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In line with the Canons of Financial Propriety [Annexure-1] it is the intention of the functionaries dealing with tenders to get the most economical and reasonable rates for works to be executed on contracts. Tenders are a useful means for getting the best possible value for the money spent.


Open Tenders

(Para 1213E)
The system of invitation of tender by public advertisement in the most open public manner possible should be used as a General rule and must be adopted subject to certain exceptions.

  • How To Invite ?

To comply with the condition of advertisement in the “most open public manner possible” wide publicity is to be given by putting

  1. Notices in Railway Offices
  2. Advertisements in vernacular/local newspapers
  3. Advertisement in National/International Newspapers
  4. Publication of Tender Notice and Tender Document on the website, in down loadable form

In case of important, highly technical or/and high value tenders, tender notice must be published in National newspapers. Though the ceiling limit for the same is not notified, it is normally followed in Tenders above Rs.30 lakhs. (Board’s letter No.2000/W-I/NE/NL/10 of 17/10/2001 – Annexure-2).

Railway Board ( Letter No. 2008/RS(G)/779/2 dt 7.11.2008) have directed that Tender Notice and Tender Document should be published on website in downloadable form for all tenders, except for Single Tender and Spot Purchase. It further directs that publication on website must be ensured not only at the stage of publication of Notice and sale of Documents, but also by the Tender Committee while considering the tender.

  • Time Frame for sale of Tender Papers & Publication of NIT

Normally in all cases of Open Tender, Tender notice should be published at least a month in advance of the date of opening ( Para 1238 of Engineering Code). For small vaue Open Tender, tender notice period may be reduced to 21 days by DRM in Open Line / CAO/C in Construction. In rare and exceptional case, tender notice period may be reduced to 15 days by CAO/C with concurrence of FA&CAO/C. Normally, for big open line works, the tender papers should be available for sale at least three weeks before the opening the tender. For other smaller works, at least a fortnight should be the time. [Annexure-3 : GM(W)’s Circular No.W.187.R.V. of 6th June, 1970] [Annexure-4 : Railway Board’s letter No.93/CE.I/CT/85 of 9.5.1994] ( Rly Bd Lr No.2007/CE-1/CT/18 dt. 7/03/2008) These guidelines have been issued for adequate publicity and fair competition. For small value tender ( small value was defined by Rly Bd as Rs. 20 lakh, which has since been revised to Rs. 50 lakh ), DRM/ CAO/C can reduce the notice period to 21 days provided tender documents are ready and the reduction in notice period does not restrict the level of competition. Non-availability of tender papers leads to denial of a fair opportunity to prospective tenderers and can invite complaints. SUGGESTION SDGM, Central Railway’s, vide letter No.L.2000/6.130/C-23/V.Con. dated 6/9/2000 [Annexure-5] has clearly instructed that sale of Tender Papers should not be denied to anybody who is willing to pay for the Tender forms. These instructions have been reiterated by Board [Annexure-6 Board’s letter No.2000/CE-I/CT/42 of 12/2/2001]. There is therefore the need for making a centralised sale counter where Tender papers of all departments are available for sale. The idea of putting Tender Notices on the Web have also not fully crystallized though Construction organization and Stores Department have made a beginning on Central Railway.

  • Precautions in Tender Notice
  1. Those dealing with Tenders should ensure that the minimum notice period is adhered to. Cases where a delay has taken place and the gap between the date of publication and date of opening, as advertised, is less than 30 days, a corrigendum to the Tender Notice must be issued before the advertised date of opening. Corrigendums should be worded clearly and must contain the original Tender Notice and Name of work so that the prospective bidders are not confused. Moreover, issue of a large number of corrigendums should be avoided [Annexure-7 – Board’s letter No.2001/U3/N/Misc/Tender dated 23/06/2001]
  2. Tender Committee Members must ensure that a copy of the Newspaper cutting is invariably available on the Tender File.

Case Study 1 : In one of the cases, the Tender Committee discovered while deliberating on a particular case that the Draft Tender Notice had not reached the office of CPRO and whatever Tender Forms had been sold (a very limited number) were on the basis of tender notice placed on the Notice Boards. The tender had to be discharged.
Case Study 2 : Often there is a practice to cut the Newspaper cutting without reference to date of publication. The notice should be cut in such a manner that date of publication is clearly visible [See Annexure-8].

  • Precautions prior to invitation

The executing officer must know clearly before invitation of tender about :-

  • What exactly is required to be done
  • Where it is to be done
  • By when it is reasonably possible to be completed
  • To what extent Railways will be able to help/assist in execution work
  • The realistic estimated cost, payment terms
  • Whether drawings for the work are approved by the authorities competent to approve, whether the work is essential and not covered by another sanctioned work already under execution and the ultimate user of the proposed facility is satisfied about the scope of the work.
  • [Annexure-9 – Board’s letter No.80/W2/3/33 of 29th August, 1980]
  • Soil survey, wherever necessary has been done
  • [Annexure-10 : Board’s letter No. 68-B(C)PAC/IV/23 of 20.6.68]
  • Whether the estimate is sanctioned and it incorporates the inputs of all departments concerned and the Tender Schedule is clear, unambiguous and complete. The tendency to get estimates sanctioned without getting the requirement of other participating departments approved by them needs to be curbed.

Case Study 3 : In one case a work of replastering of quarters was got sanctioned. Owing to replastering the electrical wiring, plugs, sockets which were old were also required to be replaced. However no provision in the estimate had been kept for the magnitude of work involved. The Electrical Branch was therefore compelled to process their estimate afresh and the quarters remained unoccupied for a substantially long time in spite of a heavy demand.

  • The site of work is ready for handing over
  • Supply of Railway material should be done with due caution [Annexure-11 – Board’s letter No.68/WI/CT/25 dated 12/07/1968] and lead and lifts should be decided along with the place where the material will be supplied.
  • Sanction before Tender: At times contracts are invited even without the sanctions to Detailed Estimate. On some occasions an estimate is got sanctioned without ascertaining the actual requirement of all participating departments.

In terms of Board’s letter No.94/CE-I/CT/4 of 17.9.97 [Annexure-12] only in case of extreme urgency, Tenders can be invited before sanction of the detailed estimate with prior concurrence of associate Finance and personal sanction of

  • DRM – for works costing upto Rs.50 lakhs
  • PHOD – for works costing upto Rs.1 crore
  • GM – for works costing beyond Rs.1 crore.

It may be borne in mind that dispensation is allowed –

  • Only for “extremely urgent” cases
  • Prior Finance concurrence is necessary and the dispensation is only for invitation as
  • Sanction of detailed estimate is necessary before awarding the contract.
  • Other Typical Requirements for Tender Invitation:
  1. Railway board’s approval has to be obtained before calling tenders involving Foreign exchange which is estimated to be in excess of Rs.50,000/-
  2. In case where the specifications in a tender have undergone any major change before the tender is finalised, fresh tenders should be called for, giving sufficient notice to tenderers. [Annexure-13 - Board’s letter No.58/B(C)-2498/11/4th Report dated 27th/30th May, 1958].
  3. When the work is spread over various places on the Railway, it would be advantageous if the Railway Administration, while inviting tenders for such work, invites quotations for all the works at all places collectively as well as for the work of each place or groups of places fairly close to each other. [Annexure-14 - Board’s letter No.61-B/C/NE/9 of 23.9.1960].
  4. For inviting tenders in which design and construction are included, the following precautions need to be taken right at invitation stage :-
  • Contract should be awarded on lump sum basis and not on item rate basis.
  • Schedule of payment should be planned carefully.
  • Excess quantities if any found at design approval stage should not be paid extra but reduction for minus quantities can be done (details in item 13 of Board’s letter No.94/CE-I/CT/4 of 17.9.97 – Refer back to Annexure-12).
  • Value of Tender Forms:

In terms of Advance Correction Slip No.24 added to Para 1240A of Engineering Code the cost of Tender forms will be as under :-

  1. For works upto Rs.5 lakhs Rs.500
  2. For works above Rs.5 lakhs to Rs.20 lakhs Rs.1000
  3. For works above Rs.20 lakhs to Rs.50 lakhs Rs.1500
  4. For works costing above Rs.50 lakhs upto Rs.2 crores Rs.2000
  5. For works above Rs.2 crores Rs.3000

(Authority: Board’s letter No.94/CE-I/CT/53 of 25/7/94)

  • Minimum Eligibility Criteria

Vide Joint P.O.O. issued by CE(Works) and FA&CAO(F&B) vide letter No.W.187.R.1/A/SPL.CON dated 2.1.2002, the following minimum eligibility criteria for Tenders above Rs.30 lakhs has been specified :-

  1. Past Experience of Similar Works : The tenderer must have completed at least one work of similar nature, valuing not less than one-third the estimated cost of this work, in any period of 12 calendar months in last three years. Alternatively the aggregate value of works of similar nature executed in a period of 12 calendar months in last 3 years should not be less than 50% the estimated cost of this work. This evaluation shall be done on the basis of payments received for the corresponding period in respect of work/works of similar nature. For this purpose the tenderers are required to furnish the necessary details duly attested by the concerned office/department.
  2. Annual Turnover : The annual turnover of the tendering firm in last 3 years shall not be less than 1.5 times the estimated cost of this work as per ITCC to be submitted along with this tender.
  3. Machinery and Plants : The tenderers will submit with the tender a list of required machinery, plants and tools along with necessary documents to establish the ownership/hiring.
  4. Financial Solvency : The firm shall submit a solvency certificate from a Nationalised or Scheduled Bank for an amount not less than 1/4th of the estimated cost of this work.
  5. Organisation : A list of personnel, technical and otherwise, as available on hand and as proposed to be engaged for the subject work will be submitted with the tender.

The offers from the tenderers not satisfying the above mentioned eligibility criteria, are liable to be rejected. Notes:
(a) For tenders below Rs.30 lakhs, eligibility criteria if any should be vetted by associate Finance.
(b) Combined Tender Notices are published with Minimum Eligibility Criteria in which works of more than Rs.30 lakhs are combined with works below Rs.30 lakhs. This is incorrect and separate Tender Notices in such cases should be published.

  • Model Tender Notice (Para 1239 E)

The tender notice should in all cases state :-

  1. the place and time where contract documents can be seen.
  2. the place and time where blank tender forms can be obtained.
  3. the amount, if any, to be paid for such documents.
  4. the place, where, the date on which and the time at which tenders to be submitted and are to be opened.
Model Tender Notice

(A hypothetical case of NIT published on 1/4/2002) DRM(W), 3rd Floor, above Computer Reservation Centre, CST Mumbai 400001, invites sealed Tenders for the following works. (Tender forms will be available in DRM(W)’s Office which is also the place of sale, submission & Tender opening).
Name of Work: Repairs to leaky roof in Annexe Building.
Estimated Cost: Rs.50 lakhs
Completion Period: 6 months (including monsoon)
Commencement of : From 14/04/2002 from 10.00 hours
Sale of Tender Form
Last Date of Submission: On 5/5/2002 till 12.00 hours
Date & Time of Closing: On 5/5/2002 at 15.00 hours
Date & Time of Opening: On 5/5/2002 at 15.05 hours
Cost of Tender Form: Rs.1500/- (Rs.60 extra if required by post)
Earnest Money: Rs.10,000/- (Form of submission of Earnest Money can be checked in the Tender Booklet)
Note: Tenderers or their authorized representatives can be present at the time of Opening of Tender.
Explanation :
The above model tender notice ensures that the :

  1. Date & Time of receipt, submission, closing and opening are clearly specified.
  2. Earnest Money amount and cost of Tender form are as per Board’s instructions.
  3. Minimum time gap between publication and opening (30 days) has been maintained.
  4. Stipulated time of commencement of sale of Tender papers (21 days) has been observed.
  5. Eligibility criteria has not been given in spite of the cost of the work being above Rs.30 lakhs. Therefore the items under Minimum Eligibility Criteria as per Joint P.O.O. issued vide letter No.W.187.R.1/A/SPL.CON dated 2.1.2002 (in Para 1.09 at Page 5 & 6) should be given in such cases and the model tender notice is deficient to that extent.
  • Check List for Invitation
  1. Advertise high value tenders in National Newspapers
  2. Minimum gap between Publication and Opening – 30 days
  3. Tender Forms to be available for sale – 3 weeks before opening (minimum 15 days before for small tenders)
  4. Curtailment of notice period (minimum 21 days) with prior Finance concurrence
  5. Sale of Tender Form not to be denied to anyone
  6. Corrigendum(s) to be published before original date of opening and date of publication of original tender notice and name of work to be mentioned
  7. Newspaper cutting a must and should be pasted on tender file
  8. Get Estimates sanctioned before invitation or obtain competent authority’s sanction after prior accounts concurrence
  9. If specifications after invitation undergo a major change, reinvite tenders
  10. Scope, completion time is known
  11. Drawings/site is ready
  12. Requirements of all participating Departments have been taken care of in the scope of work
Limited Tenders

The contents of Para 1214-E in this context are reproduced as under :-

  1. Where for reasons, which should be in the public interest it is considered not practicable or advantageous to call for open tenders, limited tenders may be invited with the concurrence of the FA&CAO and approval of the competent authority. The reason for inviting limited tenders from firms/contractors should be kept on record while approaching finance for concurrence.
  2. In open line railways, the systems of inviting tenders for works costing up to Rs. 5 lakhs (Five lakhs) each from amongst the contractors borne on the approved list may also be adopted when it is considered advantageous to do so, provided the number of contractors borne on the approved list for the particular type of work is not less than 10(Ten).
  3. Some percentage of the tenders, which would normally be finalised by calling limited tenders, be finalised by calling open tenders so as to test the market rates periodically.
  4. Notice for Limited Tenders be sent to all eligible contractors borne on the approved list.

Note:- Notwithstanding the provision contained in para 1214(ii) above, the Railways may, in consultation with the associate finance, invite open tenders in the following circumstances:

  • In the event of insufficient response to the tender from the contractors borne on the approved list;
  • When the work is of special nature and contractors with requisite experience are not available on the approved list; and
  • When ring formation is suspected.
  • Open tenders are however to be invited as a General Rule (Para 1213E). In terms of item 1.18 of SOPGEN, the powers for invitation of Limited Tender are as under :-

PHODs/ CHODs/ SAG : Rs.15 lakhs
DRM/ADRM : Rs.10 lakhs
SG/JA : Rs.5 lakhs
Sr.Scale : Rs.1 lakh
i) In terms of Board’s letter No.83/W1/CT/14(Policy) of 30.3.1987, prior Finance concurrence is not necessary if Limited Tenders are being called from approved list.
ii) If however Special Limited Tenders are to be called (Board’s letter No.94/CE-I/CT/4 at Annexure-12) prior concurrence of FA&CAO and approval of GM is required. As per this letter, all contractors on the approved list may also be included. This letter has also enhanced the powers of General Manager for calling Limited Tenders to Rs.40 lalkhs. However, these powers have not been redelegated on Central Railway yet beyond Rs.15 lakhs.
iii) In terms of Board’s letter No.94/CE-I/CT of 22.10.2001 some additional instructions have been issued [Annexure-17] as per which

  • Notice for inviting Limited Tenders should also be published as in the case of Open Tenders.
  • Offers for Special Limited Tenders should be invited preferably from at least six but not less than four tenderers.
  • Precautions :

(a) Rates received in Limited Tenders should be compared with Open Tenders also.
(b) Till the system of advertisement in newspapers has not been streamlined for Limited Tenders, clear acknowledgement from all contractors from approved list should be obtained about receipt of Tender papers/Notice and the invitation should not be restricted to only 10 contractors of approved list.
© In case a Limited Tender has been invited on an estimate of lower value (say Rs.4 lakhs) and the lowest offer is higher (say above Rs.5 lakhs) approval of next higher authority as per delegation should be taken.
(d) While obtaining acknowledgement, the name of work should be clearly mentioned on the document in support of acknowledgement of receipt. The receipt in original should be kept on the Tender file.
(e) For single offers received in Limited Tender refer Para 3.0 at Page 42 of Chapter IV.
Case Study: In one case a contractor complained that he had not received the tender enquiry for a particular work in spite of being on the approved list. Investigations revealed that the tender file contained a photocopy of acknowledgement on which the name of that work for which the complaint was received had been mischievously put by taking a photocopy of acknowledgement of another work invited on Limited Tender basis.


Railway Board vide its Letter No.93/W2/PQR/SC/4/Pt of 24-9-96 has further elaborated upon the procedure with regard to Single Tender which is extracted below:
Sub: Procedure with regard to Single Tender/Awards of Contracts on Zonal Rlys.

  1. The Chairman, Rajya Sabha Committee on Govt Assurances while taking oral evidence of Board (CRB and ME) in connection with the system of award of contracts on one of the Zonal Railways had adversely commented upon the high incidence of Single Tenders particularly on that Railway. The Committee has desired this Ministry to order an enquiry into the incidence of Single Tenders resorted to during the last three years on the zonal railways and to suggest measures to streamline the procedure for inviting single tenders so as to curb their misuse.
  2. On the basis of the report furnished by the enquiry committee, it has been decided that the following procedures should be strictly observed by the zonal railways, in cases of award of single tenders :-

i) Award of works on single tender should be restricted to restoration works in cases of accidents, breaches and other emergencies, as also to works of very specialised nature. The decision in regard to these specialised works should be taken by the CAO(C) or the GM and cannot be delegated further. Routine nature of works like transportation of ballast, P.Way, cement, renovation of canteen complex and renovation of officers chambers should not be undertaken on a single tender basis under the garb of urgency. Adherence to stiff target dates, or any shift in target dates of completion of projects like gauge conversion etc. should not be a cause of awarding works on a single tender. Such exigencies can be taken care of by special limited tender by the railways.
ii) It has been noticed that in many cases of single tenders, the delay in completion of contracts has resulted in time over-runs as well as incurring of extra expenditure, which completely nullified the calling of single tenders on grounds of urgency. Therefore, single tender should be invited on a very restrictive basis, as brought out above.
iii) Selection of agencies for award of work on single tender basis should be from the approved list of contractors on the zonal railways, except in respect of works of a specialised nature for which no approved list is usually maintained.
iv) Detailed reasons justifying the need for resorting to single tender should be spelt out. The tender value should be worked out carefully based on realistic quantities and rates, and keeping in view the time frame for completion of the works. All cases of single tender shall require prior finance concurrence before the competent authority accords administrative approval for the award of the work on single tender.
v) The delegation of powers below the level of GM for according administrative approval for award of work on single tenders for works connected with restoration of traffic will henceforth be as below :-
a) Upto Rs.20 Lakhs per case per PHOD subject to annual limit of Rs.1 Crore per PHOD.
b) Prior finance concurrence at the level of FA&CAO should be obtained in each case.
c) Upto Rs.10 Lakhs per case per DRM subject to annual limit of Rs.50 Lakhs.
d) Prior finance concurrence at the level of Sr.DAO should be obtained in each case.
vi) Once Administrative approval for awarding the work on single tender has been accorded by the competent authority, the reasonableness of the rates quoted by the tenderer as also other terms and conditions, if any, would require to be considered by a tender committee and accepted by competent authority at appropriate level. The acceptance of the TC recommendations would be determined with reference to the delegation of powers prevailing on that Railway for open tenders.
vii) Where award of contract on single tender basis is for a very specialised nature of work, extension may be considered as per extant rules and instructions. No extension should normally be granted for works awarded on single tender basis for works connected with restoration of through traffic. However, in case of extreme necessity warranting grant of extension on account of unforeseen exigencies, the same should be done by levying adequate penalty (if extension is on contractor’s account). Prior finance concurrence and sanction of competent authority that had earlier accorded Administrative approval for the award of the work on single tender, should be obtained irrespective of whether the extension is being granted on contractor’s account or Administrations account. If the value of the single tender goes beyond the original competent authority’s powers, in the regard, then prior approval of the next higher authority (i.e.PHOD/GM) should be taken.
3. This issues with the concurrence of finance directorate of Boards office.

Based on the letters mentioned above FA&CAO/CR vide letter No.AC/FX/1402/RB/IV of 02-02-98 has further laid down the Procedure with regard to Single Tender which is reproduced below:
Sub: Procedure with regard to Single Tender

  1. Please refer to Rly Bds L.No.97/CE-1/CT/32 of 27.8.97 & No.93/W2/PQR/SC/4/Pt of 27.9.96.
  2. As per the Boards letters quoted above single tenders are permitted only where restoration of traffic is involved subject to the monetary limits laid down as per the above quoted letters.
  3. In this connection, the following procedure may be followed with immediate effect:-

a) All single tender cases (Other than Stores supply contract) will require GMs personal sanction and FA&CAOs personal concurrence. The only exception would be where restoration of traffic is involved in case of accidents.
b) No post-facto concurrence of sanction will be given.
c) Single tender should be resorted to only after exhausting Open tenders and Special limited tender routes.
d) Tight targets and urgency cannot be accepted as a ground for calling single tenders.
e) After obtaining the administrative approval from GM, the reasonableness of the rates should be examined by a duly constituted tender committee at appropriate level.

  1. In the case of Annual Maintenance Contracts, repairs etc. the single tender may be proposed with the original manufacturer/authorised dealer upto a monetary limit of Rs.10,000/- by PHOD/Co-Ord.HOD. On certification by HOD that the repairs/AMC, are of a sophisticated nature and have to be undertaken by the original manufacturer/authorised dealer. If the amount is above Rs.10,000/-, it will require GMs personal sanction with FA&CAOs personal concurrence.
  2. As regards single tender purchase of Catering items/Rate Running Contract for ready made items for resale etc. HODs power is restricted to Rs.1 Lakh per contract and PHODs upto Rs.2.50 Lakhs in each case with Accounts concurrence. If the value is above these limits, FA&CAOs personal concurrence and GMs personal sanction should be obtained.
  3. Extant Code rules and Rly Bds orders pertaining to the above should be kept in mind while exercising the powers.

This issues with the approval of General Manager.

Rly. Bd. vide its letter No.97/CE.I/CT/32 of 27.8.97 [Annexure 39] & 24.2.99 and F(X)II-99/PW/3 of 29.10.99 have issued Advance Correction Slip to the above para 1214-E by adding a sub para (a) as under :
(a) Single tender can be awarded under following situation such as :-
1. Emergent Situation –
(a) Accidents, breaches involving dislocation to traffic.
(b) Works of specialised nature to be personally approved by the GM/CAO(C) with prior concurrence of the FA&CAO. This power is not to be delegated to any other authority.
© Any other situation where GM personally considers it inescapable to call single tenders subject to these powers can be exercised by GM only with prior concurrence of finance.
2. Annual Maintenance Contract for equipment can be placed on single tender basis on authorised dealers with approval of AGMs of Railways.
Note: These powers may be delegated by the GMs in consultation with FA&CAOs to PHODs/DRMs upto a maximum of Rs.5 Lakhs per item per annum. On re-delegation, these powers would be exercised by PHODs/DRMs in consultation with associate finance.
SINGLE TENDERS should be rarely resorted to. Only in case of extreme urgency and unavoidable circumstances like restoration of traffic due to accident and breaches should single tender be resorted to. The obvious reason being higher rates being quoted by the lone offerer and resultant loss to public money. Instances of single tender due to excess variation of more than 25% of the original contract value need to be curbed.
As per Central Railway SOPGEN, TCM for Single Tender is to be done at one stage higher which also takes the acceptance to a step higher as compared to Open Tender except when GM is the accepting authority. [Item No.2 of Annexure-12]

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