecycle. The utilization of e-payment in financial transactions can
bring more efficiency and economy in the process.
The low cost of information and technology, courtesy of the Internet, is a major advantage of e-
procurement. The costs of buying or selling as well as barriers to market entry have significantly
been lowered as operation costs are reduced. Prices are more transparent and there is better
balance of power between buyer and seller given that information is much more available.


B. Awarding of contracts to Joint Ventures/Sub-contractors/conditions in the NIT
The joint bidding is a way to enable smaller parties to participate in larger tenders, from which
they would otherwise be excluded. However, a bidding consortium should not be permitted if
each firm in the consortium has the economic, financial and technical capabilities to fulfill the
contract on its own. For the purpose of evaluating the bidder, the eligibility criteria should take
into account credentials of all JV partners. It needs to be ensured that all partners are signatory
to the bid and the contract. Contract conditions should make all partners responsible jointly and
severely for execution of the contract. It is seen that many times some well known companies
only lend their name to an agency for a fee for using the name in participation in bidding process
without any intention of sharing any liability or responsibility. General conditions in respect of
Joint Venture for ascertaining their overall capability & responsibility may be as under:
i. In case of a Joint Venture, the available bid capacity should be applied for each partner
to the extent of his proposed participation in the execution of the works and combined.
ii. Upper limit to number of members of Joint Venture should be specified.
iii. Bidder should nominate one of the partners, who is responsible for performing key
function in the contract management or is executing major component of the proposed
contract, as in-charge partner during the bidding period and in the event of a successful
bid, during contract execution. The partner-in-charge shall be authorized to incur
liabilities and receive instructions for and on behalf of any and all partners of the joint
venture. This authorization shall be evidenced by submitting power of attorney signed
by legally authorized signatories of all partners. Change of partner-in-charge should not
be generally allowed.
iv. All partners of the Joint Venture should be liable, jointly and severally, during the
bidding process and for the execution of the contract in accordance with the contract

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terms, and a statement to this effect shall be included in the authorization. The bid shall
be signed so as to legally bind all partners, jointly and severally.
v. The JV must satisfy collectively the eligibility criteria specified in tender document. For
this purpose, the following information of each member of the JV may be added
together to meet the collective eligibility criteria:
a) Average annual turnover
b) Particulars about experience in the field for which tender is called
c) Capability of key personnel
d) Ability to own/lease relevant equipment
e) Financial capacity
vi. Each partner of JV must satisfy the following criteria individually:
a. General experience in relevant field
b. Adequate sources to meet the financial commitments on other contracts
c. Financial capability
d. Litigation history
vii. The lead partner shall meet not less than XX% (may vary from case to case) of the
following criteria:
a) Average annual turnover
b) Particular experience in the field for which tender is called
c) Financial capability
viii. Each of the remaining partners shall meet not less than YY% (may vary from case to
case) of the following criteria:
a) Average annual turnover
b) Financial capability
ix. A copy of the Joint Venture Agreement (JVA), specific to the tendered project, entered
into by the partners should be taken with the Bid. Alternatively, a letter of Intent to
execute a JVA in the event of successful bid shall be signed by all partners and submitted
with the Bid together with a copy of the proposed Agreement. Pursuant to the foregoing,
the JVA shall include among other things, the JV's objectives, the proposed management

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structure, the contribution of each partner to JV operation, the commitment of the
partners to joint and several liability for due performance, recourse/sanctions within the
joint venture in the event of default or withdrawal of any partner and arrangements for
providing the required indemnities.
x. Each partner of JV shall furnish the following information:
a) Undertaking about the minimum cash investment (in proportion of participation)
during the implementation of contract
b) Latest evidence of access to or availability of credit facilities certified by bankers
c) Latest Income Tax clearance certificate


C. Subcontracting agreements are often part of anticompetitive bid-rigging in which
the competitive undertakings agree not to bid or to submit a losing bid as a result of
which they are appointed as subcontractors by the winning bidder
If possible, bids should be free of sub-contracting. Allowing the winning bidder to enter into
subcontracting arrangements has a potentially important effect on the likelihood of bid-rigging.
In particular, the mechanisms of the cartel may be such that bidders who agree to bid higher
than the designated winners price or not to participate at all might be compensated by being
awarded a subcontract by the winning bidder.
In order to make the process of selection of sub-vendors more transparent, the condition of
seeking prior approval from Contratee for selection of subcontractors should be dispensed with.
However, to ensure that the work is sub-contracted to a genuine and reliable firm, the Contratee
may specify suitable qualification criteria and may even suggest an approved list of sub vendors
to the main contractor.
Adequate mechanism should be incorporated in the contract due to which winning bidder is not
allowed to subcontract work to unsuccessful bidders/incapable parties. If subcontracting is
allowed then the reasons for subcontracting, activities & responsibilities of the subcontractor,
volume or proportion of subcontracting should be ascertained. The Contractor must be asked at
tender stage to name his subcontractors and submit appropriate documents to the Contracting
Authorities attesting that the proposed subcontractor(s) is/are not in an exclusion situation.


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D. Post Tender activities timely execution, quality and quantities of items, time
overrun, cost overrun, nonpayment of bills on time, non-inspection of goods,
services affected as per terms of Contract, well defined discretion of project
managers, accountability
The post-tender phase is regarded as an internal management process between the
administration and the contractor that is subject to less strict requirements for transparency. It is
not covered by procurement laws and regulations but rather by contract law. A core challenge is
to ensure that the project is being carried out in accordance with specifications, in particular in
terms of quality and quantity of materials used, timely provision of all components. Another
common issue in the post-bidding process is whether the payment is carried out in a timely
manner.
Contract variations are changes to the contract which are agreed between the parties and include
changes to any term, condition or schedule of the contract. All contract variations regardless of
whether the contract value or scope is increased require a value for money assessment before
proceeding. The process for contact variations must be consistent with, where applicable, the
process outlined in the contract. The contract/project managers should take care not to enter
into any verbal or other informal contract variations. Contract monitoring is an important part
of contract management. It involves ongoing or periodic review of contract performance in
comparison with agreed performance indicators and broader contractual obligations.
Contract options are clauses included in the contract under which a party to the contract may
extend the period of the contract or require the performance of additional work. A unilateral
contract option may enable the contract to be extended for a particular period of time by giving
written notice to the contractor. The procedure for exercising a contract option is governed by
the terms of the option clause in the contract and usually involves written notice within a
specified period. If an existing contract has no option for extension, then any proposed
extension should be treated as a new procurement. The exercise of a contract option is an
expenditure related decision. As such, the principle of value for money applies and necessary
financial approvals must be obtained.
Price escalation clauses provide a mechanism under which the pricing schedule in a contract may
be adjusted under a set formula. This type of clause can be used when contractors are uncertain
about the level of costs which will be incurred by performing the contract. The price variation
clause may utilize factors like Consumer Price Index, fuel levies, etc. The operation of price
variation clause requires special attention as these have financial implication on project cost.

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In case of scarcity of resources, Independent third party monitoring can be performed directly,
by giving the responsibility over to an external monitoring body, or indirectly through an
accreditation process. In such a process, service standards are set, reviewed and monitored
generally through an independent body. If Third Party Inspection (TPI) is stipulated in the
contract and is included under the scope of Contractor, then TPI report should be verified
thoroughly by examining the date, place of inspection, items, etc indicated in the TPI report.
Moreover, it should be ascertained that TPI has been conducted by the agency agreed upon by
the Contratee. The marking/stamping of the TPI should be verified with respect to the TPI
report.
Audits are often, though not solely, used for important services such as telecommunications
contracts, travel contracts and provision of IT network services. These functions are
characterised by the service being delivered to many individuals across the organisation, thereby
making monitoring by an individual officer managing the contract a difficult task. An audit
provides an independent, third party option as to whether contractor performance meets
requirements. Audits can assist an organization to effectively manage specific risks that may arise
from engaging a particular contractor and to take appropriate risk management actions.
Depending on the nature of the project the audit may be the main means of measuring
performance or it may be in addition to regular monitoring processes. Apart from above,
internal audit mechanism should be in place to verify whether payments have been released on
time and whether payments have been made as per contractual terms & conditions.
Regular, scheduled meetings between project team and the contractor are an important avenue
for monitoring the performance of both parties. Such meetings also form the foundation for
building, developing and maintaining an effective relationship. Regular meetings are particularly
important for long-term contracts. Quarterly and annual reviews are standard contract meeting
times but they can be conducted more frequently if necessary or appropriate. Ideally, such
meetings would complement other forms of performance monitoring.
Regular site inspections should be considered where other performance monitoring methods
cannot give sufficient guarantee of the desired outcome. They are particularly useful for long
term contracts where the activity takes place away from the Contratees premises or for high
value capital works projects.
Contractors have obligations to maintain a secure environment at all times for the handling and
storage of physical and contract related material i.e. hardcopy file records, staff/client data,
private mail addresses etc. Incidents of physical break-ins or hacking of electronic data systems

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of a contractor's premises including computer systems is a potential risk to owners contract
related material. Contract terms must include necessary clauses that require the immediate
reporting of such incidents to the owner.
Performance evaluation is an important consideration in assessing whether value for money has
been obtained from the contract. Monitoring and evaluating performance helps maintain
accountability and ensures value for money is achieved. Once a contractor has been selected and
the buyer-contractor relationship has commenced, it is important to immediately start
monitoring and assessing the contractor's overall performance. The purpose of this is to
enhance the relationship and thereby control performance. Contractors should be briefed
regarding expectations of their performance and methods for measuring that performance. All
contracts for procurement of goods and services should be evaluated upon completion. This is
to identify the strengths and weaknesses in the procurement process and lessons that can be
applied to other procurements.
The final evaluation of contractor performance should be based on the performance criteria
established at the commencement of the contract. The evaluation should cover all aspects of the
procurement. When a contract has ended, required closure activities should be completed as
soon as possible after the contract expiry takes effect. The contract closure activities that may be
required to include:
Verifying that all contractual obligations have been satisfactorily completed, including
payments and final accounting;
Ensuring that all disputes under the contract have been resolved;
Completing records and ensuring there is an appropriate audit trail;
Post activity evaluation, analysis and reporting;
Ensuring that any transition arrangements required under the contract have been
implemented;
Documenting lessons learnt;
Where the contract is terminated, ensuring that any requirements set out in the deed of
settlement are met.


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E. Different wings of organization (Project division, Technical division, Finance
department, quality team, etc) involved in contracts
Different stages of procurement / works contract involves different stakeholders. The human
resource allocation is handled by the HR group, which is responsible for allotting capable
resources for smooth execution of contract. Thus, HR group is indirectly responsible for the
success of any contract. While allocating resources, it needs be ascertained that resource is
capable enough and having undoubtful integrity. The initial phase of procurement/project
lifecycle involves indenting department/planning department, who are responsible for the
assessing the need generation. This phase is the foundation block for the entire tendering &
contract process because the real need assessment in terms of specification, quantity, usage, etc is
finalized in this phase. The faulty assessment/planning may jeopardize the entire project or
outcome of procurement/project may not justify the expenditure or undue favour may be passed
on to some particular vendor. Thus, need assessment phase should be fully objective.
Once the requirement generation and need assessment activities are approved, the tendering
phase is handled by the Contracts group. The preparation of NIT, tender document,
advertisement, evaluation of bids, etc are handled by various committees are formed out of
Contracts group and other departments like Finance, Legal, etc. The stakeholders involved in
the preparation of tender documents should ascertain the following:
The eligibility criteria for bidders incorporated in the tender document should be clearly
mentioned and it should not be made very stringent/very lax to restrict/facilitate the
entry of bidders. The eligibility conditions should be exhaustive, yet specific.
Detailed evaluation / exclusion criteria should be mentioned in tender document
Contract conditions should not be ambiguous or contradictory to other conditions in the
tender documents.
Complete specifications should be included in tender document, unless it is of highly
sensitive nature.
All contract related conditions should be clearly mentioned in the tender document.
During evaluation of bids, the concerned group should examine all offers transparently and with
respect to tender conditions. The eligibility criteria stipulated in the tender document should
only be used as benchmark to evaluate the capability of bidders. No new evaluation/exclusion
criteria should be decided after opening of bids. In case of deviations in the bid, realistic &
logical financial loading should be done on the bid.

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Once tendering phase is over, other stakeholders like Project group, Finance group, Quality
Assurance group, HR group, Internal Audit group, etc get involved with execution phase. The
project group directly interacts with the Contractor and monitors the progress in contract. The
activities required to be taken care by the Project group has been indicated at Section-D above.
The payments to Contractor should invariably be made on time but as per contractual terms.
The physical progress should be in line with the financial progress in a contract. Since, Finance
group may not be technically sound enough to verify the physical progress in technical terms.
Thus, Project group should certify the bills/invoices raised by the Contractor with respect to
actual progress. The onus for irregular payment mainly lies on the Project group as they monitor
the project against contractual terms & conditions. Moreover, before releasing the payments, all
relevant documents should be taken and submitted to the Finance department. The relevant
documents may include:
In case of foreign imports, the documents may include Country of Origin Certificate, Bill
of Lading, TPI certificate/pre-dispatch inspection certificate, invoice, packing list,
guarantee/warranty certificate, etc. Moreover, the above mentioned documents should
be cross checked with Bill of Entry certificate, once the imported items are received.
When items are procured from agents/resellers/distributers, then the copy of the invoice
of manufacturer/OEM should be taken to verify the price reasonability.
Once the bidder has been allowed to supply item from a particular
workshop/factory/place, then copy of excise duty challan, transportation documents
(lorry receipt/rail receipt/bill of lading/airway bill) should be taken to ascertain that item
has actually been supplied from the intended place or not.