Indents and Tenders by PIM
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Supply Tenders & Contracts
R. Rajpurohit Prof (IM)
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• While dealing with public money; follow “Cannons of Financial Propriety”
1. The expenditure should not prima facie be more than- the occasion demands, and that every Govt. Servant should exercise the same vigilance in respect of expenditure incurred from public moneys as a person of ordinary prudence would exercise in respect of his own money.
Canons of financial Propriety
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Canons of financial Propriety
1. No authority should exercise its powers of sanctioning expenditure to pass an order which will be directly or indirectly to its own advantage
2. Public money should not be utilized for the benefit of a particular person or section of the community unless-
(a) The amount of expenditure involved is insignificant ; or
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Canons…contd.
(a) A claim for the amount could be enforced in a court of law;
(b)The expenditure is in pursuance of a recognized policy or custom;
1. The amount of allowance, such as traveling allowance, granted to meet expenditure of a particular type, should be so regulated that allowance are not on the whole sources of profit to the recipients.
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Purchase Policy
• Purchase Policy to be within the frame work of Constitution of India & various Public Acts;– Indian Contract Act, 1872– Sale of Goods Act, 1930– Arbitration & Conciliation Act, 1996– Relevant Customs, Excise & Sales Tax Acts
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• Types of Supply Contracts:– Rate Contracts
– Running Contracts
– Fixed Quantity/Delivery Contracts
• RATE CONTRACTs:– Generalized Contracts
– Finalized for a specified period, one/two years
– All terms finalized including RATE but not the QUANTITY & CONSIGNEES
– DDOs place orders on RC for specific Consignee & Quantity.
Purchase Policy contd..
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– Saves lot of time in routine processing
– Supplier takes a risk as anticipated quantity may not be placed on him, no damage can be claimed
• DGS&D: Common User items of RC: e.g.
– Ceiling Fans, Cables, Torch Cells
– Refrigerators, ACs
– Industrial gases
– Cleaning Items
– Vehicles
– PCs
Purchase Policy contd..
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Purchase Policy contd..
• Running Contracts:– To avoid risk in RC, supplier insists on
quantity specification, approximately– Quantity variation up to 30%– Consignee not specified– Generally Contract Placing Authority only
operates RGC (Unlike RC by DDOs)
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• Fixed Quantity/Delivery Contracts:– All terms including quantity, consignee &
delivery date, specified at the contract stage itself
– It is not a long period contract like RC/RGC– No subsequent supply order– Lack of flexibility but better contract
administration– Most of the Railways supply contracts fall in
this category
Purchase Policy contd..
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INDENTS
• All items are not purchased by the concerned Railway;
• Due to bulk advantage, centralized purchase is resorted to;
• Bulk indents are placed on; – DGS&D, – Railway Board (Import, other high value item) – DLW/CLW/ICF/CORE/COFMOW (For
certain identified items)– Government Medical Store (by CMD)
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Tender System• Purchase requires contracts with suppliers• Two essential elements of contract are;
– Offer– Acceptance of offer– Supplier submits offer, accepted by way of supply
order
• For purchase of materials at competitive prices we follow tendering systems;– Open Tender: Used for estimated tender
value>Rs. 15 Lakhs, • Wide publicity, no control on choice of suppliers• Most competitive prices• Causes longer lead time
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• Limited Tender System;– Value <15 Lakhs– Limited sources, on approved panel– Demand is urgent– Different types of LTs are;
• Ordinary LT
• SLT; safety items, urgent demands
Tender System
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• Weekly Bulletins; • few hundred items at a time, • issued to the registered suppliers
who subscribe to the bulletin
• Single Tender– PAC item– Item extremely urgent– Very small value, not economical
for competitive tendering
Tender System
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• PAC Format:
• Maker’s Name & Address, & Name of Local Agent
• I approve the above purchase & I certify that-
•(a) No other make/brand will be suitable
•(b) This is the only firm who is manufacturing/stocking this item
•(c) A similar article is not manufacture/ sold by any other firms which could be used in lieu of.
• NB: If (c) is deleted Purchase Power gets restricted to Rs. 8 lacs/- only, else GM’s approval
Tender System
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Tender Invitation
• Purchase proposal is approved by PO and tender document is prepared
• In case of OT a tender notice is sent to CPRO for publication in the dailies & posted on website
• Tender documents are then sent to the tender sale section
• LT & SLT enquiries are sent directly • All tenders have due date & time for submission• Case transferred to Tender Section of COS office
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Tender Opening
• On the due date & time• Elaborate system to ensure that all offers received
are linked to the relevant tenders• OT & SLT opened in the presence of firms’
representatives (transparency), by a Gazetted Stores Officer, & Section officer from accounts dept.
• Limited tenders are opened by Ch.OS/OS of Stores & SO from Accounts dept. Firms’ representatives are not allowed at the time of tender opening.
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• All pages of all offers are signed. All financial terms are encircled & initialed
• Over writings are attested• Offers are sorted tender case wise• Tender cases with offers are transferred to POs• For cases where lowest tender value is exceeding
Rs. 15 lacs, comparative statement is prepared & got vetted by finance also before passing on the file to POs.
Tender Opening
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Tender Finalization
• Finalization;– Accept/Reject an offer
• If value is less than Rs. 15 lacs, direct decision by the PO, if more, the case to be dealt by a TC, consisting of three officers
• Officers from stores & user dept. are Sr. Scale Officers (Minimum level)
• TC is a recommending body, its recommendations are to be considered by an accepting authority.
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Guidelines for Tender Committee
• Committee to be duly constituted (SOP)• Lowest tender value is the criteria for level of
TC; a TC may have to transfer the case to a higher level TC
• Dropping of purchase is also to be considered by the TC
• Stores Member is the convener of TC, who puts up the case to competent authority
• TC member can not be the AA also• Concept of dissenting note. In some Railways
case goes to next higher accepting authority
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TC Proceedings
• Signed by all the three members• Any changes to be done with the consent of all
members of the TC• The Points included in the TC Proceedings are;
– Demand No & Date
– Description/Specification/Quantities
– Authority for issue of tender & Number of tenders issued
– Date of opening & No. of offers received
– Details of Technical Comments
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– LPR & details of last PO– Discussion of offers under the zone of
consideration– Reasonableness of rates– Specific recommendation for splitting with
rate differential– Credential/Performance of the firm being
recommended – Summary of recommendations
TC Proceedings contd..
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• Recommended Terms & Conditions;– Delivery Terms
– Delivery schedule
– Payment terms
– Inspection clause
– Warranty clause
– ST/ED/P&F, extra or inclusive
– ST/ED variation if any
– PVC, along with formula & base prices
• TAA to record its acceptance on the body of TC recommendations & not on the noting side
TC Proceedings contd..
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• Certain important points;– Offer to be technically suitable
– Rates of lowest technically suitable offer to be examined for rate reasonability
– Check if the delivery condition offered suits our requirement
– Above being OK, see if the firm is reliable & their past performance is satisfactory
– Check various terms & conditions offered by firm are acceptable
– IRS Conditions of Contract: whether any deviation
– Tenders to be finalized within the offer validity
Tender Finalization
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• EMD/SD, Bankers’ Particulars, Performance Statement
• Details of Equipment & Technical Personnel,
• In case of failure to furnish the above their offer be ignored
• Else verify the capacity-cum-capability,
• 20% trial order
• If trial order fails cover the qty. on regular order against option clause
OFFERS FROM UNTRIED FERMS
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Unsolicited Offer
– In-adequate competition,
– Urgency of demand & Rate Reasonableness
– Capacity-cum-capability
– Acceptance at higher level
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Late/Delayed Offer
• In exceptional cases with Boards approval if; o Competition is restricted o Ring Formation suspectedo Need for development of new sourceo Offer with substantial price advantage,
from a proven source
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Placement of PO
• Placement of Purchase Order– Acceptance recorded by PO or the TAA– Case passed on to the Purchase Section for
making PO– PO is signed & sent to Accounts Dept. for
vetting if value exceeds 6,00,000/-– Value of PO is posted in the Liability Register – PO is numbered & sent to the supplier by post
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• Placement of PO is not the end• We have to get the materials, administer the
contract
• PO Modifications:– Suppliers may make requests for certain
amendment in the PO, dispose it appropriately– Take finance concurrence if the requested
modification involves financial repercussions
Contract Administration
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• Delay in supply:– DP expires, Contract expires, further extension in DD
with mutual consent– Right to recover LD for any loss or inconvenience
suffered by Railway due to delay in supply (IRS Terms)
• Failure of Supply: Risk Purchase– Purchase from alternative source at risk & cost of the
defaulting supplier; if higher price paid, recover from the defaulter
– Give opportunity to defaulter to minimize his loss – Ensure that the RP is tenable, finalized within 6/9
months
Contract Administration
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Powers of signing PAC
Indenting Officer – up to Rs. 40,000/-JAG/SG– up to Rs. 1 Lakh
SAG-- up to Rs. 5 LakhsPHOD/CHOD-- > Rs. 5 Lakhs
Authority: - Bd’s letter dated 12.03.2015
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