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CHAPTER III CONTRACTS SECTION 13
CONTRACTS AND FORMS 13.1 What is a contract? (1) When two or more persons have a common intention communicated to each other to create some obligation between them, there is said to be an agreement. An agreement which is enforceable by law is a "Contract.'' (2) According to Section 10 of the Indian Contract Act, 1872, only those agreements are enforceable by law which are made by the free consent of parties competent to contract, for a lawful consideration and with a lawful object, and are not expressly declared to be void. This is subject to any special law according to which a contract should be in writing and attested by witnesses. (3) The following are the essential ingredients of a contract:(a) Offer made by one person called the "Promisor". (b) Acceptance of an offer made by the other person called the "Promisee". (c) Doing of an act, or abstinence from doing a particular act by promisor for promisee, that is called consideration. (d) The offer and acceptance should relate to something which is not prohibited by law. (e) Offer and acceptance constitute an agreement, which when enforceable by law, becomes a contract. (f) In order to make a valid and binding agreement, the party entering into such an agreement should be competent to make such agreement. (4) For the purpose of an agreement, there must be a communication of intention between the parties thereto. Hence in the forms of a contract there is: (a) A proposal. (b) Communication of the proposal. (c) Communication of acceptance of the proposal. (5) The communication of acceptance of the proposal completes the agreement. An offer may lapse for want of acceptance or be revoked before acceptance. Acceptance produces something that cannot be recalled or undone. A contract springs up as soon as the offer is accepted and imposes an obligation upon the person making the offer. It has been opined by the Ministry of Law that before communication of acceptance of an offer, the tenderer would be within his right to withdraw, alter and/or modify his tender before its acceptance, unless there is a specific promise to keep the offer open for a specific period, backed by a valid consideration. 13.2 Forms to be used for contracts (1) The following forms shall be used for agreements with the contractors for the purpose noted against each. (2) Except for the statutory clauses, the NIT approving authority, not lower than the Executive Engineer, can introduce additional terms and conditions in the NIT to suit the exigencies of a work, and these would override the corresponding standard clauses of the various forms
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13.2.1 CPWD Form 6 (1) This is Notice Inviting Tender Form, and in brief is known as NIT. It is required to be invariably issued in respect of works for which tenders are to be called. The Form includes the name of work, estimated cost put to tender, period of completion, time and dates of receipt and opening of tenders, and other relevant conditions. Care is required to be taken with regard to para 4 of CPWD Form 6, which provides two alternatives, viz. (i) the site for the work is available, or (ii) the site for the work shall be made available in parts as specified. Only one of these two alternatives is required to be retained. (2) Para 16.3(1) and (2) of this Manual may be referred to regarding provisions to be made in the NIT (Form 6) while inviting tenders with specialised components of works. (3) Para 13.2.8(4)(v) may be referred to regarding provisions to be made in the NIT (Form 6) when all the participating tenderers are to be paid by the Department for furnishing their drawings and design along with their technical bids in the case of lump sum tenders. (4) Para 15.4 may be referred to regarding provisions to be incorporated in the NIT (Form 6) for composite tenders. (5) Para 17.1 may be seen regarding provisions to be incorporated in the NIT (Form 6) for posting of tender notice on the website. 13.2.2 CPWD Form 7 - Percentage rate tender (1) This form should be used in tenders for a work where the items of work constituting a major part of the estimated cost put to tender are based on the Department's Schedule of Rates, irrespective of the value of the work. (2) In other works, where the bulk of the items are not based on the Department's Schedule of Rates, this form should be restricted to works whose value does not exceed Rs.10 lakhs. However, the NIT approving authority may decide to go in for this form even for higher values of work for valid reasons. 13.2.3 CPWD Form 8 - Item rate tender This form should be used in tenders for a work of value exceeding Rs. 10 lakhs, where the items of work constituting a major part of the estimated cost put to tender are not based on the Department's Schedule of Rates. However, the NIT approving authority may decide to go in for this form even for lesser values of work for valid reasons. 13.2.4 CPWD Form 9 - Supply of materials This form should normally be used where the purchase of materials is involved. According to the CPWD Form 9, the contractors are required to quote rates for supply of the required quantity of materials, whether raw or finished. 13.2.5 CPWD Form 10 - Piecework (1) This form is to be used: (i) For a work costing less than Rs. 5 lakhs (ii) In cases in which it is necessary to start the work in anticipation of formal acceptance of contract, and (iii) For running contracts. (2) In case of (ii) above, the piecework contract is cancelled as soon as regular contract is signed. (3) In case of (iii) above, quotations are called periodically and a running rate contract is drawn up
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as a result of those quotations, usually for one year. The piecework contract form provides for payment of stipulated rates only when it refers to such quantity of time and also stipulates that the Engineer-in-charge may put an end to the agreement at his option at any time. 13.2.6 CPWD Form 11 - Work order This form may normally be used for works costing Rs.10 lakhs and below. It is not much different from Form 10, but any work awarded on Form 11 may be stopped by the Engineer-in-charge at any time, and the contractor is also entitled to stop the work at any time. 13.2.7 CPWD Form 11A - Work order This form may be used for small works costing less than Rs.10 lakhs where it is not considered necessary to use regular Forms 7, 8 or 12, and at the same time it is desired to bind the contractor in respect of the quantity of the work and the time in which it is to be completed. 13.2.8 CPWD Form 12 - Lump sum contract (1) This form, as its name indicates, is used for work in which contractors are required to quote a lump-sum amount for completing the works in accordance with the given designs, drawings, specification and functional requirements as the case may be. Lump-sum tender can be either: (i) For only executing the work as per design, drawing and specification given by the Department, or (ii) For executing the work including the element of doing design work and preparation of structural drawings as well, which shall be in keeping with the given functional, structural and architectural parameters, and subject to approval by the competent authority before hand. (2) Drawing and design by the Department (i) In cases where work is to be executed as per design and drawing of the department, all the detailed working drawings, both architectural and structural must be prepared before hand, and should form part of the tender documents, which should also contain complete and detailed specifications of the work. The tender documents must set out complete scope of the work. Only the drawings and the detailed specifications as contained and/or referred to in the tender documents shall form the basis of execution and payment. (ii) The extra payment or recovery over and above the accepted rate shall be called for only in the event of authorized deviations from the drawings and specifications (as given and/or referred to in the tender documents) in course of execution and not otherwise. (3) Drawing and design by the contractor - after the award of work (i) In cases where the detailed architectural and structural drawings are to be provided by the contractor, all the architectural and structural data/parameters necessary to work out the cost of the work, details of the functional requirement and complete/detailed specification thereof, including preliminary drawings, if any, must be finalised before call of tenders, and the tender documents must contain all these details so that there is little scope of guess work on the part of the contractor while tendering, and chances of dispute at a later stage are minimized. Any clarification or doubt as may be raised by the intending tenderer should be cleared before the receipt of tender. (ii) A condition should be stipulated in the tender documents that the work shall be executed as per detailed design and architectural/structural drawings to be prepared by the successful contractor conforming to the given parameters and functional/design requirements as mentioned in the tender documents, and submitted to the department within specified time after the award of work. The contractor shall accordingly get the design/drawings approved by the department before taking up execution of the work. 160 Years of Engineering Excellence
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(4)
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In case any modification for any reason is ordered in course of execution, suitable adjustment for extra payment or recovery shall be effected only if such modification results in change in the scope of work as given in the tender documents, or any change from the specified parameters. Drawing and design by the contractor - before the award of work (i) Where the contractor is required to give the design and structural drawings, the contract can suffer from the following infirmities: (a) The contractor may under design the structure in order to reduce the cost and win the contract, or, (b) During the proof checking of the structural design, there could be a tendency on the part of the contractor not to agree to the department's genuine contention for revising the structural design that may increase the cost of structure to his disadvantage. (ii) Wherever the above problem(s) is/are anticipated, the tenders shall be invited in a two-bid system, (a) The technical bid, containing the architectural plans, structural design calculations, structural drawings, service plans, the detailed measurement sheets, and other technical parameters as may be required, etc. (b) The price bid. (iii) The technical bids shall be evaluated by a Committee chaired by the tender accepting authority (not higher than the Chief Engineer), and comprising the Senior Architect/Architect, Superintending Engineer (P)/Executive Engineer (P). The Committee shall co-opt appropriate officers from other disciplines concerned with the work. The Committee shall obtain clarifications from the tenderer(s) and/or call them for discussions wherever required, and select a final scheme. The same shall be made available or made known to all the participating tenderers, preferably through a pre-bid conference, and invite revised technical bids from them, if required. (iv) After examining the technical bids/revised technical bids, and equalising the same in respect of all the tenderers, the price bids shall be opened. If the tenderers are asked to modify their structural design and calculations as a result of this exercise, or if the validity period of the price bids expire, they shall be given the chance of offering revised price bids, and in that event, only the revised price bids shall be opened. (v) The NIT approving authority shall consider paying to all the participating tenderers a reasonable and specified amount for furnishing all the above details along with their tenders, if it is felt that the specified requirements so warrant. In that event, the same should be suitably incorporated in CPWD Form 6 as well as in the advertisements through website/ press. The lump sum tender documents shall contain: (i) the detailed architectural and structural drawings, (ii) detailed specifications for the various items and components of the work, (iii) the schedule of quantities for the various items and components of the work, (iv) the inclusions in and exclusions from the scope of the contract, if required, for better clarity, and, (v) the various stages of work, and the percentage of the contract value for each stage for release of intermediate and final payments. 160 Years of Engineering Excellence
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(3)
(4) (5)
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The schedule of quantities referred to above is only limited for the purpose of assessing the quantum of work involved by the tenderers. It is not meant for subsequent measurement and payment in the course of execution of the work. Before submitting their tenders, the tenderers shall, therefore, have to satisfy themselves that the quantities given in the tender documents for the various items and components of the work are correct. Deficiencies noticed, if any, should be immediately brought to the notice of the tender inviting authority, who shall examine the same, and make necessary corrections, if required, to the tender documents before receipt of the tenders. The contractor shall execute the work as per the drawings and specifications as given in the tender documents, and shall have no claim for any payment on account of deviations and variations in quantity of any item(s) or component(s) of the work, unless they are authorised deviations from the parameters, drawings and specifications contained in the tender documents. The rates of deviated items shall be determined on the lines of clause 12.2 of Conditions of Contract for percentage/item rate contracts. The Junior Engineer and Assistant Engineer shall satisfy themselves that the work has been done in each stage in conformity to the drawings and specifications contained in the tender documents, and certify the same before recommending to the Divisional Office for the release of the stage payment. The Executive Engineer shall conduct test checks to the prescribed levels as under para 7.10.2.
13.2.10 CPWD Form 47 - Tender for demolition of buildings This form of tender is adopted for demolition of buildings and removal of debris from the site. 13.2.11 World Bank documents (1) The Standard Bidding Documents finalised by World Bank are used for works aided by it. Only work specific changes, acceptable to the Bank, may be made in the conditions of contract. Such changes may be incorporated through additional conditions or contract-data-sheets and not by introducing changes in the standard wordings of the Standard Bidding Documents of the World Bank. (2) The two authorities for administering the contract for World Bank project, viz. the "Employer" and the "Engineer" should be substituted with "The Central Public Works Department represented by Chief Engineer/Superintending Engineer" and "The Executive Engineer represented by the Assistant Engineer/Junior Engineer" respectively in the Additional Conditions of Contract, and should be got approved by the World Bank representative. It should be mentioned that it shall be open for the Executive Engineer to invite a third party to inspect the work and advise him on the quality, workmanship etc. of the work.
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