PUBLIC WORKS DEPARTMENT

TENDERING
PROCESS

Steps in Procurement
1.

Preparation of Bid Documents

2.

Approval of Bid Documents by Competent Authority

3.

Public Invitation for Pre-qualification (where relevant)

Issue of Instructions and Pre-qualification criteria

Pre-Application Meeting and Issue of Clarifications to Applicants

Receipt of PQ applications and scrutiny

Approval to PQ

4.

Invitation for Bids

5.

Issue of Bid documents to prospective bidders

6.

Pre Bid Meeting and Issue of Minutes, Clarifications and Common Set of
Deviations

7.

Receipt of Bids

8.

Scrutiny/Evaluation

9.

Negotiations, where warranted

10. Acceptance of Bids

Preparation and Approval to Draft

Bid Documents

Draft Bid Documents prepared before the invitation of the bids is

commenced.

Bid Documents to be approved by the authority empowered

While approving the Bid documents it should be inter alia ensured that:

(a)

there is no ambiguity, contradiction, or duplication in the nomenclature of

items, conditions of contract, specifications and drawings;

(b)

the specifications & drawings are capable of implementation at site; &

(c)

the time stipulated to complete the job is adequate.

()

The official approving the bid documents to affix his signature on every
page of the bid document as a token of approval and a certificate of
approval.

Bid Advertisements in Newspapers in

Web sites

Wide publicity must be given to the Bid Invitation Notice.

Tenders must be invited in the most open and public manner

possible, by advertisement in the Press and by notice in
English/Hindi and regional language newspapers of the concerned
District/ State or National Levels as may be applicable.

Many departments/ organizations/ ULBs have well-managed web

sites with the practice of hosting the notices on the web site in
addition to the invitation in the press.

Invitation in the newspaper in a window format - important or core

information is provided while leading the intending bidders to the
detailed tender notice on the web site of the organization.

CVC Guidelines on Tender Publicity

The
Central
Vigilance
Commissions
(CVC)
communication no. OFF/CTE/ dated 4.2.2002 stipulates :
a)

b)
c)

In order to have wider, fair and adequate competition, it is

important that sufficient time, say 4-6 weeks in case of
Advertised/Global tenders is allowed.
The tenders should preferably be kept open for sale till the date of
tender opening or just one day prior to the date of tender opening.
With the widespread use of Information Technology, the tender
notices should also be put on the website and e-mail address of the
organization should be indicated in the tender notice.

Time Period for Bids

Period given for submission of Bids should be adequate to enable the bidder
make his investigations, visit the site, carry out his costing, and quote
realistically.
For domestic Bids this period may be 30 to 60 days.
For smaller works the period could be less than 30 days.
For very short works the period could be about 15-20 days.
For large and complex works, this period will depend on the demands of the
work/ stipulation imposed by the funding institution (e.g. World Bank).
Usually the period is reckoned from the publication to the last date of sale of
bid documents.
Some organizations prescribe a time gap of four to seven days between the
last date of sale and the receipt of bids so as to allow some time for the
bidders to study the bid documents and prepare their bids.
The time period for bids is reduced for the second or subsequent calls, in
case re-bidding is resorted to.

Sale of Tenders

Tender documents must be kept ready for sale

before the issue of Invitation for Bids.
The intending bidders desiring to tender should
generally make a written application and pay the
price of the bid documents in the specified format.
An official is designated to see that tender
documents with complete set of drawings are made
available to the bidders as soon as their applications
are received.
Bidders need to acknowledge receipt of the bid
documents for purposes of record.

Pre-Bid Meeting

A Pre Bid Meeting is held at a specified place and time to enable prospective bidders to
seek clarifications about the provisions of the bid and make suggestions to the
organization about the work and the bidding conditions.
It is to be noted that non-attendance at the Pre Bid Meeting does not constitute a
disqualification of the bidder.
A senior official connected with the bid process usually chairs the meeting.
Minutes of this meeting are prepared along with clarifications to the bidders to
respond to their queries.
In case there are amendments to the bid conditions proposed at this stage ensuing
from the suggestions made by the bidders or otherwise, the same are issued in the
form of Common Set of Deviations (CSD) to the bidders.
The minutes of the Pre Bid Meeting, Clarifications and the CSD as above need to be
supplied to the bidders without delay.
A minimum gap of about ten to fifteen days is usually allowed between the Issue of
these minutes and the clarifications/CSD and the last date of sale of the bid documents
primarily with a view to enable bidders who are attracted to the bid process on account
of these deviations, to purchase the bid documents and participate in the bid.

Bid Validity

Bids to be valid for a stipulated period after the

submission, usually 120 days.
The process of scrutiny and evaluation of the bids has
therefore to be completed and acceptance communicated
well within the validity period.
If for some reason, the process of scrutiny and evaluation
is delayed, either the successful bidder or all the bidders
could be requested to extend their validity for a suitable
period.
It must be noted that extension to the bid validity is
entirely discretion of the bidder and such a request may
not be responded favourably.

Bid Security

A bid security (Normally 1% of the estimated cost of

the work put to tender) is to accompany the bids.
This is also called Earnest Money Deposit (EMD)
The format of the bid security as well as the time
frame and manner of its refund in case of
unsuccessful bids is stipulated in the bid
documents.
The successful bidders are allowed usually to
convert the bid security into their performance
security.

Submission of Bids

Fixed place, specific date and time as the deadline for the
submission of tenders.
Prior to the deadline for the submission of tenders; extend the
deadline, if necessary
Notice of any extension of the deadline needs to be given promptly
to each bidder.
The tender to be submitted in writing, signed and in a sealed
envelope as per stipulations contained in the Bid documents.
The employer may provide to the bidders a receipt showing the date
and time when its tender was received, especially when asked for.
The tender received after the deadline for the submission of tender,
shall be returned unopened to the bidders who submitted the same.

Opening of Bids

On the due date and appointed time, bids are opened in the
presence of the intending bidders or their representative.
The bidders name, the bid prices and discount, if any will be
announced by the procuring entity during opening of bids.
A record of opening of bids is to be maintained.
Where the bidding follows a two envelope bid submission, the first
envelope of the bidders containing the documents to ascertain
eligibility/qualification of the bidders and/ or technical proposals is
opened on the bid submission date.
The documents in the first envelope are scrutinized in due course.
The financial bids of those technically qualified bidders are opened.
Qualifying bidders intimated date of opening of financial bids
Bid documents should clearly spell out the procedure of opening
and scrutiny of the bid documents.

Responsive Bids
Scrutiny of the 'Financial Bids to determine whether properly signed and is
substantially responsive.
A substantively responsive bid is one that conforms to all the terms, conditions and
specifications of the tender documents without material deviation and reservation.
A material deviation or reservation is one:
a)
which affects in any substantial way the scope, quality, or performance of the
works; or
b)
which limits in any substantial way the Employer's rights or the bidder's
obligations; or
c)
whose rectification would affect unfairly the competitive position of other bidders
which are substantially responsive.
) If a bid is not substantially responsive to the requirements of the bid documents, it
shall be rejected with the approval of the authority empowered to accept the bid in
the first instance, and may not subsequently be made responsive by correction or
withdrawal of the non-conforming stipulation.
) In this context, conditional bids may be considered as non-responsive.
) The provisions regarding determination of responsiveness of bid documents
generally form part of the Instructions to Bidders (ITB) incorporated in the bid
documents.

Correction of Errors

Substantially responsive financial bids are checked for any

arithmetic errors.
Arithmetic errors are to be rectified on the basis of the
standard procedure stipulated in the ITB which is as follows:
a)

b)

c)

If there is a difference between the amount of rate in figure and in

words of an item, and the total amount is worked out, then the rate
which corresponds to the amount worked by the bidder shall be
taken as correct.
If the bidder has not worked out the amount of an item, or the same
does not correspond with the rates written either in figures or in
words, then the rate quoted by him in words shall be taken as
correct.
If the rate quoted by the bidder in figures and in words tallies, but
the amount is not worked out correctly, the rate quoted by the
contractor shall be taken as correct and not the amount.

Clarification from Bidders

To assist the process of examination, evaluation and

comparison of bids a procedure is stipulated in the bid
documents - the Employer may ask the bidder individually
for clarification, if any, of their bids, including breakdown of
unit rates and price.
The request for clarification and the response must be in
writing, but no change in the price or substance of the bid will
be sought, offered or permitted, except as required to confirm
the correction of arithmetical errors discovered by the
Employer in the course of scrutiny.

Evaluation and Comparison of Bids

The evaluated bid Prices will be adjusted after taking into account
(i) correction for errors;
(ii) adjustments for any acceptable variations, deviations and,
(iii) adjustments to reflect any discounts or other modifications offered.
Variations, deviations, or alterative offers and other factors which are in
excess of the bidding documents or otherwise result in unsolicited benefits for
the Contractor should not be taken into account in bid evaluation.
Duties, taxes and other levies will not be considered in evaluation of bids.
If the bid of the successful bidder is seriously unbalanced in relation to the
estimate of the cost of the work, the Employer may ask the bidder to produce
detailed price analysis for any or all the items of Bill of Quantities, to
demonstrate the internal consistency of those prices with the construction
methods and schedule proposed.
After evaluation of this analysis, the Employer may require that the amount of
performance security be increased to a level sufficient to protect the Employer
against financial loss in the event of default of the successful bidder under the
Contract.

Confidentiality Considerations

The ITB shall usually provide for the confidentiality of the

process by stipulating that information relating to the
examination, clarification, evaluation and comparison of bids,
and recommendations for the award of a contract shall not be
disclosed to bidders or any other person not officially
concerned with such process, until the award to the successful
bidder is announced.
Additionally, Bidders are not to contract the Employer or his
officials from the time of bid opening to the time contract
award on any matter related to the bid, except on request and
prior written permission and that any effort by the Bidder to
influence the Employer in bid evaluation, bid comparison or
contract award decisions will result in the rejection of the
Bidder's bid.

Acceptance of Bids

At the end of its scrutiny and evaluation of the bids a comparative statement of
tenders is prepared to compare the tenders and in order to ascertain the successful
tender in accordance with the procedures and criteria set forth in the bid
documents.
No criteria shall be used that has not been set forth in the tender document.
Based on the acceptance criteria stipulated in the Bid documents, the competent
authority shall accept the tender that meets the requirements of the bid
documents and the acceptance criteria stipulated.
The usual criterion stipulated in bid documents, is to regard a bidder successful if
his bid quotes the lowest price subject to any margin of preference applied
pursuant to Government policy.
The Bid documents should incorporate the stipulation that the Employer shall
reserve the right to accept or reject any bid or all bids, recall the tender and to
annul the bidding process, at any time before the award of its work, without
thereby incurring any liability to the affected bidder(s) or any obligation to inform
the affected bidder(s) of the grounds for this action.
However, while exercising this right the competent official of the Employer must
base his action of rejection on clear, logical reasons and keep these reasons for
rejection/recall of tenders on record.

Negotiations CVC Guidelines

a)

b)

c)
d)

CVC guidelines in this regard stipulate as under:

There should not be any negotiations. Negotiations, if at all, shall be an
exception and only in the case of proprietary items or in the case of items with
limited source of supply. Negotiations shall be held with L-1 only. Counter
offers are tantamount to negotiations and should be treated at par with
negotiation.
Negotiations can be recommended in exceptional circumstances only after
due application of mind and recording valid, logical reasons justifying
negotiations. In case of inability to obtain the desired results by way of
reduction in rates and negotiations prove in fructuous. Satisfactory
explanations are required to be recorded by the Officials/Committee who
recommended the negotiations. The Officials/Committee shall be responsible
for lack of application of mind in case its negotiations have only unnecessarily
delayed the award of work/contract.
In case of L-1 backing out there should be re-tendering as per extant
instructions.
The original terms and conditions of the bid should not be varied while
negotiating. A record of the negotiations will be kept, which will form part of
the agreement along with undertakings given by the contractor.

Guidelines for Acceptance of Single

Tenders

The acceptance of single tender poses difficulty and is not encouraged. Acceptance
of a single tender is to be an exception and not a general rule. The following
guidelines adopted by NHAI for its works, may be used for guidance.
In case only a single bid is received by the due date of receipt, normally the bid
process may be cancelled and re-bidding done by giving a shorter notice (say of four
weeks) except in cases where due to other reasons like difficult conditions, law and
order etc., the tender response is expected to be poor.
In case of re-bidding, change from pre-qualification to post-qualification may also
be considered and resorted to, if that would help increase response of tender.
In case re-bidding/change to post-qualification also results in receipt of single bid
then it should be opened and the bid amount should be compared with the
estimated project cost. In case the bid amount is within 15% of the estimated cost,
then acceptance of the bid may be considered with proper justification and reasons.
For EPC contracts such single tenders can be considered for acceptance provided if
bid is reasonable and sufficient justifications exist for acceptance.
In cases where due to reasons like difficult conditions, law and order, likelihood of
poor response etc., it is decided to open the single bid without going for re-bidding,
then for acceptance, the above guidelines shall be applicable as are prescribed for
acceptance of tenders where re-bidding is resorted to.

Communication of Acceptance

Acceptance of the bid is communicated to the

successful bidder well before the expiry of the bid
validity period, in a standard format of
acceptance letter.

The bidder is requested to submit a performance

security (Usually 5 % to 10% of the contract
price) within the stipulated period so as to issue
a notice to proceed with the work (Work Order)

Performance Security

The successful bidder is required to furnish to the Employer a

performance security after the receipt of Letter of Acceptance, within
the time stipulated,
usually of an amount equivalent to 5% to 10% of the contract price
plus additional security for unbalanced bids.
The Performance Security to be provided by the successful bidder is in
the form of a bank guarantee as per prescribed format issued from any
nationalized Indian bank/IDBI/ICICI/Export Import bank/Foreign
bank with counter guarantee from any nationalized Indian Bank or
other bank as may be acceptable to Employer
The Bank Guarantee for performance security shall remain valid for a
sufficient period (as specified in the Contract) after expiry of Defects
Liability Period.
After the successful bidder furnishes the performance security towards
the work as stipulated in the bid documents, the notice to proceed
with the work (Work Order) is issued and the agreement is signed.

Eligibility & Qualification of Bidders

Pre-qualification: The successful execution of contracts for large

buildings, civil engineering, supply and installation, turnkey, and
design and build projects requires that contracts be awarded only to
firms, or combinations of firms, that are suitably experienced in the
type of work and construction technology involved, that are financially
and managerially sound, and that can provide all the equipment
required in a timely manner. The assessment by an implementing
agency of the suitability of firms to carry out a particular contract
prior to being invited to submit a bid is a process called prequalification.
Post-qualification: Where the assessment by the implementing agency
of the suitability of the firm to carry out the contract is carried out
after the submission of bids, the process is called post-qualification.
The post-qualification process comprises scrutiny of the credentials of
the firm from the first envelope of the two envelopes bidding process
and considering the financial bids in the second envelope only of those
bidders who conform to the stipulated qualification criteria.

Eligibility Criteria

Eligibility criteria generally stipulated in the bid documents

comprises the following:
Conflict of Interests: A firm that has provided consultancy
services to the Employer in the preparation of the project or
bid documents etc. or affiliates of such a firm are not
eligible to provide services or goods and thus not eligible for
bidding.
Government owned enterprises are not eligible for bidding
unless they are legally and financially autonomous and
operate under the commercial law.
A firm declared ineligible for having indulged in corrupt or
fraudulent practices by the Employer shall not bid. Firms
that have been debarred from participating in the bid
processes of the Employer for non- performance shall be
ineligible for bidding in the period so applicable.

Qualification Criteria

Registration of Contractors in Appropriate Class

General Construction Experience
Particular Construction Experience
Turnover
Bid Capacity
Financial Capability
Equipment Capability
Personnel Capability
Litigation History and Past Performance

Qualification Criteria

Generally, the following qualification criteria are specified in the pre-qualification

document for qualification of bidders. The criteria may also be used to carry out
post-qualification of bidders. The criteria could be modified and expanded to
include other conditions to meet the requirements of individual works.
Registration of Contractors in Appropriate Class: The Qualification criteria usually
stipulates that the bidders must be registered in appropriate class with the
Employer or the CPWD or State PWDs or Railways etc, The registered contractors
would be eligible to tender for the class (es) of work(s) for which they are registered
and up to the limits of their registration and area of operation.
General Construction Experience: The qualification criteria stipulates that bidders
should have been actively engaged in civil works construction business for similar
work at least for 5/ 10 years immediately prior to the date of submission of
application.
Particular Construction Experience: The qualification criteria stipulation may
provide that the bidder should have successfully completed or substantially
completed, within the last 5/10 financial years, at least one contract of the specified
percentage (e.g. 75 %) of the contract value in question and which is similar to the
one now being proposed and (ii) The bidder should also have achieved the
minimum annual production rates of the key construction activities stipulated.

Qualification Criteria

Turnover: The minimum average turnover of the bidder during the

preceding 5 to 7 years should be more than the specified value. This is
usually two times the estimated cost of the work put to tender divided
by the time in years allowed for the work. While working out the
turnover of the preceding years, a compounding factor (e.g. 10% per
year) may be specified.
Bid Capacity: The qualification criteria invariably provide that the
bidder should possess the bidding capacity as calculated by the
specified formula. The formula generally adopted is: Bid Capacity = A
x N x F -B, where : A = Maximum value of works executed in any one
year during the last 5 years (updated at the current price level by a
compounding factor e.g. 10% per annum), taking into account the
completed as well as works in progress. 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. F = A multiplier factor
(Usually 1.5 to 2)

Qualification Criteria

Financial Capability: With a view to ensure that the bidder has access to or
possesses adequate liquid assets and other financial assets to meet the cash
flow requirements for the contract in question, the qualification criteria
provides that (i) The bidder must possess a specified minimum value of
liquid assets (Generally 10% of the annual turnover) (ii) The bidder should
have adequate sources of finance to meet the cash flow requirements of
works currently in progress and for future contract commitments and (iii)
The bidder should possess financial soundness as established by audited
balance sheets and/or financial statements. Towards this the bidder may be
required to produce these details such as Profit and Loss Statements and
Balance Sheets for the preceding five or seven years. The bid documents may
also provide that the Employer may seek reference from the bidders bankers
to establish his financial soundness.
Equipment Capability: The qualification criteria may provide that the
bidders should demonstrate the availability of key equipment necessary for
the contract work. This may be through ownership of the equipment of
through hire or lease. The prime consideration in this regard would be to
assure the availability of the equipment at the time when it is required to be
deployed in the contract work.

Qualification Criteria
Personnel Capability: The qualification criteria may require the
bidder must demonstrate the availability of key personnel of the
requisite qualification and experience for deployment in the
contract work.
Litigation History and Past Performance: With a view to weed
out bidders with a history of unsuccessful or bad litigation or poor
performance in past contracts, e.g. unsuccessful completion, or
excessive delays the criteria may require the bidders to provide
details of previous works and litigations. The Employer may, in
this regard insist on certificates/ independent verification from
the previous Employers to ensue that the past history of the
bidder does not create a doubt about his performance in the
present contract. A decision to disqualify has to be based on solid
evidence (references) from the previous Employers to substantiate
that non-performance resulted from a default by the bidder.

Joint Venture

Intending bidders forge joint ventures to bring together their technical,

financial, personnel and equipment capabilities to meet the requirements of
a contract work.
For large and complex works (say costing more than Rs. 100 Cr.), joint
ventures are, therefore, permitted.
While qualifying joint ventures, the memorandum of understanding
forming the joint venture agreement should be carefully scrutinized.
The MOU between the joint venture partners should contain details such as
Management structure of the J/V, share of individual partners in the J/V,
Lead Partner and his empowerment to incur liabilities and enter
negotiations, responsibilities of individual partners in furnishing bid
security, performance security etc., their joint and several liability and
remedy in case of abdication of responsibility by one or more parties etc.
While considering qualification of a Joint Venture, some of the criteria
specified above could be met collectively and some by the Lead Partner.
Some of the criteria could be applied to the individual partners to the extent
of their share in the J/V.
For smaller contracts it may be desirable to disallow joint ventures.