CONTENTS - Central Public Works Department

162 SECTION 23
SECTION 23
ESSENTIAL FEATURES OF AGREEMENTS/CONTRACTS
23.1 General principles and guidelines
(1) The Ministry have full powers to accept tenders, and they are authorized to frame subsidiary rules
relating to the calling for or acceptance of the tenders and the general procedures connected with
the contracts.
(2) There are, however, certain general principles and guidelines laid down for acceptance of tenders
that are required to be observed by subordinate authorities empowered to enter into contract or
agreement involving expenditure from Public Funds.
(3) No contract shall be made by a subordinate authority that has not been directed or authorized to
do so by or under the orders of the President in terms of Article 299 (1) of the Constitution.
(4) The President should be made a party to every contract of the Government and the words “for and
on behalf of the President of India” should follow the designation appended below the signature of
the officer who is authorized in this behalf under Article 299 of the Constitution and who is executing
the contract.
(5) The terms of contract must be precise and definite and there must be no room for ambiguity or
misconstruction therein. In Central P.W.D., standard contract forms have been prescribed to avoid
this possibility. The alternative conditions given in the standard forms that are not applicable to a
particular contract should be invariably scored out. In cases where the standard forms of contracts
are not convenient to be used, legal and financial advice should be taken in drafting the contracts
before they are finally entered into.
(6) No relaxation of specification in a contract, or relaxation of the terms of an agreement entered into
by the Government should be made without proper examination and consequence of such
relaxation. The interest of the public exchequer should be taken due care before agreeing to any
relaxation of agreement or contract. Save in exceptional circumstances, no work of any kind
should be commenced without prior execution of contract documents. Even in cases where a
formal written agreement is not made, no order for supplies etc. should be placed without at least
a written agreement as to the price and other terms of agreement.
(7) “Cost Plus” contract should be avoided except where they are inevitable and prior written approval
of Director General (Works) has been obtained.
Explanation: A “Cost Plus” contract means a contract wherein the price payable for supplies or
services under the contract is determined on the basis of the actual cost of production of the
supplies or services rendered plus profit either at a fixed rate or unit or at a fixed percentage on the
actual cost of production.
(8) The terms of the contract once entered into should not be materially varied without the previous
consent of the authority competent to accept the tender/offer for the contract as so varied. Such
variation involving payment to contractors by way of compensation or otherwise outside the strict
terms of the contract or in excess of the contract rates shall be authorized by the Director General
(Works)/ Additional Director Generals as per the powers delegated to them in Appendix – I. A
variation of the terms of contract, which has been approved by the competent authority, shall be
made by writing executed “for and on behalf of the President of India” by an officer who is authorized
by the order under Article 299 of the Constitution to execute the original contract.
(9) No contract involving an uncertain or indefinite liability or any condition of an unusual character
should be entered into without the previous consent of the Ministry of Finance.
23.2 Execution of agreements
(1) Power to sign agreements
(i) The Divisional Officer shall sign all agreements for execution of works “for and on behalf of the
President of India” after the acceptance of tenders by the competent authority.