Module 2

2.1 Tenders
A tender is a formal process used to invite bids for the supply of goods, services, or execution of
construction works. It ensures transparency, competitiveness, and fairness in awarding contracts.

The tendering process in India is a standardized procedure for awarding contracts for public and
private sector projects. It ensures transparency, competitiveness, and fair opportunities. The process
is regulated by various guidelines, including the General Financial Rules (GFR) for public
procurement and sector-specific regulations.

2.1.1 Types of Tenders

1. Open Tender:

o Publicly advertised through newspapers, websites, or government e-procurement

portals (e.g., Government e-Marketplace (GeM)).

o Anyone meeting the eligibility criteria can participate.

o Common for public works like infrastructure, road projects, and large-scale supply
contracts.

2. Limited Tender:

o Invited from pre-qualified or shortlisted contractors.

o Often used for specialized projects or when the timeline is critical.

o Examples include defense projects, high-end technology procurements, and sensitive

government works.

3. Single Tender:

o Awarded to a specific contractor without competition.

o Used for urgency, monopoly situations, or proprietary items (e.g., patented

technologies or critical government needs).

4. Two-Stage Tender:

o First Stage: Technical bids are evaluated.

o Second Stage: Financial bids are invited from technically qualified bidders.

o Typically used for complex projects like airports, smart cities, and metro rail systems.

5. Global Tender:

o Open to international bidders.

o Common for high-value or technology-driven projects requiring global expertise,

e.g., major infrastructure, aerospace, or defense procurements.
 6. Rate Contract Tender:

o Establishes fixed rates for a specified period for recurring supplies or services.

o Widely used in sectors like healthcare (e.g., supply of medicines) and public utilities.

7. E-Tender:

o Conducted online through platforms like Central Public Procurement Portal (CPPP)
or State e-procurement portals.

o Ensures enhanced transparency and efficiency.

o Examples include tenders for Smart Cities, PSU projects, and state infrastructure
works.

2.1.2 Key Components of the Tendering Process in India

Tender Notice:

• Purpose: Public invitation to participate in the bidding process.

• Content:

o Project details (e.g., nature, scope, and location).

o Eligibility criteria and required documents.

o Availability of tender documents (date, place, or website).

o EMD amount and submission deadline.

o Contact details for queries.

2. Tender Document:

A detailed document outlining:

• Instructions to Bidders:

o Submission format, deadline, and evaluation criteria.

• Scope of Work (SoW):

o Detailed technical and operational requirements.

• Terms and Conditions:

o Payment schedules, timelines, penalties for delays, etc.

• Eligibility Criteria:

o Technical qualifications, experience, financial stability.

• EMD and Security Deposit: Amount, mode of payment, and refund conditions.

• Bid Evaluation Methodology: L1 (lowest cost) or QCBS (Quality and Cost-Based Selection).
3. Tender Submission:

• Technical Bid:

o Experience credentials, methodology, and compliance with SoW.

• Financial Bid:

o Itemized cost estimates and total project cost.

4. Tender Acceptance:

• Evaluation is conducted by a Tender Evaluation Committee based on:

o Technical competence.

o Financial competitiveness.

o Compliance with statutory norms.

• The successful bidder is issued a Letter of Acceptance (LoA) or Work Order.

5. Work Order:

• Formal contract issued to the selected bidder.

• Specifies:

o Scope of work.

o Timelines and milestones.

o Payment terms.

o Applicable penalties for non-compliance.

2.1.3 Tender for Demolition Work

Demolition tenders involve risks and regulatory considerations, such as:

• Safety measures and equipment standards.

• Debris management and waste disposal compliance (e.g., rules by CPCB).

• Clearance from local authorities for demolition in urban or heritage areas.

2.1.4 Financial Terms – Tender

1. Earnest Money Deposit (EMD):

• A refundable deposit to ensure serious participation.

• Commonly set at 2-5% of the estimated project value.

• Paid via:

o Demand Draft (DD).

o Bank Guarantee.

o Online transfer (for e-tenders).

 • Forfeited if:

o The bidder withdraws after bid submission.

o The bidder fails to sign the contract.

2. Security Deposit (SD):

• Retained as a safeguard for performance assurance.

• Typically 5-10% of the total project cost.

• Can be deducted from running bills or submitted upfront.

• Refunded after the successful completion of the project or after the defect liability period.

3. Retention Amount:

• A part of every payment withheld by the client to address potential defects in work.

• Usually 5-10% of interim bills.

• Released after the defect liability period or rectification of identified issues.

2.1.5 Indian Laws Governing Tenders

1. The Indian Contract Act, 1872:

o Governs the formation and execution of tender contracts.

2. General Financial Rules (GFR), 2017:

o Applicable to public procurements.

o Ensures accountability and efficiency in government contracts.

3. CVC Guidelines (Central Vigilance Commission):

o Regulates public procurement to minimize corruption.

4. State-Specific Procurement Laws:

o States may have additional tendering rules for local projects.

5. Public Procurement (Preference to Make in India) Order, 2017:

o Promotes indigenous goods and services in government procurement.

Examples of Tenders

• Infrastructure Projects: Construction of national highways, metro rail systems.

• Public Utilities: Supply of water pipelines, electricity grids.

• Health Sector: Procurement of medical equipment and supplies.

• Demolition Works: Removal of old bridges or unsafe buildings.