DOCUMENT NO: PS:MSX:GCC, REV 01, 1ST JUNE 2012

General Conditions of
Contract
(Common for Power Sector Regions)

2012

BHARAT HEAVY ELECTRICALS LIMITED

General Conditions of Contract (Common for Power Sector Regions) 1st June 2012
(Document No. PS:MSX:GCC, Rev 01)

TABLE OF CONTENTS

1. Chapter-1 : General Instructions to Tenderers

1.1. Despatch Instructions
1.2. Submission of Tenders
1.3. Language
1.4. Price Discrepancy
1.5. Qualification of Tenderers
1.6. Evaluation of Bids
1.7. Data to be enclosed
1.8. Authorisation and Attestation
1.9. Earnest Money Deposit
1.10. Security Deposit
1.11. Return of Security Deposit
1.12. Bank Guarantee
1.13. Validity of offer
1.14. Execution of Contract Agreement
1.15. Rejection of Tender and other Conditions

2. Chapter-2
2.1. Definitions
2.2. Law Governing Contract and Court Jurisdiction
2.3. Issue of Notice
2.4. Use of land
2.5. Commencement of Work

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2.6. Measurement of Work and Mode of Payment

2.7. Rights of BHEL
2.8. Responsibilities of Contractor in respect of Local
Laws, Employment of Workers etc
2.9. Progress Monitoring, Monthly Review and
Performance Evaluation
2.10. Time of Completion
2.11. Extension of Time for Completion
2.12. Over Run Compensation
2.13. Interest Bearing Recoverable Advances
2.14. Quantity Variation
2.15. Extra Works
2.16. Supplementary Items
2.17. Price Variation Clause
2.18. Insurance
2.19. Strikes & Lockout
2.20. Force Majeure
2.21. Arbitration and Conciliation
2.22. Retention Amount
2.23. Payments
2.24. Performance Guarantee for Workmanship
2.25. Closing of Contracts
2.26. Reverse Auction
2.27. Suspension of Business Dealings
2.28. Other Issues

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CHAPTER -1
1. GENERAL INSTRUCTION TO TENDERERS
1.1. DESPATCH INSTRUCTION

i) The General Conditions of Contract form part of the Tender specifications. All pages of the tender
documents shall be duly signed, stamped and submitted along with the offer in token of
complete acceptance thereof. The information furnished shall be complete by itself. The tenderer
is required to furnish all the details and other documents as required in the following pages

ii) Tenderers are advised to study all the tender documents carefully. Any submission of tender by the
tenderer shall be deemed to have been done after careful study and examination of the tender
documents and with the full understanding of the implications thereof. Should the tenderers have
any doubt about the meaning of any portion of the Tender Specification or find discrepancies or
omissions in the drawings or the tender documents issued are incomplete or shall require
clarification on any of the technical aspect, the scope of work etc., he shall at once, contact the
authority inviting the tender well in time (so as not to affect last date of submission) for clarification
before the submission of the tender. Tenderer’s request for clarifications shall be with reference to
Sections and Clause numbers given in the tender documents. The specifications and terms and
conditions shall be deemed to have been accepted by the tenderer in his offer. Non compliance
with any of the requirements and instructions of the tender enquiry may result in the rejection of the
tender.

iii) Integrity pact (IP) shall be applicable for all tenders / contracts if indicated in NIT. This integrity
pact shall be issued as part of the Tender documents and shall be returned by the bidder along
with Techno-commercial bid duly filled, signed and stamped by the authorized signatory who signs
the bid. Only those vendors / bidders who have entered into such an IP with BHEL shall be
considered qualified to participate in the bidding. Entering into this pact shall be a preliminary
qualification.

1.2. SUBMISSION OF TENDERS

1.2.1 The tenderers must submit their tenders to Officer inviting tender as per instructions in the NIT

Offfer shall be submitted online in e procurement portal.

No other mode of offer submission shall be acceptable & shall be rejected.

Note : Party can review & revise their submitted offers till due date & time of submission

1.2.2 The tenders received after the specified time of their submission are treated as ‘Late Tenders’ and
shall not be considered under any circumstances.

1.2.3 Tenders shall be opened by authorized officer of BHEL as specified in the NIT.

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1.2.4 Tenderers whose bids are found techno commercially qualified shall be informed the date and time
of opening of the Price Bids and such Tenderers may depute their representatives to witness the
opening of the price bids. BHEL’s decision in this regard shall be final and binding.

1.2.5 Before submission of Offer, the tenderers are advised to inspect the site of work and the
environments and be well acquainted with the actual working and other prevalent conditions,
facilities available, position of material and labour, means of transport and access to Site,
accommodation, etc. No claim will be entertained later on the grounds of lack of knowledge of any
of these conditions.

1.3. LANGUAGE
1.3.1 The tenderer shall quote the rates in English language and international numerals.These rates
shall be entered in figures as well as in words. For the purpose of the tenders, the metric system of
units shall be used.
1.3.2 All entries in the tender shall either be typed or written legibly in ink. Erasing and over-writing is not
permitted and may render such tenders liable for rejection. All cancellations and insertions shall be
duly attested by the tenderer.

1.4 PRICE DISCREPANCY:

1.4.1 Conventional Price Bid opening : In the case of price bid opening without resorting to Reverse
Auction, if there are differences between the rates given by the tenderer in words and figures or in
amount worked out by him, the following procedure for evaluation and award shall be followed:
i) When there is a difference between the rates in figures and in words, the rates which corresponds
to the amounts worked out by the contractor, shall be taken as correct
ii) When the amount of an item is not worked out by the contractor or it does not correspond with the
rate written either in figure or in words, then the rate quoted by the contractor in words shall be
taken as correct.
iii) When the rate quoted by the contractor in figures and words tallies but the amount is not worked
out correctly, the rate quoted by the contractor shall be taken as correct and not the amount.
iv) In case of lumpsum price, if there is any difference between the amount in figures and in words,
the amount quoted by the bidder in words shall be taken as correct.
v) In case of omission in quoting any rate for one or more items, the evaluation shall be done
considering the highest quoted rate obtained against the respective items by other tenderers for
the subject tender. If the tenderer becomes L-1, the notional rates for the omission items shall be
the lowest rates quoted for the respective items by the other tenderers against the respective
omission items for the subject job and the ‘Total quoted price (loaded for omissions)’ shall be
arrived at. However the overall price remaining the same as quoted originally, the rates for all the
items in the ‘Total quoted price (loaded for omissions)’ shall be reduced item wise in proportion to
the ratio of ‘Original’ total price and the ‘Total quoted price (loaded for omissions)’’.
vi) The ‘Final Total Amount’ shall be arrived at after considering the amounts worked out in line with ‘i’
to ‘v’ above.

1.4.2 Reverse Auction: In case of Reverse Auction, the successful bidder shall undertake to execute
the work as per overall price offered by him during the Reverse Auction process. In case of
omission of rates, the procedure shall be as per ‘Guidelines for Reverse Auction’ enclosed.

1.5. QUALIFICATION OF TENDERERS

i) Only tenderers who have previous experience in the work of the nature and description detailed in
the Notice Inviting Tender and/or tender specification are expected to quote for this work duly

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detailing their experience along with offer.

ii) Offers from tenderers who do not have proven and established experience in the field shall not be
considered
iii) .Offers from tenderers who are under suspension (banned) by any Unit/Region/Division of BHEL
shall not be considered.
iv) Offers from tenderers who do not comply with the latest guidelines of Ministry/Commissions of Govt
of India shall not be considered.

1.6. EVALUATION OF BIDS

i) Technical Bids submitted by the tenderer will be opened first and evaluated for fulfilling the Pre
Qualification criteria and other conditions in NIT/Tender documents, based on documentary
evidences submitted along with the offer
ii) In case the same qualifying experience is claimed by more than one agency, then the agency who
has executed the work as per documentary evidence submitted shall only be qualified. Scope of
qualifying work should be totally with the agency who has executed and in case it is only
labour+consumables without T&P, then the responsibility of execution is assigned to the first
agency and not to the agency who has executed only as labour supply contractor. Further, BHEL
reserves the right to ask for further proofs including submission of TDS certificates for the said job
iii) In case the qualifying experience is claimed by private organizations based on Work Order and
completion certificates from another private organization, BHEL reserves the right to ask for
further proofs including submission of TDS certificates for the said job
iv) Assessing Bidder Capacity for executing the current tender shall be as per Notice Inviting Tender
v) Price Bids of shortlisted bidders shall only be opened either through the conventional price bid
opening or through electronic Reverse Auction, at the discretion of BHEL
vi) Price Bids of unqualified bidders shall not be opened. Reasons for rejection shall be intimated in
due course after issue of LOI/LOA to successful bidder and receipt of unqualified acceptance from
the successful bidder
vii) Bidders are advised to also refer to clause no 2.9.4 regarding evaluation of their performance in
ongoing projects for the current tender.

1.7. DATA TO BE ENCLOSED

Full information shall be given by the tenderer in respect of the following. Non-submission of this
information may lead to rejection of the offer.

i) INCOME TAX PERMANENT ACCOUNT NUMBER

Certified copies of Permanent Account Numbers as allotted by Income Tax Department for the
Company/Firm/Individual Partners, etc. shall be furnished along with tender.

ii) ORGANIZATION CHART

The organization chart of the tenderer’s organization, including the names, addresses and contact
information of the Directors/Partners shall be furnished along with the offer.

iii) Not used

iv) IN CASE OF INDIVIDUAL TENDERER:

His / her full name, address and place & nature of business.

v) IN CASE OF PARTNERSHIP FIRM

The names of all the partners and their addresses, A copy of the partnership deed/instrument of

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partnership dully certified by the Notary Public shall be enclosed.

vi) IN CASE OF COMPANIES:

a. Date and place of registration including date of commencement certificate in case of Public
Companies (certified copies of Memorandum and articles of Association are also to be furnished).
b. Nature of business carried on by the Company and the provisions of the Memorandum relating
thereof.

1.8 Not used

1.9 EARNEST MONEY DEPOSIT

1.9.1 Every tender must be accompanied by the prescribed amount of Earnest Money Deposit (EMD) in
the manner described herein.

i) EMD shall be furnished before tender opening / along with the offer in full as per the amount
indicated in the Special Conditions of Contract / NIT.
ii) The EMD is to be paid in the following forms:
(a) Cash deposit as permissible under the extant Income Tax Act (before tender opening).
(b) Electronic Fund Transfer credited in BHEL account (before tender opening).
(c) Banker’s cheque / Pay order / Demand draft, in favour of ‘Bharat Heavy Electricals
Limited’ and payable at Regional HQ issuing the tender (along with offer).
(d) Fixed Deposit Receipt (FDR) issued by Scheduled Banks/ Public Financial Institutions as
defined in the Companies Act (FDR should be in the name of the Contractor, a/c BHEL).

In addition to above, the EMD amount in excess of Rs. Two lakh may also be accepted in the
form of Bank Guarantee from scheduled bank. The Bank Guarantee in such cases shall be
valid for atleast six months.

Note: In case required EMD as above is not available at the time of Technical Bid opening,
offer of the bidder shall not be considered for further processing.

iii) No other form of EMD remittance shall be acceptable to BHEL.

iv) The EMD shall be waived in the following cases:
(a) Joint Venture or Subsidiary companies of BHEL.
(b) Central/ State PSUs/ Government deptts/ Autonomus/ Educational/ Research institutions.

1.9.2 EMD by the Tenderer will be forfeited as per NIT conditions, if:
i) After opening the tender and within the offer validity period, the tenderer revokes his tender or
makes any modification in his tender which is not acceptable to BHEL.
ii) The Contractor fails to deposit the required Security deposit or commence the work within the
period as per LOI/ LOA/ Contract.
EMD by the tenderer shall be withheld in case any action on the tenderer is envisaged under the
provisions of extant “Guidelines on Suspension of business dealings with suppliers/ contractors”
and forfeited/ released based on the action as determined under these guidelines.

1.9.3 EMD shall not carry any interest.

1.9.4 In the case of unsuccessful bidders, the Earnest Money will be refunded to them within a
reasonable time after award of work.
1.9.5 EMD of successful tenderer will be retained as part of Security Deposit.

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1.10 SECURITY DEPOSIT

1.10.1 Upon acceptance of Tender, the successful Tenderer should deposit the required amount of
Security Deposit towards fulfilment of any obligations in terms of the provisions of the contract. The
total amount of Security Deposit will be 5% of the contract value. EMD of the successful tenderer
shall be converted and adjusted towards the required amount of Security Deposit.

1.10.2 The security Deposit should be furnished before start of the work by the contractor.

1.10.3 The balance amount to make up the required Security Deposit of 5% of the contract value may be
accepted in the following forms:-

i) Cash (as permissible under the extant Income Tax Act)

ii) Local cheques of Scheduled Banks (subject to realization)/ Pay Order/ Demand Draft/ Electronic
Fund Transfer in favour of BHEL.
iii) Securities available from Indian Post offices such as National Savings Certificates, Kisan Vikas
Patras etc. (held in the name of Contractor furnishing the security and duly endorsed/
hypothecated/ pledged, as applicable, in favour of BHEL).
iv) Bank Guarantee from Scheduled Banks/ Public Financial Institutions as defined in the
Companies Act. The Bank Guarantee format for Security Deposit shall be in the prescribed
formats.
v) Fixed Deposit Receipt issued by Scheduled Banks/ Public Financial Institutions as defined in
the Companies Act (FDR should be in the name of the Contractor, a/c BHEL).
vi) Security deposit can also be recovered at the rate of 10% of the gross amount progressively
from each of the running bills of the contractor till the total amount of the required security
deposit is collected. However in such cases at least 50% of the required Security Deposit,
including the EMD, should be deposited in any form as prescribed before start of the work and
the balance 50% may be recovered from the running bills as described above.

(Note: In case of small value contracts not exceeding INR 20 lakhs, work can be started
before the required Security Deposit is collected. However, payment can be released only
after collection/ recovery of initial 50% Security Deposit).

Note: BHEL will not be liable or responsible in any manner for the collection of interest or
renewal of the documents or in any other matter connected therewith.

1.10.4 The Security Deposit shall not carry any interest.

1.10.5 In case the value of work exceeds / reduces from the awarded / accepted value, the Security
Deposit shall be correspondingly enhanced / reduced as given below:
i) The enhanced part of the Security Deposit shall be immediately deposited by the Contractor or
adjusted against payments due to the Contractor.
ii) There will be no reduction in Security Deposit value in case of variation in contract value upto the
lower limit specified in Quantity variation clause. In case of reduction of contract value beyond
the lower limit specified in Quantity Variation clause, then the Security Deposit shall be re
adjusted in proportion.
iii) In case of reduction, the reduced Contract value shall be certified by BHEL Construction
Manager after ascertaining / freezing of BOQ / Drawings from the Design / Engineering Centre.
The reduced Security Deposit value can only be considered after taking into account the
adequacy of the securities held by BHEL to meet the liabilities of the contractor for the contract,

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and the performance of the contract in general. In such cases, the revised value of Security
Deposit shall be worked out only after execution of not less than the lower limit of the
revised scope of work/contract value as per quantity variation clause, and as certified by
Construction Manager. This reduction in value of Security Deposit shall not entitle the
contractor to any amendment of Contract and shall be operated at the discretion of BHEL
iv) Contract value for the purpose of operating the reduced/increased value of Security Deposit due
to Quantity Variation, shall be exclusive of Price Variation Clause, Over Run Compensation and
Extra works done on manday rates.
v) The recoveries made from running bills (cash deduction towards balance SD amount) can be
released against submission of equivalent Bank Guarantee in acceptable form, but only once,
before completion of work, with the approval of BHEL.

1.10.6 The validity of Bank Guarantees towards Security Deposit shall be initially upto the completion
period as stipulated in the Letter of Intent/Award + 3 months, and the same shall be kept valid by
proper renewal till the acceptance of Final Bills of the Contractor, by BHEL.

1.10.7 BHEL reserves the right of forfeiture of Security Deposit in addition to other claims and penalties
in the event of the Contractor’s failure to fulfill any of the contractual obligations or in the event of
termination of contract as per terms and conditions of contract. BHEL reserves the right to set off
the Security Deposit against any claims of other contracts with BHEL.

1.11 RETURN OF SECURITY DEPOSIT

Security Deposit shall be refunded/Bank Guarantee(s) released to the Contractor along with the
‘Final Bill’ after deducting all expenses / other amounts due to BHEL under the contract / other
contracts entered into with them by BHEL.

1.12 BANK GUARANTEES

Where ever Bank Guarantees are to be furnished/submitted by the contractor, the following shall be
complied with
i) Bank Guarantees shall be from Scheduled Banks / Public Financial Institutions as defined in the
Companies Act.
ii) The Bank Guarantees shall be as per prescribed formats.
iii) It is the responsibility of the bidder to get the Bank Guarantees revalidated/extended for the required
period (subject to a minimum period of six months), as per the advice of BHEL Site Engineer /
Construction Manager. BHEL shall not be liable for issue of any reminders regarding expiry of the
Bank Guarantees.
iv) In case extension/further extensions of any Bank Guarantees are not required, the bidders shall
ensure that the same is explicitly endorsed by the Construction Manager and submitted to the
Regional HQ issuing the LOI/LOA.
v) In case the Bank Guarantees are not extended before the expiry date, BHEL reserves the right to
invoke the same by informing the concerned Bank in writing, without any advance
notice/communication to the concerned bidder.
vi) Bidders to note that any corrections to Bank Guarantees shall be done by the issuing Bank, only
through an amendment in an appropriate non judicial stamp paper.
vii) The Original Bank Guarantee shall be sent directly by the Bank to BHEL under Registered Post
(Acknowledgement Due), addressed to the Subcontracting Department of the respective Region.

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1.13 VALIDITY OF OFFER

The rates in the Tender shall be kept open for acceptance for a minimum period of SIX MONTHS
from latest due date of offer submission (including extension, if any). In case BHEL (Bharat Heavy
Electricals Ltd) calls for negotiations, such negotiations shall not amount to cancellation or
withdrawal of the original offer which shall be binding on the tenderers.

1.14 EXECUTION OF CONTRACT AGREEMENT

The successful tenderer’s responsibility under this contract commences from the date of issue of
the Letter of Intent/ Award by Bharat Heavy Electricals Limited. The Tenderer shall submit an
unqualified acceptance to the Letter of Intent/Award within the period stipulated therein.

The successful tenderer shall be required to execute an agreement in the prescribed form, with
BHEL, within a reasonable time after the acceptance of the Letter of Intent/Award, and in any
case before releasing the first running bill. The contract agreement shall be signed by a person
duly authorized/empowered by the tenderer.

1.15 REJECTION OF TENDER AND OTHER CONDITIONS

1.15.1 The acceptance of tender will rest with BHEL which does not bind itself to accept the lowest
tender or any tender and reserves to itself full rights for the following without assigning any
reasons whatsoever:-

a. To reject any or all of the tenders.

b. To split up the work amongst two or more tenderers as per NIT

c. To award the work in part if specified in NIT

d. In case of either of the contingencies stated in (b) and (c) above, the time for completion as
stipulated in the tender shall be applicable.

1.15.2 Conditional tenders, unsolicited tenders, tenders which are incomplete or not in the form
specified or defective or have been materially altered or not in accordance with the tender
conditions, specifications etc., are liable to be rejected.

1.15.3 Tenders are liable to be rejected in case of unsatisfactory performance of the tenderer with
BHEL, or tenderer under suspension (hold/banning /delisted ) by any unit / region / division of
BHEL or tenderers who do not comply with the latest guidelines of Ministry/Commissions of Govt
of India. BHEL reserves the right to reject a bidder in case it is observed that they are overloaded
and may not be in a position to execute this job as per the required schedule in line with clause
no. 9.0 of the ‘NIT’. The decision of BHEL will be final in this regard.

1.15.4 If a tenderer who is a proprietor expires after the submission of his tender or after the
acceptance of his tender, BHEL may at their discretion, cancel such tender. If a partner of a firm
expires after the submission of tender or after the acceptance of the tender, BHEL may then
cancel such tender at their discretion, unless the firm retains its character.

1.15.5 BHEL will not be bound by any Power of Attorney granted by changes in the composition of the
firm made subsequent to the execution of the contract. They may, however, recognise such
power of Attorney and changes after obtaining proper legal advice, the cost of which will be

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chargeable to the contractor concerned.

1.15.6 If the tenderer deliberately gives wrong information in his tender, BHEL reserves the right to
reject such tender at any stage or to cancel the contract if awarded and forfeit the Earnest
Money/Security Deposit/any other money due.

1.15.7 Canvassing in any form in connection with the tenders submitted by the Tenderer shall make his
offer liable to rejection.

1.15.8 In case the Proprietor, Partner or Director of the Company/Firm submitting the Tender, has any
relative or relation employed in BHEL, the authority inviting the Tender shall be informed of the
fact as per specified format, along with the Offer. Failing to do so, BHEL may, at its sole
discretion, reject the tender or cancel the contract and forfeit the Earnest Money/Security
Deposit.

1.15.9 The successful tenderer should not sub-contract part or complete work detailed in the tender
specification undertaken by him without written permission of BHEL’s Construction Manager/Site
Incharge. The tenderer is solely responsible to BHEL for the work awarded to him.

1.15.10 The tender submitted by a techno commercially qualified tenderer shall become the property of
BHEL who shall be under no obligation to return the same to the bidder.

1.15.11 Unsolicited discount received after the due date and time of Bid Submission shall not be
considered for evaluation. However, if the party who has submitted the unsolicited
discount/rebate becomes the L-I party, then the awarded price i.e contract value shall be worked
out after considering the discount so offered.
1.15.12 BHEL shall not be liable for any expenses incurred by the bidder in the preparation of the tender
irrespective of whether the tender is accepted or not.

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CHAPTER-2
2.1 DEFINITION: The following terms shall have the meaning hereby assigned to them except where the
context otherwise requires

i) BHEL shall mean Bharat Heavy Electricals Limited (of the respective Power Sector Region inviting
the Tender), a company registered under Indian Companies Act 1956, with its Registered Office
at BHEL HOUSE, SIRI FORT, NEW DELHI – 110 049, or its Power Sector Regional Offices or its
Authorised Officers or its Site Engineers or other employees authorised to deal with any matters
with which these persons are concerned on its behalf.
ii) “EXECUTIVE DIRECTOR” or ‘GROUP GENERAL MANAGER’ or “GENERAL MANAGER
(Incharge)” or “GENERAL MANAGER” shall mean the Officer in Administrative charge of the
respective Power Sector Region.

iii) “COMPETENT AUTHORITY” shall mean Executive Director or Group General Manager or General
Manager (Incharge) or General Manager or BHEL Officers who are empowered to act on behalf of
the Executive Director or General Manager (Incharge) or General Manager of BHEL.
iv) “ENGINEER” or “ENGINEER IN CHARGE” shall mean an Officer of BHEL as may be duly
appointed and authorized by BHEL to act as “Engineer” on his behalf for the purpose of the
Contract, to perform the duty set forth in this General Conditions of Contract and other Contract
documents. The term also includes ‘CONSTRUCTION MANAGER’ or ‘SITE INCHARGE’ as well
as Officers at Site or at the Headquarters of the respective Power Sector Regions.

v) “SITE” shall mean the places or place at which the plants/equipments are to be erected and
services are to be performed as per the specification of this Tender.

vi) “CLIENT OF BHEL” or “CUSTOMER” shall mean the project authorities with whom BHEL has
entered into a contract for supply of equipments or provision of services.

vii) “CONTRACTOR” shall mean the successful Bidder/Tenderer who is awarded the Contract and
shall include the Contractor’s successors, heirs, executors, administrators and permitted assigns.

viii) “CONTRACT” or “CONTRACT DOCUMENT” shall mean and include the Agreement of Work
Order, the accepted appendices of Rates, Schedules, Quantities if any, General Conditions of
Contract, Special Conditions of Contract, Instructions to the Tenderers, Drawings, Technical
Specifications, the Special Specifications if any, the Tender documents, subsequent amendments
mutually agreed upon and the Letter of Intent/Award/Acceptance issued by BHEL. Any conditions
or terms stipulated by the contractor in the tender documents or subsequent letters shall not form
part of the contract unless, specifically accepted in writing by BHEL in the Letter of Intent/Award
and incorporated in the agreement.

ix) “GENERAL CONDITIONS OF CONTRACT” shall mean the ‘Instructions to Tenderers’ and
‘General Conditions of Contract’ pertaining to the work for which above tenders have been called
for.

x) “TENDER SPECIFICATION” or “TENDER” or “TENDER DOCUMENTS” shall mean General

Conditions, Common Conditions, Special Conditions, Price Bid, Rate Schedule, Technical

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Specifications, Appendices, Annexures, Corrigendums, Amendments, Forms, procedures, Site

information, etc and drawings/documents pertaining to the work for which the tenderers are
required to submit their offers. Individual specification number will be assigned to each Tender
Specification.

xi) “LETTER OF INTENT/ AWARD” shall mean the intimation by a Letter/Fax/email to the tenderer
that the tender has been accepted in accordance with provisions contained in the letter. The
responsibility of the contractor commences from the date of issue of this letter and all terms and
conditions of the contract are applicable from this date.

xii) “COMPLETION TIME” shall mean the period by ‘date/month’ specified in the ‘Letter of
Intent/Award’ or date mutually agreed upon for handing over of the intended scope of work, the
erected equipment/plant which are found acceptable by the Engineer, being of required standard
and conforming to the specifications of the Contract.

xiii) “PLANT” shall mean and connote the entire assembly of the plant and equipments covered by the
contract.

xiv) “EQUIPMENT” shall mean equipment, machineries, materials, structural, electricals and other
components of the plant covered by the contract.

xv) “TESTS” shall mean and include such test or tests to be carried out on the part of the contractor as
are prescribed in the contract or considered necessary by BHEL, in order to ascertain the quality,
workmanship, performance and efficiency of the contractor or part thereof.

xvi) “APPROVED”, “DIRECTED” or “INSTRUCTED” shall mean approved, directed or instructed by

BHEL.

xvii) “WORK or CONTRACT WORK” shall mean and include supply of all categories of labour, specified
consumables, tools and tackles and Plants required for complete and satisfactory site
transportation, handling, stacking, storing, erecting, testing and commissioning of the equipments
to the entire satisfaction of BHEL.

xviii) “SINGULAR AND PLURALS ETC” words carrying singular number shall also include plural and
vice versa, where the context so requires. Words imparting the masculine Gender shall be taken
to include the feminine Gender and words imparting persons shall include any Company or
Associations or Body of Individuals, whether incorporated or not.

xix) “HEADING” – The heading in these General Conditions are solely for the purpose of facilitating
reference and shall not be deemed to be part thereof or be taken as instructions thereof or of the
contract.

xx) “MONTH” shall mean calendar month unless otherwise specified in the Tender.

xxi) Day’ or ‘Days’ unless herein otherwise expressly defined shall mean calendar day or days of
twenty four (24) hours each. A week shall mean continuous period of seven (7) days.

xxii) “COMMISSIONING” shall mean the synchronisation testing and achieving functional operation of
the Equipment with associated system after all initial adjustments, trials, cleaning, re-assembly
required at site if any, have been completed and Equipment with associated system is ready for

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taking into service.

xxiii) “WRITING” shall include any manuscript type written or hand written or printed statement or
electronically transmitted messages, under the signature or seal or transmittal of BHEL.

xxiv) “TEMPORARY WORK” shall mean all temporary works for every kind required in or for the
execution, completion, maintenance of the work.
xxv) ‘CONTRACT PRICE’ or ‘CONTRACT VALUE’ shall mean the sum mentioned in the
LOI/LOA/Contract Agreement subject to such additions thereto or deductions there from as may
be made under provisions hereinafter contained
xxvi) “COMMENCEMENT DATE” or “START DATE” shall mean the commencement/start of work at Site
as per terms defined in the Tenderl
xxvii) “SHORT CLOSING” or “FORE CLOSING” of Contract shall mean the premature closing of
Contract, for reasons not attributable to the contractor and mutually agreed between BHEL and
the contractor
xxviii) “TERMINATION” of Contract shall mean the pre mature closing of contract due to reasons as
mentioned in the contract
xxix) “DE MOBILISATION” shall mean the temporary winding up of Site establishment by Contractor
leading to suspension of works temporarily for reasons not attributable to the contractor
xxx) “RE MOBILISATION” shall mean the resumption of work with all resources required for the work
after demobilization.

2.2 LAW GOVERNING THE CONTRACT AND COURT JURISDICTION

The contract shall be governed by the Law for the time being in force in the Republic of India.
Subject to clause 2.21.1 or 2.21.2 of this contract, the Civil Court having original Civil Jurisdiction
at Delhi for PSNR, at Kolkata for PSER, at Nagpur for PSWR and at Chennai for PSSR, shall
alone have exclusive jurisdiction in regard to all matters in respect of the Contract.

2.3 ISSUE OF NOTICE

2.3.1 Service of notice on contractor

Any notice to be given to the Contractor under the terms of the contract shall be served by sending
the same by Registered Post / Speed Post to or leaving the same at the Contractor’s last known
address of the principal place of business (or in the event of the contractor being a company, to or
at its Registered Office). In case of change of address, the notice shall be served at changed
address as notified in writing by the Contractor to BHEL. Such posting or leaving of the notice shall
be deemed to be good service of such notice and the time mentioned to the condition for doing any
act after notice shall be reckoned from the date so mentioned in such notice.

2.3.2 Service of notice on BHEL

Any notice to be given to BHEL in-charge/Region under the terms of the Contract shall be served
by sending the same by post to or leaving the same at BHEL address or changed address as
notified in writing by BHEL to the Contractor.

2.4 USE OF LAND

No land belonging to BHEL or their Customer under temporary possession of BHEL shall be
occupied by the contractor without written permission of BHEL.

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2.5 COMMENCEMENT OF WORK

2.5.1 The contractor shall commence the work as per the time indicated in the Letter of Intent/Award
from BHEL and shall proceed with the same with due expedition without delay.

2.5.2 If the contractor fails to start the work within stipulated time as per LOI/ LOA or as intimated by
BHEL, then BHEL at its sole discretion will have the right to cancel the contract. The Earnest
Money and/or Security Deposit with BHEL will stand forfeited without any further reference to him
without prejudice to any and all of BHEL’s other rights and remedies in this regard.

2.5.3 All the work shall be carried out under the direction and to the satisfaction of BHEL.

2.6 MEASUREMENT OF WORK AND MODE OF PAYMENT:

2.6.1 All payments due to the contractors shall be made by e mode only, unless otherwise found
operationally difficult for reasons to be recorded in writing.

2.6.2 For progress running bill payments: - The Contractor shall present detailed measurement sheets in
triplicate, duly indicating all relevant details based on technical documents and connected drawings
for work done during the month/period under various categories in line with terms of payment as
per contract. The basis of arriving at the quantities, weights shall be relevant documents and
drawings released by BHEL. These measurement sheets shall be prepared jointly with BHEL
Engineers and signed by both the parties.

2.6.3 These measurement sheets will be checked by BHEL Engineer and quantities and percentage
eligible for payment under various groups shall be decided by BHEL Engineer. The abstract of
quantities and percentage so arrived at based on the terms of payment shall be entered in
Measurement Book and signed by both the parties.

2.6.4 Based on the above quantities, contractor shall prepare the bills in prescribed format and work out
the financial value. These will be entered in Measurement Book and signed by both the parties.
Payment shall be made by BHEL after effecting the recoveries due from the contractor.

2.6.5 All recoveries due from the contractor for the month/period shall be effected in full from the
corresponding running bills unless specific approval from the competent authorities is obtained to
the contrary.

2.6.6 Measurement shall be restricted to that portion of work for which it is required to ascertain the
financial liability of BHEL under this contract.

2.6.7 The measurement shall be taken jointly by persons duly authorized on the part of BHEL and by the
Contractor.

2.6.8 The Contractor shall bear the expenditure involved if any, in making the measurements and testing
of materials to be used/used in the work. The contractor shall, without extra charges, provide all
the assistance with appliances and other things necessary for measurement.

2.6.9 If at any time due to any reason whatsoever, it becomes necessary to re-measure the work done in
full or in part, the expenses towards such re measurements shall be borne by the contractor unless
such re measurements are warranted solely for reasons not attributable to contractor.

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2.6.10 Passing of bills covered by such measurements does not amount to acceptance of the completion
of the work measured. Any left out work has to be completed, if pointed out at a later date by
BHEL.

2.6.11 Final measurement bill shall be prepared in the final bill format prescribed for the purpose based on
the certificate issued by BHEL Engineer that entire works as stipulated in tender specification has
been completed in all respects to the entire satisfaction of BHEL. Contractor shall give unqualified
“No Claim” Certificate. All the tools and tackles loaned to him should be returned in satisfactory
condition to BHEL. The abstract of final quantities and financial values shall also be entered in the
Measurement Books and signed by both parties to the contract. The Final Bill shall be prepared
and paid within a reasonable time after completion of work.

2.7 RIGHTS OF BHEL

BHEL reserves the following rights in respect of this contract during the original contract period or
its extensions if any, as per the provisions of the contract, without entitling the contractor for any
compensation.

2.7.1 To withdraw any portion of work and/or to restrict/alter quantum of work as indicated in the contract
during the progress of work and get it done through other agencies to suit BHEL’s commitment to
its customer or in case BHEL decides to advance the date of completion due to other emergent
reasons/ BHEL’s obligation to its customer.

2.7.2.1 To terminate the contract or withdraw portion of work and get it done through other agency, at the
risk and cost of the contractor after due notice of a period of 14 days’ by BHEL in any of the
following cases:
i). Contractor’s poor progress of the work vis-à-vis execution timeline as stipulated in the Contract,
backlog attributable to contractor including unexecuted portion of work does not appear to be
executable within balance available period considering its performance of execution.
ii). Withdrawal from or abandonment of the work by contractor before completion of the work as per
contract.
iii). Non-completion of work by the Contractor within scheduled completion period as per Contract or as
extended from time to time, for the reasons attributable to the contractor.
iv). Termination of Contract on account of any other reason (s) attributable to Contractor.
v). Assignment, transfer, subletting of Contract without BHEL’s written permission.
vi). Non-compliance to any contractual condition or any other default attributable to Contractor.

Risk & Cost Amount against Balance Work:

Risk & Cost amount against balance work shall be calculated as follows:
Risk & Cost Amount= [(A-B) + (A x H/100)]
Where,
A= Value of Balance scope of Work (*) as per rates of new contract
B= Value of Balance scope of Work (*) as per rates of old contract being paid to the contractor at
the time of termination of contract i.e. inclusive of PVC & ORC, if any.
H = Overhead Factor to be taken as 5

In case (A-B) is less than 0 (zero), value of (A-B) shall be taken as 0 (zero).

* Balance scope of work (in case of termination of contract):

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Difference of Contract Quantities and Executed Quantities as on the date of issue of Letter for
‘Termination of Contract’, shall be taken as balance scope of Work for calculating risk & cost
amount.
Contract quantities are the quantities as per original contract. If, Contract has been amended,
quantities as per amended Contract shall be considered as Contract Quantities.
Items for which total quantities to be executed have exceeded the Contract Quantities based on
drawings issued to contractor from time to time till issue of Termination letter, then for these
items total Quantities as per issued drawings would be deemed to be contract quantities.
Substitute/ extra items whose rates have already been approved would form part of contract
quantities for this purpose. Substitute/ extra items which have been executed but rates have not
been approved, would also form part of contract quantities for this purpose and rates of such
items shall be determined in line with contractual provisions.
However, increase in quantities on account of additional scope in new tender shall not be
considered for this purpose.

NOTE: Incase portion of work is being withdrawn at risk & cost of contractor instead of
termination of contract, contract quantities pertaining to portion of work withdrawn shall be
considered as ‘Balance scope of work’ for calculating Risk & Cost amount.

LD against delay in executed work in case of Termination of Contract:

LD against delay in executed work shall be calculated in line with LD clause no. 2.7.9 of GCC, for
the delay attributable to contractor. For limiting the maximum value of LD, contract value shall be
taken as Executed Value of work till termination of contract.

Method for calculation of “LD against delay in executed work in case of termination of contract” is
given below.

i). Let the time period from scheduled date of start of work till termination of contract excluding the
period of Hold (if any) not attributable to contractor = T1
ii). Let the value of executed work till the time of termination of contract= X
iii). Let the Total Executable Value of work for which inputs/fronts were made available to contractor
and were planned for execution till termination of contract = Y
iv). Delay in executed work attributable to contractor i.e. T2=[1-(X/Y)] x T1
v). LD shall be calculated in line with LD clause (clause 2.7.9) of the Contract for the delay attributable
to contractor taking “X” as Contract Value and “T2” as period of delay attributable to contractor.

2.7.2.2 In case Contractor fails to deploy the resources as per requirement, BHEL can deploy
own/hired/otherwise arranged resources at the risk and cost of the contractor and recover the
expenses incurred from the dues payable to contractor. Recoveries shall be actual expenses
incurred plus 5% overheads or as defined in TCC.
2.7.3 Recoveries arising out of Risk & Cost and LD or any other recoveries due from Contractor
Following sequence shall be applicable for recoveries from contractor:

a) Dues available in the form of Bills payable to contractor, SD, BGs against the same contract.
b) Demand notice for deposit of balance recovery amount shall be sent to contractor, if funds are
insufficient to effect complete recovery against dues indicated in (a) above.
c) If contractor fails to deposit the balance amount to be recovered within the period as prescribed in

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demand notice, following action shall be taken for balance recovery:

i) Dues payable to contractor against other contracts in the same Region shall be considered
for recovery.
ii) If recovery cannot be made out of dues payable to the contractor as above, balance amount
to be recovered, shall be informed to other Regions/Units for making recovery from the
Unpaid Bills/Running Bills/SD/BGs/Final Bills of contractor.
iii) In-case recoveries are not possible with any of the above available options, Legal action
shall be initiated for recovery against contractor.
2.7.4 To terminate the contract or to restrict the quantum of work and pay for the portion of work executed
in case BHEL’s contract with their customer are terminated for any reason, as per mutual
agreement.

2.7.5 To effect recovery from any amounts due to the contractor under this or any other contract or in any
other form, the moneys BHEL is statutorily forced to pay to anybody, due to contractor’s failure to
fulfill any of his obligations. BHEL shall levy overheads of 5% on all such payments along with
interest as defined elsewhere in the GCC.

2.7.6 While every endeavour will be made by BHEL to this end, they cannot guarantee uninterrupted
work due to conditions beyond their control. The Contractor will not be normally entitled for any
compensation/extra payment on this account unless otherwise specified elsewhere in the contract.

2.7.7 In case the execution of works comes to a complete halt or reaches a stage wherein worthwhile
works cannot be executed and there is no possibility of commencement of work for a period of not
less than two months, due to reasons not attributable to the contractor and other than Force
Majeure conditions, BHEL may consider permitting the contractor to de mobilize forthwith and re
mobilize at an agreed future date. Cost of such demobilization/remobilization shall be mutually
agreed. ORC in such cases shall not be applicable for the period between the period of
demobilization and re mobilisation. The duration of contract/time extension shall accordingly get
modified suitably. In case of any conflict, BHEL decision in this regard shall be final and binding on
the contractor.

2.7.8 In the unforeseen event of inordinate delay in receipt of materials, drawings, fronts, etc, due to
which inordinate discontinuity of work is anticipated, BHEL on its own or contractor’s request at its
discretion may consider to short close the contract in following cases:

a) The balance works (including but not limited to Trial Operation, PG Test, etc) are minor vis a vis the
scope of work envisaged as per the contract.
b) There has been no significant work in past 6 months OR no significant work is expected in next 6
months (example in Hydro projects or in projects where work has stopped due to reasons beyond the
control of BHEL)
c) The balance works cannot be done within a reasonable period of time as they are dependent on unit
shut down or on other facilities of customer or any other reasons not attributable to the contractor.
d) Work does not start within six months of LOI/ LOA date.

At the point of requesting for short closure, contractor shall establish that he has completed all
works possible of completion and he is not able to proceed with the balance works due to
constraints beyond his control. In such a case, the estimated value of the unexecuted portion of
work ( or estimated value of services to be provided for carrying out milestone/stage payments like

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Trial Operation/PG Test, etc) as mutually agreed, shall however be reduced from the final contract
value.

2.7.9 LIQUIDATED DAMAGES/PENALTY

If the contractor fails to maintain the required progress of work which results in delay in the
completion of the work as per the contractual completion period, BHEL shall have the right to
impose Liquidated Damage/Penalty at the rate of 0. 5% of the contract value, per week of delay or
part thereof subject to a maximum of 10% of the contract value. For this purpose, the period of
delay shall be the delay attributable to the Contractor for the completion of work as per contract.
Contract Value for this purpose, shall be the final executed value exclusive of ORC, Extra Works
executed on Manday rate basis, Supplementary/ Additional Items and PVC.

2.8 RESPONSIBILITIES OF THE CONTRACTOR IN RESPECT OF LOCAL LAWS, EMPLOYMENT

OF WORKERS ETC.

The following are the responsibilities of the contractor in respect of observance of local laws,
employment of personnel, payment of taxes etc. The subcontractor shall fully indemnify BHEL
against any claims of whatsoever nature arising due to the failure of the contractor in discharging
any of his responsibilities hereunder:

2.8.1 As far as possible, Unskilled Workers shall be engaged from the local areas in which the work is
being executed.

2.8.2 The contractor at all times during the continuance of this contract shall, in all his dealings with local
labour for the time being employed on or in connection with the work, have due regard to all local
festivals and religious and other customs.

2.8.3 The contractor shall comply with all applicable State and Central Laws, Statutory Rules,
Regulations, Notifications, etc. such as Payment of Wages Act, Minimum Wages Act, Workmen
Compensation Act, Employer’s Liability Act, Industrial Disputes Act, Employers Provident Act,
Employees State Insurance Scheme, Contract Labour (Regulation and Abolition) Act, 1970,
Payment of Bonus & Gratuity Act, Building and Other Construction Workers (Regulation of
Employment and Conditions of Service) Act, 1996, The Building and Other Construction Workers’
Welfare Cess Act, 1996 and other Acts, Rules, and Regulations for labour/workers as applicable
and as may be enacted by the State Government and Central Govt. during the tenure of the
Contract and having force or jurisdiction at Site. The Contractor shall also comply with provisions of
and give all such notices to the local Governing Body, Police and other relevant Authorities as may
be required by the Law.

2.8.4 The Contractor shall obtain independent License under the Contract Labour (Regulations and
Abolition) Act, 1970 for engaging contract labour as required from the concerned Authorities based
on the certificate (Form- V) issued by the Principal Employer/Customer.

2.8.5 The contractor shall pay and bear all taxes, fees, license charges, Cess, duties, deposits, tolls,
royalties, commission or other charges which may be leviable on account of his operations in
executing the contract.

2.8.6 While BHEL would pay the inspection fees and Registration fees of Boiler/Electrical Inspectorate,
all other arrangements for site visits periodically by the Inspectorate to site, Inspection certificate
etc. will have to be made by contractor. However, BHEL will not make any payment to the

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Inspectorate in connection with contractor’s Welders/Electricians qualification tests etc.

2.8.7 Contractor shall be responsible for provision of Health and Sanitary arrangements (more
particularly described in Contract Labour Regulation & Abolition Act), Safety precautions etc. as
may be required for safe and satisfactory execution of contract.

2.8.8 The contractor shall be responsible for proper accommodation including adequate medical facilities
for personnel employed by him.

2.8.9 The contractor shall be responsible for the proper behavior and observance of all regulations by the
staff employed by him.

2.8.10 The contractor shall ensure that no damage is caused to any person/property of other parties
working at site. If any such damage is caused, it is responsibility of the contractor to make good
the losses or compensate for the same.

2.8.11 All the properties/equipments/components of BHEL/their Client loaned with or without deposit to
the contractor in connection with the contract shall remain properties of BHEL/their Client.

2.8.12 The contractor shall use such properties for the purpose of execution of this contract. All such
properties/equipments/components shall be deemed to be in good condition when received by the
contractor unless he notifies within 48 hours to the contrary. The contractor shall return them in
good condition as and when required by BHEL/their Client. In case of non-return, loss, damage,
repairs etc, the cost thereof as may be fixed by BHEL Engineer will be recovered from the
contractor

2.8.13 In case the contractor is required to undertake any work outside the scope of this contract, the
rates payable shall be those mutually agreed upon if the item rates are not mentioned in existing
contract

2.8.14 Any delay in completion of works/or non achievement of periodical targets due to the reasons
attributable to the contractor, the same may have to be compensated by the contractor either by
increasing manpower and resources or by working extra hours and/or by working more than one
shift. All these are to be carried out by the contractor at no extra cost.

2.8.15 The contractor shall arrange, coordinate his work in such a manner as to cause no hindrance to
other agencies working in the same premises.

2.8.16 All safety rules and codes applied by the Client/BHEL at site shall be observed by the contractor
without exception. The contractor shall be responsible for the safety of the equipment/material and
works to be performed by him and shall maintain all light, fencing guards, slings etc. or other
protection necessary for the purpose. Contractor shall also take such additional precautions as
may be indicated from time to time by the Engineer with a view to prevent pilferage, accidents, fire
hazards. Due precautions shall be taken against fire hazards and atmospheric conditions. Suitable
number of Clerical staff, watch and ward, store keepers to take care of equipment/materials and
construction tools and tackles shall be posted at site by the contractor till the completion of work
under this contract.

The contractor shall arrange for such safety devices as are necessary for such type of work and
carry out the requisite site tests of handling equipment, lifting tools, tackles etc. as per prescribed

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standards and practices.

Contractor has to ensure the implementation of Health, Safety and Environment (HSE)
requirements as per directions given by BHEL/Customer. The contractor has to assist in HSE audit
by BHEL/Customer and submit compliance Report. The contractor has to generate and submit
record/reports as per HSE plan/activities as per instruction of BHEL/Customer

2.8.17 The contractor will be directly responsible for payment of wages to his workmen. A pay roll sheet
giving all the payments given to the workers and duly signed by the contractor’s representative
should be furnished to BHEL site for record purpose, if so called for.

Contractor shall create awareness amongst their workforce by helping & encouraging in opening
bank accounts and to encourage them to adopt digital mode of transactions. While releasing wages/
salary to their workers/ supervisors/ staff, Contractor shall comply with the GOI’s guidelines for
maximizing such transactions through Non-Cash / digital means.

2.8.18 In case of any class of work for which there is no such specification as laid down in the contract,
such work shall be carried out in accordance with the instructions and requirements of the
Engineer.

2.8.19 Also, no idle charges will be admissible in the event of any stoppage caused in the work resulting in
contractor’s labour and Tools & Plants being rendered idle due to any reason at any time.

2.8.20 The contractor shall take all reasonable care to protect the materials and work till such time the
plant/equipment has been taken over by BHEL or their Client whichever is earlier.

2.8.21 The contractor shall not stop the work or abandon the site for whatsoever reason of dispute,
excepting force majeure conditions. All such problems/disputes shall be separately discussed and
settled without affecting the progress of work. Such stoppage or abandonment shall be treated as
breach of contract and dealt with accordingly

2.8.22 The contractor shall keep the area of work clean and shall remove the debris etc. while executing
day-to-day work. Upon completion of work, the contractor shall remove from the vicinity of work,
all scrap, packing materials, rubbish, unused and other materials and deposit them in
places specified by the Engineer. The contractor will also demolish all the hutments, sheds,
offices, etc. constructed and used by him and shall clean the debris. In the event of his failure to
do so, the same will be arranged to be done by the Engineer and the expenses recovered from
the contractor.

2.8.23 The contractor shall execute the work in the most substantial and workman like manner in the
stipulated time. Accuracy of work and timely execution shall be the essence of this contract. The
contractor shall be responsible to ensure that the quality, assembly and workmanship conform to
the dimensions and clearance given in the drawings and/ or as per the instructions of the
Engineer.

2.8.24 The Contractor to note that some of BHEL’s T&Ps/MMDs may not be insured. The Contractor will
take necessary precautions and due care to protect the same while in his custody from any
damage/ loss till the same is handed over back to BHEL. In case the damage / loss is due to
carelessness/ negligence on the part of the contractor, the Contractor is liable to get them repair/
replaced immediately and in case of his failure to do so within a reasonable time, BHEL will

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reserve the right to recover the loss from the contractor.

2.8.25 For all works having contract value of Rs. 5,00,000/- or above, BHEL shall recover the amount of
compensation paid to victim(s) by BHEL towards loss of life/ permanent disability due to an
accident which is attributable to the negligence of contractor, agency or firm or any of its
employees as detailed below.

a) Victim: Any person who suffers permanent disablement or dies in an accident as defined
below.

b) Accident: Any death or permanent disability resulting solely and directly from any unintended
and unforeseen injurious occurrence caused during the manufacturing/ operation and works
incidental thereto at BHEL factories/ offices and precincts thereof, project execution, erection
and commissioning, services, repairs and maintenance, trouble shooting, serving, overhaul,
renovation and retrofitting, trail operation, performance guarantee testing undertaken by the
company or during any works/ during working at BHEL Units/ Offices/ townships and premises/
Project Sites.

c) Compensation in respect of each of the victims:

i. In the event of death or permanent disability resulting from Loss of both limbs: Rs.
10,00,000/- (Rs. Ten Lakh).
ii. In the event of other permanent disability: Rs.7,00,000/- (Rs. Seven Lakh)

d) Permanent Disablement: A disablement that is classified as a permanent total disablement

under the proviso to section 2 (I) of the Employee’s Compensation Act, 1923.

2.9 PROGRESS MONITORING, MONTHLY REVIEW AND PERFORMANCE EVALUATION

2.9.1 A detailed plan/ programme for completion of the contractual scope of work as per the time
schedule given in the contract shall be jointly agreed between BHEL and Contractor, before
commencement of work. The above programme shall be supported by month wise deployment of
resources viz Manpower, T&P, Consumables, etc. Progress will be reviewed periodically
(Daily/Weekly/Monthly) vis a vis this jointly agreed programme. The Contractor shall submit
periodical progress reports (Daily/Weekly/Monthly) and other reports/information including
manpower, consumables, T&P mobilization etc as desired by BHEL.

2.9.2 Monthly progress review between BHEL and Contractor shall be based on the agreed programme
as above, availability of inputs/fronts etc, and constraints if any, as per prescribed formats.
Manpower, T&P and consumable reports as per prescribed formats shall be submitted by
contractor every month. Release of RA Bills shall be contingent upon certification by BHEL Site
Engineer of the availability of the above prescribed formats duly filled in and signed.

2.9.3 The burden of proof that the causes leading to any shortfall is not due to any reasons attributable
to the contractor is on the contractor himself. The monthly progress review shall record shortfalls
attributable to (i) Contractor, (ii) Force Majeure Conditions, and (iii) BHEL

2.9.4 Performance of the Contractor shall be assessed as per prescribed formats and shall form the
basis for ‘Annual/Overall Performance Evaluation’ of the Contractor and also for ‘Assessment of
Capacity of Bidder’ for Tenders where the Contractor is a bidder. BHEL reserves the right to revise

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the evaluation formats during the course of execution of the works

2.10 TIME OF COMPLETION

2.10.1 The time schedule shall be as prescribed in the Contract. The time for completion shall be
reckoned from the date of commencement of work at Site as certified by BHEL Engineers
2.10.2 The entire work shall be completed by the contractor within the time schedule or within such
extended periods of time as may be allowed by BHEL under clause 2.11.

2.11 EXTENSION OF TIME FOR COMPLETION

2.11.1 If the completion of work as detailed in the scope of work gets delayed beyond the contract period,
the contractor shall request for an extension of the contract and BHEL at its discretion may extend
the Contract.
2.11.2 Based on the monthly reviews jointly signed, the works balance at the end of original contract
period less the backlog attributable to the contractor shall be quantified, and the number of months
of ‘Time extension’ required for completion of the same shall be jointly worked out. Within this
period of ‘Time extension’, the contractor is bound to complete the portion of backlog attributable to
the contractor. Any further ‘Time extension’ or ‘Time extensions’ at the end of the previous
extension shall be worked out similarly.
2.11.3 However if any ‘Time extension’ is granted to the contractor to facilitate continuation of work and
completion of contract, due to backlog attributable to the contractor alone, then it shall be without
prejudice to the rights of BHEL to impose penalty/LD for the delays attributable to the contractor, in
addition to any other actions BHEL may wish to take at the risk and cost of contractor.

2.11.4 A joint programme shall be drawn for the balance amount of work to be completed during the
period of ‘Time Extension’, along with matching resources (with weightages) to be deployed by the
contractor as per specified format. Review of the programme and record of shortfall shall be done
every month of the ‘Time extension’ period in the same manner as is done for the regular contract
period.

2.11.5 During the period of ‘Time extension’, contractor shall maintain their resources as per mutually
agreed program.

2.11.6 At the end of total work completion as certified by BHEL Engineer, and upon analysis of the total
delay, the portion of time extensions attributable to (i) Contractor, (ii) Force majeure conditions, and
(iii) BHEL, shall be worked out and shall be considered to be exhausted in the same order. The
total period of time extensions shall be the sum of (i), (ii) and (iii) above and shall be equal to period
between the scheduled date of completion and the actual date of completion of contract. LD shall
be imposed/levied for the portion of time extensions attributable to contractor and recoverable from
the dues payable to the contractor.

2.12 OVERRUN COMPENSATION (ORC)

2.12.1 ORC during original contract period: No ORC shall be applicable during the original contract
period.
2.12.2 ORC during extended period for the reasons solely attributable to contractor: No ORC shall
be applicable during the extended period granted for the reasons solely attributable to contractor
and work executed during this period shall be paid as per original contract rates.

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2.12.3 ORC during extended period for the reasons not attributable to contractor: ORC shall be
payable as per following procedure:
2.12.3.1 For initial period of twelve months of extended period, ORC rate applicable over executed value
shall be 5%. For every subsequent period of twelve months, ORC rate shall be further increased
by 5% over the previous rate. For example, ORC rates applicable for initial period of 12 months
and subsequent period of 12 months are given below.

Sl. Extended Period for the reasons ORC rate applicable over
No. attributable to BHEL executed value

1 First 12 months 5%
2 13th-24th month and so on 10.25%
{[(1.05 x 1.05)-1] x 100}

This process of increasing ORC rate for each subsequent period of 12 months shall continue till
applicability of ORC.
2.12.3.2 On completion of original contract period as well as on completion of each subsequent period of
twelve months i.e. at the time of change in applicable ORC rate, Delay Analysis shall be carried
out and percentage shortfall attributable to both BHEL & Contractor shall be calculated.
2.12.3.3 For the purpose of calculation of ORC, executed value of work in the month shall be divided in
Part-1 and Part-2 in proportion of percentage shortfall attributable to BHEL and contractor
respectively, based on the last delay analysis as worked out in 2.12.3.2.
ORC shall be payable only on Part-1 and no ORC shall be payable on Part-2.
Value of Part-1 shall be further limited to the value of actual inputs provided by BHEL i.e. “Plan -
Shortfall attributable to BHEL” for the month, as per Form-14 for calculation of ORC.
2.12.3.4 Payment of ORC amount shall be further regulated as follows:
(i) 50% of the ORC is allocated for deployment of matching resources (with weightages) agreed
as per the joint programme drawn vide 2.11.4. ORC Payment against resources shall be
calculated in proportion to percentage of resources actually deployed w.r.t. planned
resources, as per Form-14.
(ii) 50% of ORC is allocated for achieving of planned progress agreed as per the joint
programme drawn vide 2.11.4. ORC Payment shall be reduced in proportion to percentage
shortfall attributable to contractor w.r.t. “Plan - Shortfall attributable to BHEL” for the month,
as per Form-14.
2.12.3.5 The maximum amount of ORC payable for the month shall be limited to Rs. 5,00,000/-.
2.12.3.6 In case, there is no shortfall attributable to contractor for the month and also contractor has
deployed the resources as agreed in Form-14 but ORC amount payable for the month worked out
as per procedure mentioned in clause 2.12.3.3, 2.12.3.4 and 2.12.3.5, is less than Rs.1,00,000/-,
then ORC amount payable for the month shall be Rs.1,00,000/- otherwise ORC amount payable
for the month shall remain same.
2.12.3.7 In case execution is on HOLD (Other than Force Majeure), ORC shall be payable as per following:

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i). Contractor has not been permitted by BHEL to de-mobilize

a) ORC amount of Rs. 1,00,000/- per month shall be applicable during the period of HOLD
provided resources as planned are deployed (not demobilised) during the period of hold.
b) Subsequent to lifting of HOLD, Period of HOLD shall not be excluded in calculation of period
for deciding applicable ORC rate as per clause 2.12.3.1.

ii). Contractor has been permitted to demobilize and to remobilize after lifting of HOLD
a) No ORC shall be payable to contractor for the period of HOLD.
b) Subsequent to lifting of HOLD, Period of HOLD shall not be excluded in calculation of period
for deciding applicable ORC rate as per clause 2.12.3.1.

2.12.3.8 In case Force Majeure is invoked:

(i) No ORC shall be applicable during the period of Force Majeure.
(ii) Subsequent to revocation of Force Majeure, period of Force Majeure shall be excluded in
calculation of period for deciding applicable ORC rate as per clause 2.12.3.1.

2.12.4 Applicability of ORC: ORC shall not be applicable for following activities.

(i) Area cleaning, removal of temporary structures and return of scrap.

(ii) Punch list points / pending points liquidation pending due to reasons attributable to contractor
(iii) Submission of “As built Drawing”
(iv) Material Reconciliation
(v) Completion of Contract Closure formalities like HR Clearance/ No dues from various dept./
Statutory Authorities etc.

2.12.5 Total Over Run Compensation shall be limited to 10% of the cumulatively executed contract value
till the month (excluding Taxes and Duties if payable extra). For this purpose, executed contract
value excludes PVC, ORC and Extra/Supplementary Works.

2.13 INTEREST BEARING RECOVERABLE ADVANCES

2.13.1 Normally no advance is payable to the contractor. However, advance payment in exceptional
circumstances shall be interest bearing and secured through a Bank Guarantee and shall be
limited to a maximum of 5% of contract value. This ‘Interest Bearing Recoverable Advance’ shall be
payable in not less than two installments with any of the installment not exceeding 60% of the total
eligible advance.
2.13.2 In exceptional circumstances, with due justification, Competent Authority of BHEL is empowered to
approve proposals for payment of additional interim interest bearing advance against Bank
Guarantee, for resource augmentation towards expediting work for project implementation.

2.13.3 Bank Guarantee towards ‘Interest Bearing Recoverable Advance’ shall be atleast 110% of the
advance so as to enable recovery of not only principle amount but also the interest portion, if so
required.

2.13.4 Contractor shall establish the utilization of advance drawn before the release of next installment.

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2.13.5 Payment and recovery of Interest Bearing Recoverable advance shall be at the sole discretion of
BHEL and shall not be a subject matter of arbitration.

2.13.6 The rate of interest applicable for the above advances shall be the Base rate of SBI (on date of
release of advance) plus 6%, and such rate will remain fixed till the total advance amount is
recovered.

2.13.7 Unadjusted amount of advances paid shall not exceed 5% of the total contract value at any point of
time. Recovery of advances shall be made progressively from each Running Bill such that the
advance amounts paid along with the interest is fully recovered by the time the contractor’s billing
reaches 80% of contract value.

2.13.8 Recovery rate per month shall be the sum of:

a. Not less than 10% of Running Bill amount
b. Simple interest up to the date of RA Bill on the outstanding Principle amount/amounts

2.13.9 Contractor to submit Bank Guarantee as per prescribed formats for each of the advance and shall
be valid for at least one year or the recovery duration or the balance contract period which ever is
later. In case the recovery of dues does not get completed within the aforesaid BG period, the
contractor shall renew the BG or submit fresh BG for the outstanding amount and the remaining
recovery period.

2.13.10 BHEL is entitled to make recovery of the entire outstanding amount in case the contractor fails to
comply with the BG requirement

2.14 QUANTITY VARIATION

2.14.1 The quantities given in the contract are tentative and may change to any extent (both in plus side
and minus side). The quoted rates for individual items shall remain firm irrespective of any
variations in the individual quantities. No compensation becomes payable in case the variation of
the final executed contract value is within the limits of Minus (-) 15% of awarded contract value.
2.14.2 Compensation due to variation of final executed value in excess of the limits defined in clause
above, shall be as follows:
i) In case the finally executed contract value reduces below the lower limit of awarded Contract
Value due to quantity variation specified above, the contractor will be eligible for compensation
@ 15% of the difference between the lower limit of the awarded contract value and the actual
executed contract value.
ii) In case the finally executed contract value increases above the awarded Contract Value due to
quantity variation, there will be no upward revision in the rates for the individual items and also
contractor is not eligible for any compensation.

2.15 EXTRA WORKS

2.15.1 All rectifications/modifications, revamping, and reworks required for any reasons not due to the fault
of the contractor, or needed due to any change in deviation from drawings and design of equipments,
operation/maintenance requirements, mismatching, or due to damages in transit, storage and
erection/commissioning, and other allied works which are not very specifically indicated in the
drawings, but are found essential for satisfactory completion of the work, will be considered as extra
works.

2.15.2 Extra works arising on account of the contractor's fault, irrespective of time consumed in rectification
of the damage/loss, will have to be carried out by the contractor free of cost. Under such

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circumstances, any material and consumable required for this purpose will also have to be arranged
by the contractor at his cost.

2.15.3 All the extra work should be carried out by a separately identifiable gang, without affecting routine
activities. Daily log sheets in the pro-forma prescribed by BHEL should be maintained and shall be
signed by the contractor's representative and BHEL engineer. No claim for extra work will be
considered/entertained in the absence of the said supporting documents i.e. daily log sheets. Signing
of log sheets by BHEL engineer does not necessarily mean the acceptance of such works as extra
works.

2.15.4 BHEL retains the right to award or not to award any of the major repair/
rework/modification/rectification/fabrication works to the contractor, at their discretion without
assigning any reason for the same

2.15.5 After eligibility of extra works is established and finally accepted by BHEL engineer/designer,
payment will be released on competent authority's approval at the following rate.

MAN-HOUR RATE FOR ELIGIBLE EXTRA WORKS: Single composite average labour man-hour
rate, including overtime if any, supervision, use of tools and tackles and other site expenses and
incidentals, consumables for carrying out any major rework/ repairs/ rectification/ modification/
fabrication as certified by site as may arise during the course of erection, testing, commissioning or
extra works arising out of transit, storage and erection damages, payment, if found due will be at Rs
108/- per man hour.

2.15.6 The above composite labour man hour rate towards extra works shall remain firm and not subject to
any variation during execution of the work. PVC will not be applicable for extra works. Rate revision,
Over Run Charges/compensation etc will not be applicable due to extra works.

2.15.7 Extra Works for Civil Packages shall be regulated as follows

i) Rates for Extra Works arising due to (1) non availability of BOQ (Rate Schedule), OR (2) change in
Specifications of materials/works (3) rectification/modification/dismantling & re erecting etc due to no
fault of Contractor, shall be in the order of the following:
a) Item rates are to be derived from similar nature of items in the BOQ (Rate Schedule) with
applicable escalation derived from All India Consumer Price Index for Whole Sale Commodities.
b) As per CPWD-DSR-2007 (or latest edition) with applicable escalation derived from All India
Consumer price Index for Whole Sale Commodities, OR, Notification issued by the office of
CPWD for ‘Cost Index’ in that Region where the project is being executed, whichever is less
c) Item rates are to be worked out on the basis of prevailing market rates mutually agreed between
BHEL and Contractor, plus 15% towards Contractor’s overheads and profit.
ii) PVC and ORC will not applicable be for (i) above.

2.16 SUPPLEMENTARY ITEMS

2.16.1 For NON Civil Works
Supplementary items are items/works required for completion of entire work but not specified in the
scope of work. Subject to certification of such items/works as supplementary items by BHEL
Engineer, rates shall be derived on the basis of any one of the following on mutual agreement:
i) Based on percentage breakup/rates indicated for similar/nearby items
ii) In case (i) above does not exist, then BHEL/site may derive the percentage breakup/rates to suit the
type of work.

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2.16.2 For Civil Works

i) Rates for Supplementary Works/Additional Works arising out due to additions/alterations in the
original scope of works as per contract subject to certification of BHEL Engineer shall be worked out
as under:
a) Item rates which are available in existing BOQ (Rate Schedule) shall be operated with applicable
escalation derived from All India Consumer Price Index for Whole Sale Commodities
b) Items of works which are not available in existing BOQ shall be operated as an ‘Extra Works’
and rate shall be derived as per clause no 2.15.7
ii) Execution of Supplementary Works/Additional Works through the Contractor shall be at the sole
discretion of BHEL, and shall be considered as part of executed contract value for the purpose of
Quantity Variation as per clause 2.14
iii) BHEL Engineer’s decision regarding fixing the rate as above is final and binding on the contractor.
iv) PVC and ORC will not be applicable for (i) above.

2.17 PRICE VARIATION COMPENSATION

2.17.1 In order to take care of variation in cost of execution of work on either side, due to variation in the
index of LABOUR, HIGH SPEED DIESEL OIL, WELDING ROD, CEMENT, STEEL, MATERIALS,
Price Variation Formula as described herein shall be applicable (only for works executed during
extended period, if any, subject to other conditions as described in this section).
2.17.2 85% component of Contract Value shall be considered for PVC calculations and remaining 15%
shall be treated as fixed component. The basis for calculation of price variation in each category,
their component, Base Index shall be as under:

SL CATEGORY BASE INDEX PERCENTAGE COMPONENT (‘K’)

NO.
Electrical, C&I,
CIVIL PACKAGES MECHANICAL Material
(See Note A/B/C) PACKAGES Management/
Handling and
A B C other labour
oriented
packages
i) LABOUR ‘MONTHLY ALL-INDIA AVERAGE 40 25 30 65 80
CONSUMER PRICE INDEX NUMBERS
(ALL CATEGORIES)
FOR INDUSTRIAL WORKERS’
published by Labour Bureau, Ministry of
Labour and Employment, Government
of India.
(Website: labourbureau.nic.in)
Name of Commodity: HSD
ii) HIGH SPEED 5 3 5 5 5
DIESEL OIL
Commodity Code: 1202000005
(See Note E)
Name of Commodity : MANUFACTURE
iii) WELDING ROD
OF BASIC METAL 15
Commodity Code: 1314000000
(See Note E)
Name of Commodity: ORDINARY
iv) CEMENT 20 30
PORTLAND CEMENT
Commodity Code: 1313050003
(See Note E)

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STEEL Name of Commodity: MILD STEEL:
v)
(Structural and LONG PRODUCTS 25
Reinforcement
Steel) Commodity Code: 1314040000
(See Note E)
Name of Commodity: ALL
vi) ALL OTHER
COMMODITIES 40 12 20
MATERIALS
Commodity Code: 1000000000
(Other than
(See Note E)
Cement & Steel)

Note: A) Cement & Steel : Free Issue (BHEL Scope)

B) Cement & Steel : In Contractor Scope
C) Cement in Contractor Scope, and Steel is Free Issue (BHEL Scope)
D) For Composite packages (i.e. Civil+Mechanical+Electrical and/or CI or Civil+Mechanical or
Mechanical+Electrical and/or CI), the COMPONENT (‘K’) for various categories shall be as per
respective packages as above.
E) As per the ‘MONTHLY WHOLE SALE PRICE INDEX’ for the respective Commodity and Type,
published by Office of Economic Adviser, Ministry of Commerce and Industry, Government of India.
(Website: http://eaindustry.nic.in/home.asp). Revisions in the index or commodity will be re adjusted
accordingly.

2.17.3 #

2.17.4 Payment/recovery due to variation in index shall be determined on the basis of the following
notional formula in respect of the identified COMPONENT (‘K’) viz LABOUR, HIGH SPEED
DIESEL OIL, WELDING ROD, CEMENT, STEEL, MATERIALS.
P = K x R x (XN - Xo)
Xo
Where
P = Amount to be paid/recovered due to variation in the Index for Labour, High Speed Diesel
Oil, Welding Rod, Cement, Steel and Materials.
K = Percentage COMPONENT (‘K’) applicable for Labour, High Speed Diesel Oil, Welding Rod,
Cement, Steel and Materials
R = Value of work done for the billing month (Excluding Taxes and Duties if payable extra)
XN = Revised Index for Labour, High Speed Diesel Oil, Welding Rod, Cement, Steel and
Materials for the billing month under consideration
Xo = Index for Labour, High Speed Diesel Oil, Welding Rod, Cement, Steel and Materials as on
the Base date.

2.17.5 Base date shall be the calendar month of the schedule completion date (i.e. Actual start date
+ Scheduled Contractual completion period as per Letter of Intent/award and/or work order).

2.17.6 PVC shall not be payable for the ORC amount, Supplementary/Additional Items, Extra works.
However, PVC will be payable for items executed under quantity variation of BOQ items under
originally awarded contract.

2.17.7 The contractor shall furnish necessary monthly bulletins in support of the requisite indices from the
relevant websites along with his Bills.

2.17.8 The contractor will be required to raise the bills for price variation payments on a monthly basis
along with the running bills irrespective of the fact whether any increase/decrease in the index for

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relevant categories has taken place or not. In case there is delay in publication of bulletins (final
figure), the provisional values as published can be considered for payments and arrears shall be
paid/recovered on getting the final values.

2.17.9 PVC shall be applicable only, during the extended period of contract (if any) after the scheduled
completion period and for the portion of work delayed / backlog for the reasons not attributable to
the contractor.

However total quantum of Price Variation amount payable/recoverable shall be regulated as

follows:
i) For the portion of shortfall / backlog not attributable to contractor, PVC shall be worked out on the
basis of indices applicable for the respective month in which work is done. Base index shall be
applicable as defined in clause 2.17.5.
ii) In case of Force majeure, PVC shall be regulated as per (a) or (b) below:

a) Force majeure is invoked before “base date”/”revised base date” (as explained below) OR
immediately after “base date”/”revised base date” in continuation (i.e. during the period when
PVC is not applicable):
1. Base date shall be revised: Revised base date=Previous base date + duration of Force
majeure. No PVC will be applicable for the work done till revised base date.
2. PVC will be applicable for the work done after “base date”/”revised base date” as the case
may be (during extended period when delay is not attributable to contractor). PVC shall be
worked out on the basis of the indices applicable for the respective month in which work is
done with base index as on “base date”/’revised base date” as the case may be.

b) Force majeure is invoked after “base date”/”revised base date” as the case may be (during
extended period when delay is not attributable to contractor).
1. PVC shall be applicable for the work done after revocation of force majeure.
2. PVC for the work done after revocation of force majeure shall be worked out on the basis
of indices applicable for the respective month in which work is done excluding the effect of
change in indices during total period of Force majeure(s) invoked after “base date”/”revised
base date” as the case may be. Base index shall be taken as on “base date”/’revised base
date” as the case may be.

iii) The total amount of PVC shall not exceed 15% of the cumulatively executed contract value.
Executed contract value for this purpose is exclusive of PVC, ORC, Supplementary/Additional
Items and Extra works except extra items due to quantity variation.

2.18 INSURANCE
2.18.1 BHEL/their customer shall arrange for insuring the materials/properties of BHEL/customer covering
the risks during transit, storage, erection and commissioning.
2.18.2 It is the sole responsibility of the contractor to insure his materials, equipments, workmen, etc.
against accidents and injury while at work and to pay compensation, if any, to workmen as per
Workmen’s compensation Act. The work will be carried out in a protected area and all the rules
and regulations of the client /BHEL in the area of project which are in force from time to time will
have to be followed by the contractor.

2.18.3 If due to negligence and or non-observation of safety and other precautions by the contractors, any
accident/injury occurs to the property / manpower belong to third party, the contractor shall have to
pay necessary compensation and other expense, if so decided by the appropriate authorities.

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2.18.4 The contractor will take necessary precautions and due care to protect the material, while in his
custody from any damage/ loss due to theft or otherwise till the same is taken over by BHEL or
customer. For lodging / processing of insurance claim the contractor will submit necessary
documents. BHEL will recover the loss including the deductible franchise from the contractor, in
case the damage / loss is due to carelessness / negligence on the part of the contractor. In case of
any theft of material under contractor's custody, matter shall be reported to police by the contractor
immediately and copy of FIR and subsequently police investigation report shall be submitted to
BHEL for taking up with insurance. However this will not relieve the contractor of his contractual
obligation for the material in his custody.

2.19 STRIKES & LOCKOUT

2.19.1 The contractor will be fully responsible for all disputes and other issues connected with his labour.
In the event of the contractor’s labour resorting to strike or the Contractor resorting to lockout and if
the strike or lockout declared is not settled within a period of one month, BHEL shall have the right
to get the work executed through any other agencies and the cost so incurred by BHEL shall be
deducted from the Contractor’s bills.

2.19.2 For all purposes whatsoever, the employees of the contractor shall not be deemed to be in the
employment of BHEL

2.20 FORCE MAJEURE

2.20.1 "Force Majeure" shall mean any event beyond the reasonable control of the parties including
but not limited to fire, flood, earthquake or other acts of God, war, riots, civil war and restraints
of Governing States, as the case may be, and which is unavoidable notwithstanding the
reasonable care of the party affected. The following events are explicitly excluded from Force
Majeure and are solely the responsibilities of the non-performing party : a) any strike, work-to-rule
action, go-slow or similar labour difficulty (b) late delivery of equipment or material (unless
caused by Force Majeure event) and (c) economic hardship.

2.20.2 If either party is prevented, hindered or delayed from or in performing any of its obligations
under the Contract by an event of Force Majeure, then it shall notify the other in writing of the
occurrence of such event and the circumstances thereof within 15 (fifteen) days after the
occurrence of such event.

2.20.3 The party who has given such notice shall be excused from the performance or punctual
performance of its obligations under the Contract for so long as the relevant event of Force
Majeure continues and to the extent that such party's performance is prevented, hindered or
delayed. The Time for Completion shall be extended by a period of time equal to period of delay
caused due to such Force Majeure event.

2.20.4 Delay or non-performance by either party hereto caused by the occurrence of any event of Force
Majeure shall not
 Constitute a default or breach of the Contract.
 Give rise to any claim for damages or additional cost or expense occasioned thereby, if and
to the extent that such delay or non-performance is caused by the occurrence of an event of
Force Majeure.

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2.21 ARBITRATION & CONCILIATION

2.21.1 ARBITRATION:

2.21.1.1 Except as provided elsewhere in this Contract, in case Parties are unable to reach amicable
settlement (whether by Conciliation to be conducted as provided in Clause 2.21.2 herein below
or otherwise) in respect of any dispute or difference; arising out of the formation, breach,
termination, validity or execution of the Contract; or, the respective rights and liabilities of the
Parties; or, in relation to interpretation of any provision of the Contract; or. in any manner
touching upon the Contract (hereinafter referred to as the ‘Dispute’), then, either Party may,
commence arbitration in respect of such Dispute by issuance of a notice in terms of section 21
of the Arbitration & Conciliation Act, 1996 (hereinafter referred to as the ‘Notice’). The Notice
shall contain the particulars of all claims to be referred to arbitration in sufficient detail and shall
also indicate the monetary amount of such claim. The arbitration shall be conducted by a sole
arbitrator to be appointed by the Head of the BHEL Power Sector Region issuing the Contract
within 60 days of receipt of the complete Notice. The language of arbitration shall be English.

The Arbitrator shall pass a reasoned award.

Subject as aforesaid, the provisions of Arbitration and Conciliation Act 1996 (India) or statutory
modifications or re-enactments thereof and the rules made thereunder as in force from time to
time shall apply to the arbitration proceedings under this clause. The seat of arbitration shall be
New Delhi/ delhi. The Contract shall be governed by and be construed as per provisions of the
laws of India. Subject to this provision 2.21.1.1 regarding ARBITRATION, the principal civil court
exercising ordinary civil jurisdiction over the area where the seat of arbitration is located shall
have exclusive jurisdiction over any DISPUTE to the exclusion of any other court.

2.21.1.2 In case of Contract with Public Sector Enterprise (PSE) or a Government Department, the
following shall be applicable:

In the event of any dispute or difference relating to the interpretation and application of the
provisions of commercial contract(s) between Central Public Sector Enterprises (CPSEs)/ Port
Trusts inter se and also between CPSEs and Government Departments/Organizations
(excluding disputes concerning Railways, Income Tax, Customs & Excise Departments), such
dispute or difference shall be taken up by either party for resolution through AMRCD
(Administrative Mechanism for Resolution of CPSEs Disputes) as mentioned in DPE OM No.
4(1)/2013-DPE(GM)/FTS-1835 dated 22-05-2018 as amended from time to time.

2.21.1.3 The cost of arbitration shall initially be borne equally by the Parties subject to the final allocation
thereof as per the award/order passed by the Arbitrator.

2.21.1.4 Notwithstanding the existence of any dispute or differences and/or reference for the arbitration,
the Contractor shall proceed with and continue without hindrance the performance of its
obligations under this Contract with due diligence and expedition in a professional manner
unless the dispute inter-alia relates to cancellation, termination or short-closure of the Contract
by BHEL.

2.21.2 CONCILIATION:

If at any time (whether before, during or after the arbitral or judicial proceedings), any Disputes

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(which term shall mean and include any dispute, difference, question or disagreement arising in
connection with construction, meaning, operation, effect, interpretation or breach of the
agreement, contract), which the Parties are unable to settle mutually, arise inter-se the Parties,
the same may, be referred by either party to Conciliation to be conducted through Independent
Experts Committee (IEC) to be appointed by competent authority of BHEL from the BHEL Panel
of Conciliators.

Notes:

1. No serving or a retired employee of BHEL/Administrative Ministry of BHEL shall be included in

the BHEL Panel of Conciliators.

2. Any other person(s) can be appointed as Conciliator(s) who is/are mutually agreeable to both
the parties from outside the BHEL Panel of Conciliators.

The proceedings of Conciliation shall broadly be governed by Part-III of the Arbitration and
Conciliation Act 1996 or any statutory modification thereof and as provided in Procedure 2.3 to
this GCC. The Procedure 2.3 together with its Formats will be treated as if the same is part and
parcel hereof and shall be as effectual as if set out herein in this GCC.

The Contractor hereby agrees that BHEL may make any amendments or modifications to the
provisions stipulated in the Procedure 2.3 to this GCC from time to time and confirms that it
shall be bound by such amended or modified provisions of the Procedure 2.3 with effect from
the date as intimated by BHEL to it.

2.21.3 No Interest payable to Contractor

Notwithstanding anything to the contrary contained in any other document comprising in the
Contract, no interest shall be payable by BHEL to Contractor on any moneys or balances
including but not limited to the Security Deposit, EMD, Retention Money, RA Bills or the Final
Bill, or any amount withheld and/or appropriated by BHEL etc., which becomes or as the case
may be, is adjudged to be due from BHEL to Contractor whether under the Contract or
otherwise.

2.22 RETENTION AMOUNT

2.22.1 Retention Amount shall be 5% of executed contract value and shall be recovered at the rate of 5%
from each Running Bill admitted, including PVC Bills.

2.22.2 Refund of Retention Amount shall be as follows:

i) 50% of retention amount along with ‘Final Bill’
ii) Balance 50% of retention amount shall be retained towards ‘Performance Guarantee for
Workmanship’ and shall become refundable after expiry of Guarantee period, provided all the
defects noticed during the guarantee period have been rectified to the satisfaction of BHEL
Site Engineer/BHEL Construction Manager, and after deducting all expenses/other amounts
due to BHEL under the contract/other contracts entered into by BHEL with them. This portion
of the retention amount can be released on commencement of the Guarantee period, on
submission of equivalent Bank Guarantee.

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General Conditions of Contract (Common for Power Sector Regions) 1st June 2012
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2.23 PAYMENTS
Payments to Contractors are made in any one of the following forms

2.23.1 Running Account Bills (RA Bills)

i) These are for interim payments when the contracts are in progress. The bills for such interim
payments are to be prepared by Contractor in prescribed formats (RA Bill forms).
ii) Payments shall be made according to the extent of work done as per measurements taken
up to the end of the calendar month and in line with the terms of payments described in the
Tender documents
iii) Recoveries on account of electricity, water, statutory deductions, etc are made as per terms
of contract
iv) Full rates for the work done shall be allowed only if the quantum of work has been done as
per the specifications stipulated in the contract. If the work is not executed as per the
stipulated specifications, BHEL may ask the contractor to re do the work according to the
required specifications, without any extra cost. However, where this is not considered
necessary ‘OR’ where the part work is done due to factors like non-availability of material to
be supplied by BHEL ‘OR’ non availability of fronts ‘OR’ non availability of drawings,
fraction payment against full rate, as is considered reasonable, may be allowed with due
regard for the work remaining to be done. BHEL decision in this regard will be final and
binding on the contractor.
v) In order to facilitate part payment, BHEL Site Engineer at his discretion may further split the
contracted rates/percentages to suit site conditions, cash flow requirements according to the
progress of work

2.23.2 Final Bill

Final Bill’ is used for final payment on closing of Running Account for works or for single payment
after completion of works. ‘Final Bill’ shall be submitted as per prescribed format after completion
of works as per scope and upon material reconciliation, along with the following.
i) ‘No Claim Certificate’ by contractor
ii) Clearance certificates where ever applicable viz Clearance Certificates from Customer,
various Statutory Authorities like Labour department, PF Authorities, Commercial Tax
Department, etc
iii) Indemnity bond as per prescribed format

BHEL shall settle the final bills after deducting all liabilities of Contractor to BHEL.

2.24 PERFORMANCE GUARANTEE FOR WORKMANSHIP

2.24.1 Even though the work will be carried out under the supervision of BHEL Engineers the Contractor
will be responsible for the quality of the workmanship and shall guarantee the work done for a
period of twelve months from the date of commencement of guarantee period as defined in
Technical Conditions of Contract, for good workmanship and shall rectify free of cost all defects
due to faulty erection detected during the guarantee period. In the event of the Contractor failing to
repair the defective works within the time specified by the Engineer, BHEL may proceed to
undertake the repairs of such defective works at the Contractor’s risk and cost, without prejudice to
any other rights and recover the same from the Guarantee money.

2.24.2 BHEL shall release the guarantee money subject to the following
i) Contractor has submitted ‘Final Bill’
ii) Guarantee period as per contract has expired

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General Conditions of Contract (Common for Power Sector Regions) 1st June 2012
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iii) Contractor has furnished ‘No Claim Certificate’ in specified format

iv) BHEL Site Engineer/Construction Manager has furnished the ‘No Demand Certificate’ in
specified format
v) Contractor has carried out the works required to be carried out by him during the period of
Guarantee and all expenses incurred by BHEL on carrying out such works is included for
adjustment from the Guarantee money refundable.

2.25 CLOSING OF CONTRACTS

The Contract shall be considered completed and closed upon completion of all contractual
obligations and settlement of Final Bill or completion of Guarantee period whichever is later. Upon
closing of Contract, BHEL shall issue a completion certificate as per standard format, based on
specific request of Contractor.

2.26 REVERSE AUCTION:

BHEL reserves the right to go for Reverse Auction for Price Bid Opening by BHEL appointed
service provider, instead of opening the submitted sealed price bid in the conventional way. The
Business Rules for Reverse Auction shall be as per BHEL guidelines issued from time to time.

2.27 SUSPENSION OF BUSINESS DEALINGS

BHEL reserves the right to take action against Contractors who either fail to perform or
Tenderers/Contractor who indulge in malpractices, by suspending business dealings with them in
line with BHEL guidelines issued from time to time.

2.28 OTHER ISSUES

2.28.1 Value of Non judicial Stamp Paper for Bank Guarantees and for Contract Agreement shall be not
less than Rs 100/- unless otherwise required under relevant statutes.
2.28.2 In case of any conflict between the General Conditions of Contract and Special Conditions of
Contract, provisions contained in the Special Conditions of Contract shall prevail.
2.28.3 Unless otherwise specified in NIT, offers from consortium/ JVs shall not be considered.
2.28.4 BHEL may not insist for signing of Contract Agreements in respect of low value and short time
period contracts like providing services for Hot water flushing, Chemical Cleaning, Transportation,
etc.

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