Indian Railways adopts General Conditions of Contract for Services

In another first, Indian Railways have introduced new General Conditions or Contracts (GCC) for Services to define the terms & conditions for contractors engaged in service contracts for non-operational areas such as Housekeeping, Facilities Management, Consultancy etc., as distinct from Works. Under the leadership of Union Minister of Railways & Coal, Shri Piyush Goyal the Ministry of Railways is committed to bringing transparency & accountability in the system to make it more efficient and beneficial for the people.

The new policy of General Conditions of Contract for Services introduces for first time the concepts of Digital Labour Management System, stepped Performance Guarantee in place of Security Deposit, access to liquidity as a qualifying criteria and specific provisions violation of which will lead to disqualification of bidders. Pointing out the advantages of the new method, Shri Goyal said “the new contract system will ease the registration process for bidders, promote competitiveness and help Railways to save more on cost”.

Railways had recently issued Standard Bid Document (SBD) for Housekeeping. During the development of SBD, given the diverse nature of Works and Services, and the problems in managing service contracts using a GCC for Works, a need was felt to formulate a simplified, outcome focused GCC catering specifically to Services to improve contract management, delivery of services and to reduce government litigation.

The digital management labour system mandates contractor to maintain a data base of all workers including their attendance data and salary details. It also states that a contractor bidding for a service will be disqualified if penalty has been levied three times in last two years for violation of labour laws.

The concept of stepped performance guarantee, while reducing the financial burden on the contractor due to security deposit, puts a premium on service delivery by having a provision of confiscation of part performance guarantee in case of unsatisfactory delivery of outcome during the contract.

Service contracts are characterized by regular requirement of funds; therefore, access to liquidity has been included as a qualifying criterion.

Apart from labour laws, non-performance in previous contracts will also lead to bidders being disqualified in future. This is expected to put a premium on good performance.

A committee of Executive Directors of Railway Board was formed with a mandate for simplification and improvement of service contracts with a view to improve the quality of services and service contract management. The recommendation of the Committee after approval of concerned directorates and approval of Railway Board was adopted as “The general conditions of contract for services on 02.01.2018”. The new GCC is a result of wide ranging consultations, profound erudition and of immensely valuable contribution of various directorates of Railway Board.