Improvements in Outsourcing of Services through Parallel Contracts
12.0 Brief Introduction:
Vigilance department conducted CTE type examination of a case of Parallel Contracts for Outsourcing of Fabrication services required for Shipbuilding Project.
During the investigation, it was observed that parallel contract placement was not handled in an optimal manner. The contract concluding department had proposed placement of order for 60% of work on L 1 without addressing the balance 40% work (i.e., negotiation with L2). Such practice can create complications. If L2 refuses to accept balance 40% work based on negotiated rates of L 1, then in such cases, L1 needs to be considered for balance 40% of work also after renegotiations with L1 for quantity discount.
The following Systemic improvements suggested by Vigilance Department were implemented:
(i) In case of parallel orders/contracts, negotiations with bidders be completed for 100% scope of work before proposing placement of order.
(ii) Financial Criteria like Turn over, value of previous orders executed etc. should always be part of a High value order and service/turnkey contract.
(iii) The term & conditions of the order, as regards to the, hindrance Register be complied with in toto by the contractors &MDL. Project Superintendent (PS)should monitor the same on monthly basis.
(iv) Tender terms should clearly stipulate that offers without rates/price for all line items of the scope of work/rate sheet will not be accepted in case of turnkey / service contracts with large no. of line items, and where ranking isdone on overall L-1 basis.
(v) In case bidder missed to quote for any line item rate of which is insignificant considering total value of order, suitable evaluation criteria be indicated in the tender accordingly.
12.3 Impact and Benefits:
Complications to deal the complete scope of work projected in Purchase Requisition would be avoided. Once the terms of evaluation criteria of bids are properly laid down in tender, working out L-1 would be resulted with transparency and there won’t be chance of complaint to other bidder. Price reasonableness with optimal rates will be justified. Maintaining appropriate Hindrance register updated all the time help in delay analysis and arriving at the applicable liquidated damages. Thereby smooth execution of order/contract.