International Journal of Civil Engineering and Technology (IJCIET)

Volume 7, Issue 3, MayJune 2016, pp. 145162, Article ID: IJCIET_07_03_015

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ISSN Print: 0976-6308 and ISSN Online: 0976-6316
IAEME Publication

A RATIONAL APPROACH FOR ASSESSING

THE COMPETITIVE BIDDING OF
INFRASTRUCTURE PROJECTS OF INDIAN
RAILWAYS
M. Chittaranjan and K. N. Prasad
Department of Civil Engineering,
S .V. University College of Engineering, Tirupati,
Andhra Pradesh, India
ABSTRACT
Contract Management plays a vital role in the execution of construction
projects for infrastructure creation such as Indian railways (IR). A birds eye
view of issues in the public procurement practices of IR is given based on a
recent audit report on the subject. IR inherited the rich British legacy and due
to this historical background, a brief appraisal of public procurement
practices and guidelines in UK is given in this paper for a comparative
analysis. The focus of this paper is to customize a global trend of multi criteria
contract management. A case study of competitive bidding in IR based on
multi criteria is discussed. The multi criteria attributes being globally adopted
are recommended in Civil Engineering constructions contracts. This is based
on a comprehensive analysis of price and non price criteria which was
financed by the Swedish Research Council (SRC).
Key words: Contract Management, Public Procurement, Multi Criteria, TwoPacket System, Catering Tender, Bid Evaluation, Eligibility Criteria
Cite this Article: M. Chittaranjan and K. N. Prasad, A Rational Approach For
Assessing The Competitive Bidding of Infrastructure Projects of Indian
Railways, International Journal of Civil Engineering and Technology, 7(3),
2016, pp. 145162.
http://www.iaeme.com/IJCIET/issues.asp?JType=IJCIET&VType=7&IType=3

1. INTRODUCTION
Traditionally lowest bid has been the award criteria for public sector construction
contracts. Prequalification of the bidders started with an American Society for Civil
Engineers (ASCE) seminar on contract award practices, held in 1965. This seminar
focused on protecting the interest of both the parties to the public sector construction
contracts (Hunt et al 1966). Using other criteria than the lowest bid emerged in the

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M. Chittaranjan and K. N. Prasad

late 1980s. (Ashley et al 1987). Herbsman and Ellis 1992 studied multi parameter
bidding for highway projects. Other US contributions in this field are performance
based procurement (Kashiwagi and Byfield 2002), multi parameter and best value
contracting (Anderson et al 2001). Outside the US, Holt (1998) and Wong (2001)
investigated contractor evaluation and selection methods. Palaneeswaran (2003)
studied on how much public procurement could benefit from the application of
multiple criteria. Multi-evaluator, multi-criterion (MEMC) decision making can be
controversial if bias or uncertainty find their way into the final decision (El Asmar
etal 2012).A similar study from a different perspective was made by Alhumaidi
(2014).

2. BACK GROUND INFORMATION

In the above perspective the effect and benefit of non-price criteria is important in the
choice of contractor. The buyers started using either a linear weighting model or
another type of function when relaying on multiple, non-price criteria (De Boer et al
2001). This has transformed the bidders organization and management to meet
buyers needs. This has opened the prospect of recurring commercial relationships
and more than a single contract. Such bidders were rewarded by a higher probability
of winning future contracts. In general attributes such as these criteria should be
complete, tangible, decomposable, operational, non-redundant and minimal,
according to Keeney and Raiffa (1976).
2.1 F.Waara and J.Brochner studied 386 public sector bidding documents in Sweden
in 2003. This study analysed 314 cases of non-price criteria excluding 42 cases of
public procurement based on lowest bid. They also excluded another 30 cases where
information is not revealed. They classified projects into small, large and complex
catagories and examined the incidence of non-price criteria in each category. The
criteria in public procurement as per the sample of 314 cases is tabulated below.
Table 1 Criteria used by Swedish Municipalities
Quality, Quality assurance system, quality plan
Bid price, Unit technical solution,
Function, Technical solution,
Technical design
Environmental characteristics, Environmental management system, Corporate environmental
policy
Operation costs, Maintenance costs, Life-cycle costs
Service, Responsiveness, Availability
Project duration contractors, Capabilities, Skills, Training, References, Past experience, and
past performance, Project realization, Construction methods, Financial capacity, Solidity
Health and safety conformity with bidding documents

There is however no restriction on use of similar or identical criteria for

evaluating the sub-contractors.

2.2. EVALUATION OF BID CRITERIA

Specifying price and non-price criteria and their respective weights is not sufficient in
the bid evaluation. The bid evaluation can be done on i) relative or ii) absolute merits
of the submitted bids.

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A Rational Approach For Assessing The Competitive Bidding of Infrastructure Projects of

Indian Railways

When evaluating the bids on relative merits, highest scale value to the best bid and
lowest scale value for the worst bid can be assigned. The other bidders scores are
then distributed between these two extremes. Alternatively the best bid can be
assigned highest scale value and the worst bid can be assigned any score depending
on how much it is perceived to deviate from the best bid.
When evaluating the bids on absolute merits, it is mentioned as to what is
necessary to attain a particular scale value. For example quality certificate of A
category may get 100 points, quality certificate of B category 80 points and so on. It
is interesting to note that criteria such as function, technical solution, technical design
always were evaluated on relative merits.
With this back ground information on evolution and evaluation of multi criteria
bidding, the public procurement practices are critically examined with reference to
Indian Railways.

3. CONTRACT MANAGEMENT IN INDIAN RAILWAYS:Indian Railways enters into contracts for execution of various works of maintenance
and creation of assets and spends substantial amounts towards resources in terms of
contractual payments and maintenance of manpower of Engineering Department.
These works are executed through agency of contractors by the Engineering
Department of Indian Railways, on Open Line and Construction. While the Open Line
is responsible for maintenance of all fixed assets of Indian Railways, i.e.Tracks,
Bridges, Buildings, roads, Water Supply, the Construction wing is responsible for
construction of new assets such as new lines, gauge conversion, doubling, major
bridges and developmental works in Railways. Management of these contracts is done
as per guidelines laid down in the Engineering and Finance code of the Indian
railways and instructions issued from time to time. The guidelines and instructions
stress upon ensuring proper tendering process so that the eligible contractor is selected
and ensuring that the relationship between the Railways and contractors is mutually
constructive and problem free.
The total expenditure incurred by IR on execution of works was Rs. 36,905 crore
during the period 2001-12 to 2013-14, averaging to Rs. 12,300 crore per annum,
3.1 The statutory audit (C&AG) examined the process of tendering and contract
management in the Indian Railways. The C&AG examined with reference to
adherence of rules / procedures, delays in tendering and executing the works, the
inspection system, incidence of malpractices, recovery of dues from contractors and
efficacy of arbitrations. The following aspects have been taken into consideration:

Provisions stipulated in Chapter XII-Contract for works in Indian Railway code for
Engineering Department and Chapter-VI-Contracts- general principales in Indian
railway Finance code Vol.I.
Guidelines/instructions issued from Railway Board on processing of tenders and
execution of contracts.

All source documents pertain to the 3 year period from 2011-12 to 2013-14. The
sample and basis on which the sample was selected is given in table 2.

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Table 2 Basis of Tsample selection
Sl. No.

Area

Monetary
limits
Up to Rs1
Crore

Contracts
executed
during the
year

Rs 1 to Rs
5 Crore

Above Rs.
5 Crore

Rs. 1 to Rs
5 Crore
2

Contracts in
progress
Above Rs.
5 Crore

Completed
contracts

Criteria for selection

6 agreements on two
division and 2
agreements on
construction for each
year
8 agreements on two
divisions and 4
agreements on
construction for each
year
6 agreements on two
division and 4
agreements on
construction for each
year
20 precent by
construction and 10
percent by open Line
subject of maximum of
15 and 10 contracts
50 percent by
construction and by
open Line subject to
maximum of 10and 5
contracts.

Same as above

Period
covered

No. of
Cases

1215
2010-11 to
2013-14

As on
31.03.2014

560

2013-14

252

2010-11 to
2013-14

318

Discharged
tenders

50 percent Construction
25 percent Open Line of
such tenders subject of
maximum of 15 and 10

Tenders
valuing
above Rs 8
crore/10
crore

100 percent

2010-11 to
2013-14

Contracts
short- closed/
fore-closed

50 percent construction
25 percent Openly Line
of such contracts.
Subject of maximum of
25 and 15.

2010-11 to
2013-14

7
8

Contracts
terminated
Arbitration
awards
settled

Same as above
10 cases in Construction
and in open line
separately.

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321

132

2010-11to
2013-14

196

2010-11 to
2013-14

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A Rational Approach For Assessing The Competitive Bidding of Infrastructure Projects of

Indian Railways

3.2. Some of the audit findings include

The purpose of open tendering is to get best agencies at competitive rates. Out of
1215 tenders checked, single offer was received in 25% of the cases, and two offers
were received in 27% of the cases.
A review of time taken in 1183 tenders revealed that only 291 cases are finalized
within the validity period of 90/ 120/ 180 days as the case may be. Delay in issue of
letter of acceptance (LoA) ranged from 16 days to 195 days in 173 cases.
Tender discharge reasons are defects in schedules, non-receipt of approvals, high
rates, unworkable rates, low participation, work no longer required etc.
The two packet system is to ensure that the lowest bid is not eliminated on technical
or financial ground as an after thought. Out of 321 cases where in two packet system
should have been adopted, single packet system is followed in 22 cases. Railways
need to introduce the two packet system of tendering in all works tenders irrespective
of the value.
Out of 1215 cases, lowest tender was bypassed in 46 cases. As per Central Vigilance
Commission guidelines, tenders are to be discharged if lowest bid is withdrawn.
The agreements are awarded with specific mention that time is essence of contract
and if the contractor fails to complete the works within the time specified in the
contract for the reasons other than Railway account, the Railway may if satisfied that
the works can be completed by the contractor within reasonable short time thereafter,
allow the contract such further extension of time. For extensions attributable to
contractors under clause 17(B), railways are entitled to recover from the contractor as
agreed damages a sum equivalent to of1% of the contract value for the work for
each week or part of a week. Competent authority while granting extension to the
currency of contract under this clause may also levy token penalty as deemed fit
based on the merit of the case.
Out of 823 agreements which were due for completion as on 31-3-2014 only 20
agreements were completed within the prescribed time schedule.
Table 3 Reasons for extension
Number of
agreements

Delay on
part of
Contractors

135

Railway

590

Both

73

Reasons
Slow progress of work, labour problem
(Shortage), rains, skilled labour, shortage of
material.
Site not handed over, drawings not ready,
material not ready, traffic blocks not give,
change in scope of work, paucity of funds.
Combination of reasons above, public
agitations, heavy monsoons, ban on sand
mining etc

By default extensions are given on railway account though clear grounds exists to
prove delays by the contractual agencies.

As per conditions of contract, several recoveries as a part of complying with the

statutory obligations are imposed on the contract by various statutes of central and
state/local laws. Besides these, the administration is also entitled to recover monies
towards hire of tools and machineries, supply of water and electricity and failure of
contractor to employee qualified supervisors. The statutory deductions to be made at
source are income tax in compliance with section of 194-C of IT Act, sales tax/value
added tax in compliances with local sales tax /VAT laws, building and construction
workers cess (BOCW) in terms of BOCW Act 1996, seigniorage/royalty charges on

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M. Chittaranjan and K. N. Prasad

minor minerals consumed in the work in compliance with Minor Minerals Act of the
State.
Out of 1215 cases checked, a short recovery of dues amounting to Rs. 6.12 crore is
noticed in 163 contracts.
During the period of review, 132 contracts were foreclosed (closed mid way due to
railway failure). The amount of in fructuous expenditure is Rs.242.5 crores.
Additional expenditure of Rs. 25.85 crore was incurred in 28 agreements which were
awarded afresh.
With the advent of the arbitration and conciliation Act in January1996. Railways also
revised the existing arbitration clauses in the standard general conditions of contract.
All disputes and differences of any kind whatsoever arising out of or in connection
with a contract shall be referred by the contractor to the railway and railway shall
with 120days of the receipt of the contractors representation make and notify
decision on all matters referred to by the contractor. If the Railway fails to make a
decision with120days, the contractor should demand with 180days for referring the
matter to arbitration. The claimant will submit his claim to the arbitral tribunal, within
30 days of its appointment, all details/documents pertaining to his claim and the
railway will submit counter claim with60days of their receipt of the claim from the
Tribunal. If claims are not preferred by the party within 90days from the date of
intimation of the final bill, he cannot seek arbitration. The tribunal may award interest
for any period from the date of dispute to the date of award at 18 percent, unless
specific rate of interest is awarded by the tribunal. Thus, the contractual clauses
envisage not only a procedure for resolving disputes but also provide for timely
disposal of these cases. As on 31-3-2011, 1370 arbitration cases were pending.
During the three year period under review 462 new arbitration cases have accrued and
380 cases were settled. Out of this 380 cases, 101 cases were settled in favour of
Railways and 278 cases in favour of the contractors. An amount of Rs. 31.4 crore was
paid on this account.
E - tendering is limited to uploading and downloading of tender documents. Filling,
filing, evaluation and finalization is being done manually. Complete implementation
of E-tendering is desirable.

4. PUBLIC PROCUREMENT PRACTICES AND GUIDELINES IN

U.K AND OTHER COUNTRIES
The public sector spends staggering amounts in U.K every year on the goods and
services needed to deliver public policy. However notable achievements in terms of
value for money (VFM) for the tax payer, effective management of procurement,
proper planning and execution can be observed in their endeavours. Key concepts and
principles of public procurement are practiced in all departments dealing with the
public procurement. The contracting authorities adhere as part of Transforming
Government Procurement, the governments priorities for public procurement reform.
A public body may bid for government work against private bidders through a formal
competitive process. The government applies the highest professional standards on
public works and quality is ensured. This process spans a life cycle from identification
of the need, selection of bidders, post contract management and disposal. Contracting
authorities display and deploy strong personal and organizational leadership and
activities are led by professionally trained staff. The emphasis is on procurement
approach and procedure which is relevant and appropriate for what is being procured.
The contracting authorities should show achievement of targets and commitments.
The link between policy and deliverables is clearer.

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A Rational Approach For Assessing The Competitive Bidding of Infrastructure Projects of

Indian Railways

Often, procurement is only one of a number of mechanisms which could be used

to deliver government policy. For example, rather than procuring a policy-delivery
solution, the Government could introduce a new tax or subsidy; it could regulate or
prohibit something; it could use persuasion techniques through advertising or
marketing to influence behaviours in society. If procurement is selected as the most
desirable policy delivery mechanism, this should be justified against the other options.
Whether the driver is strategic policy delivery or support for ongoing operations,
authorities must adhere to government procurement policy, which is to buy the goods
and services that it needs to deliver world-class public services, through a fair and
open procurement process, guarding against corruption and seeking to secure value
for public funds with due regard to propriety and regularity.

4.1. SPECTRUM OF PROCUREMENT

The key factors that affect the decision on approach to the procurement are i)
Repeatability ii) Complexity iii) Value and Risk iv) Commonality
At one end of the spectrum, a low value, low risk, non-repeatable purchase
requires little process, governance or expertise and at the other extreme, buying an
aircraft carrier requires a strong project structure, considerable expertise, governance
and processes, advanced tools and probably several years worth of effort. Options
may include the Private Finance Initiative (PFI) or other Public Private Partnerships
(PPP), which in themselves present options for the funding of major capital projects,
as well as options for project and operational delivery. Less positively, an authority
may be faced with a situation where the market is limited or even non-existent.
Between these two extremes, there are many variations of approach. For instance,
awarding rail franchises is now a repeated activity, and has benefited from the
procuring authority developing strong market understanding, and using complex
procurement tools and techniques (as well as very capable staff) to achieve significant
value improvement over time.

4.2. COMPLEX PROJECT PROCUREMENT

Three key stages of a typical complex project procurement in the U.K are error free
and managed by taking all necessary precautions. Pre procurement (stage-1) is
marked by meticulous planning, consultation, development of specifications,
investment appraisal, market engagement, procurement strategy. A major
procurement requires project management skills, procurement skills and involves
expertise in law, finance, security, risk and human resources management. These are
duly taken care of by a consistent and systematic Project and Programme
Management (PPM). Private Finance Initiative (PFI) is encouraged where it can be
shown to deliver value for money (VFM).
The tender process (stage-2) consists of ensuring fair and open competition,
compliance of legal obligations, principles such as equal treatment, non
discrimination, mutual recognition, proportionality and transparency. There are
directives which provides for four main procurement procedures at this stage to be
used by the authorities. They are i) open procedure ii) restricted procedure iii)
competitive dialogue procedure iv) competitive negotiated procedure.

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M. Chittaranjan and K. N. Prasad

Evaluation of Tenders
Tenders are assessed against the criteria set out in the advertisement or tender
documentation. The assessment should follow the pre-defined evaluation strategy and
be consistent with the ultimate objectives of the project/procurement. The financial
and qualitative elements of tenders are assessed separately. Weightings may be
applied to the criteria to allow price and non-price factors to be scored to reflect their
importance to the project and to arrive at a final VFM judgment. For complex
procurements, this process requires skilled and experienced staff. The final selection
should be the tender which offers best overall VFM.
Good management of the operational face namely contract and supplier
management (stage-3) is the key to successful service delivery.
This phase of the procurement cycle is typically the most lengthy, and for a PFI
type contract can last for up to 20 years. The potential impact on VFM and overall
effectiveness can be substantial, and therefore it is vital that authorities dedicate the
right level of resources, skill and expertise into this critical function.
Here the contract management activities are grouped in to three areas ie.

Service delivery management

Relationship management
Contract administration and change management

Throughout the procurement process due attention is necessary to stress upon and
encourage healthy competition. Assessment of bids should be in relation to the
published set of evaluation criteria which must be relevant to the subject of contract.
Any added value that justifies a higher price must flow from these defined criteria.
VFM is often primarily established through the competitive process. A strong
competition from a vibrant market will generally deliver a VFM outcome. But where
competition is limited, or even absent, other routes may have to be used to establish
value. These can include benchmarking, the construction of theoretical cost models or
shadow bids by the authority. For major contracts, this can require considerable
financial expertise and external support may be justified.
Procurement Capability Reviews (PCR) are periodically done to assess the
standards required to deliver government policy and achieve value for money. Finally
the most important of all is the visibility of ethics and propriety of the public
procurement. This is more significant in the Indian context in view of the perceived
low rankings in comparative global transparency index.
Palaneeswaran, E [8] et al. have described the contractor selection practices in the
public sector construction industry in India, the abstract of which is as follows.
Benchmarking of best practices has proved useful in the business and
manufacturing sectors. However, benchmarking is not established in the construction
industry in general and in government organization in particular. A study of the
contractor selection methodologies used by various clients confirms the multiplicity
of approaches in practice. This paper aims at identifying some relevant best
practices and highlighting innovative contractor selection approaches that have been
used by large public clients. A co-operative and non-competitive conceptual
benchmarking model is formulated and presented with a view to encouraging
continuous improvement in contractor selection for construction projects.
Faisal Arain et al. [6] have highlighted the project procurement trends in the
Canadian construction industry. The abstract is given below:

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A Rational Approach For Assessing The Competitive Bidding of Infrastructure Projects of

Indian Railways

Construction procurement is recognized as a complex business process.

Traditional procurement methodologies have received wide criticism although is
remains popular with owners/clients, regardless of the published disadvantages and
criticisms. This study assesses the future of traditional procurement and also evaluates
the current popularity of traditional procurement against alternative approaches to
construction procurement. To achieve research objectives, a questionnaire survey was
conducted within British Columbia, Canada, to gauge the perspective of construction
industry stakeholders. Respondents were asked to gauge 50 statements on a fivepoint Likert scale. A Web-based survey service was employed to ensure anonymity
while providing a single point of contact for gathering results. As a majority of the
interviewees were positioned professionally at management level or higher, a certain
level of accuracy in the data collected was assured. Research findings revealed that
the traditional procurement methods do not meet the need of the Canadian
construction industry. Traditional procurement alone cannot support the unique needs
of each and every project in Canada, thus the Canadian construction industry. The
paper identifies alternative methods that offer similar value while maintaining
competitive practices that permit contractors to compete equitably for work.
Recommendations for further research include conducting case studies into
traditional, partnering, and management specimens of procurement methods.
Additionally, national level surveys of industry stakeholders would further benefit this
research, thus providing an indication of the procurement status quo, as well as a
better understanding of what the future may hold.The study is valuable for all the
professionals involved with the construction industry in general.
Ping Chen, et al. [7] have discussed the issues and practices in project
management in Chinese construction Industry. This is summarized below in the
following abstract.
Originating from the West, project management was introduced into China after
the countrys economic reforms in the 1980s and has since spread quickly throughout
the whole country, particularly in the construction industry. However, despite the
wide adoption of project management practices by construction organizations and the
growing recognition of the importance of project managements an enabler of
organization success, empirical studies on project management in the context of the
Chinese construction industry have been inadequate. This paper presents the results of
an empirical study of six Chinese construction organizations in order to come to a
more comprehensive and sophisticated understanding of project management
practices in the Chinese construction industry. The findings revealed: (1) a good
appreciation of the role of projects and project management and satisfaction with
current project management practices; (2) 11key aspects of project management
implementation;3) 12 resultant value and benefits; and (4)five aspects of the main
challenges facing the organizations. Meanwhile, variations is project management
practices and the resultant organizational value were identified, first between the three
owner and the three contractor case study organizations, then between the two
construction contractor organizations and the one design contractor organization.

5. PROPOSED METHODOLOGY BASED ON A CASE STUDY:If any tender either in the open line organization or project construction organization
of IR is examined with regard to the inherent evaluation criteria,it can be concluded
that almost all of them are based only on two eligibility criteria. These two eligibility
criteria in all tenders including the Civil Engineering tenders are as follows.

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M. Chittaranjan and K. N. Prasad

Technical eligibility criteria: The bidder must have satisfactorily completed in the last
three previous financial years and the current financial year up to the date of opening
of the tender, one similar single work for a minimum of 35% of the advertised value
of the tender.
Financial eligibility criteria: The contractual payments received by the bidder in the
previous three financial years and the current financial year up to the date of opening
of the tender shall be at least 150% of the estimated value of the work as mentioned
in the tender.

In the two packet system, the Technical tender committee evaluates the eligibility
in respect of each bid (Packet-I, Techno-Commercial bid) and qualifies only such
techno-commercial bids which meet the above stated two eligibility criteria. The Price
bids (Packet-II) of only such tenders which are recommended by the Technical
Tender Committee will be opened. The Financial Tender Committee which
deliberates on those Price bids will recommend lowest/ highest bid, as the case may
be among such bids for acceptance by the accepting authority. Once the accepting
authority approves the recommendations of the financial tender committee, a formal
letter of acceptance (LOA) will be issued. It needs to be noted that the accepting
authority has powers to accept/reject/modify the recommendations of the tender
committee duly recording the reasons.
It is clear from the existing procedure outlined above that there are no other
evaluation criteria apart from the above two in awarding tenders irrespective of the
value of work. This kind of practice is not prevalent in foreign countries which have
the reputation of qualitative works and strictly adhering to transparent procedures.
However the only exception in Indian Railways with regard to the twin aspects of
eligibility criteria is mobile catering tenders. A case study of one mobile catering
tender has revealed the following.

5.1. DETAILS OF THE CASE STUDY:Table 4 Tender Description

Tender Title
Product Category
Sub-Category
Tender value
Earnest Money
Tender Document Cost
Tender Type
Location
Announcement date
Last date of document collection (with
in time)
Last date of submission (with in time)
Opening date (with in time)
Works description

Prequalification criteria
Notice for RFP
Contact Authority

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Award of pantry car contract

On board catering service
Nil
Rs.4,93,20,415/Rs.49,32,042/Rs.11,350/Open Tender
CCM/catering office, SERLY, Kolkata
28.03.13
01.5.2013(17.00 hrs)
02.05.2013(15.00 hrs)
02.05.2013 (15.30 hrs)
On board catering service through pantry
car in train no. 12863-64 HowrahYeswantpur Howrah Exp.
As per bid document
Date 28.03.2013 and time from 15.00 hrs
Chief Commercial Manager, South
Eastern Railway,14, Strand Road, (8th
Floor), Kolkata-700001

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A Rational Approach For Assessing The Competitive Bidding of Infrastructure Projects of

Indian Railways

5.2. SCOPE OF THE WORK

The menus and rates for each service are as per the railway tariff. Railway reserves
the right to modify/alter the catering tariff and menu and such changes in catering
charges and menu shall be informed to the Licensee in advance for which the License
Fee shall be varied based on the re-assessment of sales. In the event of change in the
menu and tariff thereof, the Licensee shall maintain the same quality and hygiene
standard for preparation, supply and service of food/meals to passengers as it were
prior to such change.
It is mandatory that the Licensee shall sell or, as the case may be, distribute/serve Rail
Neer (Packaged Drinking water) to passengers on board in adequate quantities to
fulfill passenger demand and at rates as may be prescribed by Railway from time to
time. The Licensee shall be responsible for storing, cooling and distribution of Rail
Neer to the passengers. In case of non-availability/inadequate supply of Rail Neer by
Railway/IRCTC, the Licensee shall be permitted to sell packaged drinking water of
brands approved by Railway, for which the Licensee is bound to take prior approval
of Railway, in writing.
The Licensee shall be responsible for ensuring the quality and quantity maintaining
proper hygiene and cleanliness while handling raw materials, preparation, packaging,
supply, service, etc., of food/meals. The Licensee shall ensure that all raw
materials/food items used by the Licensee or its Base Kitchen for the preparation of
food/meals shall be FPO/AGMARK approved wherever applicable.

5.3. SELECTION PROCESS

The responsive bids shall be evaluated in the following manner:

Scrutiny of bids will be on the basis of Minimum Eligibility specified. Only such bids
that meet with the eligibility criteria will be called eligible bids
The eligible bidders will be evaluated techno-commercially and awarded a technocommercial score to assess the capability of the eligible bidder(s) on the basis of
scrutiny of information provided and the scoring scale.
The highest techno-Commercial score (HTS) secured by any of the bids will be the
base techno-Commercial index.
All bids whose techno-commercial score is more than or equal to 60% of HTS will be
techno-commercially qualified for consideration of Railway Administration.
Price Bids will be opened for techno-commercially qualified bids only. The date,
time and venue of opening of price bid will be intimated only to the technocommercially qualified bidders
Highest Priced bid will be selected for award of contract.
In the event of highest price being the same for more than one bid, the bid with higher
techno-commercial score should be considered for award of contract.

5.4 EVALUATION CRITERIA

The bidders shall be selected by the following method giving due cognizance to
techno-commercial parameters and license fee offered.

Scrutiny of bids for minimum eligibility.

Technical Score determination of all bids who qualify the minimum eligibility..
The highest technical score (HTS) secured by any of the bids will be the base
technical index.
All bids whose technical score is more than or equal to 60% of HTS will be
Technically qualified for consideration of Railway administration..

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M. Chittaranjan and K. N. Prasad

Price Bids will be opened for Technically qualifiedbids only. The date, time and
venue of opening of price bid will be intimated only to the short-listed parties.
Highest Priced bid will be selected for award of contract.
In the event of highest price being the same for more than one bid, bid with higher
technical score should be considered by award of contract.

Table 5 Bidder Information for Eligibility

S.NO.

Technical Criteria

Evaluation
Company/Partnership
firm/Individual

Specify the Legal Status of the bidder

In case of company, Please enclose Memorandum and
Articles of Association along with certificates of
incorporation, and date of commencement of business

In case of Firm, registered under the Partnership Act.,

1932, Please enclose details of partners along with
certificate of registration details of their business and
partnership deed duly attested by Notary
PAN Number of the bidder( Please enclosed the attested
photocopy of PAN Card issued by Income tax
Department)
Service Tax/VAT Number of the bidder (Please enclose
the attested Photocopy of Service Tax/VAT
Registration Certificate issued by Relevant authorities)

Check the Main objects of MoA

and AoA for Food
Catering/Restaurants
Check Partnership deed for food
Catering/Restaurants as the
main purpose of partnership
Check the name and registered
address of the firm
Check the name and registered
address of the firm

Table 6 Evaluation Criteria for Attributes

S. No.

Technical Criteria
Year of Incorporation of the Catering
Business( as determined from attached
copy of Certificate of Incorporation/
Partnership Deed or any other
document like attested copy of Income
Tax returns or a copy of any contract
issued to the bidder by a government
agency/body /public sector
undertaking)
Average Annual Turnover of the
bidder from catering business in the
preceding 5 financial year (With
respect to all
Railway/Airline/Industrial/
Institutional/Canteens/Hotels/
Restaurant/Food Factory/Specialized
food Chains/Mess Being operated)

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Criteria
If experience of catering
business, as determined form
date of incorporation is
More than 25 years
Between 20 and 25 years
Between 15 and 20 years
Between 10 and 15 years
Between 5 and 10 years
Less than 5 years
If Average Turnover
determined in Form Tech-1, is
More than Rs. 11Cr.
Between Rs.9Cr and Rs. 11Cr.
Between Rs.7Cr and Rs.9 Cr.
Between Rs.5Cr and Rs.7Cr.
Between Rs.3Cr and Rs.5Cr.
Between Rs.3Cr
More than Rs.5 Cr.
More than Rs.4Cr and Rs.5Cr.
Between Rs.3Cr and Rs.4Cr.
Between Rs.1.5Cr and Rs.3Cr.
Between Rs.0.75Cr

Score

5
4
3
2
1
NIL

10
8
6
4
2
Nil
5
4
3
2
1

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A Rational Approach For Assessing The Competitive Bidding of Infrastructure Projects of

Indian Railways
S. No.

Technical Criteria

Criteria
andRs.1.5Cr.
Less than Rs.0.75Cr.
Average financial Standing of the
If the average financial
bidder in the preceding 5 financial
Standing of the bidder as
years
determined in Form Tech -2,
Please fill this information from the
is
Form Tech 2 (Value of K)
More Than Rs. 2.5Cr.
Between Rs.2Cr and Rs.2.5Cr.
Between Rs.1.5Cr and Rs.2Cr.
Between Rs.1Cr and Rs.1.5Cr.
Between Rs.50Lakh and
Rs.1Cr.
Less than Rs. 50 Lakh
Total Experience of the bidder in
If the average turnover from
Mobile railway Catering in the
mobile units as determined in
preceding 5 financial years Please fill
form Tech-1,is
this information form the Form tech
More than Rs. 10Cr.
1 (Value of A)
Between Rs.5Cr and Rs.8Cr.
Between Rs.3Cr and Rs.5Cr.
Between Rs.1.5Cr and Rs.3Cr.
Between Rs.0.75Cr and
Rs.1.5Cr.
Less than Rs. 0.75 Cr.
Total Experience of the bidder in other If the average turnover from
Catering Business
other mobile units as
(Airline/Industrial/Institutional
determined in Form tech-1, is
Canteens/Hotels/Restaurants/food
More than Rs. 10 Cr.
Factory/Specialized food Chains/Mess Between Rs.5Cr and Rs.8Cr.
being operated) in the preceding 5
Between Rs.3Cr and Rs.5Cr.
financial year Please fill this
Between Rs.1.5Cr and Rs.3Cr.
information form the Form-Tech1
Between Rs.0.75Cr and
(Value of B+C)
Rs.1.5Cr.
Less than 0.75 Cr.
Quality Certification available for
Please fill
restaurants/Hotels/Food/
Factory/Specialized food chains/
Franchise outlets/canteen or Mess
operated by the bidder Please fill this
information from the Form Tech 3
Total number of Professionally
If the total number of
qualified staff with minimum 3 year
Professionally Qualified Staff
experience employed by the bidder
at the largest operating unit, as
please fill this information from the
determined in Form Tech-4, is
Form-Tech 4
More than 20
Between 16 and less than 20
Between 12 and less than 16
Between 8 and less than 12
Between 4 and less than 8
Less than 4
Total number of Kitchens owned and
If the total number of kitchens
operated by the Bidder Please fill this owned and operated, as
information from the form Tech 5
determined in Form tech-5, is

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157

Score
Nil

5
4
3
2
1
NIL

10
7
5
3
1
Nil

10
7
5
3
1
Nil

10
8
6
4
2
Nil

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M. Chittaranjan and K. N. Prasad

S. No.

Technical Criteria
Note: Any kitchen activity for
providing meals in a programmed
manner will be admissible for
weightage.
Average number of meals prepared by
the bidder per day at their kitchen
Please fill this information form the
Form Tech5 (Value of Q)

Note: Any kitchen activity for

providing meals in a programmed
manner will be admissible for
weightage

Criteria
More than 10
Between 7 and Less than 10
Between 4 and Less than 7
Between 1 and Less than 4
Less than 1
If average number of meals
prepared per day be the
bidder, as determined in Form
tech-5, is
More than 10,000
Between 4000 and less
than7000
Between 1000 and less than
4000
Less than 1000

Score
10
7
4
2
Nil

10
4
2
Nil

It can be seen from the above that the nine parameters taken for evaluation have
scales of range 1to 10 (or) scales of range 1to 5 for scoring. A separate scale for
quality aspect has been incorporated which is as follows.

6. CRITICAL ANALYSIS OF A CIVIL ENGINEERING TENDER

WITH REFERENCE TO MULTIPLE CRITERIA
Case study of a catering tender presented in the previous paragraph is a very rare
instance of multiple eligibility and evaluation criteria in the Indian Railways. It has to
be noted that the catering tenders involve cash inflows whereas in general all the civil
engineering tenders pertain to cash outflows or expenditure based. Before proposing
the multiple criteria for finalization of civil engineering tenders, it would be necessary
to critically examine the existing practices and procedures of this type of tenders in
the Indian Railways. Hence latest data pertaining to laying a new Broad Gauge (BG)
railway line in the construction organization of railway has been obtained and
critically reviewed.
An example:
The nature of this civil engineering tender is mainly earth work in the embankment of
reach I of Nadikudi-Srikalahasti section. The estimated cost of this work is Rs.45.7
crore. Two packet system is followed in finalizing this work and a total of nine offers
were received against the notice inviting tenders (NIT). As usual the technical and
financial eligibility criteria are 35% of estimated value for execution of similar work
and 150% of estimated value for meeting the turn over requirement.
The technical tender committee weeded out five out of nine offers on the basis of
the above mentioned eligibility criteria. The price bids of the remaining four firms are
opened and tabulated below for comparison.
Table 7 comparative statement of price bids
S.No
1
2
3
4

Tender S.No
4/9
2/9
7/9
1/9

Name of the Firm

Firm A
Firm B
Firm C
Firm D

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Total Bid amount in Rs.Crore

49.5
49.6
54.3
69.0

158

Ranking
L1
L2
L3
L4

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A Rational Approach For Assessing The Competitive Bidding of Infrastructure Projects of

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In this scenario, it is to be noted that the Central Vigilance Commission (CVC)

directives strictly prohibit awarding the work to any other firm apart from lowest
tender (L1) namely Firm A. It is very obvious and certain that the financial tender
committee automatically recommends Firm A without considering any other aspect at
this stage.
Present practice versus prospective method:
The above case study considers the two packet system based on a few aspects that
have been in practice for quite some time. The first packet deals with the technical
competence in terms of turn over and the experience factors pertaining to the similar
works executed earlier by the bidder. Out of the bidders qualifying in the technical
bid, the agency which has quoted the lowest price would automatically become the L1
for taking the final decision.
An exhaustive study on the existing practices in the developed nations brings out
that there are as many as fourteen aspects to be considered for comprehensive analysis
and appropriate decision making for successful creation of qualitative assets. If these
identified factors are given suitable weightages depending on their relative influence
in the project management the inter se position of the bidders will change. The final
selection based on multi criteria will qualitatively vary when compared the existing
practices based on limited considerations. The multi criteria selection is very much
helpful in the scientific judgement of the competence of the bidders.
Since the financial aspect is one of the very important factors, it may be given for
instance 60% weightage and other factors such as technical competence, distinctions
received, track record of the time frame within which the previous works have been
completed, free maintenance etc., may all put together be given 40% weightage. This
suggestion has been made as a first step in the reforms. The relative weightages of the
price and non price criteria may be altered on a case to case basis based on the
experience of all concerned. Furthe the number of factors to be considered for the
overall assessment depend on the size of the project as may be deemed appropriate

7. CONCLUSION
Trevelyan, the noted historian, has called railways Englands gift to the world, for it
was in that country that the steam locomotive was first developed, wrought iron rails
were invented and a railway system on steam traction was operated successfully.
India inherited this legacy and the present Indian Railways has a rich history and
evolved over a period of 163 years since 1853. Indian Railways are passing through a
crucial phase now, facing not only numerous problems but also the demands of the
21st century .The maintenance as well as creation of new assets is done primarily
through contractual practices which is normally prevalent in any undertaking in the
public domain. It is to be noted that IR is the largest public sector departmental
undertaking in India with a vast network, about 14 lakh employees and a separate
budget of its own. The railway finances are separated from the general budget by the
separation convention of 1924.
An attempt has been made to understand the contract management in Indian
railways. For this purpose a detailed account of the Comptroller and Auditor General
of India (C&AG) is examined. This study is made on a sample of 1215 tenders spread
over 16 railways of IR. In order to appreciate the contractual mechanisms as existing
in IR today, a detailed appraisal of public procurement practices presently being
followed in the united kingdom will be very useful to critically review the IR
contractual systems in proper perspective and derive meaningful conclusions for their

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M. Chittaranjan and K. N. Prasad

present state of affairs. To begin with various aspects of public procurement in UK

and the guiding principles are enumerated in greater details and in a comprehensive
manner. The construction practices in Canada and China are briefly given for the sake
of comparative analysis. However the statutory audit normally presents an outsiders
view. Hence it is endeavoured to enrich the study by means of insiders views. A few
aspects which are missing in the audit report are dealt with in greater detail. The focus
of this paper is tender/bid evaluation criteria. At present there are only two criteria in
tender evaluation in the IR contracts. A multiple criteria of 14 aspects is suggested in
order to ensure qualitative and world class results out of IR contracts. A study
sponsored and financed by the Swedish Research Council( SRC) is duly examined
and customized to meet the IR requirements. It appears that, the only attempt to
incorporate multiple criteria in IR tenders was in respect of catering bids (through
Standard Bid Documents). The criteria as existing today in SBDs is to be further
refined and a more rational and reasonable multiple criteria based tender evaluation is
recommended
A critical review of public procurement which is largely prevailing in India is
given below.

There are only two non-price criteria taken into account in the decision making.
The non price criteria is merely qualifying in nature and does not possess any
weightage.
There are as many as 39 non-price criteria according to a study on contractor
selection. These are followed in the western countries in the public procurement.
There is every possibility of experienced contractor being overtaken by a not so
experienced contractor. The experience beyond a limit has no value.
There is no guarantee that the money spent gets back best value.
There is no guarantee that the work gets completed in time. There is no incentive with
reference to a time frame.
Operation, maintenance and life cycle costs are not even associated in this process of
finalization.
Quality and its assurance are absent visibly in this method of public procurement.
The technical merit, managerial skills of the tenderers is not examined.
All contractors are considered to be equally capable which is not true.
No incentives for meeting health, safety, environmental standards.
Several researchers internationally observed that this method is not suitable in public
procurements.

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