Contracts in Organizations

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Awarding Contracts :

How to define a Contract: A contract simply means the process of entering into an agreement in writing to provide services for a specified period of time say one or two years or supply of items or manpower for a specified period under mutually agreed terms and conditions between two parties forming the agreement between Contractor and Contractee.  

Essentials of a Contrat:

A Contract needs the following :

01. A Person or a Contractee who is in need of hiring a contractor.

02. A Contractor, who agrees to the contract or provider of a service

03. A valid Agreement, Offer, and Acceptance of the Offer. 

04. Interest, the parties to the contract show some inclination or interest in contracting with the other party.

05. Purpose, there should be a purpose or services.

06. Making the Offer and Acceptance of the Offer.

07. Mutual Agreement to the Offer.

08. Time Period, the agreement will be entered into between parties to the contract for a specified time period, say one or two years.

For every Organization there are some particular systems implemented for hiring Contracts.  

Tendering Process: means by way of publishing Enquiries or by giving notifications on the websites of respective organizations regarding the work to be executed or procurement to be done.  Nowadays, almost all the Contracts are awarded through e-tendering processes, earlier there were newspaper ads to invite bids from interested parties to a contract.

Collection of Bids/Submission of Bids:  Both parties to a contract should be clear about the concept and need to be mentioned in clear words to understand the work and its nature or the item details to be supplied.  The contractor submits his bids in a sealed envelope or online to the respective Organization by quoting their price brackets for each work or for each item.

EMD(Earnest Money Deposit): Every contractor needs to deposit some amount towards the Deposit at the time of submitting the bid when the contractee announces their requirement, against which the contractor responds and agrees to the request or accepts the offer of the contractee, which will be released by the buying Organization upon completion of the contract, the Security Deposit should be released without any hesitation.

A Consolidated List of Specialised Vendors: It is to be noted that every organization keeps a list of qualified vendors in their record for issuance of inquiries to suitable vendors as and when the requirement arises.  In case the work type is new and has never been done in the past then it will be published on the Website or in the newspapers, as there may not be a consolidated list of Vendors, the vendors need to be registered in the Organization where they are willing to take up any work likely arise in future. Whenever a Company or Unit is in need of a contractor or supplier, they issue a notification to that effect. Bids are invited from suitable vendors and there would be a Tender Money is a must for engaging a contractor for various services.

Experience of the Contractor is important: An Organization that needs to hire a contract should specify in its notification how and why the work should be done and the bidder will quote the appropriate amount after proper calculations for such type of work.  The contractor may have undertaken such work in the past, normally Any organization that needs a contractor or service provider usually searches for an experienced one because if the contractor is new then they do not have sufficient experience or expertise in that line, therefore, before going into an agreement for doing some work the buying Organization will check the experience of the contractor on the same lines.  

Sealed Envelopes-Confidentiality: Normally the buying Organization specifies that the Contractor should submit their bid in a sealed cover for confidentiality of the terms and price offerings.  After completion of the period of bid submission, the Organization concerned takes out the Bids from the Box and makes a list of the bidders and a date will be scheduled for opening the bids, which will be intimated to the concerned contracting agencies. In the case of e-tendering, the computer system will workout the calculations and the contract will be awarded accordingly. The price bids will be opened only if the Organization offering the service meets with the Technical feasibility. The contracting agency representatives will be called at the time of opening the bids.  

Technical Bid and Price Bid: There may be separate dates for the Technical Bid and Price Bid because same-day opening price bid and technical bid may not be possible.  On the date of opening of the price bid, the lowest bidder will be negotiated on the price quoted if the price quoted is much higher when compared to the estimated price by the buying organization.  If the selected bidder agrees to offer discounts on his quoted price, if the Organization concerned feels that the discount offered is ok then it will be taken in writing from the contractor that he is ready to offer this much discount on the offered rates.  Accordingly, the Service Order will be issued to the specific vendor who stands on "L1" rates.

Monthly Payment / Running Bills: For each contract document, there is a Scope of Work, General Terms and Conditions, etc. including Payment terms.  Some contracts may have payment after completion of all work and in some other cases, monthly running bills will be submitted by the contractor and payment will be released accordingly by the Contractee.

Work Completion and No Due:  Every contractor who contracts with the contractee needs to clear No Dues for final bill payment release and the document will be signed by various Departmental Representatives for the purpose of clearance.

Written by MBN







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