Contract Management PDF

Projects
CHAPTER-1
INTRODUCTION
The manual on Project Contracts Management System covering one of the key
project management functions had been prepared in April 1986 to present at one place
the policies and procedures for contract management covering all the activities from the
stage of initiation to the conclusion of the contract. The manual was updated in October
1990. It was felt necessary to modify some of the provisions of existing manual. A
workshop on Project Management-2000 was conducted in June 2000 to discuss the
project management procedures for effective execution of the project. Pursuant to the
workshop, it was felt necessary to modify some of the provisions of the Project Contract
Manual. The Plants/Units, based on the experience gained, have also made suggestions
from time to time for updating the manual. Keeping the developments in view, the
existing manual has been reviewed and updated.
The manual aims at an integration of all the contract functions by identifying the
responsibility centres for various activities as well as defining inter-dependent
relationships. The manual highlights the following major features of sound contract
management system:
1. Project is to be broken up into well identifiable packages. This will facilitate

procurement of equipment and help in better planning, co-ordination, engineering
and timely execution of the project as a whole.
2. Repetitive and small value projects may be implemented with non-turnkey mode
of implementation. For projects involving new technologies, the main package
may preferably be implemented on turnkey basis. However, the auxiliary
packages may be implemented on non-turnkey basis. While seeking approval of
the investment proposal, plant/unit may indicate the mode of implementation of
the project/package, viz., turnkey/non-turnkey alongwith justifications in the
proposal itself.
3. Tender specifications should be prepared precisely so as not to leave room for

ambiguities.
4. For project contract, two stage bidding procedure should be followed. However,
where technical specifications are prepared precisely and in sufficient details such
as machine tools, compressors, motors, etc., single stage tendering is followed as
a procedure.
5. Any tender which differs substantially from the requirements spelt out shall
ordinarily not be considered.
6. Negotiations of prices should be an exception rather than the rule. Orders should
be placed on Lowest (L1) technically, and commercially acceptable bidder, if the
Project Directorate, SAIL Manual for Project Contracts Management Systems

December 2000 Page 1 of 115 Ref : G-CMS-2K0025 (R2)
Projects
prices are considered to be reasonable. In cases where the negotiations are

considered necessary, the reasons for doing so, must be clearly stated for
consideration by the Competent Authority as per delegation of powers. If the
approving authority (Competent Authority) is a member of the Tender Committee,
approval of the next higher authority should be obtained. If L1 prices are not
considered reasonable, price negotiations should be held with L1 bidder only.
7. All decisions regarding bid evaluation/recommendation should be by consensus

among members at the Tender Committee meetings. In case the differences
persist, consensus should be secured by reference to successively higher levels.
8. Bids should be evaluated by bringing all the acceptable bids at par by applying
suitable loading, as necessary, for the deviations as specified in the biding
documents.
9. Level-2 network for the activities right from the start till completion of contract
activities should form a part of the contract. Contract documents should also
contain the list of milestones alongwith their completion schedule.
10. Release of payments should ordinarily be linked to the attainment of milestones

which should be clearly identified in the contract. Terms of payments as well as
stage payments for attaining various milestones should be clearly indicated in the
contract.
11. The contract should provide firm price for foreign supplies and services whose
prices are in foreign currencies. For supplies & services whose prices are in
Indian Rupees should be firm if Time for Completion is up to twenty four (24)
months. However, in case the Time for Completion exceeds 24 months, price
adjustment due to variation in price indices should be provided.
12. Quality plans and inspection procedures should form a part of contract.
13. The contract should provide liquidates damages up to a maximum of 7.5% of

contract price for non-fulfilment of Performance Guarantee Parameters and
liquidated damages up to a maximum of 5% of contract price for delay in
completion of the contract.
14. The contract may provide a bonus clause envisaging payment of bonus up to
maximum of 5% of the contract price for completion of the contract ahead of
contractual schedule subject to the condition that the Plant/Unit is able to operate
the facilities gainfully but not less than rated capacity, on regular basis.

Projects
CHAPTER-2
CONTRACTS MANAGEMENT ORGANISATION
2.1 Organisation
The following aspects are to be considered while organising the Contracts

Management Department:
(i) In order to make the optimum use of the expertise of each manager and
his respective specialisation in functional area, the responsibility within the
Contracts Management Department should, as far as possible, be
assigned on the basis of the nature of the contract packages.
(ii) Within the Contracts Management Department, single point responsibility

for dealing with contracts right from the pre-tendering stage to closure of
contracts should be envisaged.
(iii) Contract Co-ordinator to co-ordinate all contract activities within Contracts

Management Department related to a package, should be nominated. He
will be the focal point for internal co-ordination and monitoring of all
contract activities of the package.
(iv) The Organisation of Contracts Management Department may be

structured in the following groups:
Procurement Group.
Works Contract Group
Equipment Planning Group
Stores Group
Turnkey Contracts Group
Consultancy Contracts Group
2.2 Procurement Group
The procurement functions are organised with the following main sub-groups:
(i) Mechanical Equipment Contracts

(ii) Electrical and Instrumentation Equipment Contracts
(iii) General contracts for procurement of steel, cement, refractory, other
essential materials, stores/spares for construction equipment such as
cranes, port clearance, co-ordination with railways/transport, and
insurance.
The project is sub-divided into various equipment packages. Mechanical

equipment sub-packages are dealt with by mechanical contract group while

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electrical and instrumentation equipment packages by electrical and

instrumentation contracts group. The other activities such as port clearances,
insurance etc., for all the contract packages are to be looked after by separate
groups with co-ordination by Contract Co-ordinator.
The details of organisation within Procurement Group will depend on the

workload. If the project is small, normally all contract co-ordination activities right
from the stage of pre-tendering to delivery/completion at site will be looked after
by a single group. But if the project is large, it will be looked after by more than
one group with co-ordination between the activities of various groups by the
Contract Co-ordinator.
2.3 Works Contracts Group
Works contracts group will basically be responsible for placement of orders/

contracts with regard to civil & structural works and erection of equipment &
refractories as well as scrutiny of claims of the contractors.
2.4 Equipment Planning Group
Equipment Planning Group will be responsible for co-ordination of the

procurement of the equipment in a phased manner to suit the requirement of site.
2.5 Stores Group
This group will be responsible for co-ordination of all activities regarding receipt of
material, accounting, warehousing and issue to the site.
2.6 Turnkey Contract Group
This group will be responsible for all activities of turnkey contract right from pre-
tendering stage to closure of contract including scrutiny of the claims of the
contractors.
2.7 Consultancy Contracts Group
This group will exclusively look after consultancy contracts.

Projects
CHAPTER-3
CONTRACT MANAGEMENT FUNCTIONS
3.1 General
Contract Management System calls for sharing of responsibilities by the

concerned departments at all stages of contract activities. All the activities and
functions involved in contract management have been identified in this Chapter.
Responsibility centres for each activity have also been assigned. Activities along
with responsibility centres are listed below:
3.2 Contract Management Functions/Activities
The activities involved in contract management along with responsibility are

indicated below. While indicating the responsibility for the activities, Project
Department has been abbreviated as PROJECTS, Contract Management
Division as CONTRACTS, Project Finance as PROJFIN, Project Engineering &
Design as PED, Operation & Maintenance as OPR/MAINT, Law Department
as LAW and Inspection and Quality Assurance as I&QA.
Sl.No. Activity Resposibility

1. Formulation of identifiable PED/CONSULTANT in association
packages for award of contract with CONTRACTS & PROJECTS
2. Preparation of contract award CONTRACTS in association with
schedule PROJECTS and PED/CONSULTANT
3. Issue of contract numbers CONTRACTS in association with
PED/CONSULTANT
4. Overall co-ordination with PROJECTS
Consultants
5. Preparation of technical PED/CONSULTANT in association
specifications with PROJECTS & OPR/MAINT
6. Specifying work schedule in the PED/CONSULTANT in association
bid documents with PROJECTS
7. Preparation of general CONTRACTS in association with
conditions of contract PROJECTS, PED/CONSULTANT,
PROJFIN and LAW
8. Compilation/preparation of CONTRACTS
complete set of bidding
documents
9. Approval for issue of Invitation CONTRACTS
for Bids (IFB)

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10. Issue of bidding documents CONTRACTS

11. Amendments to bid documents PED/CONSULTANT in association
technical with CONTRACTS
12. Amendments to bid documents PROJECTS in association with
work schedule CONTRACTS
13. Amendments to bid documents CONTRACTS in association with
commercial, financial and legal PROJFIN & LAW
condition
14. Extension of bid opening date CONTRACTS
15. Bid Opening CONTRACTS in association with
PROJFIN, PROJECTS & PED/
CONSULTANT
16. Nomination of evaluation team Joint responsibility of PROJECTS,
with approval of Competent CONTRACTS, PREOJFIN & PED/
Authority CONSULTANT with CONTRACTS as
co-ordinating agency
17. Verification of Bank Guarantees CONTRACTS in association with
including bid/contract PROJFIN
18. Preliminary evaluation of the Joint responsibility of CONTRACTS,
offers PROJECTS, PROJFIN & PED/
CONSULTANT with CONTRACTS as
For two/three stage tendering (Sl.No.19-28)
19. Preparation of list of clarifications PED/CONSULTANT, PROJECTS,
on technical & commercial CONTRACTS & PROJFIN with
matters from bidders. CONTRACTS as co-ordinating agency
20. Issue of letters regarding CONTRACTS
clarifications from bidders
21. Receipt of clarification letters CONTRACTS
from bidders.
22. Scrutiny of clarifications & short- Joint responsibility of CONTRACTS,
listing by evaluation team by PROJECTS, PROJFIN and
eliminating those offers which do PED/CONSULTANT with
not meet technical & commercial CONTRACTS as co-ordinating agency
requirements
23. Invite short-listed bidders for CONTRACTS in association with
discussions Conducting PROJECTS, PED/CONSULTANT and
discussions on clarification PROJFIN
matters with bidders
24. Final clarifications and CONTRACTS in association with
confirmations from bidders and PROJECTS, PROJFIN & PED/

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equalisation of scope CONSULTANT

25 Invitation of revised price bids CONTRACTS
26 Final technical and commercial Joint responsibility of CONTRACTS,
appraisal PROJECTS, PROJFIN in association
with PED/CONSULTANT
27. Opening of revised price bids CONTRACTS and PROJFIN in
association with PROJECTS
28. Preparation of bids evaluations Joint responsibility of CONTRACTS in
association with PROJECTS,
PROJFIN and PED/CONSULTANT
with CONTRACTS as co-ordinating
agency
For single stage tendering (Sl.No.29-35)
29. Preparation of list of clarifications PED/CONSULTANT in association
on technical & commercial with PROJECTS
matters from bidders
30. Preparation of clarifications on CONTRACTS in association with
commercial matters from bidders PROJFIN and PROJECTS
31. Clarification letters issued to CONTRACTS
bidders
32. Receipt of clarifications from CONTRACTS
bidders
33. Completion of comprehensive PED/CONSULTANT in association
technical evaluation with PROJECTS
34. Completion of comprehensive CONTRACTS in association with
commercial evaluation PROJFIN and PROJECTS
35. Preparation of tender Joint responsibility of CONTRACTS,
evaluations PROJECTS, PROJFIN and PED/
Common Activities (36-107)
36. Tender Committee TENDER COMMITTEE
recommendations
37. Obtaining approval of Competent CONTRACTS
Authority for award of work

38. Issue of Letter of Intent CONTRACTS in consultation with
PROJECTS and LAW
39. Finalisation of key events with PROJECTS in association with
the successful contractor and CONTRACTS and PED/

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preparation of L-2 Network for CONSULTANT

activities right from the start till
completion of commissioning
40. Engineering information PROJECTS in association with
schedule finalisation CONTRACTS & PED/CONSULTANT
41. Preparation of List of PROJECTS in association with PED/
construction equipment CONSULTANT
42. Contractors resource PROJECTS in association with
mobilisation plan CONTRACTS & PED/CONSULTANT
43. Finalisation of detailed PROJECTS in association with
manufacturing schedule based PED/CONSULTANT & CONTRACTS
on L-2 Network
44. Drawing schedule PROJECTS in association with PED/
CONSULTANT
45. Quality plans and Inspection PROJECTS in association with
procedures PED/CONSULTANT
46. Bill schedule/Payment schedule PROJFIN in association with
CONTRACTS, PROJECTS and PED/
CONSULTANT
47. Approval of sub-contractors PROJECTS in association with
CONTRACTS & PED/CONSULTANT
48. Verification of contract PED/CONSULTANT in association
performance with CONTRACTS
49. Finalisation of pre-construction PROJECTS in association with PED/
activity network CONSULTANT
50. Verification of power of attorney CONTRACTS in association with LAW
to sign the agreement
51. Preparation of draft agreement CONTRACTS
52. Vetting of draft agreement PROJECTS, PROJFIN and PED/
53. Signing of agreement To be signed by Competent Authority
as per delegation of powers and
CONTRACTS shall be the co-
ordinating agency
54. Co-ordination of insurance policy CONTRACTS and PROJFIN
55. Progress monitoring of technical PROJECTS in association with
information flow, drawings, etc. CONTRACTS & PED/CONSULTANT
56. Providing technical information/ PED/CONSULTANT with PROJECTS
clarification to the contractor as co-ordinating agency

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57. Approval of GA drawings, etc. PED/CONSULTANT

58. Approval of detailed drawings for PROJECTS in association with PED/
erection/construction, wherever CONSULTANT
required
59. Monitoring and issue of all PROJECTS in association with PED/
related construction drawing CONSULTANT
60. Physical follow-up at PROJECTS in association with
manufacturers work CONTRACTS
61. Monitoring of procurement of CONTRACTS in association with
bought out items PROJECTS
62. Holding of periodic contract CONTRACTS in association with
review meeting PROJECTS, PROJFIN and PED/
CONSULTANT
63. Contract Progress Report - PROJECTS in association with
Contractors Engineering status PED/CONSULTANT & CONTRACTS
64. Contract Progress Report - CONTRACTS in association with
Contractors manufacturing & PROJECTS
despatch status
65. Contracts site progress PROJECTS
66. Approval of inspection procedure PROJECTS in association with PED/
CONSULTANT
67. Inspection I&QA
68. Issue of despatch clearance I&QA in association with
certificates CONTRACTS & PED/CONSULTANT
69. Port clearance of equipment CONTRACTS
70. Settlement of Port rent/claims at CONTRACTS
Port
71. Co-ordination with Railways for CONTRACTS
imported consignments
72. Monitoring of receipt of material CONTRACTS in association with
at site PROJECTS

73. Allocation of space for storage CONTRACTS and PROJECTS
and office purpose of the
Contractor
74. Timely receipt of Contractors PROJECTS
erection equipment
75. Review of manpower PROJECTS
deployment by Contractor

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76. Electricity & water provision to PROJECTS

the Contractor
77. Issue of construction machinery PROJECTS
on hire
78. Physical receipt, storage and CONTRACTS
issue of Purchasers material
79. Identification of non-receipt of PROJECTS in association with
materials already despatched CONTRACTS
80. Identification of non-availability PROJECTS
of construction material like
cement/ steel
81. Follow-up action on report of CONTRACTS
delay in receipt
82. Replacement of defective parts CONTRACTS
at site
83. Changes in erection programme PROJECTS in association with
on account of non-availability of CONTRACTS
material
84. Check hold-points as per quality PROJECTS in association with PED/
plans CONSULTANT
85. Changes in specification without PED/CONSULTANT
commercial implications
86. Changes in technical PED/CONSULTANT in association
specifications with commercial with CONTRACTS, PROJFIN and
implications PROJECTS
87. Changes in scope of site PROJECTS in association with
activities including extra items of CONTRACTS, PROJFIN and PED/
work and change in quantities CONSULTANT
88. Changes in conditions of CONTRACTS in association with
contract PROJFIN and PROJECTS

89. Changes in delivery schedule CONTRACTS in association with
PROJECTS and PED/CONSULTANT
90. Extension of work schedule for PROJECTS in association with
site activities CONTRACTS, PROJFIN and PED/
CONSULTANT
91. Post award correspondence on
various subject matters will be
as follows:
i) Engineering/Technical PED/CONSULTANT

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ii) Progress follow-up up to CONTRACTS

receipt of material at site
iii) Inspection & Quality I &QA
Assurance
iv) Site activities PROJECTS
v) Contract matters including CONTRACTS
delivery schedule
vi) Payment CONTRACTS in association with
PROJFIN
92. Monitoring of site progress PROJECTS in association with PED/
CONSULTANT
93. Supervision of start up activity in PROJECTS in association with PED/
case of major equipment CONSULTANT and OPR/MAINT
94. Approval of commissioning OPR/MAINT in association with
procedure PROJECTS and PED/CONSULTANT
95. Preparation of Final as built PED/CONSULTANT
drawings
96. Obtaining statutory clearance CONTRACTS in association with
certificates PROJECTS and PED/CONSULTANT
97. Preliminary acceptance PROJECTS in association with
PED/CONSULTANT and OPR/MAINT
98. Successful commissioning OPR/MAINT in association with
PROJECTS, PED/CONSULTANT and
CONTRACTOR
99. Performance Guarantee Test CONTRACTOR in association with
OPR/MAINT, PED/CONSULTANT and
PROJECTS

100. Payments:
i) Progress payments PROJFIN in association with
CONTRACTS/PROJECTS and PED/
CONSULTANT
ii) Extra claims of the PROJECTS in association with
contractor PED/CONSULTANT, CONTRACTS
and PROJFIN
iii) PAC/Commissioning/FAC PROJECTS in association with
Payments PED/CONSULTANT, CONTRACTS
and PROJFIN
101. Physical custody and monitoring PROJFIN

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of all the Bank Guarantees

102. Invoking the Bank Guarantees CONTRACTS in association with
PROJECTS, PROJFIN and LAW
103. Obtaining extended guarantee, CONTRACTS, PROJFIN and
wherever necessary PROJECTS
104. Obtaining, verifying and physical CONTRACTS in association with
custody of insurance policies PROJFIN
and indemnity bonds from the
Contractor
105. Insurance claims, if any CONTRACTS in association with
PROJECTS and PROJFIN
106. Monitoring the contract cost CONTRACTS in association with
PROJECTS, PED/CONSULTANT and
PROJFIN
107. Training of SAILs personnel Some of the contracts provide for
training of SAILs personnel. OPN/
MAINT will be responsible for
deputation of its personnel in
association with Personnel
Department

Projects
CHAPTER-4
CONTRACT PACKAGING AND MODE OF IMPLEMENTATION
4.1 General
The first step in contract planning is to define the total list of contract packages for
a project. The project should be broken up into identifiable packages. The
objective of contract packaging is to group equipment/works into an optimum
number of well defined and manageable unit for procuring/installation of
equipment at a competitive price as well as for better planning and co-ordination
of engineering and execution of the project as a whole.
The contract packages will be developed before Master Net work schedules for
the project is finalised. This will ensure that the heads of the Master Network are
developed in accordance with project packages for better monitoring and control.
4.2 Contract Package Design
Following factors should be taken into consideration while developing a list of

packages for the project:
i) The number of packages should be optimum. This will help in effective co-
ordination at various stages of project implementation.
ii) The package should be so formed that the responsibilities for the
performance of the equipment systems/sub-systems are clearly
identifiable. This should involve minimum number of agencies.
iii) Each package should be independent of each other in regard to its content
and scope which should be exhaustively defined.
iv) The equipment and services packages should consist of groups having
inter-related equipment. This will help prospective vendor to tie up with the
suppliers of various equipment and services involved without much
difficulty. This will ensure adequate competition in bidding.
v) It should be ensured that the terminal points/battery limits between sub-

system/equipment packages are properly defined so that all the required
equipment and services are covered in the various packages and nothing
is left out uncovered.
4.3 Mode of Implementation
Generally, there are two well known strategies adopted for project implementation,
viz., Turnkey and Non-Turnkey.
In turnkey concept, entire responsibility right from design to commissioning is

entrusted to a single agency whereas in non-turnkey mode of implementation, the
package is implemented through a number of contractors with each Contractor

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having direct contract with the Plant/Unit. The overall co-ordination with various
contractors is done by the Plant/Unit itself.
4.3.1 Repetitive and small value projects may be implemented with non-turnkey mode
of implementation. For the projects involving new technologies, the main package
may preferably be implemented on turnkey basis. However, the auxiliary
packages may be implemented on non-turnkey basis.
4.4 Scope of Work
4.4.1 Turnkey Packages
The scope of work may include design, engineering, civil work, dismantling, if any,
of existing building; modification/diversion of structures & equipment, if any;
fabrication & supply of steel structures; manufacture & supply of plant &
equipment and refractories; Customs & Port clearances; inland transportation;
storage; insurance & handling; erection work; testing; pre-commissioning; start-up
& commissioning and demonstration & establishment of performance guarantee
parameters of the facilities of the Project/Package.
However, Plant/Unit may ensure that contract for turnkey package should be a
divisible turnkey contract and not indivisible turnkey contract. In indivisible turnkey
contract, the bidder quotes a lumpsum price for the entire work of the turnkey
package and in divisible turnkey contract, the bidder quotes contract price under
various heads such as design & engineering, supply of plant & equipment, supply
of structures, civil work, erection of plant & equipment, erection of structures,
testing & commissioning.
4.4.2 Non-Turnkey
The independent packages of supplies & services and its scope of work involved
in non-turnkey mode of implementation may comprise the following activities:
i) Civil Engineering Work:
Design; engineering; dismantling of existing facilities and civil construction

including supply of building materials.
ii) Structural Work:
Design, engineering, procurement of structural steel, fabrication, painting,

transportation, supply/delivery at site, handling till erection, erection and
final painting.
iii) Supplies & Supervision Services:

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Equipment, technological structures, auxiliary equipment/materials &

refractories including supervision of erection, testing, commissioning and
establishment of performance guarantee test parameters.
iv) Erection of Refractories:
Transportation & handling of refractories from Employers stores to

erection site, opening of packing and inspection for any damage/
replacements and erection.
v) Erection, Testing, Trial-runs and Commissioning:

Transportation & handling of equipment from Employers stores to erection
site, opening of packing and inspection for any damage or
repairs/replacements, erection, testing, trial runs, commissioning including
establishment of performance guarantee parameters of individual as well
as integrated equipment under supervision of experts deputed by
equipment suppliers.
4.5 Approval of Mode of Implementation
While seeking approval of the investment proposal, Plants/Units may indicate the
mode of implementation of the Project/packages along with justifications in the
proposal itself.

Projects
CHAPTER-5
CONTRACT AWARD SCHEDULE
5.1 General
Contracts management involves a considerable number of activities to be

performed for awarding contracts. To ensure timely execution of all these pre-
award contract activities, a detailed scheduled should be prepared. It should
indicate scheduled dates of completion of each activity based on master network
of the project.
5.2 Pre-Award Contract Activities
5.2.1 General Activities
i) Pre-qualification of contractors wherever necessary.
ii) Receipt of technical specifications by Contract Management Division.
iii) Preparation and compilation of complete set of bidding documents.
iv) Constitution of Tender Committee.
v) Approval for release of notice for Invitation for Bids (IFB).
vi) Release of IFB to advertising agency.
vii) Sale of bidding documents.
viii) Holding of Bidders Conference, wherever necessary.
ix) Receipt of Bids.
x) Opening of bids documents and preparation of bid opening statements.

Only technical and commercial parts will be opened except for single stage
bidding.
xi) Preliminary evaluation of the bids.
5.2.2 For Two Stage Tendering
i) Preparation of list of clarification on technical and commercial matters from

bidders.
ii) Issue of letters to bidders for seeking clarifications.
iii) Receipt of clarifications from bidders.

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iv) Scrutiny of clarifications received and short-listing by evaluating team by

eliminating the bidders not meeting the technical requirements.
v) Invite bidders, whose bids meet technical requirements, for discussions.
vi) Final confirmation from bidders to bring the scope of technical and
commercial offers at par.
vii) Technical and commercial appraisal.
viii) Submission of revised prices, if required; and opening of price bids.
ix) Submission of bids evaluation report to Tender Committee.
5.2.3 For Single Stage Tendering
i) Preparation of list of clarifications on technical matters from bidders.
ii) Preparation of list of clarifications on commercial matters from bidders.
iii) Issue of letters to bidders for seeking clarifications.
iv) Receipt of clarifications from bidders.
v) Completion of technical evaluation report.
vi) Completion of commercial evaluation report.
vii) Submission of bids evaluation report to Tender Committee.
5.2.4 Common Activities
i) Tender Committee recommendation.
ii) Putting up of proposal to approving authority.
iii) Preparation of draft letter of intent (LOI).
iv) Issue of LOI and obtaining bidders acceptance of the same.
v) Finalisation of key events with successful bidder and preparation of L-2

Network for activities right from the start till completion of commissioning
activities.
vi) Engineering information schedule finalisation.
vii) Bidders resource mobilisation plan.
viii) Finalisation of detailed manufacturing programme.
ix) Finalisation of schedule for submission of drawing.
x) Finalisation of quality assurance plans & inspection procedures.

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xi) Approval of sub-contractors.
xii) Finalisation of pre-construction activity network.
xiii) Verification of power of attorney to sign the contract.
xiv) Preparation of draft contract agreement.
xv) Vetting of contract agreement by Project Finance Department.
xvi) Signing of contract agreement.
5.3 Pre-Award Contract Schedule Preparation
Pre-award contract schedule may be prepaed by Contract Co-ordinator along with

Projects Department and Project Engineering & Design/Consultant.
5.4 Pre-Award Contract Schedule Monitoring
Contract Co-ordinator is responsible for monitoring the progress of each pre-

award contract activity. Depending upon the actual progress of pre-award
activities and the slippages that might have occurred, changes in schedule may
be necessitated. All such changes will be initiated by Contracts but will be
formalised after obtaining the concurrence of Projects and Project Engineering &
Design/Consultant.

Projects
CHAPTER-6
MODE OF TENDERING
6.1 General
Open Tender Enquiry should be issued for Project Contracts. However, when
adequate number of contractors and/or reliable and reputed contractors are
known, Limited Tender Enquiry may be issued. In case of emergency situation
and projects of proprietary nature, Single Tender Enquiry may be issued.
6.2 Open Tender Enquiry
Open Tender Enquiry should be issued for all Project contracts except for the
conditions due to which Limited or Single Tender Enquiries are issued. Further,
Open Tender Enquiry may be advertised for invitation to indigenous contractors or
both indigenous and overseas contractors depending upon the conditions
indicated below:
6.2.1 Global Tender Enquiry
Global Tender Enquiry should be considered under the following conditions:
i) when the technology is not available indigenously,
ii) when the number of Indian parties known in the field are not adequate for
obtaining better response & competitive bids.
Global Tender Enquiry should be invited through publication of Invitation for

Bids in leading Newspapers and Internet.
6.2.2 Open Tender Enquiry
Open Tender Enquiry should be considered in all the cases except for the
conditions for which `Limited and `Single Tender Enquiries are preferred.
Open Tender Enquiry should be invited through publication of Invitation for Bids
in the leading `Indian Newspapers and `Internet.
6.2.3 Pre-qualification of the Bidders
In case of Open Tender Enquiry, pre-qualification bids may be invited and the
bidders may be pre-qualified based on the pre-qualification criteria as indicated in
Chapter-7. The bidding documents will be issued to the pre-qualified bidders only.
6.3 Limited Tender Enquiry
6.3.1 `Limited Tender Enquiry (LTE) should be issued to only registered contractors.

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6.3.2 The selection of parties for issue of LTE should be done by the Project
Department in a judicious manner to ensure that:
i) the parties are financially and technically sound,
ii) the past performance of the parties with regard to quality of work and
adherence to time schedule, is satisfactory,
iii) the party has executed the last job successfully,
iv) all the parties registered for a particular category are given coverage by
rotation. Subject to (i), (ii) and (iii) above, no registered party should be
considered for issue of LTE for the second time unless all the registered
parties in the list have been considered at least once in each cycle.
6.3.3 Each Plant/Unit will maintain the list of registered contractors for `Project contract.
The list will be updated half yearly. The contractors shall be registered as per
procedure indicated in Annexure-1.
6.3.4 LTE should be issued to more than three registered Contractors and in no case
less than three registered contractors. If the number of registered contractors for
the specific Project is less than three, then Open Tender Enquiry should be
issued.
6.3.5 LTE document should be dispatched through registered post/under certificate of

posting to the postal address of the party as available in the records of the
Company. Original LTE document should not be given by hand to the
representatives of any party.
6.4 Single Tender Enquiry
6.4.1 Single Tender Enquiry may be issued for projects of proprietary nature or to meet
the emergency requirement when the normal process of tendering cannot be
followed.
6.5 Approval of Mode of Tendering
While seeking first stage approval of the investment proposal, Plants/Units may
indicate the mode of tendering of each package of the project alongwith
justification in the proposal itself.
Further, in case of emergent schemes where Open Tender Enquiry is proposed if

Plant/Unit does not prefer to undergo the process of pre-qualification and
straightway invites the bids from the bidders, the justification of the same may also
be included in the proposal.

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CHAPTER-7
PRE-QUALIFICATION OF CONTRACTOR
7.1 General
The criteria for the pre-qualification must be considered with care as early as
possible in the bidding process. However, the invitation for pre-qualification bids
should only be issued when the preparation of engineering designs and bid
documents has sufficiently advanced and the scope of work is reasonably well
defined. Invitation for pre-qualification bids should include the details of the
Project, scope of work of the package, details to be sought from the bidders and
pre-qualification criteria.
7.2 Benefits of Pre-qualification
7.2.1 Pre-qualification enables Plant/Unit:
to assess the interest generated by the project among qualified parties,
to assess the availability of state of art technology,
to reduce the amount of work and time involved in evaluating bids from
unqualified contractors or suppliers,
to encourage indigenous parties to form Joint Ventures with other

indigenous or international parties, thereby deriving benefits from their
resources and experience,
to reduce significantly, if not eliminate, problems associated with low prices

submitted by bidders of doubtful capability.
7.2.2 The pre-qualification process also enables bidders in the following respects and
in-turn facilitates selection of the competent bidders:
Insufficiently qualified bidders get better chance to understand the nature

& magnitude of the Facilities/Project work and the capabilities warranted
and can avoid the expenses on bidding or forming a Joint Venture,
Well-qualified firms may also price their bids with the knowledge that they
will be competing with other qualified bidders meeting realistic minimum
competence criteria,
Ensure that inadequately qualified competitors will be excluded from

bidding thus encourages competent contractors or suppliers to bid.
7.3 Pre-qualification Criteria

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7.3.1 The invitation for pre-qualification should provide a clear basis upon which
prospective bidders can be evaluated, following an objective process based on
fair and transparent criteria. Pre-qualification criteria for a project should be drawn
in accordance with the realistic needs of the project. The criteria adopted must
relate to characteristics that are essential to ensure satisfactory execution of the
contract and must be precisely stated. It should also be ensured that the criteria
are sufficiently stringent to assure that only properly qualified parties are included
in the final list.
7.3.2 The criteria should be such that they neither inhibit competition nor set a limit to
number of parties to be pre-qualified. All parties that meet the criteria should be
pre-qualified. The pre-qualification criteria for joint ventures should be the same
as those for single applicants.
7.3.3 The bidders should be pre-qualified by meeting predefined, precise & minimum
requirements. The Pass/Fail method entails the setting of pass/fail criteria which,
if not met substantially by the applicant, results in disqualification.
7.4 Information to be sought from Bidders
7.4.1 Applicants should furnish the following information, data, document based on
which qualification of the bidders shall done:
i) Bidders profile,
ii) Bidders experience & past performance on similar Facilities/Projects,
iii) Bidders capability in respect of personnel, equipment & plant,
iv) Financial status, conditions and prospects,
v) Bidders proposal for funding the implementation,
vi) Bidders confirmation regarding general scope of work of contract.
The above mentioned information, data and document, should be obtained not
only for applicants (bidders) but also for their Associate(s)/Consortium Partner(s),
if proposed to be involved.
The invitation for pre-qualification bids should include the following details:
7.4.2 Bidders Profile
i) Names & address of bidder with Postal address of Registered Office,

fax/telephone numbers/e-mail address and names & details of bidders
representatives/agents in India in case of overseas bidder.
ii) Ownership status of bidder whether Govt. Department, Govt. Undertaking/

Enterprise, Limited Company, Private Ltd. Company, Private Company,
Partnership firm, Entrepreneur, along with data on establishment, copy of

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Memorandum and Article of Association, Partnership Deed, whichever

may be applicable.
iii) Organisational set-up with the name & address of Chief Executive,
Director(s), Proprietor(s), Partner(s) of bidders Companies/Firms/
Entrepreneur(s).
iv) Details of Organisation under bidders and bidders Associate(s)/

Consortium Partner(s) command which bidder proposes to involve in
undertaking the Facilities/Project work, including Curriculum Vitae of
bidder & bidders Associate(s)/Consortium Partner(s) key personnel with
their qualifications, experience and nature of job being handled by them.
v) Complete details of bidders Associate(s) or consortium partner(s), if any,

for their pre-qualification including Memorandum & Article of Association/
Consortium Agreement, duly authenticated. Plant/Unit shall reserve the
right to approve or disapprove the bidders proposal for any change in the
name(s) of Associate(s)/consortium partners after its approval by the
Plant/Unit.
7.4.3 Bidders Experience & Past Performance on Similar Facilities/Projects
i) Details of bidders valid Collaboration/License agreement with validity, to

which bidder desires to use for undertaking the contract.
ii) Necessary documentary evidence that the bidder possesses proven

technology, know-how, basic design & engineering, capabilities and
competence for execution on turnkey or non-turnkey basis.
iii) Details of bidders past experience of execution of turnkey or non-turnkey

work indicating the name of works, employers, contract date and value,
contractual & actual completion time, etc.
iv) Details of similar work executed and under-execution indicating the

names, address and contact person of Client(s), nature & scope of project
work, date of award & value of contract, contractual & actual completion
time of project work executed, progress of project work under execution
and certification of performance with supporting documentary evidence.
v) Details of current orders/contracts in hand with brief description, date of

award & value of contract, contractual & expected completion time of those
project works.
7.4.4 Bidders Capability in respect of Personnel, Equipment & Plant
Details of capacity regarding manpower & workforce, designing, range of

manufacturing facilities alongwith list of vital equipment, tools, tackles, other

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resources, etc. available with bidder and bidders Associate(s)/Consortium

Partner(s).
7.4.5 Financial Status, Conditions and Prospects
i) Financial status of bidder & bidders Associate(s)/Consortium Partner(s), if

any, with Annual Report/Balance Sheet and Profit & Loss Account for the
preceding three years. A Bankers Certificate/Solvency Certificate
regarding financial capability of bidder and bidders Associate(s)/
Consortium Partner(s) to execute the Facilities/Project Work.
ii) Certified copies of Income Tax Clearance Certificate for the preceding
three years.
iii) Details of registration Certificate held under Central Sales Tax and State
Sales Tax and Sales Tax Clearance for preceding three years.
iv) Statement containing brief details of litigation, if any, instituted against the
bidder and/or bidders Associate(s)/Consortium Partner(s) during
preceding ten years and the forum in which they are pending.
7.4.6 Bidders proposal for funding the implementation (if required)
Details of funding to be offered by the bidder and/or bidders Associate(s)/

Consortium Partner(s) in the form of either multilateral or bilateral credit or soft
loan or suppliers/contractors credit or Employers credit with detailed terms &
conditions including the total sum available for funding the Facilities/Project work,
currency, rate of interest (preferably fixed rate of interest), repayment schedule, etc.
7.5 Joint Ventures and other Forms of Association
7.5.1 When two or more firms apply jointly for pre-qualification, the pre-qualification
document must set out clearly the conditions applying to such joint ventures.
Each party of the joint venture must submit the complete documentation required
of an individual firm applying for pre-qualification.
7.5.2 The requirements described for joint ventures apply to associations, partnerships,
consortia, and other ventures in which firms associate with each other formally for
the purpose of carrying out a contract jointly. Partners of a joint venture must
confirm that, if pre-qualified, the joint venture bid will be submitted with a formal
joint venture agreement and that all parties to that agreement will be legally bound
jointly and severally for the bid and any consequent contract. The lead partner in
the joint venture should also be designated with overall responsibility for the joint
application, who will be the principal contractor for all the liabilities to the total
Contact and communications. These requirements do not apply to subcontract
arrangements.
7.5.3 A firm may apply for pre-qualification both individually and as part of a joint
venture. It should not, however, be permitted to bid for the same contract as an
individual party/firm and as part of a joint venture. In the event that bids for the
same contract as an individual firm and as part of joint venture, both or all bids by
(or including) this firm should be rejected.

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7.5.4 Formation or regrouping of joint ventures after pre-qualification should only be

considered if the additional firms or joint ventures have already been pre-qualified.
However, such new joint ventures should not be approved, if, in the Plant/Unit
opinion, this would result in a substantial reduction in competition.
7.6 Clarification Meeting
7.6.1 Where circumstance warrant (usually for very large or very complex Facilities/
Projects work), a clarification meeting should be held to clear any doubts the
potential applicants may have about the information, data & documents or the
Facilities/Project work. If such a meeting takes place and in case any changes are
made to the pre-qualification requirements or procedure as a result of the
meeting, the amendment should be advertised in the Newspapers at least three
weeks before the submission date.
7.7 Evaluation of Pre-qualification Bids
7.7.1 The pre-qualification bids will be evaluated by a Committee to be constituted by

the Competent Authority. The evaluation report should address each of the set
pass/fail criteria. Disqualification of applicants who marginally fail to meet the
criteria should be explained in the evaluation report.
7.7.2 After obtaining approval of the Competent Authority, the pre-qualified bidders
should be informed about their having been qualified for issue of Bidding
Documents.

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CHAPTER-8
BIDDING & BIDDING DOCUMENTS
8.1 Bidding Documents
8.1.1 The purpose of bidding documents is to inform potential bidders about the plant,
equipment and services required, the terms and conditions at which these are to
be provided, within the stipulated time period. The documents should be drawn
up in a manner to ensure fair competition and equal opportunity to all bidders.
The bidding documents should clearly & unequivocally specify the obligations to
be undertaken by the successful bidder. The Bidding Documents should clearly
mention the criterion for bids evaluation. The technical parameters, if any, on
which the prices will be loaded, should be clearly indicated in the bidding
documents. The bidding documents may include the following:
1. Invitation for Bids

2. Instructions to Bidders
3. Draft Contract Agreement
4. General Conditions of Contract
5. Special Conditions of Contract
6. Project/Equipment Technical Specifications
7. General Technical Specifications
8. Work Schedule
9. Financing Package to provided by the successful bidder, if required
10. Safety Codes for Contractors
11. List of preferred makes for equipment/supplies
12. Approved list of sub-contractors
8.1.2 The bidding document should include provision for submission of Performance
Security Guarantee by the Contractor within 30 days from the date of signing of
the Contract. The value of performance security may be 5% of the contract price.
8.1.3 The bidding document may incorporate that the consultant of the Plant/Unit for
Facilities/Project cannot be a bidder.
8.1.4 It should be clearly indicated in the bidding document, that all the bidders may be
required to explain/justify the basis of their quoted price as and when asked for.
In case, any bidder fails to justify his quoted price or refuse to co-operate in this
regard, they will not be considered for participating in the re-tendering, if the
contract is not finalised from the present bidding.
8.1.5 The bidding documents for turnkey project contracts may be in line with Standard
Bidding Documents issued by the Project Directorate in April 2000.

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8.1.6 Agents in Project Contracts
The bidding document should envisage that the foreign bidders are required to
give particulars of Agents/representatives as per Circular No. SAIL/CD/MM/ 7329
dated 13/15.10.1988 (Annexure-2) and to confirm that commission/
remuneration/fee payable to Agents in India shall be paid in Indian rupee only.
The bidding document may also envisage a written declaration from the foreign
bidders that their Indian Agents are working on salary basis and they are not
paying any commission to their Indian Agents, if this be so.
8.2 Cost of Bidding Documents
The cost of bidding documents to be charged from the prospective bidders, should
be reasonable and limited to the expenditure to be incurred in its printing and
forwarding to the bidders and should not be so high as to discourage the
prospective bidders.
8.3 Clarification of Bidding Documents
8.3.1 The document Instructions to Bidders may provide that if a prospective bidder
requires any clarification on the bidding documents, he may notify the same in
writing/telefax/E-mail. The Plant/Unit should respond in writing to any request for
clarification pertaining to the bidding documents that it receives no later than
twenty-eight (28) days prior to the deadline for submission of bids prescribed by
the Plant/Unit. Written copies of the clarification to the queries (but not
identification of its source) should be sent to all prospective bidders that have
received the bidding documents.
8.3.2 Bidders Conference, wherever required particularly for mega projects, may be
held to facilitate the prospective bidders to understand the technical specification
and terms & conditions of the contract. However, the bidders should be asked to
submit their queries before the Conference. Clarifications and/or interpretation
given in writing pursuant to the above Conference, shall form a part of the bidding
documents.
8.4 Amendment of Bidding Documents
The document Instructions to Bidders may provide that at any time prior to the
deadline for submission of bids, the Plant/Unit may for any reason, whether at its
own initiative or in response to a clarification requested by a prospective bidder,
amend the bidding documents.
The amendment should be notified in writing or by telefax or by e-mail to all

prospective bidders who have received the bidding documents and will be binding
on them.
In order to afford prospective bidders reasonable time to take the amendment into
account in preparing their bid, the Plant/Unit may, at its discretion, extend the
deadline for the submission of bids.
8.5 Extension of Bid Submission Period

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Extension of the bid submission period may be granted in exceptional

circumstances only. In case of extension, all the bidders to whom bidding
documents have been sent should be informed about the revised bid submission
date before expiry of the original date of bid submission.
8.6 Bidding
After preparing complete set of bidding documents as mentioned in para 8.1, the
approval for issue of Invitation for Bids (IFB) should be obtained from the
Competent Authority as per the delegation of powers.
8.7 Bid Security (Earnest Money)
8.7.1 To avoid leakage of cost estimate, a fixed sum should be specified as bid security
in preference to a percentage of the cost estimate. Bid security should not be so
high as to discourage bidders from taking part in the bidding process. Bid security
alongwith the bids shall be submitted by the bidders as a lumpsum amount in the
form of Pay Order, Bankers Cheque, Demand Draft or Deposits at Call from a
Nationalised or Scheduled Bank or cash deposit in the Plant/Unit up to a sum of
Rupees one lakh. Where the total amount of bid security exceeds Rupees one
lakh, the whole amount may be deposited in the form of a Bank Guarantee from a
Nationalised or Scheduled Bank. Bid security be specified in terms of absolute
value as indicated below:
Cost Estimates Bid Security

Up to Rs.1 Lakh : Rs.2000/-
Above Rs.1 lakh up to Rs.5 lakh : Rs.6000/-
Above Rs.5 lakh up to Rs.10 lakh : Rs.15,000/-
Above Rs.50 lakh up to Rs.2 crore : Rs.200,000/-
Above Rs.2 crore : Rs.500,000/-
For cost estimate below Rs.1 lakh, the Plant/Unit may decide the amount for Bid
Security.
8.7.2 As per guidelines issued by Department of Public Enterprises (DPE), the Public
Sector Undertaking will be exempt from submitting earnest money.
8.7.3 The earnest money should normally be valid for sixty (60) days beyond the validity
of the bid. The earnest money should be submitted by the bidder in the currency
of the bid or equivalent US Dollars. It should be submitted in a separate cover
superscribed Earnest Money. The same may be returned to unsuccessful
bidders within 60 days from the date of signing of contract with the successful
bidder. Earnest money of successful bidder should be returned after the bidder
furnishes the performance security (Security Deposit) and the contract is signed.

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8.7.4 The earnest money is forfeited:
i) If bidder withdraws its bid during the period of bid validity specified by the
bidder in the bid, or
ii) In the case of successful bidder, if the bidder fails within the specified time
limit:
to sign the Contract Agreement
to furnish performance security
8.8 Single/Two Stage Tendering
8.8.1 In project contracts, normally two stage bidding procedure should be followed. The
bid should comprise the following documents in separate sealed cover:
Part - I : Bid Security
Part - II : This part should be marked as Technical Bid and should not
contain any price at all.
Part - III : This part should be marked as Commercial Bid and should not
contain any price at all.
Part - IV : This part should be marked as Price Bid and should contain
prices only without any terms and conditions.
Any bid not accompanied by Part-I (Earnest Money/Bid Security) will be rejected
as being non-responsive. In case Part-I of the bid is acceptable, two separate
covers - Part-II and Part-III will be opened simultaneously. Part-IV of the bid - Price
Bid will be opened only if Part-II and Part-III of the bid are acceptable.
8.8.2 However, where technical specifications are prepared precisely and in sufficient
detail such as machine tools, compressors, motors, etc., single stage tendering
may be followed i.e. all the four parts of the bids will be in one sealed cover and
would be opened together.
8.9 Funding for Package
8.9.1 The bidder may be asked to arrange finance in the form of Multilateral/Bilateral
Credit/Soft Loan, Suppliers Credit or Buyers Credit for the imported supplies and
services. The bidder should offer the best financial packages. The terms and
conditions of loan like repayment schedule, interest rates (preferably fixed interest
rate), currency, total amount available, etc. should be indicated in detail along with
the bid. A consent letter from the lending agency should also be enclosed along
with the bid. The validity of the offer of the lending agency for financing the project

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shall be kept open for acceptance for a period of six months initially which may
have to be renewed at the request of the Purchaser, if necessary.
8.9.2 The bidder is also required to offer his prices separately on cash payment basis, as
well as on financing basis, clearly indicating the financing charges to be paid by the
Plant/Unit. The bidder should also be advised to enclose along with the bid a Draft
Financial Agreement to be entered into by the Plant/Unit with Supplier or the
Financial Institution, as the case may be.
8.9.3 The bidder shall indicate the funding for package in the Commercial Bid (Part-III of
the bid).

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CHAPTER-9
BID EVALUATION
9.1 Bid Opening
9.1.1 The bids should be opened at the place and time specified in the bidding
documents. The bids should be opened in presence of bidders who may like to be
present. The name of the bidder and total bid price and other details of the bid
should be read. However, in cases where collusive bidding or cartel is suspected,
with the approval of Competent Authority as per the delegation of powers, the
policy of public opening may be dispensed with.
9.1.2 Late tenders (those which are dropped in the tender box/posted through post office
and received after the tender opening date and time) should not be accepted under
any circumstances. Late tenders received should not be opened and the Bid
Security may be returned at the earliest.
9.1.3 Unsolicited tenders should not be considered. However, tenders filed by agents on
behalf of the principals to whom enquiries have been sent may not be treated as
unsolicited and may be considered.
9.1.4 In case of single stage tendering, consultants cost estimate should be opened just
before the bid opening. However, in case of two stage tendering, consultants cost
estimate should be opened just before opening of original/revised price bid.
Consultants cost estimate should not be disclosed to the bidders.
9.2 Preliminary Evaluation
Technical specifications offered by the bidders are scrutinised with reference to the
tendered technical specifications. Those bids whose specifications do not meet
technical and commercial requirements should not normally be considered. A
team of engineers may also visit organisations, if necessary, where similar
contracts have already been executed by the bidder to ascertain the quality and
performance of equipment supplied, quality of other work executed and adherence
to the agreed time schedule of work.
9.3 Formation of Tender Committee
9.3.1 Plant Level Tender Committee
Tender Committee for the contract should be constituted. Tender Committee

should have members from PED, CONTRACTS, Operation/Maintenance and
Project Finance. CONSULTANT may be invited for Tender Committees meetings
but may not be member of the Tender Committee.
9.3.2 SAIL APEX Committee

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For proposals relating to contracts or commitments for works and equipment

(including supplies) of the value exceeding Rupees fifty (50) crore in each case,
SAIL APEX Committee was constituted, vide Office Order No. CA-19(24)/87 dated
15.12.1987. Subsequently, the Apex Committee had been reconstituted from time
to time in view of retirement/promotion of Chairman/members of the committee.
The details of Apex Committee presently in position are given in Office Order No.
CA-19(24)/97 dated 29.10.1997 (Annexure-3).
9.4 Tender Evaluation in case of Single Stage Tendering
On scrutinising the details of the bids, if required, a list of questionnaire on

technical and commercial matters prepared and clarifications from the bidders will
be sought. After receipt of clarifications from the bidders, technical and
commercial evaluation of the bids, including price evaluation will be made by PED/
CONSULTANT, CONTRACTS & Project Finance and put up to Tender Committee
alongwith the report from the team of engineers, if any, (refer para 9.2). While
evaluating the price bids, the financing package, if any, may also be considered.
Tender Committee will recommend the successful bidder based on the evaluation
reports. The recommendations will then approved by the Competent Authority as
per the delegation of powers for award of Contract.
9.5 Tender Evaluation in case of Two Stage Tendering
The technical specifications and commercial terms of the bids will be scrutinised
and clarifications sought from the bidders, if required. Equalisation of scope of
bidders should be done. Wherever considered necessary, bidders may be asked
to submit the revised price bids as per agreed technical specifications and
commercial conditions. Price bids should be opened in the presence of
representatives of the bidders and bids evaluation reports prepared by PED/
CONSULTANT, CONTRACTS and Project Finance. While preparing the
evaluation report, loading or weightages for variations in technical specifications
and commercial conditions as per evaluation criteria indicated in the bidding
documents will be determined. The financing package, if any, may also be
considered in the price evaluation. The evaluation reports should be submitted to
the Tender Committee alongwith the report of engineers, if any, (refer para 9.2).
Tender Committee will consider evaluation report and recommend the successful
bidder based on the evaluation report. The recommendations will then be
approved at plant level by the Competent Authority [for contract value up to
Rupees fifty (50) crore] as per delegation of powers for award of contract. For
contract with value above Rupees fifty (50) crore, the recommendations of the
Plant Level Tender Committee will be considered by SAIL APEX Committee for
award of contract. However, for award of contracts with value above Rupees two
hundred (200) crore, approval of SAIL Board will be required.
9.6 Price Negotiation
9.6.1 Negotiations of prices should be an exception rather than the rule. Orders should
be placed on Lowest (L1) technically and commercially acceptable bidder, if the

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prices are considered reasonable. In cases where negotiations are considered

necessary, the reasons for doing so, must be clearly stated for consideration by
the Competent Authority as per delegation of powers. If the approving authority
(Competent Authority) is a member of the Tender Committee, approval of the next
higher authority shall be taken. Negotiations should be carried out by a
Committee which should include a Finance representative.
9.6.2 Price negotiations should be held with L1 bidder only (Annexure-4). If L1 bidder
backs out or withdraws its bid before award of contract, Plant/Unit may invite
limited or short notice tender if so justified in the interest of work & take decision on
the basis of lowest bid (Annexure-4).
9.7 Approval for Award of Work
CONTRACTS will submit the recommendation of the Tender Committee for

consideration and approval of the Competent Authority as per delegation of
powers. If the Approving Authority does not agree with the recommendation of
Tender Committee, the reasons for the same will be recorded, and further action
will be taken by CONTRACTS as per directions given by the Approving Authority.

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CHAPTER-10
CONTRACT FEATURES
10.0 General
The main features of contract such as contract price, price adjustment, advance
payment, terms of payment, preliminary acceptance, commissioning, taking over,
performance guarantee test, liquidated damages, bonus, defect liability, final
acceptance and conciliation & arbitration are explained in this Chapter. The
contract may include the following features, wherever applicable, depending upon
the type of contract, viz., supply contract, works contract or turnkey contract.
10.1 Contract Price
The contract price for the entire scope of Facilities/Project work envisaged in the
contract including its break-up, should be specified in the contract. Base date
(date submission of bids/revised price bid, if any) of the contract price should be
clearly indicated in the contract. However, in case, the contractor is a consortium
of two or more parties, the break-up of the contract price is to be indicated
separately for each member of consortium.
The contract price should be based on the condition that the contractor will use
steel as are manufactured by Steel Authority of India Limited (SAIL) for
execution of all civil and building structural work including sheeting, technological
structures, pipelines, etc. Such items of steel as are manufactured by SAIL and
required for the work shall be procured from SAIL Stockyards. To ensure
availability of steel items required, the contractor has to give at least ten (10)
weeks advance intimation of such requirement. In no case without obtaining a
prior No Objection Certificate from the Plant/Unit, any item of steel other than
made by SAIL will be used by the contractor.
10.2 Taxes & Duties
10.2.1 Foreign Supplies & Services
The contract should provide that all taxes and duties payable outside India should
be borne and paid by the contractor. However, the contract price should not
include Customs Duty and Counter Veiling Duty, payable in India, on the imported
plant & equipment specified in the contract, for which prices indicated in the
contract may be in Foreign Currencies. Further, the contract price should also not
include Income Tax & Research & Development (R&D) Cess on imported
Engineering/Technical Services by overseas experts.
10.2.2 Indian Supplies & Services

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The contract price should comprise basic price, Excise Duty, Sales Tax (including
Sales Tax on Works Contract), Octroi, Turn Over Tax (TOT) and any other duties,
taxes and levies, as may be applicable.
The payment of duties, taxes, levies, etc. for the Indian supplies & services should
be reimbursed (on actual) against documentary evidence to be produced by the
contractor, subject to amounts indicated in the contract. In no case the
reimbursement towards duties, taxes & levies should exceed the amounts
indicated in the contract against those items. However, the contract may provide
that if rate of any of the duties, taxes & levies is increased or decreased or a new
duty/tax/levy is introduced or an existing duty/tax/levy is abolished or any change
in interpretation or application of any duty/tax/levy occurs in course of the
performance of the contract, an adjustment in the contract price will be made
accordingly. However, contract price should include Customs Duty & Counter
Veiling Duty on the imported plant & equipment for which prices are indicated in
Indian Rupees in the contract. Customs Duty & Counter Veiling Duty for
replacement against short supply or damaged or defective items, should be borne
by the contractor.
For Sales Tax on Works Contracts, guidelines indicated vide Corporate Law
Circular No. 7/21/85-L dated 12.6.89 may be followed. As per this circular, the
following incidence in a Works Contract will not be subject to Sales Tax:
Plant & equipment imported from abroad
Goods purchased from outside the State or when the property in goods
has passed outside the State
Goods which were subject to levy of Central Sales Tax being sale of goods
in the course of inter-state trade
Tax not exceeding 4% on Declared Goods under Section 15 of the

Central Sales Tax Act, 1956 and such tax not to be levied at more than
one stage.
There should be clear cut provision in the works/turnkey contract that the
contractor shall place the contract before Sales Tax Authorities for their
examination, identification and apportionment of the contract for applicability of
Works Contract Tax in terms of the provisions under respective Sales Tax Act and
Rules made thereunder and get the apportionment done. Plant/Unit should deduct
Tax at source accordingly from the running account bills of the contractor. Failure
on the part of the contractor, should make the contractor liable for deduction of
Tax at source to be made by the Plant/Unit on full value of the contract.
10.3 Price Adjustment

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10.3.1 The contract should provide that the prices for items, for which the prices
indicated in the contract are in foreign currencies, should be firm not subject to
any escalation.
10.3.2 For the items, for which the prices are indicated in Indian Rupees in the contract,
and the Time for Completion [excluding the Defect Liability Period] is up to
twenty four (24) months, the contract price should be firm not subject to any
escalation. However, where the Time for Completion exceeds twenty four (24)
months, the contract price for the following heads may be subject to price
adjustment due to variation in price indices:
Supply of Indigenous Mechanical Plant & Equipment including

Technological Structures.
Supply of Indigenous Electrical Plant & Equipment.
Erection of Mechanical and Electrical Plant & Equipment including

Technological Structures.
Supply of Building Steel Structures & Sheeting.
Erection of Building Steel Structures & Sheeting.
Civil Engineering works including all necessary supplies.
Erection of Refractories (prices for supply of refractories to be firm).
10.3.3 However, the contract should clearly mention the following:
If completion of the Facilities/Project is delayed beyond scheduled Time

for Completion irrespective of duration of contractual Time for
Completion, due to the reasons not attributable to the Plant/Unit,
notwithstanding the extension to the Time for Completion is granted, no
price adjustment will be allowed in the contract price for any variations,
whatsoever it may be, arising either during the Time for Completion or
extended Time for Completion.
When Time for Completion is up to twenty four (24) months and if

completion of Facilities gets delayed beyond scheduled Time for
Completion due to reasons attributable to the Plant/Unit and extension to
the Time for Completion is granted, the extent of price adjustment, if any,
may be allowed in the contract price, for the variations arising between the
scheduled Time for Completion and actual date of completion of the
respective item within the Extended Time for Completion of the contract.
When Time for Completion of the contract is more than twenty four (24)
months and if completion of Facilities gets delayed beyond scheduled
Time for Completion due to reasons attributable to the Plant/Unit and
extension to the Time for Completion is granted, price adjustment, if any,
may be allowed in the contract price, for the variations arising between the

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base date (date of submission of bid/revised price bid, if any) and actual
date of completion of the respective item of work within the Extended
Time for Completion of the contract.
10.3.4 Formulae for determining Price Adjustment
The formulae for determining price adjustment due to variation in price indices are
given below:
The Original Price as on Base Date (date of submission of bid/revised price bid,
if any) is referred to as Po and the Revised Price after price adjustment, if any,
is referred to as P in the formulae. Po and P are exclusive of taxes & duties. If,
price adjustment becomes applicable in terms of the Contract, P minus Po is
the net price adjustment to be made.
A. For Supply of Indigenous Mechanical Plant & Equipment including

Technological Structures
The price for supply of indigenous mechanical plant & equipment including
technological structures may be subject to adjustment as per the following
formula:
P = Po [ 0.20 + 0.80 RBIi / RBIo ]

Where :
P : Revised price after adjustment.
Po : Original price for supply of indigenous mechanical plant &
equipment including technological structures as on base date.
RBIi : RBI Index for heavy machinery & parts, Item No Ka of Table
No 30A of Index Number of wholesale price in India, prevailing
three months prior to actual month of dispatch or three months
prior to end scheduled completion month of delivery,
whichever is earlier.
RBIo : RBI Index for heavy machinery & parts, Item No Ka of Table
No 30A of Index Number of wholesale price in India, prevailing
on base date.
B. For Supply of Indigenous Electrical Plant & Equipment
The price for supply of indigenous electrical equipment may be subject to

adjustment as per the formula of Indian Electrical and Electrical
Manufacturers' Association (IEEMA).
The price adjustment as above may be calculated based on IEEMA index

prevailing three months prior to the actual date of dispatch or three months
prior to end scheduled completion month of delivery, whichever is earlier.
C. For Erection of Mechanical and Electrical Plant & Equipment
The prices for erection of mechanical and electrical plant & equipment may
be subject to adjustment as per the following formula:

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(LTR)
P = Po [0.50+0.50 --------]
(LTO)
Where :
Po : Original price for erection of mechanical and electrical plant &
equipment as on base date.
LTR : Minimum wage payable to the minimum rated unskilled worker
within the plant premises (as per the Gazette Notification for
minimum wages issued by the State Govt.) on actual date of
erection or scheduled date of erection, whichever is earlier.
or
The revised labour rate of minimum rated worker applicable as
per tripartite agreement covering the payment of the
contractors workers within the plant premises on actual date
of erection or schedule date of erection, which ever is earlier.
LTO : Minimum wage payable to the minimum rated unskilled worker
minimum wages issued by the State Govt.) on the base date.
or
The original labour rate of minimum rated worker as applicable
on the Base Date as per tripartite agreement covering the
payment of the contractors workers within the plant premises.
The price adjustment towards the labour component, may be payable for
the quantities on pro-rata basis as per the agreed bar chart or actual
quantity executed, whichever is less.
D. For Supply of Building Steel Structures and Sheeting
The price for supply of building steel structures and sheeting may be
subject to adjustment in accordance with the following formulae:
D.1 In case Steel is given by the Employer on cost recovery basis at
rates prevailing on Base Date:
(LTR)
P = Po [0.70+0.30 --------]
(LTO)
Where :
Po : Original price for supply of steel structures and
sheeting as on base date.
The details of LTR and LTO are given above.
D.2 In case Steel is procured by the contractor under the scope of

work:

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(RBIi) (LTR)
P = Po [0.30+0.40 --------- + 0.30 ---------]
(RBIo) (LTO)
Where :
Po : Original price for supply of steel structures and
sheeting as on base date.
RBIi : Wholesale price Index for raw steel as per RBI Bulletin
prevailing three months prior to actual month of
dispatch or three months prior to end scheduled
completion month of delivery, whichever is earlier.
RBIo : Wholesale price Index for raw steel as per RBI Bulletin
prevailing on base date.
The details of LTR and LTO are given above.
D.3.1 For Building Steel Structures Fabricated inside Employers Plant

Premises:
LTR : Minimum wage payable to the minimum rated unskilled

worker within the plant premises (as per the Gazette
Notification for minimum wages issued by the State Govt.)
on actual date of fabrication or scheduled date of
fabrication, whichever is earlier.
or
The revised labour rate of minimum rated worker
applicable as per tripartite agreement covering the
payment of the contractors workers within the plant
premises on actual date of fabrication or scheduled date
of fabrication, which ever is earlier.
LTO : Minimum wage payable to the minimum rated unskilled
on the base date.
or
Original labour rate of minimum rated worker as
applicable on the base date as per tripartite agreement
covering the payment of the contractors workers within
the plant premises.
D.3.2 For Building Steel Structures Fabricated outside Employers Plant

Premises:
LTR : Minimum wage payable to the minimum rated unskilled


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on actual date of fabrication or scheduled date of
fabrication, whichever is earlier.
or
The revised labour rate of minimum rated worker
applicable as per tripartite agreement covering the
payment of the contractors workers within the plant
premises on actual date of fabrication or scheduled date
of fabrication, which ever is earlier.
LTO : Minimum wage payable to the minimum rated unskilled
on the base date.
or
Original labour rate of minimum rated worker as
applicable on the base date as per tripartite agreement
covering the payment of the contractors workers within
the plant premises.
E. For Erection of Building Steel Structures and Sheeting
The price for erection and installation of building steel structures and
sheeting including final painting may be subject to adjustment in
accordance with the formula given hereunder:
(LTR)
P = Po [0.60+0.40 --------]
(LTO)
Where :
Po : Original price for erection of steel structures & sheeting as on
base date.
or
of erection or scheduled date of erection, which ever is earlier.
or

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Original labour rate of minimum rated worker as applicable on

the base date as per tripartite agreement covering the
F. For Civil Engineering Works including all necessary Supplies
The price for the Civil Engineering works including all necessary supplies
shall be subject to adjustment in accordance with the following formula:
(RBIi) (LTR)
P = Po [0.45+0.25 --------- + 0.30 --------]
(RBIo) (LTO)
Where :
Po : Original price for civil engineering works as on base date.
RBIi : Wholesale price Index for cement as per RBI Bulletin
prevailing three months prior to actual month of dispatch or
three months prior to end scheduled completion month of
delivery, whichever is earlier.
RBIo : Wholesale price index for cement as per RBI Bulletin
prevailing on base date.
or
or
the base date as per Tripartite agreement covering the
G. For Erection of Refractories
The price for erection of refractories may be subject to adjustment as per

the following formula:
(LTR)
P = Po [0.50+0.50 --------]
(LTO)
Where :

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Po : Original price for refractories as on base date.
or
or
the base date as per tripartite agreement covering the
The price adjustment towards the labour component may be payable for
the quantities on pro-rata basis as per the agreed bar chart or actual
quantity executed, whichever is less.
10.3.5 Ceiling on Price Variation
The contract should mention that the price adjustment (plus or minus) will be
subject to a ceiling amount of 15% of price (excluding duties, taxes, levies, etc.)
for respective heads. For the purpose of calculation of ceiling on price
adjustment, the taxes & duties included in the contract price as on base date and
price for raw steel items if supplied by the Plant/Unit on cost recovery basis should
be deducted from the contract price. The statutory variation in Taxes, Duties
being reimbursed at actuals should also not be included in fifteen percent (15%)
ceiling on price adjustment.
10.3.6 Billing Schedule
The contractor within ninety (90) days of the effective date of the contract should
submit detailed Billing Schedules (break-up of the Price Schedule) for the purpose
of giving the value of Po for the consideration of price adjustment, if applicable,
and release of progress payments, which should be linked with the milestones
and be scrutinised and approved by the Plant/Unit. The detailed Billing Schedules

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should be based on Time Schedule to the Contract Agreement and PERT

network, for respective progress payment terms.
10.4 Payment of Advance
10.4.1 General
The following guidelines for grant of advance to the Supplier/Contractor for

Supply/Works Contracts (including Service Contract and Maintenance Contracts)
as approved by SAIL Board during its 256th meeting held on 7.12.99 may be
followed:
A) Mobilisation Advance
1. The Notice Inviting Tenders (NIT) may mention that no initial

mobilisation advance will be provided to the Supplier/Contractor
and the payments will be linked with progress of work and
submission of the progress bills.
2. However, for the selected contracts where initial mobilisation

advance payment is considered to be relevant, interest bearing
initial mobilisation advance to the Supplier/Contractor may be paid.
The specific criteria for selecting such contracts, where interest
bearing initial mobilisation advance is to be paid, are indicated
below:
a) The value of the contract should not be less than Rs.1 crore;
and
b) The Supplier/Contractor needs to mobilise resources for the

following:
i) conducting site survey for preparation of drawings &

documents; and/or
ii) procurement/hiring of special construction equipment such

as heavy duty mobile cranes, excavator, concrete mixing
machinery & plant etc. to meet the specific requirement of
the tendered work; and/or
iii) procurement of raw-material for manufacturing & purchase

of equipment.
2.1 The interest bearing advance to the Supplier/Contractor for

selected contracts as above may be paid subject to the following
conditions:
a) The prior approval of the Chief Executive of the Plants/Units is

required for issue of the NIT with initial interest bearing
mobilisation advance.

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b) The clause in the NIT indicating that no initial mobilisation

advance will be provided to the Supplier/Contractor to be
deleted and a new Clause included in the NIT clearly indicating
that interest bearing initial mobilisation advance may be paid to
the Supplier/Contractor on his request.
c) The NIT may indicate that the Supplier/Contractor shall indicate

the amount of mobilisation advance as requested for.
However, the interest bearing mobilisation advance shall be
maximum up to 10% of contract price (excluding taxes & duties
and free supplies/supplies on cost recovery basis).
d) The advance along with payable interest shall be recovered

from the Supplier/Contractor through the progress bills till the
advance including payable interest is fully recovered within the
contractual completion.
e) The interest rate would be one percent per annum above the
prevailing rate of interest as applicable on the date of issue of
NIT for the Cash Credit Limits of SAIL with SBI. The interest
rate will be indicated in the NIT.
f) Advance to the Supplier/Contractor will be paid against

submission of Bank Guarantee of amount equal to the advance
and payable interest as per d & e above. Bank Guarantee
from Public Sector Undertakings/Small Scale Industries Units,
would also be required for payment of initial mobilisation
advance.
B) Interim Advance
a) No interim advance may be paid to the Supplier/Contractor.

However, in case, during the execution of the Contract, if the work
is suffering due to cash flow problems of the Supplier/Contractor
and payment of interim advance is in the interest of Company to
meet the exigencies for completion of the contract, a suitable and
reasonable amount of interest bearing interim advance may be paid
to the Supplier/Contractor, whether or not the Supplier/ Contractor
has been paid initial interest bearing mobilisation advance, after
seeking approval of the Competent Authority. The amount of
interim advance shall not exceed value of balance supplies/work or
10% of the contract price, whichever is less.
However, ad-hoc payments made to the Supplier/Contractor

towards progress bills submitted to the Plants/Units will not be
considered as interim interest bearing advance. Further, direct
payments made by the Plants/Units to the sub-vendor/sub-
contractor of the Supplier/Contractor against supplies/work done by
these agencies will also not be considered as interim interest
bearing advance.

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b) In case the amount of interim advance is up to Rs.10 lakh,

Chairman/SAIL is the Competent Authority to grant the interim
advance. In case the amount exceeds Rs.10 lakh, the interim
advance will be approved by SAIL Board.
c) The interest rate would be one percent per annum above the
prevailing rate of interest as applicable on Cash Credit Limits of
SAIL with SBI, at the time of consideration/approval of interim
advance. The interest-rate will be indicated in the proposal to be
considered & approved by the Competent Authority.
d) Interim advance to the Supplier/Contractor will be paid against

submission of Bank Guarantee of amount equal to the interim
advance and payable interest. Bank Guarantee from Public Sector
Undertakings/Small Scale Industries Units, would also be required
for payment of interim advance.
e) The mode of recovery of such advance alongwith interest shall also

form part of the proposal to be considered and approved by the
Competent Authority.
C) Maintenance/Service Contracts
The following cases will not be covered under the definition of initial
mobilisation advance and interim advance. Advance payment as per the
requirement on case to case basis, can be released with the approval of
the Competent Authority as per Delegation of Powers of the Plants/Units.
i) The cases which requires advance payment by its nature, viz.,

Insurance Premium, Property Tax etc.
ii) The contracts pertaining to Annual Service Contracts of proprietary

equipment with the manufacturer or his authorised agent.
10.5 Terms of Payment
10.5.1 Release of payments should ordinarily be linked to the attainment of milestones to

be clearly identified in the contract. Terms of payment as well as progress
payments for attaining various milestones should be clearly indicated in the
contract.
10.5.2 The terms of payment may include the following:
Eighty per cent (80%) of the price should be released towards progress
payments linked with the milestones as mentioned above.
Five percent (5%) of the price should be released upon issue of the
Preliminary Acceptance Certificate.
Five percent (5%) of the price should be released upon issue of the
Commissioning Certificate.

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Five percent (5%) of the price should be released after establishment of

performance guarantee parameters and issue of Performance Guarantee
Certificate.
Five percent (5%) of the price should be released upon issue of the Final
Acceptance Certificate.
10.5.3 The Plant/Unit should release the payment to the contractor within 30 days from
the date of receipt of the complete and correct invoices & relevant documents
failing which the concerned contract co-ordinator/project engineer should inform
the reasons for not making payment in time.
10.6 Recovery of Income Tax at Source
10.6.1 The contract may mention that recovery at source towards income tax calculated
at the rates prescribed from time to time under section 194-C of the Income Tax
Act 1961 and other relevant provisions of the Indian Income Tax Act will be made
from the bill of the contractor and the amount so recovered should be deposited
with the Income Tax Department.
10.6.2 Income Tax, if any, payable by the foreign personnel of the contractor/sub-
contractor deputed in India, should be paid by the respective personnel directly
and Plant/Unit will not be liable to pay the Income Tax payable by such foreign
personnel.
10.7 Joint and Several Responsibility
Where a contract is to be awarded to a consortium of two or more parties/

companies, the contract should specifically provide for joint and several
responsibility for various obligations in the contract.
10.8 Preliminary Acceptance
The contract may include the following provisions pertaining to preliminary

acceptance:
10.8.1 Trial Runs
On completion of erection of the Facilities/Project work by the contractor, trial runs

for individual equipment/units should be conducted by the contractor under its sole
responsibility and employing its own personnel, to prove that the Facilities/ Project
work have been supplied and erected as per contract and after erection,
Facilities/Project are fit for start up and commissioning. Trial runs should be so
designed to conduct the systematic check of the components and of the functional
operation. The Plant/Units supervisory personnel and skilled operating personnel
should, however, witness the trial runs.
10.8.2 Integrated Trial Runs

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On successful completion by the contractor of trial runs and liquidation of the

defects and/or deficiencies, indicated/listed by the Plant/Unit to the contractor
during trial runs (except minor defects and/or deficiencies which in the opinion of
the Plant/Unit will not affect the operation, safety & commissioning of the
Facilities/Project), the contractor should conduct integrated trial runs. On receipt
of the notice from the contractor for conducting integrated trial runs, the Plant/Unit,
if required, should deploy the necessary operating and maintenance personnel,
raw materials, utilities & services.
After the operating and maintenance personnel have been deployed by the
Plant/Unit and raw materials, utilities & services have been provided by the
Plant/Unit, the contractor should conduct pre-commissioning including integrated
trial runs of the Facilities/Project, in preparation for commissioning. In case,
Facilities/Projects involving operation at high temperature), trial runs on individual
equipment/units and integrated trial runs should be conducted in cold condition.
As soon as all works in respect of integrated pre-commissioning are completed
and the Facilities/Project are ready for commissioning, the contractor should notify
the Plant/Unit in writing. The Plant/Unit should, within fourteen (14) days after
receipt of the contractors notice, either issue a Preliminary Acceptance Certificate
(PAC) stating that the Facilities/Projects are fit for start-up and commissioning. If
the Plant/Unit notifies the contractor of any defects and/or deficiencies, the
contractor should then correct such defects and/or deficiencies, and shall repeat
the procedure.
When the Plant/Unit is satisfied that the defects and/or deficiencies, indicated/
listed by the Plant/Unit to the contractor have been liquidated and the
Facilities/Projects are fit for start-up and commissioning, the Plant/Unit should,
within seven (7) days after receipt of the contractors repeated notice, issue a PAC
stating that the Facilities/Project are fit for start-up and commissioning. If the
Plant/Unit is not so satisfied, then the Plant/Unit should notify the contractor in
writing of any defects and/or deficiencies within seven (7) days after receipt of the
contractors repeated notice, and the above procedure shall be repeated.
The contractor should rectify all outstanding defects and/or deficiencies so that the
Facilities/Project are fully in accordance with the requirements of the contract,
failing which the Plant/Unit should undertake such rectification and deduct the
costs thereof from any money owing to the contractor.
10.9 Commissioning
The contract may incorporate the following provisions pertaining to issue of

commissioning certificate :
After the issue of PAC, the contractor should start-up and commission the
Facilities/Project, the Plant/Unit should supply the operating and maintenance
personnel and all raw materials, utilities & services required for commissioning.
The contractor should conduct commissioning test and establish two third (2/3) of
the guaranteed production capacity (100% guaranteed production in case of
equipment alone) within the contractual completion period.

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The commissioning certificate should be issued by the Plant/Unit subject to

occurrence of the following:
Commissioning test to establish a level of output not less than sixty six
percent (66%) of the guaranteed production capacity within the contractual
completion period, has been successfully completed and the quality of
materials produced and other parameters are as per Technical
Specifications.
Commissioning test to establish a efficiency level of not less than 100% in
case equipment alone.
The contractor has submitted all final drawings & documents including as-
built drawings for the respective Facilities/Project in accordance with the
provisions of this contract.
The contractor to the satisfaction of the Plant/Unit, has met all the
objections/observations, if any, contained in the PAC.
In the event of delay in conducting the commissioning test for reasons attributable
to the Plant/Unit beyond contractual completion period, the contractor may be paid
against Bank Guarantee of equal value. The Bank Guarantee submitted by the
contractor should be returned by the Plant/Unit to the contractor as soon as
commissioning certificate has been issued, at the latest, however, on the expiry of
12 months from the date of release of payment against commissioning certificate.
10.10 Taking Over
The contract may envisage that after issue of commissioning certificate, the
Plant/Unit should provide consumable and should be responsible for the care &
custody of the Facilities/Project together with the risk of loss or damage thereto,
and should thereafter take over the Facilities/Project.
10.11 Performance Guarantee Test
The contract may envisage that the contractor should conduct performance
guarantee test to establish performance guarantee parameters specified in the
contract. If, for reasons not attributable to the Plant/Unit, the performance
guarantee parameters specified in the contract are not met either in whole or in
part, the contractor should at its cost and expense make such changes,
modifications and/or additions to the Facilities/Project or any part thereof as may
be necessary to meet performance guarantee parameters. The contractor should
notify the Plant/Unit upon completion of the necessary changes, modifications
and/or additions, and should request the Plant/Unit to allow him to repeat the
performance guarantee test so as to establish the performance guarantee
parameters.
If, for reasons not attributable to the Plant/Unit, the performance guarantee
parameters specified in the contract are not attained either in whole or in part,
after first campaign of performance guarantee test, the contractor should at its
own cost make good any deficiencies and the contractor may be allowed by the
Plant/Unit to repeat the performance guarantee tests twice after first campaign of
guarantee test and the contractor should establish the performance guarantee

Projects
parameters within a period of six months from the date of issue of commissioning
certificate. However, under all circumstances, performance guarantee test should
be established within six (6) months from the date of commissioning certificate.
In case, the performance guarantee test has not been carried out for reasons
attributable to the Plant/Unit within a period of six month from the date of issue of
commissioning certificate, the contractor shall receive payment against Bank
Guarantee of equal value. In case Bank Guarantee is submitted by the contractor
then the same shall be returned to the contractor as soon as the performance
guarantee test is successfully completed and the guaranteed output and other
parameters are met, at the latest, however, on expiry of twelve (12) months from
the date of release of payment against commissioning certificate.
10.12 Liquidated Damages
The contract may envisage the following provisions for liquidated damages:
10.12.1 Liquidated Damages for non fulfilment of Performance Guarantee

Parameters
In case the contractor expresses its inability to achieve the performance

guarantee parameters but attains above the minimum acceptance level of
performance guarantee parameters either in whole or in part, in spite of
repeated performance guarantee tests conducted by the contractor within a
period of six (6) months from the date of commissioning, the Plant/Unit should
recover the amount of Liquidated Damages, not by way of penalty but by making
deductions from the contractors account or by encashment of contractors Bank
Guarantees up to a maximum of seven and half percent (7.5%) of the contract
price, in respect of the failure to meet the minimum level of performance
guarantees.
In case, even after all possible repairs and replacements, the contractor fails to
attain the minimum level of performance guarantee parameters, the Plant/Unit
may reject the Facility/Project and recover the entire cost paid to the contractor
or alternatively the Plant/Unit may proceed for commercial settlement with the
contractor for acceptance of the Facilities/Project at the negotiated price.
In case, the contractor is a consortium, the Plant/Unit should recover the amount
of Liquidated Damages, not by way of penalty but by making deductions from
the account of each member of consortium, or by encashment of their Bank
Guarantees up to maximum of seven and half percent (7.5%) of the contract
price of the respective Scope of Facilities/Project. However, each member of
Consortium, should be jointly and severely bound to the Plant/Unit for paying
Liquidated Damages to the Plant/Unit.
10.12.2 Liquidated Damages due to Delay in Completion of the Facilities

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If the contractor fails to attain Completion of the Facilities/Project within the

Time for Completion defined in the contract, or any extension thereof, due to
reasons not attributable to the Plant/Unit, the Plant/Unit should recover the
amount of Liquidated Damages, not by way of penalty but by making deductions
from the contractors account or by encashment of contractors Bank
Guarantees at the rate of 0.5% of the contract price per complete week of delay
up to a maximum of 5% of the contract price.
In case, the contractor is a consortium, the Plant/Unit should recover the amount
of Liquidated Damages, not by way of penalty but by making deductions from
the account of each member of consortium, or by encashment of their Bank
Guarantees, up to a maximum of 5% of the contract price of the respective
scope of Facilities/Project. However, each member of consortium, should be
jointly and severally bound to the Plant/Unit for paying Liquidated Damages.
However, the payment of Liquidated Damages shall not in any way relieve the
contractor from any of its obligations to complete the Facilities/Project or from
any other obligations and liabilities of the contractor under the contract.
10.13 Bonus for Completion of the Facilities before Time Schedule
If the contractor attains completion of the Facilities/Project before the Time for
Completion or any extension thereof, the Plant/Unit may pay to the contractor a
bonus at the rate of 0.5% of the contract price per complete fortnight ahead of
time schedule up to a maximum of 5% of the contract price subject to the
condition that the Plant/Unit is able to operate the Facilities gainfully but not less
than its rated capacity, on regular basis.
10.14 Defect Liability
The contract may envisage that the contractor will warrant that the
Facilities/Project or any part thereof shall be free from defects in the design,
engineering, materials and workmanship of the plant & equipment, structures &
refractories supplied and of the work executed. The defect liability period (DLP)
should be twelve (12) months from the date of issue of commissioning certificate.
If during the defect liability period any defect is found in the design, engineering,
materials and workmanship of the plant & equipment, structures and refractories
supplied or of the work executed by the contractor, the contractor should promptly,
in consultation and agreement with the Plant/Unit and at its own cost, repair,
replace or otherwise make good such defect as well as any damage to the
Facilities/Project caused by such defect.
If the contractor fails to commence the work necessary to remedy such defect or
any damage to the Facilities/Project caused by such defect within a reasonable
time, the Plant/Unit may, following notice to the contractor, proceed to do such
work, and the reasonable costs incurred by the Plant/Unit in connection therewith
should be paid to the Plant/Unit by the contractor or may be deducted by the
Plant/Unit from any money due to the contractor or claimed under the
performance Bank Guarantee.
10.15 Final Acceptance

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The Contract may envisage that the final acceptance will occur in respect of the
Facilities/Project when:
a) the performance guarantee tests have been successfully completed and

the guaranteed output and other parameters are met by the Contractor, or
the amount of liquidated damages, if recoverable, has been recovered by

the Plant/Unit from the contractor.
b) the contractor has fulfilled all the obligations under the contract including
12 months of defect liability period from the date of the commissioning
certificate.
10.16 Conciliation & Arbitration
Any disputes or differences, whatsoever, arising between the parties out of or

relating to the construction, the meaning, scope, operation or effect of this contract
should be settled between the Plant/Unit and the contractor amicably. If, however,
the Plant/Unit and the contractor are not able to resolve their disputes/differences
amicably as aforesaid or through conciliation also, the said disputes/differences
should be settled by arbitration in accordance with the Rules of Arbitration of the
Indian Council of Arbitration and the award made in pursuance thereof shall be
binding on the parties.
The arbitration shall be governed and regulated in all respect according to the
laws of India and the arbitration proceedings should be regulated and governed
by Indian Arbitration and Conciliation Act 1996 or such modifications or re-
enactment thereof. The venue of arbitration in case of Indian contractors, should
be the place where site is situated and in case of overseas contractors, should be
New Delhi, India.
10.17 Cancellation of Contract and Risk-Purchase
10.17.1 When it is indented to cancel the contract which has been kept alive after expiry
of contractual completion period by the conduct of the contractors, it is
necessary to issue a notice to the concerned contractor before actual
cancellation giving a period of fifteen days or such period as Law Department
may advise without prejudice to rights to recover Liquidated Damages as per
terms of the contract. Where the contract is not kept alive beyond contractual
completion period by implication or conduct of the contractors, cancellation
should be issued by the Contract Department immediately after expiry of the
completion period stating that balance work on the due date are cancelled and
risk purchase will be made in terms of the relevant clause of the contract.
However, before resorting to the risk purchase, approval of the next higher
authority should be taken. Wherever necessary, the Law Department should be
consulted to protect the interests of the Plant/Unit.

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10.17.2 After expiry of the notice period, the contract should be cancelled and while
doing so, the following should be informed specifically to the concerned
contractor by including these in the letter of termination to be issued to the
contractor:
a. that the option to be exercised under risk purchase action by the

Plant/Unit under the relevant Article or Clause of the General Conditions
of contract (including forfeiture of bid security and performance security
bank guarantee, if any).
b. that fresh enquiries are being issued to the various contractors for
completing the supply/work at the contractors risk and cost.
c. that against breach of contract by the concerned contractor, the right of

the Plant/Unit to enforce all claims and recover the entire expenses
incurred on account of getting the balance supply/work completed
through third party at the risk and cost of the concerned contractor, shall
remain unaffected.
10.17.3 All efforts should be made to explore the possibilities of finalisation of risk
Purchase Order/contract with the third party based on the fresh enquiries quickly
so that order/contract is decided immediately on competitive basis.
10.17.4 While calling for fresh tenders, no enquiry should be sent to the defaulting
contractor.
10.17.5 The Risk Purchase Order/contract should as far as possible be on the same
terms and conditions as the original Purchase Order/contract (apart from Time
for Completion), i.e., the supply/work should be of the same specifications, etc.
10.17.6 It should be ensured that Risk Purchase Order/contract is concluded within a

reasonable time.
10.17.7 The defaulting contractor should be informed of the conclusion of Risk Purchase
Order/contract and the amount to be recovered from him towards Risk Purchase
Order/contract, specifying a date for the remittance immediately after conclusion
of alternative Purchase Order/contract. In case of difficulty in recovery, the case
should be handed over to Law Department for suitable action.
10.17.8 The primary responsibility for execution of contract as per the terms and
conditions of the contract and recover damages, etc., from the contractor is that
of the Contracts/Project Department. They should act in close contact with the
Finance Department and Law Department.

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CHAPTER-11
AWARD OF CONTRACT
11.1 General
After the award of work to the successful bidder has been approved by the
competent Authority, discussions will be held with successful bidder to finalise
dates by which the successful bidder shall submit the following documents before
issue of letter of intent (LOI):
1. Engineering information schedule,
2. Drawing schedule,
3. Manufacturing programme,
4. Quality plans and inspection procedure,
5. Pre-construction network,
6. Preliminary Level-2 Network
7. Contractors resource mobilisation plan, etc.
11.2 Issue of Letter of Intent
After having finalised dates by which successful bidder shall submit various
schedules/programmes as mentioned above, draft letter of intent is prepared by
CONTRACTS in consultation with PROJECTS and Law Department.
The LOI may contain important technical and commercial terms & conditions
mutually agreed with the successful bidder including the schedules &
programmes. The language of the LOI is important. LOI is placed subject to
signing of contract or obtaining Government approval would not constitute a
legally binding contract; but LOI simply stating that Plant/Unit accepts the offer
with following terms & conditions may be interpreted as a binding contract.
The effective date of contract should be the date of signing of the contract and not
the date of issue of LOI. In case, the date of issue of LOI is the effective date of
contract and the contractor is asked to commence the preparatory work, LOI may
be interpreted as a binding contract. The successful bidder may also be asked to
give his unconditional acceptance of the LOI, so that it binds him also to the
intention expressed in the LOI.
11.3 Finalisation of Pre-Contract Documents

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After the issue of Letter of Intent but before signing of contract, discussions will be
held with the successful bidder to finalise, engineering information schedule,
drawing schedule, manufacturing programme, quality plans & inspection
procedure, pre-construction network, Level-2 network, contractors resource
mobilisation plan, etc.
Preparation of Preliminary Level-2 Network for Completing Scope of

Work
Milestones for the execution of scope of work under the contract will be
identified and preliminary L-2 network for the activities right from the start
till completion of commissioning activities will be prepared. This network
will form a part of the contract.
Engineering Information Schedule
A detailed engineering information schedule will be agreed to with the

successful bidder for the flow of engineering information.
Drawing Schedule
Schedule for the submission and approval of drawings will be prepared

and mutually agreed to with the successful bidder.
Manufacturing Schedule
A manufacturing network, based on the preliminary L-2 network, will be

prepared. This network will not form a part of the contract but will be
reviewed periodically for the purpose of detailed monitoring at the
manufactures works.
Bought-out Items Schedule
List of various standard preferred indigenous supplies of bought-out items

given in the bidding documents will form a part of the contract. This is to
ensure the quality of bought-out items and standardisation which helps in
better maintenance and low level of spares inventory. In case, the
successful bidder desires to procure bought-out items from the supplier not
included in the list of preferred suppliers, the contractor will be required to
get the prior approval of the Plant/Unit.
A final list of bought-out items along with their suppliers will be made which
will form a part of the contract.
Despatch and Payment Schedule
Despatch schedule and payment schedule will be discussed and agreed to

between the Plant/Unit and the successful bidder. Payment schedule will

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be prepared in such a manner that payments will be released only against

the attainment of identified milestones.
Pre-Construction Activity Schedule
Pre-construction activity schedule indicating building of site office, receipt

of construction and erection equipment etc. will be mutually agreed to
between the Plant/Unit and the successful bidder.
Civil & Structural Schedule
A detailed civil & structural network based on the agreed network will be
prepared. This network will not form a part of the contract but will be
reviewed periodically for monitoring of the project work/package under the
scope of work of the contract.
Erection & Commissioning Schedule
A detailed erection & commissioning network based on the agreed network

will be prepared. This network will not form a part of the contract but will
be reviewed periodically for detailed monitoring.
Quality Plans & Inspection Procedure
Critical items/equipment will be identified where stage inspection should be

carried out by the representative of Plant/Unit at the manufacturers works.
The quality parameters and stages of inspection will be mutually agreed to
between the Plant/Unit and the successful bidder.
Sub-Contracting
If a part of work is to be sub-contracted to a sub-contractor who is not in

the approved list, the successful bidder will be required to get prior
approval of the Plant/Unit. After discussions, a final list of major works
along with the name of sub-contractors will be prepared.
Contractors Resource Mobilisation Plan
The successful bidder shall submit:
1. List of various construction equipment such as cranes, dumpers

etc. planned to be mobilised at site giving specifications and
quantity of each item.
2. List of machinery, tools & tackles such as welding transformers,

gas cutting sets, drilling machines, survey instruments, etc. giving
specification and quality for each item.
3. Number of engineers with their educational background and

experience to be engaged for design, co-ordination and follow up
work at contractors works.

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4. No of engineers and supervisors with their educational background

and experience to be deployed at site with schedule of their
posting.
5. No of skilled workers such as fitters, welders etc. to be deployed at

site with schedule of their posting.
6. No of unskilled persons to be deployed at site with schedule of their

posting.
7. Bio-data of the Site-In-Charge.
Resource mobilisation plan submitted by the successful bidder will be discussed

and finalised by PROJECT, CONTRACTS and PED/CONSULTANT.
11.4 Signing of Contract
On finalising the schedules indicated above, contract will be prepared by

CONTRACTS alongwith PROJECT, PED/CONSULTANT & Project Finance and
signed. The contract should generally be signed within 60 days from the issue
date of LOI. No payment should be released before signing of the contract.

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CHAPTER-12
INSPECTION & QUALITY ASSURANCE
12.1 General:
The main functions relating to Inspection & Quality Assurance are:
1. Engineering Quality Assurance
2. Contracts Quality Assurance
3. Inspection at contractors work
4. Site Quality Assurance
5. Monitor progress at suppliers end.
12.2 Engineering Quality Assurance
Engineering Quality Assurance is basically a function of PED/ CONSULTANT.

Engineering Quality Assurance function consists of:
1. Development of engineering quality assurance check-lists.
2. Design review of engineering drawings.
3. Preparation of check-list for sub-contractors drawings. Review of

drawings before they are released for manufacture/construction/
fabrication.
12.3 Contracts Quality Assurance
This is also basically a function of PED/CONSULTANT executed in co-ordination

with representatives from Inspection & Quality Assurance Department.
Contracts Quality Assurance consists of :
1. Review of technical specifications with respect to quality parameters.
2. Identification of quality assurance systems requirement for the

manufacture and field installation of the equipment.
3. Evaluation of quality assurance programme including the quality

organisation of the contractors.
4. Review of contractors/manufacturers quality assurance programme.

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5. Approval of the Contractors quality programme including finalisation of

detailed quality plan for the contract.
6. Assist in the development of a quality assurance programme of the

contractor where the contractor does not have a detailed quality assurance
programme of his own.
7. Analyse feed-back information from operating plants and update

inspection and other check-list procedures.
12.4 Inspection at Contractors Works
This is basically a function of Inspection & Quality Assurance Department. The

objective is to ensure that the contractors conform completely with the engineering
specifications and other quality requirements as laid down. Inspection & Quality
Assurance Department will depute its inspectors to the manufacturers works on
getting requisition from Contractor Co-ordinator. If the work load demands,
inspectors can be stationed at the manufacturers premises or at important
selected centres to look after inspection work in a particular area/zone/region.
This would avoid delays in arranging inspectors visits from the headquarters and
also his presence at manufacturers works will help in stage inspection for
ensuring adherence of quality needs.
Inspection should be carried out as per the agreed programme for inspection and
testing of plant & equipment including structurals and refractories at contractors
works.
Inspection & Quality Assurance Department should further provide the following
additional services, if called upon :
1. Regularly check the progress of work with respect to schedule and provide
feedback information for expediting.
2. Supervise packing, loading and shipping operations.
12.5 Site Quality Assurance
Inspection & Quality Assurance Department should supplement the efforts

towards implementation of mutually agreed quality plans with the contractor for
site activities. The primary responsibility for quality control of the contractors work
on day to day basis should be that of civil, structural and erection supervisors.
Site quality assurance function consists of :
1. Soil and concrete testing in the laboratory.
2. Performing quality surveillance and quality audits of the contractors site

quality plan.
3. To carry out inspection of stores at receipt stores or at plant site

wherever required/stipulated.

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4. To co-ordinate all activities relating to statutory inspection and approval for

site activities.
12.5.1 Progress
Inspection & Quality Assurance Department will monitor the progress of

manufacture on the shop floor of the contractors including all procurement
activities of not only materials but also bought out components and submit regular
progress reports in relation to schedules agreed in prescribed formats.

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CHAPTER-13
CONTRACT PROGRESS MONITORING
13.1 Progress of Contract Execution
13.1.1 Submission of Performance Security
The first & foremost important event in the Contract is the submission of
performance security Bank Guarantee by the Contractor within 30 days from the
date of signing of the Contract. The value of performance security may be 5% of
the contract price. The Plant/Unit should monitor the timely submission of the
performance security Bank Guarantee.
13.1.2 Engineering Matters
PED will co-ordinate flow of technical information, preparation of drawings and

issue of all related construction drawings. PED will also co-ordinate the approval
of manufacturing/erection/construction drawings and provide technical
information/clarifications to the contractor. Monthly engineering progress report
should be submitted by the contractor.
13.1.3 Bought-out items Procurement
On placement of an order for bought-out items, the contractor should immediately

submit confirmed un-priced copy of order on supplier. Contract Co-ordinator
should ensure that the contractor finalises orders for all identified bought-out items
in time with delivery dates so that major components system/assembly are
despatched to site as per agreed schedule. The contractor should also ensure
that bought-out items from the suppliers are despatched to contractors/sub-
contractors work in time as per delivery schedule agreed in purchase orders. The
contractor should also submit monthly report on procurement status of identified
bought-out items.
13.1.4 Manufacturing Activities at Contractor/Sub-contractors Works
The Project monitoring group should be responsible for overall monitoring the
progress of manufacture at contractors and sub-contractors works as per
manufacturing activities network.
Inspection engineers of Inspection & Quality Assurance under Project who are
basically responsible for ensuring that the contractor conforms completely to
engineering specifications and adhere to other quality plans, should also
physically check all the manufacturing related activities of the contractor. He
should identify delays, if any, at manufacturers works and inform Contract Co-
ordinator. Monthly manufacturing status should be reported by contractor.
13.1.5 Inspection Progress

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Monthly inspection progress at contractors/sub-contractors works should be

reported by contractor.
13.1.6 Expediting Despatches
Contract Co-ordinator will monitor despatch schedules. The contractor should

submit monthly report on despatches made during the month. He should also
indicate expected despatches during next month.
13.1.7 Site Activities
Site activities can be sub-grouped as:
A. Pre-construction activities
Building of stores and office by the Contractors for site works.
Timely receipt of contractors construction/erection equipment and

tools and tackles.
Issue of construction machinery on hire, if available with Plant/Unit.
Electricity and water provision to contractor.
Deployment of contractors manpower.
Handing over of site.
B. Receipt of material/equipment at site
Identification of non-availability of material already despatched.
Identification of non-availability of construction material such as

cement, steel etc.
Follow up action on report of delay in receipt.
Replacement of defective parts, if any.
C. Construction/erection activities.
Civil and structural construction.
Equipment erection.
Trial run and commissioning.
Project Monitoring Group will monitor the progress of all the pre-construction
activities as per pre-construction schedule. The Group will co-ordinate all the
activities in regard to receipt of material/equipment at site as detailed above and

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monitor the progress of work at site as per civil and structural network and
erection & commissioning network. Contractor should submit monthly status
report on site activities.
13.1.9 Signing of ACTS
Completion of each defined activity should be recorded in the form of ACTS and
signed by all the agencies, viz., Project Department, PED/Consultants and
contractor after completion of the same. The numbers of ACTS should be
clearly defined in the contract.
13.1.8 The monthly progress should be reported by the contractor as per format at
Annexure-6 to 10.
13.2 Contract Progress Review Meeting for Delivery of Equipment at Site
Periodic contract progress review meeting at an interval of one month to three

months depending upon requirements should be conducted to monitor the
progress and resolve various issues pertaining to the contract. In such meetings
depending on the nature of problems involved, Contract Co-ordinator will request
the representatives of PROJECTS, Project Finance and PED/CONSULTANTS to
attend such meetings.
13.3 Contract Progress Review Meeting for Reviewing Progress for Site Activities
For monitoring the progress of site activities for resolving various issues pertaining
to construction/erection and co-ordinating with various agencies involved,
PROJECTS should conduct weekly contract meeting at site with contractor, sub-
contractor, CONTRACTS, Project Finance and PED/CONSULTANT.
13.4 Monthly Contract Progress Reporting
13.4.1 For Delivery of Equipment
Based on the various reports received from contractor, Contract Co-ordinator

should prepare a brief report for the month for activities which are progressing as
per schedule and detailed report for activities which are likely to be delayed or
already delayed giving status, reasons of delay and specific recommendations
regarding action to be taken.
13.4.2 For Site Activities
PROJECTS should prepare a brief report for the month for activities which are
progressing as per schedule while for activities which are likely to be delayed or
already delayed, PROJECTS should prepare detailed report indicating their
status, reasons for delay and suggestions for remedial action.

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13.5 Review of Monthly Contract Progress Reports
CONTRACTS/PROJECT should review the reports, revised networks and suggest

remedial actions to be taken such as suggesting alternative suppliers for
procurement of part of delayed bought-out items, off-loading manufacturing to
more sub-contractors, augmentation at manufacturers work, advising contractor
to engage more sub-contractors to work at different available fronts
simultaneously, mobilisation of more labour at site etc. Remedial actions in
consultation with head of projects will be taken so as to complete the project as
per schedule.

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CHAPTER-14
CONTRACT COST MONITORING
14.1 Contract Package Cost
14.1.1 The contract package cost at the time of award is based on the contract price
indicated in the contract. However, such award prices are normally base prices
and are subject to variations during the execution of the contract on account of the
following terms of the contract:
Price Adjustment
Where contract [with Time for Completion exceeding twenty four (24) months]
allows for price adjustments on account of variation in price indices in
accordance with the provisions of the contract.
Currency Exchange Rate Variation
Where the payment in foreign currencies is involved under the contract

and the contract price may vary due to variation in exchange rate
prevailing on base date of the contract price and the date of payment
affected to the overseas contractors/sub-contractors.
14.2 Contract Package Cost Estimate
Contract package cost estimates are developed for all the contract packages on
the following basis:
1. Contract base price.
2. Add escalation provision due to variation in price indices from base date
upto the date of contractual completion, if any.
3. Add provision for variation in price due to change in foreign exchange

parity rates, if any.
During the execution of the contract, monitoring of claims for adjustment, due to
variations in price indices and exchange rates will ensure the correct forecast for
final contract price. This should form the basis of financial monitoring of the
progress during execution of the work.
14.3 Contract Budgeting System
The payments against contract involve large requirement of funds. The efficient
management of such funds should be done through budgeting system. It ensures
proper forecasting and planning of funds required for each contract on monthly/
quarterly/annual basis.

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Budgets will normally be prepared for the financial year. The budget for a contract
package will be based on a detailed payment schedule normally tied with the
contractor at the time of award.
14.4 Monitoring of Contract Package Cost
The contract package cost should be monitored to ensure that the actual cost of
the contract price is within the contract package cost estimate.

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CHAPTER-15
CLOSING OF CONTRACT
15.1 Settlement of Contractors Claims
15.1.1 The contractor should submit claims for extra work within 30 days of execution of
such extra work. Such claims should be scrutinised by Plant Level Committee
indicating whether the claim is payable or not payable. In case the claim is not
payable, the reasons should also be informed in writing to the contractor within 30
days from the date of receipt of extra claim.
15.1.2 In case, the claims of the contractors are found by the Plant Level Committee to
be payable as per contract, the contractor should be paid for extra claims within
30 days after settlement of claims.
15.1.3 For disputed claims (such claims for which assertion has been made by a
Contractor but repudiated by the plant), as per circular issued on 22.5.98
(Annexure-11), the Chief Executive of Plant/unit can accept the claim for a value
not exceeding Rs. 20 lakh. The approval of the higher authority (Chairman/Board)
is required to be obtained for settlement of claims exceeding Rs. 20 lakh before
making any commitment/payment. However, the Plants/Units should make
specific recommended action, when approval of higher authority is required.
Further, as per the circular dated 22.5.98, Chief Executives of the Plants/Units
should decide and settle all the contractual claims/issues with the contracting
agency/party at the plant level. In case, it is felt by the Chief Executive that
disputed claims are not payable, the Chief Executive should accordingly inform
the concerned contracting agency/party and such claims/matters need not be
referred to the higher authority.
For disputed claims exceeding Rs.20 lakh, where Chief Executive recommends
that payment may be made to the contracting agency/part, in such cases only, the
recommendations of the Chief Executive should be referred to the higher authority
for consideration and approval. The details of such disputed claims should be
accompanied by comprehensive report stating the contractual position with
respect to the contract clauses along with full reasons/justification for
recommending such payments.
Wherever the approval of the higher authority is sought, the clause/s of the
delegations of power under which the Chief Executive is not empowered to
decide the issues is required to be mentioned.

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15.1.4 All efforts should be made by the Plant/Unit to settle such claims through
discussions between the Plant/Unit and the Contractor amicably. If, however, the
Plant/Unit and the Contractor are not able to resolve and settle the claims
amicably as aforesaid or through even Conciliation also, the said claims shall be
settled by Arbitration in accordance with the Rules of Arbitration of the Indian
Council of Arbitration as per Indian Arbitration and Conciliation Act 1996 or such
modifications or re-enactment thereof.
15.2 Closing of Contract
After issue of Final Acceptance Certificate (FAC) and settlement of claims

including recovery of counter claims of Plants/Units, the contract should be
closed. The contract should be closed within 3 months of issue of FAC.

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CHAPTER-16
CONTRACTORS PERFORMANCE
16.1 Performance
16.1.1 Performance of the contracts should be recorded by CONTRACTS from the stage
of signing of contract till closing of the Contract. The performance of contractor
should be appraised under following heads:
Timely submission of engineering drawings
Quality of engineering drawing
Quality of equipment and workmanship
Adherence to safety practices
Timely payment of labour wages including Provident Fund
Timely completion of Facilities/Project
Post commissioning performance of Facilities/Project
Tendency to raise claimed without justification
16.1.2 On completion of the Facilities/Project work by the contractor, performance of the

contractor is recorded at various stages of execution.
16.1.3 In case of unsatisfactory performance of the contractor, the report of the

contractor should be circulated by the concerned Plant/Unit to heads of the
projects of all other Plants/Units and also to the Project Directorate in SAIL.
16.1.4 Vigilance Department should also intimate to Project Department, the results of
any investigation if carried out in relation to the contractor which may have a
bearing on the performance of the contractor and his continuance.
16.1.5 The instructions issued by SAIL Corporate Office forwarded vide Vigilance letter
No. 010475 dated 1.10.1999 (Annexure-12) in respect of Guidelines regarding
Removal from List of Suppliers, Suspension and Banning of business dealings
with unscrupulous companies shall be followed.

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CHAPTER-17
CONTRACT DOCUMENTATION
17.1 The safe custody of all the contract documents is extremely important. No bid
documents should be taken out of the office premises without specific approval of
head of the department. The following should be treated as classified information
which should receive strict confidential treatment :
Details of bidders who have bought the bid documents;
Offers of various bidders and bid opening statement;
Evaluation criteria and recommendations;
Commercial information in letter of intent and contract; and
Appraisal of performance of the contractor.
17.2 Responsibility for Documentation
17.2.1 CONTRACTS should be responsible for following contract documents:
Approval note for notice inviting bids;
Bidding documents as floated;
Original of all bids;
Clarifications as submitted by the bidders and pre-award correspondence

with bidders;
LOI to the successful bidder, correspondence and minutes of meetings

with successful bidder before signing of contract, and issue of
amendments;
Correspondence and minutes of meetings with contractor/sub-contractor

after the award of the contract;
Invoices and receipts of payment by the contractor/sub-contractor;
Insurance documents and records of all the claims;
Progress reports regarding procurement of bought-out items;
Progress reports regarding progress at manufacturers works;
Despatch and receipt certificates; and
Correspondence pertaining to railways/transport/port clearance.

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17.2.2 Project archives under the control of PED should be used for documentation by
PROJECTS. Inspection & Quality Assurance Department should be responsible
for documentation of inspection reports and despatch clearance certificates. The
Inspection & Quality Assurance Department should do documentation for
despatch clearance certificates and inspection reports at the works of contractor
and sub-contractors. The department should also do documentation for all the
inspection reports for site activities.
PED should be responsible for documentation of all contract drawings and

engineering correspondence with the consultants and contractors/sub-contractors
related to a contract.
Following should be documented by PED :
Technical proposals submitted by all the bidders before award of contract;
Engineering correspondence with the consultants and contractor/sub-

contractor related to a contract;
Engineering drawings;
Operation, maintenance, erection and commissioning manuals;
Documentation of bought-out items supplied by contractors;
Preliminary acceptance certificates;
Commissioning certificates;
Performance guarantee test reports; and
Final acceptance certificates.
Project Monitoring Group should be responsible for documentation of all activities

at site as given below :
Progress reports for technical information flow;
Progress reports for site activities;
Correspondence and minutes of meetings with contractors/sub-contractors

for reviewing progress for site activities; and
Various networks.
17.2.3 Project Finance should be responsible for :
Safe custody and timely renewal of Bank Guarantees;
Safe Custody of Invoices and receipts for payments; and
Booking of expenditure in line with sanctioned estimates and reporting the

same for capital budgeting.

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CHAPTER-18
GLOSSARY
Battery Limits means the area indicating the boundary earmarked within which the
Facilities/Project shall be installed and utilities & services shall be made available by the
Plant/Unit upto the boundary lines.
Base Date means the date of submission of bids or revised price bids, if any, and shall
be considered in price variation formulae given in the Contract.
Bid means an offer made by the Bidder in response to invitation for bid issued by the
Plant/Unit.
Bidder means any person or firm or company or corporation who submits a bid in
response to Invitation for Bids (IFB).
Bidding Documents means a set of documents which is sold or issued to the potential
Bidders against which Bidders submit their bids in response to invitation for bid issued by
the Plant/Unit.
Commissioning Certificate is the Certificate to be issued by the Plant/Unit after

establishment of a level of output not less than sixty six percent (66%) of the Guaranteed
Production Capacity, quality of materials produced and other parameters as per
Technical Specifications and also all as-built drawings & documents for the respective
Facilities/Project are submitted in accordance with the provisions of the Contract and
Contractor has met all the objections/observations contained in the Preliminary
Acceptance Certificate.
Completion of the Facilities/Project means the Facilities/Project have been

commissioned as per Commissioning stipulated in the Contract. The Facilities/Project will
be considered complete in all respects and accepted when performance guarantee
parameters are established and Final Acceptance Certificate has been issued pursuant to
the Contract.
Contractor means the person(s) whose bid to perform the Contract has been accepted
by the Plant/Unit and is named as such in the Contract, and includes the legal successors
or permitted assigns of the Contractor. In case, the Contract is with Consortium of two or
more members, the Contractor shall mean one or more members of Consortium as the
case may be.
Contract Price means the sum specified in Contract, subject to such additions and
adjustments thereto or deductions therefrom, as may be made pursuant to the Contract.
Defect Liability Period means the period of validity of the warranties given by the
Contractor commencing from the date of issue of Commissioning Certificate of the

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Facilities/Project, during which the Contractor is responsible for defects with respect to
the Facilities/Project as provided in the Contract.
Facilities/Project means the works specified in the Contract, Technical Specification

and include the design & engineering work, civil engineering work, supply of the steel
structures, plant and equipment, refractories & commissioning spares and installation
services to be carried out by the Contractor under the Contract.
Final Acceptance Certificate means the Certificate to be issued by the Plant/Unit after
the performance guarantee tests have been successfully completed and the guaranteed
output and other parameters are met by the Contractor, or the amount of Liquidated
Damages specified in the Contract, if recoverable, has been recovered by the Plant/Unit
from the Contractor and items mentioned in the Preliminary Acceptance relevant to the
Facilities/Project or that part thereof have been completed.
Preliminary Acceptance of the Facilities/Project means that the Facilities/Project have

been completed operationally and structurally and put in a tight and clean condition, and
that all work in respect of Pre-commissioning of the Facilities/Project have been
completed; in other words, that the Facilities/Project are fit for Start-up & Commissioning
and Preliminary Acceptance Certificate has been issued pursuant to the Contract.
Preliminary Acceptance Certificate means the Certificate to be issued by the

Plant/Unit on successful completion of Preliminary Acceptance Tests.
Performance Guarantee Test means the test(s) specified in the Technical

Specifications to be carried out to ascertain whether the Facilities/Projects are able to
attain the Performance Guarantees specified in the Technical Specifications in
accordance with the provisions of the Contract.
Time for Completion means the time specified in the Contract within which
Completion of the Facilities/Project as a whole (or of a part of the Facilities/Project where
a separate Time for Completion of such part has been prescribed) is to be attained in
accordance with the stipulations made in the Contract and the relevant provisions of the
Contract.
Taking Over means the Plant/Unit, after issue of the Commissioning Certificate, shall
be responsible for the care & custody of the Facilities/Project together with the risk of loss
or damage thereto, and shall thereafter take-over the Facilities/Project.

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ANNEXURE-1
PROCEDURE FOR REGISTRATION OF CONTRACTORS
1. Objective
1.1 Timely completion and quality of Contracts largely depends on the competence of
the executing agencies, i.e., the Contractors. As such, it is essential to identify and
enlist the Contractors having expertise and competence in different fields.
1.2 Registration of Contractors is done with the twin objectives of having a readily
available list of Contractors who are capable of executing various contracts with
efficiency and promptness and evaluating their performance periodically with a
view to update their records and decide whether to continue or discontinue
dealings with the party
2. Scope
2.1 This procedure outlines the guidelines for registration of indigenous Contractors
for Contracts and shall be followed by plants/units including the mines.
2.2 Contractors shall be classified and registered according to the nature of work and
also their financial capacity for executing work of specified value.
2.3 Categorisation - Based on the nature of work Contractors shall be registered for
the following categories :
1) Consultancy/Design/Engineering/Drawing work,
2) Civil work,
3) Mechanical work,
4) Air Conditioning & Ventilation,
5) Electrical work,
6) Refractory work,
7) Fabrication & erection of steel & technological structures,
8) Instrumentation & Tele-communication,
9) Automation & Computerization,
10) Mining and allied works,
11) Any other work.
Each category may have a number of sub-categories depending on the
requirement of plant/unit. The sub-categorization shall be approved by the
Chairman of the Contractor Registration Committee (CRC).
2.4 Classification - Based on their financial capacity for executing job/works of
specified value Contractors may be registered for the following five classes :
Class Capable of executing Contracts of value of each individual Contract

A Above - Rs. 50 lakhs

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B Above Rs.25 lakhs and up to - Rs. 50 lakhs

C Above Rs.10 lakhs and up to - Rs. 25 lakhs
D Above Rs. 5 lakhs and up to - Rs. 10 lakhs
E Above Rs. 1 lakh and up to - Rs. 5 lakhs
F Above Rs.50,000 and up to - Rs. 1 lakh
G Up to - Rs. 50,000
3. Procedural Steps
3.1 Contractor Registration Section (CRS) - There shall be a Contractor

Registration Section in each plant/unit. Registration of Contractors shall be
processed by this Section.
3.2 Contractor Registration Committee (CRC) - A Contractor Registration

Committee shall be constituted by an order of Chief Executive which shall be
headed by an executive of plant/unit not below the rank of E-8 who will be ex-
officio Chairman of CRC. CRC may consist officers from the following
Departments :
Projects Department
Works Department
Materials Management Department
Town Administration/Township Department
Finance Department
Personnel & Administration Department
Other members may be co-opted to the CRC, depending upon the nature of work
of Contract. Members of the CRC shall not be below the rank of E-5. Officer-in-
charge of CRS shall be the Convener of the Contractor Registration Committee.
3.2.1 However, in case of the smaller plants/units, the rank of E-8 envisaged for the
Chairman and E-5 for the members of CRC may be relaxed with the approval of
the Chief Executive.
3.3 Scrutiny of Contractors Request - CRS shall issue an application form to the
intending Contractors for the registration depending on the current requirement.
Specimen for the check list to be prepared by the CRS for scrutiny of the
Contractors request, is placed at Appendix A.
3.4 Issue of Application Form - Application form for the registration of Contractor
shall be issued to the prospective Contractors by CRS on payment of Rs. 100/-
(Rupees one hundred) in the form of cash payment at the cash section of the
plants/units or Postal Order or Pay Order or Bankers Cheque or Demand Draft.
The sample form of Application is placed at Appendix B.
3.5 Submission of Application to CRS - Duly filled in application form for

registration with required details/documents as contained in the application form
along with non-refundable application processing fee of Rs.1000/- (Rupees one
thousand) shall be submitted by the intending Contractor within 90 days from the

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date of issue of form. Delay, if any, in submission of the completed application

form together with required details/documents, can be condoned by the Chairman
of CRC depending on the merits of the case.
Completed application forms shall be scrutinized by the CRS and capacity of the
Contractors shall be physically verified by a team consisting of members from
concerned departments nominated by the respective heads of the Departments.
Specimen for check list to be prepared by CRS for scrutiny of filled up application
forms/documents and check list to be prepared by Physical Verification Team for
capacity verification, are given at Appendix C & Appendix D respectively.
3.6 Capacity Verification Report - Capacity verification report shall be submitted by

the Physical Verification Team to the Convener of the CRS within 60 days from
the date of reference to the team, in the form given at Appendix E.
Summary of capacity verification reports and other details of Contractors shall be
put up by the Convener of CRC on monthly basis for all applications received
during the month, in the subsequent month in the format given at Appendix F.
CRC shall deliberate on the same and record its recommendation. The
recommendation of CRC shall be submitted to the Chief Executive for approval.
3.7 Registration Fee - After approval of the Chief Executive, applicant Contractor
shall be advised to deposit the following amounts of registration fee for the
respective class(es). Fees stipulated for each class of registration includes one
category of work. However, applicants who desire to register for more than one
category under a particular class, shall be required to pay non-refundable
additional fee, mentioned in column (4), for each additional category :
Class Value of each individual Contract (Rs.) Payable non-refundable
Registration Fee (Rs.)
For Class For Addl. Category
(1) (2) (3) (4)
A Above - 50 lakhs 15,000 2,500
B Above 25 lakhs and up to - 50 lakhs 10,000 2,500
C Above 10 lakhs and upto - 25 lakhs 9,000 2,500
D Above 5 lakhs and up to - 10 lakhs 6,000 2,000
E Above 1 lakh and up to - 5 lakhs 5,000 2,000
F Above 50,000 and up to - 1 lakh 2,000 1,000
G Up to - 50,000 500 250
3.8 Issue of Registration Certificate to the Contractors - After approval of the
Chief Executive and payment of requisite registration fees by the applicant,
Registration Certificate in the prescribed proforma given at Appendix G, duly
signed by the Officer in-charge of CRS or his authorised representative shall be
issued to the concerned Contractors.
3.9 Inclusion of Additional Classes and/or Categories - During the validity of the
registration of a Contractor, inclusion of additional classes and/or categories may
be considered by CRC depending on merit of each case subject to capacity
verification. If it is so recommended by the CRC to include additional classes
and/or categories in the registration of a particular Contractor and approved by the

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Chief Executive, an addendum to Registration Certificate may be issued as per

format given at Appendix H, duly signed by the officer-in-charge of CRS.
3.10 Registration of Government Establishment - All Government establishments/

undertakings shall be deemed registered with permanent validity. No capacity
verification and application fee shall be required in such cases.
However, details of such Government undertakings shall be obtained in the
prescribed application forms and a formal registration certificate shall be issued to
them with the approval of CRC.
3.11 Period of Validity of Registration - The period of validity of registration shall be

as under :
a) Govt. Undertaking : Deemed registered with permanent validity.
b) Contractors : 3 Years.
3.12 Provisional Registration - In exceptional cases, Provisional Registration pending

regular formal registration, may be considered with the approval of CRC. Such
Provisional Registration shall be valid for a period of six months within which the
concerned Contractor shall be required to complete the requisite registration
formalities and get himself registered. In such cases, Provisional Registration
Certificate shall be issued as per format given at Appendix I.
Simultaneously, the prescribed Application forms for registration shall be issued to

such provisionally registered Contractors in order to enable them to complete the
regular registration formalities as per procedures contained therein.
3.13 Re-Registration/Renewal of Registration - On the expiry of validity of

registration the registered Contractor is required to re-register himself. The
application form (Appendix-B) shall be issued by the plants/unit on payment of
Rs. 100/- to such registered Contractor. The Contractor shall complete the
formalities and submit the duly filled-in an application form for re-registration/
renewal of registration, along with the relevant documents and non-refundable
application processing fee amounting to Rs. 1000/-. 25% of the Registration fee
(as mentioned in para 3.7) shall have to be paid by the Contractor seeking re-
registration/renewal of registration. However, for any additional category, 100% of
the amount of additional fee stipulated in para 3.7 shall be payable by the
Contractor.
The re-registration/renewal of registration formalities shall start 90 days before

expiry of validity and be completed within 90 days. Time relaxation, if any, may be
granted before expiry of validity of registration, depending on merits of the case
with the approval of Chairman of CRC. After approval of the Chief Executive, Re-
registration certificate shall be issued by Officer-in-charge of CRS in the same
format given at Appendix G.
While processing for re-registration/renewal updating of class and inclusion of

additional categories if requested by the Contractor, may be considered on case

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to case basis, subject to physical verification as may be required and payment of

respective amount stipulated for class and category.
3.14 De-registration of Contractors - The performance of the Contractors shall be

evaluated as indicated in the format given at Appendix-J.
De-registration of Contractors, shall be done with the approval of the Chief

Executive on sufficient grounds. The Contractor shall be informed accordingly.
For banning/blacklisting of business dealings with the Contractor, procedure as

laid down by respective plants/units shall be followed. The list of Contractors with
whom business dealings are banned, shall be circulated by the plant/unit to other
plants/units also for information and suitable action.
3.15 Advertising for New Registration - From time to time, depending upon the
requirement of respective plants/units, advertisement may be made in the Press,
inviting application from intending Contractors for registration in selected areas
with the approval of Chief Executive.

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APPENDIX-A
(Clause 3.3)
CHECK LIST FOR SCRUTINY OF REQUEST FOR

REGISTRATION RECEIVED FROM INTENDING
CONTRACTORS BEFORE ISSUE OF APPLICATION FORMS FOR
REGISTRATION OF CONTRACTORS
1. Name of the intending Contractor :
2. Classifications (A/B/C/D/E/F/G) for which :

registration is intended by the Contractor
3. Categories & Sub-categories of work for which :

registration is intended by the Contractor
4. No. of Contractors already registered for the :

Classes and Categories (including Sub-
categories) for which registration has been
intended by the Contractor
5. Whether further registration is required by :

Plant/Unit
6. Whether the indenting Contractor is registered :

with others if so, for which Class and Categories
(including Sub-categories)
Remarks :
Officer-in-charge CRS

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APPENDIX-B
(Clause 3.4)
Form Sl. No.___________________
(Name of Plant/Unit)
(Complete Postal Address)
APPLICATION FORM
FOR
REGISTRATION OF CONTRACTOR
(NON-TRANSFERABLE)
NOTE : 1. The form should be signed by Proprietor/Partner/Director/Company

Secretary and attested copy of Power of attorney should be enclosed.
2. Registration of any applicant/firm/company is done entirely at the

discretion of . (Name of plant/unit) and
(Name of plant/unit) reserves the right to reject
any application for registration of Contractor, without assigning any
reason.
3. This form, duly filled in all respects together with all the required
enclosures, must be submitted within 90 d(ninety) days from the date
of issue of this form.
4 An Application Processing Fee of Rs.1000/- (Rupees One thousand

only - Non refundable) shall be sent in the from of Account Payee
Demand Draft or Pay Order drawn in favour of ..
(name of the plant/unit), payable at .. (Place - name of the
city), along with this form.

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APPENDIX-B
Form Sl. No. ________________
APPLICATION FOR REGISTRATION AS CONTRACTOR
1. General
1.1 Full name of the Applicant/Firm/Company ______________________________
(in capital letters)
1.2 Address _________________________________________________________
________________________________________________________________
Telephone No. ____________________ Fax ___________________________
E-mail Address ___________________________________________________
Telegraphic Address _______________________________________________
1.2.1 Registered Office _________________________________________________
1.2.2 Branch Office ____________________________________________________
1.3 Name and Designation of Chief Executive ______________________________
1.4 Your firm/company is registered as:
Proprietary concern : ]
Hindu Undivided Family : ]
Registered Partnership : ] (tick the appropriate box)
Private Limited Company : ]
Public Limited Company : ]
Any other (Please specify) : ]
Please enclose the documents related to the type of registration:
a) In case of Proprietorship:
Affidavit of Sole Proprietorship and attested copy of Trade Licence.
b) In case of Partnership:
Attested copy of Partnership deed
Specify whether registered or unregistered.
c) In case of Limited companies:
Memorandum & Articles of Association
Certificate of Incorporation
Entry in form A from the Registrar of firms
1.5 Status of your firm is:

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Small scale Industry : ] (tick the appropriate box and enclosed

Medium Scale Industry : ] the attested copy of certificate/document)
Large Scale Industry : ]
1.6 Indicate the details and status of Proprietor/Partners/Directors/ Shareholders and
their near relatives such as son/daughter/brother/sister/ father/mother in their own
firm/company and also in other firm/company as Proprietor/Member/Partner/
Director/Shareholder, as under:
Sl. Details of Proprietor, Partner, Details of near relatives of Proprietor,
No. Director, Shareholders Partner, Director, Shareholders
Name Status Address Details of Name Status Address Details of
Proprietorship/ Proprietorship/
Partnership, Partnership,
etc. in other etc. in other
firm/company firm/company
1.6.1 Whether the applicant/Contractor or any of its Proprietor, Partner, Director,

Shareholders or their relatives is/are Member(s) of the Indian Parliament or any
State Legislature. If YES, give the details as under:
Names of applicant/Proprietor, Partner, Constituency State
Director, Shareholders or their relatives
1.6.2 Whether any of the following is/are dismissed Government Servant(s)/Employee(s)

of the (name of plant/unit) and if YES, attach the details:
a) The applicant,
b) Any of its Partners or Directors or Shareholders,
c) Any of its employees.
1.6.3 Whether the applicant or any of the Proprietor, Partner, Director, Shareholders or
their spouse working as Contractor in (name of plant/unit) or any
Government Department/Public Undertaking, has been:
a) Black listed,
b) Removed from the approved list of Contractors,
c) Demoted to lower class,
d) Under orders for banning or suspending business with him/them.
If YES, give the details indicating the period.
1.7 Whether you are already registered with us or any other Government
Department/Public Undertaking? If YES, furnish the following information and
submit the documentary evidences:

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Sl. Name of Category Qualified to Date of Validity of

No. Organisation of work tender up to Rs. Registration Registration
1.71. Whether the applicant is a Partner or Director or Shareholder of any firm/company

registered in the .. (name of the plant/unit). If YES, give the name
and address of the firm/company.
1.8 Whether you have any collaboration either financial or technical with foreign/
indigenous firm, if yes, give the details and address of collaborators?
1.9 Indicate your C.S.T. Registration No. :
1.10 Indicate your State S.T. Registration No. :
1.11 Indicate your Trade Licence No & enclose attested copy, if applicable:
1.12 Indicate your PF/RFC Registration Code No. :
1.13 Registration with ESI, in case applicable :
2. Technical
2.1 Contractors Experience
2.1.1 Indicate the following details of work executed/completed by you or which are in
execution and enclose (1) documentary evidences in its support (2) performance
report and (3) contact persons of respective employers:
S. Description Employers Order Order Order Completion Actual
No. of Work Name Ref. Date Value Schedule Completion
2.1.2 Indicate the full details of infra-structure and facilities possessed by you and
address of the factory or workshop owned by you with true copy of documentary
proof of ownership.
Sl. No. Details of Infra-Structure & Address and other
Facilities/Workshop details
2.1.3 Please furnish the details of Construction & erection equipment/machinery, mining
equipment, handling equipment, transport vehicles, special tools & tackles, testing
equipment/facilities possessed by you, in the following format:
Sl. Description of No. of Own Capacity Manufacturer Year of
No. Equipment Equipment or Purchase

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Hired
3. Organisational Strength
3.1 Please enclose the organisational chart of your firm/company indicating the
number of people employed and their competence in the execution of class and
categories of work for which registration is intended.
3.2 Give the strength of the workers:
Strength Qualification Experience
Engineering Degree holders
Engineering Diploma holder
Other technical personnel
Skilled & Unskilled workers
4. Financial Position
4.1 Annual turnover for the last three years : ...
4.2 Capital Employed : ...
4.3 Name, its branch & address of your Banker with details of Accounts stand in the
name of:
i)
ii)
iii)
iv)
v)
4.4 Please enclose attested copies of your:
i) Income Tax clearance certificate for last three years:
Sl. Year of Total Income Contractual Income Tax Paid
No. Assessment Assessed Assessed
ii) Current Sales Tax Clearance Certificate.

iii) Balance Sheet for three years.
iv) Profit & Loss Statement for three years.

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4.5 Along with this form the applicant shall submit the Bankers Certificate for the
following amount depending upon the class for which registration is sought:
Cla- Capable of executing Contract of Value of Registration Fee (Rs.)
ss value of each individual Contract (Rs.) Bankers For Class For Addl.
Certificate Category
(Rs.)
(1) (2) (3) (4) (5)
A Above - 50 lakhs 12,50,000 15,000 2,500
B Above 25 lakhs and up to - 50 lakhs 7,50,000 10,000 2,500
C Above 10 lakhs and up to - 25 lakhs 5,00,000 9,000 2,500
D Above 5 lakhs and up to - 10 lakhs 3,00,000 6,000 2,000
E Above 1 lakh and up to - 5 lakhs 2,00,000 5,000 2,000
F Above 50,000 and up to - 1 lakh 50,000 2,000 1,000
G Up to - 50,000 Nil 500 250
The applicant shall be required to deposit the above mentioned non-refundable

registration fee for class which includes one category. The amount mentioned in
column (5) will be required for each additional category for which registration is
sought.
5. References Of Previous Clients

a) ..
b) ..
c) ..
d) ..
e) ..
6. Any Other Information Considered Relevant And Useful

..
..
..
..
..
7. Class & Category

7.1 Indicate the following for which registration is sought:
Class of Registration : (A/B/C/D/E/F/G)
Category & Sub-category of Work :
8. Application Processing Fee

Details of Demand Draft:
Bank _______________________________________________________

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No. _______________________ Date ____________________________

Value ______________________________________________________
Signature __________________
Name & Designation __________________
Seal of Company __________________
Date : _________________
Place :_________________
Attested copies of the documents/certificates mentioned in this Application Form shall be

attached.
For office Use only
Date of Issue ________ D. D. No. _________ & Date ___________

Due date of Receipt _______ Value ________________________
Bank ________________________

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APPENDIX-C
(Clause 3.5)
(Name of Plant/Unit with Complete Address)
CHECK LIST FOR SCRUTINISING THE APPLICATION FORM
FOR REGISTRATION OF THE CONTRACTOR
1) Name of the applicant/Contractor
_____________________________________________
2) Status
__________________________________________________________________
3) Class of Registration
_______________________________________________________
4) Category___________ and Sub-category _____________ for which registration is sought
5) Has the Processing Fee in the form of Demand Draft for Rs.1000 been Yes/No
submitted?
6) Has the Bankers Certificate been submitted? Yes/No/NA
Entry in the Register at Sl. No. __________________________________
7) Details of constitution:
i) Affidavit of Sole Proprietorship and attested copy of Trade Licence. Yes/No/NA
ii) Attested copy of Partnership deed Yes/No/NA
(Whether registered or unregistered). Regd/Unregd
iii) Memorandum & Article of Association Yes/No/NA
iv) Certificate of Incorporation Yes/No/NA
v) Entry in form A from the Registrar of firms Yes/No/NA
8) List of Contracts being executed/completed & in execution, is enclosed. Yes/No
List of infra-structures and facilities possessed, is enclosed. Yes/No
9) The details of Construction & erection equipment/machinery, mining Yes/No
equipment, handling equipment, transport vehicles special, tools & tackles,
testing equipment/facilities possessed, are indicated.
10) Registration : i) State Sales Tax Registration - copy enclosed. Yes/No
ii) Central Sales Tax Registration - copy enclosed. Yes/No
iii) Registered with SSI / NSIC - copy enclosed. Yes/No
iv) Registered with PF/RPFC - copy enclosed. Yes/No
v) Any other Registration, if any - details enclosed. Yes/No
11) Have all the pages of form been signed by Proprietor/Partner/Director/ Yes/No
Company Secretary and Power of Attorney is enclosed.
12) Sales Tax Clearance Certificate - attested copy enclosed. Yes/No
13) Current valid Income Tax Clearance Certificate - attested copy enclosed. Yes/No
14) Is the firm black listed / suspended / banned etc. Yes/No
15) Auditors report, balance sheet and Profit & Loss Account - copy enclosed. Yes/No
Signature ______________________
Name & Designation _____________

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Date : _______________________________

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APPENDIX-D
(Clause 3.5)
CHECK LIST FOR
CAPACITY VERIFICATION REPORT
(A) REGISTRATION WITH GOVERNMENTT AUTHORITIES
i) The firm should be a registered unit.
ii) Details of Registration with SSI/NSIC/other Government bodies to be

checked.
(B) FACILITIES AVAILABLE
Facilities available for taking up construction, erection, testing & commissioning,

manufacture of items to be correctly mentioned in Capacity Verification Report
(Appendix-E).
(C) DETAILS OF CONTRACTS EXECUTED/COMPLETED & IN EXECUTION
i) Details of Contracts executed/completed and/or in execution should be in

line with the details given in the form.
ii) Details of manpower to be taken into consideration while recommending

for registration.
iii) Resources available with the firm should be adequate for the execution
class and categories of works.
iv) Additional information not covered in the format should be given in a

covering note.
(D) DETAILS OF REGISTRATION WITH VARIOUS FIRMS TO BE VERIFIED

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APPENDIX-E
(Clause 3.6)
(Name of the plant/Unit with Complete Address)
Ref. No :_____________
CAPACITY VERIFICATION REPORT
(For Contractor)
Note : Please enclose additional sheet wherever space is not sufficient.
1. Name of the firm __________________________________________________

2. Postal address ___________________________________________________
Telegram : _______________________________________
Telex : _______________________________________
a) Registered Office : _______________________________________
b) Local Office : _______________________________________
3. Names of Senior Executives : Name Designation Telephone Nos.
a)______________________________________________________________
b)______________________________________________________________
4. Capital investment: _______________________________________________
5. Construction Equipment/Facilities/Resources available (Details may be given):
________________________________________________________________
6. Details of Contracts executed/completed and/or in execution should be in line with
the details given in the form:
a)
b)
c)
7. Annual Turn over : __________________________________
8. a) Total number of employees : __________________________________
b) No. of Engineering Graduate : __________________________________
c) No. of Engineering Diploma : __________________________________
d) No. of Supervisory staff : __________________________________
e) No. of Skilled and unskilled workers _____________________________
9. Infra-structure : Give details
10. Design Department : Yes/No
11. Project Planning and Monitoring Department : Yes/No
12. Building Structural Fabrication Facilities : Poor/Satisfactory/Good/
Excellent
Technological Structure Fabrication facilities : (to be indicated)
The works of M/s ______________________ was inspected by me on ______________.
Signature : _______________________
Name : _________________________
Designation :_____________________
Date : __________________

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APPENDIX-F
(Clause 3.6)
SUMMARY OF CAPACITY VERIFICATION AND OTHER
DETAILS/CHECK LIST/RECOMMENDATION OF THE
REGISTRATION COMMITTEE
1. Name of firm : M/s. ___________________________________________
2. Status : ________________________________________________
3. Nature of Constitution of firm/company:
i) Proprietorship Concern ii) Partnership concern
iii) Public Ltd. Company iv) Private Ltd. Company
v) Registered Co-operative
4. Commercial Documents:
i) Income Tax Clearance certificate submitted : Yes / No
ii) Sales Tax Clearance certificate submitted : Yes / No
iii) Demand Draft of Rs. 1000/- submitted : Yes / No
iv) Valid Trade/Statutory Licence submitted : Yes / No
v) PF/RPFCs Certificate : Yes / No
5. Class & Categories of work executed : Yes / No
6. Names of Major Companies Registered with:
a) ___________________________
b) ___________________________
c) ___________________________
7. Technical capabilities:
i) Experience of execution Acceptable/Not acceptable
ii) Construction/erection equipment/machinery, Acceptable/Not acceptable
mining equipment, handling equipment,
transport vehicle, special tools & tackles,
testing equipment/facilities possessed
iii) Infra-structure facilities Acceptable/Not acceptable
iv) Qualified technical personnel engaged Acceptable/Not acceptable
8. Financial capabilities: Acceptable/Not acceptable

9. Previous experience/past performance Acceptable/Not acceptable
10. Observations & recommendation of the Registration Committee
Signature
Officer In-charge
Contractor Registration Section

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APPENDIX-G
(Clause 3.8)
REGISTRATION CERTIFICATE
Registration No ___________
Date ____________________
M/s ______________________________
______________________________
______________________________
We have pleasure to register you as an approved Contractor of _____________ (Name

of Plant/Unit) and classified you for the following Class and Categories/Sub-categories of
Job/Works Contracts :
Sl.No. Class Categories of Work Sub-Categories of Work

1
2
3
4
5
Validity of Registration - Three years from date of issue of this certificate.

NOTE : i) This registration does not guarantee award of Contracts.
ii) We reserve the right to demand from you such sureties as may be
necessary and applicable in terms of Bidding document/Contract.
iii) We may eliminate your name from our register of approved Contractors
without assigning any reason thereto.
iv) It shall be your responsibility to repeat the process of registration and
apply for re-registration on the prescribed form for registration of
Contractor along with payment of non-refundable application processing
fee and production of requisite documents well in advance before expiry of
validity period of Registration to keep your name in the register of
approved Contractors.
Yours faithfully,
for (Name of the Plant/Unit)
Officer In-charge

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APPENDIX-H
(Clause 3.9)
Reference No. ___________

Date :__________________
M/s. _______________________
_______________________
_______________________
_______________________
Re - Inclusion of Additional Classes and/or Categories
The following Class and/or Category/Sub-category are hereby included in the registration
already granted to you vide Registration Certificate No _____________ issued on
_____________ :
Sl No. Class Category of Work Sub-Category of Work Remarks
All other terms and conditions of Registration shall remain unchanged.
Yours faithfully,
Officer In-charge

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APPENDIX - I
(Clause 3.12)
Provisional Registration No. _________________

Date :_________________
M/s. _______________________
_______________________
_______________________
_______________________
Re : Provisional Registration
Dear Sirs,
We have pleasure to register you provisionally as an approved Contractor of

________________ (Name of plant/unit) for the Class & Category/Sub-category listed
below :
Sl No. Class Category of Work Sub-Category of Work Remarks
Validity of Registration - Six months from date of issue of this certificate.
Since the registration Form is issued on payment of requisite fee, you are
requested to obtain it from Contractor Registration Section (CRS) and complete the
formalities for registration at the earliest. please be returned to us duly filled.
Yours faithfully,
Officer In-charge

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APPENDIX-J
(Clause 3.14)
EVALUATION OF CONTRACTORS PERFORMANCE
DURING EXECUTION OF A CONTRACT
Sl No. Parameters Remarks
1. Name of the Contractor
2. Name of work/Package
3. Award letter number and date
4. Date of commencement of work:
As per Award letter
Actual
5. Date of completion of work:
As per Award letter
Actual
Reasons for delay in work
Extension granted (with penalty/without penalty)
6. Value of work:
Estimated value
Awarded value
Value as per actual
7. Performance regarding:
Quality of job done (achievement of PG parameter as per
contract)
Resource mobilisation
Dealing with other departments/discipline/behaviour
8. General performance feedback during execution:
Timely payment to workers/sub-contractors
Undue claims raised
Dispute/litigation
Safety aspect (any accident/damage to plant property)
Case of theft/misplacement
Industrial relations
9. Interest in bidding for contracts:
No. of tomes enquiry floated
No. of times responded
No. of times responded but not quoted
No. of times not responded
RECOMMENDATIONS:
Executing/Operating Authority

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ANNEXURE-2
AGENTS IN PROJECT CONTRACTS - DRAFT CLAUSES

SUGGESTED FOR INCLUSION IN THE MODERNISATION TENDER
DOCUMENTS
1. Disclosure of Particulars of Agents/Representation in India, in any.
1.1 Tenderers of foreign nationality shall furnish the following details in their offer:
1.1.1 The name and address of the agents/representatives in India, if any and the extent
of authorisation and authority given to commit the Principals. In case the
agent/representative be a foreign company, it shall be confirmed whether it is a
real substantial company and details of the same shall be furnished.
1.1.2 The amount of commission/remuneration included in the quoted price(s) for such
agents/representatives in India.
1.1.3 Confirmation of the Tenderer that the commission/remuneration, if any, payable to

his agents/representative in India, if any, may be paid by SAIL in India in Indian
Rupees only.
1.2 Tenderers of Indian Nationality shall furnish the following details in their offer:
1.2.1 The name and address of the foreign principals indicating their nationality as well
as their Status i.e. whether manufacturer or agents of manufacturer holding the
Letter of Authority of the principal specifically authorising to make an offer in India
in response to this Invitation to Tender either directly or through the
agents/representatives.
1.2.3 The amount of commission/remuneration included in the price(s), quoted by the

Tenderer for himself.
1.2.3 Confirmation of the foreign principals of the Tenderer that the

commission/remuneration, if any, reserved for the tenderer in the quoted price(s),
may be paid by SAIL in Indian in equivalent Indian Rupees on satisfactory
completion of the Project.
1.3 In either case, in the event of a contract materialising, the terms of payment will
providefor payment of the commission/remuneration, if any, payable to the
agents/representatives in India in Indian Rupees about 90 days after the discharge
of the obligations under the contract.
3.4 Failure to furnish correct and datailed information as called for in Paragraph
1.1/paragraph 1.2, will render the concerned tender liable to rejection or in the
event of a contract materialising, the same liable to termination by Steel Authority
of India Ltd.

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ANNEXURE-3
STEEL AUTHORITY OF INDIA LIMITED

NEW DELHI
NO.CA-19(24)/97 October 29, 1997
OFFICE ORDER
In suppression to office order of even number dated 7th July, 1997, Chairman,
SAIL has re-constituted the Apex Committee for recommending proposals for entering into
contracts or commitments for works and equipment (including supplies) relating to capital
expenditure of the value exceeding Rs.50 crores in each case consisting of the following
members:
1. Managing Director, BSP Chairman

2. Director (Finance) Member
3. Director (Corporate Planning) Member
4. Director (Projects) Member
5. Chief Executive of the concerned plant Member
The Executive Director (Projects), Corporate Office will be the Member Convenor.
The Committee will associate Executive Director (Law) as and when necessary.
The Committee shall also examine and recommend such special cases or
proposals for entering into contracts below Rs.50 crores and for settlement of
disputed/extra claims for projects as referred to the Apex Committee by Chairman.
The recommendations of the Committee in each case will be put up by the

Member Convenor to the Committee for consideration and recommendations to the
appropriate authority i.e. Chairman/Board.
(L. A. K. Sinha)
Executive Director a Company Secretary
Distribution:
1. Members of the Committee

2. Chief Executives of the Plants/Units
3. Projects Heads of Plants/Units
4. Executive Director (Projects)
5. Executive Director (Law)
Copy to:
PSO to Chairman

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ANNEXURE-4
IMMEDIATE
No. 8(1)(h)/98(1)
CENTRAL VIGILANCE COMMISSION

Jaisalmer House, Man Singh Road,

New Delhi - 110 011,
Dated the 18th November, 1998
SUB: Improving vigilance administration

.
The Central Vigilance Commission Ordinance 1998 under Section 8(1)(h) directs
that the power and function of the CVC will be the following:
exercise superintendence over the vigilance administration of the various

Ministries of the Central Government or corporations established by or
under any Central Act, Government companies, societies and local
authorities owned or controlled by that Government.
2. Improving vigilance administration is possible only if system improvements are

made to prevent the possibilities of corruption and also encourage a culture of
honesty. In exercise of the powers conferred on the CVC by Section 8(1)(h), the
following instructions are issued for compliance:
2.1 Creating a culture of honesty
Many organisations have a reputation for corruption. The junior employees and
officers who join the organisations hopefully may not be so corruption minded as
those who have already been part of the corrupt system. In order to ensure that a
culture of honesty is encouraged and the junior officers do not have the excuse
that because their seniors are corrupt, that they have to also adopt the corrupt
practices, it is decided with immediate effect that junior employees who initiate
any proposal relating to vigilance matters which is likely to result in a reference to
the CVC can send a copy directly to the CVC by name. This copy will be kept in
the office of the CVC and data fed into the computer. If within a reasonable time
of say three to six months, the reference does not come to the CVC, the CVC then
can verify with concerned authorities in the department as to what happened to
the vigilance case initiated by the junior employee. If there is an attempt to protect
the corrupt or dilute the charges, this will also become visible. Above all the junior
officers will not have the excuse that they have to fall in line with the corrupt
seniors. Incidentally, the seniors also cannot treat the references made directly to
the CVC as an act of indiscipline because the junior officers will be complying
with the instructions issued under Section 8(1)(h) of the CVC Ordinance 1998.
However, if a junior officer makes a false or frivolous complaint it will be viewed
adversely.

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2.2 Greater transparency in administration
2.2.1 One major source of corruption arises because of lack of transparency. There is a
scope for patronage and corruption especially in matters relating to tenders, cases
where exercise of discretion relating to out of turn conferment of
facilities/privileges and so on. Each Organisation may identify such items which
provide scope for corruption and where greater transparency would useful. There
is a necessity to maintain secrecy even in matters where discretion has to be
exercised. But once the discretion has been exercised or as in matters of tenders,
once the tender has been finalised, there is no need for the secrecy. A practice,
therefore, must be adopted with immediate effect by all organisations within the
purview of the CVC that they will publish on the notice board and in the
organisations regular publication the details of all such cases regarding tenders or
out of turn allotments or discretion exercised in favour of an employee/party. The
very process of publication of this information will provide an automatic cheek for
corruption induced decisions or undue favours which go against the principles of
healthy vigilance administration.
2.2.2 The CVC will in course of time take up each organisation and review to see
whether any additions and alterations have to be made to the list of items which
the organisation identified in the first instance for the monthly communications for
publicity in the interests of greater transparency. This may be implemented with
immediate effect.
2.3 Speedy departmental inquiries
2.3.1 One major source of corruption is that the guilty are not punished adequately and
more important they are not punished promptly. This is because of the prolonged
delays in the departmental inquiry procedures. One of the reasons for the
departmental inquiry being delayed is that the inquiry officers have already got
their regular burden of work and this inquiry is to be done in addition to their
normal work. The same is true for the Presenting Officers also.
2.3.2 Each organisation, therefore, may immediately review all the pending cases and
the Disciplinary Authority may appoint Inquiry Officers from among retired honest
employees for conducting the inquiries. The names of these officers may be got
cleared by the CVC. The CVC will also separately issue an advertisement and
start building a panel of names all over India who can supplement the inquiry
officers work in the department. In fact, it will be a healthy practice to have all the
inquiries to be done only through such retired employees because it can then be
ensured that the departmental inquiries can be completed in time. If any
service/departmental rules are in conflict with the above instructions they must be
modified with immediate effect.
2.3.3 In order to ensure that the departmental inquiries are completed in time, the
following time limits are prescribed:
(i) In all cases which are presently pending for appointment of Inquiry Officer
and Presenting Officer, such appointment should be made within one

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month. In all other cases, the Inquiry Officer and the Presenting Officer
should be appointed, wherever necessary, immediately after the receipt of
the public servants written statement of defence denying the charges.
(ii) The Oral inquiry, including the submission of the Inquiry Officers report,
should be completed within a period of 6 months from the date of
appointment of the Inquiry Officer. In the preliminary inquiry in the
beginning requiring the first appearance of the charged officers and the
Presenting Officer, the Inquiry Officer should lay down a definite time-
bound programme for inspection of the listed documents, submission of
the lists of defence documents and defence witnesses and inspection of
defence documents before the regular hearing is taken up. The regular
hearing, once started, should be conducted on day-to-day basis until
completed and adjournment should not be granted on frivolous grounds.
2.3.4 One of the causes for delay is repeated adjournments. Not more than two
adjournments should be given in any case so that the time limit of six months for
departmental inquiry can be observed.
2.3.5 The IO/PO, DA and the CVO will be accountable for the strict compliance of the
above instructions in every case.
2.4 Tenders
Tenders are generally a major source of corruption. In order to avoid

corruption, a more transparent and effective system must be introduced. As
post tender negotiations are the main source of corruption, post tender
negotiations are banned with immediate effect except in the case of
negotiations with L-1 (i.e. Lowest tenderer).
3. Hindi version will follow.
(N. VITTAL)
CENTRAL VIGILANCE COMMISSSIONER

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ANNEXURE-5
CONFIDENTIAL
DO. No. 98-ORD-1
S.N.P.N. Sinha
Tele: 461 8891
SECRETARY
CENTRAL VIGILANCE COMMISSION
GOVERNMENT OF INDIA
SATARKTA BHAWAN, G.P.O. COMPELEX,
BLOCK - A, INA. NEW DELHI - 110 023
Dated 17, July 2000
Dear Shri Pandey,
Kindly refer to your D.O. letter No. Ch/2/20 dated 30.06.2000, addressed to the
Central Vigilance Commissioner, regarding considering L-2 offer when L-1 offer is
withdrawn before work order is placed.
The Commission has observed that such a situation may be avoided if a two bid
system is followed (techno-commercial) so that proper assessment of the offers is made
before the award of work order. The Commission would therefore, advise that if L-1 party
backs out, there should be retendering in a transparent and fair manner. The authority
may in such a situation call for limited or short notice tender if so justified in the interest of
work and take a decision on basis of the lowest tender.
With regards,
Yours sincerely
Sd /-
(S.N.P.N. SINHA)
Shri Arvind Pandey

Chairman
Steel Authority of India Ltd.,
Ispat Bhavan, Lodi Road,
New Delhi - 110 003.

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ANNEXURE-6
(PLANT NAME : PROJECT NAME)
SUMMARY STATUS OF DRAWINGS
Approval Category : Basic Engineering Month :
Discipline Estimated Drawings Submitted Cumulative status of drawings Remarks

Drawings During the month Cumulative Approved Approved Commented Under
As Noted Scrutiny
Target Actual Target Actual
General Layout
Technological
Mechanical including
Material Handling
Electrical & Power

Supply
Civil including Arch. &

Planning
Structural including
Building & Technological
Refractories
Instrumentation &
Automation
Utilities and Services

including Ventilation, AC and
Fire Fighting
Total :

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ANNEXURE-7
( PLANT NAME : PROJECT NAME )
Approval Category : Detailed Engineering Month :
Discipline Estimated Drawings Submitted Cumulative Status of Drawings Remarks

As Noted Scrutiny
General layout
Technological
Mechanical including Material handling
Electrical & power

Supply
Civil including arch. &

Planning
Building & technological
Refractories
Instrumentation &
Automation

Fire Fighting
Total :

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ANNEXURE-8
Information Category : Detailed Engineering Month :
Discipline Estimated Drawings Submitted Cumulative status of drawings Remarks

As Noted Scrutiny
General Layout
Technological
Mechanical including
Material Handling
Electrical & Power

Supply
Civil including Arch. &

Planning
Building & Technological
Refractories
Instrumentation &
Automation

Fire Fighting
Total :

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ANNEXURE-9
(PLANT NAME : PROJECT NAME)
STATUS OF DRAWINGS
(Approval Category)
Month :
Sl. Unit Drawing No. Submission Approval Status

No. Schedule Actual Schedule Actual
Basic Engg.
Detailed Engg.

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ANNEXURE-10
STATUS OF EQUIPMENT
Ordering, Supply & Erection Month :
Sl. Eqpt. Descripition Weight Order Placement Supplier Delivery Manufacturing Status Inspection Despatch Erected Remarks
No. No. (T) Scheduled Actual Schedule Started % progress Call sent Report Shipping Recevied (T)
Date Date in month as on date on date Date Date at site (T)
A Imported
i) Mechanical
ii) Electrical
iii) Others
B Indigenous
i) Mechanical
ii) Electrical
iii) Others

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ANNEXURE-11
Clarifications to the delegation of powers to

Chief Executives of BSP/DSP/BSL/RSP/ASP/SSP
1.0 In exercise of the powers delegated to Chairman, SAIL by the Board of Directors
at its 71st meeting held on 4th Nov80 and in suppression of all existing orders on
the subject, Chairman, SAIL prescribed the following rules (enclosed) relating to
exercise of powers by Chief Executives of BSP/DSP/BSL/RSP/ASP/SSP.
2.0 On the matters of claims of the contracting agencies, the following delegations to
Chief Executives with respect to the award of contracts and incurring of capital
expenditure are relevant. These powers will be subject to budget provisions
and policies laid down by the Board. Interpretations on the same are as given
below :
2.1 Delegations on Capital Expenditure
* Item 3.2: Excess over estimates of capital schemes approved by

higher authority where such excess is more than 10% of the whole
or any of the component part of the approved project.
Interpretation:
On capital schemes approved by higher authority, Chief Executive has powers to
accord approval of expenditure (as whole or any of the component part) within
110% of the approved estimated cost. Wherever cost estimates have been
revised and approval of higher authority is taken, the revised cost shall be
considered as the approved estimates/approved cost for this purpose.
* Item 3.3: In the case of approved project, any estimates exceeding

Rs.200 lakh not forming part of a component indicated in the
Detailed Project Report.
Interpretation:
In case of an approved project, Chief executive may approve additional estimates
(over and above the approved estimates) up to a limit of Rs.200 lakh in each case
even if the additional work may not be a part/component of Detailed Project
Report, but is required to be done for completion of the Project.
* Item 3.4: Any deviation resulting in substantial modification in and/or

the scope of the Project for which sanction has already been given
by Competent Authority.
Interpretation:

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For any deviations resulting in substantial modification in and/or the scope of the
Project, sanction of competent authority (i.e. who has sanctioned the project
initially) is to be obtained by the Chief Executive. Any change in scope of work
resulting in increase in cost beyond 5% of the originally approved cost and 3% of
the latest approved cost excluding increase due to statutory levy, exchange rate
variation, price escalation etc. during the approved project time cycle shall be
considered as substantial modification. [This is in accordance with O.M.
No.1(6)/PF-II/91 dated 24th August, 1992 of Department of Expenditure, Ministry
of Finance, Government of India]
2.2 Delegations on contracts
* Item 4.2: Award of any contract or entering into any commitment

relating to works and equipment (including supplies) of the value
exceeding Rs.50 crore in each case provided such works or
equipment for a component of the project report/cost estimate
already sanctioned or the value of such contract/commitment
exceeds the approved estimates and/or for any component thereof
by more than 10%.
Interpretation:
For a project or a component of the project where project report/cost estimates
are already sanctioned , Chief Executive of the plant/unit has powers to approve
placement of orders or enter into any commitments not exceeding Rs. 50 crore in
each case relating to works and equipment. However, during execution of the
contract, Chief Executive shall limit expenditure (as whole or any of the
component part) within 110% of the approved estimated cost.
For a project costing more than Rs.50 crore, the contracts can only be awarded
with the approval of the higher authority.
* Item 4.4: Acceptance of disputed claims for the value of Rs.20 lakh.
Interpretation:
i) For disputed claims (such claims for which assertion has been made by a
Contractor but repudiated by the plant), the Chief Executive can accept the
claim for a value not exceeding Rs.20 lakh. The approval of the higher
authority (Chairman/Board) is required to be obtained for settlement of
claims exceeding Rs.20 lakhs before making any commitment/payment.
When approval of higher authority is required Plant/Units should make
specific recommended action.
ii) Chief Executive to decide and settle all the contractual/claims issues with the
contracting agency/party at his/plant level. In case, it is felt by the Chief
Executive that disputed claims are not payable, the Chief Executive should
accordingly inform the concerned contracting agency/party and such
claims/matters need not be referred to the higher authority.
iii) For disputed claims exceeding Rs.20 lakhs, where Chief Executive
recommends that payment may be made to the contracting agency/party, in

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such cases only, the recommendations of the Chief Executive shall be

referred to the higher authority for consideration and approval. The details of
such disputed claims should be accompanied by comprehensive report
stating the contractual position with respect to the contract clauses along
with full reasons/justification for recommending such payments.
iv) Wherever the approval of the higher authority is sought, the clause/s of the
delegations of power under which the Chief Executive is not empowered to
decide the issues is required to be mentioned invariably.

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ANNEXURE-12
Guidelines regarding Removal from List of Suppliers, Suspension

and Banning of Business dealings with Unscrupulous Companies
1. Introduction
1.1 Steel Authority of India Ltd, being a Public Sector Enterprise, is State within the
meaning of Article 12 of the Constitution and every person has a right to deal with
SAIL. It has to ensure that Fundamental Rights enshrined in Chapter III of the
Constitution of India are observed in letter and spirit. SAIL has also to safeguard
its commercial interests and would prefer to deal with Companies/Parties with high
sense of integrity. It would be in SAILs interest NOT to deal with unscrupulous
Companies/Parties which play deception, fraud or commit criminal offences or
misconducts. In this context, following observation of the Honble Supreme Court in
Erusion Equipment and Chemicals Ltd. Vs. State of West Bengal (AIR 1975 SC
266) are relevant and are reproduced below:
Blacklisting* has the effect of preventing a person from the privilege and
advantage of entering into lawful relationship with the Government for purposes of
gains. The fact that a disability is created by the order of balcklisting indicates that
the relevant authority is to have a objective satisfaction. Fundamental of fair play
require that the person concerned should be given an opportunity to represent his
case before he is put on the blacklist. [*Now called Banning of Business
Dealings].
The State which has the right to trade has also the duty to observe equality. The
Government cannot choose to exclude persons by discrimination. The order of
blacklisting has the effect of depriving a person of equality of opportunity in the
matter of public contract. A person who has been dealing with the Government in
the matter of sale and purchase of materials has legitimate interest or expectation.
When the State acts to the prejudice of a person, it has to be supported by legality.
The State can enter into contract with any person it chooses. No person has a
fundamental right to insist that the Government must enter into a contract with him.
A citizen has a right to claim equal treatment to enter into a contract which may be
proper, necessary and essential to his lawful calling. Where the blacklisting order
involves civil consequences, it casts a slur. It creates a barrier between the
persons blacklisted and the Government in the matter of transactions. The
blacklists are instruments of coercion. Hence person must be given an
opportunity of hearing before his name is put on the blacklist.

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The above judgement has been upheld by the Honble Supreme Court in its
subsequent rulings and the principle enunciated above applies to the public sector
enterprises like SAIL. The latest case on the subject is Raghunath Thakur Vs.
State of Bihar (AIR 1989 SC 620). It was contended on behalf of the State
Government that there was no requirement in the rule of giving any prior notice
before blacklisting any person. The Honble Supreme Court observed that in so far
as the contention that there is no requirement specifically of giving any notice is
concerned, the respondent is right. But it is an implied principle of the rule of Law
that any order having civil consequence should be passed only after following the
principles of natural justice. It has to be realised that blacklisting any person in
respect of business ventures has civil consequences for the future business of the
person concerned in any event. Even if the rules do not express so, it is an
elementary principle of natural justice that parties affected by any order should
have right of being heard and making representations against the order.
2. Scope
2.1 The General Conditions of contracts of SAIL generally provide that SAIL. reserves
its right to remove from List of Approved Suppliers or to ban Business Dealings if a
Company has been found to have committed misconduct as also to suspend
Business Dealings pending investigation. If in any GCC such a permission does
not exist, it may be incorporated.
2.2 Similarly in case of sale of material there is a Clause to deal with

customers/buyers, who indulge in lifting of material in unauthorised manner. If in
any Sale Order, such a stipulation does not exist, it may be incorporated.
2.3 The procedure of (i) Removal of Companies/Parties from the List of Approved
Suppliers; (ii) Suspension; and (iii) Banning of Business Dealing has been laid
down in these Guidelines.
2.4 These Guidelines apply to all the Plants/Units and Subsidiaries of SAIL.
2.5 It is clarified that these guidelines do not deal with the decision of the Management
not to buy any particular product due to its poor/inadequate performance or for any
other reason.
3. Definitions
In these Guidelines, unless the context otherwise requires :
i) Company/Party shall mean and include a public limited company or a

private limited company, a firm whether registered or not, an individual, a
co-operative society or an association or a group of persons engaged in
any commerce, trade, industry, etc.
ii) Inter-connected Companies shall mean two or more companies having

any of the following features:
a) If one owns of controls the other in any manner;

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b) If the Directors, Partners, Managers or Representatives are

common;
c) If management is common;
d) If one is a subsidiary of the other.
iii) Competent Authority shall mean the following:
a) The Managing Director/Executive Director/Chief Executive of the

Plants/Units of SAIL.
b) Vice-Chairman/Functional Directors of SAIL.
c) Any other authority nominated by Chairman, SAIL.
iv) Appellate Authority shall mean Chairman, SAIL or any other authority
nominated by Chairman, SAIL. Appellate Authority shall be higher than the
Competent Authority.
v) Investigating Department shall mean any Department or Unit Investigating

into the conduct of the Company/Party and shall include the Vigilance
Department, Central Bureau of Investigation, the State Police or any other
agency set up by the Central or State Government having powers to
investigate.
vi) List of approved suppliers shall mean and include list of

Approved/Registered Suppliers, Contractors, Builders, etc.
4. Suspension of Business
4.1 If the conduct of any Company/Party dealing with SAIL is under investigation by
any department, the Competent Authority may consider whether the allegations
under investigation are of a serious nature and whether pending investigation, it
would be advisable to continue business dealing with the Department/Company/
Party. If the Competent Authority, after consideration of the matter, including the
recommendation of the Investigating Department, if any, decides that it would not
be in the interest of SAIL to continue business dealings pending investigation, it
may suspend business dealings with the Company/Party. The order to this effect
may give list of the charge under investigation. If it is decided that inter-connected
Companies would also come within the ambit of the order of suspension, the order
should specifically say so. The order of suspension would operate for a period not
more than six months and may be communicated to the Company/Party as also to
the Investigating Department. The Investigating Department may ensure that their
investigation is completed well before the period of six months.
4.2 The order of suspension shall be communicated to all Departmental Heads within
the Plant/Unit and during the period of suspension, no business dealing may be
held with the Company/Party.

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4.3 As far as possible, the existing contracts with the Company/Party may continue
unless the Competent Authority, having regard to the circumstances of the case,
decides otherwise.
4.4 If the gravity of the misconduct under investigation is very serious and it would not
be in the interest of SAIL, as a whole, to deal with such a Company/Party pending
investigation, the Competent Authority may send his recommendation to CVO of
the Corporate Office alongwith the material available. If the Corporate Office
considers that depending upon the gravity of the misconduct, it would not be
desirable for all the Plants/Units and Subsidiaries of SAIL to have any dealings
with the Company/Party concerned, an order suspending business dealings may
be issued to all the Plants/Units by the Competent Authority of the Corporate
Office, copy of which may be endorsed to the Company/Party concerned. Such an
order would operate for a period of 6 months from the date of issue.
4.5 The Corporate Office would communicate the order to the MD/Chief Executives of
all the Plants/Units and also to the Company/Party.
4.6 During the 6 months when the order of suspension is in operation, the Competent
Authority, which issued the order, may review the order to suspension either on
receipt of a representation from the Company/Party or suo-moto. If the
Competent Authority considers, in the light of its review, that the order may be
revoked, it may do so by issuing an order and communicating the same to all
concerned.
4.7 If the company/party concerned asks for reasons of suspension, the

company/party may be informed that its conduct is under investigation but it is not
necessary to enter into correspondence or argument with the company/party at this
stage.
4.8 It is not necessary to give any show-cause notice or personal hearing to the
company/party before issuing the order of suspension. However, if investigations
are not complete in 6 months time and the Competent Authority considers that
suspension may continue beyond 6, Show Cause Notice may be given to the
company/party concerned.
5. Banning of Business Dealings
5.1 If the investigations, prima facie, establish the misconduct of the Company/Party
concerned, the Competent Authority may consider whether the misconduct prima
facie established warrants removal from the list of Approved Suppliers or it is
serious to ban business dealings and whether such a ban should be restricted to
the Plant/Unit concerned or it may be applied by all the Plants/Units of SAIL.
5.2 Some of the grounds on which business dealings may be banned are enumerated
below:
a) If the security consideration, including questions of loyalty of the

Company/Party to the State, so warrants;
b) If the Director of the Company, proprietor or partner of the firm,

manager/representative of the Company/Party is convicted by a Court of

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Law for offences involving moral turpitude in relation to its business

dealings with the Government or any other public sector undertaking or
SAIL.
c) If there is strong justification for believing that the Directors, Proprietors,

Partners, Managers of Representatives of the Company/Party have been
guilty of malpractices such as bribery, corruption, fraud, substitution of
tenders, interpolations etc.
d) If the Company/Party continuously refuses to return the dues of SAIL

without showing adequate cause and this is not due to reasonable dispute
which would attract proceedings in arbitration or Court of Law.
e) If the Company/Party employs a public servant dismissed/removed or

employs a person convicted for an offence involving corruption or abutment
of such offence.
f) If business dealings with the Company/Party have been banned by the

Govt. or any other Public Sector Enterprise.
(Note: The examples given above are only illustrative and not exhaustive
and the Competent Authority may decide to ban business dealing for any
good and sufficient reason)
5.3 Banning of Business Dealings would be of two types:
i) Banning of business dealings restricted to the Plants/Units concerned; and
ii) Banning of business dealings by all the Plants/Units/Subsidiaries of SAIL.
6. Banning of business dealings restricted to the Plant/Unit concerned
6.1 There will be a Standing Committee in each Plant/Unit to be appointed by Chief

Executive for processing the cases of Banning of Business Dealings. The
functions of the Committee shall, inter-alia, include:
i) Study the Report of the Investigating Agency and decide if a prima-facie

case for banning exists.
ii) To recommend issue of Show Cause Notice to the party by the concerned
department dealing with the party.
iii) Examine the reply to Show Cause Notice and call the party for personal
hearing, if required.
iv) Final recommendation of Chief Executive for banning or otherwise.
6.2 If the Competent Authority decides that business dealings with the Company/Party
should be banned, a Show Cause notice may be issued to the Company/Party as
per paragraph 9.1 and an enquiry held accordingly.
7. Banning of Business Dealings by all the Plants/Units/Subsidiaries of SAIL

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7.1 If in the opinion of the Competent Authority, guilt or misconduct of the

Company/Party has been so serious that all the Plants/Units/Subsidiaries of SAIL
should also ban business dealings with the Company/Party, the proposal should
be sent to the CVO of the Corporate Office of SAIL setting out all the facts of the
case and the justification for the action proposed alongwith all the relevant papers
and document.
7.2 The Competent Authority of the Corporate Office would examine the entire case
and where it concurs that prima facie the ban should cover all the
Plants/Units/Subsidiaries of SAIL, a Show Cause Notice in the manner prescribed
in para 9.1 may be issued to the Company concerned.
8. Removal from List of Approved Suppliers etc.
8.1 If the Competent Authority decides that the charge against the Company/Party is of
a minor nature, it may issue a Show Cause Notice as to why the name of the
Company/Party should not be removed from the list of Approved Suppliers, etc.
8.2 The effect of such an order would be that the Company/Party would not be
disqualified from competing in Open Tender Enquiries but LTE may not be given to
the Company/Party concerned.
8.3 Past Performance of the Company/Party may be taken into account while
awarding the contract.
9. Procedure for issuing Show Cause Notice
9.1 In case where the Competent Authority decides that action against a
Company/Party is called for, it may issue a Show Cause Notice to the
Company/Party. Statement containing the imputation of misconduct or
misbehaviour may be appended to the Show Cause Notice and the
Company/Party should be asked to submit within 15 days a written statement in its
defence.
9.2 If the Company/Party requests for inspection of any relevant document in

possession of SAIL, necessary facility for inspection of documents may be
provided.
9.3 The Competent Authority on receipt of reply to the Show Cause Notice and
recommendation of Standing Committee or where no reply is received, may
consider the same and pass an appropriate speaking order:
a) Exonerating the Company/Party if the charges are not established.
b) Removing the Company/Party from the list of Approved Suppliers etc.
c) Banning Business Dealing.
9.4 If it decides to ban business dealings, the period for which the ban would be
operative may be mentioned. The order may also mention that the ban would
extend to the interconnected Companies of the Company.

Projects
10. Appeal against the decision of the Competent Authority
10.1 The Company/Party may file an appeal against the order of the Competent
Authority banning business dealing etc. The appeal shall lie to Chairman, SAIL.
Such an appeal shall be preferred within one month from the date of receipt of the
order banning business dealing, etc.
10.2 Chairman would consider the appeal and pass appropriate order which shall be
communicated to the Company/Party as well as the Competent Authority.
11. Circulation of the names of the Companies/Parties with whom Business

Dealings have been banned
11.1 Depending upon the gravity of misconduct established, the Competent Authority of
the Corporate Office may circulate the names of Companies with whom Business
Dealings have been banned to the Government Department, other Public Sector
Enterprise etc. for such action as they deem appropriate.
11.2 If Government Department or a public Sector Enterprise requests for more

information about the Company/Party with whom Business Dealings have been
banned, a copy of the Report of Inquiring Authority together with a copy of the
order of the Competent Authority/Appellate Authority may be supplied.
11.3 If business dealing with any Company/Party has been banned by the Central or
State Government or any other Public Sector Enterprise, SAIL may, without any
further enquiry or investigation, issue an order banning business dealing with the
Company/Party and its inter-connected Companies.


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Projects

1. Project is to be broken up into well identifiable packages. This will facilitate

3. Tender specifications should be prepared precisely so as not to leave room for

Project Directorate, SAIL Manual for Project Contracts Management Systems

prices are considered to be reasonable. In cases where the negotiations are

7. All decisions regarding bid evaluation/recommendation should be by consensus

10. Release of payments should ordinarily be linked to the attainment of milestones

13. The contract should provide liquidates damages up to a maximum of 7.5% of

Project Directorate, SAIL Manual for Project Contracts Management Systems

CONTRACTS MANAGEMENT ORGANISATION

The following aspects are to be considered while organising the Contracts

(ii) Within the Contracts Management Department, single point responsibility

(iii) Contract Co-ordinator to co-ordinate all contract activities within Contracts

(iv) The Organisation of Contracts Management Department may be

2.2 Procurement Group

(i) Mechanical Equipment Contracts

The project is sub-divided into various equipment packages. Mechanical

Project Directorate, SAIL Manual for Project Contracts Management Systems

electrical and instrumentation equipment packages by electrical and

The details of organisation within Procurement Group will depend on the

2.3 Works Contracts Group

Works contracts group will basically be responsible for placement of orders/

2.4 Equipment Planning Group

Equipment Planning Group will be responsible for co-ordination of the

2.5 Stores Group

2.6 Turnkey Contract Group

2.7 Consultancy Contracts Group

This group will exclusively look after consultancy contracts.

Project Directorate, SAIL Manual for Project Contracts Management Systems

CONTRACT MANAGEMENT FUNCTIONS

Contract Management System calls for sharing of responsibilities by the

3.2 Contract Management Functions/Activities

The activities involved in contract management along with responsibility are

Sl.No. Activity Resposibility

Project Directorate, SAIL Manual for Project Contracts Management Systems

10. Issue of bidding documents CONTRACTS

Project Directorate, SAIL Manual for Project Contracts Management Systems

equalisation of scope CONSULTANT

Sl.No. Activity Resposibility

Project Directorate, SAIL Manual for Project Contracts Management Systems

preparation of L-2 Network for CONSULTANT

Project Directorate, SAIL Manual for Project Contracts Management Systems

57. Approval of GA drawings, etc. PED/CONSULTANT

Sl.No. Activity Resposibility

Project Directorate, SAIL Manual for Project Contracts Management Systems

76. Electricity & water provision to PROJECTS

Sl.No. Activity Resposibility

Project Directorate, SAIL Manual for Project Contracts Management Systems

ii) Progress follow-up up to CONTRACTS

Sl.No. Activity Resposibility

Project Directorate, SAIL Manual for Project Contracts Management Systems

of all the Bank Guarantees

Project Directorate, SAIL Manual for Project Contracts Management Systems

CONTRACT PACKAGING AND MODE OF IMPLEMENTATION

4.2 Contract Package Design

Following factors should be taken into consideration while developing a list of

v) It should be ensured that the terminal points/battery limits between sub-

4.3 Mode of Implementation

In turnkey concept, entire responsibility right from design to commissioning is

Project Directorate, SAIL Manual for Project Contracts Management Systems

4.4 Scope of Work

4.4.1 Turnkey Packages