Execution of Agreement/Work Order

Execution of Agreement/Work Order

As soon as possible after the acceptance of a tender and award of work, the successful tenderer is called upon to furnish the required initial security deposit and to execute a formal agreement. Only work order is issued to the contractor for works valued upto Rs. 5 lakhs and it is not necessary to execute agreements in such cases. Standard documents only form part of the contract agreement. Important points of the correspondences with the contractor should be reflected in the work order/contract agreement.

A formal agreement is executed on a non-judicial stamp paper of appropriate value for contracts  more  than  Rs.  5  lakhs.  The  agreement  and  the  work  orders  shall  be  thoroughly scrutinized with reference to the following:

i) That  the  agreement  is  signed  by  the  contractor himself  or  a  person  holding  the power of attorney to sign the agreement.

ii) Any alteration to the standard form may result in legal complications. No officer should accept unauthorized  alterations  to  the  standard  printed  contract    The  primary responsibility for issuing amendments to the contract will always rest with the authority who has originally approved the contract though for administrative reasons, he may delegate the powers  of  issuing  amendments  to  his  subordinate  authorities  subject  to  the  delegation  of financial  power  rules  of  the  company.  The  subordinate  authority  will  keep  the  superior authority informed in writing whenever such amendments are issued. At the time of closing the contract, the authority who had originally approved the contract must satisfy itself that the amendments issued by the subordinate authority are in order. He may, if required, evolve his own control systems to see that the contracts approved by him are being executed properly.

iii)  That the terms of the agreement/work orders are precise and definite without any ambiguity or misconception/wrongful words.

iv) whether  there  are  provisions  in  the  contract  for  making  available  land  for construction of temporary structure, allotment of company’s buildings, supply of electricity,supply of water, supply of equipment etc. for the execution of the contract. If so, whether clear stipulations have been made for the recovery of the cost thereof.

v) The  provision  has  been  made  for  recovery  of  all  statutory  dues  wherever applicable, sales tax on works contracts and other taxes and duties.

vi) All decisions taken by correspondence with the contractor shall form part of the agreement and shall be duly incorporated.

vii)  That the quantities stipulated in the agreements are in accordance with  those shown in the tender document.

viii) That the rates and the amounts in the agreements/work orders are in accordance with the accepted tender.

ix) That the dates of commencement and completion of the work have been clearly specified.

x) Whether there  is  any  provision  in  the tender/work  order/agreement  for  issue  of materials to the contractor. If so, whether the rates of recovery have been clearly specified

xi) That the  contractor has submitted  a  labour license  under  Contract  Labour (Regulation & Abolition) Act 1970 and rules 1971.

xii) The Clause for “ Compensation for Delay ’’ in execution of works is included.

xiii) The agreement includes provision of adequate technical supervision and quality assurance by the contractor.

xiv)  The  agreement includes undertaking on  behalf of  the contractor to  provide reasonably clean and hygienic habitation to the staff/labourers on roll of the contractor.

xv) The common defects to be taken care of regarding agreement :

a) The original offer by the contractor is kept in a correspondence file that is freely

b) Pages of  agreement  are not  numbered  Page numbering  is necessary  to ensure that no unauthorized deletions or additions are made.

c) The condition  of  contract  many  times  call  for  submission  of  drawings  for  prior approval. This is not enforced.

d) Acceptance letter as well as letters  which contain important deviations from  the contract  conditions but which have been  agreed  to  during  negotiations are  not attached to the agreement.

xvi) The contractor indemnifies the Company against any liability arising out of non observance  of  the  statutory provisions  like  royalty  payments,  all  taxes,  workmen compensation act, minimum wages act, income tax act, contract labour & abolition act etc.

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