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EASTERN RAILWAYSTORES DEPARTMENT .~ -->

INoSlPolicy Rate Contractl10-11 Dated: 08.09.2010PROCEDURE ORDER No,Sub: Procedure order on the policy of placing orders against ioGS&D RateContracts, 'Reference: I) Railway Board's letter No. 2005/RS(G)/779 dt. 04.07.06

1 1 ) Railway Board's letter No. 2005/RS(G)1779 dt. 19.12.07Ill) 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 hassince been decided with the approval of COS to adopt the following system connected tothe 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 lowervalue/quantity limit below which supply orders may not be entertained by the rate ,-contract holder. '.:.::

2.0 . As per the tarms of the contracts, the respective firms are free to receive supplyorders from any Direct Demanding Officer, and accordingly, the quantum of orderbooking with a particular rate contract holder is quite unpredictable. The ratecontract holders when over-loaded have the tendency to decline and to returnany supply orderwhich m a y be beyond their capacity to-undertake. In the finaloutcome,the rate contract holders very often get aWay without any penalty fornon-execution, and in a oy case, no risk purchase action is feasible 3gc:ici::~a ratecontract holder by the Direct Demanding Officer. The DGS&D is to be im'.itTl:ltedby the Direct Demanding Officer about the failure and it is entirely uncertainwhether DGS&D wtll exclude such. firms from the purview of future rate -contracts.

3.0 The conclusion from the aforesaid factual position is that the DGS&D fixes alarge' number of rate contracts knowing fully that some of them may fail to meetthe supply order requirements. It is entirely upto the Direct Demanding Officer tofind-out which of the rate contract holders would execute supply orderssatlsfactorlly.

tt.O The reliability of- supply order execution is thus the most important area. whichmust be carefully adjudged by each Direct Demanding Officer before placingsupply orders. Unless the ..supply reliability' is pre-facto confirmed andcomrnitrnents are given by the respective rate contract holders, it is futile for theDirect-Demanding Officer to place order on them The rate contracts ;:jrefinalized all at reasonable rates and, therefore, the Direct Dernandinq Officershave Jo.._concentrate upon the,asr~d of supply reliability, and then to placesupply orders:'o-rlinurtl=SoDtce basis so as to ensure the proLJability of compliance

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to C l level of hundred percent. While operating RCs the following factors may bekept in view:(i)(iil

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

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-.- Ry statistical law, placement of hundred percent supply orders on a single ratecontract holder cannot ensure hundred percent supply reliability.

S 0 All the RC holding firms are to be addressed by fax (if available) followed tJ yspeed post registered post confirmation copies asking them to confirm in clear-cut terms that they shall supply the materials strictly as per Railways requireddelivery,schedule (to be specified in such letters) It should be also mentionedtherethat the RC holder's reply must be received within the target date say 7 /15days from the data of issue of the communication failing which their RC would beiqnored without any further reference to them. If required ,communication canalso be made through e-mail.

60 1\ database is to be kept in the respective purchase sections (either manually orin the computer) Which will contain the past qualitative and quantitativeperformances of the RC holders. Concerned Dy CMMs should evolve properformats for such database and advise the concerned SMM and purchase sectionin-charge accordingly for creating and maintaining such databases.'

7 0 The proposal for placement of order should beiniHated by SMM/DyC~MJIconcerned, in a typed self-contained note, who will bring out full factual positionill detail. Such proposals are to be routed through the concerned Dy CMMs/CMMs who will put up his recommendations for distribution of procurable quantityamonqst the RC holders with the justification, and put up the same to CMM orC :O S for their acceptance, depending upon the value of the purchase. Operationof RCs is to be made only by appropriate authority as per SOP/Railway Board'sinstructions. Wherever, as per SOP/Railway Board's instructions, Dy CMMs 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.

R 0 Details of all the RCs are to be included in the proposalwith projection of totalunit rate in each Case. Names of allindenters along with quantity indented shall8 1< ': 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 - whichwouldenable competent authority to take proper decision regarding quantity tohp allotted It is not necessary that new sources should be totally iqnored.Ordering small quantities (rnaximum.upto 20% of NPQ) on such firms will haveIl~ad~antage o f knowing their pertorrnancetorfuiiire ordering.

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9.0 I1 should be stipulated in the supply orders that outstanding quantities wtlich arenntexecuted within the stipulated dplivery period shall be liable to automaticcancellation and such defaulted quantities arc liable. to be entrusted to betterre/forming RC holders.

10.0 If fhe number of RC holders are very few, say three or four, thl?n also the aboveprocedure should be followed as far as possible.11.0 Ir 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 multisnurce ordering as far as possible., ..120 Wherever the valid rate contracts-are not available or the available rate contracts

'f.r1O '' '' 'fl'? '.J t meet the requirement of the Railways in respect of the specification,delivery requirement and quality considerations, Railway call go ahead wj-')ledirect procurement of materials after recording adequate justification for tha:purpose.

13.0 Wherever, there are failures against the rate contract in terms of timely delivery fand quality of goods, such failures should be reported tc DGS&D and direct.alternate procurement action may be taken in order to ensure timely availabilityof quality materials to meet the needs of the Railways.

14.0 Whenever direct tenders for procurement of DGS&D RC items are invited in theabsence of valid OCS&O rate contracts and subsequently if OGS&D ratecontracts are received while direct tenders ealied for by Railways are underconsideration and such rate contracts are at higher rates than the acceptable18t8 received in' the tenders called for by the Railways/Pus, then the directtenders-rnav be finalized and orders placed not. to forego the advantageousf8tes. Thereafter. the lower rates finalized by the Railways may be advised toDGS&D for their lnformation. However. in such cases Railways should satisfythemselves as to the qualify of the materials, specification, the standards ofiilsoection and acceptance, the credentials source of supply etc. with ret\\r}cetothose in the DGS&D rate contracts.

1 S .O I \n y deviation from above should have approval of next higher authority, notbelow the rank of CMM.16.0 This issues with the approval of COS

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D y Chief:or Controller of Stores-'.

. D is tr ib r r lio n:All Purc:1ias e Offlcers1 \1 1 Depot Officers, All Divisional OfficersOy CVO/Stores/KKK

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