TENDERING SYSTEM IN SO=
UTH EAST
CENTRAL COALFIELD LTD (SECL) AND SOUTH EAST CENTRAL RAILWAY (SECR) - A
COMPARATIVE STUDY
= &nb= sp; = By - DIPANKAR LAHIRI , FA & CAO (F&B)
= &nb= sp; = = &nb= sp; SEC Railway
With a view to enriching = the scope and content of a BPR (Business Process Reengineering ) study in respect of preparation of estimates= and finalization of tenders, it was thought prudent to gain an understanding of= the features of the tendering system as they prevail in South East Central Coalfield Ltd.(SECL) - a leading PSU at Bilaspur.
Towards this end, detailed discussions were held with Senior Executives of SECL belonging to engineeri= ng, finance and vigilance departments. They included Shri A.R. Komawar, General Manager (Finance), Shri Vinod Kumar, Chief Engineer (Civil), Shri B.K.Kasid= , DY. Chief Engineer (Civil) and B.K. Jha General Manager (Vigilance) . From the railways, CE, CE (Con.), CEE, CSTE (Con) and a number of JAG Officers were present during the discussions.
A lively exchange of views with SECL’s Executives enabled us to gain a valuable insight into the procedures being adopted by the leading PSU in regard to finalization of tenders and helped us further refine our own ideas in the process.
The distinguishing fea=
tures of
the tendering system followed by SECL are as under: -
1. The detailed estimates prepa= red by SECL are basically a replica of the SOR (Schedule of Rates) whereas in the = Railways the description of the item in the detailed estimates is grossly at variance with those of SOR.
This leads to a situation= in which the ‘Schedule of works’ prepared subsequently for floatin= g a tender against these estimates have little in common with what is shown in = the sanctioned detailed estimate leading, in turn, to difficulties in ensuring whether the rates shown in the schedule are in conformity with those shown = in the estimate.
In the cas= e of SECL this problem dose not arise. To overcome this difficulty in the Railways, estimates can be prepared in such a way as to correspond with the SOR.
2. In the case of SECL the L= ast Accepted Rate along with its source is invariably mentioned in the detailed estimate. In the Railways this is never done. When a detailed estimate is s= ent to finance for vetting, the rates shown in the estimate are compared with L= AR. But even after vetting is accorded, the LAR rates are not shown in the esti= mate along with their source (I.e., Agreement no., P.O. no. etc).
Since the estimated rates are compared with LAR, there dose not seem to be any reason= as to why these rates along with their sources cannot be reflected in the estimate. This practice of mentioning the LAR along with their sources in t= he detailed estimate would make the task of&n= bsp; comparing rates easier for the Tender Committee as well. Hence, this system could be adopted by the railways.
3. It was learnt from SECL Executives = that their detailed estimates are prepared only after 90% of the standard drawin= gs are ready. This is not the case with the Railways. Hence, an earnest endeav= or should be made to have all drawings ready before preparing the detailed estimate so that estimation of the rates for different items of work can be done realistically.
4. In SECL, a single percentage rate = is asked to be quoted for all items of work. If the quoted rate is 20% lower t= han the departmentally assessed rate for the work, the same is declared as unworkab= le. The departmentally assessed rate is determined on the basis of an average of the LARs .
In the Rai= lways, there are no criteria for declaring a rate as unworkable.
It is suggested, therefor= e, that the departmentally assessed rates should invariably be based on an average = of LARs received over a period of one year and any quoted rate which falls bef= ore the departmentally assessed rate by 30% or more would be declared as unworkable.
5. In SECL, two packet system of tend= ering is adopted in all tenders valuing Rs. 10 lakhs and above. In the railways t= he monetary value of a tender is not the determining criteria for adoption of the two packet system.<= /p>
It is, the= refore proposed to make two-packet system mandatory for all tenders valuing Rs. 1 = Cr and above. The adoption of two-packet system would enable us to stipulate s= pecial conditions for the tenderers, wherever necessary, thereby allowing only fir= ms with proven expertise and impeccable credentials to quote for the work.
6. In SECL, for tenders above Rs. 1 C= r the eligibility criteria for tenderers in respect of a particular tender is determined by a committee of three officers drawn from Engg., Finance and a sister Department. In the Railways this is not done. The introduction of th= is system will allow us to lay down a meaningful set of criteria for execution= of value works. Hence, this system should be adopted by us.
7. In SECL, for tenders valuing less = than 10 lakhs only seven days time is given for opening of the tender. This is n= ot the case in the Railways. To expedite the process of tendering this system = may be adopted by the railways as well.
In SECL, for high value w= orks a notice period of twenty-one days is given whereas the normal notice period = for tenderers in the Railways is 30 days.
8. In SECL, a separate Briefing Note = is not sent to accounts for vetting. Only the Comparative Statement is vetted by t= he Associated Accounts Officer. In the Railways also we may do away with the present system of getting Briefing note vetted by Accounts. There is hardly= any financial angle to the Briefing Note and, hence, its vetting by Account is considered redundant.
9. In SECL, a standardized form= at exists for the preparation of the Briefing Note. So is the case in Eastern Railway. In SECR a standardized format for preparation of the Briefing Note should be evolved immediately.
10. A very interesting point emerg= ed during discussions with the SECL’s officers. If there is enough competition in an open tender but the rates obtained are higher/lower than = that of the LAR, the quoted rates should be taken as reflective of the market ra= te and LAR, to that extent, would loose its sanctity. It was felt that the pro= cess of floating an open tender is, in itself, an exercise in market research and rates obtained through this exercise should be deemed to be more realistic = than the LAR. This is a refreshingly new concept which needs to be examined. It = has, however, to be ensured that the system of open tender remains free and fair allowing all interested eligible parties to quote their rates unhesitatingl= y. The matter, it was felt, can be referred to SDGM/SECR for his considered vi= ew on the issues involved.
11. The term ‘simil= ar works’ is not defined in the Railway’s tender notice presently. This leaves scope for differing interpretations to be made of what exactly is signified= by ‘similar works’ by different tender committees and technical members. This need to be done away with and the words ‘similar works&= #8217; should be clearly defined in the tender notice itself.
12. In terms of memorandum no W/47/work= s/454 dt 22.01.01 to the SOP on work matter of S. E. Railway, the total implicati= on of variation in quantities and items including introduction of new schedule/ non-schedule item in a contract has to be limited to 25% of the total value= of the original contract. In case the original contract value exceeds beyond 2= 5%, such cases should be put up to next higher authority for sanction provided = the enhanced value of the contract dose not exceed the power of acceptance of n= ext higher authority.
In every agreement that i= s finalized, a provision exists for variation to the extent ± 25%. This would mean that a contract for R= s. 2 Crs will have an inbuilt provision for variation up to + 25% of the contract value (i.e. up to Rs. 2,50,00,000/-). Now, the power of acceptance of CE/Co= n in respect of a tender is limited to Rs. 2 Crs. Thus, in the event of his accepting a tender for Rs. 2 Crs, the agreement signed subsequently with the tenderer would have a provision for ± 25% variation leaving the poss= ibility for the value of work orders issued to go upto Rs 2,50,00,000/-. In spite of this, however, if a variation of says Rs 1000/- only takes place against th= is contract taking the agreement value to Rs 2,00,001,000/-, it technically go= es beyond the power of acceptance of CE/Con and requires the sanction of the n= ext higher authority. In case this is not obtained, the bill for Rs 1,000/- in excess of Rs 2 Crs is deemed as “Provisional” and gets held up = in Accounts.
On the other hand, item 1= 4 of the same SOP stipulates that only CE and CE/Con can approve excess variation up= to 25% of the contract value or Rs. 25 lakhs whichever is less in respect of contract approved by higher authority. This would mean that if a contract for Rs. 20 Crs has been approved by AGM/GM, CE/Con will be able to approve variation upto Rs. 25 lakhs in respect of that contract. He would, however, remain powerless to approve variation of Rs. 1,000/- in respect of a contra= ct of Rs 2 Crs accepted by him. This is an anomalous situation in which the same authority (viz, CE/Con) has been given, on the one hand, the power to accept variation upto Rs. 25 lakhs in one case and not to accept variation = of even Rs. 1,000/- on the other. This needs to be rectified by rationalizing = the Delegation of powers in the SOP of SECR and making a reference to the Rly. Bd., if necessary.
Against this background, = it was felt that the tender accepting authority should have the power to sanction variation to extent of ±25% of the contract value, irrespective of t= he amount, since this variation clause is an integral part of the agreement which is finalized after acceptance of the tender by that authority. Any variation caused on account of the operation of the 25% variation clause should not be referred to next higher authority but come within the accepting power of the same authority. Variation exceeding (±) 25% should be got approved by the next higher authority only.
Finance will also automat= ically pass all bills against variations upto a limit of 25%.
It needs also to be ponde= red as to whether separate sanction is at all necessary for variation upto 25% sin= ce by virtue of having accorded acceptance to a tender of certain amount, the concerned authority, it is to be deemed, has also accorded sanction to the = acceptance of an amount in excess of the agreement value by 25%. At the time vetting agreements (all of which invariably have a ± 25% variation clause), finance, it may be argued, legitimizes the possibility of the contract amou= nt going up by ±25%. When a contract for Rs. 100/- for example, gets finance vetting, it implies that the agreement amount can go safely upto Rs. 125/- and finance by virtue of according its vetting to the agreement accep= ts this fact. Hence, no separate sanction needs to be taken for operating 25% variation in respect of any contract centered into by any authority irrespective of the value of the contract.
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