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About Mesbai

Brief History of The Association

Till early seventies, the MES Builders were almost individually on their own. Even the concept of constituting an organized body was not mooted. In 1972-73, as a result of increase in oil prices all over the world and inflation increasing by leaps and bounds almost all Builders were hit hard and there was no clause in the contracts providing for reimbursement of escalation in prices of material and wages of labour. Large number of works were foreclosed. Payments were stopped due to paucity of funds. An unprecedented and totally unforeseen situation arose resulting in heavy losses to Builders, some of whom faced total ruin. The Builders were in a state of quandary as to the future course of action to be taken particularly when the situation had arisen as a result of a declared Government policy. It was such compulsion of events that led to the concept of the Builders joining hands in search of collective approach for a remedy.

To start with, independent local Associations of groups of Builders were formed at station level to deal independently with the Builders problems of the station. The usefulness of the approach gained momentum resulting in formation of an All India Body under the name and style of “ MES Builders Association of India” in 1973. Memorandum & Articles of Association were drafted and approved by the founder members. The Association was registered on 3.2.1977 under the Societies Registration Act 1957. But for the able stewardship of our elder Builders and the dedicated team work of the founder members, this important step which led to the formation of the nucleus of the Association would not have been possible. The Association owes all, what it is today, to the wisdom and foresight of these handful of our Builders. Subsequently, the Ministry of Defence also recognized the Association on 24th August 1978.

Ever since then the Association has been striving to espouse the cause of the Builders with the employers i.e. with the ‘Military Engineer Services’. Constructive suggestions were made to put the relationship of the parties to the contract on an even keel. With the help understanding and accommodation shown by the Engineer-in-Chief., we broke through many barriers. Even where we agreed to differ we had meetings and discussions with the Ministry in presence of the Engineer-in-Chief and gain considerable ground. The activities and efforts of the Association were appreciated by the Builders all over the country as any change or amendment of the terms and conditions of the contract agreement affected the entire community of Builders all over the country. The reward we have today is that we have 74 Branches with over 8000 members.

Our achievements to put it humbly, have been hailed by all Builders for they generally benefit all alike irrespective of the class or category they belong to.

Some of these are listed below:-

  • a. The Contract conditions have been got amended for release of retention money (leaving an amount of Rs. 1.50 lakhs or 1% of contract, whichever is more) on completion of the work.
  • b. Payment for advance on account of materials collected at site is now made upto 85% in all contracts. The balance 15% amount of retention money can also be released against bank guarantee bonds in respect of contracts costing over Rs.50 lakhs.
  • c. The definition of ‘Accepted Risks’ earlier did not include invasion, act of foreign enemies, hostilities, rebellion, revolution, Military or usurped power and Acts of God such as lightning, unprecedented floods and tornado. These have now been brought within the scope of description of ‘Acceptable Risks’.
  • d. The provision in conditions of contracts regarding maintenance period of 12 months was often misused and mis-interpreted requiring Builders to undertake even normal items of maintenance arising out of fair, wear and tear. This is now avoided by change in terminology of said period from ‘ maintenance period’ to ‘defect liability period’.
  • e. The Government have agreed to issue mobilization advance for contracts of specialist works costing over Rs. one crore.
  • f. Most important amendments that have been carried out to term and conditions of the contract are escalation clauses for reimbursement in prices of materials and wages of labour. Earlier provision catered for reimbursement of increase in price in cost of materials was due to act of legislature only and there again cumbersome procedures were specified to be gone through in order to establish proof of payment. The subject conditions now inserted in contracts do away with such drills and provide for escalation in prices of materials on the All India Wholesale Price Indices or a formula based escalation in wages of labour on the basis of increase in minimum wages, which is a simplified method.
  • g. In view of the all round increase in prices of material and labour, the tendering limits of various classes of contractors have since been substantially raised from time to time.
  • h. The qualifications and experience of engineers necessary to be employed on works by the contractor in terms of the condition 25 of General Conditions of Contract have now been considerably relaxed.
  • i. The additional security is now to be released in two stages – 50% at the time of payment of the undisputed amount of the final bill and balance after the expiry of the ‘Defect Liability Period.’
  • j. Department has agreed to reimburse tax/ levy imposed by Govt. after receipt of tender if the tax/ levy is directly payable to the Govt.
  • k. The policy of denying certain claims from arbitration has now been changed and all claims are now being referred to arbitrator who himself would decide whether a claim is arbitrable or not.
  • l. Amount of compensation for delay in completion has been reduced and a maximum limit laid down for compensation.
  • m. A new formula is evolved for RAR payment when contract is running under compensation. As per this formula, if total RAR amount exceeds the amount of maximum compensation, no amount is to be retained for retention money.
  • n. If there is delay in handing over the site as a result of which no work could commence, there is a provision of amending the work order postponing the date of commencement and completion.
  • o. In the case of deviations , percentage of overhead and profit has been enhanced from 10 to 15. We are stressing that even this enhancement is not adequate and should be made at least 25%.
  • p. There used to be delay in approving of yardstick resulting in delay in payment of RARs. The Department has now agreed to include yardsticks in tender documents in all lump sum tenders for common and standard buildings.
  • q. To avoid delay in release of Additional Security Deposit, it has been decided that FDRs for the same will be pledged in favour of Accepting Officers instead of Controller of Defence Accounts.
  • r. The limit of passing of final bills by UA’s without reference to CDA has been enhanced to Rs.2.5 lakhs. Efforts are on to get this limit increased further to at least Rs.15 lakhs.
  • s. To avoid hardship to Builders in getting material tested, it has been decided that a site laboratory for all contracts of Rs. 1 crore and above can be set up by the contractor for which suitable clause will be included in tenders.
  • t. It has been agreed to by the Department that the MES Builders Association of India is the only MES Builders Association recognized by the Ministry of Defence. Any other Association being not recognized should not be encouraged and no cognizance be given to them.

As we have said, we have just come of age. We have yet to bloom. The relationship between the Employer and Builders today is comparatively more equitable than what is was over a decade past. The terms and conditions of the contract are comparatively much more reasonable and less arbitrary and one sided than what they then were.

Some of the important issues, which we are still grappling with, are:-

  • a. The vesting of final and binding powers in one of the parties of the contract is unfair and illogical particularly when there is a machinery agreed upon in the terms of contract for resolution of the disputes. Such powers are reminiscent traces of bureaucracy. Working Group appointed by the Government (Planning Commission) for redrafting of the contract forms few years back had also excluded such provisions from terms of the contract. The Government, however, then did not accept these recommendations of the Group. We are pursuing the matter to convince the authorities of the rationale of an impropriety of continuing with such provisions which are irritants in operation of contracts and often result in undue influence being wielded over the Builders.
  • b. Although the terms and conditions of the contract provide for final bills to be paid within a specified period of 6/4 months, this is done as an exception rather than a rule. We have suggested provision of payment of compensation by way of interest if the time schedule for payment of final bills is not kept up.
  • c. We have also taken up certain proposals regarding reforms in procedures for issue of tenders, enlistment of contractors and upgrading/ downgrading of contractors.
  • d. Amendments have been suggested to General Conditions of Contract. The same are under consideration of the Govt.
  • e. Escalation formula is under revision in which escalation for cement, steel & bitumen etc/ would be payable based on WPI of these items in lieu of WPI of all commodities.
  • f. Proposal is also under examination with Govt. for compensating Builders for sharp & abnormal increase in prices of steel, cement etc.
  • g. Suggestion has been made to increase the tendering limit of contractors periodically at intervals of 5 years.
  • h. A request to allow use of ISI Mark material rather than by brand name is under consideration of the Department since long. This if accepted will remove hardship to Builders in procurement of material.
  • i. The Department has been refusing requests of Builders for Running Arbitration Matter is being pursued that this be allowed and provided in contracts.

We gratefully acknowledge the appreciable and reasonable disposition of the MES Department towards our rational and constructive proposals and place on record that but for their goodwill and understanding, we could not have achieved what we have done during the past 35 years. We assure our Employers – the MES that as a responsible body of the Builders, we shall never be found wanting in meeting with any challenge that comes our way and shall leave no stone unturned in upholding the banner and glory of the Military Engineer Services as a partner in our joint venture.