Contract, tendering process, agreement

A contract is a legally enforceable agreement between parties creating rights and obligations. A tender is an offer to carry out work or supply goods at a price, made in response to an invitation. The contract agreement is the formal document signed after the tender is accepted.

Tendering process (Public Procurement Act 2063)

1. Need identification and planning: budget approval, procurement plan, design and cost estimate.
2. Preparation of bidding documents: instructions, specifications, drawings, BOQ, conditions of contract.
3. Bid notice: published in newspapers and e-GP for the required period.
4. Issue of documents and clarification: pre-bid meeting, site visit, addenda.
5. Submission of bids with bid security before the deadline.
6. Opening of bids in the presence of the bidders.
7. Evaluation: preliminary examination, qualification, technical and financial evaluation; select the lowest substantially responsive bidder.
8. Notice of intention to award, a waiting period for complaints (7 days), then letter of acceptance.
9. Performance security and signing of the contract.
10. Notice to proceed and commencement.

Plan -> Bid Docs -> Notice -> Submit -> Open
  -> Evaluate -> Award -> Agreement -> Start

Contract agreement

It is the formal written document signed by the employer and contractor after the award, containing: parties, contract price, time, scope, the list of contract documents and their priority, payment terms, securities, and signatures with date and witnesses. It makes the tender binding.

Essential elements of a contract

1. Offer and acceptance
2. Lawful consideration
3. Competent parties (age 18, sound mind)
4. Free consent
5. Lawful object
6. Intention to create legal relations
7. Certainty and possibility of performance
8. Legal formalities (writing, stamp or registration where required)

Notes on the tendering stage

• Bid security (generally not more than 3% of the estimate) protects the employer if the winner withdraws; performance security (about 5% of contract price, higher for abnormally low bids) is taken before signing.
• Bidders may complain to the procuring entity and then the Review Committee within the time fixed by the Act.
• Bids are evaluated only on criteria stated in the bidding documents; negotiation on price is not allowed except as the Act permits.
• Public works are mostly processed through the e-GP system (Bolpatra) for transparency.

Example: For a Rs. 3 crore school building, the office prepares drawings and estimate, publishes the notice, receives sealed bids, opens them publicly, awards to the lowest evaluated responsive bidder, takes performance security and signs the agreement.