TENDER EVALUATION AND MISCELLANEOUS POLICY ISSUES IN PURCHASES

8.1.0 Consideration Of Tenders :

Some of the important points to be kept in mind while tenders are under finalisation are discussed below:

(a) Attempt should always be made to finalize the tenders within the validity of the offer. All tenderers prescribe a definite date (known as validity date of offer) by which if decision is not taken by us, validity of the offer will lapse. As per law of contract, the acceptance of the offer should be out from our office by validity date though it is not necessary that the acceptance of offer should physically reach the supplier before that date.

(b) If the tender is not accepted by the validity date, we have to request the firm for extension of validity date. This delays the purchase and if in the meantime, prices of materials increase, the firm may not even extend the validity on the originally quoted price and we may have to purchase the material at higher prices. Many times, firms quote conditions which are not acceptable to us. For getting such conditions withdrawn or to get additional information, we have to seek commercial clarifications from the suppliers. We should not seek these clarifications in piecemeal and whatever clarifications are required, should be sought in the first instance itself.

(c) Terms and conditions of the contract to be finalized should be clear and definite and nothing should be left vague. All attempts should be made that the contract is placed as per Indian Railway Standard Conditions of Contract, but if the firm does not agree to accept some of the clauses of IRS conditions, repercussion of this should be examined and should be accepted with the approval of competent authority only, in the unavoidable cases. In some of the cases, we may have to obtain concurrence from Associated Finance or Law Officer.

(d) Tender cases should be kept under safe custody and when the tenders are under finalisation, no unauthorized persons should be allowed to make queries or call for the tender papers.

8.2.0 Guidelines For Tender Committees :

8.2.1 Some of the points which should be kept in mind by tender committee members are enumerated below.

(a) The tender committee should be duly constituted. The level of tender committee which will discuss the tenders of a particular value are given in the schedule of powers. Although the authority to constitute as tender committee vests in the officer competent to accept the tender, members from consuming department and Accounts Department should ensure that they have been adequately authorized by their heads of department for sitting in the tender committees.

(b) Tender Committee : The criteria for constitution of tender committees, is the value of lowest tender. However, if lower offers within their powers, are not considered suitable by lower level committee, they may recommend so and on acceptance of these recommendations, the case will pass on to next higher level tender committee.

(c) No. of offers issued or received is not the criteria and tender committee has to be constituted even in case of single tenders/offers. Therefore, tender committee has to discuss the offers received even from the proprietary firms. 

(d) Even if it is felt by some of the members that purchase against a particular case is required to be dropped, this also is to be recommended by the tender committee.

(e) All tender committee cases are kept and processed by Stores member. After getting signatures of all the members on the minutes, Stores member directly puts up the case to the competent authority.

(f) An officer who is member in a tender committee, cannot act as accepting authority also for the same case even though acceptance may be within his competence.

(g) If all the tender committee members do not agree on all the recommendations, then disagreeing member gives the dissenting note. In such cases, although accepting authority is competent to take a decision, there is a practice on some of the Railways that accepting authority has to put up the case to his next higher authority with his recommendation and final orders are given by the next higher authority only. Similarly, there is also a practice on some of the Railways that if the accepting authority disagrees with the recommendations of the tender committee, he has to put up the case to next higher authority with his views.

(h) The recommendations made by the tender committee are joint recommendations. However, reasonableness of quantity is certified by Stores member only in case of stock item. For nonstock items, reasonableness of quantity under purchase is certified by the member from consuming department.

8.3.0 Proceedings Of Tender Committee :

8.3.1 After discussing the offers, proceedings of tender committee are prepared. These should be signed by all the 3 members on all the pages. Any corrections/overwriting should be initialed by all the 3 officers. Tender Committee proceedings should not be changed and if changes are considered necessary, supplementary proceedings should be prepared and signed by all the members.

8.3.2 Some of the points which should be included in the tender committee proceedings are listed below ;

(a) Demand Ref. No. & date

(b) Description with specifications & Quantities demanded

(c) Authority for issue of the Tender and No. of tenders issued

(d) Tender opening date & no. of offers received

(e) Details of technical comments

(f) Details of any fresh review of quantity and reasonableness of quantity

(g) Last Purchase Rate and Details of Last Purchase Order

(h) Any special development since last order

(i) Discussion of offers under zone of consideration

(j) Reasonableness of rates

(k) Specific recommendations with justification where recommended for splitting at different rates

(l) Performance of the firm being recommended

(m) In case of negotiations, names of firms & justification

(n) Summary

(o) Terms & Conditions recommended

It is important to clearly specify the terms and conditions on which offer is being recommended. These are as under:

(i) Earnest Money / Security Deposit

(ii) Income Tax Clearance Certificate (ITCC)

(iii) Terms of delivery

(iv) Delivery schedule

(v) Payment Terms

(vi) Inspection Clause

(vii) Warranty Clause

(viii)Sales Tax extra or inclusive

(ix) Excise duty extra or inclusive

(x) Packing charges, if any, extra or inclusive

(xi) Details of any other extra charges discount (conditional or otherwise)

(xii) Sales Tax, Excise Duty variation clauses, if any

(xiii) Price variation clause (if acceptable) along with price variation formula and base prices

(xiv) Any special condition relevant to tender case

8.3.3 The accepting authority should record his acceptance on the body of the tender committee recommendations and not on the noting side of the file.

8.4.0 Other Policy Issues In Purchases :

8.4.1 Splitting of the order quantity on two or more suppliers is permitted in the following situations :

(a) The item is vital/critical in nature and having alternative sources

(b) The lowest supplier has not offered full quantity

(c) The lowest offer does not meet our delivery requirement fully

(d) Capacity of firms are not certain

(e) Performance of the lowest tenderer is not certain.

In these cases, Time Preference Clause will not be attracted. But, Finance's concurrence is required before going for splitting.

8.4.2 Late / Delayed Tenders : Consideration of such tenders is not permitted. Only in rare exceptional cases public sector offers may however be recommended for acceptance at Railway Board level.

8.4.3 Offers Received From Unregistered / Untried Firms :Against open tenders, many time we receive offers from new firms, performance of which has not been tried on the Railway. Although past performance of the firm has to be seen, we should not give undue importance to past performance, otherwise, our doors to new suppliers/manufacturers will always remain closed and this will lead to monopolies. Therefore, if we are otherwise satisfied about credentials of the new supplier and their offer is otherwise suitable, we may consider their offer for part quantity. We may also place order normally for a quantity up to 20% after collecting necessary security deposit. However, in case of certain exceptionally sound firms, we can even consider for more quantity.

8.4.4 Unsolicited Offers : The offers received against limited tenders from the firms to whom tender inquiry was not sent, are known as unsolicited offers. Even if a registered firm submits tender against weekly stores bulletin, for an item for which they are not registered, such tender will also be classified as unsolicited.

Unsolicited offers should normally be ignored. But in certain  exceptional cases, as mentioned below, they may be accepted.

(a) There is inadequate competition

(b) Quotations received from unregistered suppliers or from firms to whom inquiries were sent are not suitable.

But we should consider them only when demand is urgent and capacity/capability of the firm offering to supply the relevant item is known.

The sanction of acceptance of the unsolicited offer is to be obtained from next higher authority which in no case should be below the rank of Dy. COS.

8.4.5 Variation Clauses : We generally prefer a firm price contract but for high value contracts we may accept price variation clauses. In such cases base price at which present price is worked out should be clarified, formula to govern variation in prices should be realistic and clear and the authority of the prices on which price variation will be based should also be very clear.

• In case of variable price contracts, prices should vary on both sides i.e. in case of reduction of prices in the market we should pay at the reduced rates worked out as per formula.

8.4.6 Negotiations : In tenders negotiations are normally not allowed because it is against the sanctity of the tender system . However in certain exceptional cases where prices quoted by all the suppliers are unreasonably high and retendering is either not considered advantageous or there is no time for retendering due to urgency of demand, we may go for negotiations with the suppliers.

8.4.7 Total value of tender shall be the criterion for deciding the "Competent authority" for acceptance of a tender irrespective of whether the tender is decided in parts or as a whole. (Ref. 341 AS)

8.5.0 Local Purchase :

8.5.1 It is seen that for purchasing materials, a set procedure is to be followed and all this adds to costs of purchasing. Therefore, it is not economical at all to purchase items of petty value through centralized purchase office and hence all the field officers have been delegated powers to purchase the materials without following the detailed procedure. Officers are allowed to have cash imprest and recoup the amount on regular basis. For cash imprest of Rs.10,000/ or more Bank Account can be opened and payment made through cheques.

8.5.2. However, even for local purchases, it is to be seen that canons of financial propriety are followed and materials are purchased at reasonable prices.

o Powers for local purchases depends upon delegation. Normally, officers have been delegated these powers depending on charge held by them. On most of the Divisons, the purchase power are exercised through Divisional Controller of Stores up to Rs.20000/-.. o Stores Officers holding independent charge and Senior Scale or above have local purchase powers of Rs.10000 per item in the Depots.

8.5.3 Some of the important points to be kept in mind by all the officers making local purchase are as under:

(a) There should be a proper system, of entering all the local purchase cases in a register. This register should indicate details of item to be purchased and rate and firm etc., from which purchase has been made.

(b) The purchases should be made at competitive rates after trying no. of firms/shops.

(c) Purchases should be made from standard firm i.e. the firm should be either a reputed dealer/authorized stockiest/manufacturer or a good shopkeeper. Purchases from persons who do not own any shop etc. and operate business from their residence and act only as middlemen, should be avoided.

(d) The quotations should be collected only from existing firms. If a firm is doing business in different names from the same premises, only one quotation should be taken from such firms. The practice of collecting more than one quotations from a single shop should not be resorted to.

(e) For collecting quotations per bearer from the local market, officer incharge of local purchase shall nominate the Railway employee by name. The nominated employee shall be required to sign each cover of the quotations and subsequently on opening by the officer in-charge, each quotation also in token of his having collected personally.

(f) The names of firms from whom quotations are to be obtained are to be suggested by the officer in-charge of local purchase. The employee, however, may suggest names of new firms coming to his

notice, to the purchase officer who could consider including them for subsequent purchases.

(g) If the local purchases are regularly made, a panel of firms should be maintained which should be updated from time to time.

(h) A tender box should also be kept for dropping the tender.

(i) All inquiries should mention time and date by which offers should be received. Any offer received after this should not be considered.

(j) Non-stock items for which standard pattern exists should not be purchased if it can be manufactured by the Railway.

(k) Local purchase of items for which valid rate/running contracts exists, should not be made.

(l) Local purchases from cooperative stores and Khaki Handers should be encouraged. Purchase up to Rs.5000 from a cooperative stores can be made even on single quotation, while for others single quotation is permissible only up to Rs 2000/-.

(m) No attempt should be made to split the requirement to bring it within the power of purchase.

(n) Cash Impress amount should be fixed on the basis of 50 percent of the average monthly expenditure on local purchases (Ref.S711B)