Conditions of Tendering

Conditions of Tendering KCTang Sat, 20/12/2014 - 23:29

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Note

  • 10 Jun 2023: "Sample clauses" added in place of "Special contents".
  • 20 Dec 2014: Moved from wiki.

Alternative names

  1. Conditions of Tendering.
  2. Conditions of Tender.
  3. Instructions to Tenderers.
  4. Notes to Tenderers.

Purpose

  • To describe rules and procedures to be followed during tendering.

Usual contents

  1. Tender Documents issued.
  2. Obligations to check sufficiency of pages.
  3. Obligations to raise queries before tender return.
  4. Tender submissions required.
  5. Mode of submission of tenders, sealed envelope, labels, marked confidential.
  6. Return of Tender Drawings.
  7. Treatment of unauthorized alteration or erasure to the text of the Tender Documents.
  8. Treatment of qualifications.
  9. Treatment of alternative tenders.
  10. Unpriced items deemed included.
  11. Currency to be used.
  12. Statutory qualifications to contract.
  13. Treatment of errors.
  14. Not bound to accept the lowest or any tender.

Sample clauses

1.       Tender Documents issued

1.1     The Tender Documents issued consist of:

(a)      A Tender Booklet containing:

(1)     Conditions of Tendering;

(2)     Form of Tender;

(3)     Special Conditions of Contract;

(4)     Special Conditions of Nominated Sub-Contract;

(5)     Specification;

(6)     Preambles to Bills of Quantities;

(7)     Bills of Quantities; and

(8)     <Alternative to (6) and (7): Schedule of Quantities and Rates; and>

(9)     <Optional: Schedule of Rates for Plumbing and Drainage; and>

(10)     Schedule of Drawings.

<Note: The list should match the Contents page but to avoid inconsistency should be a condensed list showing the various types only while the contents should give the various parts making up each type.>

(b)      One set of drawings as listed or referred to in the Schedule of Drawings. 

<Note: Such drawings are the Tender Drawings and will become the Contract Drawings. "referred to" means that some of the drawings may not actually be issued to the tenderers." 

(c)      <Optional: One duplicate copy of the booklet as (a) above for retention by the Tenderer.>

<Note: In the old days when photocopying was not popular, a total of two copies were issued to the tenderers.>

1.2     <Optional: The Tender Documents (including Tender Drawings) are issued in PDF file format. The Tenderer shall print the Tender Documents for his own retention.>

<Note: It has become popular that softcopy is issued instead.>

1.3     The Tenderer shall check the number of the pages of the booklet referred to in Clause<s> 1.1(a) <and (c)> above against the page numbers given in the Contents page, and the number of drawings against the Schedule of Drawings, and should he find any missing, in duplicate, or indistinct, he must inform the Architect at once and have the same rectified.

1.4     Should the Tenderer for any reason whatsoever be in doubt as to the precise meaning of any description, he must inform the Architect in order that the correct meaning may be decided before the date for submission of tenders.

<Note: Some organisations may specify earlier deadline for raising queries.>

1.5     No liability will be admitted, nor claim allowed, in respect of errors in the Contractor's tender due to mistakes which should have been rectified in the manner described above.

2.       Tender

2.1     The Tender shall consist of:

<Alternative: The Tender shall consist of THREE hard copies and THREE CD Roms each containing electronic files of the following:>

(a)      The bound booklet referred to in Clause 1.1(a) above with:

(1)       The Form of Tender completed, signed, witnessed and dated.

(2)      The Bills of Quantities priced, extended, cast and totalled. The sum shown on the Form of Tender must agree with the total of the General Summary.

(3)      <Alternative: The Schedule of Quantities and Rates priced, extended, cast and totalled. The sum showing on the Form of Tender must agree with the total of the Schedule of Quantities and Rates.>

(4)     <Optional: The Schedule of Rates for Plumbing and Drainage priced, extended, cast and totalled with the total carried forward to Bill No. <> of the Bills of Quantities.>

(5)     Technical Schedule for <Plumbing and Drainage> completed.

<Note: If both hard and soft copies are to be submitted, which one shall prevail in case of discrepancies should be stated.>

(b)     Three copies of a list of the names of the specialist domestic sub-contractors that the Tenderer intends to choose for sub-letting part of the Works.

(c)     Three sets of preliminary design drawings and specification for <>.

(d)     Three sets of proposed method statement and programme of the Works.

(e)      Three copies of site layout plan showing the locations of plant, scaffolding, catch fans, stores, site office and access routes.

(f)     Three copies of organisation chart with the names and qualification of key management and site personnel for the Works.

(g)     <Optional: Four copies of statement of qualifications to and deviations from the Tender Documents.>

(h)      <Optional: Four copies of job reference of projects of similar nature completed within the last five years.>

(i)      Three copies of the following general company information, if not already fully submitted when expressing interests to tender:

(1)     Company organisation.

(2)     List of past job reference of similar nature to the Works.

(2)     <Alternative: Descriptions on past and current experience in the supply and installation of <>, together with a job reference list.>

(3)     Current and anticipated work load for the coming 12 months.

(4)     <Optional: Experience in working on the airport restricted areas.>

(5)     Photocopy of business registration certificate.

(6)     Photocopy of certificate of incorporation, if a company.

(7)     Photocopy of contractor’s registration certificates.

(8)     Audited accounts for the last three years (strict confidence will be observed by the Employer and the Consultants).

(9)     Statement of all convictions or no convictions under the Immigration Ordinance (Cap. 115) in the last twelve months.

(10)     Statement of all convictions or no convictions under the Factories and Industrial Undertakings Ordinance (Cap. 59) in the last twelve months.

(11)     Statement of all convictions or no convictions under the Employment Ordinance (Cap. 57) in the last twelve months.

(12)     Statement of involvement in arbitration or litigation in the last three years or foreseeable in the next 12 months.

<Note: Requesting three copies is to reduce the task of making photocopies and further distribution.>

2.2     The Tender shall be enclosed in a sealed envelope which is to be labelled in the manner and deposited at the time and place set out in the invitation to tender.

<Note: Though not expressly stated here to give flexibility, tenders not submitted accordingly should be disqualified.>

2.3     All drawings issued for tendering purposes are to be returned to the Architect on or before the time set for receipt of tenders.

<Note: This is a practice left from the old days when the drawings were large and making prints was expensive. The returned drawings could be used for binding as Contract Drawings. The tenderers should actually need the drawings for answering queries after tender return. The actual return of the drawings has diminished particularly when softcopies are disseminated.>

2.4     No unauthorised alteration or erasure to the text of the Tender Documents will be permitted. Any tender containing such alteration or erasure may not be considered.

<Note: "may" only to give flexibility.>

2.5     The Tenderer shall submit a conforming tender strictly based on the requirements of the Tender Documents. Any qualification of the Tender Documents may cause the Tender to be disqualified. Alternative proposals may be submitted separately in addition to the conforming tender with the details and effects on the Contract Period and Tender Sum stated.

<Note: It is the usual practice to reject all qualifications. To ensure competition on the same basis without giving room to manipulate the tender after submission when being enquired about the qualifications, Government projects may disqualify a tender submitted with qualifications. However, the qualifications may not necessarily be unacceptable. They may be genuine attempts to clarify or modify some unsuitable terms and conditions in the Tender Documents. Therefore, the qualifications should be individually considered on their own merits. To ensure competition on the same basis, other tenderers should also be given a chance to advise on the implications of those acceptable qualifications. In that case, the tender sums may need to be permitted to be adjusted.> 

2.6     The Tenderer shall be deemed to have made allowance in his prices generally to cover items of Preliminaries and any other items if these have not been priced against the respective items.

2.7     In the absence of specific prices for any items required for the execution of the Contract, the relevant costs shall be deemed to have been included in the rates and prices for other specifically priced items.

<Note: It is usual that not all Preliminaries items will have prices entered against them. It may also be possible that a few measured items have no prices entered against them intentionally or accidentally. The two above deeming clauses are to avoid the need to ask the Tenderer to confirm inclusion.>

3.       Currency

All tenders shall be in Hong Kong Dollars and no adjustment will be made for fluctuations in exchange rates of currencies.

4.       Contracting qualification

The Tenderer shall possess a valid business registration certificate and be registered with the relevant authorities authorising him to carry out construction works of the category of the Works.

5.       Correction of errors

5.1     In the event of the Tenderer discovering a genuine error in his Tender after it has been deposited, attention in writing may be drawn to the error and an amendment submitted which, provided that the amendment shall have been deposited on or before the time fixed for receipt of tenders, may be accepted.

5.2     The Tender Sum will be regarded as a lump sum and will not be amended for errors found in the examination of tenders.

<Note:

(a)     Alternative clause will be needed for remeasurement contract.

(b)     Traditionally, the tendered total of the remeasurement contract can be altered when arithmetical errors are found and the arithmetically corrected total will be treated as the tendered total for acceptance.

(c)     The rationale is that since the quantities are subject to remeasurement, if the final remeasurement does not change the quantities, the quantities multiplied by the unit rates will give the same arithmetically corrected total, and therefore the arithmetically corrected total should be accepted as the corrected tendered total.

(d)     When the tendered total is permitted to be altered, the unit rates must not be altered at the same time, otherwise, it would mean a change to the total price level defeating the tender competition on the unit rates (quantities are not for competition).

(e)     The clause may become: The Tender Sum will be recalculated to correct any arithmetical errors found but the unit rates shall not be altered.

(f)     However, it may still be permissible to treat the tendered total as fixed for the purposes of correction of errors as if it is a lump sum. This has the benefits of keeping the tendered total unchanged and offering chances to amend any anomalous unit rates.

(g)     The clause may become: The Tender Sum will not be amended for errors found in the examination of tenders.> 

5.3     If there is any discrepancy between the amounts in “words” and in “figures” for the Tender Sum stated in the Form of Tender, the one that agrees with the figure stated in the General Summary of the <Bills of Quantities / Schedule of Quantities and Rates> shall be taken as the Tender Sum, otherwise, the amount in “figures” shall be taken as the Tender Sum. Where either of the amounts is left blank or illegible, the remaining one shall be taken as the Tender Sum. If the amounts are both left blank or illegible, the Tender will be taken as invalid.

5.4     The following errors should they occur in the tendered priced <Bills of Quantities / Schedule of Quantities and Rates> will be rectified and altered in red ink:

(a)      Discrepancies between the product of quantity and rate and the extension (The rate will be amended to agree with the quantity and the extension in the cash column or the extension to agree with the quantity and the rate, as appropriate.);

<Note: The rate will not be amended, and only the extension in the cash column will be amended to agree with the product of quantity and rate, in the case of remeasurement contract with the tendered total recalculable.> 

(b)      Insertion of a lump sum price for a measured item without a unit rate (The unit rate will be deemed to be equal to the lump sum price divided by the quantity of the item.);

(c)      Errors in including the prime cost and provisional sums as specified;

(d)      Errors in casting of cash columns;

(e)      Errors in carrying forward totals to collections or summaries; and

(f)       Omission of some priced pages (The priced pages shall be submitted with each page total matching that in the collection of summary and the rates matching those in other submitted pages.).

5.5     The total error will be calculated as a plus or minus percentage of the corrected tender sum minus the correct totals of preliminaries items, provisional sums, Prime Cost Sums (if any) (but not profit and attendance thereon) and dayworks, and will be applied to the tendered rates other than preliminaries prices and daywork rates for the purposes of pricing variations and remeasured quantities. If the percentage error is less than 0.50%, no adjustment will be made.

5.6     Should examination of a tender reveal errors of such magnitude as in the opinion of the Architect would involve the Contractor in serious loss then the nature and amount of such errors will be communicated to the Tenderer and he will be asked to confirm in writing that he is prepared to abide by his Tender.

6.       Percentage adjustments

6.1     The calculation of any percentage adjustments to the rates and prices shall be based on the all-in rates without subtracting any prime cost rates which may be included therein. The prime cost rates included in the all-in rates subject to percentage adjustments shall remain unchanged.

<Note:

(a)     The percentage adjustments may be for correcting arithmetical errors or for reflecting discount offered. Where a tender involves both, it would be preferred to combine the two adjustments into one single percentage adjustment.

(b)     The first statement above means that the adjusted all-in rate is equivalent to (prime cost + other costs) x (1 + profit and overheads) x % adjustment. The second statement is to clarify that the prime cost shall not be adjusted. The % adjustment is to be understood as an adjustment to the profit and overheads. If the % adjustment is a downward adjustment, it may be possible that the adjusted all-in rate becomes smaller than the prime cost rate. Though appearing odd, this does not affect the validity of the adjusted all-in rate and the integrity of the prime cost rate. If the % adjustment is applied to a group of items at the end of variation calculations, the odd impression will not be apparent.

(c)     Some consultants deduct the value of the prime cost rates when calculating the percentage adjustment because they consider that the prime cost rates should not be subject to the percentage adjustment. The adjusted all-in rate is then equivalent to prime cost + other costs, profit and overheads x % adjustment. This has the benefit of avoiding the possibility of the adjusted all-in rate being smaller than the prime cost rate, but this would require a detailed calculation of the value of the prime cost rates. When applying the % adjustment, it should be applied to the (all-in rate - prime cost rate every time). This method is cumbersome and will increase the chances of making errors. This method is not really necessary.

(d)     It should be noted that the % adjustments calculated using the two different methods are different. Whatever base is used to calculate the % adjustment, the % adjustment shall be applied the same base to ensure correctness. e.g. if D% = A / B x 100%, then B can multiply D% to give A. If D% = A / (B - C) x 100%, then D% must multiply (B - C) to give A.>

6.2     All Prime Cost Sums (if any) and Provisional Sums shall be excluded from any corresponding percentage adjustment calculations as a result of any overall adjustment to the Tender Sum.

<Note: Similar to the prime cost rates, Prime Cost Sums and Provisional Sums shall not be adjusted for any percentage adjustments to the Tender Sums.>

7.       Rationalization of unreasonable rates and prices

The Tenderer may be required to rationalize unreasonable rates and prices by replacing them with more reasonable rates and prices for all purposes of the Contract (including pricing payments, variations and provisional quantities). The amounts of the affected items shall be re-calculated. The Tender Sum shall remain unchanged. The difference between the corrected total and the original Tender Sum shall be treated as an arithmetical error as Clause 5 hereof, unless it is specifically agreed that this shall be treated as a lump sum adjustment without affecting the unit rates.

<Note:

(a)      This is not a common clause for tenders based on Bills of Quantities because usually the tendered unit rates should not be changed. This is specially drafted by our company for reasons explained below.

(b)      In case of the presence of unreasonably high or low rates in a contract, the following will happen:

 

Employer

Contractor

Unreasonably high rates

 

 

Variation addition

Unreasonable cost increase

Very good profit (favourable)

Variation omission

Higher cost reduction (favourable)

Unreasonable income reduction

Unreasonably low rates

 

 

Variation addition

Lower cost increase (favourable)

Unreasonable loss

Variation omission

Unreasonable cost reduction

Lower cost reduction (favourable)

(c)      The usual practice is to identify unreasonable rates and prices and agree more reasonable rates and prices to be used for pricing variation additions and omissions, and the Tender Sum should remain unchanged. 

(d)      The rationale is that, in spite of any over or under pricing in the Tender Sum, when more reasonable rates are used for valuing changes whether it be an addition or an omission, the above unreasonable situations would not arise.

(e)      However, this practice has the following issues

(1)      Some people may argue that the original rates and prices should be used for omissions, while the more reasonable rates and prices should be used for the additions only. Tenderers would argue for this when the original rates and prices were unreasonably low. Employers would argue for this when the original rates and prices were unreasonably high.

(2)      When the unreasonably priced item is a provisional quantity item, care should be exercised to describe whether the more reasonable rate is to be used for the increase to or decrease from the provisional quantities (i.e. price the original provisional quantity at the original rate first) or is to be used for the complete remeasurement.

(3)      For interim payment valuation, the original rates and amounts are still used, giving an impression of either over or under payment.

(f)       By replacing the unreasonable rates and prices with more reasonable rates and prices for all purposes of the Contract, the rationale of the usual practice is maintained, but people no longer need to refer to the unreasonable rates and prices any more, and the issues mentioned above would not persist.

(g)      For tenders not based on Bills of Quantities, the quantities do not form part of the Contract, and the unit rates are more important. It should be permissible to require the adjustment of both the quantities and the unit rates before awarding the Contract to rationalise the unit rates for post contract use. This special clause is very relevant.

8.        Short-listing

The Employer reserves the right to short-list tenders for further tender clarifications, interviews and negotiation without the obligation to invite all tenderers to do so.

<Note: This is to avoid the challenge by tenderers not on the short-list as to why they are not similarly invited.>

9.        Acceptance of tender

The Employer is not bound to accept the lowest or any tender he may receive.

<Note: This is to avoid the challenge by tenderers that they should be paid the tendering costs if no tender is accepted.>

Clause headings of Housing Authority's Notes to Tenderers, February 2013 Edition

  1. Opening of Tenders.
  2. Tender Evaluation Criteria.
  3. Acceptance of Tender.
  4. Sureties or Security.
  5. Review Body on Bid Challenges.
  6. Other Matters.

Clause headings of Housing Authority's Special Conditions of Tender, February 2013 Edition

  1. Type of Tender.
  2. Tender documents issued.
  3. Documents available to tenderers.
  4. Tenderers alterations, qualifications and modifications.
  5. Schedules to the Form of Tender.
  6. Submissions required with tender.
  7. Other submissions required with tender.
  8. Inspection of documents etc.
  9. Inspection of Site.
  10. Joint Venture Guarantees.
  11. Special terms of payments for precast concrete façade construction.
  12. Unreasonable low bids.
  13. Erratic Pricing.
  14. Sub-contractor Registration Scheme.
  15. Dispute Resolution Advisor (DRAd) System.
  16. Housing Construction Management Enterprise System (HOMES).
  17. Wall Tiling Works.
  18. Trip Ticket System.
  19. Construction Waste Disposal Charging Scheme.
  20. Statutory Minimum Wage.
  21. Disclosure of Information (Bid Challenges).
  22. Conflict of Interest (Housing Authority member).
  23. Warranty Against Collusion.
  24. Evaluation of Tender.
  25. Incorporation of Technical Proposals into the Contract.
  26. Other matters.

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