Transcript POM 370

Procurement, Execution & Materials Management.
General and special Conditions of Contracts,pre Order
tie-ups and MOUs
V K Mathur
Dy. General Manager I/c (MM)
Steel Authority of India Limited
R & D Centre for Iron & Steel
Procurement is the acquisition of goods,
services or works from an external source. It is
favorable that the goods, services or works are
appropriate and that they are procured at the
best possible cost to meet the needs of the
purchaser in terms of quality and quantity,
time, and location. Corporations and public
bodies often define processes intended to
promote fair and open competition for their
business while minimizing exposure to fraud
and collusion.
Public Procurement can be defined as the
procurement of goods, works and services
by all Govt. Ministries, Departments,
Agencies, Statutory Corporations and Public
Sector Undertakings in the Centre and the
States, Municipal Corporations and other
local bodies and even by private Public
Sector Undertakings providing public
services on monopoly basis award of Public
Private Partnership projects.
 Transparency
 Fairness
 Efficiency
 Economy
 Adherence to laid down procedures
"Public Private Partnership" means, an arrangement
between the Central Government, statutory entity or
any other Government owned entity on one side and a
private sector entity on the other, for the provision of
public assets or public services or both, through
investments being made or management being
undertaken by the private sector entity, for a specified
period of time, where there is defined allocation of risk
between the private sector and the public entity and
the private entity receives performance linked
payments that conform (or are benchmarked) to
specified and predetermined performance standards,
measurable by the public entity or its representative.
 Material management is an approach for
planning, organizing, and controlling all those
activities principally concerned with the flow of
materials into an organisation
 5 R’s of Materials Management:
► Of Right Quality
► In Right Quantity
► At Right Time
► At the Right Cost
► From the Right Source
Raising of
Indent
Finance
Screening
Committee
Budget
Clearance
MMD
Tender
Opening
Issue of
Enquiry
Enq. Proposal
& Approval
Scrutiny of
Indent
Indent
Registration
Techno-comml
Purchase
Proposal
Issue of
Order
Follow up with
Evaluation
Clarification
From Parties
Issue
of Materials
Storage
of Materials
Acceptance
Inspection
Supplier
Receipt of
Material

Limited Tender Enquiry

Open Tender Enquiry

Global Tender Enquiry

Single Tender Enquiry ( for Proprietory Items)

Single Tender Enquiry ( Non-Proprietory Items)*

Repeat Order*

Emergency Purchase*
The General Conditions of Contract (GCC) shall apply to all procurement
contracts done by the oganisation. These General Conditions are intended
primarily for use in lump sum contracts but may be applied to other categories
of contract and as modified with the Special Conditions of Contract (SCC).
Special Conditions of Contract (SCC) shall be read in conjunction with the
General Conditions of Contract (GCC) also referred to as General Terms &
Conditions of Works Contract, Schedule of Quantities, Specifications of work,
drawings and any other document forming part of this Contract wherever the
context so requires.
Where any portion of the GCC is repugnant to or at Variance with any
provisions of the Special Conditions of Contract, then unless a different
intention appears, the provision(s) of the Special Conditions of Contract shall
be deemed to override the provision(s) of GCC only to the extent that such
repugnancy or variations in the Special Conditions of Contract are not
possible of being reconciled with the provisions of GCC.
► Indent Estimate should be judiciously prepared
►For frequently purchased items – Last Purchase Price (LPP)
should be taken into consideration.
►For Slow moving / new items – estimate should be prepared
taking into consideration the input cost of material and
technology cost etc. w.r.t to budgetary quotations obtained.
►For proprietary items: Manufacturer’s price list / rates with
discounts, if any , should be taken into consideration.
►For Labour oriented Jobs , the latest rate of wages should be
taken into consideration while preparing estimate.
►For Job contracts, if L-1 price is less as compared to the lower
range of estimated price, the L-1 party will be asked to justify the
rates quoted which is to be examined by Indentor. On nonacceptance of justification, the party will be asked to furnish PGB
of differential amount
1.
All tech. points offered by party viz a viz TS
requirement to be examined
2.
All items/services as per BOM to be examined
3.
Avoid using phrases like “offered as per TS” or
“specs offered by party”
4.
All models/makes offered by party to be examined
& acceptability to be indicated
5.
Final TCS to be prepared after examining & taking
into consideration of all the clarifications giving
reference in TCS too.
Party may be invited for discussion in high value
cases
7. First, Eligibility to be checked minutely
6.
 Scope of Facilities
 Completion Time
 Contractor’s Responsibilities
 Employer’s Responsibilities
 Payment Terms, Taxes and Duties
 Confidential Information: Patent, Copyright
 Work Execution
 Test and Inspection
 Guarantee and liabilities
 Dispute Settlement, Risk Distribution
 SCOPE OF FACILITIES
 COMPLETION TIME
 PAYMENT TERMS
 WORK EXECUTION
 TEST AND INSPECTION
 GUARANTEES AND LIABILITIES
 PO
details to be checked by Indenting Group.
Discrepancies if any to be informed to MMD
 Kick off meeting with the Party / Plant/ RDCIS
 Protocol of the activities to be duly signed
 Billing schedule to be frozen & approved
 Back–up documents for LD to be maintained
 Timely follow-ups for delivery, inspection, I&C, PAC,
FAC, etc
 All correspondences to be made with a copy to MM
 Commercial issues, to be referred to MM
 No additional supply / job / alteration to Scope shall be
allowed during execution.
 Nomination of Representative: Employer, Contractor
 Co-operation with Other Contractors
 Work Program
 Progress Report
 Progress of Performance
 Manpower Requirement for Operation & Maintenance
of Facilities
 Training
 subcontracting
 Design and Engineering
 Codes and Standards
 Approval
/ Review of Technical Documents by
Engineer / Consultant
 Civil Engineering Work
 Structural Load Test
 Royalties for the Construction Materials
 explosives
 Import License & Export License
 Packing
 Transportation
 Customs Clearance
 Installation
 Labour and Labour Rules
 Compliance
with Statutory Laws
Regulations of Govt. / Local Authority
 Site Regulations and Safety
 Erection
 Emergency Work
 Site Clearance
 Test and Inspection
 Preliminary Acceptance
and
Other
 Commissioning
 Performance Guarantee Test
 Final Acceptance
 CONTRACT: Contract Agreement entered into between
the Employer and the Contractor, together with the
Contract Documents constitute the Contract
 TECHNICAL
SPECIFICATIONS/CONTRACT
TECH.
SPECIFICATION: Technical Specifications, schedules,
detailed designs, statements of technical data,
performance characteristics value and all other technical
particulars of the Contract
 CONTRACTOR: The person(s) whose bid to perform the
Contract has been accepted by the Employer and is
named as such in the Contract Agreement, and includes
the legal successors or permitted assigns of the
Contractor. In case Contract is with Consortium of two
or more members then the contractor shall mean one or
more members of Consortium as the case may be.
 CONTRACTOR’S REPRESENTATIVE: Person nominated
by the Contractor and approved by the Employer hereof
to perform the duties delegated by the contractor. For
site work Contractor’s Representative shall also mean
the representative of Sub-Contractors and SubContractor’s Sub-Contractors
 SUB-CONTRACTOR:
Including vendors, means any
person to whom execution of any part of the Facilities,
including preparation of any design or supply of any
Plant and Equipment, is sub-Contracted directly or
indirectly by the Contractor, and includes its legal
successors or permitted assigns.
 FACILITIES:
The work specified in Technical
Specification, including General Technical Specification
and all supply & services to be carried out by the
Contractor under the Contract.
 INSTALLATION
SERVICES/SERVICES: All those services
ancillary to the supply of Plant and Equipment for the Facilities,
to be provided by the Contractor under the Contract; e.g., design
& engineering, supervision work, Customs & Port clearance,
loading & unloading, dismantling & modification, intermediate
storage, transportation & provision of insurance, inspection, site
preparation works, installation, testing, commissioning,
demonstration of performance guarantee tests, training, etc.
 CONTRACTOR’S EQUIPMENT: All plant, equipment, machinery,
tools, apparatus, appliances or things of every kind required in or
for installation completion and maintenance of Facilities that are
to be provided by the Contractor, but does not include Plant &
Equipment, or other things intended to form or forming part of
the Facilities.
 SITE: The land and other places upon which the Facilities are to
be installed, and such other land or places as may be specified in
the Contract as forming part of the site.
 EFFECTIVE DATE OF CONTRACT: The date of signing of
Contract or 30 days from date of Letter of acceptance
(LOA), whichever is earlier
 TIME FOR COMPLETION: The time specified in the
Contract Agreement within which Completion of the
Facilities as a whole (or of a part of the Facilities 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 Agreement and the
relevant provisions of the Contract
 PRELIMINARY ACCEPTANCE OF THE FACILITIES: The
Facilities 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 have been completed; in other words, that the
Facilities are fit for Start-up & Commissioning.
 PRELIMINARY
ACCEPTANCE CERTIFICATE: The
Certificate to be issued by the Employer on successful
completion of preliminary Acceptance Tests
 COMMISSIONING: Operation of the Facilities by the
Contractor to a level of output
 COMMISSIONING CERTIFICATE: The Certificate to be
issued by the
commissioning
 PERFORMANCE
Employer
on
completion
of
GUARANTEE TEST: The test(s)
specified in the Technical Specifications to be carried
out to ascertain whether the Facilities are able to
attain the Performance Guarantees specified in the
Contract
 PERFORMANCE
GUARANTEE CERTIFICATE: The
Certificate to be issued by the Employer upon
successful establishment of Performance Guarantee
Parameters
 FINAL
ACCEPTANCE: The acceptance by
Employer of the Facilities which certifies
Contractor’s fulfillment of the Contract
the
the
 FINAL ACCEPTANCE CERTIFICATE: The Certificate to
be issued by the Employer on Final Acceptance of
System
 DEFECT LIABILITY PERIOD: The period of validity of
the Warranties given by the Contractor commencing
from the date of Commissioning of the Facilities,
during which the Contractor is responsible for defects
with respect to the Facilities
 Memorandum of Understanding (MOU) is a common
understanding reached between parties to do or not to
do certain things or work or act.
 Under an MOU obligations are moral but in a contract
rights and obligations are legal
 No legal right flows from MOU unless contents of
MOU expressly provides so
 It is contents of MOU which will determine the nature
and character of the documents as to whether it is
MOU or contract
 Mere heading of a document as MOU will not make it
MOU
 Witness should be avoided
 No legal clauses such as arbitration, force majeure,
severability, fee, payment terms, tax clauses,
indemnity. Liability, guarantee/warranty etc. should be
written in MOU
 If intention is to create Under an MOU it would be
treated as contract and not MOU
 If intention is not to create legal rights, then at the end
of MOU it should be expressly written that parties
shall within specified time sign a legally enforceable
contract
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