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EASTERN RAILWAY STORES DEPARTMENT

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Contractl10-11 PROCEDURE ORDER No,

Dated: 08.09.2010

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Sub: Procedure order on the policy of placing orders against ioGS&D Rate Contracts, ' Reference: I) Railway Board's letter No. 2005/RS(G)/779 dt. 04.07.06

11) Railway Board's letter No. 2005/RS(G)1779 dt. 19.12.07

Ill) CQS/E Rly's office Order No.SP. 0/26/0 dt. 05.10.94 In super session of all the previous procedure orders issued on the above subject, it has since been decided with the approval of COS to adopt the following system connected to the placement of supply orders ag~inst DGS&DRate Contracts. 1,0 ihe DGS&D rate contracts, by the very definition, fixes the rates with different! suppliers. .For some contracts;' there may be, however, some lower value/quantity limit below which supply orders may not be entertained by the rate ,contract holder. '.:.::" . As per the tarms of the contracts, the respective firms are free to receive supply orders from any Direct Demanding Officer, and accordingly, the quantum of order booking with a particular rate contract holder is quite unpredictable. The rate contract holders when over-loaded have the tendency to decline and to return any supply orderwhich may be beyond their capacity to-undertake. In the final outcome,the rate contract holders very often get aWay without any penalty for non-execution, and in aoy case, no risk purchase action is feasible 3gc:ici::~a rate contract holder by the Direct Demanding Officer. The DGS&D is to be im'.itTl:lted by the Direct Demanding Officer about the failure and it is entirely uncertain whether DGS&D wtll exclude such. firms from the purview of future rate -contracts. The conclusion large' number of the supply order find-out which satlsfactorlly. from the aforesaid factual position is that the DGS&D fixes a rate contracts knowing fully that some of them may fail to meet requirements. It is entirely upto the Direct Demanding Officer to of the rate contract holders would execute supply orders

2.0

3.0

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The reliability of- supply order execution is thus the most important area. which
must be carefully adjudged by each Direct Demanding Officer before placing supply orders. Unless the ..supply reliability' is pre-facto confirmed and comrnitrnents are given by the respective rate contract holders, it is futile for the Direct-Demanding Officer to place" order on them The rate contracts ;:jre finalized all at reasonable rates and, therefore, the Direct Dernandinq Officers have Jo.._concentrate upon the,asr~d of supply reliability, and then to place supply orders:'o-rlinurtl=SoDtce basis so as to ensure the proLJability of compliance

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to Cl level of hundred percent. While operating RCs the following factors may be kept in view:
(i) (iil (iii)

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(v)

The Rate Contract Price: The past performance of firm with reference to their capacity, quality of supplies as well as timely delivery of the goods; I . The delivery date committed by the firm with respect to the delivery requirem~nt. of the Railways: The proximity of the rate contract holder wherever the proximity IS considered crucial for timely delivery, ease of progr~ssing and from the point of view of logistics and contract management et6.; and The need for reputed brands in the case of sensitive, critical and selective applications. '

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Ry statistical law, placement of hundred percent supply orders on a single rate contract holder cannot ensure hundred percent supply reliability.
S 0

All the RC holding firms are to be addressed by fax (if available) followed tJy speed post! registered post confirmation copies asking them to confirm in clearcut terms that they shall supply the materials strictly as per Railways required delivery,schedule (to be specified in such letters) It should be also mentioned therethat the RC holder's reply must be received within the target date say 7/15 days from the data of issue of the communication failing which their RC would be iqnored without any further reference to them. If required ,communication can also be made through e-mail. 1\ database is to be kept in the respective purchase sections (either manually or in the computer) Which will contain the past qualitative and quantitative performances of the RC holders. Concerned Dy CM Ms should evolve proper formats for such database and advise the concerned SMM and purchase section in-charge accordingly for creating and maintaining such databases.' The proposal for placement of order should beiniHated by SMM/DyC~MJI concerned, in a typed self-contained note, who will bring out full factual position ill detail. Such proposals are to be routed through the concerned Dy CMMs/ CMMs who will put up his recommendations for distribution of procurable quantity amonqst the RC holders with the justification, and put up the same to CMM or C:OS for their acceptance, depending upon the value of the purchase. Operation of RCs is to be made only by appropriate authority as per SOP/Railway Board's instructions. Wherever, as per SOP/Railway Board's instructions, Dy CM Ms or ~MMs are. empowered to place supply orders against DGS&D's Rate Contracts (rip-pending upon the value of purchase), they shall exercise such powers. Details of all the RCs are to be included in the proposalwith projection of total unit rate in each Case. Names of allindenters along with quantity indented shall 81<':" he indicated in the proposal. Res should I)e broadly put into two categories '-- one. with having performance over E Railway and the other without - which wouldenable competent authority to take proper decision regarding quantity to hp allotted It is not necessary that new sources should be totally iqnored. Ordering small quantities (rnaximum.upto 20% of NPQ) on such firms will have !Il~ad~antage of knowing their pertorrnancetorfuiiire ordering.
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I1 should be stipulated in the supply orders that outstanding quantities wtlich are nntexecuted within the stipulated dplivery period shall be liable to automatic cancellation and such defaulted quantities arc liable. to be entrusted to better re/forming RC holders. If fhe number of RC holders are very few, say three or four, thl?n also the above procedure should be followed as far as possible. I r there are no RC holders with past performance or the item is a new item.
pffnrts should be made to order maximum quantities on reputed brands with multi

10.0

11.0

snurce ordering as far , as possible.

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Wherever the valid rate contracts-are not available or the available rate contracts meet the requirement of the Railways in respect of the specification, delivery requirement and quality considerations, Railway call go ahead wj-')le direct procurement of materials after recording adequate justification for tha: purpose.
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13.0

Wherever, there are failures against the rate contract in terms of timely delivery and quality of goods, such failures should be reported tc DGS&D and direct .alternate procurement action may be taken in order to ensure timely availability of quality materials to meet the needs of the Railways. Whenever direct tenders for procurement of DGS&D RC items are invited in the absence of valid OCS&O rate contracts and subsequently if OGS&D rate contracts are received while direct tenders ealied for by Railways are under consideration and such rate contracts are at higher rates than the acceptable 1"8t8 received in' the tenders called for by the Railways/Pus, then the direct tenders-rnav be finalized and orders placed not. to forego the advantageous f8tes. Thereafter. the lower rates finalized by the Railways may be advised to DGS&D for their lnformation. However. in such cases Railways should satisfy themselves as to the qualify of the materials, specification, the standards of iilsoection and acceptance, the credentials source of supply etc. with ret\\r}ce tothose in the DGS&D rate contracts.

14.0

1 S.O
16.0

I\ny deviation from above should have approval of next higher authority, not
below the rank of CMM. This issues with the approval of COS

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For Controller of Stores

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