Administration of Tender


            Government of India have decided that with a view to avoid the possibility of original tender documents being tampered with, the following procedure shall be adopted in connection with the receipt and opening of tenders and their acceptance.

  1. Office opening the tenders should invariably date and initial corrections, conditions and additions in the Schedule of Quantities, Schedule of Material to be issued and specifications and other essential parts of contract documents, and also date and initial on pages of the tendered documents irrespective of fact whether they contain or do not contain any corrections or overwriting, etc., the officer concerned should record the fact in writing at the end of those pages individually.
  2. The Officer concerned should mark all corrections, conditions, additions and over-writings and number them and attest them in red ink. In case of a number of corrections in any rate, either in words or in figures or in both, the number of corrections marked should indicate the corrections serially, that is to say, in case of say, three corrections in rates of any one item, each of these corrections should be allotted independent numbers serially and not one number to represent all the three corrections.  In case of more than one correction where the correction is not eligible, the rates should be written afresh in the hand of the officer opening the tenders.
  3. The number of such corrections and over-writings must be clearly mentioned at the end of each page of Schedule attached to the tender paper and properly attested with the date. Any omission observed should also be brought out clearly on each page of the Schedule.
  4. The corrections, conditions, additions and over-writings should be allotted separate numbers, i.e., corrections should start from 1, 2 3 etc., and over-writings should similarly start separately from 1, 2, 3, etc.
  5. Any ambiguities in rates quoted by tenderers, in words or figures, must be clearly indicated on each page of the schedule attached to the tender to which it concerns.
  6. In case where the contractor has quoted rates in rupees and no paise is mentioned, the word “only”, should invariably be added after the words rupees and the corrections should be initialed and dated with suitable remarks at the end.
  7. Where the contractors have omitted to quote the rates in figures or in words, the omissions should be recorded by the Officer opening the tender on each page of the Schedule.
  8. The Divisional Officer should see that the contractors quote entire rates in words including paise to avoid chance of tampering in rates and if the contractor fails to do so the Executive Engineer should himself write the rates in words at the time of opening of tenders and if necessary, initiate action against the contractor.

     The contractor should be asked to fill in the tenders properly and carefully.  They should avoid quoting absurd rates and making too many corrections in the tenders.  The amounts should also be correctly worked out.  If any contractor does not follow these instructions and desists from filling the tenders carefully it would be open to the Department to take disciplinary action against the contractor.


          All the tenders received upto the expiry of the time on the last day for receipt of tenders, are kept on the table for inspection by any of the tenderer, if desired.  A list is prepared of all the tenders received and the sealed covers are opened in the presence of the tenderers or their representatives who may wish to be present.  Each tender is checked up regarding earnest money deposit and any corrections, alterations, over writings, omissions etc., are scrutinized and attested.  The rates are written not only in figures but also in words to avoid any discrepancy later on.  The rates are read out by the officer opening the tender, so that subsequent manipulation of rates or replacement of a tender by a new one etc. are not possible or, are not attempted and the total number of tenders received is also announced.


         All the tenders received are entered in the tender register and a comparative statement is prepared.  The individual item rates as also the total cost of work as per quoted rates, is compared and the most competitive offer is picked out.  The tenders are thoroughly checked up and properly compared.  The previous performance of the lowest tenderer is also studied and the capacity of the lowest tenderer both technically and financially to execute the work is also judged and a recommendation made to accept the lowest tender, or any other higher tender.  The reasons for such a recommendation should also be recorded in writing.  The lowest tender is normally accepted.  Orders of acceptance of tenders should be obtained from the competent authority and the concerned people informed of the decision.  The Earnest Money Deposit of all other unsuccessful tenders may be refunded.  If the rates quoted are abnormally high, the rates have to be fixed up by negotiations.  The contractor quoting the lowest rate-which itself is higher than estimated rate, is invited by the competent engineer for a personal discussion regarding the rates.  The reasons for the high rates quoted are discussed and the contractor may eventually accept a lower rate.  His revised offer is again considered by the competent authority and either accepted or rejected.  This process of negotiation is continued till the mutually agreed rates are finalized and the work entrusted on contract.  The contractor will not have the option to withdraw the tender, after his tender has been accepted.  If, however, he does not deposit the security deposit and enter into an agreement within the time prescribed, the work will be again notified calling for fresh tenders at his risk and responsibility, and he will lose his earnest money deposit also.


                It is the amount of money ranging from 1 to 2% of the cost of the work to be deposited by the intending tenders, while submitting tenders, as an expression of their earnestness in submitting the tenders.  The earnest money deposit of unsuccessful tenderers will be refunded, immediately after the tenders are opened and the tender of any one of them accepted.  The E.M.D. of the successful tenderer is adjusted towards the security deposit, which he is asked to deposit within a stipulated time.


          This is the amount which has to be deposited by the successful tenderer to whom the work has been decided to be entrusted.  This money is held in deposit during the period of execution of the work, and any amount which becomes recoverable from the contractor, by way of penalties, discrepancy in work or over payment etc. can be deducted from this deposit.  This amount or the balance after making any such deductions will be refunded to the contractor, after the lapse of 6 months i.e. the period of observation after the completion of the work, within which time any defects in the execution of works etc. would have been observed and got rectified by the contractor at his cost.  If he fails to attend to the rectification, the rectification work is got done by some other agency or departmentally and the corresponding expenditure deducted from the caution deposit.  In practice, this amount is usually refunded or adjusted towards security deposit of any new work entrusted to him, only after the observation time is over and the corresponding bills are audited and admitted by the audit department.  The amount of security deposit will be normally 10% of the value of work.
     A register of security deposit is maintained to show an up-to-date account of deposits received and deposits refunded.  The bill of the refund of deposit should not be passed for payment unless entries are made in the register of security deposits and reference to page number etc., are noted.


         This agreement is executed between the contractor and the department.  The form of agreement has been standardized, separately for piece works and for item rate contracts and the agreement form is carefully filled in, signed by the contractor and the departmental officer, in token of their acceptance of the stipulated conditions.  This contract agreement is enforceable under the law and it may become a matter of evidence, in a court of law when a dispute arises and so should be carefully prepared.


          After the contract agreement is signed, the contractor must be taken to the actual site of execution and the site physically handed over, with sufficient instructions as to the actual location or alignment of the work.  The time allowed for the execution of the work will have to be counted only from the day the site is lawfully handed over to him.  To avoid disagreement and misunderstandings later on, an acknowledgement is obtained from the contractor, for having taken over charge of the site.  After the site is handed over, it becomes the responsibility of the contractor to execute the work as per specifications, and conforming to the sanctioned plans and estimates.


          Large organizations such as Life Insurance Corporation, Railways, Unit Trust of India, etc. have to enter into contracts of similar nature with thousands of persons, such as contractors of insurance, or carriage of goods, finance arrangements, etc.  It is not practicable for such organizations to enter into a separate contract with every individual.  They have, therefore, printed forms of standardised contracts containing a number of terms and conditions.  The individual can hardly negotiate with the organisations,  he has not choice but to accept the contract in toto.  An individual has following modes of protection against such contracts:

  1. Reasonable Notice – It is the duty of the person delivering a document to give adequate notice to the offeree of the printed terms and conditions.  If this is not done, the acceptor will not be bound by the terms.

Notice of the terms should be given before or at any time of the contract.  A subsequent notice will amount to modification of the original contract and will not be binding on the other party unless he has assented thereto.

  1. Fundamental Breach – Even where adequate notice of the terms and conditions has been given, if a party fails to perform the fundamental obligation under a contract he will be guilty of a breach of the contract, whether or not any exempting clause has been inserted which purpose to protect him.
  2. Strict Construction – Any ambiguity in the mode of expressing an exemption clause is resolved in favour of the weaker party.

A contract may contain a provision for cost escalation.  Such a contract is not void for uncertainty and cannot be repudiated when prices are either reviewed or escalated provided that the review is reasonable and not arbitrary.

  1. Unreasonable terms – A term is unreasonable if it would defeat the very purpose of the contract or if it is repugnant to public policy.  Such a term shall be excluded from the contract.  A term in a contract of employment providing for the removal of a permanent employee without inquiry shall be unreasonable.

5. Exemption clauses and Third parties – Where goods are supplied or services rendered under a contract which exempts the supplier from liability and a third party is injured by the use of them, the supplier is liable to him notwithstanding that he has purchased his exemption from the other party to the contract.  If for example, a contractor agrees to maintain and repair a lift in certain premises under contract with the owner which exempts him from liability, that exemption would not avail the contractor against a person who is injured owing to bad repairs.