PROCEDURES FOR PROCUREMENT OF RAW MATERIAL AND AWARD OF TRANSPORTATION CONTRACTS
1.0 PROCESSING DETAILS:
Ä Procurement of main raw materials viz., iron ore, coal and dolomite inclusive of transportation is to be proposed by the Raw Material Department at Plant Office in Paloncha every year.
Ä Raw Material Department will assess the stock position of iron ore, coal and dolomite, the quality of supply made for the previous year, get the feed back from the plant operations department about quality supplies made and requirement of quantities.
Ä On the basis of analysis, Raw Material Department may suggest the details of Raw material suppliers and transport agencies, if any, to General Manager (Works) .
Ä In case GM (W) feels that it can be considered, the information is forwarded to Contract Cell under Engineering & Projects Division headed by Chief Manger (Mechanical) at Hyderabad.
Ä Based on this, Contract Cell will have to initiate the tendering action for the selection of agencies for procurement and transportation of the materials.
Ä One of the following modes of tendering is to be followed by Contract Cell.
i) Advertised Tender
ii) Limited Tender
iii) Extension/Repeat Order
iv) Single Tender
Ä However in exceptional cases, taking into account the type of contract and exigencies of work GM (W) is authorised to call for tenders.
2.0 TENDERING
In general the basis of decision on the mode of procurement and the process of calling tenders to be followed are given below:
2.1 Advertised Tender
Advertised Tenders are to be called for by issue of tender notice in newspapers and sending tender notice to various organisations such as to the tender notice boards of KTPS, SCCL, Navabharat, District Industrial Offices etc., to ensure wide coverage. The following are the normal considerations to be followed to decide in favour of advertised tender.
· Source of supply not clearly known
· Advertising will allow better response
· Value involved is very high
· The available known supplies have formed a ring to control the market
· To develop new sources of supply to generate more competition for quality and price.
Normally case of the value of Rs.1.0 crore an d above could be considered for advertisement. However, the value cannot be the only criterion. Advertised tender will not be useful if supply sources are few and well known. Reasons shall be recorded and approval of Competent Authority shall be got even for advertising or otherwise.
2.2 Limited Tenderer
Limited tenders are to be normally issued when reliable sources of supply are known. For this purpose, to prepare a vendor list, thorough and extensive study is essential. Following normal consideration is to be made to decide in favour of a limited tender.
· Sources of supply are well known.
· Factors such as nearness, potential to supply the required quantity and quality, etc.
· Value involved is less than Rs.1.0 Crore
In case the value of limited tender enquiry is more than Rs.1.0Crore, the reasons for issuing LTE should be recorded and approval from Competent Authority should be obtained.
2.2.1 Number of parties to be contacted
Depending upon the value of likely purchase, the following guidelines may be kept in view:
Upto Rs.2.0 lakhs - 3 to 6 parties
More than Rs.2.0 lakhs - more than 6 parties
2.3 Repeat/Extension Order
The existing contract may be repeated if found beneficial to the company. Some of the issues to be followed for this are:
· The original contract must have been finalized through tendering process
· Price in the raw material or transport rate has not shown declining trend below the existing contract rate in the nearby region.
· Performance of the present contractor is highly satisfactory.
· No change in terms and conditions involved.
· There is a strong possibility of increase in price/quotation if fresh advertisement is made.
· If the contractor suits criteria of vendor development
· Modality is to be approved by the Competent Authority before taking procurement action
2.4 Single Tender
Purchase by single tender will be made only in exceptional cases, as reasons will be recorded for restoring to single tender purchase.
This mode is specially applied only in respect of proprietory items and items to be procured from vendors developed by the Company. However, modality is to be got approved before taking procurement action.
3.0 STAGE WISE SCRUTINY AND REVIEW
· While suggesting the modality i.e. fresh tender or extension by the Raw Materials Department which shall be forwarded by GM (W) after his scrutiny to Contract Cell and it should hold discussions with Works Division before processing.
· Once decided the mode of tendering, process of tendering shall be followed as explained further in the paras on invitations to tender, time to be given, opening of tenders, formation of Tender Committee, scrutiny and recommendations etc.
· Finance scrutinizes the case forwarded by Contract Cell after the recommendations of specific Committees appointed for the purposes. The Committee shall consist members from Contract Cell, Works Division and Finance Department.
· The suggestions offered after detailed discussion should be agreed by CMD.
· If it is felt necessary, further discussion in Board of Directors may be done by CMD where besides Board Members, Senior Officers from Contract Cell, Finance Department and Works Division may be asked to participate.
· After approval is given, the Contract Cell/Raw Material Department has to do the remaining coordination work.
· It is necessary that entire process should be coordinated in transparent manner and in participation of all the concerned officers of the Plant and Head Office.
· At the end of the year, CMD will take a review with all concerned Officers to evaluate the benefit achieved through the decision made. The result of the evaluation will also be used by the plant for its own analysis and decision making.
4.0 Invitation to Tender:
4.1 Invitation to tender should be issued to prescribed forms with all terms and conditions.
4.2 Samples may be called for from tenderers only where they are essential for taking a decision on purchase.
4.3 Financial status, capability of the tenderer etc., shall be ensured.
4.4 EMD value shall be decided upon the value of the contract it may be either a fixed amount or 2% of the quoted price. If required, EMD can be waived after obtaining approval from Competent Authority.
4.5 Normally enquiries are to be sent Under Certification of Posting in case of Limited Tender Enquiry (LTE). However, for the sake of expeditious dispatch, enquiries may be handed over personally to the representative of the party and acknowledgement shall be obtained.
5.0 Time to be given
While the time to be given to quote by the Tenderer will depend upon various factors like nature of item, source of supply, delivery requirement, mode of the tender etc., the following guidelines may be kept in view:
Advertised Tenders - 2-4 weeks (from the date of Publication)
Limited Tenders - 2 weeks (from the date of issue of tender notice)
Depending upon the necessity /urgency the time given above can be altered with the approval of the Competent Authority.
6.0 Receipt and Opening of Tenders
The tender received shall be sorted out and kept according to the dates of opening. If any tenders are received without any indication of the tender number and date of opening and are opened in the normal course, the same should be put in a cover and sealed by an executive duly superscribing the tender number and due date of opening along with the reasons therefor. The name of the tenderers should also be mentioned on the envelope. All advertised tenders irrespective of the value may be opened in the presence of tenderers who might choose to be present at the time of opening the tenders and an indication to that effect made in the notices inviting such tenders. The tenders will be opened by a representative each of Contract Cell and Finance Department as per the date indicated in the tender. In opening the tenders, the following procedures should be observed.
6.1 Each page of the original quotation should be signed with date.
6.2 Alternations, over writings or corrections found in the quotation must be initialed with date.
6.3 Each quotation must be numbered as “A”/”B” where the denominator will be the total number of quotations received and the numerator will be the serial number of the quotation in question out of the total quotations received. For instance, if there are five quotations, each will be numbered as 1/5,2/5,3/5,4/5 and 5/5.
6.4 The postal envelope should be signed and preserved in the files. The details of the tenders received should be recorded in the prescribed proforma and kept in the respective file.
6.5 Signatures of the authorized representative of tenders who are present at the time of opening of the tenders should also be obtained.
6.6 When tenders are opened and where the representatives of tenderers are present, the following information should be read out to the tenderers representatives.
1. Tender Number and Date
2. Name of the Tenderer
3. Description of the materials offered
4. Price quoted
5. Terms of Delivery
6. Delivery Period
7. Terms of payment
7.0 Classification of Tenders:
7.1 Tenders received should be classified as (i) Regular Tender, (ii) Delayed Tender and (iii) Late Tender
7.1.1 Regular tenders are those, which are received within the due date and the time indicated in the invitation of tender.
7.1.2 Delayed tenders are those, which are posted before the due date but received after opening of tenders. Such tenders may be construed as valid tenders with the approval of the Competent Authority subject to there being sufficient documentary proof to confirm that the tenders were posted earlier than the due date fixed for opening of the tender.
7.1.3 Later tender: Offers submitted/posted on or after the date of tender opening shall be classified as late tender. Such tenders should not normally be considered except under the following special circumstances.
- Lack of adequate response from regular tenderers
- Rates reflect the formation of a ring by a group of tenderers.
- The lowest acceptable regular tender received is unduly high compared with the last purchase price and /or the late tender.
Even under the above special circumstances, late tenders can be considered only with the approval of the Competent Authority.
8.0 Tender Scrutiny
After receipt of offers from the suppliers, Contract Cell will prepare a comparative statement and will forward the file to the Finance Department, through GM for its scrutiny. If required opinion of the GM(W)/RMD will be taken. Thereafter Tender Committee will negotiate with the party as explained in Para (9) and (10) and detailed review is taken by as given in Para (3).
9.0 Tender Negotiations
Negotiations with tenderers after opening of tenders should be made only in exceptional cases with the approval of the Competent Authority. A committee should be appointed for the purpose consisting of representatives of Finance, indenter and the Head of the Contract Cell. Reasons for negotiations should be clearly recorded and record notes of such negotiations duly signed by the negotiating committee must be maintained in the respective files. A written confirmation on all the points agreed to by the tenderers during the negotiations should be obtained at the earliest possible time. After completing the negotiations and obtaining written confirmation from the party. Tender Committee shall prepare the recommends on the proposals for the approval of the Competent Authority. Thereafter work order will be placed after obtained Financial Concurrence.
10.0 Purchase Recommendations:
While giving Purchase Recommendations the following points should be borne in mind.
10.1 Preference should be given to (I) tenderers quoting from prices, (ii) who can supply
The required quantity as per the time schedule indicated by RMD.
10.1.1 Where higher tenders are recommended for purchase, specific reasons for
rejection of lowest tender should be recorded in writing.
10.2 Commercial Terms
While formulating the proposal, the following commercial considerations should be particularly kept in view.
(i) Price Variation
In accepting tenders, preference should be given to tenderers who quote firm price. Where it is absolutely necessary to agree to a price variation clause preference should be given to the tenderers who agree to a reasonable ceiling. However, the suppliers, request for the price increase after receiving the order on the grounds that the low price was quoted due to error or typing mistake does not come within the meaning of price variation clause.
However, price variation clause and formula relating to variation in Diesel/Petrol/Lubricant shall be incorporated in all the transport contracts to arrive at the revised price.
(ii) Payment Terms.
(iii) Taxes and Duties
(iv) Contract Period
11.0 Issue of Amendments:
All amendments should be issued after approval of the Competent Authority in respect of change in specifications/quantities/prices, waival/levy of liquidate damages, price variations as per the POL clause.