PURCHASE

MANUAL

BEMLLIMITEDCorporateOf�ice:“BEMLSoudha”,No:23/1,4thMainRoad,

SampangiramNagar,BANGALORE–560027

PURCHASE MANUAL

BEMLLIMITEDCorporateOf�ice:“BEMLSoudha”,No:23/1,4thMainRoad,

SampangiramNagar,BANGALORE–560027

The Purchase Manual broadly deals with the objectives and functions of Purchase

departmentandtheproceduretobefollowedforprocurementofmaterialsconsistentwith

thepolicylaiddownbytheManagement.ThisreplacesthePurchasemanualissuedon12th

July2012andsubsequentinstructionsissuedfromtimetotime.

ThePurchaseManualisprepareddulyaligningwiththeCVCguidelines,GeneralFinancial

Rules2017andDelegationofPowerw.e.f01.04.2017andPublicProcurementguidelines.

RegulationsanddirectivesissuedbyvariousMinistriesofCentralandStateGovernments,

ChiefVigilanceCommissionoranyotherstatutorybodiesthathaveabearingonPurchase

activities,shallbecompliedwith.Anysuchnewregulationsanddirectivesthatmaybe

issuedinfuturealsoshallbecompliedwith.

AllthemajoraspectsofProcurementhavebeencoveredinthecurrentupdate.Someofthe

newchaptersadded in thePurchaseManual includeContractManagement, Startup’s,

Legal aspects of procurement, Grievance Redressal, Requirement of Professional

StandardsandTraining,&OutsourcingandVendorDevelopmentpolicy.Apartfromthe

aboveCivilWorksmanualisalsoclubbedandformpartofPurchaseManual.

ThePurchaseManualisintendedtoserveasaguidetoallof�icersandstaffdeployedin

dischargingthePurchasefunctions.Whileadheringtothepracticesandprocedurelaid

down,theof�icersandstaffconcernedarerequiredtoupdatethemanualcontinuallyby

incorporating the instructions and guidelines thatmay be issued by theManagement

subsequenttothepublicationofthismanual.ThepurchasemanualwasapprovedbyBoard

inits338thmeetingheldon30.05.2017

Ihopetherevisedmanualwillfacilitatetheusersintakingtherightdecisionandensuring

thatthecommercialand�inancialinterestsoftheCompanyaretakencare.

Bangalore

Edition:2017

PREFACE

DEEPAKKUMARHOTAChairman&

ManagingDirector

TABLEOFCONTENTS

Sl.No CHAPTERHEADINGS&CONTENTS PageNo

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CHAPTER1:INTRODUCTION. AboutpurchasesinBEML,Objectivesofpurchasedepartment. Functionsofpurchasedepartment,Purchaseprocesschart.

CHAPTER2:DEFINITIONSANDBRIEFPROCESS. PurchaseRequisition(PR),Tender,Typesoftenders,Offer,

Classi�icationofQuotations,PurchaseOrder,CompetentAuthority,Emergent/ExpressPR,ImportLicense,LetterofCredit(LC),CapitalItem,Local/BazaarPurchase,LongTermContract,Subcontract,Smallvalueitems,Letterofintent(LOI),BankGuarantee,RepeatOrder,DivisionalTechnicalCommittee,MaterialPurchaseCommittee.

CHAPTER3:SOURCESELECTION&VENDORENLISTMENT. IntroductionaboutSourceSelectionandVendorEnlistment,

MarketSurvey,Listofapprovedvendorssourcesforsupply,VendorEvaluationforvendorrating,Numberofvendorstobecontacted,Selectionofvendorsfromapprovedlist,Vendorregistrationprocedureforprojectitems,Procedureforcustomercerti�iedvendors(Governmentcerti�iedorganizationRDSO,CQA,DMRC,etc..,),ProcedureforTraders/Stockiest/DealersofIndigenousandImportitemssuppliers,Procedureforoverseassuppliers/collaboratorsandreputed/Proprietary�irms,registrationofsuppliersfornonprojectitemsmaintainedbyCentralPurchaseorganization(e.g.DGS&D),Debarmentfrombidding.

CHAPTER4:PURCHASEREQUISITION(PR) IntroductionaboutPurchaseRequisitions,Productionitems,

ConsumptionBasedPlanning(CBP),CapitalItems,R&DProjects,Sparepartsforsale,Subcontractitems,General,ERPT-codesrelevantunderthischapter.

CHAPTER5:TENDERSYSTEMINGENERAL Introduction,Exceptionalcasefornotfollowingthepublic

tendersystemforprocurementofitems,Tenderingprocess,Tenderfee,Bidsecurity/Earnestmoneydeposit(EMD)/BidGuarantee,Transparencyintenderingsystem,Transparency,Competition,FairnessandEliminationofarbitrarinessintheprocurementprocess,Buybackoffer,Consultingservice,Nonconsultingservice,Issueoftender,Timeschedule,Reserveditemsandotherpurchase/pricepreferencepolicy,ProcurementfromMSES,Securitydeposit/PerformanceBankGuarantee,Performancesecurity,ERPT-codesrelevantunderthischapter.

CHAPTER6:SELECTIONOFOFFERSANDACCEPTANCEOFMANUALTENDERS ReceiptandOpeningofTender,PurchaseTenderCommittee,

Postponementoftenderclosingdate,Inopeningtenders,thefollowingproceduremustbefollowed,Tenderevaluation,Tenderevaluationofcapitalitems,DivisionofPatronage:,Retendering,CVCguidelinesontransparencyintenderprocess.

CHAPTER7:E­PROCUREMENT Introduction,ObjectivesofE-procurement,Bene�itsofE-procurement,

Stakeholders,RolesandResponsibilities,OperatingsystemofE-procurement,RFQ(requestforquotation)creationguideline,DigitalSignatureCerti�icate,UserIDandPassword,E-biddingprocess,SubmissionofbidsbybiddersandOpeningofbids,TwobidTendering,EarnestMoneyDeposit(EMD)/BidGuarantee/Bidsecurity,Specialapprovals,Awardpurchaseorder/ContractbasedonE-bidding,Importprocurement,ElectronicReverseAuction,Proceedureforelectronicreverseauction.

E-reverseauctionprocess,SendingRFQtoselectedvendors,receiveaccepteddocumentsfrombidders,setupE-reverseauctionevent,Trainingthebidderswithdemoevent,Auctionadministration,Generateposteventreports,Receivebidcon�irmationfrombidders/participants,awardpurchaseorder/contractbasedoneventresult.

CHAPTER8:FINANCIALCONCURRENCE

CHAPTER9:COMMERCIALDISCUSSION. Introduction,Guidelinesforcommercialdiscussion, ERPTcodesrelevantunderthischapter

CHAPTER10:PLACINGOFPURCHASEORDER Introduction,Generalprocedure,Vetting/coordinationby�inancedepartment,

Purchasesthroughtendersystem,Purchaseordersforadditionalrequirement,Singletender&Proprietaryitem,Longtermcontract(LTC)/MOU,Patterncharges/Developmentcostofdie/Tool,Establishedweightforregulatingpaymentforcastingsupplies,Purchasesthroughimports,Purchasefromcollaborators,Purchasefromotherforeignsuppliers,Purchaseofsparepartsforsale,Materialpurchasecumreceiptadvice(MPCRA):,purchaseofsteelfromtraders,Spotpurchase,Emergent/expresspurchases,Governmente-marketplace(GEM),ReleaseofManualPurchaseOrders,ERPTcodesrelevantunderthischapter,HighSeaSales(HSS)procedure,DisclosureofimportvalueinHSS,Penalty/LiquidatedDamages(LD),MaterialPurchaseCommittee(MPC)

CHAPTER11:SMALLVALUEITEMSFORPRODUCTION Introduction,Identi�icationofSmallValueItems,Procedurefor

ProcurementofSmallValueItems,Othermattersunderprocurementofsmallvalueitems

CHAPTER12:PROCEDUREFORSUBCONTRACTING. Introduction,Procedure,SubcontractingprocessinERP, ERPTcodesrelevantunderthischapter

CHAPTER13:PURCHASEPROGRESSION Delayindeliveryofsuppliesandlevyofliquidateddamages,

AmendmenttoPurchaseOrders,Veri�icationandAcceptanceofBankGuarantee,InvocationofBankGuarantee,AcceptanceofBankGuarantees,ReturnofBankGuarantee.

CHAPTER14:SOURCE/PRODUCTDEVELOPMENT Introduction,Procedure,Theproceduretobefollowedis

broadlyoutlinedbelow,PricepreferenceforIndigenizationcontent.

CHAPTER15:TERMSOFPAYMENT PaymenttoSuppliers,Advancepayment,Advancepaymenttosupplier,

CHAPTER16:CONTRACTFORSERVICES Introduction,Maintenanceservices/Maintenancecontracts,

Theservicecontractmaybroadlyfallunderthefollowinggroups,procedure,ERPTcodesrelevantunderthischapter

CHAPTER17:BLOCKING/SUSPENSIONOFFIRM'SNAMEFROMTHEAPPROVEDLISTOFVENDORS

Introduction,Blockingofvendors,Guidelinesonbanning/blacklistingof�irms,De�initions,InitiationofBanning/Suspension,Suspensionofbusinessdealings,

01 01-03

02 04-10

03 11-18

04 19-25

05 26-37

06 38-45

07 46-55

08 56

09 57-58

10 59-71

11 72-73

12 74-82

13 83-89

14 90-93

15 94-98

16

17

99–103

104-113

LISTOFANNEXURESSl.No

01

02

03

04

05

06

07

08

09

10

AnnexureA­MaterialPurchaseCommittee-Production

AnnexureB­MaterialPurchaseCommittee-MarketingDivision

AnnexureB1­MaterialPurchaseCommitteeCorporateOf�ice(Contracts/PurchasesbyCorporateMaterialsonmattersdirectlyconnectedwithHumanResourcesFunctions/Administration)

AnnexureB2­MaterialPurchaseCommittee-CorporateOf�ice(Contracts/PurchasesbyCorporateMaterialsonmattersconnectedwithManufacturingActivities)

AnnexureC­GuidelinesForEvaluationofCapitalItems

AnnexureD­ImportantTermsAndConditionsofTender

AnnexureF­SpecimenofProprietaryCerti�icate

AnnexureG­SpecimenofLetterofIntent

AnnexureH­INCOTERMS-Introduction,Exworks,FOR/FOT,FreeOnRail/FreeOnTruck,FAS,FreeAlongsideShip,FOBFreeOnBoard,C&FCostAndFreight,CIFCost,Insurance&Freight,FOBAirport,

AnnexureI­Con�identialityAgreement

Contents PageNo

202-203

204-205

206-207

208-209

210-213210-213

214-225

226

228-244

245-246

227

LISTOFAPPENDICES

Sl.No

01

02

03

Appendix­A:ConstructionTenderCommitteeI

Appendix­B:ConstructionTenderCommitteeII

Appendix­C:ContractAgreement

Contents PageNo

194

195

196-201

Sl.No CHAPTERHEADINGS&CONTENTS PageNoSl.No CHAPTERHEADINGS&CONTENTS PageNo

Groundonwhichbanningofbusinessdealingscanbeinitiated,Banningofbusinessdealings,Procedureforbanningofbusinessdealingswithforeignsuppliers.,Removalfromlistofapprovedagenciessuppliers/contractors,etc.,Showcausenotice,AppealagainstthedecisionoftheCompetentauthority,Reviewofthedecisionbythecompetentauthority,circulationofthenamesofagencieswithwhombusinessdealingshavebeenbanned,levyof�inancialpenalty,

CHAPTER18:GENERALGUIDELINESONPURCHASEORDER

CHAPTER19:PURCHASEBUDGET

PurchaseBudgetandplacementofordersforrevenueitems,ERPTcodesrelevantunderthischapter.

CHAPTER20:INVENTORYCONTROL

CHAPTER21:ETHICSOFPURCHASING Introduction,Codeofintegrity,Responsibilityoflosses,

Relationshipwithsuppliers,Filingsystem,Conclusion

CHAPTER22:CONTRACTMANAGEMENT Generalprinciplesforcontract,Managementofcontracts,

Legaladvice

CHAPTER23:STARTUp’s De�initionofstartup,Relaxationofnormsforstartups,

Startuprecognition,Identi�icationofareas,Paymentforstartup’s,

CHAPTER24:LEGALASPECTSOFPROCUREMENT Introduction,GeneralPrinciplesofLawofContract,PurchaseContract,

Offerandacceptance,Consideration,Competentparties,Legalityofpurpose,Speciallegalconsiderationsinspectionrights,Rightofrejection,Ordercancellationandbreachofcontract,

Patentinfringement,Honestmistakes,Conclusion.

CHAPTER25:GRIEVANCEREDRESSAL

CHAPTER26:REQUIREMENTOFPROFESSIONALSTANDARDSANDTRAINING

CHAPTER26:GENERALTERMS&CONDITIONSAPPLICABLETOCONTRACTS&PURCHASEORDER

CHAPTER28:OUTSOURCINGANDVENDORDEVELOPMENTPOLICY

Objectivesofoutsourcing,De�inition&Measurementofoutsourcing,Scope&feasibilityofoutsourcing,Subcontract,Ratecontract,LongTermContract,VendorDevelopmentframeworkforoutsourcing,Selectionofpotentialvendors,Registrationofvendors,Tendering,Tenderquantity,PlacementofPurchaseOrders,Technicalsupporttothevendors,Vendorrating,VendorsfromDPSU’s,Updationofvendormaster(addition/deletion),EnhancedoutsourcingfromIndianprivateindustries,Beml'MakeinIndia'displaycentre.

CHAPTER29:CIVILWORKSPROCEDURE Introduction,Aim,Tendercommittee,Approval,De�initions,

Budget,Administrativeapproval,Technicalsanction,

Empanelmentofcontractors,Earnestmoney,Integritypactagreementwithcompany,MSE,Typesofcontract,Tendersystem,Awardingcontractwithoutatender,Tenderopeningandtendercomparativestatement,selectionofoffersandacceptanceoftenders,Retender,Negotiations,Securitydeposit,Refundofsecuritydeposit,Tendercommittee,Executionofwork,Empoweredprojectteamforlargevalueprojects(reffno.16/1/2016ppddtd04.08.2016emc),Measurementbook(MB),RunningAccountRemittances(RAR),Issueofmaterials,Custodyandcontrolofmaterials,Freesupplyofmaterials,Valuationofdeviations,Classi�icationofsoil,Completioncerti�icate,Layoutdrawings/revisedcontractvalue,Finalbill,Pre�inalRARS,Adhocpayment,Defectliabilityperiod,Extensionoftime,Liquidateddamagesfordelayincompletionofworks,Foreclosureofcontract,Disputeresolutionandjurisdiction,Contractor'sliabilityandinsurance,Principalemployer,Consultants/architects,Appointmentofconsultants,EmpanelmentofArchitects/Consultants,Agreement/Acceptance,consultants/architects'fees.

18 114

19 115

20 116­117

21 118-120

22 121-124

23 125

24 126-130

25 131

26 132

27 133–145

28 146–163

29 164-193

LISTOFFORMATS

Sl.No Contents PageNo

AVL ApprovedVendorsList

AWB AirWayBill

B/L BillofLading

BDC BEMLLtdFunctionalDirectorsCommittee

BEE BureauofEnergyEf�icieny

BG BankGuarantee

BI BidInvitation

BoM BillofMaterails

BOQ BillofQuantity

C&F CostandFreight

CAPEX Capitalexpenditures

CAR CapitalAppropriationRequest

CBEC CentralBoardofExcise&Customs

CBG CombinedBankGuarantee

CBP ConsumptionBasedPlanning

CCA ControllerofcertifyingAuthorities

CENVAT CentralValueAddedTaxes

C-folder Collaborationfolder

CIF Cost,Insurance&Freight

CII ConfederationofIndianIndustry

CMC CommercialNegotiationCommittee

CPPP CentralPublicProcurementPortal

CPWD CentralPublicWorksDepartment

CQA Certi�iedQualityAuditor

CRS CentralRegistrySection

CTC ConstructionTenderCommittee

CVC CentralVigilanceCommission

CVD CounterVailingDuty

CVO ChiefVigilanceOf�icer

DGS&D DirectorateGeneralofSuppliesandDisposals.

DMRC DelhiMetroRailCorporation

DoP DelegationofPowers

DPSU DefencePublicSectorUndertakings

DRDO DefenceResearchandDevelopmentOrganisation

EA EconomicAdvisory

ECS ElectronicClearnceservice

EDI ElectronicDataInterchange

EDI ElectronicDataInterchange

EMC ExpenditureManagementCommittee

EMD EarnestMoneyDepoist

EoI ExpressionofInterest

ERP EnterpriseResourcePlanning

ERV ExchangeRateVariation

ESI EmployeesSateInsurance

E-Tender ElectronicTender

FAS FreeAlongsideShip

FICCI FederationofIndianChambersofCommerce&Industriy

FOREX ForeignExcahnge

FOT FreeonTruck

GCC GeneralConditionsofContract

GeM GovernmentE-marketplace

GFR GeneralFinancialRules

GM GeneralManger

GRN GoodsReceiptNote

GST GoodsandServicesTax

GTC TheGeneralTerms&Conditions

HSS HighSeaSales

ICC(A) InstituteCargoClauses

ICF IntegralCoachFactory

IED IndustrialEngineeringDepartment

IEEMA IndianElectricalandElectronicsManufacturesAssociation

IEM IndependentExternalMonitors

IGM ImportGeneralManifest

IP IntegrityPact

ISRO IndianSpaceResearchOrganisation

ABBREVIATION

11

12

13

14

15

16

AnnexureJ­IntegrityPact

AnnexureJ1­GuidelinesforIndianAgentsofForeignSuppliers

AnnexureK­Non-CompetitionAgreement

AnnexureL­UndertakingofAuthenticityForDesktopsandServerSupplies

AnnexureM­ListofitemsreservedforPurchasefromSmallScaleIndustrialunitsincludingHandicraftSector.

AnnexureN­Guidelinesofprotectionofexchangeratevariationincontracts

Sl.No Contents PageNo

247-251

252-253

254-255

257-267

258

256

01 FormatF1:PurchaseProposal 270–27102 FormatF2:CheckList 272-276 FormatF3:TypesofBankGuarantees a)FormatofBidGuaranteeForm b)FormatofCombinedBankGuaranteeforContractPerformance c)FormatofBankGuaranteeforPerformanceofContract03 d)FormatofGuaranteeforWarranty 277–293 e)FormatofIndemnityBondforGuaranteedPerformance f)FormatofBankGuaranteeforAdvancePayment g)FormatofRetentionMoneyBankGuarantee h)FormatofPerformanceBankGuranteeforServiceContracts FormatF4:NonDisclosureAgreementtoIEMs04 WithAnnexureP:ScopeofworkforIndependent 298-300

ExternalMonitor/Monitors

17 AnnexureO­IndigenizationPlan 294-297

CHAPTER­1INTRODUCTION

1.1 ABOUTPURCHASESINBEML

ThePurchasefunctionsinBEMLaredecentralizedandeachdivisionisresponsiblefor

procurement of its requirements. The head of the Purchase Department is directly

accountableforef�icientdischargeoffunctions,dutiesandresponsibilities.Heisassisted

byateamofof�icersandstaffforcarryingoutthepurchasefunctions.

1.2 OBJECTIVESOFPURCHASEDEPARTMENT

Theprimaryobjectivesaretheprocurementsofrequiredmaterialsandservicesatthe

right price, high inventory turnover, low procurement cost, storage cost, continuity of

supply,preventionofstockouts,consistencyinqualityandgoodsupplierrelations.

a. Thematerialsmanagementencompasseswithinitsspherethethreerelatedfunctionsof

purchasing,inventorycontrolandstorekeeping.

b. Theobjectivesarelistedasunder:

i. To ensure uninterrupted �low of materials/services of required quality and

quantityforproduction/services.

ii. To ensure that the items purchased are economical, taking into account their

quality,durabilityandef�iciency.

iii. Toprocurethematerialsrequiredatthebestpricekeepingabreastofpricetrends

andmarketconditionsattherighttime.

iv. Tokeeptheinvestmentininventoryattheminimumpossible.

v. Toensurecontinuoussearchforalternate/additionalsourcesofsupply.

vi. Topromoteanddevelopindigenoussourcesofsupplieswhereverpossibleandto

minimizerelianceonimports.

vii. To strive for cordial, enduring and bene�icial business relationship with the

supplierstoensurefairplayandequity.

viii. Toensuretransparencyinpurchasefunctioning.

KEYCONSIDERATIONINMATERIALMANAGEMENT

PURCHASE MANUAL01

LC LetterofCredit

LD LiquidatedDamages

LIBOR LondonInterBankOfferedRate

LOI LetterofIntent

LPP LastPurchasePrices

LTC LongTermContract

MB MeasurementBook

MES MilitaryEngineeringServices

MoD MinistryofDefence

MoQ MinimumOrderQuantity

MoU MemorandumofUnderstanding

MPC MaterialPurchaseCommittee

MPCRA MaterialPurchaseCumReceiptAdvice

MRP MaterialRequisitionPlanning

MSES MircoandSmallEnterprises

MSME Micro,SmallandMediumEnterprises

NIT NoticeInvitingTenders

NT NonTendered

OEM OriginalEquipmentManufactures

OFB OrdanceFactoriesBoard

OPEX Operatingexpenses

PBG PerformanceBankGuarantee

PC ProcurementCommittee

PCIP Pre-ContractIntegrityPact

PDO PartsDispositionOrder

PF ProvidentFund

Po PurchaseOrder

PR PurchaseRequisition

PWD PublicWorksDepartment

QC QualifyingCriteria

R&D ResearchandDevelopment

RAR RunningAccountRemittance

RBI ReserveBankofIndia

RDSO ResearchDesignsandStandardOrganisations

RFP RequestforProposal

RFQ RequestforQuatation

SBC SafeBearingCapacity

SCC SpecialConditionsofContract

SMH StandardManHours

SMV SmallValueItems

SRM SupplierRelationshipManagement

SSR StandardScheduleofRates

STO StockTransferOrder

TOT TransferofTechnology

VC VendorCodes

PURCHASE MANUAL PURCHASE MANUAL02 03

1.3 FUNCTIONSOFPURCHASEDEPARTMENT:

a. Identi�ication and selection of suitable sources of supply including promotion and

developmentofpotentialsources.

b. EffectivelyutilizetheinputfromCostEstimatesand/oranalyzepurchasehistoryusing

ERPT-Codes “ME1P – PurchaseOrderHistory” and “ZMLPP – Last Purchase Price”

beforeacceptingtheprice.

c. EnsuringthatthebidsandpricesarekeyedintoERPsystemandanalyzingsameusing

ERP T-Code “ME49 – Quotation Comparison”/ E-Procurement, ensuring fair

opportunitytoBidders/Suppliers.

d. Conducting techno-commercial discussion with L-1 with regard to technical

speci�ication in two bid system, prices, delivery schedule and terms of payment

wherever it is absolutely necessary with L1 after obtaining approval of competent

Authority.

e. Comparingtheprices,termsofpaymentetc.,atleastforhighvaluecommonitemswith

ordersplacedreceivedbytheotherdivisions,soastoensureuniformityinprocurement

totheadvantageofBEMLLtd.

f. IssueofPurchaseOrdersusingERPT-Code“ME21N–CreatePurchaseOrder”,follow-up

forsuppliesandperiodicalreviewforclosureofPurchaseOrders.

g. Toassistinstandardizationofmaterial,suppliesandequipment.

h. To co-ordinate and assist in payment of suppliers bills and recovery of dues from

suppliers,ifany.

i. Marketresearchforimprovedproductsandalternatesources.

j. TokeepabreastofGovernmentregulationsinregardtopurchasesandtaxesandlevies

thereon.

k. Thereshallbeacloseco-ordinationandexchangeofinformationbetweentheDivisions

toensurethatnormallythereisnovariationinpricesandothertermsandconditions,

especially for castings, electrodes, CO2 wire paints, similar machine tools, tyres,

transmissions,Hydraulicaggregates,batteriesetc.

PURCHASEPROCESS

MaterialControl

RequirementofMaterial(MRPRunbyPlanningDept)

CheckforFreeStock

PlanningdepartmenttoCreatePurchaseRequisition

CheckforanyoldpendingPurchaseRequisitionforthe

samematerial

ReleaseApprovedPurchaseRequisitionbyPlanning

CheckforApprovedVendorsDirectoryandSourceList

GenerateRequestforQuotation

CallforTendersandMaintainQuotation

PrepareComparativeStatementforidenti�icationofL1,

Negotiationwithshortlistedvendors

Create&ReleasePurhcaseOrder

PURCHASE MANUAL PURCHASE MANUAL04 05

CHAPTER–2DEFINITIONSANDBRIEFPROCESS

2.1 PURCHASEREQUISITION(PR):

PRisthebasicdocumentrequiredbyPurchaseDepartmentforinitiatingprocurement

action.

a. ThePRisraisedbythePlanningDepartmentforprojectitemsanduserdepartmentsfor

non-projectitemsfurnishinginteralia,thefollowingdetailsof

i. MaterialNumber/speci�ication

ii. Quantity

iii.Delivery

iv.ValuationPrice

b. The quantity and the delivery schedule shall be suitably linked to the production/

provisioningprogramme,takingintoaccountofstockavailable,pendingordersandthe

leadtimeforprocurementwhichistakencarebyMRPruninERPsystem.

c. ThePRshallbegeneratedthroughERP.

2.2 TENDER:

Tendersystemisadoptedtoprocurematerials/servicesatcompetitiverateswithwider

withwiderparticipation,conformingtoethicsoftendering.

2.3 TYPESOFTENDERS:

Differenttypesoftendersareshownunderinthediagram:

a. PublicTender:

PublicTenderwhichisalsoknownasOpenTender,shallrefertocallingforquotationsby

advertising Tender Enquiry in Central Public Procurement Portal (CPPP) & BEML

websitemandatorily, If the tender value exceedsRs 1.00 crore (one crore) shall be

publishedinIndianTradeJournalorinatleastoneleadingEnglishNewspaperhaving

morethanonelakhcirculation,orlocalnewspaperasrequired.Besidesadvertisement,

theattentionofallknownandestablishedsourcesisdrawntotheenquiryforaquote.

Theadvertisementshallbeinabridgedformwithfulldetailsavailableonthewebsite.

b. GlobalTender

GlobalTendershallrefertocallingforquotationsfromIndian/foreignsuppliersby

advertising Tender Enquiry in Central Public Procurement Portal (CPPP) & BEML

websitemandatorily.FurtheritisrequiredtoadvertiseinatleastoneleadingEnglish

NewspaperofmorethanonelakhcirculationorIndianTradeJournal,ForeignTrade

Journal.

NoticeInvitingTender(NIT) intimationmaybesentdirectlytoestablishedIndian/

foreignsuppliersasalsotoselectedcountriesthroughforeignConsulates/Embassiesas

maybedecidedbytheMaterialsChief.

Theadvertisementshallbeinabridgedformwithfulldetailsavailableonthewebsite.It

willbefollowedforcasesfortendersaboveRs.10Cr.forCapitalitems.

For Revenue itemswhich aremore than 1 Crore procedure indicated under Public

Tendertobefollowed.

c. LimitedTender

Limited Tender refers to tender enquiry sent to selected suppliers from Approved

VendorsList(AVL).

i. In case of limited tender Enquiry shall be issued to the vendorswho are in the

approvedvendorlist.

ii. Projectitemswhicharehavingestablishedsourcesshallcomeunderthiscategory.

d. SingleTender

SingleTendershallrefertothecaseswheretenderenquiryisforwardedtoonlyone

supplier/vendor.

i. TheSingleTenderistoberesortedtoonlyfollowingcircumstancessuchas:

• ProcurementfromCollaborator,Licensor,Transferoftechnology(ToT)partner

orCustomernominatedvendor/sources;

• Procurementformeetingnaturalcalamitiesandemergencies;

• Nobidsreceivedagainstrepeatedtenders;

• TechnicallythereisonlyonesupplierwhocanmeetBEMLrequirements

• Thequantityrequiredcannotbesharedformorethanonesource.

• Development chargesareveryhighandnot economical fordevelopmentof

additionalsource.

• Onlyoneknowndevelopedsourcefortheitem

PURCHASE MANUAL PURCHASE MANUAL06 07

ii. Effortsmadetodevelopalternatesourcetobebroughtoutintheproposal.

e. ProprietaryTender

Procurementofitemsrecommended/adoptedbyR&D/DesignDepartmentforproject

itemsandOriginalEquipmentManufacturers (OEM) likespares formachine tools/

cutting tools as duly certi�ied by user department is classi�ied under this category.

A competent of�icer level of Grade VIII and above (i.e. GM) shall certify as per

Annexure­Fthattheitemsrecommendedforprocurementareproprietaryinnature.

f. E­Tender

The abovementioned 5 types of tenders have to be resorted through E-Tender i.e.

tenderingthroughERP-SRMplatform.

g. ManualTender

Manual tender is theNITsent throughmanualmode. Inexceptional caseswheree-

tenderisnotpossiblemanualtendermayberesortedduetocertainpracticaldif�iculties

withtheapprovalofDivisionHead.

• ReferAnnexureDforTermsandConditionsoftender.

• ReferAnnexureJ1forGuidelinesForIndianAgentsofForeignSuppliersin

respectofimporttenders.

2.4 OFFER

a. AnofferistheresponsefromabiddertoaTenderEnquiry.

b. Anofferisconsideredtobevalidifitisnotalate/regret/unsolicitedoffer.

c. Itreferstothesubmissionofquotationbya�irmintheformofpriceforsupplyingthe

itemaspertherequiredspeci�icationandquantityorforaservicetoberenderedin

responsetoanenquiryalongwithcommercialterms.

2.5 THEQUOTATIONSSUBMITTEDBYBIDDERSMAYBECLASSIFIEDASUNDER:

a. SingleOffer

Singleofferreferstoanytender�inalizedonthebasisoftechnicallyacceptedsingleoffer

received against limited tender/Public tender. A tender �inalized on the basis of

technically accepted single offer received against Limited tender shall be treated as

singletenderfortheacceptanceoftenderasperDoP.

b. ValidOffer

Validofferreferstoregularofferreceivedintimeagainstatenderenquiry.

c. RegretOffer

Regretofferrefersto'Nil'quotationfromtheBidderindicatingthattheBidderisnot

interestedintheTenderEnquiry.

d.UnsolicitedOffer

UnsolicitedOffershallrefertosubmission/receiptofquotationfromasupplierwhohas

notbeencontacted/towhomnoenquirywassent,inalimitedtender.However,anoffer

received in time from the authorized agent or a sister concern on behalf of the

manufacturercontactedinatenderenquirycanbetreatedasasolicitedoffer,providedit

couldbeestablishedthattheenquirysenttothemanufacturerwaspassedontohis

authorized agent /dealer of sister concern by the manufacturer for submitting

quotation.Inthecaseofpublictenders,allthebidswillbeconsideredassolicitedoffers

offer.

e. LateOffer

Inthecaseofadvertisedtenderenquiryorlimitedtenderenquiry,latebids(i.e.bids

receivedafterthespeci�ieddateandtimeforreceiptofbids)shallnotbeconsidered.

(GFR165&202)

Lateoffersreceivedshallbereturnedbacktothebidderunopenedincaseofmanual

tenderwithreasonsinwriting.ThisfactshallclearlybebroughtoutinNIT.

2.6 PURCHASEORDER

PurchaseOrder isa legallyenforceableContractplacedonasupplierwithmutually

agreed price, terms and conditions on acceptance of the valid offer for supply of the

items/servicesstatedtherein.AllthepurchaseordersshallbeissuedthroughERPonly.

For General Terms& Conditions forming part of Indigenous Purchase Orders refer

AnnexureE

2.7 COMPETENTAUTHORITY

Competent Authority shall refer to the Authority competent to sanction / approve

PurchaseOrdersuptoprescribedvalueintermsofmonetarylimitsgiveninthe"Delegation

ofPowers(DoP)”.ThelandedcostofPurchaseOrdershallbeconsideredasthevaluefor

deciding the Authority competent to approve the proposals including sub-

contracting/outsourcingproposals.

2.8 EMERGENT/EXPRESS–PR

PURCHASE MANUAL PURCHASE MANUAL08 09

Emergent/Express PR shall refer to initiating the PurchaseRequisition (PR) by the

indenting department for urgent procurement action by the Purchase Department by

obtainingquotation/sandapprovedbytheCompetentAuthorityasperDoP.

2.9 IMPORTLICENSE

ImportofitemsshallbeinlinewiththeExportandImportPolicyofGovernmentofIndia

invoguefromtimetotime.

2.10LETTEROFCREDIT(LC)

Itisanauthorizationbyabanktoasuppliertodrawonitforfunds,withinastated

amountandtimeinpaymentforspeci�iedgoodstobeshipped.Inotherwords,itisaletter

issuedbythebankinfavourofthesupplierauthorizinghimtodrawbillsuptoaparticular

amount(usuallythecontractprice)coveringaspeci�iedshipmentofgoodsandassuring

paymentagainst thedeliveryof theprescribedshippingdocuments. It coversnotonly

imports but also inland supplies in speci�ic cases. Efforts shall be made by Purchase

Departmenttomakesuppliersacceptuncon�irmedLetterofcredit.Incaseofacceptanceof

InlandLClessthan60dayscredit,approvalofCMDisrequired.

2.11CAPITALITEM

Anitemissaidtobeofcapitalinnaturewhenthereisenduringbene�itspreadovera

longer period. It relates to addition to the �ixed assets of BEML. It is in the form of

acquisitionofanewassetdulycoveredeitherinthecapitalbudgetorthroughDelegationof

Powers.

2.12LOCAL/BAZAARPURCHASE

This refers to purchases made on the basis of hand quotations obtained by the

representativesfromPurchase,UserandFinanceDepartment.Purchasesofmaterialsnot

exceedingRs.2,000/-willcomeunderthiscategory.HoweversuchLocalBazaarpurchases

nottoexceedRs.5LakhsperannumperDivision.

2.13LONGTERMCONTRACT

LongTermContractisgenerallyenteredintowithrenownedandreputedsuppliersfor

criticalitemsofmaterialsofhighqualitystandards.

a. Theitemscoveredunderlongtermcontractare:

- Castings,Forgings

- CuttingTools

- Electrodes

- Hardwareitems

- Radiators

- Non-projectitemsetc.,

b. Theadvantagesofthelongtermcontractare:

i. Supplier isassuredofexpectedvolumeofbusinessandhencecanofferbetter

prices.

ii. Thecompanyisassuredofcontinuoussupplyasperrequirement.

iii. Assuranceofsustainedqualitysupplies.

iv. Effectivecontrolsoninventorybuildup.

v. Purchasingcostiskeptlow.

c. Except in case of purchase of production items from already approved/

proprietary/DevelopedsourcesandwhereLicenseAgreements/LongTermContracts

are in force, Rate / Running Contracts or other long supply agreements should be

enteredwith reliable and established sources of supply after obtaining competitive

offersthroughOpenTender/limitedtenderasperDoP.

d. DGS&Dshallconcluderatecontractswiththeregisteredsuppliersforsuchgoods,which

arenotavailableonGeM,andareidenti�iedascommonuseitemsandareneededon

recurringbasisbyvariousCentralGovernmentMinistriesorDepartments.DGS&Dwill

furnish and update all the relevant details of the rate contracts on itswebsite. The

Ministries orDepartments shall follow those rate contracts to themaximumextent

possible.[AsperGFR148]

e. Theratesare�inalizedforaperiodofnotlessthanoneyearandnotmorethan3yearsat

atime.Undernocircumstancesitshallbeextendedbeyond3yearswithoutspeci�ic

approvalofDirector/CMD.

2.14SUB­CONTRACT

Thisreferstoordersplacedformachining,fabricationand/orforfurtherprocessinglike

heattreatment,plating,shotblasting,etc.,onmaterialssuppliedbyBEML.

2.15SMALLVALUEITEMS

AnitemofmaterialcostingRs.200/-orlessperitemexcludingvitalperformancerelated

itemsidenti�iedbyDesign&Developmentdept.,isconsideredasSmallValueItem(SMV).

AnnualbudgetshallbeallocatedforsuchSMVpurchases.PurchaseOrderforSmallvalue

itemsexceedingRs.2LakhshallbeapprovedasperDoP

2.16LETTEROFINTENT(LOI)

Letterofintentisanauthorizationtothesupplierfortakingupproductionandsupplyof

theitemmentionedtherein,subjecttoregularizationbyaPurchaseOrderandshallbe

issuedwithapprovalofFunctionalDirectorasperAnnexure­G.

2.17BANKGUARANTEE

Abankguaranteeisapromisefromabankthatifaparticularborrower/vendordefaults

onaloanorpromisethebankwillcovertheloss.Bankguaranteesaretobesubmittedby

thebiddersintheformofearnestmoneydeposit,performancebankguaranteeetc.The

requiredformatsareavailableatFormatF3.

2.18REPEATORDER

Repeatorderwithoutcallingforfreshtendermaybeplacedagainstpreviousorderand

alsoforproprietaryitemswithin12monthsfromthedateoforiginalorderprovidedthere

hasbeennodownwardtrendinpricesandthequantityisnotexceeding50%oftheoriginal

orderedquantityasperDoP.Iftherequirementexceeds50%,approvalshallbeobtainedas

perDoP.Norepeatordershallbeplacedwhentheoriginalorderwasplacedonthebasisof

higherpricesforearlierdeliveryandalsoordersplacedonsingletenderbasis.

PURCHASE MANUAL PURCHASE MANUAL10 11

2.19DIVISIONALTECHNICALCOMMITTEE

TheCommitteetobeconstitutedatthedivisionlevelheadedbyPlanningChiefwith

representativesfromfacilityplanning,manufacturing,maintenance,�inanceandpurchase

to�inalisethespeci�icationsofcapitalitemprocurements.

2.20MATERIALPURCHASECOMMITTEE

TheConstitution,termsofreferenceandthepurchaseproposalsrequiringreferenceto

MaterialPurchaseCommitteeare furnished inAnnexure­A. In the caseof SpareParts

procurementinMarketingDivision,theorderprojectionwilltaketheplaceofPRandthere

is a separate Material Purchase Committee constituted. The Constitution, terms of

reference and the purchase proposals requiring reference to Marketing Division

CommitteearefurnishedinAnnexure­B.

Procurements made at corporate of�ice, Unity building & Regional of�ices are also

coveredforMPC.

CHAPTER­3SOURCESELECTION&VENDORENLISTMENT

3.1 a. It is the primary responsibility of the Purchase Department to procure materials

requiredoftherightquantityandquality,atrighttimeandpriceensuringthatthebest

valueisobtainedforthemoneyspent.Generally,suppliesleadtimenottoexceedtwo

monthsrequirement.

b. Inordertokeepdowninvestmentininventorytothebarestminimum,andtheproduct

costundercontrol,itisnecessarytoensurethatutmosteconomyisenforcedrightfrom

thetimeofreceivingPurchaseRequestforpurchasebystrictlyfollowingtheprocedure

giveninthisManual(Chapter20).

c. Thegenerallyacceptedmethodforprocurementbytendersystemwillbefollowed,viz.,

Publictender,GlobalTender,Limitedtender,Singletender,Proprietarytender,&manual

tender.

d. Having regard to intricate and sophisticated nature of varied items required to

manufacture equipment(s) of varied range and capacity for the core sector and the

paucityofavailablesourcestomeetourrequirementsinrequiredquantityandquality,

thelimitedtendersystemwillbefollowedforallproductionitems.Limitedtenderisalso

resortedtopreventthedrawingsofCompanygettingintopossessionofspuriousspare

partsmanufacturers.Limitedtender/Tenderthroughe-procurement/ManualMode

arealsoadoptedfornon-productionitemsincludingcapitalitems,whicharemostly

specialpurposeinnature.However,publictendersystemisalsoretainedforavailingat

the discretion of the Purchase Department depending on the inadequacy of the

establishedsourcesandtheneedforsourcedevelopment.

e. Wherearelaxationisrequiredfromcallingforlimitedtendertheitembeingproprietary

oneor urgently required to beprocured, on a single tenderbasis, theDoP shall be

followedforacceptingthesameassingletender.

3.2 IncaseofLimitedTenderactionforallitems,itisessentialthatascienti�icandsystematic

approachismadeforachievingthegoalofutmosteconomyinpurchaseandtheprocedure

aregivenbelow.

a. MarketSurvey:

ThePurchaseDepartmentshallorganizeregistrationofsupplierswithaplanned

marketsurveyforsourceselection.

Forthispurpose:

i. The �irmscoming incontactwithBEMLand �irmsregisteredwithDGS&Dand

otherGovernmentOrganizationslikeRDSOwouldbeconsidered

ii. ThePurchasedepartmentmayalsoresorttoconductingexhibition/displaying

intricatecomponentsforattractingnewsourcesofsupply.

iii. Advertisementinleadingnewspapersforregistrationofsupplierswillberesorted

toforabroadbasedapproachtodevelopalternatepotentialsources

PURCHASE MANUAL PURCHASE MANUAL12 13

iv. Newsourcesaretriedoutforperformancewithtrial/educationalordersplaced

andprovensourcesincludedinthelistofapprovedsources, it is imperativeto

ensurethatmorethanonesourceisestablishedforeachitem.

b. Listofapprovedvendorssourcesforsupply

Alistofapprovedsourcesofsupplywillbecompiledandmaintainedcategory-wise

calledApprovedVendorList(AVL)bycorporatequality.

i. In thecontextof limited tenderbeingadopted, it is relevant that careshallbe

exercisedincategorizingtheitemsinameaningfulway.Theexistingapproved

vendor list are classi�ied individually under categories such as Fabrication,

Machining, Assembly, Raw Materials, Castings, Forgings, Hardware, Electrical,

HydraulicCylinders,Rubberitems,Hoses,Sub-contractetc.,andtosendenquiries

toalleligibleapprovedvendors.

ii. Thevendorsshallbeassignedsuitablevendorcode,withtheircorrectaddresses

and the items supplied by them to BEML. AVL shall be updated periodically

incorporatingtheadditionsanddeletionsbyCorporateQualityandmaintainedin

ERPsystem.

iii. Athoroughscrutinyregarding�inancialsoundnessandtechnicalcapabilityofthe

vendorwhereverconsiderednecessarywillbeensuredforthesuitabilityofthe

sourcestocatertoourrequirementsfollowedbyadevelopmentalorderbefore

decidingontheinclusion/retentionofthe�irminthelistofapprovedsources.

iv. A separate list of new sources will be maintained for considering them for

developmentalorderstilltheirperformanceisassessedandtakentothelistof

approvedsources.

v. CentralisedlistofDPSUvendorsforsupplyofsafety/productionconsumable/

nonprojectitemsascirculatedbyMoDhasalsobeenuploadedinBEMLwebsite

canalsoparticipateinthetender.

vi. Vendors registered in other Defence PSUs will be considered as Deemed

Registered.

vii. The Deemed Registration will enable the vendors to participate in all future

tendersofDPSUsforsimilarcategoryofgoods/servicessubjecttoful�ilmentof

othereligibilitycriteriaindicatedintheRFQ.However,priortoplacingoforder,in

case the vendor is selected after following the due process/procedure, all the

formalitiesrelatingtocompletionofregularisationoftheRegistrationProcessas

pertheextantprocedureofthiswillhavetobecompleted”.Theaboveformulation

for “Deemed Registration of Vendors” may be made applicable for common

commercialitems/offtheshelfitemsexcludingprojectmaterials.

3.3 VENDOREVALUATIONFORVENDORRATING:

a. Vendor Evaluation supports in procuring both materials and external services, by

makinguseofdatafromERPsystemandfromqualitymanagement.

b. Bene�itsofVendorEvaluation:

i. Choosemostappropriatevendordependingontherequirement

ii. Usefulforeffectivenegotiationswithvendors.

iii.Continuousmonitoringofexistingsupplyrelationships.

iv.Rankingofvendorsandblockingofvendors

c. Vendorevaluationisalwaysdonefor:

i. PurchaseOrganisationand

ii. Vendor

d.VendorEvaluation

The vendor evaluationhas to bedoneusingERPT-Code “ZQVENDMAT” –Maintain

VendorEvaluation”.

i. Theevaluationisdonebasedonqualityofsupplieditemsi.e.frequencyofrejection

and its percentage. The evaluation criteria process shall be done at regular

intervalsofoneyear.

ii. ThequalitydepartmentoftheDivisionwillcarryoutvendorevaluationonceina

yeartorecordthescoreofthevendorperformanceandfeedbackisforwardedto

Purchaseforonwardcommunicationtovendor.

iii. Vendorwhoisperformingpoorly(score<70)forconsecutivelytwoperiods,for

therespectiveitemsprocurementactionforsuchvendorsshallbesuspended.

3.4 NUMBEROFVENDORSTOBECONTACTED:

a. Asforthenumberofvendorstobecontacted,itisdif�iculttostrikeabalancebetween

commercialandtechnicalconsiderations,particularlywhentheitemtobeprocuredis

notastandardproduct.Nevertheless,theendeavourshallbetokeepthetenderenquiry

asmuchbroad-basedaspossibleforobtainingcompetitivebids.Thenumberofvendors

tobecontactedwillbedependentonthevalueofpurchasetomatchtheefforts.

b. LimitedTenderenquiriesaretobesent toallapprovedvendorsasalreadynoti�ied.

Enquiries toall theapprovedRDSOsources shallbe sent in respectofRail /Metro

Business. The Design Department concerned shall update once in a quarter

ceremoniously and forward the list of RDSO sources against each item to Purchase

Department.ItistheresponsibilityofDesignDepartmenttoobtainRDSOsourcesfor

eachidenti�ieditemsonquarterlybasisfromtheconcernedauthoritiesandChiefof

Materialsshallalsofollowupforupdationandmaintainthelistandthesamecanbe

updated in the ‘e’mode / online system also,wherever possible. Such list of RDSO

sourcesis�iledineach�ileofpurchase,whenpurchaseismadefromRDSOapproved

sources.FeedbackontheRDSOsourcesintermsofquality,reliabilityandadherenceto

scheduleetc.,shallbegiventoRDSOperiodically,whereverapplicable.Purchaseshall

updatetheRDSOapprovedsourceseverymonthandanyaddition/deletionshallbe

withtheapprovalofcompetentAuthority.Foranydeviationfromapprovedsources,all

theconcernedshallbepersonallyaccountable.

PURCHASE MANUAL PURCHASE MANUAL14 15

SELECTIONOFVENDORSFROMAPPROVEDLIST

ValueSlabofpurchaseEnquiry

MinimumNumberofSourcestobe

contacted

LevelofOf�icercompetenttoapprovewithoutrelaxation

LevelofOf�icercompetenttowaive/relaxationpartiallytheNo.ofsources

1

AboveRs10Lakhs

AboveRs.2lakh&uptoRs.10lakhs

AboveRs.1Lakhs&uptoRs.2Lakhs

UptoRs.1lakh

2 3 4

12sources

10sources

8sources

6sources

ChiefofMaterials

GradeVI&VII

GradeV

GradeIV

ChiefofDivision

ChiefofMaterial

ChiefofMaterial

ChiefofMaterial

i. ThevalueofpurchaseenquiryreferstotheestimatedtotalvalueinthePR,andthe

relaxation/waiverreferstocaseswherethenumberofsourcestobecontacted

falls short of the prescribedminimum, approval of the Authority indicated in

column3/4shallbeobtained.

ii. Whilerelaxingthestipulatedminimumnumberofsourcesfortherelevantslab,

thereasonsshallberecordedandgotapprovedbythecompetentAuthority.

iii. Itisimperativethatiftheimmediateprevioussupplierisignored,thereasonsfor

thesameshallberecordedasanoteinandgetapprovedbytheAuthorityindicated

incolumn3/4.

iv. Iftheenquiryistobesenttoonlyonesource,necessaryapprovalasrequiredfor

singletendershallbeobtainedasperDoP.

3.5 VENDORREGISTRATIONPROCEDUREFORPROJECTITEMS:

Vendorsseekingregistrationforsupplyofspeci�icproductsshallberequiredtosubmit

their applications in duplicate in the prescribed form. The vendors can use online

registrationfacilitybyvisitingwww.bemlindia.com/indexfr.phpaswell.

Thepurchasedepartmentshallensurethat thesupplierhasregisteredhimselfwith

BEMLforbeingeligibletosupplyvariousitemstoBEML.

a. The procedure applicable for the Vendorswho have establishedMANUFACTURING

UNITSinIndia,forsupplyofProjectitemsandoff-loadingactivities(Projectitemmeans

theItems/MaterialsrequiredformanufacturingofBEMLEquipments):

b. TheinterestedvendorscancontactthefollowinganyBEMLnodalpointstoseekVendor

Registrationformalitiesdescribedinthesubsequentpages.

• Corporate Quality, BEML Limited, BEML Soudha, 23/1, 4th Main, SR Nagar,

Bangalore – 560 027. Phone – 080-22963193; Fax - 080-22963391 Email:

cqof�ice@beml.co.in

OR

AnyoneofthefollowingBEMLmanufacturingdivisions/corporatepurchase

/VendorDevelopment,of�icesasapplicable.

• Dy.GeneralManager(Materials)BEMLLimited,EMDivision,KGFComplex,BEML

Nagar,KGF–563115Ph.-(08153)-263878/265176,Fax-(08153)–263274

Email–em@beml.co.in

• Dy.GeneralManager (Materials )BEMLLimited,H&PDivision,KGFComplex,

BEMLNagar,KGF–563115.Ph.-(08153)-263164/263686,Fax-(08153)–

262610Email–hm@beml.co.in

• Dy. General Manager (Materials) BEML Limited, Equipment Division, Mysore

Complex,BelawadiPost,Mysore–571186.Ph.-(0821)-2402422/2402458,

Fax-(0821)–2402434Email–ym@beml.co.in

• Dy. General Manager ( Materials ) BEML Limited, Engine Division, Mysore

Complex,BelawadiPost,Mysore–571186.Ph.-(0821)-2402422/2402755,

Fax-(0821)–2402429Email–zm@beml.co.in

• GeneralManager(Materials)BEMLLimited,BangaloreComplex,PostBox7501,

New Thippasandra, Bangalore – 560 075 Ph.- 25242414 / 25022631,

Fax-(080)–25241230Email–rm@beml.co.in

• Dy. GeneralManager (Materials)BEMLLimited, PalakkadComplex,Defence&

Rail Product Division., KINFRA Park, Menon Para Road, Kanjikode East,

Palakkad – 678 621. Ph. –(– (0491)–2568178, Fax – (0491)–) – 2567488

Email–pm@beml.co.in

• Dy. General Manager (Materials) BEML Limited, Corporate Materials, 23/1,

4th Main, SR Nagar, Bangalore – 560 027. Phone – (080)-22963179

Fax-(080)–22963283Email–of�ice@cpc.beml.co.in

• GeneralManager(MaterialsVDC)BEMLLimited,VendorDevelopmentcell,23/1,

4th Main, SR Nagar, Bangalore – 560 027. Phone – (080)-22963253

Fax-(080)–22963260Email–of�ice@vds.beml.co.in

[Note­Priorappointmentneedstobetaken,beforevisit]

c. AnyVendorunderManufacturingcategoryandestablishedunitinIndia,canapproach

above mentioned ‘BEML’ nodal contact points and appraise their Manufacturing

capability and submit the duly �illed formats including MSME / SISTER concerns

declarationwiththerelevantcerti�icatesasapplicable.,etc.,asgiveninthewebsite-

VendorRegistration(Applicationform),whichcanbedownloaded.

d. TheCorporateQualitywillallocatetemporaryvendorcodebasedoncommunication

fromany‘BEML’manufacturingDivisiondependingupontherequirementoftheItems

andPreliminaryAssessmentreport.

c. TheSourceListforaparticularmaterialcanbemaintainedinERPusingT-Code“ME01–

MaintainSourceList”.TheapprovedlistofvendorscanbeuploadedtoERPusingthe

above T-code and selection of vendors can be done electronically. The selection of

vendorswillbefromthelistofapprovedsourceswithastipulatedminimumnumberof

sourcestobecontactedbasedonthevalueofpurchaseenquiryslabwiseasgivenbelow:

PURCHASE MANUAL PURCHASE MANUAL16 17

e. Intheabsenceofanycommunicationfrom‘BEML’,CorporateQualityDepartment,with-

intwomonths,itshallconstruethat‘BEML’donothaveanyrequirementatpresentfor

additionalsourcesinyour�ieldofoperation.

f. With this Temporary vendor code, vendors can participate in tenders under

developmentactivitiesofthedivisionwhohasrecommended.

g. Withinoneyearperiod,vendorsneedtosuccessfullyexecutethedevelopmentorders

andestablishdeliveryandqualityofthesupplieditemsaspertheorder.

h. Vendorswill be upgraded to Permanent registration status on �inal Assessment by

‘BEML’teamattheirpremisesforveri�icationofmanufacturingprocessesandquality

assurancesystemsandafterobtainingManagementapproval.

i. AftertheallocationofPermanentVendorcode,theVendorswillbeeligibletoparticipate

inTendersofallthemanufacturingdivisionsof‘BEML’

j. The temporary VC Number will be blocked in our system if there is no business

transactionduringthisoneyearperiod.

3.6 PROCEDURE FOR CUSTOMER CERTIFIED VENDORS (GOVERNMENT CERTIFIED

ORGANIZATIONRDSO,CQA,DMRC,ETC..,)

OntherequestsalongwithrelevantdocumentsreceivedfromtheDivisionalmaterial

departments,basedonapprovedvendors listreleasedbytheabovecustomercerti�ied

organisationsandanyrelevant communicationswith respect toVendors forparticular

items,theCorporateQualityallocatestheVendorcodesinsistingthevendorstosubmitthe

duly�illedformats,asgiveninthewebsite-VendorRegistration(Applicationform),which

canbedownloaded.

3.7 PROCEDUREFORTRADERS/STOCKISTS/DEALERSOFINDIGENOUSANDIMPORT

ITEMSSUPPLIERS:

OntherequestsalongwithrelevantdocumentsreceivedfromtheDivisionalMaterial

Departments,basedonproductionrequirementsandPrincipalCerti�icatesoftheOriginal

Manufacturers,theCorporateQualityallocatestheVendorcodesinsistingthevendorsto

submittheduly�illedformats,asgiveninthewebsite-VendorRegistration(Application

form),whichcanbedownloaded.

3.8 PROCEDURE FOR OVERSEAS SUPPLIERS/COLLABORATORS AND REPUTED/

PROPRIETARYFIRMS

a. TheVendorcodesfortheabovecategoryofSuppliersareallocatedbyCorporateQuality

basedoncommunications from theDivisions/MarketingHeadQuarters/R&D/

Corporateof�icewithrelevantpro�iledocuments.

b. ForCriticalFunctionalItemslikeWeldingConsumables,Paints,Oils,Lubricants,Filters,

Hoses,Bearingsetc.,theVendorsneedtosubmitTYPEAPPROVALCerti�icateforthe

particularProductissuedbyBEMLR&Dinadditiontootherformats,asgiveninthe

WEB site - Vendor Registration (Application form), which can be downloaded, for

allocationofVendorCodes.

3.9 FollowingFormats,asgiveninthewebsite-VendorRegistration(Applicationform),which

canbedownloaded,needtobeFilledandSubmittedinHardCopiesasappropriatebyall

theFirmsalong-withCompany’sPro�ileBrochures,ifany.

a. VendorQualityAssuranceFormat(GeneralandTechnicaldetails)

b. MSMEStatusdeclarationandsubmissionofrelevantgovernmentissuedcerti�icates

c. SisterConcernDetailsforAllocationofMultipleVendorcodesFormat

d. TermsandConditions

3.10REGISTRATIONOFSUPPLIERSFORNONPROJECTITEMSMAINTAINEDBYCENTRAL

PURCHASEORGANISATION(E.G.DGS&D)

a. With a view to establishing reliable Sources for procurement of goods commonly

required for Government use, the Central Purchase Organisation (e.g. DGS&D) will

prepareandmaintainitem-wiselistsofeligibleandcapablesuppliers.Suchapproved

supplierswillbeknownas“RegisteredSuppliers”.TheCompanymayutilisetheselists

as and when necessary. Such registered suppliers are prima facie eligible for

considerationforprocurementofgoodsthroughLimitedTenderEnquiry.Theyarealso

ordinarily exempted from furnishing bid security along with their bids. A Head of

Departmentmayalsoregistersuppliersofgoodswhicharespeci�icallyrequiredbythat

DepartmentorOf�ice,periodically.Registrationofthesuppliershouldbedonefollowing

afair,transparentandreasonableprocedureandaftergivingduepublicity.

b. Credentials,manufacturingcapability,qualitycontrolsystems,pastperformance,after-

salesservice,�inancialbackgroundetc.ofthesupplier(s)shouldbecarefullyveri�ied

beforeregistration.

c. Thesupplier(s)willberegisteredfora�ixedperiod(between1to3years)dependingon

thenatureofthegoods.Attheendofthisperiod,theregisteredsupplier(s)willingto

continue with registration are to apply afresh for renewal of registration. New

supplier(s)mayalsobeconsideredforregistrationatanytime,providedtheyful�illall

therequiredconditions.

d. PerformanceandconductofeveryregisteredsupplieristobewatchedbytheCompany.

Theregisteredsupplier(s)areliabletoberemovedfromthelistofapprovedsuppliersif

theyfailtoabidebythetermsandconditionsoftheregistrationorfailtosupplythe

goods on time or supply substandard goods or make any false declaration to any

Governmentagencyorforanygroundwhich,intheopinionoftheCompany,isnotin

publicinterest.

e. Thelistofregisteredsuppliersforthesubjectmatterofprocurementbeexhibitedonthe

Central Public Procurement Portal and websites of the Procuring Entity/

e-Procurement/portals. (InlinewithGRF150)

3.11DEBARMENTFROMBIDDING.

a. Abiddershallbedebarredifhehasbeenconvictedofanoffence—

i. UnderthePreventionofCorruptionAct,1988;or

ii. TheIndianPenalCodeoranyotherlawforthetimebeinginforce,forcausingany

lossoflifeorpropertyorcausingathreattopublichealthaspartofexecutionofa

PURCHASE MANUAL PURCHASE MANUAL18 19

CHAPTER4–PURCHASEREQUISITION(PR)

4.1 PurchaseRequisition(PR)isthebasicdocumentrequiredbyPurchaseDepartmentfor

initiatingprocurementaction.

a. The PR is released by the Planning Department for project items and by User

departmentsfornon-projectitemsfurnishinginter-alia,thedetailsof:

• MaterialNumber/services/speci�ication

• Description

• Quantity

• Deliveryaddress

• LPP/Estimatedprice

b. TheprocurementprocessshallstartwithPurchaseRequisitions(PR)createdinERP

systemeitherthroughMaterialRequisitionPlanning(MRP)or,SystemgeneratedPR

usingERPprogrammebytheconcernedsection/department/unit.

c. IncasewherenewprojectsaretakenupformanufactureandBOMisnot�inalisedandin

such cases system generated PRs are released. Co ordination of Design, Stores and

Planningtobeobtaineddulyconsideringtheexistingstocklevel,pendingordersifanyof

theitemsandapprovalbytheCompetentAuthorityforsystemgeneratedPRs.

d. ThePlanningDepartmentshalltakethefollowingprecautionsatthetimeofcreatingthe

productionorprojectbasedPurchaseRequisition:

i. ThestockpositionoftheitemtobecheckedusingERPT-Code“MD04–Displays

Stock/RequirementStatus“byinputtingthematerialcodeandplantcode.

ii. The planning departmentwill also have to run ERP T-Code “MD01 /MD02 –

MaterialRequirementPlanning”tolinkthequantityanddeliveryscheduletothe

production/ provisioning programme, taking into account the lead time for

procurement.

iii. Thedeliveriesshallbestaggeredandinventoryshallbe30daysofconsumption

only.

iv. Nostockshallexceed60daysunlessleadtimeitselfismorethan60days.

v. ExceptionalcasesshallbeapprovedbyChiefofComplex/ChiefofDivisionupto90

days and beyond by Functional Directors. Import items involving lead time

exceeding6monthsandsteelforgingsHoweverinvolvingMOQ,shallbehowever

excludedfromthis. (GFR214)

vii. Planning department to issue PRs approved by Competent Authority for

productionitemsandbytheUserDepartmentforNon-ProjectitemstoPurchase

Department.

viii. Forservicessuchasprofessional,intellectual,training,andadvisoryservicesor

anyotherservicesclassi�iedordeclaredassuchbyuserdepartmentbutdoesnot

includedirectengagementofaretiredGovernment/Companyservant.

e. InrespectofsystemgeneratednonprojectPRsthequantityshallbeveri�iedbythe

FinanceDepartmentatthetimeofscrutinizingtheproposalbeforeplacementoforder.

publicprocurementcontract.

b. Abidderdebarredunderabovesub-sectiona(i)oranysuccessorofthebiddershallnot

beeligibletoparticipateinaprocurementprocessofanyprocuringentityforaperiod

not exceeding three years commencing from thedate of debarment.Department of

Commerce(DGS&D)willmaintainsuchlistwhichwillalsobedisplayedonthewebsite

ofDGS&DaswellasCentralPublicProcurementPortal.

c. Aprocuringentitymaydebarabidderoranyofitssuccessors,fromparticipatinginany

procurement process undertaken by it, for a period not exceeding two years, if it

determinesthatthebidderhasbreachedthecodeofintegrity.TheMinistry/Department

willmaintainsuchlistwhichwillalsobedisplayedontheirwebsite.

d. The bidder shall not be debarred unless such bidder has been given a reasonable

opportunitytorepresentagainstsuchdebarment.(AsperGFR151)

PURCHASE MANUAL PURCHASE MANUAL20 21

For this purpose, the activity of Finance concurrence will be carried out together

(activityclubbedasthe�ileneednotpassthroughtwiceinFinance)andtheproposalwill

beroutedaspernormalprocedurethroughHeadofFinanceofUnit/Division/Complex

/Corporateof�ice.

f. AstheestimatedrateinPRisavitalelementinestablishingthereasonablenessofprices,

itisimportantthatthesameisworkedoutinarealisticandobjectivemanneronthe

basisoflastpurchaseprices(LPP)andestimatedprice.Theestimatedpriceisbasedon

prevailingmarketrates,economic indices for therawmaterial/ labour,other input

costs, IEEMA formula wherever applicable and assessment based on technically

evaluatedprice.

g. PRquantityshallbecombinedwhereveritemsarecommonamongdistinctprojects.

PlanningDepartmentshallworkouttherequirementofsuchcommonitemsasfaras

possibleandPRsaretobeforwardedtoPurchaseDepartmentforprocurementclubbing

therequirementofcommon itembydifferent projects.Nosplittingoforders tobe

resortedtoavoidapprovalofsuperiorsasperDoP.Anydeviationwilltantamountto

violationofrules

4.2PRODUCTIONITEMS:

Approvedproductionprogrammecirculatedbycorporateof�iceshallbethebasisfor

procurementactionintermsofnumberofequipment(s)undereachmodel.

ThiswillbegeneratedintheERPsystemusingtheERPT-Code“MD01/MD02–Material

Requirement Planning”. The details are available in ERP T-Code “MD04”. However

outstandingquantityagainstdevelopmentordershallnotbeconsideredforarrivingatnet

quantitytillsampleisacceptedandclearedforbulkproductions.

4.3 CONSUMPTIONBASEDPLANNING(CBP)

In the case of SMV items, consumables, tooling,maintenance items, canteen items,

medicinesetc.,iscon�igured,whereverfeasible,intheERPSystembyde�iningsafetystock,

re-orderlevelandmaximumstockwithcoordinationofplanning,userdept.,purchaseand

stores. In such cases PRs generated by system on regular basis to be considered for

procurementactionforwhichPRapprovalisnotrequired.

The items covered under CBP shall be reviewed every year by user department /

Planning.TheresponsibilityofCBPitemsiswithuserdepartment/Planningforreviewas

andwhentherequirementchanges.E.g.Whenparticularmachinetool/productgoesout

ofproduction.

4.4 NON­PRODUCTION(STOCKCONTROL&TOOL)ITEMS:

a. StandardStockitems:

TheMinimum,reorderandmaximumlevelsofstockforeachstandarditemwillbe�ixed

inERPInventoryMasterbasedonpastconsumption.Fortheseitems,CBPprocedure

willbeadopted.

b. ControlsinERP:

i. TheERPsystemwillautomaticallyraiseanalarmforplacingpurchaserequisition

oncethematerialquantitydipsbelowthere-orderlevel.

ii. IftheinventorylevelintheplantfallsbelowtheMinimumquantitythathasbeen

de�ined,theERPmayblockthesalestransactions,orissuesanalert,accordingto

thede�initionforresponsetoRelease/ReceiptofInventoryoutsidede�inedrange

inthe“DocumentSettings”window.

iii. IftheinventorylevelintheplantexceedstheMaximumquantitythathasbeen

de�ined, the ERP may block your purchase transactions, or issues an alert,

according.tothede�initionforResponsetoRelease/ReceiptofInventoryOutside

De�inedRange in the “Document Settings”window. The above predetermined

stocklevelssoestablishedshallformthebasisforraisingPurchaseRequisitionfor

stockcontrolitems.

c. Non­StandardStockItems:

PR will be raised for the quantity required duly approved by the of�icer in the

departmentconcernedasperDoP.PRsofestimatedvalueofRs.1.00lakhandabovewill

requiretobecoordinatedbytheCompetentAuthority.Basicallyitistheresponsibilityof

theindenting/userdepartmenttoensurepromptusageoftheitem.

4.6 CAPITALITEMS

a. SanctionforprocurementisaccordedbytheCompetentAuthorityasperDelegationof

Powers with �inance coordination in Capital Appropriation Request (CAR) against

approvedcapitalbudget.

b. ThePRwillinvariablybearareferencetoapprovedCapitalAppropriationRequestNo.

anddateandinaddition, itemsexceedingRs.10,00,000/-invaluesindividuallyshall

have the approval of Divisional Technical Committee. The Divisional Technical

Committeeshallgiveadequateconsiderationforthebene�itsderivedinstandardizing

onaparticulartypeorrangeofequipmentfromareputedsinglesourceviz.,Process

capability,satisfactorysalesservice,lowinventoryofmaintenancespareparts,etc.,

c. However,if,onpriceorotherconsiderations,theordersaretobeplacedondifferent

sources, commonality of vital sub-assemblies like electronics package, motors,

hydraulics,gearboxetc.,istobeensured.

d. The standardization of capital equipment shall be done for BEML as a whole and

procurementdonewhereveradvantageousfortherequirementsofallthedivisionsto

obtainpriceadvantageandotheradvantages,afterknowingtheexactquantitytobe

procured keeping in view the available capacity and futureproductionplans of the

Divisions.Thiswillhelpinminimizingthecapitalinvestments.

e. AtthetimeofprocuringtheCapitalitems,careshallbetakentoincludeinthePurchase

Ordertermsandconditions,suf�icientsafeguardstoensurethatthesupplierprovesthe

performance capacity and capability of the equipment immediately after

commissioning, and guarantees the performance during the warranty period and

thereafterbyprovidingadequateaftersalesservice.Thesesafeguardsshallbeensured

atleastforthespecialpurposemachinesandNC/CNCmachinetoolscostingmorethan

Rs.10 Lakhs each. The detailed guidelines and the terms and conditions to be

PURCHASE MANUAL PURCHASE MANUAL22 23

incorporatedadditionallyinthetenderandPurchaseOrderforprocurementofspecial

purposeandcostlymachines,toensurenecessarysafeguardsaregiveninAnnexure“C”.

4.7 R&DPROJECTS

a. Basedon thePR raisedby the concernedR&Dproject groups andapprovedby the

Competent Authority, concerned Purchase groupwill issue enquiries to the parties

selected/identi�iedbyR&DonlyforprocurementofinputsofnewR&Dprojectsand

indigenization,withintheamountsanctionedbyCMD/Board.However,standarditems

alreadybeingprocured / producedbydivisionwill continue to beprocuredby the

divisionalpurchasedepartment.R&Dcanrecommendfordirectpurchaseofnewand

criticalitemsonproprietary/singletenderbasistoexpediteR&Dprojectsbyfollowing

purchaseprocedureandDoP.

b. R&Drepresentativewill scrutinize thequotations received in response to enquiries

referredtoin(a)aboveandidentifyalistofprobablesupplierswiththeapprovalof

divisionalR&DChief,fortechnicalnegotiations.

c. For the negotiations for deciding the supplier, assistance of the parent Production

Division’sFinanceandPurchaserepresentativesshallbetaken,inviewoftheirexpertise

andexperience.

d. On receipt ofmaterials at Stores, the concernedR&DProject group responsible for

procurementofthesaiditems&QCrepresentativewillinspecttheconsignmentand

givetheircerti�icationofacceptanceorrejection

e. Basedonabove,theStoresdepartmentwill�inalizetheGoodsReceiptNote(GRN).

f. TheAccountsOf�icer,atDivisions,willmakepaymentforthebillsbasedonGRNandas

perPaymenttermsofthePurchaseOrder

4.7 SPAREPARTSFORSALE

a. OrderprojectionswilltaketheplaceofPRandeachorderprojectionwillbecoordinated

bytheof�icercompetentinthepartsdepartmentaspertheDoP.

b. Thequantumintermsofquantityandvaluewillbedeterminedforeachitembasedon

customerdemand, forecastof spareparts sales, stockonhand,onorderandunder

manufacturesubjecttoinventorynormsprescribedandvaluewillbeasperLPPand

otherguidelines.

c. PRsareraisedformanufacturing/otheritemsbymarketingdivisionsarecoordinatedby

pre-scrutinycellof�inanceinMarketingAccountsforquantityclearance.ThePR’swill

be converted to STO on Manufacturing Divisions and same has to be approved by

CompetentAuthoritybeforereleasingSTOandcancellation.

4.8 SUB­CONTRACTITEMSCONTRACTITEMS

a. Thisissubjecttoanover-allassessmentofthecapacityandtheplanforSub-contracting.

For this purpose, the facilities that are found inadequate/not available within the

division,necessitatingtheSub-contractingdecision,willbeidenti�iedandgotapproved

bytheCorporateOf�ice.

b. BasedonthisapprovedplanforSub-contracting,theProductionShopandIndustrial

EngineeringDepartment(IED)shalldrawupalistofitemsindicatingthequantitytobe

Sub-contractedtakingintoaccounttheshoploadingandtheproductionprogramme.

Thislistwillbegiventosub-contractcell,whichwillformthebasisforSub-contracting.

ThisservesasthePR.

c. Rawmaterials/components issued against sub-contract orderswill be regulated in

accordancewiththedeliveryscheduleandperiodicalcon�irmation/reconciliationtobe

obtainedbytheSub-contractcellandforwardedtoaccounts.

4.9 GENERAL

a. OnePRshallberaisedforoneitemoragroupofrelateditems,whichhastobetendered

out, or ordered simultaneously. Since inventory holdings can be controlled only by

controllingtheissueofPRsforprocurement,itisessentialthatutmostcareistakento

raisePRsasperguidelinesgivenbelowattheappropriatetimeindicatingaveryrealistic

quantityandvalue.

b. TheagenciescompetenttoinitiatePRsforprocurementare:

i. Production planning department for production items, duly linking up with

approvedproduction/provisioningschedule.

ii. FacilitiesPlanningDepartmentforcapital itemsduly linkingupwithapproved

CapitalBudget/DivisionalTechnicalCommitteeapproval.

iii. PartsdepartmentforsparePartsbasedon�irmordersreceivedfromcustomers

and/orforstockandsalebasedontheforecastofSparepartsSalesforbudget

years after making due allowance for stock on hand, on order and under

manufacturesubjecttoprescribedinventorynorms.

iv. PRsraisedbyPartsdepartmentandcoordinatedbyMarketingAccountswillserve

asthebasisforprocuringasadditionalquantityorforin-housemanufactureinthe

divisions.

v. CBPisfollowedforStockControlItemsandspeci�iedindentsfornon-stockcontrol

itemsbyUserDepartments.

vi. Thenominatedof�icer forstationery,printingandcapital items isrequired for

Corporate Of�ice and Marketing Division Head Quarters. For this purpose, an

of�icer will be nominated by the GM/CGM/FD in the Corporate Of�ice and

MarketingDivisionHeadQuarters,whowillcoordinatewiththeuserdepartment.

Theof�icersonominatedseparatelyforCorporateOf�iceandMarketingDivision

willbeauthorizedtoapprovePRsforprocurementaction.Thisarrangementwill

beextendedtoZonal/Regionalof�icesundertheMarketingDivisionwiththeir

annualprojectionofrequirementsforstationeryandprintingitemsdulyapproved

bytheGM/CGM/FD.Theprocurementwillbeagainstthebudgetallocations.

vii. R&D department for developmental projects, product improvement and

indigenizationitems.ThesePRswillbebasedonapprovalgivenbyCMD/Board

andprovisionsmadeintherevenuebudget.

viii. Construction department for CivilWorks items, based on provisionsmade in

Capitalbudget.

ix. Plant maintenance department for items required for minor repairs and

maintenanceofplantandmachinery, factoryandof�icebuildings,Guesthouse,

PURCHASE MANUAL PURCHASE MANUAL24 25

T–Code Particulars FunctionsofT­Code

MD04

MD61

DisplaysStock/RequirementSituation

CreatePlannedIndependentRequirements

The transaction MD04 is used to producerequirements list for an individual material orcollectivelyforaplantorMRParea.TheindividualrequirementsreportforamaterialrequiresaplantorMRPareatobeentered.Theresultshowsstockandrequirementsthathavebeenallocatedagainstthe material. The collective requirements reportshowsthematerialsinaplantorMRPareawiththeirrespective stock level, no. of days’ supplywithoutreceipts, �irst receipt days’ supply and secondreceiptdays’supply.

The transaction MD61 allows the user to createplannedindependentrequirementsforamaterialorproductgroup.TheinitialscreenrequiresaproductgrouporamaterialtobeenteredalongwiththeMRParea,plantareaandtheplanninghorizon.Thenextscreenletstheuserenterindependentrequirementvalues into the planning table for the periodsspeci�ied. After the values have been entered, therequirementscanbesaved.

Colonyetc.,subjecttoprovisionsintherevenuebudget.

x. ToolPlanningDepartmentfortools,jigs&Fixturesbasedonbudgetprovision.

c. ThePRsshallbeauthorisedbyappropriateAuthorityandPRshallbereleasedusingERP

T-Code“ME54N–ReleasePR”dulyapprovedbycompetentAuthority.

d. PRs for express/emergent purchases shall be accompanied by approval of the

competentAuthorityasperDelegationofPowers.

e. While obtaining the sanction for procurement as above, it shall be ensured that

requirementsarenotsplitupsoas tobringthemeitherunderthepowersof lower

Authorityorwithinthelimitprescribedfromthepointofapprovalandreleasewithout

�inancialconcurrence.

f. PRs for proprietary items will specify the source of supply duly supported by a

proprietarycerti�icate(Annexure­F)issuedbyanOf�iceroflevelGradeVIIIoftheuser

department.

4.10 ERPT­CODESRELEVANTUNDERTHISCHAPTER

FollowingaretherelevantT-CodesessentialatthetimeofraisingMaterialPurchaseRequest:

T–Code Particulars FunctionsofT­Code

ME53N

MEMASSRQ

ME5F

ME54N

PurchaseRequisitionDisplay

MassMaintenanceofPurchaseRequisition

PurchaseRequisitionReleaseReminder

ReleasePurchaseRequisition

ME51N PurchaseRequisitionCreation

UsethisT-Codeforcreatingandchangingpurchaserequisitionformaterial.Allchangestotheitemsarelogged and stored. Information stored includeswhenthe informationwaschanged,whochanged,whatchangesweremadeetc.

ME52N ChangePurchaseRequisition

Any user can view already created purchaserequisition by giving the PR number and plantlocationdetails.

ThisT-CodeishelpfulindeletionofanumberofJunkPRsallatonce.

ThetransactionME5FandME5Aisusedtodisplaypurchaserequisitionsthataresubject toareleasestrategy and have yet to be released. The initialscreenofferstheusera listofselectioncriteriatorestrict the output. The selection criteria includematerial,purchasinggroup,plant,deliverydatesorcost centre. The output shows the purchaserequisitionstobereleasedandtheusercanchooserequisitionstorelease.

The transaction code allows the user to releasesingle/bulkpurchaserequisitionsthatissubjecttoa release strategy. This transaction is used byapprovers to release purchase requisitions. Thepurchase requisition is then released for placingRFQonvendorsortothenextlevelofapprovalinthereleasestrategy.

ME55

ME5A

CollectiveReleaseofPurchaseRequisitions

DisplayslistofPurchaseRequisition

MD01 MaterialRequirementPlanning(MRP)Run–Plantasawhole

ThetransactionMD01isusedtogenerateanMRPrun.Ontheinitialscreen.Theusercanenterascopeofplanningvalue,aplantnumber,processingkey,creation indicator for purchase requisitions,automaticschedulinglineindicator,planningmodevalue and planning date. The resulting displayshows details on the planning run, such as thenumberofmaterialsplannedandthenumberofanyerrorsgenerated.

MD02 MaterialRequirementPlanning(MRP)Run–forindividualmaterial

The transactionMD02 isused toperformasingleitem,multi-levelMRPrun.Ontheinitialscreen,theusercanenteramaterial.MRParea,aplantnumber,processing key, creation indicator for purchaserequisitions, automatic scheduling line indicator,planning mode value, and planning date. Theresultingdisplayshowsdetailsontheplanningrunsuch as the number ofmaterials planned and thenumberoferrorsgenerated.

PURCHASE MANUAL PURCHASE MANUAL26 27

CHAPTER–5TENDERSYSTEMINGENERAL

5.1 INTRODUCTION

Differenttypesoftendersareinvogueviz.,PublicTender,GlobalTender,LimitedTender,

SingleTender,andProprietaryTender,asde�inedinPara2.3ofChapter2.

TheawardofContractthroughPublictenderis:

• Toensuretransparencyinpublicprocurement;

• Tomaximizeeconomyandef�iciencyinpublicprocurement;

• TopromotehealthycompetitionamongBidders;

• ToprovideforfairandequaltreatmenttoalltheBidders;and

• To eliminate irregularities, interference and corrupt practices by authorities

concerned.

TheCVCvideitsvariousordersandcircularshasemphasizeduponpublictenderingas

themostpreferredmodeoftenderingandinsistedontransparency.

5.2 EXCEPTIONAL CASE FOR NOT FOLLOWING THE PUBLIC TENDER SYSTEM FOR

PROCUREMENTOFITEMS

TherequirementsofPublictendersystemdonotapplyinthefollowingcases:

a. BEMLhascollaborationorpriceagreementwiththevendor;

b. Projectitemshavinglimiteddevelopedsources.

c. PurchaseofmaterialsatControlledRates(i.e.ControlledCommodities)orspeci�icrates

approvedbyGovernmentorBoard;

d. Nonprojectitems,whichareavailableatmoreorlessatstandardpricesfromfairprice

shops,Government,Semi-Government,Co-operativesocieties,etc.

e. Khadi Village Industries Commission(KVIC), Handloom Units of Association of

CooperationandApexSocietyofHandloom(ACASH)

f. Purchase Orders on �irms such as SAIL, Stores Purchase Department (SPD) of

GovernmentofKarnataka,MedicalStoresOrganisationunderGovernmentofIndia

(MSO) rate contract, and subsidiary of BEML like VIL, Karnataka State Cooperative

Consumers Federation Ltd (KSCCF), Karnataka Milk Federation (KMF) and its

Subsidiaries,HorticultureProducersCo-operativeMarketing andProcessing society

(HOPCOMS),BEMLEmployeesCo-operativeSocietyfornonprojectitemsandanyother

Government/QuasiGovernmentAgenciesetc.,willcomeundertheabovecategories.

i. ThesecasesdonotrequiretobereferredtoMPCanditwillsuf�iceifthedelegation

ofpowers(DoP)foracceptanceofsingletenderisfollowed.

ii. PlacementofPurchaseOrdersagainstlongtermcontractsfortheabove�irmsdo

not require public tendering action, but require the approval of competent

AuthorityasperDoP.

5.3 TENDERINGPROCESS

a. InaLimitedTender,tendernoticesaresenttothesuppliers/contractorsasenumerated

inPara2.3(c)ofChapter2.InaLimitedTenderthetenderdocumentsaresentalong

withthetendernoticesfreeofcost.ImportanttermsandconditionsofTenderaregiven

inAnnexure“D”.Overandabovetheseconditions,ifanyadditionalconditionsaretobe

includedbasedontheneedandrequirementsofaparticularsituation,thesamemaybe

included.

b.In a public tender, tender notices are published as enumerated in Para 2.3 ( a ) of

Chapter2.EffortsshallbemadetopublishinBEMLwebsiteinHindiandlocallanguage

also.Thetenderdocumentscouldbedownloaded.

c. In thecaseofcapital itemsandawardingof technicalcontracts, for thevalueabove

Rs.5Lakhs,tendersshallinvariablycalledintwopartsi.e.,

• Part1–Technicaloffer;and

• Part2–Commercialoffer;---(InlinewithGFR163&164)

Theoffersmustbeintwoseparatecoversdulysealedandputinanoutercoverduly

indicatingthetenderno.,date,dateofopeningetcincaseofmanualtender.

d. WhereveragroupofitemsformsaKit,itmaybepreferabletoprocureasaKittoensure

betterperformanceand�ixwarrantyresponsibility.Insuchcasesallkititemscanbe

coveredunderonesinglePRandPlanningDepartmentinliaisonwithrepresentativesof

respectivepurchasingsectionsshallpreparethePR.Itshallbementionedinthetender

enquirythatcompetitivenessoftheofferswillbeevaluatedbasedontheofferfortotal

kit.Pricesforindividualkititemscanalsobeobtainedtofacilitatenegotiations.

e. AsregardstoGlobaltender,singletender&proprietarytender,procedureindicatedat

clauseNo.2.3(b),(d)&(e)ofChapter2tobefollowed.

5.4 TENDERFEE:

Inordertopromotewiderparticipationandeaseofbidding,nocostoftenderdocument

maybechargedforthetenderdocumentsdownloadedbythebidders.(GFR161IV)

5.5 BIDSECURITY/EARNESTMONEYDEPOSIT(EMD)/BIDGUARANTEE

a. BidSecurity

Tosafeguardagainstabidder’swithdrawingoralteringitsbidduringthebidvalidity

periodinthecaseofadvertisedorlimitedtenderenquirypertainingtoNon-project

materialandcontracts,BidSecurity(alsoknownasEarnestMoney)istobeobtained

from the bidders except Micro and Small Enterprises (MSEs) as de�ined in MSE

Procurement Policy issuedbyDepartment ofMicro, Small andMediumEnterprises

(MSME)or are registeredwith theCentralPurchaseOrganizationor the concerned

MinistryorDepartment.Thebiddersshallbeaskedtofurnishbidsecurityalongwith

theirbids.Amountofbidsecurityshallordinarilyrangebetweentwopercentto�ive

percentoftheestimatedvalueofthegoodstobeprocured.Theamountofbidsecurity

shall be determined accordingly by the Purchase department and indicated in the

biddingdocuments.Thebidsecuritymaybeaccepted in the formofAccountPayee

PURCHASE MANUAL PURCHASE MANUAL28 29

DemandDraft,Banker’sChequeorBankGuaranteefromanyofthecommercialbanksor

payment online in an acceptable form, safeguarding the purchaser’s interest in all

respects.Thebidsecurity isnormally toremainvalid foraperiodof forty-�ivedays

beyondthe�inalbidvalidityperiod.

b. EarnestMoneyDeposit(EMD)

WhereverEarnestMoneyDeposit(EMD)isstipulatedintheBidInvitation(BI),bidder

hastonecessarilymakethePaymentbyDD/bankerchequefromanycommercialbank

`digitally/BidGuaranteebeforetenderduedateandtime.Ifnot,exemptioncerti�icate

hastobesubmittedbythebidderbeforetenderduedateandtime.The�irmswhohave

remittedbidsecuritydigitallyshallindicatetheremittancedetailsalongwiththepre

quali�icationdocument.

c. Nointerestwillbeallowedonearnestmoneydeposit.

d.Refundofbidsecurity/EMD:

Bidsecuritiesoftheunsuccessfulbiddersshallbereturnedtothemattheearliestafter

expiryofthe�inalbidvalidityandlatestonorbeforethe30thdayaftertheawardofthe

contract.

e. Bidsecurityofsuccessfulbidderwillbeconvertedaspartofsecuritydepositsandthe

balance amount of security deposits will be met by the bidder as per the

contract/agreementconditions.

5.6 TRANSPARENCYINTENDERINGSYSTEM

Therehavebeeninstanceswheretheequipment/planttobeprocuredisofcomplex

natureandtheprocuringorganizationmaynotpossessthefullknowledgeofthevarious

technicalsolutionsavailableinthemarkettomeetthedesiredobjectivesofatransparent

procurementthatensuresvalueformoneyspentsimultaneouslyensuringupgradationof

technology&capacitybuilding.

AsperCVCguidelinesinsuchprocurementcaseswheretechnicalspeci�icationsneedto

beiteratedmorethanonce,itwouldbeprudenttoinviteexpressionofinterestandproceed

to �inalize speci�ications based on technical discussions/presentations with the

experiencedmanufacturers/suppliersinatransparentmanner.Insuchcases,twostage

tenderingprocessmaybeuseful andbepreferred.During the �irst stageof tendering,

acceptabletechnicalsolutionscanbeevaluatedaftercallingfortheExpressionofInterest

(EOI)fromtheleadingexperiencedandknowledgeablemanufacturers/suppliersinthe

�ield of the proposed procurement. The broad objectives, constraints etc. could be

published while calling for EOI. On receipt of the Expressions of Interest, technical

discussions/presentationsmay be heldwith the short-listedmanufacturers/suppliers,

who are prima facie considered technically and �inancially capable of supplying the

materialorexecuting theproposedwork.During these technicaldiscussionsstage the

procurementagencymayalsoaddthoseotherstakeholdersinthediscussionswhocould

addvaluetothedecisionmakingonthevarioustechnicalaspectsandevaluationcriteria.

Based on the discussions/presentations so held, one or more acceptable technical

solutionscouldbedecidedupon layingdowndetailed technicalspeci�ications foreach

acceptable technical solution, quality bench marks, warranty requirements, delivery

milestones etc., in a manner that is consistent with the objectives of the transparent

procurement.Atthesametimecareshallbetakentomakethespeci�icationsgenericin

naturesoastoprovideequitableopportunitiestotheprospectivebidders.Properrecordof

discussions/presentationsandtheprocessofdecisionmakingshallbekept.

Oncethetechnicalspeci�icationsandevaluationcriteriaare�inalized,thesecondstage

oftenderingcouldconsistofcallingfortechnocommercialbidsaspertheusualtendering

systemundersinglebidortwobidsystems,aspertherequirementofeachcase.Final

selectionsatthisstagewoulddependuponthequoted�inancialbidsandtheevaluation

matrixdecidedupon.

5.7 TRANSPARENCY,COMPETITION,FAIRNESSANDELIMINATIONOFARBITRARINESS

INTHEPROCUREMENTPROCESS.

AllPurchasesshallbemadeinatransparent,competitiveandfairmanner,tosecurebest

valueformoney.Thiswillalsoenabletheprospectivebidderstoformulateandsendtheir

competitivebidswithcon�idence.Someof themeasures forensuring theaboveareas

follows:-

a. Thetextofthebiddingdocumentshallbeself-containedandcomprehensivewithout

anyambiguities.Allessentialinformation,whichabidderneedsforsendingresponsive

bid,shallbeclearlyspeltoutinthebiddingdocumentinsimplelanguage.Thecondition

of prior turnover andprior experiencemaybe relaxed for Start-ups (as de�inedby

Department of Industrial Policy and Promotion) subject to meeting of quality &

technicalspeci�icationsandmakingsuitableprovisionsinthebiddingdocument.The

biddingdocumentshallcontain,interalia;

i. DescriptionandSpeci�icationsofgoodsincludingthenature,quantity,timeand

placeorplacesofdelivery;

ii. the criteria for eligibility and quali�ications to bemet by the bidders such as

minimum level of experience, past performance, technical capability,

manufacturingfacilitiesand�inancialpositionetcorlimitationforparticipationof

thebidders,ifany;

iii. Eligibilitycriteriaforgoodsindicatinganylegalrestrictionsorconditionsabout

theoriginofgoodsetcwhichmayrequiredtobemetbythesuccessfulbidder;

iv. Theprocedureaswellasdate,timeandplaceforsendingthebids.

v. Date,timeandplaceofopeningofthebid.

vi. Criteriaforevaluationofbids.

vii. Specialtermsaffectingperformance,ifany.

viii. Essentialtermsoftheprocurementcontract.

ix. Bidding Documents shall include a clause that “if a �irm quotes NIL charges/

consideration,thebidshallbetreatedasunresponsiveandwillnotbeconsidered”.

x. Anyother informationwhich theprocuring entity considersnecessary for the

bidderstosubmittheirbids.

b.Modi�icationtobiddingdocument:

I Incaseanymodi�icationismadetothebiddingdocumentoranyclari�icationis

issuedwhichmateriallyaffectsthetermscontainedinthebiddingdocument,the

PURCHASE MANUAL PURCHASE MANUAL30 31

procuringentityshallpublishorcommunicatesuchmodi�icationorclari�icationin

the same manner as the publication or communication of the initial bidding

documentwasmade.

ii. In case a clari�ication or modi�ication is issued to the bidding document, the

procuringentityshall,beforethelastdateforsubmissionofbids,extendsuchtime

limit,if,initsopinionmoretimeisrequiredbybidderstotakeintoaccountthe

clari�icationormodi�ication,asthecasemaybe,whilesubmittingtheirbids.

iii. Anybidderwhohassubmittedhisbidinresponsetotheoriginalinvitationshall

havetheopportunitytomodifyorre-submitit,asthecasemaybe,orwithdraw

such bid in case the modi�ication to bidding document materially affect the

essential termsof theprocurement,within theperiod initiallyallottedorsuch

extendedtimeasmaybeallowedforsubmissionofbids,afterthemodi�ications

aremadetothebiddingdocumentbytheprocuringentity.

Providedthatthebidlastsubmittedorthebidasmodi�iedbythebiddershallbe

consideredforevaluation

c. Suitableprovisionshallbekeptinthebiddingdocumenttoenableabiddertoquestion

thebiddingconditions,biddingprocessand/orrejectionof itsbid.Thereasons for

rejectingatenderornon-issuingatenderdocumenttoaprospectivebiddermustbe

disclosedwhereenquiriesaremadebythebidder.

d. Suitable provision for settlement of disputes, if any, emanating from the resultant

contract,shallbekeptinthebiddingdocument.

e. The bidding document shall indicate clearly that the resultant contract will be

interpretedunderIndianLaws.

f. Thebiddersshallbegivenreasonabletimetoprepareandsendtheirbids.

g. Thebidsshallbeopenedinpublicandauthorizedrepresentativesofthebiddersshallbe

permittedtoattendthebidopening.

h. Thespeci�icationsoftherequiredgoodsshallbeclearlystatedwithoutanyambiguityso

that theprospectivebidderscansendmeaningfulbids. Inorder toattract suf�icient

numberofbidders,thespeci�icationshallbebroadbasedtotheextentfeasible

i. Pre-bidconference:Incaseofturn-keycontract(s)orcontract(s)ofspecialnaturefor

procurementofsophisticatedandcostlyequipmentorwhereverfeltnecessary,a

suitableprovisionistobekeptinthebiddingdocumentsforoneormoreroundsof

pre- bid conference for clarifying issues and clearing doubts, if any, about the

speci�ications and other allied technical details of the plant, equipment and

machineryetc.projectedinthebiddingdocument.Thedate,timeandplaceofpre-

bid conference shall be indicated in the bidding document. This date shall be

suf�icientlyaheadofbidopeningdate.Therecordsofsuchconferenceshallbe

intimated to all bidders and where applicable, shall also be exhibited on the

website(s)wheretenderwaspublished.

ii. Criteriafordeterminingresponsivenessaretobetakenintoaccountforevaluating

thebidssuchas:

• Timeofdelivery;

• Performance/ef�iciency/environmentalcharacteristics;

• The terms of payment and of guarantees in respect of the subject matter of

procurement

• Price;

• Costofoperating,maintainingandrepairingetc

iii. Bidsreceivedshallbeevaluatedintermsoftheconditionsalreadyincorporatedin

the bidding documents; no new conditionwhichwas not incorporated in the

biddingdocumentsshallbebroughtinforevaluationofthebids.

Determinationofabid’sresponsivenessshallbebasedonthecontentsofthebid

itselfwithoutrecoursetoextrinsicevidence.

iv. Biddersshallnotbepermitted toalterormodify theirbidsafterexpiryof the

deadlineforreceiptofbids.

v. Negotiation with bidders after bid opening must be severely discouraged.

However, in exceptional circumstanceswhere price negotiation against adhoc

procurementisnecessaryduetosomeunavoidablecircumstances,thesamemay

beresortedtoonlywiththelowestevaluatedresponsivebidder.

vi. Contractshallordinarilybeawardedtothelowestevaluatedbidderwhosebidhas

been found to be responsive andwho is eligible and quali�ied to perform the

contract satisfactorily as per the terms and conditions incorporated in the

correspondingbiddingdocument.However,wherethelowestacceptablebidder

againstad-hocrequirementisnotinapositiontosupplythefullquantityrequired,

the remaining quantity, as far as possible, be ordered from the next higher

responsivebidderattheratesofferedbythelowestresponsivebidder.

vii. ProcurementofEnergyEf�icientelectricalAppliances:whileprocuringelectrical

appliancesitistobeensuredthattheycarrythenoti�iedthresholdorhigherStar

RatingofBureauofEnergyEf�iciency(BEE).

5.8 BUYBACKOffER

WhenitisdecidedwiththeapprovalofthecompetentAuthoritytoreplaceanexisting

olditem(s)withanewandbetterversion,thepurchasedepartmentmaytradetheexisting

old item while purchasing the new one. For this purpose, a suitable clause is to be

incorporated in the bidding document so that the prospective and interested bidders

formulatetheirbidsaccordingly.Dependingonthevalueandconditionoftheolditemtobe

traded,thetimeaswellasthemodeofhandingovertheolditemtothesuccessfulbidder

shallbedecidedandrelevantdetailsinthisregardsuitablyincorporatedinthebidding

document.Further,suitableprovisionshallalsobekeptinthebiddingdocumenttoenable

thepurchasereithertotradeornottotradetheitemwhilepurchasingthenewone.- - - - A s

perGFR176

5.9 CONSULTINGSERVICE

“ConsultingService”meansanysubjectmatterofprocurement(whichasdistinguished

from ‘Non- Consultancy Services’ involves primarily non-physical project-speci�ic,

PURCHASE MANUAL PURCHASE MANUAL32 33

b. Incaseofe-modetender,numberofdaysmaybereducedby4days.Howeverincaseof

deviation,approvalfromCompetentAuthoritytobeobtained

c. Thetenderopeningdate&timeshallbespeci�iedintheNoticeInvitingTender(NIT)

alongwiththelastdateandtimeforreceivingthetender.Incaseifthespeci�iedtender

closingdateisaholiday,thetenderclosingdateshallbethenextworkingdayfollowing

thespeci�iedtenderclosingdate.

d. IncaseofmultiplelineitemsforevaluationofL1biddertobemadeonoverallL1basisor

lineitemwisedependingontherequirementandsametobespeci�icallymentionedin

the(NIT)terms.

e. ExtensionofTenderClosingtimeshallbeonlyunderexceptionalcircumstanceswiththe

approvalofDivisionalHeadandreasonstoberecorded.

f. Tendersshallbeopenedonthesamedayofclosingofthetender.

g. ThedetailedprocessofopeningthetenderdocumentisdiscussedinChapter6ofthis

manual.

h. TheouterlimitforconvertingPRsintoPurchaseOrdersshallgenerallybekeptwithin60

daysand45days forpublic tenderand limited tenderrespectively fromthedateof

approval of PR. If delay in placement of order is inevitable due to compliancewith

proceduralformalities,thevalidityofthequotationshallbegotextendedwellintime.

Timetakenfortenderactionshallnotexceed10daysfromthedateofapprovalofPRs.In

case of shorter notice in the tender thanwhat is prescribed, approval Chief of the

Divisionneedstobetakenwithnecessaryjusti�ication.

i. Inordertospeeduptheprocurementprocess,followingtimeboundguidelinesaretobe

strictlycompliedwith:

i. Techno-commercialdiscussion,ifrequired,shallbeheldwithin2weeksfromthe

date of tender opening. The techno-commercial discussion can also be held

throughe-mail,faxorteleconferenceandtherevisedoffertobeobtainedthrough

receiptofemail/faxandtobedocumentedproperly.Therevisedpriceandthe

termscanalsobereceivedthroughe-mail/faxandtechno-commercialdiscussion

is to be held strictly as per procedurediscussed in themanual under chapter

Commercial discussion. E-mode can be resorted to for negotiation as far as

possibleinsteadofcallingpartiestoBEMLpremises.

intellectualandproceduralprocesseswhereoutcomes/deliverableswouldvaryfromone

consultanttoanother),otherthangoodsorworks,exceptthoseincidentalorconsequential

totheservice,andincludesprofessional,intellectual,trainingandadvisoryservicesorany

otherserviceclassi�iedordeclaredassuchbyaprocuringentitybutdoesnotincludedirect

engagementofaretiredGovernmentservant.

Note:TheseServices typically involveprovidingexpertorstrategicadvicee.g.,management

consultants, policy consultants, communications consultants, Advisory and project related

Consulting Services which include, feasibility studies, project management, engineering

services,�inance,accountingandtaxationservices,traininganddevelopmentetc.

--AsperGFR177

5.10NONCONSULTINGSERVICE

“Non-Consulting Service” means any subject matter of procurement (which as

distinguished from ‘Consultancy Services’), involve physical, measurable deliverables/

outcomes,whereperformancestandardscanbeclearlyidenti�iedandconsistentlyapplied,

otherthangoodsorworks,exceptthoseincidentalorconsequentialtotheservice,and

includesmaintenance, hiringof vehicle, outsourcing of building facilitiesmanagement,

security,photocopierservice,janitor,of�iceerrandservices,drilling,aerialphotography,

satelliteimagery,mappingetc.

–AsperGFR197

5.11 ISSUEOFTENDER:

a. IncaseofmanualtenderBEMLmayfaxore-mailthetenderenquirybutBiddersshallbe

askedtosendquotationsinsealedcover.

b. Biddersshallbeaskedtosendthequotationsinthesealedcovers.Inthisconnection,we

mustprevailuponallthesupplierstohaveEmailandFaxtofacilitateeasyandquick

communicationandweshalltryandrefrainfromdealingwiththosenotevenhaving

emailandfaxasarulethanexception.

c. Incaseofurgency,quotationsmayalsobeobtainedthroughetenderboxand�irmstobe

advisedsuitablytosubmitquotethroughelectronicmedia.

d. Alltenderenquiriesshallcontainaclauseonthefollowing:

i. PriceNegotiation:

There will be no price negotiations if the competition is adequate, offers are

technicallyacceptableandpricesareconsideredreasonable.

ii. Unsolicitedletters/canvassing/posttendercorrections:

Canvassing by Bidders in any form including unsolicited letters on tenders

submittedorposttendercorrectionsshallrendertheirtendersliableforsummary

rejection.

iii. PrecedenceClause:

Inthetenderdocument/quotationthe�igureswritteninwordswillbeultimately

considered for commercial evaluation ignoring numerical �igures in case of

discrepancynoticedbetweenthenumerical�iguresofpriceandpricewrittenin

words.

5.12 TIMESCHEDULE

a. Thefollowingtimeschedulefortendersubmissionshallbeadheredto:

TypeofTender

PublicTender

GlobalTender

LimitedTender

Proprietary/SingleTender

Minimumnumberofdays

ProjectItems Non-ProjectItems Capital/ServiceContracts

21

28

15

10

21

18

15

15

28

45

21

21

PURCHASE MANUAL PURCHASE MANUAL34 35

ii. PurchaseOrdersshallspeci�icallymentionthedeliveryscheduleinconsultation

withthevendor/supplierandthefailuretoadheretosupplyasperschedulewill

attract LD. Any delivery schedule issued shall be as per quotation or as per

mutuallyagreedterms.AmendmentofdeliveryscheduleandwaiverofLD(ifany)

shallbeasperDoP.

iii. PurchaseOrders tobe releasedwithin10 to14days from thedateof techno-

commercialdiscussions.Techno-commercialdiscussionsshallbedonebyateam

ofatleastthreeexecutivescomprisingofuserdepartment,�inanceandPurchase

Departmentandtheleveloftheof�icersinvolvedwillbedeterminedonthebasisof

DoPinvogue.Thedecisionson�ileorminutesofmeetingonpurchasedecisionare

done immediately on the samedayor on the followingday and �ile put up to

approvingAuthoritywithoutfailtohastenupthepurchaseprocess.

j. Anydelayresultinginderailmentoftheaboveprocedurewillresultinshortsupplyof

materialsandslippageinproductionplanandthereforetherevisedpurchaseprocedure

beadoptedinletterandspirit.Guidelinesmayberudimentarilyfollowedforimportof

materialsalso,whereverpossible.Foranydelayornon-adoptionofabovetimeframe,

theconcernedcaseworker/of�icer/managerneedtoexplainonthe�ileastowhythe

timeframecouldnotbefollowedandwhenever,thecaseworker/of�iceronleave,the

�ileconcernedbeleftwithnextsuperiortocompletetheprocessasperthestipulated

timeframes.Itmustbeunderstoodthatnootherthantenderingcompanyemployee/

ownercanbeallowedtoparticipateintenderprocess,infollowup,collectionoforders,

paymentetc.,underanycircumstancesandSecurityDepartmentshallstrictlyfollow

this.Further,noemployeeorex-employeeshalldealwithanypurchaseissuesonabove

onbehalfofany�irm/company.

5.13RESERVEDITEMSANDOTHERPURCHASE/PRICEPREFERENCEPOLICY

a)TheCentralGovernment,throughadministrativeinstructions,hasreservedallitemsof

handspunandhand-woventextiles(khadigoods)forexclusivepurchasefromKhadi

VillageIndustriesCommission(KVIC).Ithasalsoreservedallitemsofhandloomtextiles

requiredaretobepurchasedexclusivelyfromKVICand/orthenoti�iedhandloomunits

ofACASH(AssociationofCorporationsandApexSocietiesofHandlooms).

b)MinistryofMicro,SmallandMediumEnterprises(MSME)havenoti�iedprocurement

policyundersection11oftheMicro,SmallandMediumEnterprisesDevelopmentAct,

2006.Orasapplicablefromtimetotimewhilemakingprocurements.

c) PolicyforprovidingPreferencetoDomesticallyManufacturedElectronicandTelecom

ProductsinGovernmentprocurementissuedbyMinistryofElectronics&Information

Technologyistobefollowedtotheextentpossible.

d)Tomaketheirpurchasesforsuchreservedgoodsanditemsfromsuchunitsasperthe

instructionsissuedbytheCentralGovernmentinthisregard,issuedfromtimetotime.

5.14PROCUREMENTFROMMSEs

Government has noti�ied a new Public Procurement Policy for Micro and Small

Enterprises(MSEs)whichiseffectivefrom1stApril,2012.ThePolicymandatesthat20%

ofprocurementofannualrequirementofgoodsandserviceswillbesourcedfromthemicro

andsmallenterprises.Governmenthasalsoearmarkedasubtargetof4%procurementof

goods&services,outofthe20%,fromMSEsownedbySC/STEntrepreneurs.Itisexpected

that the policy will help to promote MSEs by improving their market access and

competitivenessthroughincreasedparticipationbyMSEsinGovernmentpurchasesand

encouraginglinkagesbetweenMSEsandlargeenterprises.

InlinewithGovernmentPolicy,thefollowingguidelinesshallbestrictlyadheredto:

a. Every purchasing organization (Division/Department/Unit/SBU/Central Services

Group etc.) shall set an annual goal for procurement from the MSE sector at the

beginningoftheyear,withtheobjectiveofachievinganoverallprocurementgoalof

minimum20percentofthetotalannualpurchasesoftheproductsorservicesproduced

orrenderedbyMSEs.

b. Outof20%targetofannualprocurementfromMSEs,asub-targetof4%(i.e.20%outof

20%)willbeearmarkedforprocurementfromMSEsownedbySC/STEntrepreneurs.

However,intheeventoffailureofsuchMSEstoparticipateinthetenderprocessormeet

the tender requirements and the L1 price, the 4% sub-target for procurement

earmarkedforMSE’sownedbySC/STentrepreneurwillbemetfromotherMSEs.

c. TheparticipatingMSEsinatender,quotingpricewithinthebandofL1+15%mayalsobe

allowedtosupplyaportionoftherequirementbybringingdowntheirpricetotheL1

price,inasituationwhereL1priceisfromsomeoneotherthananMSE.SuchMSEsmay

beallowedtosupplyupto20%ofthetotaltenderedvalue.Incaseofmorethanonesuch

eligibleMSE,thesupplywillbesharedequally.

Prior experience and �inancial status is relaxable forMSE vendors provided �irm is

meetingthetechnicalandqualityrequirements.

d)Listof358itemstobeprocuredfromMSE’sisfurnishedinAnnexureM.

5.15SECURITYDEPOSIT/PERFORMANCEBANKGUARANTEE

a. 10%ofPOvaluehas tobedepositedas interest freesecuritydeposit/Performance

Guaranteeatthetimeofacceptanceofofferinrespectofallservicecontractsandmajor

capitalgoodslikeplantandmachinery,etc

b. Bankguaranteeforfaithfulperformance(FPBG),CombinedBankGuaranteeforcontract

performancecoveringdeliveryobligationandwarranty(CBG)clausefor10%ofthe

totalordervalueshallbeapplicablewheretheordervalueexceedsRs.5.00lakh.Bank

guarantee for faithful performance, combined bank guarantee covering contract

performance and warranty, Advance Payment guarantee etc., shall be indicated

whereverapplicable.

c.Aperiodof60daystimefromthedateofPurchaseOrderorthedelivery schedule,

whichever is earlier shall be stipulated for submission of Bank Guarantee so that

contractualremediescouldbeenforced,ifrequired.

d.AbankguaranteeforanominalamountofRs.5000/-mustbeobtainedfromeachSub-

contractorvalidforayear,onyearlybasis

ME9A

ZMTES

ME47

ME48

ZMCMP/ME49

PrintRFQ.

MaintainingTenderSummary

MaintainQuotations–i.e.KeyinginERP,theQuotationresponsereceivedfromBidders.

Displayindividualquotations

CompareQuotationsreceivedfromBidders.

TheRFQ(s)canbesentelectronically(e-mail)usingEDIfeatureofERPsystem.The ERP system also has feature of sending“Rejections” to the Bidders. This can be doneautomatically or by prede�ining the “RejectionReasonCodes”inERP.

This report will display the Tender CollectiveNumber, purchasing organisation, material code,quantityrequired,nameofvendorstowhomtenderinquiriesweresentandapprox.Valueofthetenderbased on last purchase price or current marketprice.

ThetransactioncodeisusedtoenterthequotationreceivedfromavendortowhomRFQ(s)weresent.Thisstepisverycrucialasallmanagementdecisionsarebasedontheinformationtabulatedinthetenderevaluation sheet based on response for RFQrecordedinERP.

Thetransactioncodeisusedtodisplaythedetailsfrom a vendor’s quotation. The initial screenrequiresasinglerequestforquotationnumbertobeentered. The transaction shows the informationfrom the vendor’s quotation such as thematerial,quantity,deliverydateandnetprice.

TheERPsystemiscapableofsimulatingthepricingscenariosallowingtocompareanumberofdifferentquotations.

T–Code Particulars FunctionsofT­Code

ME42

ME45

ChangeRFQ

ReleaseRFQ

Thetransactioncodeisusedtochangearequestforquotation.The initialscreenrequiresthatasinglenumberbeentered.ThedetailoftheRFQsuchasthequantity and delivery date can be changed. Otherdetailsthatcanbemaintainedincludethetrackingnumberandtheremindervalues.

The transaction code allows the user to releaserequestforquotationsthataresubjecttoareleasestrategy. This transaction is used by approvers toreleaseRFQ(s)thattheyarecompetenttoapprove.TheRFQ(s)arethenreleasedtothevendorortothenextlevelofapprovalinthereleasestrategy.

PURCHASE MANUAL PURCHASE MANUAL36 37

5.16PERFORMANCESECURITY

a. Toensuredueperformanceofthecontract,PerformanceSecurityistobeobtainedfrom

thesuccessfulbidderawardedthecontract.UnlikecontractsofWorksandPlants,incase

ofcontractsforgoods,theneedforthePerformanceSecuritydependsonthemarket

conditions and commercial practice for the particular kind of goods. Performance

Securityshouldbeforanamountof�ivetotenpercentofthevalueofthecontractas

speci�iedinthebiddocuments.PerformanceSecuritymaybefurnishedintheformofan

AccountPayeeDemandDraft,FixedDepositReceipt fromaCommercialbank,Bank

Guarantee from a Commercial bank or online payment in an Acceptable form

safeguardingthepurchaser’sinterestinallrespects.

b. BidSecurity shouldbe refunded to thesuccessfulbidderonreceiptofperformance

security.

c. PerformanceSecurityshouldremainvalidforaperiodofsixtydaysbeyondthedateof

completionofallcontractualobligationsofthesupplierincludingwarrantyobligations.

(AsperGFR171)

5.17ERPT­CODESRELEVANTUNDERTHISCHAPTER

ThefollowingaretheERPT-Codesessentialforprocessnarratedinthischapter:

T–Code Particulars FunctionsofT­Code

ME41 CreationofRequestforQuotation(RFQ)

Thetransactioncodeisusedtocreatearequestforquotation.Theinitialscreenrequiresthattheuserenter a date by which vendors must return aquotation, a purchasing organization andpurchasing group. A collective number can beenteredintheheadersoRFQSandotherpurchasingdocuments can be grouped together. They shallincludethematerialandquantityrequired,aswellasthedatetheitemsshallbedelivered.

PURCHASE MANUAL PURCHASE MANUAL38 39

CHAPTER–6SELECTIONOFOFFERSAND

ACCEPTANCEOFMANUALTENDERS

Manualtenderingistoberesortedundertheexceptionalcasesonlyandpriorapproval

oftheDivisionChief/ComplexChieftobeobtainedbyjustifyingthereasons.

6.1 RECEIPTANDOPENINGOFTENDER:

a. ItistheresponsibilityofPurchaseDepartmenttoreceivethetendersandkeepthemin

safecustody.

b. Alockedtenderboxwillbekeptinaprominentplaceinthedivisionandlocationofthe

tenderboxneedstobespeci�ied intheNIT.Therepresentativesof theBidderswho

submit the tenders in person shall be asked to drop the tenders in the tender box.

Tendersreceivedbypost/courierwillbereceivedbyCentralRegistrySection(CRS)and

thesamewillbehandedovertotenderopeningsection.Themannerofreceivingand

openinge-tenderdocumentsisdiscussedseparatelyinE-Procurementchapterofthis

document.

c. Ifanytendersarereceivedwithoutreferencetothetendernumberanddateofopening

andarethereforeopenedinthenormalcourseintheof�iceandorreceivedinopen

condition,thesameshallbesummarilyrejectedandreturnedtothebidder.

d. Thetenderclosingdateandtimeshallbespeci�iedintheNITalongwiththelastdateand

timeforreceivingthetender.

e. Tendersshallbeopenedonthesamedayofclosingtimeofthetenderaftergivingagapof

aboutonehouronthespeci�ieddateandtime.

f. Public tenders, limited tenders and single tenders to be opened in the presence of

representativesoneeachfromPurchaseDepartmentandFinanceDepartment.

g. AllpublictendersforavalueexceedingRs.50Lakhsmaybeopenedinthepresenceof

Bidderswhomight choose tobepresentat the timeofopening the tendersandan

indicationtothateffectmadeinthenoticeinvitingsuchtendersindicatingthedateand

time.

h. At the time of opening the public tender, representative of vendor shall produce

authorizationletterfromthe�irmwhichisrequiredtobecheckedbyrepresentativeof

purchasedepartment.

i. All the quotations submitted by the vendor shall be preferably typed or computer

printed.Handwrittenquotationshallbegenerallyavoided.Ifanyquotationisreceivedin

handwrittenconditionsameshallbeacceptedonlyifitiswritteninink.

j. Incaseoftenders/enquirybye-mail/fax,thePurchaseDepartmentshallgivetimelimit

ofminimum24hoursasclosingtime.Thisshallberesortedonlyforproductionitems

andurgentrequirementsofnon-productionitems,byrecordingthereasons.

k. Latetendersortendersreceivedlatearenottobeconsideredandtheun-openedlate

offershavetobereturnedtothebidder.

6.2 PURCHASETENDERCOMMITTEE:

AspertherequirementsofCVCguidelines,astandingpurchasetenderCommitteeneeds

tobeconstitutedatDivisionsandmarketing,comprisingthemembersasfollowstooversee

thetenderproceduresincludingevaluation.

a. AtProductiondivisionlevelsuchaCommitteeheadedbyDivisionChief,shallconsistof:-

RepresentativefromPurchase,FinanceandPlanningDepartments.

b. Atmarketingdivision,suchaCommitteeheadedbyMarketingChiefshallconsist

ofrepresentativesfromPurchase,FinanceandPlanningDepartments.

6.3 POSTPONEMENTOFTENDERCLOSINGDATE:

a. Incaseofpublic/limitedtendersduedateforclosingthetendershallnotnormallybe

postponedexceptinexceptionallyexceptionalcasesthattoowiththeapprovalofHead

ofDivision/Complex.However,incaseitisdecidedtoextendtheprescribedtender

closingdayforvariousreasons,thepostponementshallbeintimatedwellinadvanceto

allBidders.

b. Incasetenderclosingdateispostponedduetoinadequateresponse,thesamecanbe

doneforamaximumof7daysunderintimationtoallBiddersincludingthosewhohave

quoted.

c. Further extension of tender closing date shall not be permitted, however under

exceptionalsituationspecialapprovalfromDivisional/ComplexHeadtobeobtainedfor

subsequentextension.

6.4 INOPENINGTENDERS,THEFOLLOWINGPROCEDUREMUSTBEFOLLOWED:

Tendersshallbeopenedpreferablyonthesamedayofclosingtimeaftergivingagapof

aboutonehourorso.Incaseofmanualtenderfollowingprocedureisfollowed

a. Eachpageoforiginalquotationshallbesignedonsealprescribedasbelow:

i. Sealshallhavedetailssuchasopenedon,serialno,numberofalterations/over

writings,spaceforsignaturesofpurchaseand�inancerepresentative.

b. Alterationsorcorrectionsfoundinthequotationshallbenumberedandinitialedby

membersofthetenderopeningCommittee.Blankspaceifanyonkeyareasofquotation

shallbecrossedandinitialedbythetenderopeningCommittee.

c. Eachquotationmustbenumberedas“Y/X”(thedenominatorwillbethetotalnumberof

quotationsreceivedandthenumeratorwillbetheserialnumberofthequotations,out

ofthetotalquotationsreceived).Forexample, ifthereare5quotations,eachwillbe

numberedas1/5,2/5,3/5,4/5,5/5.

d. Tendersshallbemarked‘Original’,‘Duplicate’,‘Triplicate’,etc.,

e. ThePostalenvelopes,Courierenvelopes&slipsshallbesignedandpreservedinthe

purchase�iles.

f. Thedetailsofthetendersreceivedshallberecordedintheproformaprescribedand

keptintherespective�iles.

g. SignatureoftherepresentativesofBidder’swhoarepresentatthetimeofopeningofthe

tendersshallbeobtained.

PURCHASE MANUAL PURCHASE MANUAL40 41

a. Under two Bid Tender Systemwhile evaluating the technical bids by the Technical

EvaluationCommitteeforproductionitemsconsistingof

i. RepresentativeofProductionplanning,HeadofQualitydepartment&Headofuser

department&shallbeheadedbyHeadofPlanningiftheapprovingAuthorityis

Board / Procurement sub-Committee/ CMD / Director. Approval of Head of

Divisionshallbetakenforopeningofpricebid.

ii. IncaseofApprovingAuthorityisHeadofDivisionandCommitteeheadedbyHead

of Production planning and the members from representatives of Production

planningdepartment,Qualitydepartmentanduserdepartment,tobenominated

byrespectiveHeadofDepartments.ApprovalofHeadofMaterialstobetakenfor

openingofpricebid.

iii. IncaseofCapitalitemsApprovingAuthorityisHeadofDivisionandCommittee

headedbyHeadof planning and themembers from representatives of facility

planningdepartment,Qualitydepartmentanduserdepartment,tobenominated

byrespectiveHeadofDepartments.ApprovalofHeadofMaterialstobetakenfor

openingofpricebid.

b. While evaluating technical bids before commercial bid opening if there are any

deviationsotherthanmandatoryrequirementswhicharenotsigni�icantinnatureand

same do not affect materialistically tendering process, in such cases clari�ication

/con�irmationmaybeobtainedbygivingequalopportunitytoallbidders.

c. The tenders which are not meeting technical speci�ication and where the tender

requirements formalities have not been complied with, the reasons for non-

consideration / rejection of bids shall be recorded and duly communicated to the

biddersconcerned.

d. Ifthetechnicalbidis�inallyrejectedduetononcomplianceoftenderrequirementas

recommendedandapproved,thepricebidwillbereturnedbacktothebidder.

e. Tendersareevaluatedwith reference toprice,delivery, termsofdespatch,payment

terms,validityoftheoffer,etc.,inrelationtotenderenquiryandrecordedintheERP

systemusingERPT-Code“ME47–MaintainingRFQ”fortendercomparativestatement

andanalysisofthequotationsonalike-to-likebasis.TheLastpurchasepriceisalso

recordedforassessingthereasonablenessofthelowesttechnicallyacceptableoffer.

f. UtmostcareshallbeexercisedwhilerecordingtheresponseforRFQinERPsystem.Any

deviations from the tendered speci�ications, delivery period or normal terms and

conditionsandanyspecialconditions,assistanceetc.,stipulatedbythe�irm,shallbe

highlighted.ItshallbetheresponsibilityoftheconcernedPurchaseOf�icertoensure

promptpreparationofpricestatementaswellas�inalizationofthetenderpapers.All

Managementdecisionsarebasedontheinformationtabulatedinthetenderevaluation

sheet.

g. Followingpoints shallbepaid special attentionwhile compiling informationon the

tenderevaluationsheetandsuitablyadd/loadthechargestowardsdifferentheadingsto

meettenderconditionssuchaspaymentterms,termsofdeliveryetc.

i. Theofferwasreceivedintimeandisnotanunsolicitedorquali�iedofferandthe

offer isaccompaniedbyEarnestMoneyDeposit, if required,asper theTender

conditions

ii. Basicpriceandthequantitiesforwhichitisvalid.Alsowhetherthepriceis�irm

and/oranyescalationformulaisoffered

iii. GSTandanyotherimports/taxesthatarepayable

iv. Terms of delivery i.e., ex-factory, BEML stores or FOR and other terms and

conditions.

v. Packingandforwardingcharges

vi. Firm’swillingnesstoacceptpenalties/compensationforlatedeliveryaswellas

h. WheretherepresentativesofBidder’sarepresentatthetimeofopeningtenders,the

followinginformationshallbereadout:

i. TenderNumberanddate

ii. NameofBidder

iii. Descriptionofmaterialsoffered

iv. Prices

v. TermsofDelivery

vi. Deliveryperiod

vii. Termsofpayment

6.5 TENDEREVALUATION:

TenderEvaluation

TechnicalEvaluation(Whereverrequired)

ByIndentor/PurchaseDeparment

CommercialEvaluation(aftertechnicalevaluation

-ifapplicable)

ByPurchase&FinanceDepartment

PURCHASE MANUAL PURCHASE MANUAL42 43

BEML’sStandardConditionsofcontract.Speci�icationsofferedarethesameas

demanded/alternativeofferedandbene�itsclaimedforit.Biddernotmeetingthe

laiddownspeci�icationsmaynotberanked inconsultationwith theTechnical

Department

vii. Thetermsofpaymentandrequestforadvancepayments/willingnesstooffer

bankguarantee

viii. Assurance/methodstoreplacedefectivesupplies

ix. After-sales-servicearrangementandcostofsuchservices,ifany

x. Samplesifrequiredaresubmittedwiththeofferoralternativelypartyagreesto

submitsamplesasrequiredintheenquiry

xi. Validityperiodisadequate

xii. Erection&CommissioningCharges

xiii. HandlingCharges

xiv. PerformanceBankGuarantee

h. Takingintoconsiderationtheabovefactors,anetpricecomparisonofthevalidtenders

onlyshallbepreparedandtenderevaluationsheet(s)shallbeendorsedL1,L2,L3etc.to

indicate1stlowest,2ndlowest,3rdlowestandsoforth.

i. Incaseofbidsinvolvingforeignexchange,theexchangeratevariationforevaluationof

tender shall be consideredat thedateof openingofCommercial bid.Referwebsite

Centralboardofexciseandcustomsnoti�ication(CBEC).ReferAnnexureNfordetailed

guidelines.

j. Thetenderevaluationstatementshallbepreparedandsignedbythepurchaseassistant

whohaspreparedthestatementandshallbevettedandcountersigned/approvedin

ERPby theof�icerof thepurchaseandFinanceDepartment.TheTenderEvaluation

Sheet/TenderComparisonSheetshallbetakenfromERPsystemusingtheERPT-Code

“ME49/ZMCMP–QuotationComparison”.

k. Offersmaybeclassi�iedassingle,regretandunsolicitedasde�inedinChapter2paras2.5

(a),(c)&(d)

l. ThelowestandtechnicallyacceptableofferisavailedandPurchaseOrderisplacedduly

co-ordinatedby�inanceandwheretheP.O.valueismorethanRs.2lakhforproduction

itemsandRs.1Lakhfornon-projectitemsandapprovedbythecompetentAuthorityas

perdelegationofpowers.Wherethelowestofferisignoredontechnicalground,the

concurrenceofuserdepartmentwillbeobtained.

m.Incaseofurgency,duetoproductionexigencies,letterofintentstipulatingthequantity

andotherimportantconditionsofcontractsuchasPrice,Deliverytermsetc.,maybe

issued with the approval of the Authority competent to accept the tender as per

delegationofpowers,subjecttoreleaseofthePurchaseOrderthereafterwithoutany

delay.No�inancialpre-scrutinyofsuchintentlettersarerequiredforrelease.However,

inthecaseofCapitalitemsandimporteditemspre-scrutinyby�inanceoftheletterof

intentisrequiredandapprovalofCorporateOf�icetakenwhererequired.Aspecimenof

LetterofIntentisgiveninatAnnexure“G”.However,paymentfortheSuppliesaffected

shallbemadeonlyonreleaseofPurchaseOrderandalsoasperthepaymentterms

indicatedtherein.

n. Whileacceptingthetenders,thedeviationsoffollowingnatureshallbereferredtothe

MaterialPurchaseCommittee(MPC)

i. WhereonlyonevalidquotationisreceivedagainstLimited/Open/Globaltender

andrequirestheapprovalofFunctionalDirectorandaboveasperDOP.

ii. Acceptanceofofferswherespeci�icationsarerelaxedfromthoseindicatedinthe

tenderandtheproposalrequirestheapprovalofFunctionalDirectorandaboveas

perDoP.

iii. Procurement of proprietary items / procurement on single tender basis and

requirestheapprovalofFunctionalDirectorandaboveasperDoP.

iv. AcceptanceofexcesssupplyagainsttheorderedquantityinthePurchaseOrder

will not be allowed / permitted without PO amendment and approval by

competent Authority. Excess quantity may be quarantined and BOC after PO

amendment.AmendmenttoPurchaseOrderforadmittingexcesssupplieswillbe

approvedby the sameAuthority,whichapproved theoriginalPurchaseOrder,

providedtheamendedvalueiswithinthe�inancialpowerandsubjectto�inancial

concurrence.

v. Standardizationofbrand/speci�icmake.

vi. Emergency/expresspurchaseexceedingRs.2lakh(Postfactoapproval)

vii. AmendmenttoPurchaseOrder/contractswith�irmpriceinvolvingpriceincrease.

However,anychangeinstatutoryleviestobeadmittedwithapprovalofcompetent

Authority.

viii. ProposalforenteringintoLongTermContract.

ix. RecommendationforwaiverofLiquidatedDamagesClauseasperDoP

x. Anyothermatter,whichthepurchasechiefdesirestoreferfromtimetotime.

o. TenderEvaluationofCapitalItems:

ThePurchaseDepartment,shallstudyoffersandprepareapricecomparativestatement

forendorsingtheoffersthatareprimafaciesuitable.The�ilethenistobepassedto

Divisional Technical Committee for the further study and selection of accessories,

special tooling, maintenance requirements, special civil works etc., if any, needed.

DivisionalTechnicalCommitteeafterexaminingtheoffersshallalsosuggestthedetails

ofadditionalaccessoriesandspareswhichare tobe initiallyprocured.Someof the

essentialfactorswhichshallbetakenintoconsiderationare:

i. Estimatedoperationcost,maintenancecost,andthetotalcostovertheportable

lifeofequipment.

ii. Availabilityofserviceattheinitialstageandregularafter-sales-service

iii. Availabilityofsparesonex-stockbasisordeliveryatshortnotice

iv. Theexistenceofsimilar-makemachinesinservice

PURCHASE MANUAL PURCHASE MANUAL44 45

v. Trainingofoperatorsincaseofspecial-purposemachine.

vi. Thedetailedguidelinetoensureprocesscapabilityandmaximumavailabilityof

capitalequipment(s)isplacedatAnnexure­C.

6.6. DIVISIONOFPATRONAGE:

a. Attimesthetenderedquantitymaybedividedamongst2or3developedandreliable

sourceswithaviewtohavemorethanonesourceasaprudentmeasure.Thedecision

whethermorethanonesourceisrequiredforaparticularitemshallbetakenatNIT

stageandshallbesorecordedforthepurposeoftransparencyandshallformpartofNIT.

Insuchcasesitisalsoessentialthattherightofsplittingthesupplywithmorethanone

partyismentionedinthetenderitself.

b. Wheretherewasnopriordecisiontosplittheorderquantity(divisionofpatronagenot

indicatedintheNIT)andafterprocessingthebids,ifitisfoundthatthequantitytobe

orderedismorethanwhatL1aloneiscapableofsupplying/expressinabilitytosupply

fulltenderquantity,thequantity�inallyorderedshallbedistributedinexceptionalcases

onlyamong theL2,L3biddersafteracceptanceofL1price inamanner that is fair,

transparentandequitablelike60:40or50:30:20withdueapprovals.IfL2orL3failedto

accepttheL1pricethenfreshtenderistoberesortedto,excludingL1forthebalance

quantity&procedureasenumeratedfortenderevaluationtobefollowed.

c. Asfaraspossible,theothertermsandconditionsofPurchaseOrder,suchas,payment,

deliverytermsbeingequalanduniform,anddeliveryofitemsshallbestaggeredtoavoid

simultaneousdeliveriesleadingtoinventorybuild-up.

d. Itmaybeensuredthatnormallyhighershareofthequantityisgiventothe�irmwho

havequotedthelowerpriceandaccepted.Thevalueofthe

e. tenderedquantityasperPRisonlyrelevantandtheAuthoritycompetenttoacceptthe

tendershallbewithreferencetothisvalueandnotthesplitupvaluesofthePurchase

Orderstobeplacedunderanycircumstances.

6.7 RE­TENDERING:

Re-tenderingisnottoberesortedtointhenormalcourse.However,re-tenderingshall

beconsideredinthefollowingexceptionalcases:

a. Whenthepricesquotedareconsiderablyveryhigh/verylow.

b. Whenitissuspectedthatthereisaringexistingandpricehavebeenmanipulated.

c. Materialchangeinthebasicspeci�icationhasbeenintroducedafterreceiptoftenders.

d. Noneoftheoffersmeetthedesiredspeci�icationsandprequali�icationoftendercriteria.

e. L1Firmwithdrawstheoffersordonotagreeforextensionofvaliditywhenitbecomes

necessary.

f. Whenthereisasuddenslumpinthemarketwhichistobeapproved,sustainedand

justi�ied.

Re-tenderingwhenresortedtoshallbeonlyafterobtainingtheapprovalfromtheChief

oftheDivision/Complex.

6.8 CVCGUIDELINESONTRANSPARENCYINTENDERPROCESS:

a. AsperCVCguidelines,incaseofprocurementoftechnicalitems,the2stagetendering

shallbefollowed.

i. CallingforExpressionofInterestforsupplyoftechnicalitem

ii. FinancialBidafterselectionoftechnicallyeligiblevendors

b. Duringthetechnicaldiscussionswiththeshortlistedvendorswhoaretechnicallyand

�inanciallycapableofsupplyingthematerial,theprocurementteammayalsoconsult

�inance teamwho could add value to the decisionmaking on the various technical

aspectsandevaluationcriteria.

c. Aproperrecordofminutesofsuchmeetingshallbemaintainedbythepurchasecell.

d. Oncethetechnicalspeci�icationsandevaluationcriteriaare�inalized,thesecondstage

of tendering could consist of calling of techno-commercial bids as per the usual

tenderingsystem.Finalselectionatthisstagewoulddependuponthequoted�inancial

bidsandtheevaluationmatrixdecidedupon.

PURCHASE MANUAL PURCHASE MANUAL46 47

CHAPTER–7E­PROCUREMENT

---InlinewithGFR160

7.1 INTRODUCTION

E-Procurementisthebusiness-to-businesspurchaseofsuppliesandservicesoverthe

internet.E-Procurementmakesuseofasystemutilizinginternettechnologytostreamline

thepurchaseofgoods,worksandservicesinordertoreducecosts.E-Procurementcanalso

beextendedtocovervariousfunctionsofthepurchasedepartmentlikesuppliersourcing,

purchasedataanalysis,onlinebuyerdrivencommodityexchangesetc.

a. E-Procurementconsistsoftwomainprocesses–E-BiddingandE-ReverseAuction.

E­Procurement

E­Bidding

Is electronic equivalent to traditional

manualtenderingprocess

Bidders receive Bid Invitations from the

buyingorganisation

Bidscanbesubmitted/modi�iedtill the

closing date and time and only last

updatedinformation/valuesareavailable

fordisplayandtenderevaluation.

E­Reverseauction

IsanElectronicAuction

Suppliersbidandcompeteonline inreal

time

ForPurchaseoforder/Contractsasper

pre-establishedcriteria

Enables online, real-time negotiations

between a buying organisation and a

groupofprequali�iedbidders

b. The bids submitted by the bidders will be available for display to the authorised

Purchasepersonsonlyafter theclosingdateand timeof the tenderarereached for

furtherprocessing.

7.2 OBJECTIVESOFE­PROCUREMENT:

To put in place a simpli�ied alternative to traditional tendering / procurement /

negotiationprocessaimedat

Increasingoperationalef�iciency

Enhancedtransparencyinpurchaseprocess

Costrationalization

Digitizationofpurchasedocumentation

7.3 BENEFITSOFE­PROCUREMENT:

Directcostreduction-duetohiddeninef�icienciesinheritedingenerictendering/

negotiationprocess

Cycletimesavingsforbuyersandsuppliers

IncreasedBuyersreach

Transparency

Overallprocessef�iciency/productivity:

morethroughputperbuying

spendlesstimeonmanagingthetacticalandoperationallogisticsofsourcing

can undertakemore professional, value added activities beyond traditional

negotiations

7.4 STAKEHOLDERS:

“Buyer”-BEMLUnit/DivisionPurchaseTeam

“Bidder”-Supplier

“ServiceProvider”-BEML-SRMServiceProvider

7.5 ROLESANDRESPONSIBILITIES:

a. Buyer

• Completeownershipoftheprocess

• Approvalofpurchasenorms

• Approval/empanelmentofbidders

• Preparation of RFQ document and circulation of the RFQ document amongst

empanelledvendorsandensuringconformity

• Resolvingbidderqueriesrelatedtoproductspeci�icationsandpurchaseterms

• Selection of suitable e-procurement process (whether e-bidding or e-auction)

method

b. Bidder

• UnambiguousinterpretationandunderstandingofRFQterms

• Adherencetoprocessdeadlinesde�inedinRFQ

• Takepropertrainingforparticipationine-Bidding/e-Auctionevents

• Makeproper infrastructurearrangement forparticipation ine-Bidding/e-Auction

events

• Quotearealisticandsustainableprice

c. ServiceProvider

• CoordinationwithBEMLpurchaseteamforproductselectionfore-Procurement

• Settingupe-Procurement“DEMO”andtrainingofbidders

• Training of the end users in BEML for e-Bidding and e-Reverse Auction related

activities

• ClarifyqueriesofthebidderswithrespecttobiddingonSRMplatform

• Liverun-upof�inale-ReverseAuctionevent

• Compilationandpostbidanalysisofe-ReverseAuctioneventresult

• Ensurecompletedocumentationwithinlegalframework

7.6 OPERATINGSYSTEMOFE­PROCUREMENT:

Consideringorganizationalrequirementandtoavailfulladvantagesofe-procurement,

ERP SRMmodule with all the security features has been installed for easy access to

purchasersandbidders.CustomizationshavebeencarriedoutintheSRMmoduletosuit

organizationalneedswhereverpossibleandchangemanagementprocessesareaddressed

whereverorganizationalrequirementcouldnotbemetbycustomization.

PURCHASE MANUAL PURCHASE MANUAL48 49

7.7 RFQ(REQUESTFORQUOTATION)CREATIONGUIDELINE:

RFQshallbeacomprehensivedocumentcomprisingofproductspeci�ications,Purchase

termsande-procurementprocedureforbothe-biddingande-ReverseAuction.InSRM,BI

(BidInvitation)denotesRFQ.

a. BasedonPRprojected,RFQhastobepreparedaccommodatingvariousstandardpoints

asbelow:

i. Overviewoftheintendedprocurement

ii. Speci�ications/scopeofwork

iii. Indicationofwhetherornotdeviationsfromthetechnicalspeci�icationswillbe

considered

iv. Estimatedquantitytobepurchased

v. Termsandconditions

vi. Supplierselectioncriteria(intheeventofnewitem/supplier)

vii. Summaryofsupplierinformationrequired

viii. Addresstowhichdocuments/proposalsshallbedelivered

b. RFQ can also include adisclaimer so thatBEMLdonot riskbeing legallyboundby

anythingstatedintheRFQ.Disclaimermayaddressthesepoints–

i. TheRFQisnotanofferoracontract

ii. ProposalsbecomeBEML’sproperty

iii. Bidderswillnotbecompensatedorreimbursedforcostsincurredinpreparing

proposals

iv. BEMLisnotobligatedtocontractforanyoftheproducts/servicesdescribedinthe

RFQ.

c. BEMLreservestherightsto:

i. Acceptorrejectanyorallproposals

ii. Waiveanyanomaliesinproposalsthroughanaddendum

iii. ModifyorcanceltheRFQ

7.8 DIGITALSIGNATURECERTIFICATE:

a. A Digital Signature is an electronic signature that will be used to authenticate the

identityofthesenderofamessageorthesignerofadocument,andtoensurethatthe

originalcontentofthemessageorthedocumentthathasbeensentisunchanged.

b. Digital Signature provides authenticity, integrity and non-repudiation to electronic

documents.DigitalSignatureismandatoryfore-ProcurementaspertheIndianITAct

2000.

c. DigitalCerti�icateisusedtosignwithDigitalSignature.ADigitalCerti�icateestablishes

thecredentialsofapersonwhendoingbusinessorothertransactionsontheweb.Itis

issuedbyaCerti�icationAuthority.

d. Toparticipateinthee-procurementprocessesofBEML,everyvendorisrequiredtouse

classIIIdigitalsignaturecerti�icatefromaCertifyingAuthority(CA)inIndialicensedby

theControllerofCertifyingAuthorities(CCA)undertheIndianITAct2000.

e. AuthorizedPurchaserOf�icersofBEMLalsoshallhavevalidclassIIIDigitalCerti�icates

issuedbyaCertifyingAuthorityforsigningdocumentsattachedtoBidInvitationsand

forpublishingtheBidInvitations.

7.9USERIDANDPASSWORD:

InSRM,eachuser(bothinternalandexternal)willhaveaspeci�icUserIDandpassword.

Onceavendor’sdataismaintainedinSRM,communicationgoestothevendorbye-mail

indicatinghisUserIDandtheinitialpasswordissent.Thevendorwillhavetochangethe

passwordtohischoiceon�irstlogintotheSRMsystem.ThesameUserIDandchanged

passwordwillbeusedbythevendorforloggingintoSRMandsubmittingbidsagainste-

biddingande-Reverseauctioneventsmeantforthevendor.

7.10E­BIDDINGPROCESS:

Process�lowforcreationofRFQ(calledasBidInvitation–BIinSRM)forE-bidding:

a. InthecaseofTendersincludingPublic/GlobalTenders,Purchasermayaddthevendors

intheBI.

b. Collaboration Folder (C-Folder): Purchaser can attach soft copy �iles (Speci�ication,

drawings,standards,terms&conditions,etc.)forthereferenceofthebiddersinthe

Collaboration Folder (also called as C-Folder). The �iles attached are to be signed

digitallyusingdigitalcerti�icate.The�ilesattachedintheC-Foldercanbeaccessedonly

bytheauthorizedvendorsandauthorizedpersonnelofBEML.

c. Purchasercanspecifythepriceconditions�ields(likeBasicPrice,GST,EducationCess,

SecondaryEducationCess,etc.) in theBI forwhich thebidderswillbeentering the

valueswhilesubmittingthebids.

d. Onceallthe�ieldshavebeenenteredinBI,systemwillgenerateapprovalwork-�low

matrixdependingonthepre-de�inedhierarchyaspertheprocedure.

e. Purchasercanaddadditionalapproversandreviewersinadditiontotheapproversin

thesystemgeneratedmatrixbutdeletionoftheapproversisnotpossible.Intermittent

approvercannotaddapprover.

f. PurchaserhastosignthedocumentsuploadedasattachmentstotheBIwithDigital

Certi�icate.

g. Afterenteringalltherequisitedata,purchaserhastosigntheBIusingdigitalcerti�icate.

Aftersigning,theBIwillfollowonlineapprovalprocessaspertheapprovalmatrix.

h. Onlyafterapprovalisgivenbythe�inalapprovingAuthority,systemwillpublishtheBIto

bidders.IncaseofrejectionofBIbyanyintermittentapprover,BIwillcomebackto

purchaserforcorrectionandresubmissionforfurtherapproval.

7.11.SUBMISSIONOFBIDSBYBIDDERSANDOPENINGOFBIDS:

a. ThevendorsselectedforthatBIwillreceiveanemailcommunicationforsubmissionof

bidindicatingbroaddetailsofBIsuchasBInumber,Starttime,Submissiondeadline,

Openingtime,etc.Basedonthisinformation,bidderhastologontoBEMLSRMserverto

offertheirbid.

b. InthecaseofPublic/Globaltenders,informationaboutthetenderswillbepublishedin

BEMLwebsite/CPPportal.InthecaseofpublicationinTradeJournals/newspapersfor

PURCHASE MANUAL PURCHASE MANUAL50 51

thetendersvalueexceedingRs1.00Crore(onecrore)NewVendorswhoareinterested

inparticipatingagainstthePublic/GlobalTenderhavetogetUserIDandPasswordfrom

SRMCell.OnceavendorgetstheUserIDandPassword,hecanlogintoSRMtogetthe

detailsoftheTender.

c. FollowingarethesalientpointsofBidInvitationrelatedtoaBidder:

i. BiddercanviewtheBidInvitationdetailsandsubmitbidimmediatelyaftertheBI

ispublished.

ii. Bidderwillnotbeallowedtobidaftertheendtimeisover.

iii. Biddersareallowedtochangethesubmittedbidanynumberoftimestilltheend

timeisreachedandthelastchangedbidisconsideredasthe�inalbid.

iv. CollaborationFolder(C-Folder)forBidders:SystemwillcreateaseparateC-Folder

for eachbidder.Bidder canuploaddocuments as attachments in theC-Folder.

BidderhastosignthedocumentsuploadedintheC-Folderasattachmentstothe

bidwithhisdigital signature.Thedocumentsattachedbyanybidder inhisC-

Folderwillnotbeseenbyanyotherbidderandonlytheauthorizedpurchaserand

otherauthorizedpersonnelofBEMLwillbeabletoseethedocumentsuploadedby

thebiddersintheC-Folder.

v. Bidderhastosignthebidalsowithhisdigitalsignatureforsubmission.

In case of e-bidding in SRM, bidders can submit bids against the relevant Bid

Invitationonlyandthebidssubmittedbythebidderswillbeopenedtoauthorized

personsonlyafter theopeningdate&timearereached.Therewillnotbeany

overwriting/correctionsbythebidders.Therewillnotbeanydelayedandlate

offers. Hence the existing system of opening tenders in presence of purchase,

FinanceandUsershallbedispensedwith.

7.12TWO­BIDTENDERING:

a. Inthecaseoftwo-bidtendering,thefollowingprocedureistobefollowed:

i. Purchaserhastoselectthesuitabledocumenttyperelatedto2Bidtenderingwhile

creatingtheBI(BidInvitation).

ii. Purchaser has to necessarily upload at least one document in the C-Folder as

otherwisesystemwillnotallowpublishingoftheBI.

iii. Purchaserneedsto�illtheTechnicalBidOpeningDateandTime.

iv. The Price Bid OpeningDate can be left blankwhichwill be entered after the

technicalevaluationoftheoffersreceivedisover.

v. BidderswilluploadthetechnicaldocumentsintheC-Folderandsubmittheprice

detailsinSRM.WithoutuploadinganydocumentintheC-Folder,systemwillnot

allowsubmissionoftheBidbythebidder.

vi. AftertheTechnicalBidOpeningDateandTimearereached,Purchaserwillbeable

toseethedocumentsuploadedbythebiddersintheC-Folder.Purchaserwillnot

be able to see thepricedetailsunless thePriceBidOpeningDate and time is

enteredandthesameisover.

b. Under two Bid Tender Systemwhile evaluating the technical bids by the Technical

EvaluationCommitteeconsistingof:

i. RepresentativeofProductionplanning,HeadofQualitydepartment&Headofuser

department&shallbeheadedbyHeadofPlanningiftheapprovingAuthorityis

Board/ProcurementCommittee/CMD/Director.ApprovalofHeadofDivision

shallbetakenforopeningofpricebid.

ii IncaseofApprovingAuthorityisHeadofDivisionandCommitteeheadedbyHead

of Production planning and the members from representatives of Production

planningdepartment,Qualitydepartmentanduserdepartment,tobenominated

byrespectiveHeadofDepartments.ApprovalofHeadofMaterialstobetakenfor

openingofpricebid.

iii. Whileevaluatingtechnicalbidsbeforecommercialbidopeningifthereareany

deviations which are not signi�icant in nature and same do not affect

materialisticallytenderingprocess,insuchcasesclari�ication/con�irmationmay

beobtainedbygivingequalopportunitytoallbidders.

iv. Thetenderswhicharenotmeetingtechnicalspeci�icationandwherethetender

requirements formalities have not been complied with, the reasons for non-

consideration/rejectionofbidsshallberecordedanddulycommunicatedtothe

biddersconcerned.

v. Ifthetechnicalbidis�inallyrejectedduetononcomplianceoftenderrequirement

asrecommendedandapproved,thepricebidwillbereturnedbacktothebidder.

vi. Tenders are evaluated with reference to price, delivery, terms of despatch,

paymentterms,validityoftheoffer,etc.,inrelationtotenderenquiryandrecorded

in the ERP system using ERP T-Code “ME47 - Maintaining RFQ” for tender

comparativestatementandanalysisofthequotationsonalike-to-likebasis.The

Lastpurchasepriceisalsorecordedforassessingthereasonablenessofthelowest

technicallyacceptableoffer.

vii. Oncompletionoftechnicalevaluationoftheoffersreceived,approvalforproposal

on theoffers tobeconsideredtobe taken forprice-bidopening is tobe taken

outsideSRM.

viii. Forgettingapprovalforthetechnicalevaluation,purchaserhastoselectinthe

systemthebidderswhoseoffersaretobeconsideredforprice-bidopeningand

thenchangetheBIbyenteringthePriceBidOpeningDateandTime.

ix. AfterthePriceBidOpeningDateandTimeisover,Purchaserwillbeabletoseeonly

thepricedetailsofthebidderswhoseoffersweretechnicallyfoundsuitable.

Comparative Statement also will be generated by the system only for the

technicallyacceptablebids.

x. Furtherprocessingforbidapprovalwillbethesameasapplicableforothertypes

oftenders.

7.13EARNESTMONEYDEPOSIT(EMD)/BIDGUARANTEE/BIDSECURITY:

DetailsinrespectofEMD–PleaserefertoPara5.5ofchapter5.

PURCHASE MANUAL PURCHASE MANUAL52 53

7.14SPECIALAPPROVALS:

Special approvals like approvals fromMPCandapprovals fromspeci�icCommittees

formed,etc.aretobetakenoutsideSRMsystem.

7.15AWARDPURCHASEORDER/CONTRACTBASEDONE­BIDDING:

Awarding of Purchase Order/Contract will be done as per the laid down purchase

procedure.Allfollow-ondocumentswillbecreatedinbasicERPsinceall�inancialentries,

valuationandpaymentwilltakeplaceinERP.

7.16 IMPORTPROCUREMENT:

Alltheprocedurementionedaboveisapplicableforindigenousprocurement.Duetothe

complexitiesinvolvedinimportprocurementlikemultiplecurrencies,customduties,port

charges, varying price conditions and payment terms from bidder to bidder, etc,

ComparativeStatementofbidsfromforeignvendors isnotpossibleatpresent inSRM.

HoweveractivityuptosubmissionofbidsbythebidderscanbedoneinSRMforimports

procurement. Comparative Statement and taking approval for placement of Purchase

OrdersistobedoneoutsideSRM.

7.17.ELECTRONICREVERSEAUCTION:

a. ElectronicReverseAuctionmeansanonlinereal-timepurchasingtechniqueutilizedby

theprocuringentitytoselectthesuccessfulbid,whichinvolvespresentationbybidders

ofsuccessivelymorefavorablebidsduringascheduledperiodoftimeandautomatic

evaluationofbids;

b. A procuring entitymay choose to procure a subjectmatter of procurement by the

electronicreverseauctionmethod,if:

i. Itisfeasiblefortheprocuringentitytoformulateadetaileddescriptionofthe

subjectmatteroftheprocurement;

ii. There is a competitive market of bidders anticipated to be quali�ied to

participateintheelectronicreverseauction,sothateffectivecompetitionis

ensured;

iii. Thecriteriatobeusedbytheprocuringentityindeterminingthesuccessful

bidarequanti�iableandcanbeexpressedinmonetaryterms;and

7.17.1 PROCEDUREFORELECTRONICREVERSEAUCTION

a. Theprocuringentityshallsolicitbidsthroughaninvitationtotheelectronicreverse

auctiontobepublishedorcommunicatedinaccordancewiththeprovisionssimilartoe-

procurement;and

b. The invitation shall, in addition to the information as speci�ied in e-procurement,

includedetailsrelatingtoaccesstoandregistrationfortheauction;Openingandclosing

oftheauctionandNormsforconductoftheauction---------AsperGFR167

7.17.2 E­REVERSEAUCTIONPROCESS:

CreationofRFQdocumentforE-Auction:

a. InthecaseofE-ReverseAuction,detailedRFQdocumentistobepreparedconsidering

thefollowingpoints:

i. Contact information of “Buyer – BEML Unit / Division” and “E-Procurement

ServiceProvider”.

ii. Activityschedule-clearlyearmarkingcleardeadlinesforeachscheduledactivity.

iii. GeneralTermsandConditionsofPurchase.

iv. Product/Servicespeci�icinformationandSupplyLocation.

v. Biddingprocesstocarryinformationon:

PriceBasisfortheE-ReverseAuctionevent

EventLogic(BiddingType)

StartBidPrice(optional)

Biddecrement

Biddingdurationandtimeextensionnorms

Availabilityofbiddingmanual/tutorials

EventURLdetails

UnitofBidding

CurrencyofBidding

vi. Pre-BidCon�irmationFormat-informingintentofthebidderforparticipatingin

theauctionevent.

vii. RFQ Acceptance Format – informing bidder’s acceptance to RFQ terms &

conditions.

viii. TrainingCon�irmationFormat–Bidder’scon�irmationonunderstandingofthe

biddingsystemandthebiddingprocess.

ix. Post-BidCon�irmationFormat-writtencon�irmationfrombiddercon�irmingthe

bidsplacedduringtheonlinebiddingevent.

x Service Provider’s General Terms & Conditions Format –For getting bidder’s

agreementwithserviceproviderclearlystatingobligationsofbothpartiesand

indemnifyingBEMLfromtechnologyfailurerelatedissues.

7.17.3 SENDINGRFQTOSELECTEDVENDORS:

RFQissenttotheselectedvendorsthroughe-mailtosuppliers’of�iciale-mailIDs.Incase

softcopiesofdrawing,speci�ication,etc.arenotavailable,hardcopiesofthesamearetobe

made available to the vendors suf�iciently in advance by sending the same through

post/courier.AddendumtoRFQ(ifapplicable)fromtimetotimeistobee-mailedtoallthe

vendors.

7.17.4 RECEIVEACCEPTEDDOCUMENTSFROMBIDDERS:

Vendorsarerequiredtosubmitvariouspre-requisitedocumentsstatedintheRFQas

underwhereverNIThasspeci�icclause

a. RFQreceiptcon�irmationbye-mail

b. Pre-Bidcon�irmationinprescribedformatcon�irminginitialintentofparticipation–by

fax/e-mail

c. OriginalcopyofRFQ/Addendum(ifany)carryingvendor’sseal&signoneachpageof

RFQ document as �inal intent of participation and acceptance of the terms and

conditions�inalizedbyBEMLfortheevent.

PURCHASE MANUAL PURCHASE MANUAL54 55

7.17.5 SET­UPE­REVERSEAUCTIONEVENT:

BEMLSRMteamwillsetupauctionplatformde�iningfollowingparameterswhicharein

linewiththetermsandconditionsoftheRFQdocumentagreedbythebidders.

StartDate&TimeandEndDate&Timefortheevent

PriceBasisforthee-Auctionevent

E-ReverseAuctioneventlogic

StartBidPrice

BiddecrementasissuedinRFQ

RulespertainingtoExtensionandclosureoftheevent

Settingthe�ieldstobedisplayedtotheBidders

Addingthesuppliersselectedbythepurchaserfortheevent

7.17.6 TRAININGTHEBIDDERSWITHDEMOEVENT:

BEMLSRMteamisresponsible for impartingnecessarytrainingtobiddersfortheir

participationinthee-Auctionevent.Itisrequiredtobeexecutedasunder:

CommunicateonsettingupofDemoeventtotheparticipatingbidders

Set-up a Demo event ensuring compliance to parameters of real e-Auction

event.

Pricecomponents(likeStartPrices)shallremainfake

Suppliersneed tobeappraisedonerrors committedby themduringDemo

eventsandmethodofavoidingthesameduringtherealevent.

Explainingvariousparameters i.e.,Unit, Lot, Pricingparameters,Extension,

ReverseClock,Rank,StartPrice,etc.totheparticipatingbidders.

Securing training con�irmation from each bidder about satisfactory

understandingofbiddingprocess.

TheDemoeventwillbecarriedoutintestclient400.

7.17.7 AUCTIONADMINISTRATION:

a. SelectedBidderswill receive communication about themain eventdetails.Once an

auctioneventispublished,bidderswillbeabletoseethedetailsoftheauction.However,

bidderswillbeabletosubmittheirbidsonlyaftertheStartDateandTimearereached.

Thebidderswillnotbeabletosubmitanybidbeyondtheauctioneventenddateand

time.

b. BEML’s SRM Team shall be responsible for making the e-Auction event go live.

Authorized Administrator shall view the e-Auction event and shall monitor the

followingduringanongoingevent:

I Attendanceofeachbidder

ii. Enquire `Of�line’ with bidders who have not logged-in about reasons and offer

possiblesolutionsforloggingin.

iii. SendauctioneventrelatedcommunicationmessagestothebiddersthroughChat

facilityavailableinSRM.

iv. ThoughChatfacilityisavailableforthebiddersalsoinSRM,thesameisblocked.

7.17.8 GENERATEPOSTEVENTREPORTS:

BEML’sSRMTeamshallprovidefollowingreportstoBEMLteamaftertheAuctionevent:

a. Vendordetailsshowingthelistofthevendorswhowereconsideredfortheevent.

b. AuctionDetailscontainingthefollowing:

Auctionnumber,StartDate&Time,EndDate&Time,Itemsdetails,StartPrices,

bidssubmittedbythebiddersthroughouttheauctiondurationwiththetimeof

submissionshownagainsteachbid,etc.

c. Auction Overview showing the L1, L2, L3 etc. positions of the bidders and the

correspondingbidvalues.

7.17.9 RECEIVEBIDCONFIRMATIONFROMBIDDERS/PARTICIPANTS:

Eachparticipantbidderneedstorecon�irmhisbidplacedduringtheon-lineeventinthe

formofPost-BidCon�irmationaspertheformatspeci�iedintheRFQdocument.ThePost-

BidCon�irmationdocumentwithpropersignatureandsealistobesubmittedtoBEMLby

eachparticipant.

7.17.10AWARDPURCHASEORDER/CONTRACTBASEDONEVENTRESULT:

After receipt of post-bid con�irmations from Bidders, awarding of Purchase

Order/Contract will be done as per the laid down purchase procedure. All approvals

requiredaspertheDoPwillbetakenoutsideSRMsystem.Allfollow-ondocumentswillbe

createdinERP.

PURCHASE MANUAL PURCHASE MANUAL56 57

CHAPTER–8FINANCIALCONCURRENCE:

a. ThescrutinyofPurchaseproposalsbeforetheapprovalof‘CompetentAuthority’and

beforereleaseofPurchaseOrdersshallbedonebyPurchaseScrutinyCellofFinance

Department.

b. Revenuepurchasesforproductionandsparesforre-saleuptoRs.2,00,000shallnotbe

subjecttopurchasescrutinysectionofFinance.SimilarlyforNon-ProjectitemsuptoRs.

1,00,000/-shallnotbesubjecttopurchasescrutinysectionofFinance.AllPurchaseson

Singletenderandproprietarybasisirrespectiveofthevalueshallbecoordinatedby

PurchasescrutinybeforeapprovalofCompetentAuthority.Howeverallpurchasesupto

Rs.2,00,000shallbesubjecttopostauditandascrutinyofPOplacedcouldbecarried

outoncein6monthsonrandombasis.

c. ThePurchasescrutinycellwillalsoassistPurchaseinallmattersofpricenegotiations

withvendorsexceptasabove.

d. ApprovingAuthorityforthesepurchasesshallbeaspertheDelegationofPowers.

e. Anypurchaserequisition(PR)shallnotbesplitintosmallerquantitieswithaviewto

avoid�inancialconcurrenceandtakingapprovalofcompetentauthorityofhigherlevel

forplacingPurchaseOrders.

f. Finance co-ordination / purchase scrutiny cell shall be under the administrative &

functionalcontroloftheconcernedunitFinanceHead.

g. The Purchase Manual is in accordance with the prevailing Delegation of Powers

(DoP).Mattersnotspeci�icallycoveredinthePurchaseManualandwhereadoubtarises

astotheinterpretationofanyoftheprovisionsoftheManual,thesameshallbereferred

totheCorporateAuditthroughChiefofMaterialsconcernedforanexaminationand

approvalofCMD.Alsosuggestionforchanges/improvementofPurchaseManualifany

shallbeforwardedtoCorporateMaterials.

h. Thereferenceto“CompetentAuthorityasperdelegationofpowers”isinrelationtothe

functionandthepowerstosanction/approvePurchaseOrdersaretobeexercisedbythe

of�icerstowhomprocurementfunctionisassigned.InthecaseofRegional/District

Of�ices,theRegional/DistrictManagerandtheof�icertowhomthisfunctionisassigned

bytheRegional/DistrictManagershallexercisethepowersinaccordancewiththe

delegationofpowerssubjectto�inancialconcurrencefromtheAccounts-in-chargeof

theRegional/Districtof�ice

CHAPTER–9COMMERCIALDISCUSSION

9.1 INTRODUCTION:

The purchase or the Finance Department may recommend negotiation in cases it is

consideredthatthereisscopeforreductionanditshallbedoneafterobtainingapproval

fromcompetentauthority.Negotiationswillbeenteredintomainlyforsecuringadvantage

inratesasordinarily,sanctityoftendersistobemaintained,andnegotiationsshallbean

exceptionratherthanarule.

9.2 GUIDELINESFORCOMMERCIALDISCUSSION:

Thefollowingguidelineswillbeobservedforcommercialdiscussions:

a. As per CVC guidelines, Technical Scrutiny of tenders will precede the decision to

negotiate. Tenders whose offers are technically acceptable and discussion with L1

BidderpreferablyinpersonsorthroughEmail/Teleconferencing.

b. Thejusti�icationanddetailsofsuchcommercialdiscussionsshallbedulyrecordedand

documented without loss of time and convincing reasons must be recorded while

recommendingcommercialdiscussion.

c. Themodeltimeframefromaccordingsuchapprovaltocompletionoftheentireprocess

of award of tenders shall not exceed one month from the date of submission of

recommendations.Incasethe�ilehastobeapprovedatthenexthigherlevelamaximum

of15daysmaybeaddedforclearanceateachlevelinexceptionalcases.Theoveralltime

frameshallbewithinthevalidityperiodofthetender/contract.

d. Counterofferwilltantamounttocommercialdiscussionandshallbetreatedatparwith

commercialdiscussion.

e. Firmsselectedfornegotiationswillbeaddressedadvisingthemthattheirrateshave

beenconsideredhighandrequestingthemtocomefornegotiationsonthespeci�icdate,

timeandplace.

f. ThoseattendingnegotiationwillbeinstructedtobringaletterofAuthorityempowering

themtoactontheir�irms’behalf.

g. There will be only one round of negotiations. If even after the negotiations, rates

receivedareconsideredhigh,BidderL1willbere-invited.

h. InthecaseofsplittingoforderasdiscussedinChapter6.Para6.6(b),anysuchoffertoL2,

L-3etc.,(attheratesacceptedbyL1),shallnotbedeemedtobeanegotiation.

i. IncaseofL1backingout,thereshallbere-tenderingasperextantinstructionsleaving

L1.

j. Tendershallinvariablybe�inalizedwithinthevalidityperiodandthefollowingtime

scheduleistobefollowed:

i. IncaseofLimitedTender,45daysfromthedateoftender;

ii. IncaseofOpenTender,andwheretwobidsystemsarefollowed,itshallbe60days

fromthedateoftender.

k. CommercialdiscussionswillberecordedandMinutessignedbyallthemembersofthe

negotiationCommitteealongwithbidders.

PURCHASE MANUAL PURCHASE MANUAL58 59

8.3 ERPT­Codesrelevantunderthischapter:

ThefollowingaretheERPT-Codesessentialforprocessnarratedinthischapter:

T–Code Particulars FunctionsofT­Code

ME1M

ZMLPP

InfoRecordsperMaterial

LastPurchasePrice

The transaction code is used to display all thepurchasing info records for a single or range ofmaterials. The output shows the purchasing inforecorddetailsforeachmaterialwithintheselectioncriteria.

This transactioncode iscustomized forBEMLERPwhichwillgeneratereportonlastpurchasepriceofvariousitemsalongwiththedateofpurchaseandnameofvendor.

CHAPTER–10–PLACINGOFPURCHASEORDER

10.1INTRODUCTION:

PlacementofPurchaseOrderisbeingmadeaftertakingdueapprovalasperformatF1from

CompetentAuthorityasperDoP.

10.2GENERALPROCEDURE:

a. ThedraftPOproposedtobereleasedalongwithallthetermsandconditionsofPOmust

alsobeputupandgotvettedbythepurchasescrutinysectionofFinanceasperchapter

8,parab&c.

b. OnreceiptofapprovalforreleaseoforderfromthecompetentAuthoritythePOinline

withdraft proposed and vettedby thepurchase scrutiny sectionof Financewill be

releasedbythePurchaseDepartment.

c. AnydeviationinthestandardtermsandconditionsofPOmustbespeci�icallyindicated

inthenoteforapproval.

d. Generally,theof�icerheadingtheconcernedPurchasesectionisauthorizedtosignand

releasethePurchaseOrder.

10.3VETTING/CO­ORDINATIONBYFINANCEDEPARTMENT:

As stated above, all the Purchase Orders are vetted by Finance as per Chapter 8 ,

parab&c.The�inanceteamshallbeguidedbyhighstandardsofpropriety.Itisthedutyof

�inanceteamtoenforce�inancialorderandstricteconomyateverystep.Thisinvolvesthe

followingchecks:

a. RevenueItems:

i. Whetherthepurchaseprocedurehasbeenfollowedcorrectly.

ii. Whetherthepurchaseamountiswithintheapprovedbudget.

iii. Whetherallthecommercialaspectshavebeenproperlycompliedwith.

b. CapitalItems:

i. Whethertheproposalhasbeenincludedinthecapitalbudgetapprovedbythe

Board.

ii. Whethertheamount/quantityiswithintheapprovedlimit.

iii. Whetherallthecommercialaspectshavebeenexaminedbypurchase.

10.5PURCHASESTHROUGHTENDERSYSTEM:

Thelowesttechnicallyacceptableofferreceivedinpublic/limited/Singletendershall

generally be availed and Purchase Order placed for the requirement of materials in

accordancewiththepurchaseprocedureandasperDoP.

10.6PurchaseOrdersforAdditionalRequirement:

a. Placementoforderstocoveradditionalrequirementsarisingonaccountofincreasein

productionprogramme/receiptofapprovedPRforresale,spares/warranty/in-house

rejectionscanbereleasedwithFinancecoordinationagainstapprovedauthoritiesinthe

followingmanner,providedthereisnoadversevendorratingnoti�iedbytheQuality

PURCHASE MANUAL PURCHASE MANUAL60 61

EngineeringDepartmentandtherequirementisveryurgentandthereisnodownward

trendintheprice.

i. If the order already exists on one supplier (which was ordered against

open/limited tender) and supplies are not yet completed then the existing

PurchaseOrdermaybeamendedwiththeadditionalquantitytotheextentof50%

oforiginalorderquantity.

ii. Iftherequirementexceeds50%,approvalshallbeobtainedasperDoP

b. If the supplies against the existing order are completed then the quantities can be

increasedbywayofrepeatorderwithin12monthsfromthedateoftheoriginalorderup

to50%quantityontheoriginalexistingorder.Iftherequirementexceeds50%,approval

shallbeobtainedasperDoP.

c. Evenwithin50%ifpriceshavegonedowninmarket,bene�itofsuchreduction,ifany,

shallbeavailed.Pricediscountforadditionalquantitymustbeattempted.Repeatorders

willnotbetreatedassingletenderforthepurposeofDoP.

d. Iftheordersalreadyexistonmorethanonesourceatdifferentprices,preferenceshall

begiventothecheapestsourceforamaximumquantityinordertominimizeadditional

cost.

e. Incasemorethanonesourceisavailableatthesameprice,preferenceshallbegivento

thesourcewhosedeliveriesareintimewithoutanyqualityde�iciency.

f. Ifthereisavalidreasonthatthepricesoftheitemhascomedownduetoreductionof

statutoryleviesand/orexistenceofmarketconditionsinthecaseofsuchitemstowhich

theyrelate,thepricescanbenegotiatedinthepresenceofFinancerepresentativewith

existingvendors.

g. RepeatordershallbeapprovedbytheCompetentAuthorityupto50%oftheoriginal

orderquantitybytherespectiveAuthoritybeyondwhichupto100%onelevelabove

suchApprovingAuthorityasperDoP.

h. Therepeatordersshallnotbeplacedtosplittherequirementtoavoidsanctionofnext

highercompetentAuthoritythusleadingtoviolationofDoP

I Whenrepeatordersareresortedtoeffortstobemadetoreducethepriceforadditional

quantity.

10.6SINGLETENDER&PROPRIETARYITEM:

a. SingleTenderPurchasesaretoberesortedforitemsde�inedinChapter2.3,paradofthis

manual. Whenever a Single Tender Enquiry is resorted to, Due Diligence on the

reasonablenessonthepricesquotedandproposedtobeorderedneedtobeevolved.

Somesuchcriteriacouldbeasunder:

Checkingthepricesintheinternationalmarketforthesameitem.

Checkingthepriceswithotherend-users.

Checkingthepricesofsimilaritemsfromothervendors.

Web-auctionofitems.

Studyingthetrendinthemovementofpricesoftheitems.

Correlating the prices of items vis-a-vis the price for assembled/semi

assembledcomponent.

Examiningthe�inancialstatementsofSingleVendoranddrawinginferences

therefrom.

UndertakingtechnicalstudyoftheSingleVendoritemsvis-a-visalternateitems

availableintheMarketandderivingestimatedpricesoftheSinglevendoritems

consideringthecostimplicationsofadditionalfeaturesavailableinthoseitems.

GettingQuotationsfromSingleVendorhavingmultiplelocationsandMarketing

outlets.

b. InaSingleTenderandforaproprietaryitem,thePurchaseOrdershallbeapprovedby

thecompetentAuthorityasperDoP.

c. IneachDivision,ateamtobeconstitutedbyseniorlevelof�icerheadedbyR&D,and

members from Quality, Planning and Purchase shall continuously establish second

sourcewithregardtoimports, indigenizationandlongstandingsinglesourceitems.

ThisteamwillreportquarterlytoDivisionalHead.PurchaseDepartmentwillfeedalist

ofsinglesource itemsand import itemstothis teamwithacopytoDivisionalHead

mentioningpriorities.

d. InNovembereveryyear,twodifferentlistsi.e.onelistcontainingsinglesourceitems

wheresecondsourceisnotfeasibleandtheotherlistcontainingsinglesourceaboveRs.

50Lakhswheresecondsourceispossibleinthecurrentyear,shallprojectedthrough

DivisionalHeadtoconcernedDirectorforapproval.

e. Materials required for production & Maintenance of plant and equipment, which

necessarily have to be of particular make or manufacture shall be referred to as

proprietaryitem.ThiswillbesupportedbyaProprietaryCerti�icateissuedbyanof�icer

notlessthantheGMgradedulyspecifyingthesourceofsupplyinthePR.

f. For Production items GM, R&D and for Maintenance items GM-Production/

MaintenanceareauthorisedforissueofProprietarycerti�icate

10.7LONGTERMCONTRACT(LTC)/MOU

a. Theobjectofenteringintolongtermcontract/MoUistoensurecontinuoussupplyat

competitiverates.Inkeepingwiththisobjectivelongtermcontractisgenerallyentered

intoforaperiodofnotlessthanoneyearandnotmorethanthreeyearsatatime.Under

no circumstances it shall be extended beyond 3 years without speci�ic approval of

Director/CMD.ThisshallcoveritemslikeCastings,Forgings,CuttingTools,Electrodes,

Hard-wareitems,Radiatorsetc.,

b. LongTermContract�inalizedforitem/sbyonedivisionshallbemadeuseofbyother

divisionsaswell.Thefeasibilityofcombiningtherequirementsofotherdivisionsmust

alsobekeptinview.Longtermcontractaretobe�inalizedbyfollowingthePurchase

Procedureaspermanual.

c. Wherevervendordevelopeditemsareinvolvedlongtermcontractcanbeenteredinto

withapprovalof competentAuthority.LongTermContracts require theapprovalof

PURCHASE MANUAL PURCHASE MANUAL62 63

competentAuthorityasperdelegationofpowersbasedontherecommendationsof

MPC,settingoutthetermsandconditionsincludingcommercialaspectsveryclearly.

d. TheappropriateAuthorityforapprovalofLTCshallbereckonedinlinewiththevalueof

the total requirement during period of LTC. Against such approved LTC staggered

deliveryschedulesshallbereleasedbythedivisionpurchasewiththeconcurrenceof

purchasescrutinyforquantities/valuesindicatedintheapprovedPrs.

e. ApprovaloftheDivisionHeadtobeobtainedforthequantityorvalueincaseofvalue

basedcontractsprojected.Thepricespayableshallbeasperthemutuallyagreedprices

kept�irmfortheperiodasagreedtoatthetimeofenteringintocontract.Againstsuch

approved LTC, with staggered delivery schedules shall be released by the division

purchasewiththeconcurrenceofpurchasescrutinyforquantities/valuesindicatedin

theapprovedPrs.

f. Thelabourandmaterialelementofthebasepriceshallbespeltoutsothatthepricesfor

subsequentyearcouldbedeterminedbasedonthepublishedwholesalepriceindicesby

RBI/indicesEconomicAdvisory(EA).Howevertheinitialagreedpriceshallbe�irmfor

�irstyearsupplies. If theLTCexceedsoneyearthensuitablepricevariationformula

based on RBI / EA indices as indicated above shall be arrived at based on the

requirementoncasetocasebasisbytheconcernedMaterial/Financegroupofthe

respectiveDivision.

g. Approximatevalue and tonnage/numberofunits of the items covered shall alsobe

indicatedinthecontract.Itischaracteristicoflong-termcontractforcastings,forgings

thatissueslikepatterncharges,development,costofdies,andestablishmentofweight

forregulatingpaymentneedtobedealtwithcarefully.

10.8PATTERNCHARGES/DEVELOPMENTCOSTOFDIE/TOOL:

a. Normally,patterncharges/developmentcostofdie/toolistobebornebythesuppliers.

However,inregardtospecialpatternsforintricatecastings,patterncostinlumpsum

maybenegotiatedreservingourrights toplace further indents/ordersup toapre-

determined total quantity with no further charge/payment for pattern charges. In

regardtodevelopmentcharges,thereasonablenesswillbeassessedandacceptedbased

onthemeritsofeachcaseinitstotality.Unlikeinthecaseofpattern,thechargesfor

forgingsarefortheerasableportionofthedie.

b. Toolingchargesarepaidforstructuralandfabricationworkandtheyhavealonglife.

c. Vendorsshallbeaskedtoquoteseparatelyforthecostofpattern/die/toolssothatthe

same canbenegotiated for as onetimepayment and also theprocurement price of

castingsetc.,fromtimetotimefromthevendorswillnotbevitiated,besidesservingto

havecontrolonthepaymentsmadetillweobtainthefullquantityduringthelifeperiod

ofPatterns/Dies/Tools.

d. However,asaspecialcasewherejusti�ied,AluminiumandMetalpatternchargesmaybe

admittedforintricateitemsofcastings,forsecondtime,afteravailingfullquantitytill

the life period of the wooden patterns for which payment was made earlier. The

patterns/dies/toolswouldbeBEML'spropertyandtheyshallnotbeusedbythe�irms

formanufacturingparts/componentsforpartiesotherthanBEML.TheBillspayable

unitshallmaintainaregisterindicatingpaymentsmadetovendorstowardsthecostof

pattern/die/toolandalsotheperiodoverwhichthesameshalllastorthequantityfor

whichthesamewaspaidfor.

10.9ESTABLISHEDWEIGHTFORREGULATINGPAYMENTFORCASTINGSUPPLIES:

a. Inregardtosupplyofcastingsinrough/proofmachined/fullymachinedcondition,the

rate is normally �ixed onweight basis at "Rate per Kg" as quoted by the suppliers.

However,itisnecessarytohavetherate�ixedon"perpiece"basisinrespectoffully

machinedcastingsascomponentsandalsointhecaseofproof-machinedcastingswhen

theitemisdevelopedandbeforebulksupplyiseffected.

b. Considering the inherent but latent defects like blow-holes, hot tears etc., and

consequentlythehighrateofrejectionsontheshop�loorandthere-arrangementof

facilitiesintheshop�loor,itispreferredtoprocurecastingsinproofmachinedand/or

fullymachinedcondition.Inthecaseofroughcastingsandproof-machinedcastingsfor

newitems,weightshallbeestablishedforeachitemwhenthe�irstbatchofsupplyis

received and the "established weight" will form the basis for regulating payment.

Normally,theestablishedweightneednotbedifferentforthesameitem,ifobtained

fromdifferentsources.Inthecaseofproof-machinedcastingsthe,machiningcharges

shall be worked out separately. The �ixing of "established weight" calls for proper

technicalassessmentinrelationtothenetweightofthecomponentasperdrawingso

thatpaymentonextramassofweightisavoided.Itisessentialthatthe"established

weight"isreviewedbythePurchaseDepartmentincoordinationwithProductdesign

department and Quality department vis-avis the trend of the actual weight of the

suppliesreceived,onaquarterlybasisforsuitablyscalingdowntheestablishedweight,

whenadownwardtrendisperceived.

c. ItistheresponsibilityoftheProductdesigndepartmentto�ix"establishedweight"in

consultationwithQualityengineering,productionplanning,purchaseandInspection

departments,withinareasonableperiod.Generally,theestablishedweighthastobe

�ixedandcommunicatedtoPurchasedepartmentbeforethesecondbatchofbulksupply

isreceived.Theof�icerinthePurchasedepartmentnotbelowtherankofGradeIIIwill

approve the established weight and communicate the same to the supplier under

intimation to �inance, for regulating the payment for supplies affected as per the

PurchaseOrder.

10.10 PURCHASESTHROUGHIMPORTS:

a. Importsvalue fallingwithin thepowersof theDivisionHeadcanbeorderedby the

divisions following the purchase procedures and Foreign Exchange value is to be

informedtoCorporateFinanceforrecordsbyFinance.NopriorapprovalforForeign

Exchangeisrequiredforthevalueswithinthedelegatedpowerstothedivision.

b. Whereverletterofcreditistobeopenedbeforecargoreadinessduetotheconditionsof

thesuppliersoranyotherrecordedreasons,theDivisionalHeadwillhavetoapprovethe

samewiththeconcurrenceofDivisionalFinanceChief.

c. Since,thedivisionsareauthorizedtoopenletterofCredit,theyshallensuretoavail

followingfacilities/concessionbeforeopeningtheLetterofCredit.

PURCHASE MANUAL PURCHASE MANUAL64 65

• InterestFreeCredit

• UsanceBill

• FineTunedExchangeRatei.e.,theExchangerateofferedbysomeBanksarebetter

thanRBIIndexduetothevolumeoftradingandotherfactors.Samemaybeavailed.

d. Anyreductionintheproductionprogrammeshallbetakencareatthetimeofopeningof

LetterofCredit.Wherever,LettersofCreditarealreadyopened,thevalueandquantity

shallbesuitablybeamendedtoavoidencashmentof the fullvalueof theLCby the

Supplier.

e. Theimportrestorationof indigenizeditemsshallrequiretheapprovalofFunctional

Director / Director Finance duly furnishing the cost impact. As far as possible, the

indigenizedsourcesshallbeencouragedunlesssigni�icant�inancialbene�itsaccrueto

BEMLbyImport.

f. Thedivisionsshallensurethatthe�ine-tunedrateisobtainedfromthebankatthetime

ofretiringtheLetterofCredit.

g. AstatementintheformatalreadyinvoguehastobefurnishedtoCorporateOf�ice,on

monthly basis duly specifying the necessity of entering/forward/cross currency

contracts,whereverrequired.

h. PurchaseOrdersforimportofitemstomeettheshortageandshoplosses,ifany,shallbe

placed with the approval of Director concerned. Thorough investigation shall be

conductedinallsuchcasesandreportsubmittedtoCorporateOf�ice.

i. ProcurementshallpreferablybemadedirectlyfromtheOEmanufacturers.Either,the

authorizedIndianAgentoronbehalfoftheforeignprincipal,directlycouldbebidina

tenderbutnotboth.Further,incaseanagentparticipateinatenderonbehalfofone

manufacturerheshallnotbeallowedtoquoteonbehalfofanothermanufactureralong

with�irstmanufacturerinasubsequent/paralleltenderforthesameitems.Inother

wordsoneagentcannotrepresenttwosuppliersorsubmittwoquotes,onbehalfof

them.

10.11PURCHASEFROMCOLLABORATORS:

Purchases fromour collaborators coveredby collaboration/price agreement donot

come under tender system but the sanction on PR for procurement and competent

Authority’sapprovalasperDOPshallbeobtainedbeforeplacementoforder.

10.12PURCHASEFROMOTHERFOREIGNSUPPLIERS:

a. Purchase from import sources shall also be done by following the same purchase

procedure as done for indigenous procurement with the approval of competent

AuthorityasperDOP.

b. Where customsduty is notpayableon the importsbecauseof theGovt. Exemption

noti�icationoravailabilityofspecialimprest,advancedlicenseetc.,thesamemustbe

indicatedinthePurchaseOrder(forinternaluse)sothatcustomdutyisnotpaidonsuch

items.Wherevercustomdutyispayable,thecorrectchapterandclassi�icationcodeshall

beindicatedinvariablytoensurepaymentofappropriatedutyandtoavoidexcess/short

paymentofcustomduty.

c. The speci�ication and description of the items shall be properly indicated in the

PurchaseOrderstolinktothecorrectclassi�icationcodeandchaptersoastopaythe

appropriate duty. Invoices and other import documents produced to Customs

authoritiesatthetimeofassessmentofcustomsdutyshallalsoindicatethespeci�ication

anddescriptionasperPurchaseOrders.PurchaseDepartmentshallensuretheseatthe

timeofissuingthePurchaseOrders.

10.13PURCHASEOFSPAREPARTSFORSALE:

a. TheprocurementofsparepartsPricesofimportsandindigenouspurchases.

b. TheimportsarecoveredbyindividualPurchaseOrdersplacedonourcollaborators/

foreignsuppliersaftergettingclearancebythecompetentAuthorityasperdelegationof

powers.

c. Purchase Order placed on foreign suppliers outside the collaboration and/or price

agreementshallbetreatedassingletenderandacceptedbyauthoritiesassingletender.

Normally,PurchaseOrdersforimportofsparepartsfromourcollaboratorsareplaced

onamonthlybasisstipulatingshipmentofitemsorderedinonelottoregulatespare

partsinventory.

d. The indigenous purchases are made after planned deletion of such of those

items/componentsidenti�iedforin-housemanufacturebymanufacturingdivisionsor

forindigenouspurchase.Asfortheitemstobeprocuredfromthetradeondeletion,the

long term contract or price agreement �inalized bymanufacturing divisions for OE

applicationasrelevantforpurchasesbymanufacturingdivisionsshallbeadoptedto

availthepriceadvantageaspertheagreedpricesapplicabletosparepartspurchases.In

regardtosparesandparts fromstandardandreputed �irms likeSundaramClayton,

BrakesIndiaetc.,thesourcebeingestablishedonesanditemsproprietaryinnatureor

wherethereispriceagreement,longtermcontractmaybeavailedwiththepricekept

�irmforaperiodofoneyearandtheannualoff-takedeterminedtomeetthecustomer

requirementsasbudgeted.

e. TheprocurementactioncanbetakenbytheMarketingDivision.Thetendersystemwill

applyforbalanceoftheitemscomingunderthepreviewofindigenousprocurement.

Thecompetitivenessoftheratesobtainedinatender,willbeassessedbycomparing

withtheratesatwhichtheseitemsarebeingprocuredbymanufacturingdivisions.Itis

preferable if the manufacturing divisions take procurement action in these cases

whereverpossibletoavailpriceandotheradvantages.However,PurchaseOrderwillbe

separatelyissuedforsparesrequirementtohavecontrolontheinventory.

f. ThePartsDepartmentofMarketingDivisionatKGFwill get the long termcontract,

whereverrequired,dulyapprovedbycompetentAuthorityasperDelegationofpowers,

basedontherecommendationsofMPCofMarketingdivision.Thereuponaletterwillbe

issuedtothesupplierconcernedbyPartsdepartmentindicatingthepriceagreedfor

variousItems,theeffectivedate,termsofpaymentetc.,authorizingtheregionalof�ice

concernedandthePartsdepartmentatKGFtoplacepurchaseindentsfromtimetotime

coveringspeci�iccustomerrequirementsbasedonthefollowing:

PURCHASE MANUAL PURCHASE MANUAL66 67

• Customerordersreceiveddirectatthezonal/regionalof�ice.

• SaleordersissuedbyPartsdepartmentatKGFcoveringcustomerorders.

• RequestsfromZonal/Regional/Districtof�icesforstocktransferofspeci�icitems

againstcustomerorders.

• Warrantyobligation

g. TheRegional/DistrictOf�iceconcernedandthePartsdepartmentatKGFwillplace

purchaseindentsonthesupplierconcerned,aftercheckingthestockpositionandin

accordancewithdelegationofpowers.Thepurchaseindentswillbecoordinatedbythe

�inancerepresentativeconcernednotbelowtherankofGradeIIIof�icer.Inrespectof

fastmoving spares,wherebuffer stock is considerednecessary, speci�ic approvalof

Functional Director has to be obtained by the Parts department at KGF and

communicatedtoRegional/DistrictOf�iceconcerned,wherenecessary.

10.14MATERIALPURCHASECUMRECEIPTADVICE(MPCRA):

a. MPCRAwouldbeeffectedonthebasisofhandquotationobtainedbytherepresentative

ofPurchasedepartmentforpurchasesvalueduptoRs.2000/-.Forpurchasesvalued

overRs.2,000/-anduptoRs.5,000/-thequotation,inwriting,willbeobtainedand

materialprocuredtakingintoconsiderationthepriceanddeliveryaspect.

b. ThebillsoftheitemsunderMPCRAsoprocuredshallbestampedatthesecuritygatefor

proof of receipt of materials before payment is effected by accounts after proper

scrutiny.

c. The procurementmade as above for production items shall be regularized in ERP

throughcon�irmatoryPR/PurchaseOrdertoaccountagainsttherelatedworkorders.

The procurement made for non-production item shall also be regularized in ERP

throughcon�irmatoryPR/PurchaseOrdertoaccounttheexpenditureinrespectivecost

centres.

10.15PURCHASEOFSTEELFROMTRADERS:

a. Procurementofsteelshallbedoneonlyfromdomesticmanufacturers.Singlesourceon

proprietarybasiscancontinuedtobepurchasedfromSAILasperMOU.

b. IncasetheoriginalmanufacturerdemandshigherMOQandifitcanbeutilizedwithin

thecurrentyearandthefollowingyear,thesamecanbeconsideredforprocurement.In

caseMOQdemandedbytheoriginalmanufacturerisquitehighandinventorycarrying

costisnoteconomicallyviableandbeyond2yearsasrunningmodels,aproposaltobe

putuptotheconcernedDivisional/ComplexHeadforapprovalgivingjusti�icationto

procure from traders duly enclosing the copy of letter received from the

manufacturers/re-rollersforthegivenpurchaseexpressingtheirinabilitytoserviceour

actualrequirement.

c. Incasethedeliveryscheduleindicatedbytheoriginalsteelmanufacturer/re-rollersis

notmeetingourplannedproductionrequirement,aproposaltobesubmittedtothe

concerned Complex Head to procure the material from traders duly enclosing the

relevantdocumentsforapproval.Quarterlyreportforsuchprocurementinrespectof

bothtobeforwardedtotheconcernedDirectorandCorporatePurchase.

d. ForSteelprocuredfromtrade,onlyOpenAccountPaymenttermsshallbeaccepted.

Whereverpossibletestcerti�icatesshallbecalledforandalsotheitemsshallbetested

foracceptanceofQualityasperBEMLspeci�icationwithoutwhichpaymentshallnotbe

released.

10.16SPOTPURCHASE:

a. Spotpurchaseispermissibleonlyforcriticalandemergentrequirementsforrepairing

automobiles; machine tools under break down requiring immediate repair and

production itemswhich are causing production holdups. Also packingmaterials in

exceptionalcasesonly,whenrequiredurgentlytodespatchsparepartstocustomersand

lifesavingdrugs/medicine incaseofemergencymaybeprocuredonspotpurchase

basis.

b. Theprocurementshallbemadefromauthorizeddistributors.Thereisnoneedtocallfor

quotationinsuchcases.Ateamconsistingofrepresentativesfromuserdepartment,

Finance and Purchase constituted by the Chief ofMaterials, at the timewhen spot

purchase is required tobemade is authorized todrawspeci�ic advanceand render

accountsaftermakingspotpurchasesoftheitems(asperDOP).

c. ApprovalofthecompetentAuthorityshallbeobtainedforprocurementanddrawof

speci�icadvance.Thescopeofpurchaseistobuytheitemsatlistpricefromauthorized

distributors.

d. If the item is not readily available with the authorized distributors, and if the

requirementisurgent,thesamemaybeprocuredfromthereputeddealersbasedon

cheapestofthequotationscollectedbytheteamorregularizedasasingletenderifone

quotationonlyiscollected.

e. Beforespotpurchaseisaffected,thelistofitemstobepurchasedshallbevettedbythe

Stock Control department and certi�ied for the non-availability of the same in the

holdingstores/underacceptance.Suchpurchasesshallbesubsequentlyregularizedby

issueofacon�irmatoryPurchaseOrder.

10.17EMERGENT/EXPRESSPURCHASES:

a. Tender system does not apply for emergent/express purchases that may become

inevitableundercertaincircumstancesintheinterestofproduction.

b. Whenevertheneedforemergentpurchasearises,PRscategorizedas"Express"shallbe

raisedbyindentingdepartmenttoenablepurchasedepartmenttoputthrougheffective

urgentactionforobtainingsupplies,withoutprejudicetoourrightsondefaulting�irm's

liability,whereverapplicable.

c. "Express"requestsshallbeaccompaniedbyapprovalofthecompetentAuthorityfor

sanctionasperdelegationofpowers. Suchemergentpurchasesmaybe resorted to

withoutcallingfortender.

PURCHASE MANUAL PURCHASE MANUAL68 69

10.18­GOVERNMENTe­MARKETPLACE(GeM)

a. DGS&DwillhostanonlineGovernmente-Marketplace(GeM)forcommonuseGoods

andServices.TheGeMwouldbedynamic,selfsustaininganduserfriendly.DGS&Dwill

ensureadequatepublicityincludingperiodicadvertisementsinnewspapers,onGeM

Portal and the items tobeprocured throughGeM for thebene�itof theprospective

suppliers.Theprocuringauthoritieswillsatisfythemselvesthatthepriceoftheselected

offer isreasonable.GeMmaybeutilizedbyGovernmentbuyers(at theiroption) for

directon-linepurchasesasunder:—

i. UptoRs.50,000/-throughanyoftheavailablesuppliersontheGeM,meetingthe

requisitequality,speci�icationanddeliveryperiod.

ii. AboveRs.50,000/-anduptoRs.30,00,000/-throughtheGeMSellerhavinglowest

priceamongsttheavailablesellers,ofatleastthreedifferentmanufacturers,on

GeM,meetingtherequisitequality,speci�icationanddeliveryperiod.Thetoolsfor

onlinebiddingandonlinereverseauctionavailableonGeMcanbeusedbythe

Buyerifdecidedbythecompetentauthority.

iii. Above Rs.30,00,000/- through the supplier having lowest price meeting the

requisitequality, speci�icationanddeliveryperiodaftermandatorilyobtaining

bids,usingonlinebiddingorreverseauctiontoolprovidedonGeM.

iv. Theinvitationfortheonlinee-bidding/reverseauctionwillbeavailabletoallthe

existingSellersorotherSellersregisteredontheportalandwhohaveofferedtheir

Goods/servicesundertheparticularproduct/servicecategory,aspertermsand

conditionsofGeM.

v. The abovementionedmonetary ceiling is applicable only for purchasesmade

throughGeM.Forpurchases,ifany,outsideGeM,relevantGFRs’shallapply.

vi. TheMinistries/Departmentsshallworkouttheirprocurementrequirementsof

Goods and Services on either “OPEX” model or “CAPEX” model as per their

requirement/suitabilityatthetimeofpreparationofBudgetEstimates(BE)and

shallprojecttheirAnnualProcurementPlanofgoodsandservicesonGeMportal

within30daysofBudgetapproval.

vii. The Government Buyers may ascertain the reasonableness of prices before

placement of order using the Business Analytics (BA) tools available on GeM

includingtheLastPurchasePriceonGeM,Department’sownLastPurchasePrice

etc.

viii. Ademandforgoodsshallnotbedividedintosmallquantitiestomakepiecemeal

purchasestoavoidprocurementthroughL-1Buying/bidding/reverseauctionon

GeMorthenecessityofobtainingthesanctionofhigherauthoritiesrequiredwith

referencetotheestimatedvalueofthetotaldemand.–AsperGFR149

b. Procurementfromothercommercialwebsitesmayalsobeconsideredforprocurement

throughonlinedependingontypeofitemrequiredtobeprocured.

10.19RELEASEOFMANUALPURCHASEORDERS:

The company discourages release ofmanual Purchase Orders and all the Purchase

OrdersshallbeissuedthroughERPonly.

10.20ERPT­CodesRelevantunderthischapter:

ThefollowingaretheERPT-Codesessentialforprocessnarratedinthischapter:

T–Code Particulars FunctionsofT­Code

ME21N

ME22N

ME23N

ME29N

VL10D

ME1P

CreationofPurchaseOrder

ChangePurchaseOrder

DisplayPurchaseOrder

ReleasePurchaseOrder

PurchaseOrderDueforDelivery

PurchaseOrderPriceHistory

The transactioncode isused to createaPurchaseOrder.

ThetransactioncodeallowstheusertochangethePurchaseOrderquantityforeachlineitemaswellastheprice.

-

Thetransactioncodeisusedtoreleaseapurchasedocument, such as a Purchase Order or a stocktransportorderbythepersonwhoiscompetenttoapprovesuchorder.

The transaction VL10D is used to createmultipledelivery documents in reference to purchasingdocumentsonly.

The transaction ME1P is used to display thePurchaseOrderpriceforeachpurchaseinforecord.Theselectioncanberestrictedbyvendor,material,materialgroup,purchasingorganizationandplant.TheoutputisinpurchaseinforecordsequenceandshowsthePurchaseOrderdetailforeachpurchaseinforecord.Thedate,netprice,quantity,PurchaseOrder number and variance are shown for eachPurchaseOrder.

ZMLPP DetailsforLastPurchasePrice

This transactioncode iscustomized forBEMLERPwhichwillgeneratereportonlastpurchasepriceofvariousitemsalongwiththedateofpurchaseandnameofvendor.

10.21 HIGHSEASALES(HSS)PROCEDURE

a. High Sea Sales:High Sea sales (HSS) is a sale carriedoutby the carrierdocuments

consigneetoanotherbuyerwhilethegoodsareyetonhighseasoraftertheirdespatch

from the port/ airport of origin and before their arrival at the port / airport of

destination.AnHSScontract/agreementshallbesignedafterdespatchofgoodsfrom

origin&priortotheirarrivalatdestination.Theagreementshallbeonstamppaper.

b. ProcedureandDocumentsforHSS:OnconcludingtheHSSagreement,thebilloflading

(B/L)/AirWayBill(AWB)shallbeendorsedinfavourofthenewbuyer.Inrespectofair

shipment, HSS seller shallwrite to the airline / consol agent informing that anHS

PURCHASE MANUAL PURCHASE MANUAL70 71

agreementhasbeenestablishedwiththeHSSbuyerandthatthecarrierdocumentshall

thereforebeconsideredasendorsedinfavouroftheHSSbuyerandfurthertheImport

GeneralManifest(IGM)shallbe�iledbythecarrierinthenameoftheHSSbuyer.Ifthe

importer is shown in the electronic data interchange (EDI) system as the original

importerthentheIGMisrequiredtobeamendedforimporterasHSSbuyerandB/Eisto

be�iledaccordingly.InthecaseofHSS,theCostInsuranceFreight(CIF)valueistakenas

basevalueforarrivingHSSvalue.IncasetheHSStransfertakesplaceatimportinvoice

valueonly.HSSloadingfactorisaminimumof2%andupto4%ofCIFvalue.

c. DisclosureofImportValueinHSS:

i. TheHSSSellerisrequiredtoprovidetheoriginalimportinvoicetotheCustomsfor

clearanceofthegoods.Thereisnobaronsamegoodsbeingsoldmorethanonceon

highseas.Insuchcases,thelastHSSvalueistakenbycustomsforthepurposesof

levyingCustomsDuty.ThelastHSSagreementshallgiveindicationofprevioustitle

transfers.ThelastHSSbuyershallalsoobtaincopiesofpreviousHSSagreementas

suchdocumentsmaybecalledupon.Customswillensuretheminimumloading

factorof2%eachstageoftransfer.

ii. Thecustombillofentrydoesnotindicateoriginalimportvalueandispreparedon

HSSvalueby the customs.HSS is considered as a sale carriedout outside the

territorialjurisdictionofIndia.Accordingly,nosalestaxisleviedinrespectofHSS.

iii. Thecustomsdocuments(B/E)iseither�iledinthenameofHSSbuyerorsuchB/E

hasanendorsementindicatingHSSbuyer’sname.Thetitleofgoodstransfersto

HSSbuyerpriortoentryofgoodsinterritorialjurisdictionofIndia.Thedelivery

fromcustomsisthereforeonaccountofHSSbuyer.

iv. CENVATapplicabilityinHSS:TheCENVATcreditinrespectofCVDpaidonimport

isentitledtoHSSbuyer.HSSgoodsareentitledtoclassi�ication,ratesofdutyandall

noti�icationbene�itsaswouldbeapplicabletosimilarimportgoodsonnormal

sale.

v. HSSisapplicabletogoodsimportedbyair/Sea.ThestamppaperonwhichtheHSS

agreementisexecutedmustnotbearthestamppaperpurchasedateasbeingpost

cargoarrivaldate.IftheHSSdoesnotminddisclosingoriginalimportvaluestoHSS

buyer,insuchcaseitisbetterfromcustomsclearancepointofviewforthesellerto

endorse theB/LorAWB, invoice, packing list in favour of theHSSbuyer. The

endorsementshallread“TitleTransferredonHighSeaSalesbasistoM/s.________

for a sales consideration of (currency and amount in that currency)”. Such

endorsementshallbestampedandsignedbytheHSSseller.

10.22PENALTY/LIQUIDATEDDAMAGES(LD):

a. Thetimeorperiodofdeliveryasstipulatedinthescheduleofdeliveryshallbedeemedto

be essence of the Contract. Shall circumstances arisewhereby the deadline for an

agreeddeliverydate(s)orperiod(s)isexpectedtobeexceeded,theSuppliershallinform

PurchaserwithoutdelaythatinsuchaneventtheSuppliershallbindhimselftoanyof

thetermsandconditionsthatmaybeimposedbythePurchaser. Ifdelayindeliveryis

causedbyanyofthecircumstancesmentionedisonaccountofForceMajeureconditions

priortothescheduled/extendeddeliveryorbyadditionalwork,ifany,orbyanactor

omissiononthepartofthePurchaser,thePurchasershallextentthetimefordeliveryby

aperiodwhichisreasonablehavingregardtoallthecircumstancesinthecase.

b. IftheSupplierexceedsanyagreeddeliverydate(s)orperiod(s),PurchasershalllevyLD

forsuchdelay@0.5%perweek(7days)andpartthereof,subjecttoamaximumof5%of

thevalueofthedelayedportionofthePurchaseOrder.

c. Thepenalty/LDwillbechargedonthevalueofthePurchaseOrderexcludingstatutory

levies,freightandinsurancewherevernotincludedintheprice.Imposition,recoveryor

settlementofthisLDshallnotaffectPurchaser’srighttoperformance,compensation

andterminationoftheagreement.

c. IfLDclauseisnotprovidedinthePO,reasonstobeindicatedforthesameandapproval

ofBusinessGroupDirectortobetaken.

10.23MATERIALPURCHASECOMMITTEE(MPC)

Thepre­requisitestoachieveeconomyinprocurementare:

a. AvailingtheOfferswithinthevalidityperiod.

b. MinimizingdelaysinplacingPurchaseOrders.

c. Aidingintakingeffectivedecision-making.

ThiscallsformakingPurchaseManagementbroadbasedandresponsive.Toachievethis

end,of�icersfromotherdepartmentslikeProduction,Finance,Planning,Design,Quality,

andServicearerequiredtoco-ordinatewithoneanother.

TheConstitution,termsofreferenceandthepurchaseproposalsrequiringreferenceto

MaterialPurchaseCommitteearefurnishedinAnnexure"A".InthecaseofSpareParts

procurementinMarketingDivision,theorderprojectionwilltaketheplaceofPRand

thereisaseparateMaterialPurchaseCommitteeconstituted.TheConstitution,termsof

reference and the purchase proposals requiring reference to Marketing Division

CommitteearefurnishedinAnnexure"B".

Procurements made at corporate of�ice, Unity building & Regional of�ices are also

coveredforMPC.

PURCHASE MANUAL PURCHASE MANUAL72 73

CHAPTER–11–SMALLVALUEITEMSFORPRODUCTION

11.1 INTRODUCTION:

a. Theprocedureforprocurementofsmallvalueitemsforproductionofequipment(s)is

de-linked from the mainstream of the activities of the Purchase department and

simpli�iedforclosercontrolandbetterresults.

b. Asmallvalueitemspurchasecell(SMVcell)willbeconstitutedbytheChiefofDivision,

consisting of representatives from Purchase, Inspection and Accounts. The

representativefrompurchasedepartmentwillbetheheadoftheSMVcellandhewillnot

bebelowtherankofGradeIIIOf�icer.Theothermembersofthecellshallnotbebelow

therankof'GradeIof�icer.TheSMVcellwillfunctionundertheadministrativecontrolof

ChiefofMaterial.ThereshallbeseparatestoresforSMVitemswithbincardsystem.

11.2 IDENTIFICATIONOFSMALLVALUEITEMS:

a. TheSmallValueItemswillbeidenti�iedasperthemonetarylimitsprescribedperitem

excludingvitalperformancerelateditemsidenti�iedbyDesign&Developmentdept.

b. Thelistwillindicatethequantityperequipment,materialspeci�icationandProvisional

programme,forprocurement.AcopyofthislistwillbemadeavailabletoAccountsand

Stores Departments. An item costing Rs.200/- or less per item excluding vital

performancerelateditemsidenti�iedbyDesign&Developmentdept.

c. Itemsonceconsidered,as“SMV”itemswillcontinuetoberetainedinthelistevenif

thereisasubsequentvariationintherateorvalueperequipmentunlessthevariationis

considerable,andchangedbythePlanningDepartment.Thiswillincludecommonitems

carriedunderoneandthesamepartnumber,ifidenti�iedas“SMV”itemwithreference

toanyequipment.

d. ThelistofSMVitemswillbemadeavailabletoSMVCell.Itwillberesponsibilityofthe

MaterialPlanningDepartmenttoupdatethelistforadditionsanddeletionsarisingout

of introduction of new models of equipment(s), indigenization/design change and

discontinuingproductionofexistingmodelsofequipment.

11.3PROCEDUREFORPROCUREMENTOFSMALLVALUEITEMS:

a. ThelistofSmallValueItemscompiledbythePlanningdepartmentandmadeavailableto

thiscellshallformthebasisforprocurementactionbasedonpredeterminedstocklevels

andrateofconsumption.

b. NoseparatePRisrequired.Thesourcesforprocurementwillbeidenti�iedbytheChiefof

SMVCell.

ReferERPT-Code“ME51N–CreatePR”asillustratedinPara4.10ofChapter4ofthis

documentandT-Code“ME41–CreateRFQ”asillustratedinPara5.16ofChapter5ofthis

document.

c. SMVcellshallmaintainwrittenrecordoforal/spotquotationsobtainedforcomparison

andthereasonsforselectionofaparticularvendorforprocurement.Thisrecordshallbe

signedbyallmembersoftheSMVCell.

ReferERPT-Code“ZMCMP/ME49–QuotationComparison”asillustratedinPara5.16of

Chapter5ofthisdocument.

d. SMVcellwillissuethePurchaseOrders.

Refer ERPT-Code “ME21N– Create PurchaseOrder” as illustrated in Para 10.20 of

Chapter10ofthisdocument.

e. Thedocumentationforreceipt,issue,paymentofsuppliers’billsetc.,tobeattendedto

bythiscellissimpli�iedwithstandardformatsforexclusiveusebythiscellandeasy

identi�ication,havingregardtothenumerousitemstobehandledandthesmallnessof

thevalueinvolved.

f. Thedocumentationforreceipt,issue,paymentofsuppliers’billsetc.,tobeattendedto

bythiscellissimpli�iedwithstandardformatsforexclusiveusebythiscellandeasy

identi�ication,havingregardtothenumerousitemstobehandledandthesmallnessof

thevalueinvolved.

11.4OTHERMATTERSUNDERPROCUREMENTOFSMALLVALUEITEMS:

a. TheChiefofMaterialsManagementwillensurethatissueof'SMV'itemstoproduction

are in conformity with the requirements and that the inventory of 'SMV' Items is

controlledtoavoidaccumulationsorstock-outs.

b. Thevalueof annualprocurementof SMV itemsby theSMVCell shallbewithin the

provisionsmadefortheyear,intheRevenueBudgetbasedonproductionplanforthe

year.

c. SMVCellcanalsoprocurefromapprovedhardwarevendors/approvedbrandforbulk

quantity supplies. It is preferable to order annual quantitywith staggered delivery

schedule.

d. WherelongtermagreementexistsinotherGroup/Divisions,smallvaluecellasfaras

possibleshallprocuresuch items throughLongTermAgreementsincerateswillbe

lowerandqualitybetter.

e. ForcategoryofitemsalreadybeingprocuredbySMVCell,whosevalueismarginally

morethanRs.200/-peritem,thenasanexceptionalcase,withtheapprovalofChiefof

MaterialsthisalsocanbeprocuredbySMVCell.

f. WiththepurviewofSMVCellbeingbroadened,inordertohavecontrolonprocurement,

thedraftcopyofP.Oshallcontainstockquantityasonthatdateandtheworksheetfor

quantitytobeprocured.

PURCHASE MANUAL PURCHASE MANUAL74 75

CHAPTER–12–PROCEDUREFORSUB­CONTRACTING

12.1 INTRODUCTION:

a. Sub-contractisnormallyresorteddueto:

i. Facilitiesnotavailableinternally;

ii. CostFactor;

iii.Lackoftimetocompleteproductiontarget;

iv.Company’spolicy;

v. CapacityConstraints;

b. Thesub-contractingworkwillcovermachining,fabricationandfurtherprocessinglike

heat treatment, plating, assembly, shot blasting done on BEML materials. Sub-

contractingcellraisesPurchaseOrdersforactivitiesidenti�iedtobesub-contracted.Sub

Contractordersarepurelylabourcontracts.Thiswillbemainlyconversionofrawor

semi�inishedmaterialto�inishedcomponentorfurtherprocessedpart/assembly.

c. Thepurchaseprocedureasapplicableproductionitemsshallapplytosubcontractalso.

12.2PROCEDURE:

1. Inordertoensureoptimumutilizationofallgeneralpurposemachinesontwoshift

basisandwhereverapplicableinrespectofhighcost/criticalCNCmachinesonthree

shiftbasis,onallsevendaysthroughouttheyear,theworkloadagainsteachwork

centreistobeassessedagainsteachworkcentres,aspertheproductionplanforthe

year.

2. A ‘PlantBalance’exercisehasgottobecarriedoutforallworkcentresandwork

centres identi�ied having shortage of capacity or excess capacity. ANote, on this

exercise,tobesenttoconcernedDirectorforhisapproval,byChiefofPlanningfrom

respectiveDivisions,dulycerti�iedbytheDivisionalHead,withdueco-ordinationby

DivisionalFinanceChief.ConcernedDirectorwouldreviewthe‘PlantBalance’ofall

the Divisions of BEML, to achieve optimum utilization of in-house plant and

machineryintotalityandapprovetheextentofsub-contracting,intermsofSMHfor

different work centres. SMH thus approved will be treated as ceiling for sub-

contracting.

3. The Division shall then do detailed planning and recommend jobs to be sub-

contractedandcorrelateeachsuchrequestwith totalworkcentrewiseapproval

given.Suchofthejobsandtotheextentapprovalwillonlybesub-contracted.

4. Dependinguponthevalueofeachsub-contractproposal,approvaloftheCompetent

AuthorityasperDoPshallbeobtained.Therequiredapprovalsshallbeobtainedat

leasttwomonthsbeforethecommencementoftheproductionyeardependingon

approvedproductionprogramme.

5. Duringtheyear,ifthereareanychangesintheProductionPlan,suitableadjustments

intheSMHapprovedforsub-contracting,tobecarriedoutandapprovalofconcerned

Directorforsuchchangesshallbeobtained.Whereversub-contractingisrequired

owingtoin-housefacilitiesnotavailable,separatenoteistobeinitiatedindicating

parts to be sub-contracted, process required and value of the work to be sub-

contracted and approval of concerned Director must be obtained. Copies of the

approvalsthustakenshallbefurnishedtoPurchaseScrutiny,toenabletheSectionto

co-ordinatetherelevantPurchaseOrders.

6. Theactualworksub-contractedshallbewithintheapprovaltakenandaquarterly

reportputuptotheDivisionalChiefthroughFinance,toensurethattheactualsub-

contractinghoursarewellwithintheapprovedplan.Forthispurpose,thePurchase

Order(internalworksheet)willindicatethecomponentwiseSMHlinkedtowork

centre.

7. Basedontheapprovedplanforsub-contracting,themethodsPlanningdepartmentin

consultationwithProductionControl,ProductionandIEdepartmentsshalldrawa

listindicatingtheitemsandthequantityagainsteachitemtobesub-contracted,and

furnish to the Sub-contract cell. No PR will be issued separately and this

communicationtotheSub-contractcellwillformthebasisforsub-contractingthe

work.

8. Thelistshallnotincludeitems/componentsorderedonsuppliersformanufacture

andsupplyingwiththeirownmaterialswhichshallbedealtwithbythePurchase

departmentasperthePurchaseprocedure.Also,Purchasedepartmentshallnotdeal

withany sub-contractingorders,which requireoperationby theSub-contractors

withBEMLmaterials.However,basedonvolumerequirementtherecanbeparallel

actionbothPurchaseandSubcontractpartialquantities.

9. Thesub-contractcellwillidentify,developandselectsourcesforsub-contractingAVL

basedonpropervendorevaluation.Thereshallbeanapprovedlistofestablished

sourcesupdatedperiodicallybasedonvendorrating/performance.

10. ThePurchaseprocedure as applicable toproduction items shall apply andorder

placeddulyapprovedbythecompetentAuthorityasperdelegationofpowerforsub-

contracting.AlsoDevelopmentalPOcanbeplacedbysub-contractcell.

11. Thecellwillconductnegotiationsofrateskeepinginviewourestimatedconversion

chargesasapplicable forasmallscale industry,asalsoquality,quantity, termsof

payment, delivery schedule, quantity of rawmaterials etc. to be sent to the Sub-

contractor forprocessing the tenderedquantity,normalwastageandvalueofoff

cuts/ scrap to be deducted from fabrication charges, if not, returnable to BEML.

AlternativelyNITcanspecifytogivequoteafterdeductionofscrapvalue.

12. Theinternalestimatesshallbesuitablyadjustedinviewofourhighoverheadsand

henceourestimatesshallnotbecomparedwiththequotesona liketolikebasis

withoutadjustment.However,dueweightagecanbegivenforquality,workmanship

anddependabilitywhileestimatingthecostsand�ixinguptheprices.

13. Thesub-contractcellshallcallfordrawingsfromDesigndepartmentwhereverthe

drawings are not already available. Themethods planning department shall also

realistically estimate and make available to the Sub-contract cell the raw

materials/components required for the Sub-contracted items to be sent to Sub-

contractors.

14. Therequirementsofrawmaterials/Componentswillbeindicatedperunitoftheitem

only(or)inmultiplesof5/10/20equipmentrequirementsoftheitemsandsoonto

PURCHASE MANUAL PURCHASE MANUAL76 77

minimizewastage,wheretheitemstobefabricatedbythesub-contractorsaresmall

componentsinvolvingorderingofeconomicallots.Theestimatedquantumofscrap

arising from the raw materials/components to be provided by BEML shall be

indicatedinthemateriallist.Also,thismateriallistwillindicatetheestimatedSMH

requiredforfabrication/processingoftheitemsperunit(or)inmultiplesof5/10/20

equipmentrequirementsoftheitemandsoon.

15. Thesub-contractcellshallmaintainalistofsub-contractorsdulycodi�ied,withtheir

addresses,andthenatureofworkdoneorcapableofbeingdonebythemtoBEML.

IntroductionofanewSub-contractorandincludinghisnameinthelistshallhavethe

writtenapprovalfromtheChiefofMaterialsManagement.Thesub-contractorsasper

thelistwillbecontactedforourrequirements.

16. Acomparativestatementwillbepreparedafteropeningthequotations,comparing

thefabrication/processingchargesetc.,ofvarioussub-contractorsonaliketolike

basis.Thesub-contractcellshallstudythefabrication/processingchargesquotedby

the Sub-contractors with our estimates. Wherever the fabrication charges etc.,

indicatedinthequotationsareonthehighsideascomparedtotheestimatesmadeby

BEML,keepinginviewthefacilitiesetc.,availablewiththeSub-contractors,thesame

maybenegotiatedwithL1source,ifrequiredwhoisdependable.

17. The Sub-contractors shall accept the quantum of scrap indicated by BEML as

returnabletoBEMLoutoftherawmaterials/componentssuppliedtothem.Thesub-

contractorsshallbeaskedtogivetheirQuotationforfabricationchargesaftertaking

into account income from scrap and also without taking into account the scrap

income.Therateatwhich thescrap ispricedmustalsobe indicatedby theSub-

contractors in theirquotation.ThiswillhelpBEMLto takeadecisionwhether to

reducethefabricationchargestotheextentofscrapvalueandleavethescrapwiththe

Sub-contractorsbringthescraptoBEMLandpaythefullfabricationchargestothe

�irms.OnthisbasisthePurchaseOrderwillbe�inalizedandconditionsexplained

clearlyintheSub-contractPurchaseOrders.

18. Whilesendingtherawmaterials,itshallbeensuredthatcorrectsizeofrawmaterials

aresentbymakinganeconomicallayouttoavoidissueofhigherquantumofraw

materialstoSub-contractorsandtopreventthebene�itofhigherarisingofscrapwith

sub-contractorsthanestimated.Wheneverthereisachangeinthesizeandquantum

of rawmaterials supplieddue to valid reasons, Sub-contract cell shall advise the

revisedquantumofscrapandconsequentialchangeinthefabricationchargestothe

sub-contractorsforacceptance,underadvisetoAccounts.

19. AmendmenttotheSub-contractPurchaseOrdersshallbeissuedasperDoP.

20. Nomaterials shall be sent to the sub-contractors before release of Sub-contract

PurchaseOrders, afterapprovalby thecompetentAuthorityasperDelegationof

Powers.PurchaseOrdersshallbereleasedexpeditiouslywithinamonthfromthe

timethequotationsare�inalized.

21. The delivery of �inished components/structures etc shall be completed within

maximumof180daysfromthedateofsupplyofrawmaterials/componentstothe

sub-contractorsbyfollowingtherelevantprovisionsoftheCentralExciseGSTAct

GSTshallbepayableoverandabovethefabrication/processingcharges.Sincethisis

ajobworknoSalesTaxisalsopayable.However,whenEDandSTispayableasperthe

changesintherespectiveActs/Rules,thesameshallbepaidafterproperexamination

oftherelevantprovisionsoftheActs/Rules.ItshallbeensuredbytheSub-contract

cell in consultationwith Excise Cell in the Stores department that all the excise

formalitiesarestrictlyadheredtowhilesendingtherawmaterials/componentsand

bringingbackthe�inishedcomponents.Ifforanyreason,180daysperiodcouldnot

bemaintained,extensionoftimeshallbeobtainedfromtherespectiverangeexcise

superintendentbysendinganapplicationintime.

22. TheapprovalofPurchaseOrdersshallbedoneaspertheDelegationofPowersandas

perthePurchaseProcedure.However,thePurchaseOrderscanbesignedandissued

bytheSub-contractmanager, inchargeof theSub-contractcell.TheSub-contract

PurchaseOrdersshallbeveri�iedandco-ordinatedbythePurchaseScrutinyCellof

FinanceDepartmentbeforeapprovalandissue.

23. ThePurchaseOrdershallindicatethedetailsofrawmaterials/componentstobesent

fortheindividualitemtobefabricated/processedwithmaterialcodenumbersetc.,

andalsothequantumofscraptobereturnedtoBEML,ifthefabricationchargesare

notreducedforthevalueofscraptoberetainedbytheSub-contractors.

24. CopiesofSub-contractPurchaseOrderwillbetakenfordistributionasunder:-

• Vendor

• Sub-contractaccounts

• Sub-contractcell

As per the purchase procedure, accounts copy and sub-contract cell copy of the

Purchase Order only will be approved and authenticated by the approving

authorities.ThePurchaseOrder issued shall contain the concerned rawmaterial

code numbers (for despatch) and also the �inished parts code nos. (For �inished

components)andalldocumentsshallindicatethecorrectcodenos.ofmaterials.

25. Thematerials may be sent by BEML and also collected by BEML from the sub-

contractor’s,workswhereverSub-contractorsarenotagreeabletocollecttheraw

materials from BEML and deliver the �inished components to BEML and the

fabricationchargesdonotprovideforfreightcharges.Beforethematerialsaresent,

thesameshallbeweighedintheweighbridgeandweightindicatedinthedespatch

advice and other documents where applicable and the sub-contractors

acknowledgementtakenonthedespatchadviceforhavingreceivedthematerials.

26. Raw materials/components for sub-contracting shall be loaded in the physical

presenceofrepresentativesofsub-contractcell,stores,andsecuritydepartments

whowillchecktheexistenceofPurchaseOrderandtheconditionsthereinasalsothe

documentsmadefordespatch.Theitemswillbepre-inspectedatthepremisesofthe

Sub-contractorbeforetheyarecollected/despatched,whereversuchpre-inspection

isrequired.

27. Beforesendingthematerialstosub-contractors,thefollowingdocumentationshall

bedone.

PURCHASE MANUAL PURCHASE MANUAL78 79

• ASub-contractPurchaseOrderwillbeopenedunderseparateseriesgivingfull

details,indicatingquantumofrawmaterialsetc.,tobesenttothesub-contractor

forfabrication/processingoftheorderedquantityetc.,

• MRswillbemadequotingthesub-contractPurchaseOrderreferencefordrawalof

rawmaterials/components.

• MRsshallbeco-ordinatedbyPlanningDepartment.

• MaterialswillbedrawnfromStoresandmovementarrangedbytheSub-contract

cellwithproperDespatchAdviceandGatePass.DespatchAdviceshallindicate

Purchase Order number and Material Requisition numbers also among other

details.

• ExciseChallansasperCentralExciseAct.

28. Itshallbeensuredthatalltherequiredmaterialsforanitemaresenttogetherandnot

in an imbalanced way. Also the materials shall be sent in convenient batches

dependinguponthedeliveryrequirements.Thiswilleliminatethescopefordiverting

thematerialsbythesub-contractors,besidesavoidingexciseproblemsanddelayin

fabrication.

29. The sub-contract cell shall watch for the return of the fabricated parts/�inished

components and Receiving Reports shall be �inalized immediately for proper

accounting.Where the fabricated parts/�inished components are directly sent to

shopsforuseinProduction,thesameshallhavetheco-ordinationoftheProgress

departmentandbothRRsandMRsshallbe�inalizedandreleasedwithoutanydelay

forproperaccountingandpaymenttotheSub-contractors.

30. Whererawmaterial/componentsaredrawnandsenttoshop�loorforprocessing

(likeheattreatmentetc.)beforedespatchtotheSub-contractors,theMRsinsuch

cases shall be made quoting the relevant production work order only. After

completionof the requiredoperationson the shop �loor the items shall be store

creditedagainstStoresCreditNotesquotingtheproductionworkorder.Theitems

will then be made 541 movement i.e Transfer Posting of Components to sub-

contractorforthesubcontractPO’sfordespatchtherelevantsub-contractPurchase

Ordersfordespatch.

31. EveniftheprocesseditemsaredespatchedfromtheShop�loortheabovedocuments

willbepreparedtoregularizethetransactions.

32. BankguaranteeforanominalamountofRs.5000/-mustbeobtainedfromeachSub-

contractorvalidforminimumoneyear.

33. Unless the fabricated/processed items are received/ collected against the raw

material/componentssentearliertothesub-contractor,furtherdespatchesshallnot

bemade.Alsothe�irstoffsampleshallbeapprovedbyBEMLInspectiondepartment,

beforebulksupplyiseffectedandfurtherdespatchofrawmaterials/componentscan

bemade-onlythereafter.

34. Materialissuedtosub-contractorforjobworkshallhaveinsurancecover.Itcanbe

coveredinGeneralInsuranceforallmaterialssentoutside.Thescopeofinsurance

coverage will be Loss of damages to materials despatched to contractors/ sub-

contractorsand/orattheirpremisesdueto:

(a)Whilstintransit(bothways)asperICC(A)clause

(b)Fireandalliedperilsasperstandard�ireandspecialperilspolicywithearthquake

extension.

(c)Burglary,theft,holdup,dacoitandrobbery

(d)Accidentalbreakageincludingaccidenttocarryingvehicles

(e)In�idelityofthecontractorsandsub-contractorsincludingabsconding

35. Atanypointoftimematerialissuedtosub-contractorswillnotbemorethanRs25.0

Lakhs.Howeverdependinguponthenatureofsub-contractworkinvolved,material

exceedingvalueofRs25.0Lakhsmaybesentwiththewrittenapprovalofcomplex

chief.

36. InrespectofsupplyoffreesupplyitemsasinthecaseofProductionofRailcoaches,

althoughthereisnovalueassignedtothefreesupplyitems,aquantitativerecord

shallbemaintainedbyalltheconcernedsections.Thevalueforthefreesupplyitems

shallbeassignedatmarketratesandaccountedoutsidethebooksofaccountsto

know the value ofmaterials lyingwith the Sub-contractors and for reporting to

Management.Alltherequireddocumentswillalsobemadeasperthisprocedure.

37. Theof�icialsfromSub-contractcellwillperiodicallyvisittheSub-contractorsworks

toensurethatBEMLmaterialsarekeptsafelyforuseasperthePurchaseOrderterms.

Amonthlystatusreportshallbefurnishedinco-ordinationwithaccountsindicating

thequantumofmaterialsheldbytheSub-contractorsandactiontakenasafollowup

togetthecompletedcomponents,toHeadofPlanning.Necessarycontrolregister

shallbemaintainedbytheSub-contractcellasperformat.Asuitableclauseshallbe

includedinthePurchaseOrderthattheSub-contractorshallberesponsibleforthe

safeCustodyofBEMLmaterialsandanylossduetotheftetc.,shallbemadegoodby

theSub-contractor.

38. ItshallbeensuredbytheProgressdepartmentthattheitemssub-contractedtosub-

contractorsarenotloadedtotheshopsforproductiontotheextentquantitysub-

contractedandtheJobcardsalreadyissuedtoshopsarecancelled(or)calledback.No

Jobcardsshallbeissuedinfutureforsuchoperationssub-contractedoutsideexcept

foritemswhichhavebeensub-contractedduetoshortageofinhousecapacityby

puttingPPO5�laginroutingofparticularproductionorder.

39. Noextrafacilitiesshallbegiventosub-contractorseitherintheformofadvanceorin

theformofissueoftoolsandjigs,testinggaugesetc.,onloanbasis.However,where

toolsandjigsarerequiredtobegiventothesub-contractorsonloanreturnablebasis,

andfabricationchargesacceptedonthatbasis,itshallbeapprovedbytheChiefof

Planningbasedonrequestgivenbythesub-contractorandshallbeindicatedinthe

PurchaseOrder.Wheretheseextrafacilitiesareproposedtobegivenafterreleaseof

thePurchaseOrderandPurchaseOrderdoesnot contain a clause to extend this

facility,thefabricationchargesshallbenegotiatedandreduced.

PURCHASE MANUAL PURCHASE MANUAL80 81

40. TheTools,Jigs,Gaugesetc.willbeissuedtoSub-contractorsagainstseparateloan

workorderby541movementwithapprovalofDivisionHeadandthesameshallbe

watchedfortheirreturningoodworkingconditionwithinareasonabletime.The

periodofloanshallbeindicatedintheERPsystemandalsointhePurchaseOrder.The

paymentoffabricationchargesshallbeunder"OpenAccount"termsonly.

41. Normally, there shall not be any rejections of the completed parts however 2%

rejectiontowardsmaterialispermittedagainstsupplybacktherejectedmaterialto

the division. If there are any rejections beyond 2%, the value of the

materials/componentsproportionatetotherejectedquantityofthecompletedparts

shall be recovered from the sub-contractor. However, where process rejections

cannot be avoided, it will be accepted on themerit of the case by a Committee

consisting of the Chiefs of Sub-contract Cell, Inspection, Planning and Finance

Department.TheCommitteeshallsubmititsrecommendationstoBusinessGroup

Headforapproval.CopiesofapprovalsshallbemarkedtoMaterialaccountsandSub-

contractaccountsfortakingnecessaryaction.Therejecteditemsshallbereceivedin

BEMLandsenttosalvagefordisposalbeforeapprovalisgiven.Itshallbenotedthat

intricatecastingsshallnotbesub-contractedformachining.Wherevertheorderis

cancelledfullyorpartially,BEMLrawmaterials/components,ifany,lyingwiththe

sub-contractorsshallbecollectedbackimmediately.

42. Wheretherejectionsareduetomaterialfaultasinthecaseofcastings,whichmaybe

duetothesupplier'sfault,thecostofmaterialsshallbedebitedtothesupplierof

castingsandcostrecoveredfromhim.PDOsraisedfortherejectionsduetoprimary

vendorsfaultatthereceivingstageofthefabricated/processeditemsasperPurchase

Ordersshallindicatethisfactveryclearly,andacopyofthePDOsmarkedtoMaterial

andsub-contractaccountsfornecessaryrecoveryandaccountingaction.Acopyof

thePDOshallbesenttoPurchasedepartmentforadvisingthevendorsuitably.

43. All copiesofPDOs raised at theReceiving Inspection stageof the items, shall be

markedtosub-contractaccountsandMaterialaccountsclearlyindicatingtheSub-

contractPurchaseOrderandreceivingreportreferencestoenabletheSub-contract

accountstorecoverthevalueofproportionatematerialsfortherejectedquantity

overandabovetheapprovedrejectionsasper(xxviii)andprimaryvendorsfaultas

per(xxix),basedontheadvisegivenbytheMaterialaccounts.Sub-contractcellwill

also advise Sub-contract accounts to recover the dues from the Sub-contractors

againstrejections,costofmaterialsetc.,

44. Onceinaquarterandasattheendoftheyearviz.,31stMarchofeachyear,theSub-

contractorsshallbeaskedtocertifythequantumofrawmaterials/componentsheld

bythemintermsofquantity,asperourbooksofaccountsafteraccountingallthe

transactionsuptothecloseofthequarter/year.Thesub-contractcellshallobtainthe

con�irmationwithintendays’time.

45. With regard toMaterial lyingwith vendors, ifmaterial issued during the period

exceededtwicethetimeallowedforcompletionofjob,incasethedelaywasdueto

vendor , no further PurchaseOrder to be placed on such vendors in addition to

collectingbackthematerials.

46. The points as mentioned in this procedure to take care of BEML's interests

contractuallyshallbespeltoutclearly in thePurchaseOrdersplacedontheSub-

contractors.

47. Thisprocedureforsub-contractordersshallbefollowedinthecaseofordersplaced

ontheAncillaryunitsalso.Foranydeviations,theapprovalofDivisionHeadshallbe

takeninwritinggivingreasonsfordeviations,bytheof�icerinchargeoftheAncillary

unit,withtheco-ordinationof�inance.

12.3SUB­CONTRACTINGPROCESSINERP:

a. Sub­contractingwithoutpaymentofDuty:

Note:Inthiscase,theuserwillhavetomaintaintheAssessableValuefortheComponentstobe

supplied to Vendor in J1ID and also Excise Tax rates for the Chapter IDs linked with these

components. So during J1IF01, systemwill take theAssessableValueasExcise baseValueand

calculatestheExciseDutiesbytakingExciseTaxRates.

PURCHASE MANUAL PURCHASE MANUAL82 83

b. TheMasterDatausingthefollowingT-Codestobeupdatedforaboveprocess:

i. MM01-MaterialMastersforComponentsandFG

ii. XK01-VendorMaster(Sub-contractor)

iii.CS01-BOMforFG

iv.ME11-PurchaseInforecordforSub-contracting

12.4ERPT­CODESRELEVANTUNDERTHISCHAPTER:

ThefollowingaretheERPT-Codesessentialforprocessnarratedinthischapter:

T–Code Particulars FunctionsofT­Code

J1IF01

J1IF11

CreationofSub-contractingChallan(i.e.withoutpaymentofduty)

ChangeofSub-contractingChallan(i.e.withoutpaymentofduty)

-

-

J1IF12

MBLB

DisplayofSub-contractingChallan(i.e.withoutpaymentofduty)

Stocksatsub-contracting

-

This report will generate the list and value ofmaterialswhichare lyingwith thesub-contractor.This report gives the PO number, vendor name,Quantityandvalueofmaterialwithsub-contractor.This is essential to identify if there are any itemspending with vendor and which is nearingcompletionof180days.

ME2O

ZC31

Sub-contractingStockMonitoring(Vendor)

SMHBookingAnalysisReport

Theuser canmonitorhowmuchquantity is lyingwith the Vendor for the particular material andshortage material quantity can be issued to theVendor through "Post Good Issue" option in thesamescreen.

Thistransactionisusedtodisplaydetailspertainingto job card booking. The initial screen allows theusertoenterplant&bookingperiod.Theoutputletsthe user to analyse the data on SMH basis. Thetransaction will display the information such asdepartment-employee wise SST, gate attendancehours,OTHrsdetailsetc.

ReferERPProcessManualfordetailedproceduretooperateinERPEnvironment.

CHAPTER13–PURCHASEPROGRESSION

13.1DELAYINDELIVERYOFSUPPLIESANDLEVYOFLIQUIDATEDDAMAGES:

a. Timeistheessenceofthecontractanddeliveryshallbestrictlyinsisteduponaccording

tothedeliveryschedulegiveninthePurchaseOrders.

b. Inthecaseofdelayindeliveryofsupplies,BEMLshallhavetherighttolevyliquidated

damagesasperthegeneraltermsandconditionsofthecontract.Forthispurpose,there

shallbeasystematicreviewbythePurchasedepartmentofthestatusofactualdelivery

ofsuppliesascomparedtodeliveryschedulestipulatedinthePurchaseOrder.

c. Itshallbepossibleforthepurchasedepartmenttoforeseelikelydelayindeliveryof

suppliesandsuitablytakeupwithconcernedsupplierswellinadvanceofthedelivery

scheduleandinformthemaboutthematerialduefordelivery.

d. If thedeliveryof thematerial isdelayed, thenvendorshallbe informedabout their

liability for L.D. If the payments are through bank the supplier shall be directed to

forward thedocumentsdirectly toBEML to arrangepayment afterdeductionofLD

amount.

e. ThecondonationofdelayorextensionoftimefordeliverybyBEMLwillbewithout

prejudicetotherightofBEMLtolevyLD/tocollectinterestonadvanceifanypaid,tobe

calculatedfromtheoriginaldateofdeliveryasperPurchaseOrdertotheactualdateof

delivery.

f. TheERPsystemwillhavetobecon�iguredwithLiquidatedDamagescalculationwiththe

helpofABAP.TheformulaforLDwillhavetobede�inedatthetimeofraisingofPurchase

Orderwhichwillenable inautomaticallycomputeand levy liquidateddamagesand

prompttheLDdeductionatthetimeofpaymenttovendor.

13.2AMENDMENTTOPURCHASEORDERS:

AmendmentofContracts forchanges inPurchaseOrder terms inregard tomodeof

despatch, termsofpayment,quantity toadmit/accept excess supply,price/request for

priceincrease:

a. ModeofDespatch

i. Normally,thecheapestmodeofdespatchisbyrailforinlandpurchasesandbysea

for imports. Where there is an approved transport contract for transport of

materials by road, it will be deemed as the cheapest mode of despatch. Any

deviation in the mode of despatch involving extra expenditure must be got

approvedbythecompetentAuthorityasperDoP.

ii.AirFreightCharges

1. Asgeneralrule,Airfreightshallbeavoided.

2. Airfreightmayberesortedforitemswhicharedelicate,fragile,smallinweightand

volume,chancesofpilferageetc.

iii. Incaseofurgencyfortheitemsotherthanitemsindicatedatabovepara(ii,2)

approvaloftheDivisionalHeadwithFinanceconcurrenceshallbeobtainedafter

PURCHASE MANUAL PURCHASE MANUAL84 85

recordingthenatureofurgencytogetherwithadditional�inancialimpactasper

DoP.

b. TermsofPayment

AnychangeinthetermsofpaymentofferedinthePurchaseOrderhastobecoveredby

anamendmenttoPurchaseOrderdulyapprovedbythesameAuthoritywhoapproved

thePurchaseOrder.Ithastobeensuredthatthechangedtermsofpaymentarewithin

theambitofpaymenttermsnormallyadoptedbyBEMLfortheclassofmaterialscovered

inthePurchaseOrder.

c. ExcessSupply

Excess supplieswithoutamendment toPurchaseOrderarenormallypermissible in

regardtoregularproductionitemsofBandCclassitemsandnonproductionitemsupto

5%subject tounderpropercoverage/requirementprovidedthere isnodownward

trendinpricesandunitdonotcarryexcessinventory.Allothercasesofexcesssupplies

aretobeapprovedbytheCompetentAuthoritywith�inanceco-ordinationasperDoP.

d.ChangeinStatutoryLevies:

ForgeneralamendmenttoPurchaseOrderonstatutoryleviesthePurchaseDepartment

shallobtaintheapprovalofBusinessGroupHeadwithdue�inanceco-ordinationand

necessary correctionsofPOvalue canbedoneonlineby thePurchaseDepartment.

Wheretherevisedrates/leviesareanenhancement(or)freshlevies,thesamewillnot

beappliedforpaymentonthesupplieswhichshallhavebeenmadeuptothedateof

revisionofthelevies,asperdeliveryschedulebutdelayedbythesupplier.

e. Changeinprice/requestforpriceincrease:

i. Where a price variation clause with formula is speci�ied in a Purchase

Order/contract, amendment if required to suchPurchaseOrders/contracts for

price revision may be approved by the Chief of Materials with Finance co-

ordination.

ii. Wherepricevariationclauseunderaformulaisnotcovered,tenderenquiryshall

mention thatnoprice increasewillbeallowedduring thependencyofP.O. i.e.

quantity/contractperiod.Itmeansthattherate�inalizedwillnotberevisedunder

anycircumstances.

*TheabovechangeshavetobeupdatedinERPPOusingT-code“ME22N–Update

PurchaseOrder”.

f. ForpricecontrolleditemscoveredbyGovernmentnoti�icationslikefuel,oil:

i. ThePurchaseOrdercoveredshallbeforalongperioddeliveriesi.e.,morethansix

monthsandshallhavebeen�inalizedmuchearliertothedatesofthestatutory

priceincreases.

ii. Thesuppliesrecommendedforpriceincreaseshallbeatleastthreemonthslater

thantherelevantdatesofstatutorypriceincrease.However,inthecaseofsmall

scale/mediumscaleindustrieswheresteelisnotstockedformorethanamonth's

requirementsasascertainedbythePurchasedepartment,priceincreasemaybe

givenforsupplies1to2monthslaterthantherelevantdatesofstatutoryprice

increase.

iii. Ifthedeliveriesaredelayedbythesuppliers,thepriceincreasesshallbeborneby

them,andBEMLshallnotagreeforpriceincreaseinsuchcasesofdelayedsupplies.

Where delivery is delayed due to BEML's instructions to the supplier, well in

advanceinwriting,onaccountofchangesinthepriorityforproductionetc.insuch

cases price increase may be considered. Copies of letters issued to suppliers

advisingthesupplierstodeferdeliveriesmustbemarkedtoAccountsdepartment.

iv. Incases,wheremore thanonesupplier isavailable, theprice increasemaybe

consideredonlyinthecaseofsupplierwhosepriceisthelowest.However,the

requestforpriceincreasefromothersuppliersalsomaybeconsideredtothelevel

oftherevisedpriceofthesupplierwhosepricewasthelowest.

v. Thestockingofmaterialslikesteelaspertheacceptedpracticeintheindustries

involvedshallbelookedintoinordertoseewhetherthematerialsatpricesearlier

topriceincreasearenotalreadyorderedandstockedbythesupplier.

vi. Thepriceincreaseistobelimitedtothebarestminimumandshallbelessthanthe

costincreasesworkedoutwithreferencetothestatutoryincreaseinthepriceof

theinputmaterialsinquestionsincethesupplierisalsoexpectedtobearaportion

ofthecostincreases.

vii. Forother input itemsbasedontheprice listsofmanufacturersorchannelized

bodieslikeMMTC,alltheabovebasicprinciplesunder(e)willapplyexceptthe

word"Statutoryprices"whichwillbereplacedbytheword"pricelists/invoice"of

sourceofsupplyorofchannelizedbodieslikeMMTC.

viii. AllothercasesofrequestsforpriceincreaserequiretheapprovalofCorporate

Of�ice.

g. PriceVariationClause:

I Invariably,PurchaseOrdersshallbeplacedona�irmpricebasis.Inexceptional

cases, where the �irm insists on escalation or on price ruling at the time of

despatch,thePurchaseOrdershallcontainaclausetothiseffectforadmissibility.

ThePurchaseOrdershallclearlyspecifytheformulafordeterminingthequantum

ofescalationadmissiblewithreferencetoa�ixedbaseperiodandpricesrulingat

thatperiodtakenasabasefordecidingtheescalations.Thebaseperiodandprices

shallbemutuallyagreedbasedonnecessarydocumentaryevidence.Normally,

suchescalationclaimmaybeinrelationtoinputmaterialswhereapplicableandin

afewcasesitmayrelatetolabouralsoinadditiontoinputmaterials,whichare

beyondthecontrolofthesuppliers.ItshallbemadeclearinthePurchaseOrder

that claims for escalation shall be for suppliesmade after 3months from the

relevant dates of statutory price increases and the claims submittedwithin a

reasonableperiodfromthedateofsupplyandinanycasenotbeyondsixmonthsof

thedateofcompletionofsuppliesagainstthePurchaseOrder.

ii. Theclaimsshallbesupportedbynecessarydocumentaryevidence,ascompared

tothebasepricesforadmittingtheescalationclaims.WherethePurchaseOrder

providesforadmittingtheprice/raterulingonthedateofdespatch,theclaimmay

be admitted based on the price list in force on the date of despatch.

Escalation/Revisioninpriceshallnotbeadmittedforthedelayedsupplies.

PURCHASE MANUAL PURCHASE MANUAL86 87

iii. Where a price variation clause with formula is speci�ied in a Purchase

Order/contract, amendment if required to suchPurchaseOrders/contracts for

price revision may be approved by the Chief of Materials with Finance co-

ordination.

iv. Wherepricevariationclauseunderaformulaisnotcovered,tenderenquiryshall

mention thatnoprice increasewillbeallowedduring thependencyofPO i.e.,

quantity/contractperiod.Itmeansthattherate�inalizedwillnotberevisedunder

anycircumstances.

v. AllPOenquiriesshallhaveclause(a)aboveandinspeci�iccasestheclause(b)

above.

h.Deliveryaheadschedule:

i. DeliveryaheadofthestipulateddeliveryscheduleinthePurchaseOrderisnot

normallyacceptable.However,iftheproductionexigenciesjustify,thesamemay

be accepted with �inancial concurrence if Purchase Order value is above

Rs.50,000/-Ifthereisnosuchjusti�icationforearlydelivery,thedeliverymaybe

acceptedbyChiefofMaterialsprovided,materialswillnotdeteriorateinquality

whilekeptinstock,butpaymenttothesuppliershallbemadeonlyontheduedate,

asperpaymenttermswithoriginaldeliveryschedule.Suppliersshallbeaskednot

tosendthedespatchdocumentsthroughBankinthecaseofearlydelivery.

ii. Inrespectofanyotheramendmentwithout�inancialimplication,aformalletter

from Purchase department to all concerned department will suf�ice, duly

approvedbytheAuthoritythatapprovedthePurchaseOrder.

13.3 AnycancellationorshortclosureofPurchaseOrdershallhavethecoordinationof�inance,

if thePOvalue ismore thanRs.2,00,000/-anddue intimation, to thesupplier.Where

cancellation short closure of the Purchase Order has to be issued immediately to the

supplier, in thebest interestofBEML,such letters/amendmentsmaybe issuedbythe

PurchaseDepartment and amendments sent to �inance forpost facto scrutiny and co-

ordination.

13.4VERIFICATIONANDACCEPTANCEOFBANKGUARANTEE

a. Of�icersConcerned in theMaterialsdepartment shall check allBankGuaranteeson

receiptinadditiontothefollowingchecks:

I TheBankGuaranteesneedtobeproperlyexaminedwithrespecttotheacceptable

formatandanyconditionsdeterrenttotheBEML’sinterestshallbegotwithdrawn

beforeacceptance,besidesverifyingthegenuinenessoftheBankGuaranteesfrom

thebankers.Timelyactionforrevalidation/encashmentoftheBankGuarantees

alsoneedstobetakensoastoprotecttheBEML’sinterest.

ii. BankGuaranteeforfaithfulperformanceshallbevalidtilltheendofthedelivery

periodstipulatedinthePurchaseOrderinadditiontoaclaimperiodofthreemore

months.

iii. Thenameanddesignationof theof�icer executing theBankGuaranteeandhis

powerofattorney/signingpowerNo.aredulyshownthereinandeachpageofthe

BankGuaranteedulysigned/initialledbytheexecutantsandthelastpageissigned

withfullparticularsasrequiredinthestandardformatofB.G.andunderthesealof

theBank.

iv. TheBankGuarantee isonNon-judicial stamppaperof appropriatevalue tobe

indicatedbythelawdept.ThedateofexecutionofBankGuaranteeshallnotbe

earlierthanthedateofstamppaper,whilethesamemaybeonorafterthedateof

saleofStampPaper.

v. ThefactualdetailssuchasPurchaseOrdernumber,valueofthecontract,amountof

advance,valueofcontractperformanceguarantee,validityoftheguaranteeetc.are

thoroughlychecked.Itmayalsobeensuredthatover-writingsorscoringsifanyare

properlyauthenticatedwithsignature(s)andsealoftheexecutants(s).

vi. Incasethereareanymistakesinthebankguarantee,thesameshallbenoti�iedto

thesupplierandinrarecaseswheretheMaterialsdepartment�indsitsafetoreturn

thedefectiveB.G.'ssuchas,guaranteeswhicharenotbidguaranteesorBEMLhas

notpaidanyadvancetothesuppliertheBGmaybereturnedtothesupplier(against

hiswrittenacknowledgementandafterretainingitsPhotostatcopy)forcarrying

outtherequisitecorrectionbythebankunderproperauthenticationbythebank.

However, return of original bank guarantee is not in the interest of BEML and

amendmenttothevalueofthebankguaranteeorextensionofthedateofvalidity

thereof, if any, shall be obtainedonnon-judicial stamppaper of the equivalent

amountasthatoftheBankGuaranteeitself.

vii. AphotocopyoftheBankGuaranteeshallbetakenandkeptinthe�ile,whilethe

originalbankguaranteemaybekeptinthesafecustodyoftheFinancedepartment

aftertakingacknowledgmentonthephotocopy.

b. Thecon�irmationfromthebankershallbeeitherinBEMLstandardformat/Banker's

letterhead/unstampedduplicatecopyofBGtoenabletoaccepttheBGwithoutlossof

time.

c. AllBGsshallbeindependentlycheckedinverbatimaspertheformatandcon�irmation

shallbeobtainedevenwhentheBGsarereceivedfromthebankersdirectly.

d. EachSectionHeadintheMaterialsdepartmentshallbemaderesponsibleforveri�ication,

timelyrenewalandtimelyencashmentofBGs.

e. Aletterofcon�irmationshallbeaddressedbytheMaterialsdepartmenttotheexecutants

of the Bank Guarantee seeking con�irmationwhether the Bank Guarantee has been

executedbytheexecutants.Thislettershallbeissuedinduplicatebyregisterpostinthe

name of the executants of the Bank Guarantee as per the approved format. The

executants’ bankwill be required to return one copy of the letterwith a certi�icate

thereondulysignedandstampedunderitssealthroughregisteredpost/courier/fax

within15daysofreceiptofletterofcon�irmation.Banker’scon�irmation/certi�icatein

theirownletterheadcanalsobeaccepted.Innocaseasupplierisallowedtobringthis

letterwiththecerti�icateofcon�irmationfrombank.(Notevenundersealedcoverofthe

bank)

f. BankGuaranteeintheformofe-stampscanbeaccepted,ifsubmittedbythebankers,

subjecttoveri�icationofthestampintherespectiveGovernment’sonlineportal.

PURCHASE MANUAL PURCHASE MANUAL88 89

g. Incaseofforeignbankguarantees,theBGsreceivedfromforeignbanks,authorized/

recognizedbyRBI,intheirownletterheadshallbeaccepted.

h. TheBankGuaranteeshallbeobtainedwithenoughvalidityperiods.Thevalidityofthe

Bank Guarantees shall be carefully monitored and shall be got extended suitably

wheneveritiswarranted.AsanylapseinnotgettingtheBankGuaranteeextensionmay

result in loss to the organization, it is essential to ensure that extension of Bank

Guaranteesareobtainedintime.

i. IncaseofCombinedBankGuarantee(CBG),bankguaranteesshallbeobtainedwitha

validityperiodasperthewarrantyrequirementsmentionedintherespectiveorders

withanadditionalclaimperiodof3monthsbeyondthedateofcompletionofwarranty

period.However,incaseofrequirementofBGsforlongerdurationsmorethan21months

andthesupplierexpressesdif�icultyingettingBGfromtheirbankersfortheentireperiod

atastretch,initiallyBGswithlesservaliditydurationcanbeacceptedandshallbegot

extendeduptotherequiredperiodatleast3monthsbeforetheexpiryoforiginalBG.

13.5 INVOCATIONOFBANKGUARANTEE

Incase,decisionistakenforinvokingthebankguarantee,theactionshallbeinitiatedat

leastonemonthbeforetheexpiryofthesubjectbankguarantee.Thewrittendemandshall

bemadethroughRPAD/SpeedPost/Courier/Fax/emailontheBankwhohadissuedthe

GuaranteewithitscopytotheHeadOf�iceoftheBank.Recordsshowingsuchdespatch

detailsshallbemadeavailableinthe�ile.Incasetheclaimamountisnotreceiveddespitethe

demandmade,themattershallbecloselyfollowedupbysendingremindersandbypersonal

visitifrequired.Ifnecessary,theReserveBankofIndiaandBankingDivisionoftheMinistry

ofFinancemaybeapproachedtoensurerealizationoftheclaimamount.Ifpaymentisnot

received,asa lastresort, thecasemaybehandedoverto theLegalDepartmentwell in

advancefortakinglegalaction.

13.6 ACCEPTANCEOFBANKGUARANTEES

AcceptanceofallBankGuarantees/indemnityBondsshallbeapprovedbytheexecutives

authorizedbyUnitHeadofMMitselfwithout�inanceconcurrence.

13.7RETURNOFBANKGUARANTEE

a. In the caseofBankGuarantee for faithfulperformance, theBankGuarantee shallbe

releasedonlyagainstcompletionofsupplyandissueofcompletioncerti�icateagainst

receiptandacceptanceofmaterials/service/commissioning.

b. Bank Guarantee for contract performance covering delivery obligations as well as

warrantyshallbereleasedafter ful�ilmentof contractualobligationsandobtaininga

certi�icatefromtheuserdepartmenttothiseffect.Ifthereisnowarrantyclaimwithinthe

warrantyperiodandintheabsenceofanycerti�icatefromIndentertothiseffect,thebank

guaranteemaybereleasedafteraperiodofonemonthfromthedateofcompletionof

warrantyperiodwithoutinsistingforacerti�icate/remarksfromtheuserdepartment.

c. IfanyclaimexistsduringwarrantyperiodandsuchclaimisnotinformedbytheIndenter

(userdepartment)withinthewarrantyperiod,thenthesoleresponsibilityforthefailure

tolodgetheclaimrestswiththeuserdepartment.

d. ForreturningofallBankGuaranteessameshallbereturnedwith�inanceconcurrence.

f. Acceptance/ReleaseofallBankGuaranteeshallbeissuedwiththeapprovalofexecutives

authorizedbyUnitHeadofMM/Regional/DistrictManagersincaseofROs/DOs.

PURCHASE MANUAL PURCHASE MANUAL90 91

CHAPTER–14–SOURCE/PRODUCTDEVELOPMENT

14.1 INTRODUCTION:

It is imperative toorganizeconcertedeffortsonacontinuousbasis topromoteanddevelop

indigenoussourcesofsuppliesnotonlyforimportsubstitutionbutalsofordevelopingalternate

potentialsources.Theobjectiveistohaveaminimumoftwosourcestobedevelopedsuccessfully

toreduceourdependenceonasinglesourceandtheattendantrisks,besidestogettheitemsat

competitiveprices.

14.2PROCEDURE:

a. TheProductionPlanningdepartmentaftermutualdiscussionswithR&DDepartment/

IndigenizationDevelopmentCellwillidentifyspeci�icitemsforindigenizationthrough

vendorsourcing.Wherefacilitiesareavailableintheproductiondivisionandwherethe

PlanningDepartmenthasestablishedsourcesofsupplyforCastings,Forgingsetc.,and

theindigenizationwillbedealtwithbytheProductionDivision.R&Dwilllaydownthe

importantparametersand thespeci�ications towhichcomponents shallbe �inished

afterwhichalonetheproductiondivisioncantakenecessaryaction.

b. IneachDivision,ateamtobeconstitutedbyseniorlevelof�icerheadedbyR&D,and

members from Quality, Planning and Purchase shall continuously establish second

sourcewithregardtoimports, indigenizationandlongstandingsinglesourceitems.

ThisteamwillreportquarterlytoDivisionalHead.PurchaseDepartmentwillfeedalist

ofsinglesource itemsand import itemstothis teamwithacopytoDivisionalHead

mentioningpriorities.

c. Developmental ordersmay be placed for developing indigenous sources for import

substitution as also for developing alternate potential sources. The development of

alternatesourceswillnormallybeattendedtobythePurchasedepartmentwiththe

involvementofQualityandR&D.

d. Inthecaseofitemstobedevelopedthroughvendors,R&DwillbethesoleAuthorityto

�inalizethedesignparameters,thetypetesttobedoneand�ixupatimeframeforthe

vendorformanufacture;onlyafterthetypeapprovalisgivenbytheR&D,vendorsshall

beallowedtosupplytheseassembliestoproductiondivision.

e. All items other than proprietary in nature shall undergo second and third source

developmentbyreferringtotheteam.

f. Generally,intricateandfunctionalbearingitemsforImportsubstitutionwillinvariably

comeunderthepurviewofR&DDepartment.

g. WhileitisconcededthatitmaynotbepossibletofollowthePurchaseProcedurerigidly

inregardtoindigenizingtheitemsforthe�irsttime,yetitisnecessarytoadheretothe

essentialprinciplesofpurchasingasfaraspossibleinthematterofsendingenquiries,

callingthepartiesfornegotiationsandselectingthebestoffer.Howevertheobjective

shallbetoplaceindigenizationordersatapricelessthantheFOBcostofimport.

h. InthecaseofverysophisticatedhightechcomponentR&Dcancontactsinglesource

afterobtainingapprovaloftheChiefofR&DoftheDivisionwithproperjusti�icationsas

towhy a second source cannot be contacted. If a second order is necessary on the

previoussinglesourcevendoritshallbedoneafterassessingtherealvalueoftheitem

andsuitablyrectifyingthecomponentpriceontheexistingsinglesourcevendor,and

alsotakingstepstoestablishsecondsource.

14.3THEPROCEDURETOBEFOLLOWEDISBROADLYOUTLINEDBELOW:

a. Atthedesignstageitself,basedonpreliminaryspeci�icationsandnatureoftheitem

keeping in view the functioning parameters and the degree of technology involved,

RFQ(s)willbesenttoaminimumof3sourcestotheextentpossible.ReferPara5.11of

Chapter5forproceduretoissueaRequestforQuotation.

b. Reputed manufacturers/sources having the required technical know-how and the

facilitiesfordevelopingtheitemswillonlybecontacted.Whereanitemtobedeveloped

issophisticatedinnatureandneedsspecialeffortstodeveloptherawmaterial,Tooling

and methodizing for the �irst time indigenously by a vendor, the single source as

identi�iedandapprovedbyR&Dcanbecontactedforaquotation.

Theexpertiseofthepurchasedepartmentmaybeavailedinlocatingthesources,wherever

required.

c. After a study of the literature / catalogue of the �irms and their offers, R&D/

IndigenizationDevelopmentCellwilldecideonthemostsuitableoffer/swhichmeets

withthetechnicalrequirementsorwhichcanbeadaptedmosteasilycommensurate

withthecost.

d. Thereasonablenessoftheofferreceivedwillbeassessedandwherenegotiationofprice

is considered necessary, the provisions under Chapter 8 of thisManual shall apply.

ToolingandDevelopmentcostshallnotnormallybepaidtothevendorfordevelopment

oftheitems,asaconditiontoacceptthedevelopmentorder,asitshallbetreatedbythe

vendor as an investment for his �irm's business growth with BEML. However, in

coordination with Finance & Purchase Department having regard to the quantity

proposedandfeasibilityofavailingthisbene�itinthesubsequentPurchaseOrders,the

paymentmaybedecidedasinPara9.7.2ofChapter9.

e. The enquiry papers with the quotations and the recommendations of R&D/

IndigenizationDevelopmentCellwillbeforwardedtothePurchasedepartmenttoplace

the Purchase Order .The indenting department will follow up for supplies under

intimationtoPurchasedepartment,whowillalsoassistinfollowingupforsupplies,

whereverrequired.ReferPara5.8ofChapter5regardingmaintenanceofRFQinERPand

comparisonofquotations.

f. InthecaseofPurchaseOrderforsource/productdevelopment,thereshallbeaclause

calling for submission of sample, within a period of 6 months and bulk supply to

commenceonlyafterourintimationinwritingtheacceptanceofsample.Incasesample

clauseistobewaived,theapprovalofChiefofMaterialshastobeobtainedwithreasons

toberecordedinwritinginconsultationwithR&D/ProductDesigndepartment.Where

acceptanceofthesampleisaprerequisiteforbulksupply,thesampleshallbetried/

testedandclearanceshallbegivenonprioritybasiswithoutanydelayforaffectingthe

bulksupply.

g. AregisterwillbemaintainedinR&D/IndigenizationDevelopmentCellallottingafolio

PURCHASE MANUAL PURCHASE MANUAL92 93

foreachitemtakenupforindigenizationandrecordingdetailsaboutthenumberof

�irmscontacted,numberofvalidquotationsreceived,theofferselected/recommended

forplacingtheorderthroughPurchasedepartment,abriefoftherecommendationson

theselectedoffer,specialdieortoolingcharges/developmentcostforpaymentinlump

sumorotherwise.

h. ThesameprocedureasabovewillalsoapplyinrespectofdevelopmentofitemsofR&D

design.

I Suchordersplacedwillbenormallywith"openaccount"termsandsuppliesreceived

andacceptedwouldbeissuedforproductionwithoutbeingallowedtobecarriedin

stock.Wherethesamplesrequirelongtimeforclearanceforbulksuppliesand/orbulk

suppliesonthedevelopmentorderarenotacceptedwithinareasonabletime,adhoc

paymentonareasonablebasiscanberecommendedbyChiefofMaterialsManagement

withFinanceconcurrence

j. Whenoncetheitemsaredevelopedindigenouslythesamewillbeblockedfromimports

andsubsequentactionforplacementoffurtherordersonsuchindigenousdeveloped

source/sourceswillbetakenonsingleorlimitedtenderbasisasthecasemaybe.The

aboveproceduremayfollowtillfurtherindigenoussourcesaredevelopedbasedonthe

requirement.Thesubsequentrequirementforimports(i.e.restoration)onanyaccount

shallhavethespeci�icapprovalofDivisionHeadwithconcurrenceof�inance.

k. The quantity ordered for trial/development purposes will not be reckoned for

equipmentcoverageinitially.However,thisquantitywillbeadjustedintheequipment

coverage laterwhen the supplies are received and accepted after inspection in the

normalcourse.ThePlanning/Purchasedepartmenthastokeepatrackofthequantity

receivedforsuitableadjustmentintheequipmentcoveragewithnecessarycontrol.

l. The quantity considered for placement of development order shall be mutually

acceptabletakingintoaccounttheiteminvolved,unitprice,amountinvolved,tooling,

and development expenditure, if any involved and economic batch quantity. The

quantityorderedwillnotnormallyexceed25equipmentsets.However,dependingon

thevalueof the item,costofdevelopment, leadtimeetc. theDivisionheadwiththe

clearanceofMPCcantakeadecisionifhigherquantitiesarerequiredtobeordered.Inall

thesecasesofdevelopmentorders,thecostofpattern/Dies/Toolsifpayableshallbe

paidtovendorsonlyaftertheysuccessfullyproducedasampleacceptabletoBEMLinall

respects.Wherethecost isproposedtobepaidbeforethesample isdevelopedand

supplied with the approval of Division Head, payment may be made against Bank

Guarantee(asperCVCguidelines)whichshallbevalidtillthecommencementofbulk

supply,andacceptanceofthe�irstbatchofsupplies.

m.DevelopmentalOrders:Incases,whereBEMLisnotfullyassuredofthecapabilityofthe

supplier/sub-contractororwhereaparallelsourceofsupplyhastobeestablished,itmay

be necessary to place a developmental order for a small quantity on a supplier/sub-

contractor.Thedevelopmentalordersmaybe�inalizedonthebasisofQuotationsreceived

againstourtenderingaction,withtheapprovalofDivisionHead.Fordevelopmentalorders

thetermsofpaymentshallbe"OpenAccount"andcostofPattern/Die/Tool,ifany,willbe

reimbursedbyBEML,asperpaymenttermsindicatedin13.4.

14.3PRICEPREFERENCEFORINDIGENISATIONCONTENT

a. Applicability of Indigenisation: Indigenisation clause is applicable to tenders

�loated for procurement of project itemswhere tender value is above Rs. 50 lakhs

excludingtaxesanddutiesandTendersare�loatedintwoBidsystems.i.e.,Technicaland

CommercialBid

b. IndigenisationPlan:

(PleasereferAnnexure­O)

PURCHASE MANUAL PURCHASE MANUAL94 95

CHAPTER–15–TERMSOFPAYMENT

15.1PAYMENTTOSUPPLIERS:

a. PaymentshallbemadeforsuppliesasperdeliveryscheduleindicatedinthePurchase

Order.

b. Inthecaseofimports,paymentisarrangedagainstLC/SightDraftagainstsubmissionof

documentsthroughbank.

c. Inthecaseofordersforinlandpurchases,BEML'snormaltermsofpaymentare"Open

Account"i.e.,paymentafterreceiptandacceptanceofmaterials.Wherethisisnotagreed

tobythevendors,thepaymenttermsmaybeacceptedasunder:-

i. Wherethetermsofdespatchare"FOR,BEMLFactory",100%paymentmaybe

madeonthe60thday,fromthedateofreceiptofmaterialsatBEMLStoressubject

toacceptanceofmaterials.

ii. Wherethe termsofdespatch is"Ex-Supplier'sworks”,100%paymentmaybe

madeonthe60thdayfromthedateofreceiptofinvoiceatBEML.However,itshall

beensuredthatthematerialsarereceivedinBEMLstoresandacceptedbefore

releasingpayment.

iii.InrespectofMicro,SmallandMediumEnterprisesasclassi�iedunderMicroSmall

andMediumEnterprisesDevelopmentAct2006,thepaymenttermshallbe:

1. Whenthereisanagreementinwriting,paymentshallbemadeonorbeforethe

dateagreeduponbetweenBEMLandtheVendor.However,theperiodagreed

uponbetweenBEMLandMSE(MicroandsmallEnterprises)Vendorshallnot

beexceed30daysfromthedayofacceptanceorthedayofdeemedacceptance

(videMoDrefMoMdated8thAugust2016).Ifpaymentisnotreleasedwithin30

daysinterestshallbepaidfordelayedpaymentasperMSMEact.

2. When there isno agreement, payment shall bemade immediately after the

expiryof15daysfromthedayofacceptanceorthedayofdeemedacceptance.

3. “Thedayofdeemedacceptancemeans”wherenoobjectionmadeinwritingby

thebuyerregardingacceptanceofgoodsorserviceswith15daysfromtheday

ofdeliveryofgoodsorrenderingservice,thedayofactualdeliveryofgoodsor

renderingofservices.

4. In case of maintenance service contracts the payment shall be made after

successfulserviceandaftercerti�icationbytheUserDepartment.

Note:

* Theidenti�ication/markingofvendorasMSEshallbedoneatthetimeof

creation of Vendor Master in ERP using T-Code “XK01 – Create Vendor

Master”.

**TheusercanviewthelistofMSEVendorsfromERPT-Code“ZMMSE-Listof

MSEVendors”.

d. InthecaseofpaymentstoRailwayapprovalvendorsupplyingRailwayproducts,the

paymenttermscanbe100%onreceiptatBEMLStoressubjecttoreceiptofInspection

Certi�icatefromRITES/RDSO/RQAW.TheGRsaretobe�inalizedwithin15daysof

receiptofmaterial. Incaseofanyrejectionat the �inal inspection thesame is tobe

adjustedfromthesubsequentsupplies.

e. Wherepaymentismadethroughchequeagainstdelivery,chequeistobedeliveredafter

receiptofmaterialandonveri�icationofrecordedproof.

f. WhereverElectronicClearanceService(ECS)facilityavailablepaymentshallbemade

throughECSonly.Even ifECS facility isnot therepaymenthas tobearranged from

Bangalore through the respective designated bank accounts of individual divisions

maintainedatSBIOverseasbranchBangalore.

g. Incaseofglobaltenderthepaymenttermsshallbeagainstletterofcreditaligningwith

overseas �irms. For this purpose �irms shall submit representation for accepting

L.C.payment.ThedomesticvendorswillalsobegivenpaymentonbasisofLC(videMoD

refMoMdated17thOctober2016)

*Note:ElectronicPaymentthroughERPSystem:

TheERPSystemallowscon�igurationandlinkingofOnlineBankingFacilityofthe

user with ERP This con�iguration is done through the EDI (Electronic Data

Interchange)facilityavailableinERP.

ThevendormasterinERPhastobeupdatedwithBankAccountdetailsofthevendor

suchasBankAccountNumber,BankName,BranchandIFSCCodeunderGeneralData

particularsofERPT-Code“XK03–Display.Further,asperDOP,thepersonwhois

authorisedtomakeonlinepaymentshastobecon�iguredinERP.

15.2ADVANCEPAYMENT:

a. Theadvancepaymentsneedtobegenerallydiscouragedexceptinspeci�iccases.

b. Whereverpaymentofadvance isconsideredunavoidable (up to thepercentage laid

downinrule159(IofGFR2005withbankguarantee)anddecidedbeforeissueoftender,

thesameshallbeincorporatedupfrontintheRFP/tenderdocumentindicatingthe

percentageofadvance.

c. Noadvancepaymentshallbemadetothevendorswithoutcon�irmingtheissueofbank

guaranteefromthebankconcerned.

d. As per CVC guidelineRefNo02/02/11dated 17th Feb, 2011, the vendor shall pay

interestonsuchadvancepayment if thecontract is terminatedduetodefaultof the

contractor and such payment shall be allowed after getting an acceptable Bank

GuaranteefromaNationalizedBankforanamountatleast110%ofadvancesoasto

enablerecoveryofnotonlyprincipalamountbutalsointerestportionifsorequired,

withsuf�icientvaliditysoastofullyprotecttheBEMLinterest.Theadvancepayment

maybereleasedinstagesdependingupontheprogressoftheworkandmobilizationof

requiredequipment(s).

e. HoweverincaseofMSE’sadvancesupto15%maybeconsideredifrequestedagainst

BankGuarantee.TheinterestontheadvanceamountisnottobeinsistedfromMSE’s

(videMoDrefMoMdated8thAugust2016)

PURCHASE MANUAL PURCHASE MANUAL96 97

f. SomereasonabletimeshallbestipulatedforsubmissionofBankGuaranteessothat

contractualremediescouldbeenforcedifrequired.Thebankguaranteeneedstobe

properlyexaminedwithrespecttotheacceptableformatandanyconditionsdeterrent

totheBEMLinterestshallbegotwithdrawnbeforeacceptancebesidesverifyingthe

genuinenessoftheBankGuaranteesfromthebankers.

g. Timelyactionforrevalidation/encashmentofthebankguaranteesalsoneedtobetaken

soastoprotecttheBEMLinterest.

15.3ADVANCEPAYMENTTOSUPPLIER

Ordinarily,paymentsforservicesrenderedorsuppliesmadeshallbereleasedonly

aftertheserviceshavebeenrenderedorsuppliesmade.However,itmaybecomenecessary

tomakeadvancepaymentsforexampleinthefollowingtypesofcases:-

a. Advancepaymentdemandedby�irmsholdingmaintenancecontractsforservicingof

Air-conditioners,computers,othercostlyequipment,etc.

b. Advancepaymentdemandedby�irmsagainstfabricationcontracts,turn-keycontracts

etc.Suchadvancepaymentsshallnotexceedthefollowinglimits:

c. Thirtypercentofthecontractvaluetoprivate�irms;

d. FortypercentofthecontractvaluetoaStateorCentralGovernmentagencyoraPublic

SectorUndertaking;or

e. Incaseofmaintenancecontract,theamountshallnotexceedtheamountpayableforsix

monthsunderthecontract.

f. Purchase department may relax, in consultation with their Financial Advisers

concerned,theceilings(includingpercentagelaiddownforadvancepaymentforprivate

�irms) mentioned above. While making any advance payment as above, adequate

safeguards in the formof bank guarantee etc. shall be obtained from the �irm.Part

paymenttosuppliers:Dependingonthetermsofdeliveryincorporatedinacontract,

partpaymenttothesuppliermaybereleasedafter itdespatchesthegoodsfromits

premisesintermsofthecontract.-

15.4 Intheabovecases,itshallbeensuredbythePurchasedepartmentthat,

a. ThevendorsdespatchtheconsignmentsthroughBEMLContractCarriersspeci�iedin

thePurchaseOrders.

b. ThevendorssendthedespatchdocumentsdirectlytoBEML.

c. TheGRNtobe�inalisedwithin7daysinthecaseofmaterialitemsandwithin1monthin

thecaseofCapitalitemsthroughERP

d. Theitemsarereceivedinmatchedsetswherevercalledfor.

e. TheGRNaretobeclearforacceptanceorrejectionsasthecasemaybe

15.5However,"OpenAccount"termsonlyshallbeofferedtonew�irms/untriedoutsources.

15.6 Ratecontractgovernedbyitsowntermsofadvancepaymentat98%asprovidedforinthe

contractandagreedtobyusagainstproofofdespatch,thebalancepaymentcanbemade

onlyaftergettingthereceivingreportfortheconsignmentsupplied.

15.7Wherevendors,particularlySmallScaleunits,insistforpaymentthroughbank,thesame

maybeagreedtoasaspecialcase,inwhichcaseonly90%valueoftheconsignmentwill

bepaidforsendingdocumentsthroughBank.Thebalance10%willbepaidonlyafter

�inalisation of GRN, and after recovering the value of shortages, rejections, freight

differenceetc.,ifany.

15.8 In the case of procurement of steel etc.mutually agreed payment terms are adopted,

includingopeningofInlandletterofCredit.Whereverpaymentmadeismorethanthe

valueofconsignmentreceivedagainstthePurchaseOrders,thePurchaseDepartment

shalltakeimmediateactiontoobtaintherefunds/obtainmaterialforthebalancevalue.

15.9Where Purchase Orders are having "advance" payment terms as "Proof of despatch",

”ReceiptofmaterialsatBEMLStores"etc.,notmorethantwoadvancepaymentsshallbe

allowedtoremainoutstandingforregularisationanytimeagainstsinglesupplier..Any

furtheradvancepaymentneedsspeci�icapprovaloftheDivisionHeadinco-ordination

withtheDivisionalChiefofFinance.Wherethesuppliesarerejected,weshallhavethe

righttorecovertheamountalreadypaidfromadvancepaymentforsubsequentsupplies

againstthesamePurchaseOrderorotherPurchaseOrders.

15.10 In caseswhere supplies are to bemade in balanced lots/matching sets, the advance

paymentwillbemadeintermsofbalancedlots/matchingsetsonly.

15.11 PaymenttoAncillaryunitswillbemadeagainsttheirInvoicessupportedbypreliminary

inspection report issued by BEML Inspection department. However, GRN shall be

�inalisedwithin7daysasperStoresmanual.

15.12 Payment terms in Purchase Orders for capital items like Plant and Machinery and

EquipmentshallbeasmutuallyagreedtobetweenBEMLandtheSupplier,inindividual

cases.Inanycase,10%to20%orasmutuallyagreedbetweenpartiesvalueofthecapital

itemshallbekeptasbalancepaymenttobereleasedonlyaftersatisfactoryerectionand

commissioningoftheCapitalitembythesupplier.Abankguaranteeforthe10%ofthe

value is to be taken while making �inal payment to take care ofWarranty service.

Performance BankGuarantee (PBG) to be returned after satisfactory completion of

warrantyperiod.(FormatofPBGasperF3)

15.13Finalpaymentof10%againstPBGtobereleasedaftercon�irmingthesamefromthebank

concerned.

15.14 Any other deviation in the terms of payment as in the case of plant andmachinery

involving import of components/raw materials towards tooling/die charges as

customer in the trade etc., for certain advance payment alongwith the order shall

requirethespeci�icapprovaloftheBusinessGroupHead.Suchcasesshallbewitha�irm

deliveryclausewithaconditiontochargeinterestatprevailingbankratefortheperiod

ofdelay,ifany,fromthecommitteddeliveryscheduleorfromthedatetheadvancewas

paidinthecaseofordercancellationduetonon-delivery.Itisnecessarytoinsistona

bankguaranteebeforepaymentcoveringtheamountofadvancetogetherwithinterest

fortheperiodfromthedateofpaymentofadvancetothedeliveryperiodoftheitem.For

theextendedperiodofdelivery,thevalueofBankGuaranteeshallbeenhancedtowards

interestfortheextendedperiod.

PURCHASE MANUAL PURCHASE MANUAL98 99

15.15 WheretwoPurchaseOrdersareplacedonthesamesourcearoundthesameperiodfor

the same itembutwithdifferent termsof supply i.e.,withBEMLmaterial andwith

vendormaterial,itshallbeensuredthatourmaterialsdespatchedtothesupplierare

fullyaccountedforintermsof�inishedcomponentsorderedbeforeadmittingtheclaim

forpaymentforsuppliesagainsttheotherorder.Similarly,inthecaseoftwoPurchase

Ordersexistingonthesamevendorforthesameitembutatdifferentrates,theratein

theearlierPurchaseOrderbeinglower,itshallbeensuredthatthesuppliesagainstthe

earlier Purchase Order are fully completed before admitting the claim for supplies

againsttheotherorder.

15.16 WherethePurchaseOrderprovidesforpaymentofdie/pattern/toolingcharges,the

samewillbepaidwhenthe�irstoffsample/pilotlotisreceivedandaccepted,andfor

suchitemstheCompanyshalltakeinsurancetocoveranydamage/theftetcandthe

patternshallbetakenbackbythecompanywheneverrequired.

15.17 AllbankchargesincludingOverdraftinterestchargesfordocumentsretiredthrough

bank for inlandpurchases andbank commission fordemanddraftsobtainedat the

speci�icrequestsofthe�irmswillbeto�irmsaccount.Anyexceptiontothisinregardto

bank charges/bank commission for absorption to company's amount shallhave the

speci�icapprovaloftheDivisionHead.

15.18 PaymentofGSTshallbeasperPurchaseOrdertermsandtheclaimsofthesupplierin

invoicesshallbeadmittedonlyagainstoriginal.

15.19 WheretwoormorePurchaseOrdersareplacedonthesamesourceforthesameitem(s)

atalmost-thesameperiodthepaymenttermsindicatedinthePurchaseOrdersshallnot

bedifferent.

CHAPTER–16–CONTRACTFORSERVICES

16.1 INTRODUCTION:

Theremaybeoccasionstoenterintoacontractforserviceswhichisrevenueinnature.

Forthepurposeofadministrativeconveniencesuchcontractsforrepairandservicejobs

willberegulatedasperDoP.NecessaryPR’swillbegivenbyuserdepartment.

16.2MAINTENANCESERVICES/MAINTENANCECONTRACTS:

a. Dependingonthecostandnatureofthegoodstobepurchased,itmayalsobenecessary

toenterintomaintenancecontract(s)ofsuitableperiodeitherwiththesupplierofthe

goodsorwithanyothercompetent �irm,notnecessarily thesupplierof thesubject

goods.Suchmaintenancecontractsareespeciallyneededforsophisticatedandcostly

equipment andmachinery. Itmay, however, be kept inmind that the equipment or

machineryismaintainedfreeofchargebythesupplierduringitswarrantyperiodor

such other extended periods as the contract terms may provide and the paid

maintenanceshouldcommenceonlythereafter. (GFR169)

16.3.TheMaintenanceservicesinthedivisionsarebroadlyclassi�iedbyfunctionsasbelow:-

a. PlantmaintenanceincludingHouse-keeping

b. Mechanicalmaintenance

c. Electricalmaintenance

d. InformationTechnologyrelatedservices

e. TransportationandHiringofPassengervehicles

f. Landscapingforhorticulturalservices

g. Canteenservices

h. CivilandEstatemaintenance

i. Loading/unloading

j. Securityservices

k. MARCContracts

l. Of�iceequipments

m.Otherservicesnotcoveredabove

16.4

a. Normally,theservicesaretoberenderedbytheconcerneddepartment,availingfacilities

within to the fullest extent.Assigning thework to outside agencymaybe resorted to,

whereverwarranted.

b. Userdepartmentconsolidatetherequirementsofvariousdepartmentsandexaminethe

same,keepinginviewthefollowingpoints:

i. Theworkinvolvedshallberevenueinnature.

ii. The expenditure is within the budget provision. The Marketing division Head

Quarters,shallintimatetotheRegionalandDistrictof�icestheirshareofthebudget

provisionforthispurpose.

iii. The purchase request from the concerned department shall be followed by

Administrative Approval detailing the nature of work to be done, justifying the

necessityandindicatingtheestimatedcostsanctionedbytheCompetentAuthorityas

perDoPwiththe�inancialconcurrence.

PURCHASE MANUAL PURCHASE MANUAL100 101

Sl.No.

NatureofServiceDepartment

ResponsibleforPRPeriodicity

(1)

1.

2.

3.

(2)

Major over-hauling/repairing andre- condit ioning of Plant andMachineryincludingreplacementofparts,whereverrequired.

Re-conditioning / repairing ofMotors,needweldingrecti�iers,forklifttrucks,cranesetc.

Repairing/Re-conditioningofAutomodules and hiring of passengervehiclesviz,bus,car,jeep,etc

(3)

PlantMaintenance

Plant/MechanicalMaintenance

TransportationandHiringofPassengervehicles

(4)

Asandwhenneedarises

Asandwhenneedarises

Asandwhenneedarises

4.

5.

6.

7.

8.

9.

10.

11.

12.

13.

ServicingofPlant&machinery,of�iceequipment,Computeretc.

Re-conditioning of Tyres Subject totakingtheworkinBulk

Re-conditioning / re-canning ofchairs,tables

Purchaseofseedlings,plantandthemanureetc.forBEMLnursery

Laying foundation, shifting anderection of existing plant andmachinery / erection of new plantandmachinery

CivilandEstatemaintenance

Loading/unloading

Security

MARCcontracts

Otherservicesnotcoveredabove

Userdepartment

Transportation

ConcernedDepartment

Landscaping

Plantmaintenance/FacilitiesDepartment

Construction&civilmaintenance

Storesdepartment

HRDept

Marketing

Departmentconcerned

AnnualEquipmentWise

AswhenneedArises

-Do-

-Do-

-Do-

-Do-

Annually

Annually

Annually

AswhenneedArises

Note: 1. Theclassi�icationofservicesshownabovemaybemodi�iedtosuitlocalrequirements/

conditions.

2. Regarding SI.No.8, the Civil Works portion only shall be taken by construction

departmentandtheerectionworkshallbetakenupbythedepartmentconcerned.

3. IncaseofAMCs,theupkeeppercentagemustbeindicatedinthetender/orderoncaseto

casebasis.

4. IfanyparticularAMCishandledcentrallybyCorporateMaterialsDepartment,theuser

department shall raise the purchase request with the Corporate Material Cell and

tenderingactionwillbeinitiatedwithapprovalofCompetentAuthority.

v. TheitemsofPlantandMachineryidenti�iedforrepairs/reconditioningshallbe

basedontherecommendationsofaCommitteeconsistingofChiefofProduction,

Chief ofMaintenance, and theChief of Planning, asmaybe constitutedby the

Divisionhead/HeadofComplex.

vi. Items of Plant andMachinery identi�ied for repairs or reconditioning shall be

backedbycleardataontheextentofexpenditureonrepairsanddowntimeforthe

saiditem.Noproposalwithoutsuchsupportinginformationshallbeentertained.

vii. Asfaraspossible,therepair/reconditioningworkofplantandmachineryshallbe

gotdonebythevendorwithinourfactorypremises.Ifitiswarrantedtogetthe

workdoneatthevendors'place,thereshallbeaworkorderopenedauthorising

thedespatchofplantandmachineryidenti�iedforrepairs/reconditioning.The

itemwillbesentundera"GatePass"dulyindicating"Returnable",ifitisrequired

tobe sent to vendorsplace.A control registerwill bemaintained in thePlant

Maintenancesectionindicating,interalia,thegatepassnumberanddate,dateon

whichthePlantandMachineryisreceivedbackafterrepairsanddateonwhichthe

reconditionedmachineryishandedovertoshop/department.

viii. A certi�icate for satisfactory completion of work/re-commissioning of the

equipmenthastobefurnishedbytheChiefofMaintenancedulycoordinatedby

userdepartment,whichformsthebasisforarrangingpayment.

ix. Incaseifthevendors/contractors/serviceproviders/othersrequireservicesof

thecompany’s �ixedassets/tools/testingfacilitiesetc.,samemaybeofferedon

chargeablebasis.

16.5PROCEDURE:

a. Thenormalpurchaseprocedurewillbefollowedinthematterofsendingenquiries,

obtaining quotations, opening the quotations in the presence of Finance

representatives,availingthecheapestofferetc.,

ReferPara5.16ofChapter5ofthisdocument,Chapter3regardingsourceselection,

Chapter-9fornegotiationandChapter10forissueofpurchaseorders.

b. For this purpose, a list of reputed/reliable vendors will be maintained in the

Maintenancedepartmentandenquiryshallbesenttoaminimumofsix�irmsfromthe

list.Ifforanyreasontheprescribedminimumnumberof�irmscouldnotbecontacted,

speci�icapprovalofChiefofMaintenanceisrequiredforrelaxation.

c. Thetermsofreferenceofthiscellare:

i. Short-listingofthe�irmstowhomtheenquiriesaretobesent.

ii. Tonegotiatetheprice,whereverconsiderednecessary.

iii.Todecidetheperiodofthecontracttakingintoaccountsthetypeofworkandthe

requirementsoftheuserdepartment.

iv.Thetermsandtheperiodicityforpayment

ThiswillformthebasisforissuingthecontractthroughERPsystemdulyapprovedby

theAuthorityCompetentasperDelegationofpowers.Thecontractwillbeshared

withtheFinancesectionaswelltoarrangeforpaymentstocontractors.

iv.TheServicecontractmaybroadlyfallunderthefollowinggroups:

PURCHASE MANUAL PURCHASE MANUAL102 103

d. InMarketingdivisionHeadQuarters,RegionalandDistrictof�icesandCorporateOf�ice,

this work will be assigned to the of�icer-in-charge of maintenance or the of�icer

nominatedbytheGeneralManager/ManageroftheUnitandPurchaseOrdersplaced

throughthePurchasedepartment.IntheRegionalandDistrictof�ices,wherethereisno

PurchaseDepartment,itwillsuf�iceifthePurchaseOrderisapprovedbytheRegional

Manager/DistrictManagerwiththeapprovalofproposalbyChiefoftheMarketingHQ.

16.6ERPT­CODESRELEVANTUNDERTHISCHAPTER:

ThefollowingaretheERPT-Codesessentialforprocessnarratedinthischapter:

T–Code Particulars FunctionsofT­Code

ME31K

ME32K

ME33K

ME35K

MIRO

ME31

CreateContract

ChangeContract

DisplayContract

ReleaseContract

EnterIncomingInvoice

CreateOutlineAgreement

The transaction code is used to create a contract,which can be for a speci�ic value of material orquantity of material. The initial screen requires avendor,agreementtype,purchasingorganizationandpurchasinggroup tobeentered.Dependingon theagreementtype,theuserisrequiredtoentereitheratargetvalueoratargetquantityforthecontract.

Thetransactioncodeallowstheusertochangethedetails of a value or quantity contract. The initialscreen requires a single contract number to beentered.Thetargetquantityforalineitemcanbechangedaswellasunderdeliveryandoverdeliverypercentages, tax code, shipping instructions andtrackingnumbercanbechanged.

Thetransactioncodeallowstheusertodisplaythedetails of a value or quantity contract. The initialscreen requires a single contract number to beentered. The details of the contract can then bedisplayed.

The transaction code allows the user to releasecontractsthataresubjecttoareleasestrategy.Thistransaction is used by Competent Authority toreleasecontractsthattheyauthorisedtoapproveasperDOP.Thecontractisthenreleasedtothevendorortothenextlevelofapprovalinthereleasestrategy.

The transaction code is used to record vendorinvoicedetailsinERP.

The transaction code is used to create an outlineagreement,whichcanbereferencedtoapurchaserequisitionorarequest forquotation.Theoutlineagreementcanbeeitheracontractoraschedulingagreement. A contract can be for predeterminedquantity or prede�ined value. A schedulingagreementisalongtermpurchaseagreementwithavendortosupplyaquantityofmaterialormaterialuptoacertainvalue.

T–Code Particulars FunctionsofT­Code

ML81N

AC03

ServiceEntrySheet

ServiceMasterrecord

Service entry sheet is similar to theGRdocument.Instead of the material the transaction codemaintains the details of services such as stage ofcompletion, due date of completion etc. Thetransaction code is used to create a service entrysheetoreditaserviceentrysheetordisplayaserviceentrysheetordeleteaserviceentrysheetorblockaservice entry sheet based on authorisation touser/users.

The transaction code is used to create servicemaster.Likematerialmaster,itservesthepurposeofreferring already created service while raisingPurchase Order. ERP can maintain the ServiceNumber,Servicecategory,Descriptivetexts(short&long text), valuation parameter, unit of measure,Materialservicegroupetc.

PURCHASE MANUAL PURCHASE MANUAL104 105

CHAPTER–17

BLOCKING/SUSPENSIONOFFIRM'SNAMEFROMTHE

APPROVEDLISTOFVENDORS

17.1 A�irm'snameshallbeblockedbyCorporateQualityfromtheApprovedVendorsList(AVL)

forthefollowingreasons:

a. Failing/neglecting to quote in response to invitation to tenders for 10 successive

enquiriesfortheirrangeofproducts.

b. Failingtoexecutethecontract/PurchaseOrdertoBEML'ssatisfaction,

c. Failing to honour the agreed terms and conditions of contract, such as penalty for

delayeddeliveriesetc.

d. IfshortclosingofanyPurchaseOrderisdone3timesintwoyearsagainstthesame

vendor due to vendor’s fault. An intimation to this effect to be sent to other

Divisions/unitsfortheirreviewandnecessaryaction.

e. The�irmisdeclaredbankruptorinsolventorits�inancialpositionhasbecomeunsound

andinthecaseoflimitedcompanyitiswounduporliquidated.

17.2 BLOCKINGOFVENDORS:

a. Theperiodofblocking(of1yearormore)mayalsobecommunicatedtothe�irmand

aftertheperiodisover,thecredentialsofthe�irmmaybeexaminedafreshtoconsider

readmissiontotheapprovedvendorlist.

b. The�irmwhosenameisblockedfromtheapprovedvendorlistandwhichareunder

investigation,participates inopen tendersuch �irmsneednotbeconsidered till the

periodofbaniscompleted

c. When the �irm employs a Government servant or BEML ex-employee dismissed /

removedonaccountofcorruptionoremploysanon-of�icialconvictedforcorruption.

Theblockingordershallspecifythespeci�icperiodforwhichitwillbeeffectiveprovided

itisnotpermanentone.

d. The recommendations for blocking shall be put up by the Chief of the Purchase

DepartmentwiththeconcurrenceofQualityEngineeringwhichrequirestheapprovalof

ChiefofDivision.Afterapproval,the�irm’snameshallbeblockedforthatparticular

divisionbytheCorporateQualityandthe�irmshallbeadvisedaccordingly.The�irm

shallnotbeconsideredforfreshregistrationforaminimumperiodoneyearorforsuch

extended periods. During this period offers received from such �irms shall not be

considered.Ifatanystageitisknownthattheproprietororanyofthepartnersofthe

�irmwhosenamehasbeenblockedfromtheapprovedlistisaworkingpartnerinany

other�irmregisteredwithBEMLorhasmanagedtogettheblocked�irmregisteredwith

anewname,thenameofsuch�irmshallalsobedeemedasblockedfromtheapproved

vendor'slist.

17.3GUIDELINESONBANNING/BLACKLISTINGOFFIRMS

a. Introduction

i. BEMLLtd, being a Public SectorEnterprise and 'State',within themeaning of

Article12ofConstitutionofIndia,hastoensurepreservationofrightsenshrined

inChapterIIIoftheConstitution.BEMLLTDwithoutcompromisingitscommercial

interests deals with agencies, who have a very high degree of integrity,

commitmentsandsincerityinitsdaytodayoperations.Itisnotintheinterestof

BEMLLTDtodealwithagencieswhocommitdeception,fraudorothermisconduct

intheexecutionofcontractsawarded/ordersissuedtothem.Inordertoensure

compliancewith the constitutionalmandate, it is incumbent on BEML LTD to

observe principles of natural justice before banning/blacklisting the business

dealingswithanyEntity.

ii. Since banning of business �irms involves civil consequences for an Entity

concerned,itisessentialthatadequateopportunityofhearingisprovidedandthe

explanation, if tendered is considered before passing any order in this regard

keepinginviewthefactsandcircumstancesoftheCase.

b. Scope

i. “The General Terms & Conditions(GTC) applicable to Contracts and Purchase

Orders”generallyprovidethatBEMLLTDreservesitsrightstobanfromlistof

approvedsuppliers/contractorsortobanbusinessdealingsifanyEntityhasbeen

found to have committed misconduct and also to suspend business dealings

pendinginvestigation.IfsuchprovisiondoesnotexistinanyGTC,thesamemaybe

incorporated.

ii. However, absence of such a clause does not in any way restrict the right of

Company (BEML LTD) to take action / decision under these guidelines in

appropriatecases.

iii. The procedure of (i) Removal of Entity from the List of approved suppliers /

contractors; (ii) Suspension and (iii) Banning of Business Dealing with

agencies,hasbeenlaiddownintheseguidelines.

iv. TheseguidelinesapplytoalltheDivisionsandsubsidiariesofBEMLLTD.

v. Itisclari�iedthattheseguidelinesdonotdealwiththedecisionoftheManagement

nottoentertainanyparticularEntityduetoitspoor/inadequateperformanceor

foranyotherreason.

vi. Thebanningshallbewithprospectiveeffect,i.e.,futurebusinessdealings.

17.4DEFINITIONS

IntheseGuidelines,unlessthecontextotherwiserequires:

a. Party/Contractor/Supplier/Purchaser/Customer/Bidder/Tenderer‘shallmeanand

include a public limited company or a private limited company, a �irm whether

registeredornot,anindividual,butnotlimitedtoacooperativesocietyoranassociation

oragroupofpersonsengagedinanycommerce,trade,industry,etc.'Party/Contractor/

PURCHASE MANUAL PURCHASE MANUAL106 107

Supplier/Purchaser/Customer/Bidder/Tenderer'inthecontextoftheseguidelinesis

indicatedas'Entity’.

b. 'Inter-connectedEntity'shallmeantwoormorecompanieshavinganyofthefollowing

features:

i. Ifoneisasubsidiaryoftheother.

ii. IftheDirector(s),Partner(s),Manager(s)orRepresentative(s)arecommon;

iii.Ifmanagementiscommon;

iii.Ifoneownsorcontrolstheotherinanymanner;

c. 'CompetentAuthority'and'AppellateAuthority'shallmeanthefollowing:

i. Forprocurementof items/awardofcontracts,beingcarriedoutbyDivisions,

HeadofCorporateMaterialsshallbethe"CompetentAuthority"andCMD,BEML

LTDshallbethe"AppellateAuthority".

ii.For banning of business dealings with Foreign Suppliers BEML LTD Functional

Directors’Committee(BDC)excludingCMDshallbethe'CompetentAuthority'.

TheAppealagainsttheOrderpassedbyBDC,shallliewithCMD,asFirstAppellate

Authority.

iii. Incasetheforeignsupplierisnotsatis�iedbythedecisionoftheFirstAppellate

Authority,itmayapproachBEMLLTDBoardasSecondAppellateAuthority.

d. ForDivisions(includingMarketing)only

Anyof�icernotbelowtherankofChiefofDivision/ChiefofMarketingappointedor

nominatedbytheFunctionalDirectorshallbethe'CompetentAuthority'forthepurpose

oftheseguidelines.TheFunctionalDirectoroftheconcernedBusinessunderwhichthe

Divisionfallsshallbethe'AppellateAuthority'inallsuchcases.

e. ForCorporateOf�iceonly

Forprocurementofitems/awardofcontracts,beingcarriedoutbyCorporateMaterials

foruseofallDivisions.HeadofCorporateMaterialsshallbethe"CompetentAuthority"

andCMD,BEMLLTDshallbethe"AppellateAuthority".

f. CMD,BEMLLTDshallhaveoverallpowertotakesuo-motoactiononanyinformation

available or received by him and pass such order(s) as hemay think appropriate,

includingmodifyingtheorder(s)passedbyanyAuthorityundertheseguidelines.

g. 'InvestigatingDepartment'shallmeananyDepartmentorUnit investigatingintothe

conductof theEntityandshall include theVigilanceDepartment,CentralBureauof

Investigation,theStatePoliceoranyotherdepartmentsetupbytheCentralorState

Governmenthavingpowerstoinvestigate.

h. 'ListofapprovedAgencies-Parties/Contractors/Suppliers/Purchasers/Customers

/Bidders/Tenderersshallmeanandincludelistofapproved/registeredAgencies-

Parties/Contractors/Suppliers/Purchasers/Customers/Bidders/Tenderers,etc.

17.5 INITIATIONOFBANNING/SUSPENSION

Actionforbanning/suspensionbusinessdealingswithanyEntityshallbeinitiatedbythe

department having business dealings with them after noticing the irregularities or

misconductontheirpart.Theshowcausenoticetobeissuedwiththecoordinationoflegal

departmentforinitiatingtheactionforbanning/suspensionbusinessdealingswithany

EntityshallbesenttoCVOforinformation.

17.6SUSPENSIONOFBUSINESSDEALINGS

a. If the conduct of any Entity dealing with BEML LTD is under investigation by any

department(exceptForeignSuppliers),theCompetentAuthoritymayconsiderwhether

the allegations under investigation are of a serious nature and whether pending

investigation,itwouldbeadvisabletocontinuebusinessdealingwiththeEntity.Ifthe

CompetentAuthority,afterconsiderationofthematterincludingtherecommendation

oftheInvestigatingDepartment,ifany,decidesthatitwouldnotbeintheinterestto

continuebusinessdealingspending investigation, itmay suspendbusinessdealings

with the Entity. The order to this effect may indicate a brief of the charges under

investigation.Ifitisdecidedthatinter-connectedAgencieswouldalsocomewithinthe

ambitoftheorderofsuspension,thesameshallbespeci�icallystatedintheorder.The

SuspensionordershallbesenttoCVOforinformationafterissuedtotheEntity.

Theorderofsuspensionwouldoperateforaperiodnotmorethansixmonthsandmay

becommunicatedtotheEntityasalsototheInvestigatingDepartment

The InvestigatingDepartmentmayensure that their investigation is completed and

wholeprocessof�inalorderisoverwithinsuchperiod.

b. TheorderofsuspensionshallbecommunicatedtoallDepartmentalHeadswithinthe

Divisions.Duringtheperiodofsuspension,nobusinessdealingmaybeheldwiththe

Entity.

c. As far as possible, the existing contract(s)with the Entitymay continue unless the

CompetentAuthority,havingregardtothecircumstancesofthecase,decidesotherwise.

d. Ifthegravityofthemisconductunderinvestigationisveryseriousanditwouldnotbein

theinterestofBEMLLTD,asawhole,todealwithsuchanEntitypendinginvestigation,

theCompetentAuthorityatCorporateof�icemaysendhisrecommendationtoChief

VigilanceOf�icer(CVO),BEMLLTDforinvestigationalongwiththematerialavailable.If

CorporateOf�iceconsidersthatdependinguponthegravityofthemisconduct,itwould

notbedesirableforalltheDivisionsandSubsidiariesofBEMLLTDtohaveanydealings

withtheEntityconcerned, anordersuspendingbusinessdealingsmaybeissuedtoall

theDivisionsbytheCompetentAuthorityoftheCorporateOf�ice,copyofwhichmaybe

endorsed to the Entity concerned. Such an orderwould operate for a period of six

monthsfromthedateofissue.

17.7 For suspension of business dealings with Foreign Suppliers, following shall be the

procedure:

a. Suspension of the foreign suppliers shall apply throughout the Company including

Subsidiaries.

Ifthegravityofthemisconductunderinvestigationisveryseriousanditwouldnotbein

the interest of BEML Ltd as a whole to deal with such a foreign supplier pending

PURCHASE MANUAL PURCHASE MANUAL108 109

investigation,theCompetentAuthoritymaysendhisrecommendationtoCVOBEMLltd

for investigation along with the material available. Based on the above an order

suspendingbusinessdealingsmaybeissuedtotheforeignsupplierbythecompetent

Authority,copyofwhichmaybeendorsedtothedivisions.

b. EffectsofSuspensiononBusinessdealingswithanentity:

I An order of Suspension of business dealings with an entity shall result in

immediateineligibilityoftheentity,fromparticipatinginfuturebidsforaspeci�ied

periodwitheffectfromthedateofsuchorder.NoRFPwillbeissuedtosuchan

entity.

ii. Anyon-goingprocurementprocesswhereL1determinationhasnotyetbeendone

willbeprogressedafterexcludingthebidinvolvingentitywithwhichthebusiness

dealingsarebanned.Incasethereareonlytwobidders,onebeingtheentitywith

whichbusinessdealings isbanned; theprocurementwillbeprogressedasper

extantprovisionsofBEMLPurchaseManualafterexcludingsuchanentity.

iii. Anyon-goingprocurementprocesswherethe lowestbidder involvesanentity

with which business dealings are banned, will be terminated and fresh

procurementprocess,ifrequired,maybeinitiated.

iv. Ordersofsuspensionofbusinessdealingswithanentitymaybeextendedtoits

allied�irmsbyspeci�icorderofthecompetentAuthority.

17.8GROUNDONWHICHBANNINGOFBUSINESSDEALINGSCANBEINITIATED

Itisnotnecessaryto�irstsuspendthebusinessdealingswithanentity*beforeinitiatingthe

proceedingsforbanningofbusinessdealingswithanentity.

Entities:includesCompanies,Trusts,Societies,aswellasindividualandtheirassociations

withwhomBEMLhasenteredintoorintendstoenterinto,orcouldenterintocontractsor

agreementsfortheprocurementofgoodsandservicesunderBEMLPurchaseprocedures.

BanningofbusinessdealingswithanentitymaybeorderedbythecompetentAuthorityon

acceptanceofmisconductrelatedtoanyofthegroundsenumeratedinparagraphi)(a)to

(f)by theentityorestablishmentofsuchmisconductbyacompetentcourt/ tribunal/

Authorityasfollows:

a. ThecompetentAuthoritymaylevy�inancialpenaltiesand/orsuspend/banbusiness

dealingswithanentityforoneormoreofthegroundslistedbelow:

i. ViolationofPre-contractIntegrityPact(PCIP)(wheresuchPCIPsareenteredinto

betweentheBEMLLtdandanentity)

ii. Resorttocorruptpractices,unfairmeansandillegalactivitiesduringanystageof

Bid/contracttosecureacontract,evenincaseswherePCIPisnotmandated.

iii. Violationofstandardclauseinthecontractdocuments.

iv. Ifnationalsecurityconsiderationssowarrant.

v. Non-performanceorunderperformanceunderthetermsandconditionsofthe

contract(s)oragreement(s)notcoveredingroundslistedin(i)to(iii)abovein

accordancewithprovisionsincontractoragreement.

vi. Any other ground for which the competent Authority may determine that

suspension or banning of business dealings with an entity shall be in public

interest.

vii. Banningofbusinessdealingswithanentitymaybeorderedbythecompetent

Authorityonreceiptofinformationregarding�ilingofchargesheetinthecourtof

lawbyCBIoranyotherinvestigatingEntity.

(AsperMoDIDNo:119/Vig.I/2012/D(Vig)/DDPdated:13.02.2017)

b. Ifthesecurityconsideration,includingquestionsofloyaltyoftheEntitytotheState,so

warrants;

c. IftheDirector/OwneroftheEntity,proprietororpartnerofthe�irm,isconvictedbya

CourtofLawforoffencesinvolvingmoralturpitudeinrelationtoitsbusinessdealings

withtheGovernmentoranyotherpublicsectorenterprisesorBEMLLTD,duringthelast

�iveyears;

d. If there is strong justi�ication forbelieving that theDirectors,Proprietors,Partners,

owneroftheEntityhavebeenguiltyofmalpracticessuchasbribery,corruption,fraud,

substitutionoftenders,interpolations,etc.

e. If theEntitycontinuouslyrefuses toreturn/refund theduesofBEMLLTDwithout

showingadequatereasonandthisisnotduetoanyreasonabledisputewhichwould

attractproceedingsinarbitrationorCourtofLaw.

f. If the Entity employs a public servant dismissed / removed or employs a person

convictedforanoffenceinvolvingcorruptionorabetmentofsuchoffence.

g. IfbusinessdealingswiththeEntityhavebeenbannedbytheGovt,oranyotherpublic

sectorenterprise.

h. IftheEntityhasresortedtoCorrupt,fraudulentpracticesincludingmisrepresentation

offactsand/orfudging/forging/tamperingofdocuments;

I IftheEntityusesintimidation/threateningorbringsundueoutsidepressureonthe

Company(BEMLLTD)oritsof�icialinacceptance/performancesofthejobunderthe

contract.

j. IftheEntityindulgesinrepeatedand/ordeliberateuseofdelaytacticsincomplying

withcontractualstipulations.

k. Wilful indulgence by the Entity in supplying sub-standard material irrespective of

whetherpre-despatchinspectionwascarriedoutbyCompany(BEMLLTD)ornot.

l. Basedonthe�indingsoftheinvestigationreportofCBI/PoliceagainsttheEntityfor

mala�ide/unlawfullyactsorimproperconductonhispartinmattersrelatingtothe

Company(BEMLLTD)orevenotherwise.

m.EstablishedlitigantnatureoftheEntitytoderiveunduebene�it.

n. ContinuedpoorperformanceoftheEntityinseveralcontracts.

o. IftheEntitymisusesthepremisesorfacilitiesoftheCompany(BEMLLTD),forcefully

occupies, tampers or damages the Company's properties including land, water

resources,forests/trees,etc.

PURCHASE MANUAL PURCHASE MANUAL110 111

(Note:Theexamplesgivenaboveareonlyillustrativeandnotexhaustive.TheCompetent

Authoritymaydecidetobanbusinessdealingforanygoodandsuf�icientreason).

17.9BANNINGOFBUSINESSDEALINGS

a. Normally,adecisiontobanbusinessdealingswithanyEntityshallapplythroughoutthe

CompanyincludingSubsidiaries.However,theCompetentAuthorityofthe Divisions

exceptCorporateOf�icecanimposesuchbanDivision-wiseonlyifintheparticularcase

banningofbusinessdealingsbyrespectiveDivisionwillservethepurposeandachieve

its objectiveandbanningthroughouttheCompanyisnotrequiredinviewofthelocal

conditions and impact of themisconduct / default to beyond theDivision.Anyban

imposedbyCorporateOf�iceshallbeapplicableacrossallDivisionsof theCompany

includingSubsidiaries.Aftereffectingtheban,informationtoCVOshallbegiven.

b. If the Competent Authority is prima-facie of view that action for banning business

dealingswiththeEntityiscalledfor,ashow-causenoticemaybeissuedtotheEntityas

perparagraph17.12andanenquiryheldaccordingly.InformationtoCVOshallbegiven

afterissueofShowcausenotice.

17.10. PROCEDUREFORBANNINGOFBUSINESSDEALINGSWITHFOREIGNSUPPLIERS.

a. BanningoftheagenciesshallapplythroughouttheCompanyincludingSubsidiaries.

b. If the competent Authority is the prima – facie of the view that action for banning

businessdealingswiththeforeignsupplieriscalledforashowcausenoticetobeissued

totheforeignsupplierandenquiryheldaccordingly.InformationtoCVOshallbegiven

afterissueofshowcausenotice.

17.11.REMOVALFROMLISTOFAPPROVEDAGENCIES­SUPPLIERS/CONTRACTORS,ETC.

a. If theCompetentAuthority decides that the charge against theEntity is of aminor

nature,itmayissueashow-causenoticewithinformationtoCVOastowhythenameof

the Entity shall not be removed from the list of approved Agencies -Suppliers /

Contractors,etc.

b. The effect of such an order would be that the Entity would not be quali�ied from

competinginOpenTenderEnquiriesandLimitedTenderEnquiriesshallnotbegivento

the Entityconcerned.

17.12SHOW­CAUSENOTICE

a. IncasewheretheCompetentAuthoritydecidesthatactionagainstanEntity/foreign

supplieriscalledfor,ashow-causenoticehastobeissuedincoordinationwithLegal

department to the Entity/ foreign supplier. Statement containing the imputation of

misconduct or mis-behaviour may be appended to the show-cause notice and the

Entity/foreignsuppliershallbeaskedtosubmitwithin15daysawrittenstatementin

itsdefence.TheshowcausenoticeshallbesenttoCVOforinformationafterissuedtothe

Entity/foreignsupplier.

ThecompetentAuthoritymayatanytimeintheprocess,constituteaCommitteetomake

recommendationforbanningofbusinessdealingswiththeentityorotherwise.

b. Theshowcausenoticeshallcontainthefollowing:

i. Thereasonfortheproposedactionandthegroundsreliedupon.

ii. That,theentityshallsubmititsresponseinwritingwithin30daysafterthereceipt

oftheNotice.

iii. Thatpenaltyofbanningofbusinessdealingswiththeentityisbeingcontemplated

includingorexcludingitsallied�irms.

Incasenoreplytoshowcausenoticeisreceivedfromtheentitywithinstipulated

time, action against the concerned entity shall be initiated by the concerned

Divisionex-parte.

c. IftheEntityrequestsforinspectionofanyrelevantdocumentinpossessionofBEML

LTD,necessaryfacilityforinspectionofdocumentsmaybeprovided.

d. TheCompetentAuthoritymayconsiderandpassanappropriatespeakingorderwith

informationtoCVO.

i. ForexoneratingtheEntity/foreignsupplierifthechargesarenotestablished.

ii. For removing the Entity/ foreign supplier from the list of approved Suppliers

/Contactors,etc.

iii. ForbanningthebusinessdealingwiththeEntity/foreignsupplier.

Thespeakingordershallcontainthefactsthatthedecisionhasbeentakenafterthe

issuanceofshowcausenoticeandconsiderationofrepresentationofentity,ifany

inreplythereto.

e. Ifitdecidestobanbusinessdealings,theperiodforwhichthebanwouldbeoperative

maybementioned. The ordermay alsomention that the banwould extend to the

interconnectedagenciesoftheEntityandallsubsidiariesoftheforeignsupplier.

ForthegroundslistedinParagraph17.8,a (i)to(iv)oftheguidelines,theperiodof

banningofbusinessdealingswithanentityshallnotbelessthan�iveyearsandnotmore

than10years.

Theperiodofbanningofbusinessdealingswithanentityinboththecategorieswillbe

inclusiveofperiodofsuspensiondealingswithanentity,ifanyforthesamecauseof

action.

InexceptionalcasesandthoseinvolvingnationalsecurityconsiderationstheCompetent

Authoritymayorderalongerperiodofbanningofbusinessdealingswithanentity,as

deemedappropriate.

17.12APPEALAGAINSTTHEDECISIONOFTHECOMPETENTAUTHORITY

a. TheEntity/ foreign suppliermay �ile an appeal against theorderof theCompetent

Authority banningbusinessdealing,etc.Theappealshall lie toAppellateAuthority.

Suchanappealshallbepreferredwithinonemonthfromthedateofreceiptoftheorder

banningbusinessdealing,etc.

b. Appellate Authority would consider the appeal and pass appropriate order with

informationtoCVOwhichshallbecommunicatedtotheEntity/foreignsupplieraswell

asthecompetentAuthority.

PURCHASE MANUAL PURCHASE MANUAL112 113

17.13REVIEWOFTHEDECISIONBYTHECOMPETENTAUTHORITY

Anypetition/application�iledbytheEntityconcerningthereviewofthebanningorder

passedoriginallybyChiefExecutive/CompetentAuthorityundertheexistingguidelines

eitherbeforeorafter�ilingofappealbeforetheAppellateAuthorityorafterdisposalof

appealbytheAppellateAuthority,thereviewpetitioncanbedecidedbytheChiefExecutive

/ Competent Authority upon disclosure of new facts / circumstances or subsequent

developmentnecessitatingsuchreviewtobeinformedtoCVO.

17.17 CIRCULATIONOFTHENAMESOFAGENCIESWITHWHOMBUSINESSDEALINGS

HAVEBEENBANNED

a. Dependinguponthegravityofmisconductestablished,theCompetentAuthorityofthe

Corporate Of�ice may circulate the names of Entity/foreign supplier with whom

business dealings have beenbanned, to theGovernmentDepartments, other Public

SectorEnterprises,etc.forsuchactionastheydeemappropriate.

b. IfGovernmentDepartmentsoraPublicSectorEnterpriserequestformoreinformation

abouttheEntitywithwhombusinessdealingshavebeenbanned,acopyofthereportof

InquiringAuthority togetherwithacopyof theorderof theCompetentAuthority/

AppellateAuthoritymaybesupplied.

c. IfbusinessdealingswithanyEntity/foreignsupplierhasbeenbannedbytheCentralor

StateGovernmentoranyotherPublicSectorEnterprise,BEMLLTDmay,withoutany

furtherenquiryorinvestigation,issueanorderbanningbusinessdealingwiththeEntity

anditsinter-connectedEntity/foreignsupplieranditssubsidiaries.

d. EffectofbanningofbusinessDealingswithanEntity/Debarmentofanentityasfollows:

i. An order of Banning of business dealings with an entity shall result in

immediate ineligibility of the entity, from participating in future bids for a

speci�iedperiodwitheffectfromthedateofsuchorder.NoRFPwillbeissuedto

suchanentity.

ii. Anyon-goingprocurementprocesswhereL1determinationhasnotyetbeen

donewillbeprogressedafterexcludingthebidinvolvingentitywithwhichthe

businessdealingsarebanned.Incasethereareonlytwobidders,onebeingthe

entity with which business dealings is banned; the procurement will be

progressedasperextantprovisionsofBEMLPurchaseManualafterexcluding

suchanentity.

iii. Anyon-goingprocurementprocesswherethelowestbidderinvolvesanentity

with which business dealings are banned, will be terminated and fresh

procurementprocess,ifrequired,maybeinitiated.

iv. Ordersofbanningofbusinessdealingswithanentitymaybeextendedtoits

allied�irmsbyspeci�icorderofthecompetentAuthority.

17.15LEVYOFFINANCIALPENALTY

Financialpenaltiesmaybeleviedasprovidedforinthepre-ContractIntegrityPactand/or

thecontractwhichmaybegovernedundertheextantprovisionsofthePurchasemanual.

a. In cases involving non-performance or under performance of contract, the

PerformanceBankGuaranteeand/orAdvanceBankGuaranteeshallbeinvokedasper

speci�icprovisionsofthecontractapartfromotheractionsincludingcancellationofthe

contract.

b. In cases involving the violation of Pre-Contract Integrity Pact under the Purchase

manual,apartfromotheractionsincludingcancellation/rescindingofconcernedorall

contracts,anyoneorallofthefollowingactionscanbetakentowardslevying�inancial

penalty:

i. ForfeitureofthePerformanceBankGuaranteeand/orAdvanceBankGuarantee

eitherfullyorpartially.

ii. Recoveryofallsumsalreadypaidbythebuyer,incaseofanDomesticentitywith

Interestthereonat2%higherthantheprevailingBaserateofSBIandincaseofa

BidderfromaForeignentitywithinterestthereonat2%higherthantheLondon

Inter Bank Offered Rate (LIBOR). If any outstanding payment is due to the

Bidder/entityfromthebuyerinconnectionwithanyothercontractforanyother

ContractofanyotherDivisions,suchoutstandingpaymentcouldalsobeutilizedto

recovertheaforesaidsumandinterest.

iii. EncashmentofthePerformanceBankGuaranteeand/orAdvanceBankGuarantee

iffurnishedbythebidder,inordertorecoverthepayments,alreadymadebythe

buyer,alongwithinterest.

iv. RecoveryofallsumspaidinviolationofthispactbyBidder(s)toanyAgentor

brokerwithaviewtosecuringthecontract.

c. Incasesinvolvingviolationofstandardclauseinthecontractrelatingtoentityunderthe

BEML Purchase Procedure, apart from other actions including putting on hold or

cancellationofthecontracteitherwhollyorinpart,anyoneorallofthefollowingactions

canbetakentowardslevying�inancialpenalty:

i. Topaytothebuyeranysuchamountpaidasgift, reward, fees,commissionor

considerationalongwithinterestattherateof2%perannumaboveLIBORrate.

ii. Refundofallpaymentsmadeby thebuyer in termsof thecontractalongwith

interestattherateof2%perannumaboveLIBORrate

iii. Recoveryofanysuchamountreferredin(i)and(ii)abovefromothercontractsof

theentitywiththeCompany.

(AsperMoDIDNo:119/Vig.I/2012/D(Vig)/DDPdated:13.02.2017)

PURCHASE MANUAL PURCHASE MANUAL114 115

CHAPTER–18–GENERALGUIDELINESONPURCHASEORDER

a. Purchase Orders and amendment to Purchase Orderswill bemade in 3 copies for

distribution as under, after taking approval from the competent Authority as per

delegationofpowers.

- SupplierCopy

- BillsPayablesectionCopy

- Purchasedepartmentcopy

ThedulyapprovedPOcanbesharedwithaboveusersthroughEmail.Thisfacilityi s

con�iguredinERPsystem.

b. TheFinanceco-ordinationandapprovalbythecompetentAuthorityonPurchaseOrder

isobtaineddulysignedininkontwocopies.OnecopywillbeforwardedtoBillsPayable

sectionandothercopyisretainedinPurchaseOrder�ile.Onlythesetwocopieswillbe

usedbyBillsPayablesectionforpaymentpurposesandbyPurchasedepartmentfor

followup,furthercorrespondence,etc.,

c. TheGeneraltermsandconditionsofcontracttoformpartofthePurchaseOrderissued

tovendorsisenclosedinAnnexure“E”.

d. ChiefofPurchasedepartmentinco-ordinationwithChiefofFinanceshallensurethat

repliestoInternalAuditobservationsandGovt.Auditenquiriesaregivenonpriority

afterstudyingtheobservation/enquiries.InrespectofGovt.Auditenquiries,thedraft

repliesforthesameshallbesenttoChiefofFinancefor�inalisingandgivingareplytothe

Govt.AuditParty.

e. EveryPurchaseOrder�ileshallbepagenumbered.

f. AllcompetentauthoritiesatdifferentstagesshallapprovethePurchaseOrder.

g. ThegeneralINCOTERMSareexplainedseparatelyinthismanual(AnnexureH)

h. ChecklistasperFormatF2tobe�illedandforwardthePurchaseproposaltopurchase

scrutinyasperFormatF1.

i. ERPT-Codesrelevantunderthischapter

The following are the ERP T-Codes relevant for performing various operations as

indicatedinthischapter:

T–Code Particulars FunctionsofT­Code

ME80FN GeneralAnalysisofPurchases

ThetransactioncodeisusedtoevaluatethePurchaseOrders foragivensetofcriteria.The initialscreenallowstheusertoenteramaterial,vendor,materialgroup, plant , purchasing organization andpurchasinggroup.Theoutputshowsthedetailsforeach of the Purchase Orders, including vendor,material,purchasinggroup,purchasingorganization,documentdate,quantity,andordervalue.

CHAPTER–19–PURCHASEBUDGET

19.1PURCHASEBUDGETANDPLACEMENTOFORDERSFORREVENUEITEMS:

Consideringtheneedtocontrol inventoryandproductcosts, theChiefof thePurchase

departmentshallberesponsibleforcompilingthePurchaseBudgetonanannualbasisfor

RevisedEstimate(RE)andBudgetEstimate(BE)yearswithmonthlybreakup,aftertaking

intoaccountthefollowingfactors.

a. Thedivisionwillprepareandsubmit the followingbudgetbasedon theproduction

programme:

i. QuarterlyMaterialBudget

ii. QuarterlyPurchaseBudget

iii.MonthlyFundBudget

Foreignexchangecontentwillalsobespelt-outdistinctlyinthepurchasebudget.Based

on the approval of the budgets by the Directors, the Division will have powers as

delegatedtofollowthePurchaseprocedure.

b. A monthly report on placement of Purchase Orders using ERP T-Code “ME80FN –

General Analysis of Purchase Orders”, foreign exchange commitment, coverage and

inventorywillbesenttocorporateof�iceforreviewingandmonitoring.

c. Reviewshallbemadeonquarterlybasisforshortclosure/cancellationofPurchase

Orders. The re-scheduling of delivery schedule shall invariably be according to the

productionneeds.

d. ThePurchaseBudgetfortheyearsshallbepreparedusingERP.Thisannualbudgetshall

bebrokenintomonthlybudgetsforcommitments,receiptsandconsumption.

e. ERP facilities can be availed for preparation of this budget and data stored in the

computer so thatwhenPurchaseOrders issued are fed to computer and the actual

receiptsandissuesareprocessedincomputertoobtainmonthlyinventoryoutputs.

f. TheseinformationcanbeusedforcomparisonwiththeBudgeted�iguresandfortaking

anMISreportoninventoryforthemonthandcumulativeuptotheendofthemonthfor

theyear,indicatingalsotheopeningandclosinginventory.

g. Themonth-wisebudgetandthemonthlyMISreportmustbecompiledinERP.Careshall

betakentopreparethePurchaseBudgetstrictlyaspertheProduction/Provisioning

planandBillofmaterialsapplicablefortheequipment(s)andrealisticestimatesfor

otherindirectmaterialsandkeepinginviewtheinventorynorms.

h. ThePurchaseBudgetshallbesubmittedtoBudgetandReportssectionduringSept/Oct

ofeveryyearforREofthatyearandBEofnextyear,whichwillformpartoftheRevenue

BudgetandWaysandMeansBudget.

19.2ERPT­CODESRELEVANTUNDERTHISCHAPTER:

ThefollowingaretheERPT-Codesrelevantforperformingvariousoperationsasindicated

inthischapter:

T–Code Particulars FunctionsofT­Code

ME80FN GeneralAnalysisofPurchases

ReferChapter17forexplanation.

PURCHASE MANUAL PURCHASE MANUAL116 117

CHAPTER–20–INVENTORYCONTROL

a. Billofmaterials(BOM)forallmodelsofequipmentproducedshallbeupdatedinERPas

frequentlyaspossible,keepinginviewofthechangesrequiredonaccountofmodi�ica-

tioncarriedoutontheequipment,standardizationofinputitemsetc.Theequipment

serialnumberfromwhichthechangeinBOMiseffectedshallalsobeindicated.Itshallbe

ensuredthatchangesinBOMaregiveneffecttoinsuchawaythattheinventoryonhand

shall not become redundant and further supplies not required against the orders

becauseofchangeshallbecancelledintime.

b. BOMshallbedrawnstrictlybasedondrawings,withbreakupforproductionofvarious

components, sub-assemblies and sub-sub-assemblies. Only a reasonable cushion to

coverprocesslossesneedbebuiltin,whichmustbereviewedperiodically.

c. ProcurementofmaterialsasperPurchaseManualandissueofmaterialsforproduction

shallbestrictlybasedonBOMforProjectItems,PDOandrequirementofsparesfor

Marketingbasedontheirprojectionsandbasedonbudgetprovisionsfortheindirect

materials.

d. TheBOMshallbepreparedbyProductDesign/ProductionPlanningdepartmentforall

models of equipment andmade available to all concerned departments. Alternate/

substitutematerialsshallalsobeindicated.

e. Allinventoryitemsshallbecodi�iedaspertheprincipleofcodi�ication–Inventorycode

numbersshallbeassignedbyaCentralagencyviz.,ProductDesigndepartmentforall

Production Items and Stock Control department for all non-production items. Code

numbersshallbeassignedfornewitemsattheBOM/PRstageitself.Alldocumentsviz.

BOM, Bin cards, PRs, Tenders, Purchase Orders, Receiving Reports, Material

Requisitionsetc.,shallindicatethematerialcodenumbersuniformly,consistentwith

thematerialcodenumbersaspertheInventorymasterkeptintheERP.

f. Careshallbetakenbyalltheconcerneddepartmentstoindicatecorrectmaterialcode

numbersinallthedocuments.

d. PRsshallberaisedforproductionitemsbasedonProduction/Provisioningprogramme

asalsoonthebasisofBOM.WhileindicatingthequantityinthePRfortheequipment,

coveragecareshallbetakentoadjustthestockonhand,receiptagainstorderscurrent

for execution,materials already shop loaded and are inwork in progress, supplies

receivedagainstdevelopmentalorderswhichwerenotcountedforequipmentcoverage

atthetimeofplacementofdevelopmentorders,quantitiesprocuredinexcesstocover

forprocesslosseswhereactuallosswasless,excesssuppliesagainstearlierordersetc.,

AlsodiscussedinChapter4ofthismanualonthismatter.

e. PRsshallberaisedattheappropriatetimekeepinginviewtheprocurementleadtime

andwhenthematerialsarerequiredforshoploadingforproduction.PRsshallindicate

clearandrealisticdeliveryscheduletomeetmonthlyproductiontargetsandtokeepthe

inventoryholdingsatminimumlevels.AlsodiscussedinChapter4ofthismanualonthis

matter.

f. Forstockcontrolitems,themaximum,minimumandreorderlevelsshallbeconstantly

reviewedandrevisedbasedoncurrentlevelsofconsumption,reliabilityofsuppliers,

availabilityofsuppliesandleadtimerequiredforpurchase.PRsshallbeissuedonsuch

revisedstocklevelsonly.AlsodiscussedinPara4.3ofChapter4ofthismanualonthis

matter.

g. In case the items are collected from one division to another division to meet

production/spares requirements, such transactions are being regularised through

StockTransportOrders(STO’s)inERPsystem.Regardingcancellation/shortclosureof

STO’s, while reviewing of outstanding STO’s coordination of Chief of Planning of

supplyingplantshallbetakenalongwithapprovalofCompetentAuthorityinlinewith

DoPfor“placementofordersagainstRateContract”. (asperGFR209)

h. Allinventoryitemsshallbecategorizedas'A''B'and'C'.Thetotalconsumptionofthe

itemsofmaterialsforthepreviousyear,intermsofvalue,willbearrangedindescending

orderanditemsaccountingbyvalueforthe�irst85%ofthetotalconsumptionwillbe

takenon 'A'categoryandthe itemsaccounting forthenext10%willbetakenas 'B'

categoryandthebalance5%as'C'category.Strictcontrolforcommitment,receiptand

consumption shallbeexercisedon 'A' category items.ThePurchaseBudgets for the

Budgetyearswillbecompiledindetailfor'A'categoryitemsandundermajorgroupsfor

B&Ccategoryitems.AlsodiscussedinChapter4ofthismanualonthismatter.

i. NoPurchaseOrdershallbereleasedwithoutanapprovedPR.PurchaseOrdersshallbe

releasedintimeasperthePurchaseManual.PlacementofPurchaseOrderscanbedone

onceinayearfortheyear'srequirementbutdeliveryshallbestaggeredtomaintain

productiontargetsandtoreduceinventoryholdings.

j. Non-movingandslow-movingitemsforperiodover2yearsfromthedateoflastissue

shallbeconstantlyreviewedandreasonsascertainedfortheirbecomingredundantso

as toavoidsuchcauses forredundancy in future.Effortsshallbemadetouse them

alternatively(or)tosellasspares.Actionshallalsobetakentoidentifysuchredundant

itemsintheStockmaster,BOMandprocurementlist,toavoidanypossibleprocurement

actionbymistake.ReferUnit-5ofTransactionAuditManualforidenti�icationofsuch

materialsandERPprocessinthisregard.

k. DocumentationasperStoresManualshallbestrictlydoneandnomaterialsshallbe

drawnforusewithoutapprovedPRs.

l. The Inventory balance against each item as per Bin and ledger shall be reconciled

continuouslybytheconcernedstoresin-chargetoavoidanyseriousmistakesandmix

upofitems.ReferUnit-6ofSystemsAuditManualinthisregard.

m.InrespectofRailandMetroandDefenceSegmentsProductionPlanisalwaysagainst

CustomerOrders,hence,theinventoryofRawMaterial,WIPandFGIarealwayswithin

theMoUnorms.

n. IncaseofMiningandConstructionSegmentthebusinessisunderstockandsalemodel.

ProductionPlanisbasedonMarketrequirementasprojectedbyMarketingDepartment

annually. Based on which respective planning departments generates Purchase

RequisitionbyrunningMRPinERPsystemandinventoryismonitored.

o. Thedeliveriesshallbestaggeredandinventoryshallbe30daysofconsumptiononly.

Howevernostockshallexceed60daysunlessleadtimeitselfismorethan60days.

p. ExceptionalcasesshallbeapprovedbyChiefofComplex/ChiefofDivisionupto90days

and beyond by Functional Directors. Import items involving lead time exceeding 6

monthsandsteelforgingsinvolvingMOQ,shallbehoweverexcludedfromthis.

PURCHASE MANUAL PURCHASE MANUAL118 119

CHAPTER–21–ETHICSOFPURCHASING

21.1

a TheProcurement&Contractsdivisionfostersandpromotesfairandethicalbusiness

practiceswhileactinginthebestinterestoftheBEMLLimited.Thisincludesadheringto

astrictcodeofethics.

b. Thecodeofethicscanbebroadlyclassi�iedinto:

i. Integrity

ii. Professionalism

iii. HighStandards

iv. Optimaluseofresources

v. Compliancewithlegalandotherobligations.

21.2CODEOFINTEGRITY­

Noof�icialofaprocuringentityorabiddershallactincontraventionoftheCodeswhich

includes

a.Prohibitionof-

i. makingoffer,solicitationoracceptanceofbribe,rewardorgiftoranymaterial

bene�it,eitherdirectlyor indirectly, inexchange foranunfairadvantage inthe

procurementprocessortootherwisein�luencetheprocurementprocess;

ii. Anyomission,ormisrepresentationthatmaymisleadorattempttomisleadsothat

�inancialorotherbene�itmaybeobtainedoranobligationavoided;

iii. Any collusion, bid rigging or anti-competitive behaviour that may impair the

transparency,fairnessandtheprogressoftheprocurementprocess;

iv. Improperuseofinformationprovidedbytheprocuringentitytothebidderwith

anintenttogainunfairadvantageintheprocementprocessorforpersonalgain;

v. Any�inancialorbusinesstransactionsbetweenthebidderandanyof�icialofthe

procuringentitydirectlyorindirectly

vi. Anycorrectionoranythreattoimpairorharm,directlyorindirectly,anypartyor

itspropertytoin�luencetheprocurementprocess

vii. Obstructionofanyinvestigationorauditingofaprocurementprocess;

viii. Making false declaration or providing false information for participation in a

tenderprocessortosecureacontract;

b. Disclosureofcon�lictofinterest

c. Disclosure by the bidder of any previous transgressions made in respect of the

provisionsofsub-clause(a)withanyentityinanycountryduringthelastthreeyearsor

ofbeingdebarredbyanyotherprocuringentity.

d. Theprocuringentityaftergivingareasonableopportunityofbeingheardcomestothe

conclusionthatabidderorprospectivebidder,asthecasemaybe,hascontravenedthe

codeofintegrity,maytakeappropriatemeasures.

e. Thefollowingarefewgeneralpracticesexpectedfromtheexecutivesofthecompanyto

enforce�inancialorderandstricteconomytoseethatallrelevant�inancialrulesand

regulationsareobservedbyhisownof�iceandthesubordinates;whichareconsidered

asethicalpractices:

i. Obtainmaximumvalueforeachrupeespentandtheexpenditureshouldnotbe

primafaciemorethantheoccasiondemands.

ii. Noauthorityshouldexerciseitspowersofsanctioningorapprovingexpenditure

topassanorderwhichwillbedirectlyorindirectlytoitsownadvantage.

iii. Everyof�icerisexpectedtoexercisethesamevigilanceinrespectofexpenditure

incurredfrompublicmoneyasapersonofordinaryprudencewouldexercisein

respectofexpenditureofhisownmoney.

iv. Declinepersonalfavours,gifts,andgratitudefromthesuppliers;

v. Grantallcompetitivesuppliersfairandequalconsideration

vi. Conductbusinesswithpotentialandcurrentsuppliersinanatmosphereofgood

faith;

vii. Demandhonestyinsalesrepresentation;

viii. Receiveconsentoforiginatorforuseofproprietaryideasanddesigns;

ix. Makereasonableefforttoobtainequitablesettlementofanycontroversywitha

supplier;

x. Accordapromptandcourteousresponsetoallwhocallonlegitimatebusiness;

xi. Fosterfair,ethical,transparentandlegalbusinesspractices

xii. ProtectBEML'sinterestbyensuringsuppliershonouralltermsoftheircontracts

xiii. Paymenttovendorsasperagreedterms;

xiv. DeclarationofinterestbymembersofpurchasingCommitteeorpurchasinggroup

aboutanymaterialpersonalinterestwhichmayaffectorbeseentoaffect,their

impartiality or judgement in respect of their duties i.e. owning signi�icant

shareholding in the supplier or close familymembers being employed by key

supplier.

21.3RESPONSIBILITYOFLOSSES:

Anof�icer shall beheldpersonally responsible for any loss sustainedby theCompany

throughfraudornegligenceonhispart.Hewillalsobeheldpersonallyresponsibleforany

lossarisingfromfraudornegligenceofanyotherof�icertotheextenttowhichitmaybe

shownthathecontributedtothelossbyhisownactionornegligence.

(InlinewithGFR37)

21.4RELATIONSHIPWITHSUPPLIERS:

Inall theirdealingsandtransactions, thepersonnelofthePurchaseDepartmentsshall

conductthemselvesinanexemplarymannerinkeepingwiththebestinterest,dignityand

traditionofBEMLandtheirprofession.Inthisconnection,the‘CodeofConduct&Ethics’

adoptedbytheIndianInstituteofMaterialsManagement,whichisreproducedbelow,shall

PURCHASE MANUAL PURCHASE MANUAL120 121

servetoguidetheiractions.

a. To consider �irst, the total interest of one’s organization in all transactionswithout

impairingthedignityandresponsibilityofone’sof�ice.

b. Tobuywithoutprejudice,seekingtoobtainthemaximumultimatevalueforeachrupee

ofexpenditure.

c. Tosubscribeandworkforhonestandtruthinbuyingandselling;todenounceallforms

andmanifestationsofcommercialbribery,andtoeschewanti-socialpractices.

d. Toaccordapromptandcourteousreception,sofarasconditionswillpermit,toallwho

calluponlegitimatebusinessmission.

e. To respect one’s obligations and those of one’s organization, consistent with good

businesspractices.

21.5FILINGSYSTEM:

TheProcurement�ilesareveryimportantandsensitivedocumentsandthusthereisaneed

tohaveasingle�ilesystemwithproperpagenumbering.Incaseofurgency,ifopeningof

part�ilesisunavoidable,thesameshallthereafterbemergedwithmain�ile.Thedecisions

anddeliberationsoftheindividualsorthetenderCommittee’salsoneedtobeproperly

recordedandwelldocumented.The�ilingsystemmustensureaccountability.

21.6CONCLUSION:

Purchaseprofessionals are an asset to any company.They can save the resources and

wealthofanorganisation.Thewayinwhichtheypurchaseitemsisvitaltothesuccessofa

companyandastrictcodeofethicsensuresthatallpotentialvendorsaretreatedequally.

CHAPTER–22CONTRACTMANAGEMENT

(Inlinewithchapter8ofRULES224­227OFGFR2017)

22.1AllcontractsshallbemadebyanAuthorityempowered.

22.2 Generalprinciplesforcontract—thefollowinggeneralprinciplesshallbeobservedwhile

enteringintocontracts:—

a. Thetermsofcontractmustbeprecise,de�initeandwithoutanyambiguities.Theterms

shallnot involveanuncertainor inde�inite liability,except in thecaseofacostplus

contractorwherethereisapricevariationclauseinthecontract.

b. Standard forms of contracts shall be adopted wherever possible, with such

modi�ications as are considered necessary in respect of individual contracts. The

modi�icationsshallbecarriedoutonlyafterobtaining�inancialandlegaladvice.

c. Incaseswherestandardformsofcontractsarenotused,legaland�inancialadviceshall

betakenindraftingtheclausesinthecontract.

i. InrespectofWorksContracts,orContractsforpurchasesvaluedbetweenRupees

one lakh to Rupees ten lakhs, where tender documents include the General

ConditionsofContract(GCC),SpecialConditionsofContract(SCC)andscopeof

work,theletterofacceptancewillresultinabindingcontract.

ii. InrespectofcontractsforworkswithestimatedvalueofRupeestenlakhsorabove

orforpurchaseaboveRupeestenlakhs,aContractdocumentshallbeexecuted,

withallnecessaryclausestomakeitaself-containedcontract.Ifhowever,theseare

precededbyInvitationtoTender,accompaniedbyGCCandSCC,withfulldetailsof

scope and speci�ications, a simple one page contract can be entered into by

attachingcopiesoftheGCCandSCC,anddetailsofscopeandspeci�ications,Offer

oftheTendererandLetterofAcceptance.

iii. Contract document shall be invariably executed in cases of turnkey works or

agreementsformaintenanceofequipment,provisionofservicesetc.

iv. No work of any kind shall be commenced without proper execution of an

agreementasgivenintheforegoingprovisions.

v. Contractdocument,wherenecessary,shallbeexecutedwithin21daysoftheissue

ofletterofacceptance.Nonful�illmentofthisconditionofexecutingacontractby

theContractororSupplierwouldconstitutesuf�icientgroundforannulmentofthe

awardandforfeitureofEarnestMoneyDeposit.

vi. Cost plus contracts shall ordinarily be avoided.Where such contracts become

unavoidable,fulljusti�icationshallberecordedbeforeenteringintothecontract.

Where supplies or special work covered by such cost plus contracts have to

continueoveralongduration,effortsshallbemadetoconvertfuturecontractsona

�irmpricebasisafterallowingareasonableperiodtothesuppliers/contractorsto

stabilizetheirproduction/executionmethodsandprocesses.

PURCHASE MANUAL PURCHASE MANUAL122 123

Explanation:Acostpluscontractmeansacontractinwhichthepricepayableforsuppliesor

servicesunderthecontractisdeterminedonthebasisofactualcostofproductionofthe

suppliesorservicesconcernedpluspro�iteitherata�ixedrateperunitorata�ixed

percentageontheactualcostofproduction.

vii. PriceVariationClause canbeprovidedonly in long-termcontracts,where the

delivery period extends beyond 18 months. In short-term contracts �irm and

�ixedpricesshallbeprovidedfor.Whereapricevariationclauseisprovided,the

priceagreeduponshallspecifythebaselevelviz,themonthandyeartowhichthe

priceislinked,toenablevariationsbeingcalculatedwithreferencetotheprice

levelsprevailinginthatmonthandyear.

viii. Aformulaforcalculationofthepricevariationsthathavetakenplacebetweenthe

BaselevelandtheScheduledDeliveryDateshallbeincludedinthisclause.The

variationsarecalculatedbyusingindicespublishedbyGovernmentsorChambers

ofCommerceorEconomicAdvisoryorFOREXperiodically.

ix. ThePricevariationclauseshallalsospecifycutoffdatesformaterialandlabour,as

theseinputstaperoffwellbeforethescheduledDeliveryDates.

x. The price variation clause shall provide for a ceiling on price variations,

particularlywhereescalationsareinvolved.Itcouldbeapercentageperannumor

anoverallceilingorboth.Thebuyershallensureaprovisioninthecontractfor

bene�itofanyreductioninthepriceintermsofthepricevariationclausebeing

passedontohim.

xi. Theclauseshallalsostipulateaminimumpercentageofvariationofthecontract

price above which price variations will be admissible (e.g. where resultant

increaseislowerthantwopercent.nopriceadjustmentwillbemadeinfavourof

thesupplier).

xii. Whereadvanceorstagepaymentsaremadethereshallbeafurtherstipulation

thatnopricevariationswillbeadmissibleonsuchportionsoftheprice,afterthe

datesofsuchpayment.

xiii. WheredeliveriesareacceptedbeyondthescheduledDeliveryDatesubjecttolevy

ofliquidateddamagesasprovidedintheContract,theliquidateddamages(ifa

percentageoftheprice)willbeapplicableonthepriceasvariedbytheoperation

ofthePricevariationclause

xiv. NopricevariationwillbeadmissiblebeyondtheoriginalScheduledDeliveryDate

fordefaultsonthepartofthesupplier.

xv. PricevariationmaybeallowedbeyondtheoriginalScheduledDeliveryDate,by

speci�icalterationofthatdatethroughanamendmenttothecontractincasesof

ForceMajeureordefaultsbyGovernment

xvi. Where contracts are for supply of equipment, goods etc, imported (subject to

customs duty and foreign exchange �luctuations) and/or locallymanufactured

(subjecttoGST),thepercentageandelementofdutiesandtaxesincludedinthe

priceshallbespeci�icallystated,alongwiththesellingrateofforeignexchange

elementtakenintoaccountinthecalculationofthepriceoftheimporteditem.The

modeofcalculationofvariationsindutiesandtaxesandForeignexchangerates

andthedocumentstobeproducedinsupportofclaimsforsuchvariationsshall

alsobestipulatedintheContract.

xvii. Theclauseshallalsocontainthemodeandtermsofpaymentofthepricevariation

admissible.

xviii.Contracts shall include provision for payment of all applicable taxes by the

contractororsupplier.

xix. “Lump sum’ contracts shall not be entered into except in cases of absolute

necessity.Wherelumpsumcontractsbecomeunavoidable,fulljusti�icationshall

berecorded.ThecontractingAuthorityshallensurethatconditionsinthelump

sumcontractadequatelysafeguardandprotecttheinterestsoftheGovernment.

xx. Departmentalissueofmaterialsshallbeavoidedasfaraspossible.Whereit is

decidedtosupplymaterialsdepartmentally,ascheduleofquantitieswiththeissue

ratesofsuchmaterialasarerequiredtoexecutethecontractworkshallforman

essentialpartofthecontract.

xxi. 1. IncontractswhereCompany’spropertyisentrustedtoacontractoreitherfor

useonpaymentofhirechargesorfordoingfurtherworkonsuchproperty,

speci�ic provision for safeguarding Company property (including insurance

cover) and for recovery of hire charges regularly, shall be included in the

contracts.

2. Provisionshallbemadeinthecontractforperiodicalphysicalveri�icationofthe

numberandthephysicalconditionoftheitemsatthecontractor’spremises.

Results of such veri�ication shall be recorded and appropriate penal action

takenwherenecessary.

xxii. Copiesofallcontractsandagreementsforpurchasesandofallrateandrunning

contracts entered into by civil departments of the Company to be sent to the

Financedepartment.

xxiii. 1. Thetermsofacontract,includingthescopeandspeci�icationonceenteredinto,

shallnotbemateriallyvaried.

2. Wherevermaterialvariation inanyof the termsor conditions ina contract

becomesunavoidable,the�inancialandothereffectsinvolvedshallbeexamined

andrecordedandspeci�icapprovaloftheAuthoritycompetenttoapprovethe

revised �inancial and other commitments obtained, before varying the

conditions.

3. Allsuchchangesshallbe in the formofanamendment to thecontractduly

signedbyallpartiestothecontract.

xxiv. Normallynoextensionsof thescheduleddeliveryorcompletiondatesshallbe

granted except where events constituting force majeure, as provided in the

contract,haveoccurredorthetermsandconditionsincludesuchaprovisionfor

otherreasons.Extensionsasprovided in thecontractmaybeallowedthrough

PURCHASE MANUAL PURCHASE MANUAL124 125

formalamendmentstothecontractdulysignedbypartiestothecontract.

xxvi. All contracts shall contain a provision for recovery of liquidated damages for

defaultsonthepartofthecontractor.

xxvii.Awarrantyclauseshallbeincorporatedineverycontract,requiringthesupplier

to,withoutcharge,repairorrectifydefectivegoodsortoreplacesuchgoodswith

similargoodsfreefromdefect.Anygoodsrepairedorreplacedbythesupplier

shallbedeliveredatthebuyerspremiseswithoutcoststothebuyer.

xxvii.AllcontractsforsupplyofgoodsshallreservetherightofCompanytorejectgoods

whichdonotconformtothespeci�ications.

xxviii.Noclaimforthepaymentfromcontractorshallbeentertainedafterthelapseof

threeyearsofarisingoftheclaim.

22.3MANAGEMENTOFCONTRACTS

Implementationofthecontractshallbestrictlymonitoredandnoticesissuedpromptly

wheneverabreachofprovisionsoccurs.Properprocedureforsafecustodyandmonitoring

ofBankGuaranteesorotherInstrumentsshallbelaiddown.Monitoringshallincludea

monthlyreviewofallBankGuaranteesorotherinstrumentsexpiringafterthreemonths,

alongwithareviewoftheprogressofsupplyorwork.ExtensionsofBankGuaranteesor

otherinstruments,wherewarranted,shallbesoughtimmediately

22.4LEGALADVICE

Whereverdisputesariseduringimplementationofacontract,legaladviceshallbesought

beforeinitiatingactiontoreferthedisputetoconciliationand/orarbitrationasprovidedin

thecontractorto�ileasuitwherethecontractdoesnotincludeanarbitrationclause.The

draftoftheplaintforarbitrationshallbegotvettedbyobtaininglegaland�inancialadvice.

Documents to be �iled in thematter of resolution of dispute, if any, shall be carefully

scrutinizedbefore�ilingtosafeguardgovernmentinterest.

CHAPTER–23STARTUp’s

23.1DEFINITIONOFSTARTUP:

a. Anentityisconsideredtobeworkingtowardsinnovation,development,deploymentor

commercialization of new products, processes or services driven by technology or

intellectualpropertyifitaimstodevelopandcommercialize:

i. Anewproductorserviceorprocess,or

ii. Asigni�icantlyimprovedexistingproductorserviceorprocessthatwillcreateor

addvalueforcustomersorwork�low.

b. Providedthatthemereactofdeveloping:

i. Products or services or processes which do not have potential for

commercialization,or

ii. Undifferentiatedproductsorservicesorprocesses,or

iii. Products or services or processes with no or limited incremental value for

customersorwork�lowwouldnotbecoveredunderthisde�inition.

c. Entitymeansaprivatelimitedcompany(asde�inedintheCompaniesAct,2013),ora

registeredpartnership�irm(registeredundersection59ofthePartnershipAct,1932)

oralimitedliabilitypartnership(undertheLimitedLiabilityPartnershipAct,2002).

(Fordetailsofstartupreferwww.startupindia.com)

23.2RELAXATIONOFNORMSFORSTARTUps

BEMLhasrelaxedthefollowingeligibilitycriteriaforregistrationfromStartUpsinorderto

encouragetheStartupstoparticipateinsuppliesforBEMLprocurements.

a. PriorTurnover

b. PriorExperiencemayberelaxed.

23.3 STARTUPRECOGNITION

StartupisaCompanythathasbeeninexistenceforlessthan�iveyearsandwithsales

revenuesnotexceedingRs25crore

Apartfrominnovation,suchstartupswillbeexpectedtobeengagedinthedevelopment,

deployment or commercialisation of new products, processes or services driven by

technologyorintellectualproperty.

23.4 IDENTIFICATIONOFAREAS

BEMLhasidenti�iedareasofSTARTUPwhichishostedinBEMLWEBSITEunderseparate

tabandVendorsneedtocontactR&DforStartupactivities.

23.5PAYMENTFORSTARTUP’S

Startup’sadvancesupto15%maybeconsideredifrequest isreceivedbyBEML

againstBankGuarantee.Theinterestontheadvanceamountisnottobeinsisted

fromStartup’s

(VideMoDrefMoMdated8thAugust2016)

PURCHASE MANUAL PURCHASE MANUAL126 127

CHAPTER–24LEGALASPECTSOFPROCUREMENT

24.1 a. Purchase Order is a legal contract between the buyer and the supplier, under this

contract,boththepartieshavecertainlegalrightsandobligations.Employeesdealing

withprocurementneedtohaveathoroughknowledgeofalltherelevantStatutesandthe

Rules framed there under, as may be amended from time to time, pertaining to

procurement.Thisknowledgehelpsthemtostructuretheircontractwiththesupplier

properly.SomeoftherelevantStatutes,withoutlimitation,areasunder:

1. TheIndianContractAct,1872

2. TheNegotiableInstrumentsAct,1881

3. TheSaleofGoodsAct.1930

4. ThePartnershipAct,1932

5. TheControlExciseAct1944

6. TheCentralSalesTaxAct,1956

7. TheSalesTaxAct(relevanttoStateconcerned)

8. TheCustomsAct,1962

9. TheCustomsTariffAct,1975

10. TheCentralExciseTariffAct,1985

11. TheArbitrationandConciliationAct,1996

12. TheLimitedLiabilityPartnershipAct,2008

13. TheCompaniesAct,2013

14. TheRealEstate(RegulationandDevelopmentAct),2016

15. TheInsolvencyandBankruptcyCode,2016

16. TheGoodsandServiceTaxAct,2017.

b. Unlessabuyerhasbasicknowledgeofthelegalaspectsofprocurementheislikelyto

involvehimselfandtheCompanyintolegalcomplicationswhichhavetobeavoided.The

objectiveofthischapteristomakehimfamiliarwithsomeoftheimportantlegalaspects

ofprocurement.

c. ApplicationofLawofAgency

d. ThebasicAuthorityfortheactsoftheBuyerisderivedfromtheLawofAgencywhich

giveshimtheAuthoritytoactforhisCompany.Itis,therefore,necessaryfortheBuyerto

knowtheamountofAuthoritydelegatedtohimfortransactingbusinessastheagentof

theCompany.

e. AsthecaseoftheBuyer,Suppliersandtheiremployeessimilarlyholdthestatusofselling

agentsforthe�irms.Toensurethatasatisfactorycontracthasbeenexecuted,thebuyer

mustinsistupontheacceptanceoftheofferbyanauthorisedof�icialoftheSupplier.

f. Whilesigningthecontract,Buyershallspeciallyindicateonthedocumentthatheis

acting in the capacity of agent for the Supplier. The Buyer exceeding his actual or

apparent Authority in making a contract shall absolve his company from the

implicationsofthecontractbuthehimselfshallbecomeliablefortheconsequences.

24.2GENERALPRINCIPLESOFLAWOFCONTRACT

AsperContractAct,aContractisanagreementenforceablebeforeLaw.Allcontractsare

agreementsbutallagreementsarenotcontracts.

“Consensusad-idem"meansthatboththepartiesmustunderstandthesamethinginthe

samesense.Thisisanessentialprerequisiteofavalidcontract.Inordertodeterminethe

existenceof"Consensusad-idem"itisusualtoemployinagivencontractthelanguageof

offerandacceptance.

24.3PURCHASECONTRACT

TheBuyer'smajorresponsibilityistoensurethatPurchaseContractisproperlydrawnand

islegallybindingontheSupplier.TomakeitenforceablebyLaw,theContractmustcontain

thefollowingfourbasicelements:

a. Agreement (meeting of the mind) resulting from an offer from a Supplier and

acceptancefromtheBuyertobeunderstoodinthesamesense.

b.Considerationorobligationinthesameform

c.Partiesshallbecompetenttoenterintocontract

d.Purposeofthecontractmustbelawful

24.4OFFERANDACCEPTANCE

a. WhenaBuyersendsaPurchaseOrdertoaSupplier,thisactconstituteslegaloffertobuy

materialsinaccordancewiththetermssetoutontheorder.Agreementdoesnotexist

however,untiltheSupplieracceptsthisofferintermsoftheorder.Intheeventofthe

BuyerrequestingforaquotationfromtheSupplier,theSupplier'squotationconstitutes

an offer. Agreement then exists when the Buyer accepts the quotation. Mere

acknowledgementofofferdoesnotconstituteacceptancenordoessilenceconstitute

acceptance.

b. UnderContractAct,theSupplierhaseveryrighttorevokehisofferatanytimebeforeitis

accepted.TheofferremainseffectiveuntilitisrejectedortheSuppliermakesacounter-

offeroruntiltheperiodofofferisvalid,andifthatisnotmentioned,untilareasonable

periodaftertheofferismadehaselapsed(Advisabletohave30-90days).

c. WhenaSupplieracceptsanorderbyusinghisownacceptanceformwhichcontains

sellingtermsdifferentfromthoseintheorder,legallyitisconsideredasacounter–offer

whichterminatestheBuyer'soriginalofferandtherefore,noagreementexistsuntilthe

Buyer and the Supplier agree upon terms which are mutually acceptable and

incorporatetheminanewofferandacceptance.

d. Ithasbeenseenthatinpracticesuchcon�lictsoftermsfrequentlyoccurbutarenot

resolved. Perhaps inmost of the cases, the Supplier is able to deliver thematerials

accordingtothetermsandconditionsoftheorder.Butifproblemarisesbeforedespatch

againstsuchanorder,theBuyermaywell�indthatinfacthehaslegallynovalidcontract

withtheSupplier.

e. IfaproblemarisesaftertheBuyerreceivesandacceptsthematerial,theLawconsiders

theBuyertohaveacceptedthecounter-offerwhenhehasacceptedthematerial.Itis,

therefore,necessarythateveryBuyershallexaminetheSupplier'sacceptanceandtryto

reconcilewithhimanysigni�icantdifferencesincontractualterms.

PURCHASE MANUAL PURCHASE MANUAL128 129

24.5CONSIDERATION

Inadditiontomeetingofmindsavalidcontractmustalsocontainanelementofobligation.

Mostpurchasecontractsarebilateral.TheBuyerpromisestobuyfromtheSuppliercertain

materialasastatedpriceandtheSupplierpromisestodeliverthematerialinaccordance

withthestatedcontractconditions.Whatisimportantisthemutualityofobligation.The

contractmustbedrawninsuchawaythateachpartyisboundbythecontract.InLaw,even

ifonepartyisnotbound,thereisnocontract.InaPurchaseOrdertheBuyermustmention

thequantity,price,deliveryterms,etc.inaveryspeci�iclanguagesoastobindtheSupplier

forproperperformanceofthecontract.

24.6COMPETENTPARTIES

Avalidcontractmustbemadebypersonswhoarecompetenttocontract.Thecontract

madebyaminororbyaninsaneorintoxicantpersonisvoid/voidableunderlaw.

24.7LEGALITYOFPURPOSE

Acontractwhosepurposeis illegal isautomaticallyvoidandnotenforceableby law.A

contractwhoseprimarypurposeislegal,butoneofwhoseancillarytermsisillegalmaybe

either void depending upon the seriousness of the illegality. For example, if a Buyer

purchasesmaterialatpricewhichviolatedrestraintoftradeorpricediscriminationlaws

likeEssentialCommoditiesActinIndia,theContractwouldbelegallyvoid.

24.8SPECIALLEGALCONSIDERATIONS­INSPECTIONRIGHTS

IftheBuyerhasnotpreviouslyinspectedthematerialpurchasedtoensurethatitconforms

tothetermsofthecontract,theLawgiveshimareasonableperiodoftimetoinspectthe

material after it is received. If the Buyer raises no objection to thematerial within a

reasonableperiodoftimeheisdeemedtohaveacceptedit.

24.9RIGHTOFREJECTION

TheBuyerhastherighttorejectmaterialifitdoesnotconformtothetermsofthecontract.

Ifanexcesssupplyisreceived,theBuyercaneitherrejectthecompletesupplyorhecan

reject the quantity in excess of the contract.When theBuyer does notwish to accept

wronglydeliveredmaterial,heisrequiredonlytonotifytheSupplierandheisnotlegally

boundtoreturntherejectedmaterial.Ifheneitherreturnsthematerialnornoti�iesthe

Supplierofhisrejectionwithinareasonableperiodoftime,heisthenobligedtopayforthe

material.

24.10ORDERCANCELLATIONANDBREACHOFCONTRACT

a. IfaSupplierfailstodeliverthegoodsagainstanorderbythedeliverydateagreedinthe

orderorifhefailstoperforminaccordancewiththecontractconditions,hecommits

breachof contract. Thebreachgenerally gives theBuyers right to cancel theOrder,

besidesclaimfordamages. Thetimeofdeliverycan,however,beextendedwiththe

consentofboth thepartiesandonsuch termsasagreed toby them.At the timeof

grantingofsuchextensionoftimefordelivery,reservationcouldbemadeinrespectof

futureincreasesinfreight,customduty,GST,etc.

b. Wheretheorderiscancelled,theBuyercaninadditionsuetheSupplierforthedamages

as per the terms of contract. In case of delivery failure, if the Buyer subsequently

purchases the material from elsewhere the damages are generally limited to the

differencebetweenthecontractpriceandthepricepaidtothenewsupplier.

c. Forre-purchaseorriskpurchaseattheexpenseofdefaultingSupplierthefollowing

conditionsshallbeful�illed:

i. Thematerialre-purchasedshallbeidenticalwiththematerialoriginallyordered.

ii. There-purchaseshallbemadewithinareasonabletimeafterthedateofbreachor

withinthetimestipulatedinthecontract.

iii. ThedefaultingContractorshallbeservedwithnoticeofre-purchase.

iv. There-purchaseshallbeonthesametermsasinthecaseoforiginalcontract.

Note:Riskpurchaselossshallberecoveredonlyafterthere-purchasecontracthasbeen

executed.

d. ItmayalsohappeninsomecasesthataBuyeriscompelledtocanceltheorderbeforethe

materialissupplied.InsuchacasetheBuyerbreachesthepurchasecontract.Thisactis

called'AnticipatoryBreach'anditmakestheBuyerliableforanyresultantinjurytothe

Supplier.However,ifthecancellationdoesnotharmtheSupplier,hecannotclaimany

damages.Therewillbecaseswherethecancellationoftheorderisduetofactorsbeyond

thecontroloftheBuyerlikelabourstrikeinthefactoryoftheBuyer,actofGod,waretc.In

suchcases,theSupplierhastoacceptthecancellation.

e. Itisevidentatthetimeamajorcontractisdrawnthatbreachofcontractwouldseverely

injureoneorbothpartiesandthatdamagewouldbedif�iculttodetermine.Provisions

forterminationofcontract,liquidateddamagesetc.tobeinvariablyincorporatedinthe

Contract.Suchprovisionsstipulateinadvancetheprocedurestobeusedindetermining

costsanddamages.

24.11PATENTINFRINGEMENT

a. The Law gives a patent holder the exclusive right tomanufacture, sell and use his

patenteditemforaspeci�iednumberofyears.Ifanindustrialpurchaserengagesinany

oftheseactivitiesduringtheperiodofpatentprotectionwithoutpermissionfromthe

patentholder,heisguiltyofpatentinfringementandcanbesuedfordamagesbythe

patentholder.

b. BuyersfrequentlyhavenowayofknowingwhethertheirSuppliersaresellingpatented

materialswithorwithoutauthorisationfromthepatentholder.IfaBuyerunknowingly

buysanitemsfromaSupplierwhohasinfringedthepatentholder'srights,theBuyeris

alsoguiltyofinfringement,ifheusestheitem.Toprotectagainstsuchunintentional

violations,mostcompaniesincludeaprotectiveclauseintheirPurchaseOrderswhich

statesthattheSuppliershallindemnifytheBuyerforallexpensesanddamagesresulting

frompatentinfringement.Clausesofthistypedonotpreventthepatentholderfrom

suingtheuser.Ifproperlystated,however,theycanrequiretheSuppliertodefendthe

user in such legal proceedings and can give the user legal recourse to recover any

resultinglossesfromtheSupplier.

PURCHASE MANUAL PURCHASE MANUAL130 131

24.12HONESTMISTAKES

When an honest mistake is made in drawing a Purchase Contract, the conditions

surroundingsuchspeci�iccasedeterminewhethertheContractisvalidorvoid.Asageneral

rule,mistakesmadebyonlyonepartydonotrendertheContractvoid,unlesstheother

partyisawareofthemistake.Forexample,aquotationissubmittedbyaSupplierandhe

intendstoquoteapriceofRs.260perunitandthroughanerror–maybetypographical

error-thepricetypedasRs.250istransmittedtotheBuyer.InsuchcasesCourtshaveheld

thatiftheBuyeracceptstheofferwithoutknowledgeoftheerror,avalidcontractexists.On

theotherhand,ifthepriceofRs.250isincorrectlytypedasRs.150orRs.15theCourt

wouldprobablyholdthatacompetentBuyershallrecognisesuchanerrorandifoneparty

knowsorshallknowofother'serror,thecontractisvoid.However,aBuyerorSuppliershall

not assume that a mistake, however, innocent, will release him from a contractual

obligation.Inthemajorityofcases,itwillnotdoso.

24.13CONCLUSION

ThepurposeofthischapteristomaketheBuyeralertandalivetothelegalresponsibilities

involvedinhisjob.ItisnotnecessarythataBuyershallbealegalexpert.Butatthesame

time, theBuyer shall knowas towhen to seek sound legal advicewhenever any legal

problemsarise.Heisalsosupposedtoknowthelegalaspectsofpurchasingtotheextent

thatinhisjobhedoesnothurthimselforhiscompany.ThebestthingforaBuyeristoavoid

legalproblemsbyusinghisskillinselectingsound,cooperativeandreliableSuppliers.He

shallalsousehisskillinsettlingdisputesbynegotiations.

CHAPTER–25GRIEVANCEREDRESSAL

a. Anybidderorprospectivebidderaggrievedbyanydecision,actionoromissionofthe

procurementprocessmaywithinaperiodof10daysorsuchotherperiodspecialisedin

thepre-quali�icationdocuments,documentsorTenderdocuments,fromthedateofsuch

decisions,makeanapplicationforreviewtotheconcerneddivisionclearlygivingthe

speci�icgroundorgroundswhichthevendorfeelsaggrieved.Thisapplicationforreview

canbe�iledonlybythebidderorvendorwhohasparticipatedinthetender.

b. Incaseoftwobidsystem,applicationforreviewrelatedtothecommercialbidcanbe

�iledonlybythevendorwhosetechnicalbidisfoundacceptable.

c. Theof�icialtowhomtheapplicationforreviewhastobeaddressedshallbeindicatedin

thepre-quali�icationdocuments,vendorregistrationdocumentsortenderdocuments

as the casemay be. Based on this application for review, decision on whether the

tendering process shall be suspended pending disposal of the application shall be

decidedbytheCompetentAuthority.

d. Afterexaminingtheapplicationandtheavailabledocuments,procurementagencymay

decideontherelieftobeconsideredappropriatetotheapplicantandcommunicateits

decision to the applicant and to the other bidders or prospective bidders. The

applicationforreviewshallbedealtasexpeditiouslyaspossible.

e. ThegrievanceapplicationshallbereviewedatalevelofHeadofMaterialsDepartment

orbyanOf�icernotlessthantherankofDGMnominatedbytheDivisionalHeadfor

proposalswhereCompetentAuthorityisHeadoftheDivision.

f. IncaseofCompetentAuthorityisFunctionalDirector,thegrievanceapplicationshallbe

reviewedbyHeadofDivision.

g. IncaseofCompetentAuthorityisCMD/ProcurementCommittee/Board,thegrievance

shallbereviewedbyFunctionalDirector.

I GrievanceRedressalCommittee

j. Ifthegrievanceapplicationisnotdisposedoffwithintheallowedtime,orifthebidder

feelsaggrievedbythedecision,thebiddercan�ileanapplicationforredressalbythe

concernedprocurementredressalCommitteewithin15daysofexpiryofdateofreceipt

ofthedecision.RedressalCommitteetobeconstitutedatcomplexlevelwithHeadof

Finance,HRandHeadofdivisionconcernedwhereCompetentAuthorityisDivisional

Head.RedressalCommitteeatcorporateleveltobeconstitutedwithHeadofFinance-

CO,HeadofHR–COandHeadofCorporateMaterialswhereCompetentAuthorityis

FunctionalDirector/CMD/ProcurementCommittee.

k. ThedecisionoftheGrievanceredressalCommitteeis�inal.

PURCHASE MANUAL 132

CHAPTER–26­REQUIREMENTOFPROFESSIONALSTANDARDS

ANDTRAINING

All personnel dealing with procurement are required to undergo training on the

procurementprocedure,ERP,SRMandguidelinesissuedbytheCompanyfromtimetotime

to achieve professional standards in theirwork. Only personnelwho have undergone

trainingaretobeauthorisedtodealwithprocurementprocess.Trainingofatleastone

week to be imparted to the personnel under the supervision of anOf�icer ofMaterial

Management, ERP, SRM department nominated by Head of Department of Material

ManagementoftheDivision/CorporateOf�iceasmaybeapplicable.

CHAPTER–27

8205350535Dtd13thJuly-2017

GENERAL TERMS & CONDITIONS

APPLICABLE TO CONTRACTS &

PURCHASE ORDER

PURCHASE MANUAL PURCHASE MANUAL134 135

1. DEFINITIONS&INTERPRETATIONS

1.1. `ThePurchaser’means“(includecompanynameandaddress)”(AGovernmentof

India Undertaking) incorporated under the Companies Act having its registered

of�ice at “(include address)” and shall be deemed to include its successors and

assignee.

1.2. `Supplier’meansapersonhavingbeenincludedinacontractasaContractorandalso

meansa �irmorcompanywithwhomtheorder forsupply isplacedandshallbe

deemed to include the supplier’s successors, (approved by BEML Ltd.,)

representatives, heirs, executors and administrators. The supplier may also be

referredtoasthesupplier,Contractororvendor.

1.3. `PartiestotheContract’shallmeantheSupplierandthePurchaserasnamedinthe

mainbodyofthePurchaseOrder.

1.4. `Tender’meansandincludesquotation,invitationtotenderandallotherdocuments

likedrawings,speci�ications,qualityplan,etcthatformpartofthetenderdocument.

1.5. `AcceptanceofTender’Meanstheletterofmemorandumcommunicatingsupplier,

theacceptanceoftheTenderandincludesadvanceacceptanceofthistender.

1.6. `PurchaseOrders/Contract’meansandincludestheinvitationtotender,instruction

totenderers,acceptanceoftender,Letterofintent/letterofaward,thegeneralterms

andconditionsofPurchaseOrder/contract,specialconditionsofPurchaseOrder/

contract, particulars, descriptions, speci�ications, schedule of prices, quantities,

qualityplan,drawingsenclosedandotherconditionspeci�iedintheacceptanceof

tendersandincludestherepeatorderwhichhasbeenacceptedoracteduponby/for

thesupplierforthesupplyofstoresandincludesanorderforperformanceofservice

andincludesamendments,ifany,thatmaytakeplacesubsequenttothediscussions,

negotiations,mutualagreementifany.

1.7. `Stores/Materials/Services’meansthegoodsorservicesspeci�iedinthePurchase

OrderwhichthesupplierhasagreedtosupplyunderthePurchaseOrder.

1.8. `Wordsinsingularincludetheplural&vice-versa.

1.9. Wordsimpartingthemasculinegendershallbetakentoincludethefemininegender

andwordsimpartingpersonsshallincludeany�irm,companyorassociationsorbody

ofindividualswhetherincorporatedornot.

1.10Theheadingoftheseconditionsshallnotaffecttheinterpretationsoconstruction

thereofofthecontract.

2. AUTHORITYOFPERSONSSIGNINGDOCUMENT

ApersonsigningthetenderoranyotherdocumentinrespectofthePurchaseOrdershall

bedeemedtohavepowertodosoonbehalfoftheSupplier.

3.ACCEPTANCEOFORDER

The supplier shall send Order Acceptance within two weeks from the date of

LOI/LOA/PurchaseOrderor suchotherperiodas speci�ied/agreedby thePurchaser.

Purchaserreservestherighttorevoketheorderplacediftheordercon�irmationdiffers

fromtheoriginalPurchaseOrderplacedandthePurchasershallonlybelegallyboundafter

ithasagreedexplicitlyinwritingtobeinagreementwiththedeviation.Theacceptanceof

deliveriesorsuppliesbyPurchaseraswellaspaymentsmadeinthisregardshallnotimply

acceptanceofanydeviations.ThePurchaseOrderwillbedeemedtohavebeenacceptedif

no communication to the contrary is receivedwithin twoweeks (or the time limit as

speci�ied/agreedbythePurchaser)ofthereceiptoftheorder.

4. SECURITYDEPOSIT/PERFORMANCEGUARANTEE

4.1 10%ofPOvaluehastobedepositedasinterestfreesecuritydeposit/Performance

Guaranteeatthetimeofacceptanceofofferinrespectofallservicecontractsand

majorcapitalgoodslikeplantandmachinery,etcasfollows:

(i) Bankguaranteeforfaithfulperformance(FPBG),CombinedBankGuaranteefor

contractperformancecoveringdeliveryobligationandwarranty(CBG)clause

for 10% of the total order value shall be applicablewhere the order value

exceedsRs.5.00lakhs.Bankguaranteeforfaithfulperformance,combinedbank

guaranteecoveringbothcontractperformanceandwarranty,AdvancePayment

guaranteeetc.,shallbeindicatedwhereverapplicable.

(ii) A period of 60 days time from the date of Purchase Order or the delivery

schedule, whichever is earlier shall be stipulated for submission of Bank

Guaranteesothatcontractualremediescouldbeenforced,ifrequired.

(iii) AbankguaranteeforanominalamountofRs.5000/-mustbeobtainedfrom

eachSub-contractorvalidforayear,onyearlybasis

4.2 BEMLreserves theright toacceptabankguarantee fromanyof thenationalized

banks in lieu of cash deposit as security deposit as calculated above at its sole

discretion. Thesebankguaranteesshallbevalid forthe fullsupplyperiodof the

PurchaseOrderwithaclaimperiodofthreemonths.

4.3 NoclaimshalllieagainstBEMLLtd.,inrespectofinterestoncashdepositsorGovt.

Securitiesdepreciationthereof

4.5 BEMLLtd.shallbeentitledanditshallbelawfulonitsparttoforfeitthesaidsecurity

depositinwholeorinpartintheeventofanydefault,failureorneglectonthepartof

thesupplierintheful�ilmentorperformanceinallrespectofthePurchaseOrder.

5. VALIDITYPERIOD

ThePurchaseOrderisvalidforamaximumperiodfor24monthsfromthedateofissue

unlessotherwisestated,withinwhichtimethesuppliershallcompletethesuppliesfailing

whichthePurchaseOrdershallbetreatedascancelled/shortclosedunlessitisrevalidated

againstspeci�icrequestforreasonsacceptabletoBEMLLtd.,

6. QUALITYANDWORKMANSHIP

The stores supplied shall be of thebest quality andWorkmanship shall be in strict

conformitywithallthedrawingsandspeci�icationsfurnishedwiththePurchaseOrders

andshallanswertothedescriptioninallrespects. Allsuppliesshallbeaccompaniedby

supplier’s works inspections/test certi�icates duly certifying, the Stores are in strict

PURCHASE MANUAL PURCHASE MANUAL136 137

conformitywiththedrawings/speci�ications.However,�inalacceptancewillbesubjectto

inspection and approval at BEML works. Once the materials are rejected and

communicated to the supplier, no request shall be entertained for re-inspection or

acceptanceofthestores. However,BEMLreservestherighttore-inspectthestoresand

consideracceptanceatitsdiscretion.

7. GUARANTEE/WARRANTY:

a. Guarantee

Whereverrequired,andsoprovidedinthespeci�ications/PurchaserOrder,theSupplier

shallguaranteethatthestoressuppliedshallcomplywiththespeci�icationslaiddown,

for materials, workmanship and performance. If within the guarantee period the

deliveryisfoundtobenon-compliantincludingthosewiththestipulationsinclause10

(QualityandConditionofDelivery)oftheseConditions,theSuppliershall,onitsown

account,replace,repair,orre-executethedeliveryatPurchaser’sdiscretionwhen�irst

requestedtodosowithintwoweeksormutuallyagreedperiod,withoutprejudiceto

Purchaser’sotherlegalrights. IftheSuppliercontinuestodefaultonitsobligations,

Purchaserhas the right toproceed to replace, repair or re-execute theorder at the

Supplier’sexpense,withorwithouthelpfromthirdpartiesbesides,Purchasersother

legalremedies.PurchasershallnotifytheSupplieroftheexerciseofthisrightinadvance

wherepossible.Unlessotherwisespeci�ied,guaranteeperiodshallbe18monthsafter

the date of delivery of goods. For capital goods or bought out packages which are

intendedtobeincorporatedininstallationsorsystemstheGuaranteeperiodshallnot

startuntilthetimetheinstallationsorsystemsarecommissioned,providedalwaysthat

theperiodendsnolaterthan30monthsafterthedateofdeliveryofthegoods. The

guaranteeperiodshallbeextendedbytheperiodduringwhichthegoodsarenotin

compliancewiththestipulationsinClause10(QualityandConditionofDelivery). A

guarantee period as described above shall apply afresh to replaced, repaired or re-

executedpartsofadelivery.

ThedecisionofthePurchaserinregardtotheSupplierliabilityunderthisclauseshallbe

conclusiveand�inalandwillbebindingonthesupplier.

b. Warranty

Allthestoressuppliedshallbewarrantedagainstanydefectinmaterial,Workmanship,

designordimensionetc.,foraperiodoftwelvecalendarmonthsfromthedatetheyare

actuallyput onuseor eighteenmonths from thedateof receipt of supply inBEML

Limitedwhicheverisearlierandthesuppliershallremedysuchdefectsathis/herown

costorreplacefreeofchargesuchstoreswhencalledupontodosobyBEMLwhoshall

stageinwritinginwhatrespectthestoresaredefective. WarrantyCerti�icateshallbe

furnishedbytheSupplierintriplicateasundercoveringtheentiresuppliestobemade

againstthisorderwithin15daysfromthedateoforder,butbeforecommencementof

supplies.

ThesuppliescoveredunderP.O.No.datebyWarrantedagainstalldefectsinmaterial,

workmanship,designdimensionsetc.,foraperiodof12monthsfromthedatetheyare

puttoactualuseor18monthsfromthedateofreceiptofsupplyinBEMLwhicheveris

earlierandifanydefectsarefoundwithintheaboveperiodforanyofthereasonsstated,

theywillbereplacedatyourpremisesfreeofcostwithinareasonabletime.

8. SUPPLYOFSAMPLE

Beforeeffectingthebulksupplies,anacceptablesampleshallbesubmittedwithoutany

obligationonthepartofBEMLLtd.,asregardssafecustodyandshallobtainnecessary

clearanceforeffectingbulksuppliesasperscheduleofdelivery.Samplessosuppliedshall

be clearly labelled with Supplier’s Name, Address and Purchase Order No. shall any

certi�iedsamplebelentbyBEMLthesuppliersshallberesponsibleforthesafecustodyand

returnofthecerti�iedsampleintactwithoutdamageafterthepurposeforwhichitisgiven

isserved,withoutdelayorwhendemandedback.Anyclari�icationregardingsubmission

ofsamplemaybeobtainedfromChiefofQualitydepartment. Ifthesuppliersubmitsa

samplewhetherwith,beforeorafterthetender,thesameshallnotgovernthestandardof

supply,exceptwhenithasbeensospeci�icallystatedintheacceptanceoftender.

9. PACKINGANDDISPATCH

Thesuppliershallpackagethedeliveriessafelyandcarefullyandpackthemsuitablyin

allrespectsconsideringthepeculiarityofthematerialfornormalsafetransportbySea/Air

/Rail/Roadtoitsdestinationsuitablyprotectedagainstloss,damage,corrosionintransit

and theeffectof tropical salt ladenatmosphere. Thepackagesshallbeprovidedwith

�ixtures / hooks and sling marks as may be required for easy and safe handling by

mechanicalmeans.

Thepacking,shipping,storageandprocessingof thedeliverymustcomplywith the

prevailing legislation and regulations concerning safety, the environment andworking

conditions. Itemspackedwithraw/solidwoodpackingmaterialshallbetreatedasper

ISPM–15(fumigation)andaccompaniedbyPhytosanitory/Fumigationcerti�icate. If

safetyinformationsheetsexistforadeliveryorthepackaging,theSuppliermustalways

supplythesesheetsdirect(atthesametime).

TheSuppliershallinformthePurchaseronemonthinadvanceoflikelyshipmentdate/s,

theno.ofpackages,Grosseight&Netweight,Dimensions(LxBxH)ofeachofthepackages.

EachsuchpackagemustbemarkedwithConsigneename,P.O.Number,PackageNo.,Gross

weight&Netweight,dimensions(LxBxH)andSupplier’sname.Thepackingshallallowfor

easyremovalandcheckingofgoodsonreceiptandcomplywithcarrier’sconditionsof

packingorestablishedtradepractices. PackinglistofgoodsinsideeachpackagewithPO

itemno.,&Quantitymustalsobe�ixedsecurelyoutsidetheboxoindicatethecontents.If

anyconsignmentneedsspecialhandlinginstruction,thesameshallbeclearlymarkedwith

standard symbols / instructions. Hazardousmaterial shall be noti�ied such and their

packing,transportationandotherprotectionmustconformtorelevantregulations.

10. RAWMATERIALSARRANGEMENT

TheSuppliershallmakehisownarrangementtoprocureallrawmaterialsrequiredand

BEMLshallnotberesponsibleforanyassistanceinsuchprocurementorwhatsoever.

11. IDENTIFYINGOFITEMS/PIECES

ThesuppliershallindicateBEMLstocknumberandSupplierCodeNumber/Vendor

PURCHASE MANUAL PURCHASE MANUAL138 139

CodeNo.andBEMLPONo.inallDeliverydocuments/invoicesandcorrespondence.Also

heshallemboss/engravetheSupplierCodeNo./VendorCodeNo.oneachitem/pieceata

convenientnon-machinableplace,otherwisethesuppliesareliableforrejections.

12. DELIVERY

Exceptasotherwise indicated in thePurchaseOrder,deliveryshallbeFOR(BEML).

TradetermssuchasEXW,FOB,CFRetc.,ifstipulatedintheordershallbeconstruedin

accordancewiththeversionoftheINCOTERMSapplicableatthetimeofordering,without

prejudicetotheprovisionscontainedintheseconditions.Thedeliverydate(s)ordelivery

period(s)asstipulatedintheagreementshallbe�irmandbindingandshallapplytothe

entiredeliveryforeachPOitem. Partialshipmentsmay,however,bepermittedbythe

purchaser.

ThetimeandthedateofdeliveryofthestoresstipulatedinthePONo.shallbedeemedto

betheessenceofthePurchaseOrderanddeliverymustbecompletednotlaterthanthe

dates speci�ied therein. The supplier shall strictly adhere to the delivery schedule

indicatedintheP.O.Anysuppliesmadeaheadofthisscheduleareliableforrejectionatthe

discretionofBEML.Shallthesupplierfailtodeliverthestoresoranyconsignmentthereof

withintheperiodprescribedforsuchdelivery,BEMLshallbeentitledattheiroptioneither.

a. Topurchaseelsewhere,withoutnoticetothesupplierontheaccountandattherisk

andcostof thesupplier thestoresnotdeliveredorotherofasimilardescription

wherestoresexactlycomplywith thedescriptionarenot in theopinionofBEML

(which shall be �inal, readily procurable)without cancelling the P.O.in respect of

consignmentsnotyetduefordelivery.

Or

b. TocancelthePurchaseOrder

Intheeventofactionbeingtakenunder(a)or(b)thesuppliershallbeliableforany

losswhichBEMLmaysustainonthataccountbutthesuppliershallnotbeentitledto

any gain on purchase made against default. As soon as it is apparent that the

scheduleddatescannotbeadheredto,anapplicationshallbesentbythesupplierto

BEML,wellbeforetheexpiryofthedeliveryperiodspeci�iedinthePurchaseOrder.

Withoutprejudicetotheforegoingrights,ifsuchfailuretodeliverinpropertimeas

aforesaidshallhavearisenfromanycausewhichBEMLmayadmitasareasonable

groundforanextensionofthetime(andtheirdecisionshallbe�inal)theymayallow

suchadditionaltimeastheymayconsiderjusti�iedbycircumstancesofthecase.

Deliveryrequiredtobemadeinlotsshallbemadeinlotsonlyandanyextradeliveries

involvedeitheronaccountofrepeatedrejectionsorvarianceinsupplyorlossshallbe

liableforservicechargesof5%ofthePurchaseOrdervalueforeachextradelivery.

13. PLANT&MACHINERYSUPPLY

In case of Purchase Order for supply of Plant &Machinery and supplies requiring

inspectionandtestaftererectionandcommissioningatsiteifthecompletedPlantifany

portion thereof or after it is taken over is found to be defective or fails to ful�ill the

requirementsoftheP.O. BEMLshallgivethesupplier,noticesettingforthdetailsofsuch

defectsorfailures,andthesuppliershallforthwithmakethedefectiveplantgood,orafter

thesametomakeitcomplywiththerequirementsoftheP.O.shallhefailtodosowithina

reasonabletimeBEMLmayrejectandreplaceatthecostofthesupplierthewholeorany

portionofthePlant/Machinery,asthecasemaybewhichisdefectiveorfailstoful�ilthe

requirements.

14. INSPECTIONANDTESTING:

Thegoodsandstoresshallbeofapproveddesignandeachpart/componentmaybe

inspected and tested by the Purchaser prior to shipment and shall fully comply with

relevantrequirementsofpurchaser.

Purchaserhastherighttoinspectthedelivery.Intheeventofrejection,Purchasershall

informtheSupplieraccordinglyandPurchasershallbeentitledtoreplacementorrepairat

itsdiscretionormayproceedtoterminateorannultheagreement.Allthisdoesnotaffect

Purchaser’srighttocompensation.

Incasethegoods/storesarerejectedatthetimeofinspectionatBEMLortherejections

are notices at the time of further processing the supplier will be informed of these

rejections.Onreceiptofthisinformationthesuppliershallimmediatelyarrangetocollect

therejecteditemsathiscostandriskandarrangeforthereplacementofgoodswithinthe

shortestpossibletime.UndernocircumstancesthesuppliershallcompelthePurchaserto

reworktherejectedgoods.

Whereverthesupplierhasnotcollectedtherejecteditemswithin60daysfromthedate

ofintimation,BEMLshallhavetherighttodisposethegoodsandallcostrelatedtothecost

ofmaterial,statutoryleviesincurredbothinprocurementanddisposalshallberecovered

fromthesupplierfromanyofthebillsthataredue. Thesuppliershallhavenoclaims

whatsoeveragainstthePurchaserforsuchdisposal.

Purchaser or his authorized representative shall be entitled at all reasonable times

duringexecutiontoinspect,examineandtestattheSupplier’spremisesthematerialand

workmanshipofallstorestobesuppliedundertheContract,andifthepartofthestoresare

being manufactured at other premises the Supplier shall obtain Purchaser’s or his

authorizedrepresentative’spermissiontoinspect,examineandtestasifthesaidstoresare

beingmanufacturedattheSupplier’spremises.Suchinspection,examinationandtesting,

ifmadeshallnotreleasetheSupplierfromanyobligationundertheContract.

Allcostsrelatedtoinspectionsandre-inspectionsshallbebornebytheSupplier. The

costofinspectionstaff/thirdpartyspeci�iedbythePurchasershallbebornebyPurchaser,

unless otherwise speci�ically agreed. Whether the Contract provides for tests on the

premisesoftheSupplieroranyofhisSub-contractor/s,Suppliershallberesponsibleto

provide assistance such as, labour, materials, electricity, fuels, stores, apparatus,

instrumentsasmayberequiredandasmaybereasonablydemandedtocarryoutsuchtests

ef�iciently.CostofanytypetestorsuchotherspecialtestsshallbebornebythePurchaser

onlyifspeci�icallyagreed.

ThesuppliershallgivetheauthorizedrepresentativeofthePurchaserreasonableprior

noticeinwritingofthedateonandtheplaceatwhichanystoreswillbereadyforinspection

/testingasprovidedintheContract.

PURCHASE MANUAL PURCHASE MANUAL140 141

modi�icationsthereto,shallgovernContract. ThecompetentIndiancourtsofshallhave

solejurisdictionoverdisputesbetweenpurchaserandtheSupplier.

20. INTELLECTUALPROPERTYRIGHTS;LICENSES

IfanyPatentdesign,trademarkoranyotherintellectualpropertyrightsapplytothe

delivery or accompanying documentation, Purchaser shall be entitled to the legal use

thereof free of charge bymeans of anon-exclusive, worldwide, perpetual license. All

intellectualpropertyrightsthatariseduetotheexecutionofthedeliverybytheSupplier

andby its employees or thirdparties involvedby the Supplier forperformanceof the

agreementbelongtoPurchaser.

TheSuppliershallbeobligatedtodoeverythingnecessarytoobtainorestablishthe

abovementionedrights.TheSupplierguaranteesthatthedeliverydoesnotinfringeonany

oftheintellectualpropertyrightsofthirdparties.TheSuppliershallalsobeobligatedtodo

everythingnecessarytoobtainorestablishthealternateacceptablearrangementpending

resolution of any (alleged) claims by third parties. The supplier shall indemnify the

Purchaseragainstany(alleged)claimsbythirdpartiesinthisregardandshallreimburse

Purchaserforanydamagessufferedasaresultthereof.

“The Supplier shall comply with all applicable Labour Laws, particularly Contract

Labour(Regulation&Abolition)Act,1970,ESIAct,GratuityAct,PaymentofBonusAct,

PaymentofMinimumWagesAct,ProvidentFundActetc.,andRulesframedthereinfrom

time-to-timeandtheSuppliershallindemnifyBEMLforanylosscausedtoitbyreasonof

inaction,non-complianceetc.,oftheprovisionsofanyLawbytheSupplier”.

21. BRIBESANDGIFTS

Anybribe,commissions,giftoradvantagegiven,promisedorofferedbyoronbehalfof

thesupplierorhispartner,agentorservantoranyoneonhisorontheirbehalftoanyof�icer,

servant,representativeoragentofBEMLoranypersononhisortheirbehalfinrelationto

theobtainingortotheexecutionoforanyothercontractwithBEMLLtd.,shallinadditionto

anycriminalliabilitywhichthesupplier,mayincur,subjectthesuppliertothecancellation

of thisandallothercontractswithBEMLandalso forpaymentofany lossordamage

resultingfromanysuchcancellationtolikeextent,asisprovidedincaseofcancellation

underclause–12hereof. Anyquestionordisputeasothecommissionsofanyoffence

underthepresentclauseshallbesettledbyBEMLinsuchmannerandonsuchevidenceof

information as they may think �it and suf�icient and their decision shall be �inal and

conclusive.

22. JURISDICTION

CourtsofBangalorealoneshallhavejurisdictiontodecideanyissue/disputearisingout

of the Arbitration or this Purchase Order in exclusion of all other Courts. However,

jurisdictionofanyothercourtmaybeacceptedbymutualdiscussionandagreementbyand

betweenBEMLandtheSupplier

23. ARBITRATION

Disputesifany,arisingbetweenBEMLandthesupplierinconnectionwiththisPurchase

Orderoranyothermattersconnectedherewith,thesamewillbemutuallydiscussedand

settled,failingwhich,thedisputesshallbereferredtoasolearbitratortobeappointedby

15. QUALITY&CONDITIONOFDELIVERY

TheSupplierguaranteesthatthedeliveryisofgoodqualityandfreefromalldefectsand

inthecaseofservicesrenderedthattheyareperformedbyskilledpersonnelandthatnew

materialsareused.

TheSupplierguaranteesthatthedeliverycorrespondsexactlywiththeprovisionsofthe

agreement,thereasonableexpectationsofPurchaserregardingthecharacteristics,quality

andreliabilityofdelivery.

TheSupplierguarantees that thedelivery is suitable for thepurpose forwhich it is

intendedbyitsverynatureorwhichisevidentfromthespeci�icationslistedandfromthe

order.

TheSupplierguaranteesthatthedeliverycomplieswithlegalrequirementsapplicable

inIndiaandother(international)Governmentregulations,asapplicable.

TheSupplierguaranteesthatthedeliverycomplieswithlegalrequirementsapplicable

inIndiaandother(international)Governmentregulations,asapplicable

The supplier guarantees that the delivery complieswith the customary norms and

standardsintherelevantbranchoftradeorindustry.

The supplier shall be responsible for compliance with applicable technical, safety,

quality, environmental requirements and other regulations in relation to his product,

packaging,andrawandancillarymaterials.

16. PAYMENTPROCEDURE

AllbillsshallbesubmittedintriplicatetotheconcernedAccountsDepartmentasper

termsoftheP.O.wheneverthetermsofP.O.stipulateforbalancepayment,aseparatebillin

triplicateforthebalanceamountshallbesubmitted.

Paymentshallberecommended/arrangedonlywhensuppliesaremadestrictlyinline

with the supply schedule of the P.O. Requests for piece meal payments are making

staggeredsupplies,deviationfromthesupplyschedule,shallnotbeentertained.

AlldirectpaymentshallbemadebyE-paymentmodeonly.Incaseofforeignsuppliers

paymentswillbemadethroughbankbasedonthedocumentationascalledintherelevant

PurchaseOrderdirectlytothesupplier’sbankerforcredittosupplier’saccount.

17. APPROPRIATION

BEMLLtd.,shallbeentitledtorecoverbyappropriatinginpartorfullanysumofmoney

payablebythecontractorunderthiscontractoranyothercontractincludingcontracts

withotherdivisionsofBEML.Shallthesumofamountrecoveredisnotsuf�icienttocover

thetotalamountdue,BEMLisentitledtorecoversuchamountfromthebillsthatbecomes

dueorthecontractorshallpayBEMLthebalancedue.

18.

IncaseofGSTRNNo.andotherdetailstobefurnishedforcompliance

19. APPLICABLELAWSANDJURISDICTIONOFCOURTS:

Indian laws both substantive and procedure, for the time being in force including

PURCHASE MANUAL PURCHASE MANUAL142 143

BEML. The arbitration / proceedings shall be in accordance with the provisions of

Arbitration and Conciliation Act 1996 and Rules framed there under. The place of

arbitrationshallbeatBangaloreoranyotherplacemutuallydecidedbyandbetweenBEML

andthesupplierandallarbitrationproceedingsshallbeconductedinEnglishlanguage.

Theawardofthesolearbitratorshallbe�inalandbindingonalltheparties.

24. FORCEMAJEURECLAUSE:

Notwithstanding anything contained in the Contract, neither the Supplier nor the

Purchaser shall be held responsible for total or partial non-execution of any of the

contractualobligations,shalltheobligationbecomeunreasonablyonerousorimpossible

duetooccurrenceofa ForceMajeure’conditionswhichdirectlyaffecttheobligationstobe

performedbythePurchaserortheSupplier.Sucheventsincludewar,militaryoperations

ofanynature,blockages,revolutions, insurrections,riots,civilcommotions, insurgency,

sabotage,actsofpublicenemy,�ires,explosion,epidemics,quarantinerestrictions,�loods,

earthquake,oractsofGod,restrictionsbyGovt.authoritiesoverwhichtheSupplierorthe

actsonwhichthePurchaserhasnocontrol.

ThepartyclaimingtobeaffectedbyForceMajeureshallnotifytheotherpartyinwriting

without delay, within two weeks on the intervention and on the cessation of such

circumstance. ExtensionoftimesoughtbytheSupplieralongwithsupportingevidence

andsograntedbythePurchaserforthesupply/workaffected,ifany,shallnotbeconstrued

aswaiverinrespectofremainingdeliveries.

Notwithstandingaboveprovisions,Purchasershallreservetherighttocanceltheorder

/ Contract, wholly or partly, in order tomeet the overall delivery schedule andmake

alternative arrangements including arrangements with third party for completion of

deliveriesandotherschedules. Purchasemay takeoverpartlyprocessedmaterialata

mutuallyagreedprice.

25. DRAWINGSANDDOCUMENTS:

Drawings,technicaldocumentsorothertechnicalinformationreceivedbyoneparty

shallnot,withouttheconsentoftheotherparty,beusedforanyotherpurposethanthatfor

whichtheywereprovided. Theymaynot,withouttheconsentofthesubmittingparty,

otherwisebeusedorcopied,reproduced,transmittedorcommunicatedtothirdparties.

Thesuppliershall,asperagreeddate/sbutnotlaterthanthedateofdelivery,providefree

ofchargeinformationanddrawingswhicharenecessarytopermitthePurchasertoerect,

commission, operate and maintain the product. All intellectual properties, including

designs, drawings and product information etc. exchanged during the formation and

executionoftheContractshallcontinuetobethepropertyofthesubmittingparty.

26. NON­DISCLOSUREANDINFORMATIONOBLIGATIONS:

ThesuppliershallprovidePurchaserwithallinformationpertainingtothedeliveryinso

farasitcouldbeofimportancetoPurchaser. TheSuppliershallnotrevealcon�idential

informationtoitsownemployeesnotinvolvedwiththetender/Contract&itsexecution

anddeliveryortothirdparties. ThesuppliershallnotbeentitledtousethePurchaser’s

name in advertisements and other commercial publications without prior written

permissionfromPurchaser.

27. PRICE,INVOICINGANDPAYMENT:

Theagreedpricesare�ixedpricesinthecurrencyasspeci�iedinthePurchaseOrder.

Theyshallincludepacking,forwarding,loadingandcarriagetotheplacespeci�iedbythe

Purchaserandareinclusiveofallapplicabletaxes,dutiesetc.exceptforthosespeci�ically

agreedbetweenthesupplierandpurchaser. Themethodof invoicingshallbewithout

prejudice to the parties; agreement as to the place of performance. Invoices shall be

submittedbearingthePurchaseOrdernumber&date,itemnumber/sandsupporting

documentsascalledforinthePurchaseOrder.

28. FALLCLAUSE:

i. ThepriceschargedforthestoressuppliedunderthisP.Obythesuppliershallinno

event exceed the lowest price at which the supplier sells the stores of identical

descriptiontoanyotherBEMLOf�ice/DivisionduringthependencyofthisPurchase

Order.

ii. Ifatanytime,duringthesaidperiod,thesupplierreducesthesalepriceofsuchstores

orsellssuchstorestoanyotherBEMLOf�ice/Divisionatapricelowerthantheprice

chargeableunderthisP.OandthepricepayableunderthisPOforthestoressupplied

after thedateof coming into forceof such reductionshall standcorrespondingly

reduced.

iii. Thesuppliershallfurnishtotheconsigned/payingAuthorityconcernedforthisPO

thefollowingcerti�icateunderalongwiththeinvoiceforthesupplieseffectedunder

thisPO.“I/Wecertifythatthestoresofdescriptionidenticaltothestoressuppliedto

theconsigneeconcernedunderthisPOhavenotbeensoldbyme/ustoanyother

BEMLOf�ice/Divisionfromthecommencementofthecontractuptotheperiodof

completion of delivery at a price lower than the price charged to the consignee

concernedofthisPO.”

iv. Failureinsubmissionoftheaforesaidcerti�icatebythesupplierwillresultinwith

holdingofthepaymentoftheirbillsagainstsupply,ifany.

29. DURINGARBITRATION

“SuppliesunderthisPurchaseOrder,ifreasonablypossible,maycontinuebymutual

agreementduringthedispute/Arbitrationproceedings”.

30. PROGRESSREPORT:

Thesuppliershallregularlyinformtheprogressofworkandinsuchformasmaybe

calledforbythePurchaserfromtimetotime. Thesubmissionandacceptanceofsuch

reportsshallnotprejudicetherightsofthePurchaserinanymanner.

31. CONTRACTVARIATIONS:INCREASEORDECREASEINTHESCOPEOFSUPPLY:

Purchasermayvary thecontractedscope. If the supplier isof theopinion that the

variationinscopehasaneffectontheagreedpriceordeliveryperiod,purchasershallbe

informedofthisimmediatelyinwritingalongwithtechnicaldetails,andintheeventof

additionalwork,submitaquotationwithregardstothepriceanddeliveryperiodandthe

effectthisscopewillhaveontheothercontractsunderexecutionbythesupplier. The

PURCHASE MANUAL PURCHASE MANUAL144 145

suppliershallnotperformadditionalwork/alteredscopeofworkwithoutthewritten

instructions / amendment to the Purchase Order to that effect. The Purchaser also

reservesitsrightstodecreasethescopeofsupplyplacedagainstPurchaseOrdersunder

dueintimationtothesupplier.Suchdecreasemaybewarrantedduetodefectivegoodsor

PolicyDecisionsoftheManagementofthePurchaser. Andinsuchanevent,theSupplier

shallnothaveanyclaimsorrightagainstthePurchaser.

32. PENALTY/LIQUIDATEDDAMAGES:

Thetimeorperiodofdeliveryasstipulatedinthescheduleofdeliveryshallbedeemedto

beessenceoftheContract. Shallcircumstancesarisewherebythedeadlineforanagreed

delivery date(s) or period(s) is expected to be exceeded, the Supplier shall inform

PurchaserwithoutdelaythatinsuchaneventtheSuppliershallbindhimselftoanyofthe

termsandconditionsthatmaybeimposedbythePurchaser.Ifdelayindeliveryiscaused

byanyofthecircumstancesmentionedisonaccountofForceMajeureconditionspriorto

thescheduled/extendeddeliveryorbyadditionalwork,ifany,orbyanactoromissionon

thepartofthePurchaser,thePurchasershallextentthetimefordeliverybyaperiodwhich

isreasonablehavingregardtoallthecircumstancesinthecase.

IftheSupplierexceedsanyagreeddeliverydate(s)orperiod(s),PurchasershalllevyLD

forsuchdelay@0.5%perweek(7days)andpartthereof,subjecttoamaximumof5%of

thevalueofthedelayedportionofthePurchaseOrder.

Thepenalty/LDwillbechargedonthevalueofthePurchaseOrderexcludingstatutory

levies,freightandinsurancewherevernotincludedintheprice.Imposition,recoveryor

settlementofthisLDshallnotaffectPurchaser’srighttoperformance,compensationand

terminationoftheagreement.

33. TRANSFEROFOWNERSHIPANDRISK

TheriskforthedeliveryremainswiththeSupplieruntilthegoodsaredeliveredatthe

agreedplace.TitletothedeliveryshallpassontoPurchaseratthemomentofdelivery.

Models,stamps,moulds,templates,dies,callipers,drawingsandthelikeprocuredor

manufacturedbytheSupplierinaidofthedelivery,shallbedeemedtohavebeenmade

availabletothesupplierbyPurchaseratthemomentthatthesearticlesaredeliveredtothe

Supplier or have been manufactured by it. If Purchaser makes items available or is

consideredtohavemadeitemsavailabletotheSupplierinaidofthedelivery,theseshall

remainorbecomethepropertyofPurchaserandtheSuppliershallbeobligedtoclearly

marktheseitemsasPurchaser’spropertyandtomakeadeclarationofownershipavailable

ifrequestedtodoso. Itemscreatedbyamalgamation,confusionorotherwise,become

Purchaserpropertyat themomentof creation. The supplier shallbedeemed tohave

createdtheitemsforPurchaserandshallretainthesenewitemsasPurchaserpropertyand

makeadeclarationofownershipavailabletoPurchaserifrequestedtodoso.

34. SHORTSHIPMENT/WARRANTY/GUARANTEEREPLACEMENTS:

Incaseofanyshortshipmentsduringinitialsupply,subsequentlydespatchedbythe

Supplier or as anyGuarantee /Warranty replacement shall be despatched on “DDP –

DeliveredDuty

Paid BEML Stores” basis for imported items and “FOR – BEML Stores / designated

destination”basisforindigenousitems.

35. EXPORTADMINISTRATIONREGULATIONS

If a delivery includes such technology and or supply that are subject to the export

regulations,theSuppliershallobtainduepermissions,approvals,licenseetc.

36. NON­WAIVEROFDEFAULTS

IfanyindividualprovisionoftheContractisinvalidtheotherprovisionsshallnotbe

affected.ThefailureofBEMLtoinsistuponperformanceoftheContracttoenforceanyof

thetermsandconditionsofthisContractortoexerciseanyrightorprivilegegrantedto

BEMLunderthisContractorunderlawshallnotbeconstruedasawaiverandthesame

shallcontinueinfullforceandeffect.

37. ASSIGNMENTOFRIGHTSANDOBLIGATIONS;SUB­CONTRACTING:

Thesupplierisnotpermittedtosub-contractthedeliveryoranypartthereoftothird

partiesortoassigntherightsandobligationsresultingfromthisagreementinwholeorin

parttothirdpartieswithoutpriorwrittenpermissionfromPurchaser.Anypermissionor

approval given by the Purchaser shall, however, not absolve the supplier of the

responsibilityofhisobligationsunderthecontract.

38. INTEGRITYCOMMITMENTINTHEEXECUTIONOFCONTRACTS:

CommitmentbyPurchaser:

Purchasercommitstotakeallnecessarystepstopreventcorruptioninconnectionwith

theexecutionoftheContract.

CommitmentbytheContractor:

TheContractor(s)commit(s)totakeallmeasurestopreventcorruptionandwillnot

directlyorindirectlytrytoin�luenceanydecisionforthebene�itforwhichheisnotlegally

entitled.

The contractor (s) will not commit any offence under the relevant Acts. The

Contractor(s)willnotuseimproperly,forpurposeofcompetitionorpersonalgainorpass

ontoothers,any informationordocumentsprovidedbyPurchaseraspartofbusiness

relationship.

The Contractor (s) will not enter with other Bidder (s) / Contractors (s) into any

undisclosedagreementorunderstandingoranyactionstorestrictcompetition.

If theContractor(s),beforeawardorduringexecutionof theContractcommit(s)a

transgressionoftheaboveorinanyothermannersuchastoputhisreliabilityorcredibility

inquestion,Purchaserisentitledtodisqualifythecontractor(s)fromthetenderprocessor

terminatethecontractand/ortakesuitableactionsasdeemed�it.

PURCHASE MANUAL PURCHASE MANUAL146 147

developingalternatepotentialsources.Theobjectiveistohavealternatesourcesto

be developed successfully to reduce our dependence on a single source and the

attendantrisks,besidestogettheitemsatcompetitiveprices.

2. InordertoattainhigherlevelofoutsourcingbyBEMLthemostsigni�icantstepisto

identify categories of Goods and Services in their yearlymanufacturing program

whichcanbeconsideredforoutsourcing.Possiblecategoriesofitemsmaybebroadly

classi�iedasunder:

a. The�irstcategoryofitemswillbetheitemswhicharelowincostgenericinnature

and less technology intensive e.g. Screw,Rivets,Bush,Bearings,Rubber items,

springs,Wireharnessing,PCBs,Electricalmotors,Filters,Transformersetc.They

mustbeconsideredforoutsourcingtoprivatevendors/SMEs.Theknow-how&

know-whyavailablewithBEMLforsuchitemsaretobesharedwithIndianPrivate

Vendors.ItmaynotbeeconomicallyviableforBEMLtomanufacturetheseitems;

thereforetheseitemsmustbeassignedtoprivateindustry.BEMLshallnotmake

future investment inmanufacturingofsuchcategoryof items, ifcapabilityand

capacityisavailablewithIndianPrivateIndustry.

b. ThesecondcategoryofitemswillbetheitemswhicharemanufacturedbyBEML

underTransferofTechnologyfromLicensors/OEMs.Suchitemsmayneedspecial

manufacturing processes. The items may be Sub-system or System or higher

assembly. Many sub-systems or systems are strategic in nature and in

considerationof this; theymaynot like to outsource the entire Sub-systemof

System.However,machining&otheroperationswhicharenotstrategicinnature

may be outsourced to Indian vendors. The necessary technical assistance like

manufacturingdrawings,3Dmodel,processdocumentation,qualityprocessetc.

maybesharedbythemwithpotentialvendorsforinitiallearningandoperational

acquaintance.

c. Thethirdcategoryofitemswillbetheitemswhicharenotsotechnologyintensive

but imported by BEML. Such items shall be identi�ied and assigned to Indian

vendorsforindigenousdevelopment.BEMLmustextendtechnicalassistanceto

vendorstodevelopsuchimportsubstitutionitems.Ifrequired,�inancialassistance

shall also be extended to the potential vendors during developmental phase.

Suitable schemes may be drawn up by the BEML with the approval of their

respectiveBoards/competentauthority. Indigenousdevelopmentofsuchitems

willreducetheimportcontentandinduecourseoftimeIndianindustrywillattain

processcapabilityinmanufacturingofsuchitems.

d. Thefourthcategoryofitemswillbethosewhicharetechnologysensitive,strategic

andcomplex inmanufacturing. Invariably,Transfer toTechnology isdeniedby

OEMs/Licensors forsuchcritical systems&subsystems.Manysuchsystems&

Sub-systems(MainlyElectrical&softwareoriented)alsobecomeobsoleteand

licensor/foreignOEMsrefusetosupportrepair&maintenanceforentireproduct

lifecycle.Eveniftheyagreetosupport,theydemandexorbitantsupportprice.

Hence, it becomes absolutely essential to develop/co-develop and indigenizes

these items within the country to achieve self-reliance. If required, �inancial

CHAPTER–28OUTSOURCING

ANDVENDORDEVELOPMENTPOLICY

28.1.OBJECTIVESOFOUTSOURCING

TheOEMsoftheDefenceandAerospaceIndustryworldwideplaytheroleofSystem

IntegratorsbyOutsourcingasubstantialpartofthemanufacturingprocesstovendors.

BEMLalsoneedtoshifttheirstrategyinsimilarwayfromverticalintegrationbusiness

modeltosystemintegrationBusinessmodel.Byadoptingsuchastrategicshift,BEMLcan

servetheirultimatecustomersinabetterway.TheOutsourcingeffortsbyBEMLwilladdto

their capacity enhancement, attain cost effectiveness and improve competitiveness in

Global market. The other signi�icant objective of this Outsourcing is to build a

manufacturing eco system in the country to attain self reliance. On the other hand

participationofIndianprivateIndustrywillbeanenablerinbuildingtechnologicaland

manufacturingcapabilityinsidethecountry.

28.2.DEFINITION&MEASUREMENTOFOUTSOURCING

Outsourcingisde�inedastheactofsourcinggoodsandservicesthatgointotheproduction

ofvariousproductsbyBEMLfromIndianvendors.Theoutsourcingcontributionismeasured

intermsof�inancialvalue.TheformulatomeasuretheoutsourcingcontentofBEMLcanbe

derivedas:

VoO=VoP–DI–RM–IVA

%ofVoO=(VoO/VoP)*100

Where

VoO:Valueofoutsourcing

VoP:ValueofProduction

DI:ValueofDirectImport

RM:ValueofRawMaterialspurchasedfromdomesticmarket

IVA:In–houseValueAddition(Intermsofmoneyvalue)forconversionofrawmaterials

&componentstosaleableproduct.ValueAdditionwillnotonlycovermanufacturingbut

alsotheserviceswhichaddsintovalueofproduction

28.3.SCOPE&FEASIBILITYOFOUTSOURCING

a.Sourceorproductdevelopment

b.SubContract

c.RateContract

d. LongtermContract

a. Sourceorproductdevelopment

1. Itisimperativetoorganizeconcertedeffortsonacontinuousbasistopromoteand

developindigenoussourcesofsuppliesnotonlyforimportsubstitutionbutalsofor

PURCHASE MANUAL PURCHASE MANUAL148 149

assistanceshallalsobeextendedtothepotentialvendorsduringdevelopmental

phase.Inordertoattainself-reliance,thereisaneedtodevelop/co-developand

manufacturethesesystemsandsub-systemsinthecountryjointlybyBEMLand

IndianPrivateIndustry.Theitemswhicharespeci�ictodefence&aerospace,there

isarequirementtoframeadifferentvendordevelopmentpolicywhichmaybeas

follows:

1. The category of items at b(i) in this para may not require different vendor

developmentapproach.Theseitemsmaybemanufacturedbyexistingpotential

vendorswithadegreeoftechnicalassistanceandsharingofknow-howandknow

worthybyBEMLtovendors.

2. Thecategoryofitemsatb(ii)inthisparaisbasicallyrelatedwithmanufacturing

operations.Outsourcingofsuchoperationsandservicesmayrequireadifferent

approachforvendordevelopment.Sameoperationscanbedonewiththeavailable

machines and process capability of vendors andmay not require any special

assistancefromBEML.However,ifspecialoperationsandprocessesarerequired

tohigherassemblyjobtobeout-sourced,degreeofassistancefromBEMLmay

requiretechnical,�inancialandconsultativesupport.

3. Onmanyoccasions,assistancemayberequired in the formofestablishing in-

housefacilitiesbyBEMLandmakingthefacilityavailabletovendors,providing

test&inspectionfacilities,sharingofengineeringdetailsandprocessknowledge

withvendorsetc.TheremaybeapossibilitythataBEMLhavemanufacturinginfra-

structurebutitmaybenotcostef�icienttousethein-houseorrequisiteskilled

manpower is not available with them where as a vendor may have skilled

manpower.ThiscombinationmaybeexploitedbyBEMLbyprovidingtheirfacility

tovendorunder suitable arrangements. Sucharrangementsmaybequite cost

competitiveandatthesametimeitmayaugmenttheavailablecapacityutilization

ofBEMLworkcentres.Theotherpossibilitymaybethatvendorhasmostofthe

machiningfacilitiesavailableattheirpremisesbutpossiblyinspectionandtest

facilitiesnotavailablewiththem.BEMLmayconsidersettingupthetestinspection

facilityatvendors’premises.Suchoutsourcingandvendordevelopmentdoctrine

ispursuedbyISRO,DRDOandmanyotherPSUsandithasworkedsuccessfully

bothforbuyingorganizationaswellforvendors.Suchpartnershipandassociation

among DPSU/OFB and their vendors which is called strategic alliance or

collaborativestrategy,helpboththepartnersinreductionofcapitalcost,logistics

cost,manufacturingcycletime,optimalutilizationofavailablemanufacturingand

testfacilitiesatDPSU/OFBworkplaceetc.Synergisticrelationshipmayalsobe

consideredamongDPSUs/OFBsbymakingconsortiumtoharnessthebene�itsof

hugeinfrastructure,manufacturingandtestfacilitiesattheirworkcentres.

4. Thecategoriesofitemsatb(iii)inthisparaareimportedbyBEMLonregularbasis

tomeet theirproductiondemand.Forsuch imported items,adifferentvendor

developmentapproachmayberequired.Thisrequirescapabilityassessmentof

vendors,theirwillingnesstotakeupdevelopmentofsuchitems,assessmentof

technologicalassistance,capitalinvestmentofsuchitems,making�irmlongterm

orders / commitment byBEML to the vendor in post developmentphase and

establishingalongtermpartnership.Inbroadsensesuchvendorsdevelopment

frameworkiscalledhandholdingandnurturingofvendors.Itneedsanexplicit

approachtowardsestablishingstrategicalliancewithvendors.

5. Thenextcategoryofitemsatb(iv)inthisparafallsunder“Technologysensitive

strategicandcomplex inmanufacturing“.Thismayrequiredevelopment/co-

developmentjointproductionofmanysystemsandsub-systemsspeciallyincases

where transfer to technology is denied by licensors / OEMs. This sort of

development/co-developmentandproductionbusinessmodelneedsanentirely

differentapproachtowardsvendordevelopment.Here,strategicorientationshall

be todevelop state-of-aft technologieswith long termvisionby strengthening

partnershipwith private industry to evolve internationally competitive Indian

defenceandaerospaceindustry.Toachievesuchobjectives,vendordevelopment

policyofBEMLmayberequiredestablishingjointventureswithprivatevendors,

acquisitionof�irmsforeignanddomestic,formingofconsortiumamongBEMLand

vendorsetc.Thevendordevelopmentpolicyshouldresultinproductsofpremium

quality. To achieve international quality bench mark, both the BEML and the

vendorwillhavetoworktogethertoensurethatthevendorhasstringentquality

assurancesystem.Asprincipals,BEMLhavetoexerciseutmostsupervisionover

thequalityassurancesystemsputinplacebythevendor.

6.Ineachdivision,ateamconsistingofseniorlevelofof�icersofPurchase,Quality

and R&D should continuously establish alternate sources through EOI/Open

Tenderwith regard to imports, indigenizationand long standing single source

items.Thisteamwillreportquarterlytodivisionalhead.Purchasedepartmentwill

furnisha listofsinglesourceitemstothisteamwithacopytodivisionalhead

mentioningpriorities.

28.5.Educational/developmentalorders shouldbeplacedon the sources identi�ied through

EOI/Opentender fordeveloping indigenoussources for importsubstitutionasalso for

developingalternatepotentialsources.Thedevelopmentofalternatesourcewillnormally

beattendedtobythePurchasedepartmentwiththeinvolvementofQualityandR&D.

28.6.Inthecaseofitemstobedevelopedthroughvendors,R&Dwillbethesoleauthorityto

�inalizethedesignparameters,thetypetesttobedoneand�ixupatimeframeforthe

vendorformanufacture;onlyafterthetypeapprovalisgivenbytheR&D,vendorsshould

befollowedtosupplytheseassembliestoproductiondivision.

28.7.Allitemsotherthanproprietaryinnatureshouldundergoalternatesourcedevelopment

throughEOI/OpenTendermodebyreferringtotheteam.

28.8.Generally, intricateandfunctionalbearing itemsfor Importsubstitutionwill invariably

comeunderthepurviewofR&DDepartment.

28.9.WhileitisconcededthatitmaynotbepossibletofollowthePurchaseProcedurerigidlyin

regard to indigenizing the items for the �irst time, yet it is necessary to adhere to the

essentialprinciplesofpurchasingas faraspossible inthematterofsendingenquiries,

callingthepartiesfornegotiationsandselectingthebestoffer.Howevertheobjectiveshall

betoplaceindigenizationordersatapricelessthantheFOBcostofimport.

PURCHASE MANUAL PURCHASE MANUAL150 151

28.10.InthecaseofverysophisticatedhightechcomponentallouteffortstobemadebyR&Dto

developalternatesourcesthroughEOI/OpenTenderbeforecontactingsinglesource.

28.11.Theproceduretobefollowedisbroadlyoutlinedbelow:

a.Atthedesignstageitselfbasedonpreliminaryspeci�icationsandnatureofitemkeeping

inviewthefunctioningparametersanddegreeoftechnologyinvolved,sourceswillbe

developedthroughEOI/OpenTender.Whereanitemtobedevelopedissophisticatedin

natureandneedsspecialeffortstodeveloptherawmaterial,Toolingandmethodizing

forthe�irsttimeindigenouslybyavendor,thesinglesourceasidenti�iedandapproved

byR&DcanbecontactedbytheR&DPurchasegroupforaquotation.Theexpertiseof

thepurchasedepartmentmaybeavailedinlocatingthesources,whereverrequired.

b.After a study of the literature / catalogue of the �irms and their offers, R&D /

indigenizationdevelopmentcellwilldecideonthemostsuitableoffer/swhichmeets

withthetechnicalrequirementsorwhichcanbeadaptedmosteasilycommensurate

withthecost.

c. Thereasonablenessoftheofferreceivedwillbeassessed&wherenegotiationofpriceis

necessary,theprovisionsareasunder.

i. Itisnotmandatorytoholdcommercialnegotiationsineachcase,particularlyinopen

andlimitedtendercases,wheretheresponsehasbeensubstantialandtheL1priceis

foundtobeveryclosetothereasonableprice,ifsuchanassessmenthadbeencarried

outpriortoopeningofthecommercialbids.However,commercialnegotiationmay

becomenecessarytoensurethattheinterestoftheStateisfullyprotectedandthe

pricepaidisreasonable.Commercialnegotiationsareinvariablyconductedincaseof

single tendersituations, includingproprietarycases,orwhenprice is considered

high with reference to assessed reasonable price, irrespective of the nature of

tendering. Such negotiations are invariably conducted by a duly appointed

CommercialNegotiationCommittee(CNC),whichshouldinvariablyincludea�inance

member,unlessthenegotiationiscarriedoutbythecommitteeCFAitself.

ii.Counter offers to L-1 in order to arrive at an acceptable price, shall amount to

negotiations.However,anycounterofferthereaftertoL2,L3etc.,(Atratesaccepted

byL1)incaseofsplittingthequantities,aspre-disclosedinthetendershallnotbe

deemedtobenegotiation.TheratioofsplittingtheordershallbebroughtoutinRFQ

itself.

iii.Further,thecompetentauthorityinexercisingthepowerofacceptingthetenderor

negotiateorre-tendershoulddosoinareasonabletime.Themodeltimeframefor

according such approval to completionof the entireprocessof awardof tenders

shouldnotexceedonemonthfromthedateofsubmissionofrecommendations.In

casethe�ilehastobeapprovedatthenexthigherlevelamaximumof15daysmaybe

addedforclearanceateachlevelinexceptionalcases.Theoveralltimeframeshould

bewithinthevalidityperiodofthetender/contract.

iv.If re-tendering is resorted to, due to unreasonableness of quoted price and the

requirementsareurgentandre-tenderfortheentirerequirementwoulddelaythe

availabilityoftheitems,thusjeopardizingtheessentialoperations,maintenanceand

safety, negotiation with L1 for a bare minimum quantity can be permitted. The

balancequantity should,however,beprocuredexpeditiously througha re-tender

followingthenormaltenderprocedure.

v. IncaseofL1backingout,thereshallbere-tenderingasperextantinstructions.

vi.Tendershouldinvariablybe�inalizedwithinthevalidityperiodandthefollowing

timescheduleistobefollowed:

1. IncaseofLimitedTender,60daysfromthedateoftender;

2. IncaseofOpenTender,andwheretwobidsystemsarefollowed,itshouldbe75

daysfromthedateoftender.

d. Negotiations are to be minuted and signed by all the members of the negotiation

committeealongwithbidderswithscheduleofdelivery.ToolingandDevelopmentcost

shouldnotnormallybepaidtothevendorfordevelopmentoftheitems,asaconditionto

acceptthedevelopmentorder,asitshouldbetreatedbythevendorasaninvestmentfor

his �irm's business growth with BEML. However, in coordination with Finance &

PurchaseDepartmenthavingregardtothequantityproposedandfeasibilityofavailing

thisbene�it in thesubsequentPurchaseOrders thepaymentmaybedecidedasper

following:

i. In regard to long term contract for supply of castings in rough/proof

machined/fullymachinedcondition,therateisnormally�ixedonweightbasisat

"RateperKg"asquotedbythesuppliers.However,itisnecessarytohavetherate

�ixedon"perpiece"basisinrespectoffullymachinedcastingsascomponentsand

alsointhecaseofproof-machinedcastingswhentheitemisdevelopedandbulk

supplyisestablished.Consideringtheinherentbutlatentdefectslikeblow-holes,

hottearsetc.,andconsequentlythehighrateofrejectionsontheshop�loorandthe

re-arrangementoffacilitiesintheshop�loor,itispreferredtoprocurecastingsin

proofmachinedand/orfullymachinedcondition.

ii. Inthecaseofroughcastingsandproof-machinedcastingsfornewitems,weight

shouldbeestablishedforeachitemwhenthe�irstbatchofsupplyisreceivedand

the"establishedweight"willformthebasisforregulatingpayment.Normally,the

established weight need not be different for the same item, if obtained from

differentsources.Inthecaseofproofmachinedcastingsthe,machiningcharges

shouldbeworkedoutseparately.The�ixingof"establishedweight"callsforproper

technicalassessmentinrelationtothenetweightofthecomponentasperdrawing

so that payment on extra mass of weight is avoided. It is essential that the

"establishedweight"isreviewedbythePurchaseDepartmentinconjunctionwith

Productdesigndepartmentvis-a-visthetrendoftheactualweightofthesupplies

received,onaquarterlybasisforsuitablyscalingdowntheestablishedweight,

whenadownwardtrendisperceived.

iii.ItistheresponsibilityoftheProductdesigndepartmentto�ix"establishedweight"

in consultation with Quality engineering, production planning, purchase and

Inspectiondepartments,withina reasonableperiod.Generally, theestablished

weight has to be �ixed and communicated to Purchase department before the

PURCHASE MANUAL PURCHASE MANUAL152 153

secondbatchofbulksupplyisreceived.Theof�icerinthePurchasedepartmentnot

belowtherankofGradeIIIwillapprovetheestablishedweightandcommunicate

thesametothesupplierunderintimationto�inance,forregulatingthepayment

forsuppliesaffectedasperthePurchaseOrder.

iv The enquiry papers with the quotations and the recommendations of

R&D/indigenization development cell will be forwarded to the Purchase

department toplace thePurchaseOrderwhereverR&DPurchasegroup isnot

placingPurchaseOrders.Theindentingdepartmentwill followupforsupplies

underintimationtoPurchasedepartment,whowillalsoassistinfollowingupfor

supplies,whereverrequired.

v. InthecaseofPurchaseOrderforsource/productdevelopment,thereshouldbea

clausecalling for submissionof sample,withinaperiodof6monthsandbulk

supplytocommenceonlyafterourintimatinginwritingtheacceptanceofsample.

Incasesampleclauseistobewaived,theapprovalofAGM(MM)hastobeobtained

withreasonstoberecordedinwritinginconsultationwithR&D/ProductDesign

department.Whereacceptanceofthesampleisaprerequisiteforbulksupply,the

sampleshouldbetried/testedandclearanceshouldbegivenonprioritybasis

withoutanydelayforaffectingthebulksupply.

vi.AregisterwillbemaintainedinR&D/indigenizationdevelopmentcellallottinga

folio foreach itemtakenup for indigenizationandrecordingdetailsabout the

number of �irms contacted, number of valid quotations received, the offer

selected/recommended for placing the order through Purchase department, a

briefoftherecommendationsontheselectedoffer,specialdieortoolingcharges/

developmentcostforpaymentinlumpsumorotherwise.

vii.Thesameprocedureasabovewillalsoapplyinrespectofdevelopmentofitemsof

R&Ddesign.

28.12. Suchordersplacedwillbenormallywith"openaccount"termsandsuppliesreceived

andacceptedwouldbeissuedforproductionwithoutbeingallowedtobecarriedin

stock.Wherethesamplesrequirelongtimeforclearanceforbulksuppliesand/orbulk

suppliesonthedevelopmentorderarenotacceptedwithinareasonabletime,adhoc

paymentonareasonablebasiscanberecommendedbyChiefofMaterialsManagement.

28.13. Whenoncetheitemsaredevelopedindigenouslythesamewillbedeletedfromimports

andsubsequentactionforplacementoffurtherordersonsuchindigenousdeveloped

source/sourceswillbetakenonsingleorlimitedtenderbasisasthecasemaybe.The

aboveproceduremayfollowtillfurtherindigenoussourcesaredevelopedbasedonthe

requirement.Thesubsequentrequirementforimports(i.e.restoration)onanyaccount

shouldhavethespeci�icapprovalofCGMwithconcurrenceof�inance.

28.14.Thequantityorderedfortrial/developmentpurposeswillnotbereckonedforequipment

coverageinitially.However,thisquantitywillbeadjustedintheequipmentcoverage

laterwhenthesuppliesarereceivedandacceptedafterinspectioninthenormalcourse.

ThePlanning/Purchasedepartmenthas tokeepa trackof thequantity received for

suitableadjustmentintheequipmentcoveragewithnecessarycontrol.

28.15. The quantity considered for placement of development order should be mutually

acceptabletakingintoaccounttheiteminvolved,unitprice,amountinvolved,tooling,

and development expenditure, if any involved and economic batch quantity. The

quantityorderedwillnotnormallyexceed25equipmentsets.However,dependingon

thevalueoftheitem,costofdevelopment,leadtimeetc.theCGMwiththeclearanceof

MPCcantakeadecisionifhigherquantitiesarerequiredtobeordered.Inallthesecases

of development orders, the cost of pattern/Dies/Tools if payable should be paid to

vendors only after they successfully produced a sample acceptable to BEML in all

respects.Wherethecost isproposedtobepaidbeforethesample isdevelopedand

suppliedwiththeapprovalofCGM,paymentmaybemadeagainstBankGuaranteeasper

CVC guidelines which should be valid till the commencement of bulk supply, and

acceptanceofthe�irstbatchofsupplies.

28.16.EducationalOrders:Incases,whereBEMLisnotfullyassuredofthecapabilityofthe

supplier/sub-contractororwhereaparallelsourceofsupplyhastobeestablished,it

maybenecessarytoplaceaneducationalorderforasmallquantityonasupplier/sub-

contractor.Theeducationalordersmaybe�inalizedonthebasisofQuotationsreceived

againstourtenderingaction,withtheapprovalofCGM.Foreducationalorderstheterms

of payment should be "Open Account" and cost of Pattern/Die/Tool, if any, will be

reimbursedbyBEML,asperpaymenttermsindicatedinChapter15.

28.17 SUBCONTRACT:

1. Sub-contractisnormallyresorteddueto:

a.Facilitiesnotavailableinternally;

b.CostFactor;

c.Lackoftimetocompleteproductiontarget;

d.Company’spolicy;

e. CapacityConstraints;

2. Sub-contractingworkwillcovermachining,fabricationand/orfurtherprocessing

like heat treatment, plating, shot/sand blasting etc., on BEML materials. Sub-

contractingordersarepurelylabourcontracts.

3. Inordertoensureoptimumutilizationofallgeneralpurposemachinesontwoshift

basisandwhereverapplicableinrespectofhighcost/criticalCNCmachinesonthree

shiftbasis,onallsevendaysthroughouttheyear,theworkloadagainsteachwork

centreistobeassessedagainsteachworkcentres,aspertheproductionplanforthe

year.A‘PlantBalance’exercisehasgottobecarriedoutforallworkcentresandwork

centres identi�ied having shortage of capacity or excess capacity. ANote, on this

exercise,tobesenttoconcernedDirectorforhisapproval,byChiefofPlanningfrom

respectiveDivisions,dulycerti�iedbytheDivisionalHead,withdueco-ordinationby

DivisionalFinanceChief.ConcernedDirectorwouldreviewthe‘PlantBalance’ofall

the Divisions of BEML, to achieve optimum utilization of in-house plant and

Machineryintotalityandapprovetheextentofsub-contracting,intermsofSMHfor

different work centres. SMH thus approved will be treated as ceiling for sub-

contracting.TheDivisionshouldthendodetailedplanningandrecommendjobstobe

sub-contractedandcorrelateeachsuchrequestwithtotalworkcentrewiseapproval

PURCHASE MANUAL PURCHASE MANUAL154 155

given.Suchofthejobsandtotheextentapprovalwillonlybesub-contracted.

Dependinguponthevalueofeachsub-contractproposal,approvaloftheCompetent

AuthorityshouldbeobtainedintheprescribedformatasperPurchaseManualand

DOP.

Therequiredapprovals,asdetailedabove,shouldbeobtainedatleasttwomonths

beforethecommencementoftheproductionyear.Duringtheyear,ifthereareany

changesintheProductionPlan,suitableadjustmentsintheSMHapprovedforsub-

contracting,tobecarriedoutandapprovalofconcernedDirectorforsuchchanges

shouldbeobtained.Whereversub-contractingisrequiredowingtoin-housefacilities

notavailable,separatenoteistobeinitiatedindicatingpartstobesub-contracted,

process required and value of the work to be sub-contracted and approval of

concernedDirectormustbeobtained.Copiesoftheapprovalsthustakenshouldbe

furnished to Purchase Scrutiny, to enable the Section to co-ordinate the relevant

PurchaseOrders.

Theactualworksub-contractedshouldbewithintheapprovaltakenandaquarterly

reportputuptotheDivisionalChiefthroughFinance,toensurethattheactualsub-

contractinghoursarewellwithintheapprovedplan.Forthispurpose,thePurchase

Order(internalworksheet)will indicatethecomponentwiseSMHlinkedtowork

centre.

4. Basedontheapprovedplanforsub-contracting,themethodsPlanningdepartmentin

consultationwithProductionControl,ProductionandIEdepartmentsshalldrawa

listindicatingtheitemsandthequantityagainsteachitemtobesub-contracted,and

furnish to the Sub-contract cell. No MPR will be issued separately and this

communicationtotheSub-contractcellwillformthebasisforsub-contractingthe

work. The list should not include items/components ordered on suppliers for

manufactureandsupplyingwiththeirownmaterialswhichshouldbedealtwithby

thePurchasedepartmentasperthePurchaseprocedure.Also,Purchasedepartment

shallnotdealwithanysub-contractingorders,whichrequireoperationbytheSub-

contractorswithBEMLmaterials.

5. Thesub-contractcellwillidentify,developandselectsourcesforsub-contractingAVL

basedonpropervendorevaluation.Thereshouldbeanapprovedlistofestablished

sourcesupdatedperiodicallybasedonvendorrating/performance.ThePurchase

procedure as applicable to production items shall apply and order placed duly

approvedbythecompetentauthorityasperdelegationofpowerforsub-contracting.

Thecellwillconductnegotiationsofrateskeepinginviewourestimatedconversion

chargesasapplicable forasmallscale industry,asalsoquality,quantity, termsof

payment, delivery schedule, quantity of rawmaterials etc. to be sent to the Sub-

contractor forprocessing the tenderedquantity,normalwastageandvalueofoff

cuts/scraptobedeductedfromfabricationcharges,ifnot,returnabletoBEMLThe

internalestimatesshouldbesuitablyadjusted inviewofourhighoverheadsand

henceourestimatesshouldnotbecomparedwiththequotesonaliketolikebasis

withoutadjustment.However,dueweightagecanbegivenforquality,workmanship

anddependabilitywhileestimatingthecostsand�ixinguptheprices.

6. Thesub-contractcellshallcallfordrawingsfromDesigndepartmentwhereverthe

drawings are not already available. Themethods planning department shall also

realistically estimate and make available to the Sub-contract cell the raw

materials/components required for the Sub-contracted items to be sent to Sub-

contractors.Therequirementsofrawmaterials/Componentswillbeindicatedper

unitoftheitemonly(or)inmultiplesof5/10/20equipmentrequirementsofthe

itemsandsoontominimizewastage,wheretheitemstobefabricatedbythesub-

contractors are small components involving ordering of economical lots. The

estimated quantum of scrap arising from the raw materials/components to be

providedbyBEMLshouldbeindicatedinthemateriallist.Also,thismateriallistwill

indicatetheestimatedSMHrequiredforfabrication/processingoftheitemsperunit

(or)inmultiplesof5/10/20equipmentrequirementsoftheitemandsoon.

7. Thesub-contractcellshallmaintainalistofsub-contractorsdulycodi�ied,withtheir

addresses,andthenatureofworkdoneorcapableofbeingdonebythemtoBEML.

IntroductionofanewSub-contractorandincludinghisnameinthelistshouldhave

thewrittenapprovalfromtheChiefofMaterialsManagement.Thesub-contractorsas

perthelistwillbecontactedforourrequirements.

8. Acomparativestatementwillbepreparedafteropeningthequotations,comparing

thefabrication/processingchargesetc.,ofvarioussub-contractorsonaliketolike

basis.Thesub-contractcellshallstudythefabrication/processingchargesquotedby

the Sub-contractors with our estimates. Wherever the fabrication charges etc.,

indicatedinthequotationsareonthehighsideascomparedtotheestimatesmadeby

BEML,keepinginviewthefacilitiesetc.,availablewiththeSub-contractors,thesame

maybenegotiatedwithL1source,ifrequiredwhoisdependable.

9. The Sub-contractors shall accept the quantum of scrap indicated by BEML as

returnabletoBEMLoutoftherawmaterials/componentssuppliedtothem.Thesub-

contractorsshallbeaskedtogivetheirQuotationforfabricationchargesaftertaking

into account income from scrap and also without taking into account the scrap

income.Therateatwhich thescrap ispricedmustalsobe indicatedby theSub-

contractors in theirquotation.ThiswillhelpBEMLto takeadecisionwhether to

reducethefabricationchargestotheextentofscrapvalueandleavethescrapwiththe

Sub-contractorsbringthescraptoBEMLandpaythefullfabricationchargestothe

�irms.OnthisbasisthePurchaseOrderwillbe�inalizedandconditionsexplained

clearly in the Sub-contract Purchase Orders.While sending the rawmaterials, it

should be ensured that correct size of raw materials are sent by making an

economical layout to avoid issue of higher quantum of raw materials to Sub-

contractorsandtopreventthebene�itofhigherarisingofscrapwithsub-contractors

thanestimated.

Wheneverthereisachangeinthesizeandquantumofrawmaterialssupplieddueto

valid reasons, Sub-contract cell shall advise the revised quantum of scrap and

consequential change in the fabrication charges to the sub-contractors for

acceptance, under advice to Accounts. Amendment to the Sub-contract Purchase

Orders will be issued. For deciding the competent authority for approval of a

PURCHASE MANUAL PURCHASE MANUAL156 157

PurchaseOrder,valuewillbethevalueoflabourandmaterialtogether.

10. Nomaterials shall be sent to the sub-contractors before release of Sub-contract

PurchaseOrders, after approval by the competent authority asperDelegationof

Powers.PurchaseOrdersshallbereleasedexpeditiouslywithinamonthfromthe

timethequotationsare�inalized.

11. Thedeliveryof�inishedcomponents/structuresetc.shouldbecompletedwithin180

daysfromthedateofsupplyofrawmaterials/componentstothesub-contractorsby

followingtherelevantprovisionsoftheGSTAct.

12. TheapprovalofPurchaseOrdersshallbedoneaspertheDelegationofPowersandas

perthePurchaseProcedure.However,thePurchaseOrderscanbesignedandissued

bytheSub-contractmanager, inchargeof theSub-contractcell.TheSub-contract

PurchaseOrdersshallbeveri�iedandco-ordinatedbythePurchaseScrutinyCellof

FinanceDepartmentbeforeapprovalandissue.ThePurchaseOrdershallindicatethe

details of raw materials/components to be sent for the individual item to be

fabricated/processedwithmaterialcodenumbersetc.,andalso thequantumof

scraptobereturnedtoBEML,ifthefabricationchargesarenotreducedforthevalue

ofscraptoberetainedbytheSub-contractors.

13. OnlyeightcopiesofSub-contractPurchaseOrderwillbetakenfordistributionas

under:-

- Vendor

- Sub-contractaccounts

- Sub-contractcell

- Stores

- Inspection

- Progress

- MaterialPlanning/Purchase

- Materialaccounts

As per the purchase procedure, accounts copy and sub-contract cell copy of the

Purchase Order only will be approved and authenticated by the approving

authorities.ThePurchaseOrderissuedshouldcontaintheconcernedrawmaterial

code numbers (for despatch) and also the �inished parts code nos. (For �inished

components)andalldocumentsshouldindicatethecorrectcodenos.ofmaterials.

14. Thematerialsmay be sent by BEML and also collected by BEML from the Sub-

contractor’s,workswhereverSub-contractorsarenotagreeabletocollecttheraw

materials from BEML and deliver the �inished components to BEML and the

fabricationchargesdonotprovideforfreightcharges.Beforethematerialsaresent,

thesameshallbeweighedintheweighbridgeandweightindicatedinthedespatch

advice and other documents where applicable and the sub-contractors

acknowledgementtakenonthedespatchadviceforhavingreceivedthematerials.

Rawmaterials/components for sub-contracting should be loaded in the physical

presenceofrepresentativesofsub-contractcell,stores,andsecuritydepartments

whowillchecktheexistenceofPurchaseOrderandtheconditionsthereinasalsothe

documentsmadefordespatch.Theitemswillbepre-inspectedatthepremisesofthe

Sub-contractorbeforetheyarecollected/despatched,whereversuchpre-inspection

isrequired.

15. Beforesendingthematerialstosub-contractors,thefollowingdocumentationshall

bedone.

a. ASub-contractPurchaseOrderwillbeopenedunderseparateseriesgivingfull

details,indicatingquantumofrawmaterialsetc.,tobesenttothesub-contractor

forfabrication/processingoftheorderedquantityetc.,

b. MRswillbemadequotingthesub-contractPurchaseOrderreferencefordrawalof

rawmaterials/components.

c. MRsshouldbeco-ordinatedbyPlanningDepartment.

d. MaterialswillbedrawnfromStoresandmovementarrangedbytheSub-contract

cellwithproperDespatchAdviceandGatePass.DespatchAdviceshouldindicate

Purchase Order number and Material Requisition numbers also among other

details.

e. DeliveryChallansasperGST.

16. Itshouldbeensuredthatalltherequiredmaterialsforanitemaresenttogetherand

notinanimbalancedway.Alsothematerialsshouldbesentinconvenientbatches

dependinguponthedeliveryrequirements.Thiswilleliminatethescopefordiverting

thematerialsbythesub-contractors,besidesavoidingGSTproblemsanddelayin

fabrication.

17. The sub-contract cell shall watch for the return of the fabricated parts/�inished

components and Receiving Reports should be �inalized immediately for proper

accounting.Where the fabricated parts/�inished components are directly sent to

shopsforuseinProduction,thesameshouldhavetheco-ordinationoftheProgress

departmentandbothRRsandMRsshouldbe �inalizedandreleasedwithoutany

delayforproperaccountingandpaymenttotheSub-contractors.

18. Whererawmaterial/componentsaredrawnandsenttoshop�loorforprocessing

(likeHeattreatmentetc.)beforedespatchtotheSub-contractors,theMRsinsuch

cases shall be made quoting the relevant production work order only. After

completionoftherequiredoperationsontheshop�loortheitemsshouldbestore

creditedagainstStoresCreditNotesquotingtheproductionworkorder.Theitems

willthenbedrawnthroughMRsquotingtherelevantsub-contractPurchaseOrders,

fordespatch

19. EveniftheprocesseditemsaredespatchedfromtheShop�loortheabovedocuments

willbepreparedtoregularizethetransactions.

20. AbankguaranteesforanominalamountofRs.5000/-mustbeobtainedfromeach

Sub-contractor valid for a year, on yearly basis. Where the Sub-contractors are

reliableand�inanciallysound�irms,Bankguaranteeclausecanbewaivedby-the

CGMforwhichanoteshallbeputbytheSub-contractcelltoCGMthrough�inancefor

approval.Unlessthefabricated/processeditemsarereceived/collectedagainstthe

rawmaterial/componentssentearliertothesub-contractor,furtherdespatchesshall

PURCHASE MANUAL PURCHASE MANUAL158 159

not be made. Also the �irst off sample should be approved by BEML Inspection

department, before bulk supply is effected and further despatch of raw

materials/componentscanbemade-onlythereafter.

21. Material issued to sub-contractor for jobwork should have insurance cover. The

scopeofinsurancecoveragewillbeasperPurchaseManualwhichisasfollows:-

a. Lossofdamagestomaterialsdespatchedtocontractors/sub-contractorsand/or

theirpremisesdueto:

i. Whilstintransit(bothways)asperPurchaseManual.

ii. Fire and allied perils as per standard �ire and special perils policy with

earthquakeextension.

iii.Burglary,theft,holdup,dacoitandrobbery

iv.Accidentalbreakageincludingaccidenttocarryingvehicles

v. In�idelityofthecontractorsandsub-contractorsincludingabsconding

Atanypointoftimematerialissuedtosub-contractorswillnotbemorethanRs.5.0

Lakhs.Howeverdependinguponthenatureofsub-contractworkinvolved,material

exceedingvalueofRs.5.0Lakhsmaybesentwiththewrittenapprovalofcomplex

chief.

22. InrespectofsupplyoffreesupplyitemsasinthecaseofProductionofRailcoaches,

Althoughthereisnovalueassignedtothefreesupplyitems,aquantitativerecord

shouldbemaintainedbyalltheconcernedsections.Thevalueforthefreesupply

items should be assigned at market rates and accounted outside the books of

accounts to know the value of materials lying with the Sub-contractors and for

reportingtoManagement.Alltherequireddocumentswillalsobemadeasperthis

procedure.

23. Theof�icialsfromSub-contractcellwillperiodicallyvisittheSub-contractorsworks

toensurethatBEMLmaterialsarekeptsafelyforuseasperthePurchaseOrderterms.

A monthly status report should be furnished in co-ordination with accounts

indicatingthequantumofmaterialsheldbytheSub-contractorsandactiontakenasa

followuptogetthecompletedcomponents,toAGM/DGM(MM)/CGM.Necessary

control register shall bemaintainedby the Sub-contract cell as per format F3of

PurchaseManual.AsuitableclauseshouldbeincludedinthePurchaseOrderthatthe

Sub-contractorshallberesponsibleforthesafeCustodyofBEMLmaterialsandany

lossduetotheftetc.,shallbemadegoodbytheSub-contractor.

24. ItshallbeensuredbytheProgressdepartmentthattheitemssub-contractedtosub-

contractorsarenotloadedtotheshopsforproductiontotheextentquantitysub-

contractedandtheJobcardsalreadyissuedtoshopsarecancelled(or)calledback.No

Jobcardsshallbeissuedinfutureforsuchoperationssub-contractedoutsideexcept

foritemswhichhavebeensub-contractedduetoshortageofinhousecapacity.

25. Noextrafacilitiesshallbegiventosub-contractorseitherintheformofadvanceorin

theformofissueoftoolsandjigs,testinggaugesetc.,onloanbasis.However,where

toolsandjigsarerequiredtobegiventothesub-contractorsonloanreturnablebasis,

andfabricationchargesacceptedonthatbasis,itshallbeapprovedbytheChiefof

MaterialsManagementbasedonrequestgivenbythesub-contractorandshallbe

indicatedinthePurchaseOrder.Wheretheseextrafacilitiesareproposedtobegiven

afterreleaseofthePurchaseOrderandPurchaseOrderdoesnotcontainaclauseto

extendthisfacility,thefabricationchargesshouldbenegotiatedandreduced.

26. TheTools,Jigs,Gaugesetc.willbeissuedtoSub-contractorsagainstseparateloan

work order and the same should be watched for their return in good working

conditionwithinareasonabletime.Theperiodofloanshouldbeindicatedintheloan

work order and also in the Purchase Order. The payment of fabrication charges

shouldbeunder"OpenAccount"termsonly.

27. Normally,thereshouldnotbeanyrejectionsofthecompletedparts.Ifthereareany

rejections, the value of the materials/components proportionate to the rejected

quantityofthecompletedpartsshallberecoveredfromthesub-contractor.However,

whereprocessrejectionscannotbeavoided,itwillbeacceptedonthemeritofthe

casebyaCommitteeconsistingoftheChiefsofSub-contractCell,Inspection,Planning

and Finance Department. The Committee shall submit its recommendations to

BusinessGroupHeadforapproval.CopiesofapprovalsshouldbemarkedtoMaterial

accountsandSub-contractaccountsfortakingnecessaryaction.Therejecteditems

shouldbereceivedinBEMLandsenttosalvagefordisposalbeforeapprovalisgiven.It

shouldbenotedthatintricatecastingsshouldnotbesub-contractedformachining.

Wherevertheorderiscancelledfullyorpartially,BEMLrawmaterials/components,if

any,lyingwiththesub-contractorsshallbecollectedbackimmediately.

28. Wheretherejectionsareduetomaterialfaultasinthecaseofcastings,whichmaybe

duetothesupplier'sfault,thecostofmaterialsshouldbedebitedtothesupplierof

castingsandcostrecoveredfromhim.PDOsraisedfortherejectionsduetoprimary

vendorsfaultatthereceivingstageofthefabricated/processeditemsasperPurchase

Ordersshallindicatethisfactveryclearly,andacopyofthePDOsmarkedtoMaterial

andsub-contractaccountsfornecessaryrecoveryandaccountingaction.Acopyof

thePDOshouldbesenttoPurchasedepartmentforadvisingthevendorsuitably.

29. AllcopiesofPDOsraisedattheReceivingInspectionstageoftheitems,shouldbe

markedtosub-contractaccountsandMaterialaccountsclearlyindicatingtheSub-

contractPurchaseOrderandreceivingreportreferencestoenabletheSub-contract

accountstorecoverthevalueofproportionatematerialsfortherejectedquantity

overandabovetheapprovedrejectionsasper(28)andprimaryvendorsfault,based

ontheadvisegivenbytheMaterialaccounts.Sub-contractcellwillalsoadviseSub-

contractaccountstorecovertheduesfromtheSub-contractorsagainstrejections,

costofmaterialsetc.

30. Onceinaquarterandasattheendoftheyearviz.,31stMarchofeachyear,theSub-

contractorsshouldbeaskedtocertifythequantumofrawmaterials/components

heldbythemintermsofquantity,asperourbooksofaccountsafteraccountingallthe

transactionsuptothecloseofthequarter/year.Thesub-contractcellshouldobtain

thecon�irmationwithintendaystime.

PURCHASE MANUAL PURCHASE MANUAL160 161

31. The points as mentioned in this procedure to take care of BEML's interests

contractuallyshallbespeltoutclearly in thePurchaseOrdersplacedontheSub-

contractors.

32. This procedure for sub-contract orders should be followed in the case of orders

placedontheAncillaryunitsalso.Foranydeviations,theapprovalofDivisionHead

shallbetakeninwritinggivingreasonsfordeviations,bytheof�icerinchargeofthe

Ancillaryunit,withtheco-ordinationof�inance.

28.18 RATECONTRACT

ThisreferstoprocurementofmaterialsbyavailingtheRatecontracts�inalizedbythe

DirectorGeneralofSuppliesandDisposalforplacingeitherasupplyorderoradirectorder

availingtheRateContractprices.

28.19 LONGTERMCONTRACT

LongTermContractisgenerallyenteredintowithrenownedandreputedsuppliersfor

criticalitemsofmaterialsofhighqualitystandardsandwherethesourcesofsupplyare

limited. Itwill cover items likeCastings, Forgings, CuttingTools, Electrodes,Hardware

items,Radiators,Non-projectitemsetc.,and�inalizedforaperiodofnotlessthanoneyear

andnotmorethan3yearsatatime.Undernocircumstancesitshouldbeextendedbeyond

3yearswithoutspeci�icapprovalofDirector/CMD.However,�irms/SMEslocatedinthe

premises of the Company shall have contract period exceeding 3 years as it involves

relocationandinvestmentininfrastructure.

28.20 VENDORDEVELOPMENTFRAMEWORKFOROUTSOURCING:

Identi�icationofnewvendors(AlternateSource):Ithasbeenacontinuousprocessto

identifyanddevelopnewvendorsatBEMLtobringincompetitionamongthevendorsand

toreducecosts.Thefollowingmethodsaregenerallyfollowedtoidentifypotential,new

vendors.

- Basedonthemarketresearchandcontactnetwork

- ByprovidinganoptiontosubmitdetailsthroughBEMLwebsite

- EOIispublishedinleadingnewspapers

- Participateinexhibitions,Tradefairs,etc.

- Organizevendormeets

28.21 SELECTIONOFPOTENTIALVENDORS:

- Basedonthepro�iledetailsreceived,vendorsareevaluatedbyvisitingandassessing

theirmanufacturingfacilities,qualitysystems,�inancialcapabilitiesetc.ISOcerti�ication

ismandatoryforavendortobecomearegisteredvendortoBEML.

- Uponascertainingthecapabilitiesofthevendors,theyareaddedtoourVendorList

provisionallyandbusinessopportunitiesareexplored.

- Vendorevaluationforproperratingofthevendorwillbedonebasedoncustomerpro�ile

/facilitiesavailableetc.

- Iftheperformanceofthevendorsisfoundsatisfactory,theywillbeupgradedasregular

vendors.

- TheselectionofpotentialvendorsforRailCoachComponentsisbasedonapprovalby

theICF/RDSO.

28.22 REGISTRATIONOFVENDORS:

- OnlineVendorRegistration:

Inordertoeasethevendorregistrationprocess,thereisanonlinefacilityavailablefor

suppliersandthecontractorstoregisterandtheinclusioninPVL/AVLwillbedoneupon

completingtheregularevaluationprocess.

- Vendorscanalsosubmittheirpro�ileseparatelyandtheinclusionwillbedoneiftheyare

foundsuitableduringtheassessment.

28.23 TENDERING:

TheCompanyhasmadee-modeofprocurementmandatoryforallprojectitems,non-

project items, Capital items, Civil Tenders and other service contracts (for e.g.

Transportation,Medicineetc.)WheretheestimatedvalueofPurchaseOrderismorethan

onelakh,irrespectiveofthetypeoftender.

IncaseofimporteditemsandforlessthanRs.Onelakh,allouteffortstobemadeto

progressiveachievee-modeofprocurement.ForStandardNon-Productionitemshosted

onBEMLWebsiteandCPPPPortaltheBidinvitationTransactionTypeshallbeselectedas

‘PublicTender’or‘PublicTender2bid’intheSRMsystemwhichwillenablethefollowing:

a. All the vendors who already have User ID in our SRM system will have access to

invitationsforsubmittingbids.

b. OncetheUserIDiscreatedandcommunicatedtoanewvendorbySRMTeam,thevendor

canaccess theBid invitationdirectlywithout theneed for thePurchaser toadd the

VendorCodetotheBidinvitationandgetapproval.

c. Therewillnotbeanypossibilityofdiscretionofthepurchaserinnotaddingavendorto

thebidinvitation.

28.24 TENDERQUANTITY:

The quantity considered for placement of development order should be mutually

acceptabletakingintoaccounttheiteminvolved,unitprice,amountinvolved,toolingand

developmentexpenditure,ifanyinvolvedandeconomicbatchquantity.

Thequantityorderedwillnotnormallyexceed25equipmentsets.However,depending

onthevalueoftheitemcostofdevelopment,leadtimeetc.thequantitycouldbeenhanced

afterobtaininganapprovalfromthecompetitiveauthority.Nondisclosureagreementsand

noncompetitiveagreement/exclusiverightfortheproductaretobeobtainedfromthe

�irmsforcriticaldesignsanddrawingsgivenbyBEML

Incaseswheretenderisresortedtointwobidsystemi.e.,TechnicalandPricebids,the

essentialQualifyingCriteria(QC)shallbeprescribedintenderdocument.Noncompliance

ofbidstoQC,whichisessentialforascertainingtheeligibilityofbids,shallberejected

straightaway.Duringevaluationandcomparisonofbid/s

Purchasermayaskthebidderforclari�icationofitsbid.Therequestforclari�ication

shouldbeinwritingandobtainedinwriting.Nochangeinpricesorsubstanceofthebid

PURCHASE MANUAL PURCHASE MANUAL162 163

shouldbesought,offeredorpermitted.Nopostbidclari�icationat the initiativeof the

biddershouldbeentertained.Reasonsforrejectingabidshallberecordedandinformedto

thebidder/s.

28.25 PLACEMENTOFPURCHASEORDERS:

Uponobtainingthequotations,theplacementofPurchaseOrderandProcurementof

materialisdoneaspertheproceduralguidelineslaiddowninthePurchaseManualand

DoP(DelegationofPower)onthetechnicallyacceptable

28.26 TECHNICALSUPPORTTOTHEVENDORS:

NecessarytechnicalassistanceisbeingensuredbytheVendorDevelopmentTeamwhile

developing the samplesbywayof guiding the vendorson theprocess and thequality

systemstobeadopted.

28.27 VENDORRATING

Vendorratingisbeingdonebasedonqualityofsuppliesfromthevendor.Iftheratingof

thevendorislow,theyarebeinginformedfortheimprovement.

28.28 VENDORSFROMDPSU’S

ThelistofvendorsisalsobeingcollectedfromDPSU’sinordertoexploreandexpandthe

vendorbase

28.29 UPDATIONOFVENDORMASTER(ADDITION/DELETION)

a. AmendmentinName/Addressofthe�irms,bothproject&nonproject,willbecarried

out in thesystemonobtainingcommunication fromthe �irmwithanauthenticated

documentlikeSSI/Excise/VATcerti�icateetceffectingthechange

b. Amendmentincategoryofsupplyincaseofprojectvendorswillbedoneinthesystem

after carrying out the assessment of the �irm and obtaining satisfactory

recommendationwithregardtothechangedcategory

c. Updationwithregardtocontactdetails,SSI/ISOdetailsetc.incaseofbothproject&non

projectvendorsarecarriedoutonreceiptofcommunicationfromvendors/divisions.

(ApprovedbytheBoardNo332dt17.08.2016)

28.30 ENHANCEDOUTSOURCINGFROMINDIANPRIVATEINDUSTRIES

BEMLrecognizesoutsourcingasoneofthestrategictoolstoachievecostbene�itsand

alsocomplementthestrengthsofprivatesectortobuildastrongindustrialbase.BEMLis

wellon its journey tobecomeasystem integratorbyoutsourcingasubstantialpartof

manufacturing activities from Indianvendors, enablingBEML to enhance the capacity,

attaincosteffectivenessandimprovecompetitiveness intheglobalmarket.Asapolicy

BEMLisnotmakinganycapitalinvestmentswherefacilitiesareavailableintheIndian

industry.Tofacilitateoutsourcing,thecompanyhaswellestablishedpolicies,procedures

andguidelines.

a. BEMLhasaVendorDevelopmentCelltoworkasasinglewindowhelpdeskfornew

vendors.

b. NewvendorscanregisterthroughOnline/Manual.

c. New vendors are supported by way of imparting knowledge on manufacturing

processes,speci�ications,qualityplans,etc.

d. BEMLalsoextends its testing facilitieson chargeablebasis to its vendorswherever

required.

e. To attract new vendors, BEML resorts to publishing of Expression of Interest

periodically,participationinallvendordevelopmentprogramsorganizedbyMSMEs,

CII,FICCIandotheragencies.

f. Toenhancetransparencyinallitsprocurementprocesses,BEMLhaswellestablishede-

ProcurementPortal.

28.31 BEML'MakeinIndia'DisplayCentre

BEMLhassetup'MakeinIndia'DisplayCentreatourfacilityinBangaloreComplex,New

Thippasandra, Bangalore – 560075, where prospective vendors can have access to

samples,drawingsandtechnicalspeci�ications.Interestedvendorscanvisitthefacilityto

exploreopportunitiestopartnerwithBEML.

ListofItemsforIndigenizationincludingImportedComponentphotosareavailablein

BEMLwebsiteforfollowingbusinesssegments:

a. Defence

b. MiningandConstruction

c. RailandMetro

PURCHASE MANUAL PURCHASE MANUAL164 165

CHAPTER–29CIVILWORKSPROCEDURE

29.1 INTRODUCTION:

TheadministrativemattersrelatingtoCivilWorksplanning/executionoftheCompany

shallbedealtbytherespectiveChiefsofConstructionatCorporateOf�iceandDivisions.

The administrative matters relating to Civil works planning/execution at

Regional/District Of�ices shall be dealt in coordination with Chief of Construction at

CorporateOf�icebytheRegionalManager/DistrictManagersconcerned.

Keepinginviewthecivilrequirements,eachmanufacturingcomplex,hasbeenprovided

withanindependentcivilsetupprimarilytocatertothecivilconstruction/maintenance

requirementsoftheDivisionsandtownships.

29.2. AIM:

TheCivilWorksContractProcedureaimsat:

a. BringinguniformityinalltheDivisionsofthecompanyinallmattersrelatingtoCivil

Works.

b. Keepingtheover-allcostwithintheestimates.

c. Ensuringqualityworkbyengagingcontractorswithrequisiteskillandcompetence.

d. AligningwithGovernment/Statutory/CVCguidelinesasapplicable.

29.3. TENDERCOMMITTEE:

TheobjectivesofTenderCommitteeareasunder:

a. Screeningoftendersreceived

b. Evaluationandrecommendationofacceptabletenders.

c. Carrying out the directions of the competent authority for effective execution and

completionofCivilworks

Toachievetheaboveobjectives,a2-tiertendercommittee(CTC­I&CTC­II)hasbeen

constitutedalongwithtermsofreference,asperAppendix‘A’&‘B’.

29.4. APPROVAL:

Proposals for civil works (Capital / Revenue) shall be approved by the competent

authority,afterFinanceConcurrenceasperDoP.

29.5. DEFINITIONS

a. Administrative Approval including Technical sanction: This term denotes in-

principleapprovalbytheCompetentAuthorityfortheexecutionofworkincluding

thedesignsanddrawings(whereverapplicable),anddetailedestimatesofthecostof

work for construction or repairs /maintenance as may be required and also

incurring expenditure thereon subject to budget provision . No work shall be

commencedorliabilityincurredinconnectionwithituntiladministrativeapproval

hasbeenobtainedfromthecompetentauthority.(ItisinlinewithGFR136)

b. BudgetProvision:ThistermreferstotheprovisionofthecostofworksintheCapital

BudgetorRevenueBudgetasapprovedbytheBoardofDirectors.

c. Chief Engineer: Chief Engineer shall mean the Head of Construction/Civil

DepartmentnominatedintherespectiveDivisions/CorporateOf�ice. Inrespectof

RegionalandDistrictOf�ices,Regional/DistrictManagersshalldischargetheroleof

theChiefEngineer.Heshallbein-chargeofallactivitiesconnectedwithplanningof

CivilWorksincludingassociatedworksetc.,andco-ordination/Technicalevaluation

of construction proposals at respective divisions/Corporate Of�ice /Regional /

District Of�ices. Hewill report to such executive as nominated by the respective

Complex/DivisionalChiefsorFunctionalDirector.

d. CompetentAuthority:CompetentAuthorityshallmeantheauthoritycompetentto

sanction/approveworksintermsofmonetarylimitsprovidedunderthe“Delegation

ofPowers”.Thevalueincludescostoffreesupplyitems,ifany,issuedbythecompany.

e. Contract: The Contract means the Work order against an NIT (Notice Inviting

Tender), all documents relating to Technical and commercial bids, minutes of

meetings like pre-bid meetings (if held),Techno-commercial discussion(if held),

acceptanceletter,approvedBOQ,contractagreementexecutedbetweenthecompany

andthecontractortogetherwiththedocumentsreferredtotherein includingthe

terms and conditionswith appendices and any special conditionswith regard to

designs,drawingsandincludingsuchotherrelevantconnecteddocuments.Allthese

documents taken together shall be deemed to form one contract and shall be

complementarytoeachother.

f. Contractor:The“Contractor”shallmeantheindividualandorpartnership�irmor

jointstockcompanywhohasagreedtoundertakethecivilworksandshallinclude

legalrepresentativesofsuchbusinessentities.

g. Contract Sum: Contract Sum shall be the accepted value of Contract originally

awardedoramendedfromtimetotime.

h Delayedoffer:Anofferpostedonorbeforetheclosingdatebutreceivedafterthe

closing date is deemed as delayed offer. Such offer is identi�ied and marked as

“delayed offer”. Delayed offers shall not be considered for the purpose of tender

evaluationandalldelayedoffersshallbereturnedwithreasonsinwriting.

i. Engineer­in­charge/Of�icer­in­charge:shallmeantheOf�icernominatedforthe

purposeofspeci�iccontract,whoshalldirect,superviseandexecutetheworks.He

willreporttotheChiefEngineer.InrespectofRegionalandDistrictOf�ices,hewill

reporttoRegional/DistrictManagers.

j. ItemRateContract:Thisreferstothecostoftheworksarrivedat,afterextensionof

the quantities shown in schedule of quantities by the item rates quoted by the

tendererforthevariousitems.

k. MeasurementBook(MB):Meanstheboundbook,seriallymachinenumberedand

containingdifferentnumberofpages,inwhichtheexecutionofworksaremeasured

andrecordedfromtimetotime,forascertainingtheprogressoftheworksaswellas

RARpayments.

l. Preliminary Committee for Major Civil Works: This is an ad-hoc committee

PURCHASE MANUAL PURCHASE MANUAL166 167

constituted by the respective Functional Director to address the speci�ic user

requestswiththefollowingtermsofreference;

i. Toassessthenecessityfortheproposedcivilworksdulyconsideringtheavailable

facilities

ii. Toidentifythelocation.

iii.Toascertainthescopeofwork,natureandsizeofthefacility.

iv. ToprepareandsubmitformalproposalfortheconsiderationofManagement

m. Site:TheSiteshallmeantheland,building/sandsuchothercivilstructure/sin/on

whichtheworkistobeexecutedunderthecontract,whichistobeusedforandin

connectionwiththecontract.

n. StandardScheduleofRates:(CalledinbriefSSR)ThisreferstotheLatestversionof

MilitaryEngineeringServices (MES) StandardScheduleofRatesapplicablewith

percentage of escalation noti�ied byMES from time to time if any, and this shall

generallyformthebasisforallestimatesandtenders.

o. Term Contract: Term or period contract is normally entered for a period not

exceedingtwoyearsforattendingtominor,urgentandmiscellaneouscivilworksnot

exceedingRs.3,00,000/-perjob.(tobeupdatedinAccountsManualandinDoP)It

referstoItemRatecontract(ratesarrivedbasedonpercentageescalationquotedby

the contractors above the ratesof latest versionofMilitaryEngineering Services

(MES)SSRforcorrespondingsection/scheduleitems)forrepairs/maintenancejobs

requiredtobetakenupatshortnotice.

p. TheCompany:Theword‘TheCompany’refersto‘BEMLLimited’.

q. Works:WorksincludesalltypesofworksconnectedwithDevelopmentofland,Civil

Construction, Structural works, interiors, design consultancy and Project

Management, allied type of civil works pertaining to Mechanical, Fabrication,

ElectricalInstallations,Air-conditioning,ErectionofPlantandMachineryaswellas

civilmaintenanceandrepairsthereto.

29.6. BUDGET

a. Budgetforcivilworks:Thebudget(Capital/Revenue)proposaldulyapprovedbythe

BoardofDirectorsfornewcapitalschemes/facilitiesorreplacementsandalsothe

revisedbudgetapprovedbytheboardfortheongoingschemes/facilitiesincluding

phasingofcommitmentandexpenditurethereof.TheConstructionDepartmentshall

addressthespeci�icuserrequestconsideringthenecessityandthescopeofthework,

fortheproposedcivilworksmaybeCapitalorRevenue.

i. While considering the request by the user department, the construction

departmentwillexaminetheproposaltoseewhethertheproposalsareprima

facieacceptableandwhethertherequirementsoftheuserdepartmentcannot

be met by any other alternative / more economical means. Where the

constructiondepartmentcansuggestanalternative,thiswillbedoneunder

suggestiontocompetentauthoritytoaccordadministrativeandtheremarksof

theuserdepartmentwillbeobtained.Wherenoalternativearrangementcanbe

suggestedorisacceptabletotheuserdepartment,theconstructiondivision

willexaminetheproposalfromthefeasibilityaspect,drawuparoughestimate

ona‘notexceeding’basisandalsoestimatethetimerequiredforexecutionof

thework.

ii. Justi�ication including the economics of the proposals shall be brought out

clearlyinthebudgetproposals

iii. For new Schemes, requirement of other Allied Services to the buildings/

structuresandotherexternalservicesshallalsobeconsideredintotalitysothat

thesanctioncoverstheentirerequirement.Theestimatesintheproposalshall

beasrealisticaspossibleforprovidingfundsinthecapitalbudget,keepingin

viewtheprioritiesandthealternatives.Thisshallalsoprovideadependable

basisforassessingtheoffersreceivedinthetender.

iv. Fulldetailsintermsofplintharea,Quantity,speci�icationandnatureofworks

shallbefurnishedinsuf�icientdetailprovidingforallthelineitemsrequiredfor

anycivilworkcostingRs.0.50lakhsandabove. Itemsforaworkcostingless

thanRs.0.50lakhsshallhoweverbegroupedundermiscellaneousprovision

andaconsolidatedapprovalbetaken.

v. Sanctionsforindividualitemsnotcommittedwithinthebudgetyearshalllapse

automatically.Howeverforsuchlapseditems,freshsanctionshallbesoughtin

theensuingbudgetyear.

vi. CompletionreportshallbefurnishedbytheCivilConstructionDepartmentof

the respective Divisions/Corporate of�ice / Regional / District of�ices to

Planning & Finance department in regard to schemes which have been

physicallycompletedandonwhichnofurthercommitmentsorexpenditureare

considered necessary. The Construction Department in the Divisions/

Corporateof�ice/Regional/Districtof�icesshallsendalistofsuchcompleted

itemswithfulldetailstotheCorporateFinanceDepartmentforrecords.

vii. The sanction reference given by the CorporateOf�ice shall be quoted in all

mattersconnectedwiththebudgetviz.,reportingofmonthlycommitmentand

expendituretotheCorporateOf�ice,CapitalAppropriationRequests,Purchase

Orders/Workordersetc.TheChiefofCivilMaintenanceDepartmentandthe

respective Planning Department of the Divisions shall monitor the Capital

Budget Sanctions against each item with reference to commitment and

expenditureandthesameshallbereportedtoCorporateFinance/Corporate

PlanningDepartmentthroughtheDivisionalFinance.

viii. Thephasingofcommitmentandexpenditureshallbeonarealisticbasis.

ix. Inrespectofsanctionswhicharealreadycommitted,thereportingofmonthly

expenditureshallbebasedonpercentageofprogressmade/orpaymentmade

tothecontractorwhicheverishigher.

x. Inrespectofsanctionsyettobecommitted,theexpenditureshallbeestimated

keepinginviewtheanticipateddateofcompletion.

xi. Theestimationofexpenditureshallincludeprogressofpaymentsmade,costof

PURCHASE MANUAL PURCHASE MANUAL168 169

freesupplyofmaterialsissuedagainstindividualworks,dutiesandothertaxes

etc.

xii. Projectionofcommitment�iguresinthebudgetsshallbebasedontheprobable

datebywhichtherelevantcontractforCivilWorkslikelytobereleased.Mere

risingofCapitalAppropriationRequest(CAR)againstabudgetsanctionshall

notamounttocommitment.

After approval of the capital budget by the Board, Corporate Finance shall

intimate the Divisions/Corporate Construction department /Regional and

Districtof�icesthedetailsofthesanctionsapproved.Alistofsanctionedworks

Division-wise shall be kept by the Chief of Planning Department of the

respectivedivisions/CorporateFinanceandRegional/DistrictManagers for

civil works. Such details shall also be maintained by the Chief of Civil

MaintenanceDepartmentoftherespectiveDivisions/CorporateConstruction

Department pertaining to their area. The site data required for planning

purposesshallbefurnishedbytherespectiveConstructionDepartment.

29.7 ADMINISTRATIVEAPPROVAL:

This term denotes approval by the competent authority for the execution of work

connectedwiththerequirementsoftheCompanyandincurringexpenditurethereon,as

perdelegationofpowers.Theauthoritycompetenttoaccordadministrativeapprovalshall

be as per Delegation of Powers subject to the budget provision and with Finance

concurrence.Administrativeapprovalforeachworkshallbeobtainedbytherespective

ConstructionDepartmentofDivisions/Corporateof�ice.InrespectofRegionalandDistrict

of�icesCorporateConstructionDepartmentshallco-ordinateonrequestofRegionaland

District of�ices. Administrative approval shall be accorded by taking into account the

following:

a. Necessityforthework

b. ConformingtothepoliciesoftheCompany

c. Conformitywiththescopeofworklaiddownand

d. Prioritydrawnuponthebasisofurgency

The proposal shall also be co-ordinated by the Chief of Maintenance of respective

divisions/inrespectofCorporateOf�icebytheManagementServicesDepartmentunder

HR/inrespectofRegionalandDistrictof�icesbytheHRChiefofMarketingHQbefore

administrativeapprovalisaccorded.Anyrevisionoftheadministrativeapprovalwithinthe

ceilingauthorisedbythedelegationofpowersispermissiblebythecompetentauthorityin

consultationwithFinanceprovidedfundscanbefoundfromwithintheamountsanctioned

forworkafterexcludingsavingsonaccountofitemsabandoned.

AsperGFR(GeneralFinancialRules)194/2016,worksshallnotbesplituptoavoid

thenecessityforobtainingthesanctionofhigherauthorityrequiredwithreferenceto

thetotalamountoftheorder.

29.8TECHNICALSANCTION:

Thisreferstotechnicalsanctiontodetailedestimatesforworkstobeadministratively

approvedby competent authority as per delegation of powers. The technical estimate

prepared by the Chief of CivilMaintenance departments of Divisions or a consultant

appointedforthepurposeshallbedulyco-ordinatedbytheChiefofMaintenanceofthe

respectivedivisions.InrespectofCorporateOf�iceandregional/DistrictOf�ices,technical

estimatesshallbepreparedandco-ordinatedbyCorporateConstructionDepartment.It

impliesapproval to thedesignanddrawingsof theworkproposedtobeexecutedand

sanctionisaccordedonlywhenthecompetentauthorityissatis�iedaboutthetechnical

soundnessoftheproposal.Forthepurposeofcomparisonofrates,technicalestimates

shall be prepared based on the latest version of schedule of rates of MES SSR with

appropriateescalationpercentagesissuedbyMEScircularsfromtimetotimeandalso

provision towards contingencies and taxes as applicable. Wherever the rates are not

availableinMESSSR,thesameshallbeadoptedfromPrevailingMarketrates.Thetechnical

estimatesshallalsoincludethecostoffreesupplyofmaterialstobegivenbyBEMLtothe

contractor for the subjectwork. In caseofmajor civilworks andwhere the structural

design,safetyaspectandinteriorsareinvolved,theChiefEngineershallrecommendto

obtainArchitecturalandDesignConsultancywiththeapprovaloftheCompetentAuthority.

TheadministrativeapprovalshallcontainreferencetoCapitalBudgetSanction.Incaseof

worksnotsanctionedinthecapitalbudget,theappropriatereferenceofDoPunderwhich

theAdministrativeapprovalhasbeensoughtshallbementioned.Notechnicalsanctionis

requiredforminorcivilworkscostinglessthanRs.3,00,000/-orderedonTermContractfor

repair/maintenanceworks.Theobjectiveoftechnicalsanctionistoensurethat:

Remarks:ThetermcontractvaluetobeupdatedtoRs.3.0lakhsinsteadofRs.1.0lakh.

ThishastobeupdatedintheAccountsManualandinDoP.

a. Extravagantscalesarenotadopted.

b. Thedesignsandspeci�icationsaresound,economicalandadequatetoful�ilthepurpose

oftheworks.

c. Theestimatefortheworkisasrealisticasispossibleatthetimeitisprepared.

d. Thematerialsandtheexecutionoftheworkareaccordingtothespeci�ications.

29.9 EMPANELMENTOFCONTRACTORS:

a. It isgenerallyeconomical tocarryoutconstructionwork through theagencyof the

Contractors.The timelyand satisfactory completionof any civilworks is, to a great

extent, dependent upon the capability, resourcefulness and technical skill of the

contractors.Itis,therefore,necessarytoclassifythevarioustypesofworksinrelationto

�inancial limits, keeping in view the required capability and technical skills for the

purposeofgradingthecontractorscommensuratewiththeimportanceandthevalueof

theCivilWorks.Accordinglythereshallbeasystemofempanelmentandmaintenanceof

approvedlistsofcontractorsdulyclassi�iedunderdifferentslabsforeachclass/typeof

worksand theapproved listof contractorsmaintainedclass-wise/category-wise for

eachslabseparately.

b. Thepurposeistocontacttherightsourceforrightjobforcompetitiveoffersandthe

ChiefEngineershallusehisexpertiseinproperclassi�icationintermsoftypeofwork,

PURCHASE MANUAL PURCHASE MANUAL170 171

valueandthedegreeofskillrequiredforthework.CorporateMaterialsdepartmentshall

ensure empanelment of contractors for local/repair works for Divisions and at

Corporate Of�ice, in consultation with Construction Departments of the respective

divisions/CorporateOf�ice through EOI in newspapers for value exceedingRs.1.00

Crore(onecrore)/Companywebsite/CPPPortal

c. The updation of the contractors list shall be done once in Two Years by Corporate

Materials department. A committee comprising of the following members shall

scrutinize the applications received based on the eligibility criteria �ixed and the

updatedlistshallbecirculatedtoallDivisions/RegionalandDistrictof�ices.

CommitteeMembers:

i. ChiefofCorporateMaterials–Chairman

ii. ChiefofCivilMaintenanceDepartmentofalldivisionsasmembers.

iii.Rep.fromCorporateQualityDepartment(NotbelowtherankofGradeIII)-Member.

iv.Rep.fromCorporateFinance(NotbelowtherankofGradeIII)-Member.

v. ChiefofCorporateconstructiondepartment-Co-ordinator/Secretary.

d. Inadditionfacilityforsubmissionofapplicationsonlineforempanelmentshallbemade

inthewebsite,toenabletheagenciestoapplyforempanelmentatanypointoftime.Such

applicationsshallbescrutinisedfromtimetotime,andthesameshallbeupdatedand

circulated.

29.10

a. Thetypesofworksthatarenormallyexecutedshallbeclassi�iedunderoneormoreof

thefollowingcategoriesdulygradingthejobsasminor,major,routinemaintenanceetc.,

i. Building and related Civil and structural Works, sanitary and water supply

installations

ii. Roadanddrains.

iii. InteriorDecorationandassociatedcivilworks

iv. Waterproo�ingandassociatedcivilworks

v. Electricalworks

vi. Structuralrehabilitationworks

vii. Acoustic/Insulationworks

viii. Otherspecialjobsetc.

ix. TermContractWorksforminorCivilandalliedworks

b. Theworksundereachtypeshallbefurthergroupedslab-wiseinrelationto�inancial

limitsforthepurposeofempanellingcontractorsasshownbelow.Thisshallfacilitate

betterchoiceofcontractorsforeachcategoryofworkforeasyandef�icientexecutionof

thejobs.

i. uptoRs.5.00Lakhs

ii. aboveRs.5.00lakhsanduptoRs.20.00lakhs

iii. aboveRs.20.00lakhsanduptoRs.50.00lakhs

iv. aboveRs.50.00lakhsanduptoRs.100.00lakhs

v. aboveRs.100.00lakhsanduptoRs.200.00lakhs

vi. aboveRs.200.00lakhsanduptoRs.400.00lakhs

vii. aboveRs.400.00lakhs

29.11 Thecontractorwhoiseligibleforaparticularclasscanquoteforalowerclassworkalso.

The empanelment of contractors shall bemade by inviting applications reckoning the

followingparticulars:

a. Professionalcompetence.

b. Natureofworksinwhichthe�irmisexperienced.

c. FinancialStandingandparticularsofproperty.

d. OrganisationalsetupandSupervisoryStaff.

e. Facilitiesavailable.

f. Statutoryrequirementsviz.,PAN,VAT,TIN,ServiceTaxReg.No.,etc.

g. ContractorsshallcomplywiththeprovisionofESI&PFAct.

h. Anyotherinformationrelevanttotechnicalcompetencyetc

I. TheContractorhastoinvariablyobtainaContractor'sAllRiskInsurancePolicybefore

commencementofthework,whichshallbevalidtillthecompletionofthecontractand

thepossessionoftheworksiteishandedovertotheCompany.

29.12 Thelistofempanelledcontractorsshallbeupdatedperiodicallyasstatedabove,inPara

29.10withadditionanddeletionsandgotapprovedbytheManagementsubjecttodetailed

examination of the various aspects as given below. The additions shall be based on a

thoroughscrutinyofapplicationsinourstandardformandresponsestoouradvertisement

periodically anddeletionsbasedonunsatisfactoryperformance, unreliability, doubtful

integrityetc., ofContractors.This list shallbe theapproved listof contractorsand the

empanelling authority shall have the right to suspend, remove, demote or black-list a

contractorforadequatereasonsandremovethecontractorsfromtheapprovedlistinthe

interestsoftheCompany.

a. Technicalcapabilityandpastperformances,possessingadequatetechnicalpersonnel

andnecessaryfacilitiesintheformofMachinery,Equipment,ToolsandPlantetc.,

b. Financialsoundnessdulysupportedbybankreference,latestincometaxreturns,and

anyothersupportingdocuments.

c. EmpanelmentwithotherwellestablishedorganisationslikeCPWD,MES,StatePWD,

Railways,andotherPublicSectorUndertakings.

d. Statusofany litigation/arbitration/blacklisting ifany,with theCompany/anyother

PublicSector/anyotherGovernmentDepartmentsanditslateststatus.

The main considerations are the �inancial status, capacity and experience of the

contractor.Theintendingcontractorshallproduceproofofdocumentswith�inancial

limitofworksforwhichheappliesforempanelmentasourapprovedcontractors.

e.Whileupdatingthenewlist,trackrecordofalreadyempanelledcontractorshastobe

reviewedanddeletedfor:

i. Poorperformance,

ii. BlacklistedbytheCompany/otherPSU'sorMinistry.

ThenewlistwouldbecirculatedtoallDivisions/Corporateof�ice/RegionalandDistrict

of�icesbyChiefofCorporateMaterials.

PURCHASE MANUAL PURCHASE MANUAL172 173

e. Wheneveropentendersare�loatedwithappropriatesanctions,forwiderparticipation,

the empanelled contractors shall be informed of such tenders to have wider

participation.

29.13 EARNESTMONEY:

PleaserefertoPara5.5ofChapter5ofthismanual.

29.14 INTEGRITYPACTAGREEMENTWITHCOMPANY:

ContractorsshallenterintoIntegrityPactwithCompanyforcontractsvalueasspeci�ied

bytheCompanyfromtimetotime.ThedraftofthesamecanbedownloadedfromCompany

website.Theoriginalintegritypactdulysignedshallbesubmittedalongwiththetechnical

bid.

29.15 MSE:

MSE’sregistered�irmsareeligibleforexemptionsasapplicableinMSMEAct,inrespect

ofEMDandcostoftenderformsfee.Such�irmsshallsubmitrelevantdocumentsinproofof

MSE.

29.16 TYPESOFCONTRACT:

Broadly,theCivilWorksaredividedintothefollowingtypes:

a. ItemRateContract: Itemwisebill of quantities of thework are given in the tender

documentsandthecontractorshall�illtheratesagainsteachitemandcarryforwardthe

total. The contract is accepted on the lump sum total thus arrived at. Thework is

measureditemwiseandpricedattheratesquotedbythecontractor.

b. TermContract:ThisreferstoItemrateContractforrepairsandmaintenancejobsand

minorworksnotcostingmorethanRs.3,00,000/-butrequirestobetakenupatshort

notice.Anapproximateindicationofthework-loadintermsofvalueforone/twoyears

fordifferenttypesofworkisindicatedinthetenderandascheduleofratesforeachtype

ofworks isagreeduponinthecontractbywhichthepricetobepaidforthe work

executed is regulated. The contract of this type is entered intowith the successful

tenderer foraperiod foraperiodnotexceeding twoyearsand isconcludedwell in

advance for ease of operation during the �inancial year. The term contract shall be

�inaliseddivision-wisebythePurchaseDepartmentsofrespectiveDivisions.Inrespect

ofCorporateOf�ice,byCorporateMaterialsDepartment.

Onexpiryofthecontract,thevalidityoftheexistingContractshallbeextendedfora

periodnotmorethan6months,withapprovalofthecompetentauthorityasperDoP

andwiththeacceptanceoftheexistingTermcontractor.AgainsttheapprovedTerm

Contract, work orders shall be issued by the Purchase Departments of respective

divisions. With a view to controlling the expenditure, there shall be Division-

wise/Corporateof�ice,budget sanction forTermContracts for eachyearas shallbe

approvedbythecompetentauthorityasperDoP.Theexpenditureismonitoredthrough

variousworkordersplacedunderTermContractduringa�inancialyearwhichshallbe

withintheapprovedbudgetarylimit.

c. TurnkeyContracts:Turnkeycontractsmaybeadopted,whereveritisappropriate.

29.17. TENDERSYSTEM:

Tendersystemisadoptedtosecurethemostcompetitiveratesconformingtoethicsof

tendering.Therearedifferenttypesoftendersviz.,Open/PublicTender,LimitedTender

andSingleTender.NoticeforinvitingtenderforOpentendersisadvertisedeitherthrough

leadingNewsPaper,oruploadingthetenderdocumentsintheBEMLWebsite,CPPPortal.

TendersforworkscostingoverRs.1.00Crore(onecrore)shallbeadvertisedthrough1

leadingNewspaper,inadditiontouploadingonCompanywebsiteandCPPPortal.

29.18 PUBLICTENDER/OPENTENDER:

a. Incaseofpublictender/opentender,thetendernoticeshallbeuploadedinCompany

WebsiteandCPPPortal.InrespectoftendervaluecostingmorethanRs.1.00Crore,the

sameshallbepublishedinoneleadingEnglishnewspaperapartfrompublishingthe

tendernoti�icationinBEMLWebsiteandCPPPortal.

b. Thetendershallbepublishedundertwobidsystem,i.e.,technicalbidandcommercial

bid separately.After openingof theTechnical bid, thebid shall be evaluatedby the

ConstructionTenderCommittee.Thecommercialbidsshallbeopenedonlyinrespectof

those technical bids which are technically accepted by the Construction Tender

Committee.

c. TenderDocumentsshallconsistoftendernotice,tenderform,conditionsofcontract

(generalandspecialconditionsetc.).Ifitisdesiredtoreleasetheadvertisementinmore

than one English newspaper forwider publicity, approval of CMD is required. It is

imperativethatbeforeinvitingtenders,thefollowingrequirementsaresatis�ied:

i. Budgetprovision

ii. AdministrativeapprovalofworksbytheCompetentAuthority.

iii. Billofquantities.

29.19 LIMITEDTENDER:

a. AllthetendersaboveRs.1.0lakhareissuedinvariablyaspublic/opentender.Hence,the

concept of limited tender is being restricted to contact empanelled contractors. In

addition,thesameshallbepublishedinCompanywebsiteandCPPPortal.

b. In aLimitedTender, the tender forms shallbe issuedby theCorporateMaterials in

respectofCorporateof�ice/PurchaseDepartmentfortherespectivedivisionsandby

tendercommittee/HRdepartmentforrespectiveRegional&DistrictOf�icesbasedon

theapprovedlistofcontractorsasrelevanttothevalueofworksandthetype,with

reasons recorded for non-issue of forms to empanelled contractors wherever

applicable.

c. The Chief of Corporate Materials Department/Purchase departments of respective

divisionsisauthorisedtoissuetenderformstoanyempanelledcontractorborneinthe

approvedlistofcontractorsmaintainedbytheCompany,ortherespectiveblocksfor

widerparticipationandbettercompetition,whiledoingso, thecompetencyandthe

technicalskillrequiredforexecutingtheworkshallbekeptinview.

However,invitinglimitedtenderrequirestheapprovalofManagement.

PURCHASE MANUAL PURCHASE MANUAL174 175

29.20 SINGLETENDER:

a. Singletenderisresortedtowhentheworkstobecarriedoutareofurgentnatureor

wheretechnicalneedsoftheworksaresuchastomakeopentendersinappropriate.

With the recommendations of the Construction Tender committee, the Functional

Directorshallapproveasuitablecontractor.

b. Inallmattersofprice/ratenegotiation,ChiefofFinanceorhisrepresentative inthe

Divisionshallbeassociated.Theratessonegotiatedshallfavourablybecomparablewith

theexistingscheduleofratesforsimilarworkintheexistingcontracts.

c. The justi�ication for going on Single Tender has to be recorded in writing and the

contractawardeddulyapprovedbythecompetentauthorityasperDoP,basedonthe

recommendationsoftheConstructionTenderCommittee.

29.21 AWARDINGCONTRACTWITHOUTATENDER:

Inveryexceptionalcases,contractshallbeawardedwithoutcallingforatendersubject

toapprovalofthecompetentauthorityasperDelegationofPowers(DoP).Thesepowers

aretobeexercisedinemergentcasesforreasonstoberecordedinwriting.

However, all other contractual procedures anddocuments (like acceptanceofWork

Orderetc.,)exceptContractAgreementshallbeinsisteduponforsuchemergentworks

havingdurationoflessthan3days.

29.22. TENDEROPENINGANDTENDERCOMPARATIVESTATEMENT.

a. Timeallowedforsubmissionofopentendersshallbe28days.Fortendervaluemore

thanRs.10.0Crore,45daystendersubmissiontimetobegiven.Incaseofemergent/fast

trackprojects/works thetimeforsubmissionof tenderscanberelaxedwithlesser

numberofdayswithdueapprovalofCompetentAuthorityonestepabovewhocan

acceptthetenderasperDoP,exceptinrespectofcaseswhereCMDistheapproving

authority.

b. Time allowed for submission of Limited Tenders where the tenders are sent to

empanelledcontractorsandalsouploadedinBEMLWebsite&CPPPortal,shallbe14

days.

c. Allopentenders(uploadedonBEMLwebsiteandCPPPortal)shallbeissuedunderTwo

bidsystemwithprequali�icationcriteriaexceptincertainexceptionalcases,withthe

recommendationoftheConstructionTenderCommittee.

d. ThefollowingarethePrequali�icationcriteriatobeincorporatedintheTechnicalbid.

i. AverageAnnual�inancialturnoverduringthelast3yearsending31stMarchof

previous�inancialyearshallbeatleast30%oftheapproximateestimatedamount

statedinthetenderdocuments.

ii. EMDofrequiredamounttobefurnishedintheformofDemandDraftorBanker's

Payorder.

iii. IntegrityPactAgreementtobeexecutedbythecontractorforestimatedvalueof

theworksasspeci�iedfromtimetotimeandindicatedintheNIT.Theformatof

IntegrityPact tobedulysignedandgivenbythebidderalongwith the tender

documents.

iv. As per Expenditure Management Commission, Government of India,

(Recommendation No.71) solvency of the bidder and liquidity are important

criteria to determine the capacity of the contractor, especially for large value

contractsaboveRs.10.0crore.TheTenderdocumentforlargevalueprojectshall

also include the requirement of viable �inancial model to explain how the

contractorproposestofundtheexecutionoftheproject.

FortendervaluemorethanRs.10.0Crore,theSolvencyCerti�icatefortendervalue

shallbeforanamountof40%ofestimatedvalueofthetenderandthesameshall

be givenbyaNationalised/ Scheduledbank in favourof thebidderand such

solvency certi�icate shall be within a period of 12 months from the date of

submissionofthetender.

e. Experiencecriteriatobeful�illed(CVCIOMNo.12-02-1-CTE-6dt.17.12.2002):

Experienceofhavingsuccessfullycompletedworksofsimilarnatureduringlast07

yearsendinglastdayofthemonthprevioustotheoneinwhichthetendersareinvited

shallbeeitherofthefollowing:

i. Threesimilarnatureofworkscompletedeachcostingnotlessthantheamount

equalto40%ofestimatedamountofthetender;

-or-

ii. Twosimilarnatureofworkscompletedeachcostingnotlessthantheamount

equalto50%ofestimatedamountofthetender;

-or-

iii. Onesimilarnatureofworkcompletedcostingnotlessthantheamountequalto

80%ofestimatedamountofthetender;

Note:

1. Theexperiencecerti�icateshallbeconsideredonlyinthecasesofworkscompletedin

fullandcomplete.

2. Incaseofexperiencecerti�icateobtainedfromotherthanGovernmentorganisations/

PublicSectors,thesameshallbesupportedwithTDScerti�icatebythecontractor.

3. Incaseofworkscombinedwithcivil,electricalandutilityservices,theexperiencein

similarnatureofworkshallincludecivilaswellaselectricalandutilityservices.

4. Themeaningof"similarnatureofwork"forthepurposeoftendershallbede�inedinthe

NoticeInvitingTender(NIT)

5. Valid licence fromstatutoryauthority concernedshallbe furnished forexecutionof

specialisedworksincludingelectricalworks.

6. ESIandPF:ThecontractorsarerequiredtocomplywiththeprovisionsofESI&PFact.

f. TendersshallbeopenedbytheTenderopeningsectionunderthePurchaseDepartment

of the respective divisions / Corporate Materials Department in the presence of

nominatedCommitteewhereinarepresentativeofInternalAuditFinanceDepartment

shallalsobepresentandattestthetenderdocumentswithdateandinitialasperthe

tenderopeningprocedure.

PURCHASE MANUAL PURCHASE MANUAL176 177

g. The tender opening Committee shall consist of representatives from Purchase and

Finance.InrespectofRegionalandDistrictOf�ices,thetendersshallbeopenedatthe

respectiveof�ices,inthepresenceofnominatedCommittee.

h. AtpresentalltheciviltendersarepublishedthroughManualmodesincetheSRM-ERP

portalof theCompanyisdesignedonlyformaterialprocurement.Uponupdationof

SRM-ERPportalenabling�loatingoftendersforcivilworks,thesameshallbeadoptedas

pertheCompany'sguidelines.

I Inrespectoftenderspublishedthroughnewspapers/website/CPPPortal(i.e.,public

tenders),theauthorisedrepresentativesofbiddersshallbepermittedtobepresentat

thetimeoftenderopeningbytheTenderopeningsection.

j. In respectof suchpublic tenders, the total amountquotedagainst eachbidof each

biddershallbereadoutandalsoitemwiseratesasquotedbythebiddersshallalsobe

read out, if so requested by the contractors' representatives who are present. All

correctionsshallbeattestedwithdatedinitialsbytherepresentativesoftheTender

openingCommitteeincludingrepresentativeofFinance.Acomparativestatementshall

bepreparedwithreferencetothebillofquantityasperthetenderdocuments,recording

theratesquotedbythevariouscontractors,thevalueofeachitemofworkandthetotal

valueasquotedbythecontractors.

The comparative statement shall be checkedby �inancewith respect to the tenders

receivedbeforeitisputupforapproval.

29.23 SELECTIONOFOFFERSANDACCEPTANCEOFTENDERS:

a. Thelowesttenderonlyshallbeaccepted.Thetechnicalestimateshallprovideabasisfor

assessingthereasonablenessofthelowesttender.Forthispurpose,theitem-wiserates

shallbebroadlycheckedbytheConstructionTenderCommitteeforanyabnormality.

Itemwiserateshavinglowfreakratesshallbeexaminedtoseeifthetenderasawholeis

workable.Where the tender is foundunworkable, thesameshallberejectedby the

ConstructionTenderCommittee.Clari�ications,ifanyrequired,ontechnicalmattersin

thetechnicalbidsubmittedbythebidder,andshallbeobtainedbytheConstruction

TenderCommitteetoevaluatethetenderinrightperspective.Aftertheopeningofthe

commercialbidandpreparationofthepricecomparativestatement,andarrivingofL1

bid,withdueapprovalofthecompetentauthority,techno-commercialdiscussionscan

be heldwith L1 bidder to obtain price advantage for the Company and such price

negotiation shall be conducted by the Construction Tender Committee. A note of

approvalshallbeputupforplacementofworkorderbasedonsuchpricenegotiations,if

anyheld,totherespectiveCompetentAuthorityasperDelegationofPowers.

b. Whenitisapproved,acceptanceoftendershallbeintimatedinwritingtotheContractor.

c. TheContractAgreementshallbesignedonaNonJudicialstamppaperofarequisite

valuebythecontractororhislegalassigneeandtheChiefofMaterialsinDivisions/

CorporateOf�iceandRegional/DistrictManager’sinRO’s/DO’sasperDoP.

d. ThestandardformatofContractAgreementasatAppendix­Cshallbeadopted.Any

deviationsfromthestandardformatshallbewiththeapprovalofcompetentAuthority

withtheconcurrenceofLegal&Finance.

e. Aworkordernumberlinkingtotherelevantcontractshallbeassignedforaccounting

purposesbythePurchaseDepartmentconcernedoftherespectivedivision/Corporate

Materials department. In respect of Regional and District of�ices, by the respective

RegionalandDistrictManagers.

f. Theoriginalcontractagreement,billofquantity,thetermsandconditions,detailsoffree

supplymaterials tobe issuedbytheCompanytothecontractor,generalandspecial

conditions,ContractAcceptanceletter,originalCARpolicy,etc.,shallalsobeforwarded

toAccountsDepartmentformakingpayment.

29.24RE­TENDER:

Retenderingisnottoberesortedtointhenormalcourse.However,retenderingshallbe

consideredinthefollowingexceptionalcases.

a. Whenthepricesquotedareconsiderablyveryhigh/verylow.

b. Whenitissuspectedthatthereisaringexistingandpricehavebeenmanipulated.

c. Materialchangeinthebasicspeci�icationhasbeenintroducedafterreceiptoftenders.

d. Noneoftheoffersmeetthedesiredspeci�icationsandprequali�icationoftendercriteria.

e. L1Firmwithdrawstheoffersordonotagreeforextensionofvaliditywhenitbecomes

necessary.

f. Whenthereisasuddenslumpinthemarketwhichistobeapproved,sustainedand

justi�ied.

g. DuetoanyothercriteriaasfoundbytheConstructionTenderCommittee.

Re-tenderingwhenresortedtoshallbeonlyafterobtainingtheapprovalfromtheChiefof

theDivision/Complex.

29.25NEGOTIATIONS:

a. Negotiationinrespectofallmattersrelatingtotendervalue,rate,shallbebasedonthe

recommendationsofConstructionTenderCommitteeIorII.

b. NegotiationshallbeconductedbytheChairmanofConstructionTenderCommitteeIor

IIandtherecommendationoftheCommitteetoberecordedinwriting,acopyofwhich

shallbekeptintherelevanttender�ile.AfairapproachandadvantagetotheCompany

shallbekeptinview.IncaseofexigencieswhereitisnotpossiblefortheChairmanof

Construction Tender Committee I or II to be present for the negotiation, he shall

authorisearepresentativetoattendthenegotiationonhisbehalf.Negotiationshallbe

heldwithL-1agencyonlywithdueapprovaloftheCompetentAuthority.IncaseL-1

backsoutthereshallbearetenderwiththerecommendationofCTCIorIIandwithdue

approvaloftheCompetentAuthority.SuchL-1�irmwhichhasbackedoutshallnotbe

consideredforre-tender.

29.26SECURITYDEPOSIT

a. Thesuccessfultenderershallberequiredtofurnishsecuritydepositfortheful�ilmentof

contractandtheamountshallbe10%ofthevalueofthecontract,tobepaidbythe

contractor.Nowaivercanbeallowedinthisregard.Suchsecuritydepositshallnotentail

anyinterestpaymentonrefund.

b. Thecontractorshallchooseanyoneofthefollowingoptionsforpaymentofsecurity

depositinwritingasunder:

PURCHASE MANUAL PURCHASE MANUAL178 179

i. The contractor shall within 30 days of acceptance of the contract deposit, the

difference between Earnest Money and full Security Deposit by Demand

Draft/Banker’s cheque drawn on any of the commercial bankmade in favour of

Company.PEMDheldwithBEMLcannotbeconsideredforsuchadjustmentinthe

SecurityDepositpayablebythecontractor.

ii. Bank guarantee from any commercial bank equivalent to the amount of security

deposit,validforaperiodrequiredbyBEMLshallalsobeaccepted.

iii. SecurityDepositamountshallbedeductedfromtherunningbillsofthecontractorat

therateof10%orhigherofthegrossvalueofeachbill.However,theentiresecurity

depositamountshallbedeductedbeforecompletionof90%ofwork.

d. The above deposit shall be held by the Company as security for the satisfactory

performanceofthecontract.Allcompensationsorothersumsormoneypayablebythe

contractor to theCompanyunder the termsandconditionsof this contract shallbe

deductedfromthissecuritydepositorfromanyothersumsthatshallbedue,orshall

becomeduetothecontractorbytheCompanyonanyaccountwhatsoeverandinthe

event of the security deposit being reduced by reasons of any such deductions the

contractorshallwithintendaysthereaftermakegoodthesedeductions.

29.27REFUNDOFSECURITYDEPOSIT:

a. Theabovedeposit,asthenameitselfsigni�ies,shallbeheldasSecurityforperformance

of the contract. One half of the Security Deposit i.e. 50% shall be refunded to the

contractoroncompletionofthecontractbasedontherecommendationsoftheChief

Engineerinwritingthattheworkhasbeenphysicallycompletedinallrespects.

b. Thebalance50%ofthesecuritydepositshallberefundedtothecontractoronwritten

demandfromthecontractoraftertheexpiryoftheDEFECTLIABILITYPERIODoron

paymentof�inalbillwhicheverislater,withtherecommendationoftheChiefEngineer,

providedtheChiefEngineerissatis�iedthattherearenoduesoutstandingagainstthe

contractor.IftheSecurityDepositisintheformofBankGuarantee,oncompletionofthe

contract,thecontractorcangiveafreshBankGuaranteefor50%ofthetotalsecurity

valueforaperiodrequiredbyBEMLandtheoriginalBankGuaranteeshallbereturned

thereafter onwritten demand from the contractor and shall be released subject to

rectifyingalldefectsnoticedduringthedefectliabilityperiodindicatedbyBEML.

c. AnyrefundofsecuritydepositshallbemadeonlywiththerecommendationoftheChief

Engineer.

29.28 TENDERCOMMITTEE:

a. ACommitteeknownasConstructionTenderCommitteeisconstitutedtoaiddecision

makingintheawardingofCivilWorksContracts.ForthisPurpose,acommitteeshallbe

constituteddrawingmembersfromappropriatelevelbasedonthenatureoftenderand

tender value for selection of contractors, scope for negotiations etc., recommend

acceptance of tenders etc•, in accordance with prescribed terms of reference,

Theconstitution,termsofreferenceandthetendersrequiringreferencetoConstruction

Tender Committee are furnished in Appendix ­A (for CTC­I) and Appendix ­B,

(forCTC-II).

b. All proceedings of the CTC must be clearly recorded before the approval of the

competentauthorityisobtained.RecommendationsoftheCTCshallberecordedinthe

�ilerelatingtotheparticularwork.BasedontherecommendationsofCTC,thetender

shallbeacceptedbytheauthoritycompetentasperDelegationofPowers.Inmaking

their recommendations, the Committee shall also take into account the technical

competencyand�inancialstatusofthecontractorwhosetenderisrecommendedfor

acceptance.Caseswheretheapprovingauthorityhasover-ruledtheobservationsof

Financeshallbereportedtothenexthigherauthorityforapproval.

29.29 Executionofwork:

a. TheEngineer-in-charge/Of�icer-in-chargenominatedbyChiefEngineershallsupervise

theexecutionofworksbytheContractor.Heshallauthorisedrawalofmaterialsfromthe

storesinconvenientbatchesasshallberequiredagainstthecontract,tobesuppliedby

theCompany.

b. Theissueofmaterialsshallberegulatedinconformitywiththeplannedprogressof

worksoastokeeptheexcessissuewithinlimits.Contractors'materialsbroughttosite

shall also be regulated in relation to planned progress of works. The Engineer-in-

charge/Of�icer-in-charge shall not only supervise the work but also record the

measurements at every stage in the measurement book (MB). The measurements

recordedshallbeinagreementwiththedetailsofbillofquantity.Theprogressofworks

with Cumulative quantities shall be recorded. For all the hidden work like

reinforcement, excavation, foundation concrete, masonry below ground level etc;

measurementsshallberecordedinthemeasurementbookastheworkprogresses.In

regardtootherthanhiddenwork,thereshallbekutcharecordingofthemeasurements

tobetranscribedtomeasurementbooksoastoensurethattherecordingsintheMBsare

fullandcompleteuptothepreviousRARstage.

c. Alternatively,whereitisfeasibletoquantifythestage-wiseworkdonecorrelatingwith

theBillofQuantitiesasinthecaseofbuilding,theEngineer-in-charge/Of�icer-incharge

shallsubmitawork-sheetindicatingthestage-wisepercentageofprogressandvalue

duly linkingupwith theBillofquantities.However,before the �inalbill isaccepted,

completemeasurementshallberecordedonthemeasurementbookbytheEngineer-in-

charge/Of�icer-in-chargeandacceptedbytheContractors.

29.30EMPOWEREDPROJECTTEAMFORLARGEVALUEPROJECTS(REFFNO.16/1/2016­

PPDDTD04.08.2016­EMC)

a. As per ExpenditureManagement Commission, Government of India, for large value

projects a dedicated and competent project team shall be constituted and such

empoweredproject teamsare taskedonlywithprojectexecutionandnotgivenany

other operational duties. This team shall be constituted with due approval of

Management.

29.31 MEASUREMENTBOOK(MB):

a. IndependentMeasurementBook(MB)shallbemaintainedforeachcontract.However,a

consolidatedMBshallbemaintainedforTermContracts.

b. Paymentforallworksdoneandforallsuppliesismadeonthebasisofmeasurements

PURCHASE MANUAL PURCHASE MANUAL180 181

recordedintheMeasurementBooks.TheMBmust,therefore,betreatedasthebase

recordforpayments.Evenwhereit isfeasibletoquantifytheworkdonecorrelating

stage-wisewiththebillofquantitiesasinthecaseofbuilding,completemeasurement

shalldulyberecordedinMBbytheEngineer-in-charge/Of�icer-in-chargenominatedby

ChiefEngineerandalsoacceptedbytheContractors,formakingpayments.AlltheMBs

shallbemachinenumberedandtheunusedbooksshallbekeptinthecustodyofthe

ConstructionDepartmentintherespectiveDivisions/CorporateOf�ice.

c. The issue of MBs relating to the contracts shall be regulated by the Construction

DepartmentoftherespectiveDivisions/Corporateof�iceandallthemeasurementsshall

beindividuallyrecordedintherelevantMBs.TheRARPaymentsrecommendedbythe

Engineer-in-charge/Of�icer-in-chargeateachstageshallbebasedonthemeasurement

recordedintheMB.

d. Themeasurementsaretobetakenjointlybyof�icerconcernedandthecontractor/his

representative and recorded in the MB as duly concurred by the contractor/ his

representative.Correction inMB, if any required, shallbe carriedoutby theof�icer

concerned,simplystrikingthroughatonce,anddulyattestingthesamewithinitialsand

date.ThetechnicalcheckofthemeasurementsrecordedintheMBattheRARstages

shallbeexercisedbythesuperiorof�icerofthepersonrecordingsuchmeasurementsin

theMBanddulyattestsuchcheckintheMBswithinitialsanddate.

e. Howeverthe�inalcheckmeasurementoncompletionofthejobshallbedonebythe

Chief of Civil Construction Department. The Technical Check so exercised shall be

recordedintheMBswithdatedinitialsoftheChiefofCivilConstructionDepartment.

29.31RUNNINGACCOUNTREMITTANCES(RAR):

a. Duringtheprogressofwork,contractorshallsubmittheclaimsgivingcompletedetails

ofworkdone,rateandvaluetotheEngineer-in-charge/Of�icer-in-chargenominatedby

ChiefEngineerwhoshall certify the rateandquantityasper theMBandpreparea

statementshowingthedescriptionandquantityforwhichherecommendspayment.

TheseclaimsarecalledRARbillsandRARpaymentsaremadeonceinacalendarmonth

ormoredependingupontheperiodicityofcontract/progressofwork.

b. Where the RAR payment is based on the measurements recorded in the MB, the

recommendationforpaymentshallbestage-wiseco-relatedwiththebillofquantities.

c. Duetotechnicalreasons,wherepro-ratapaymentsonstage-wiseprogressofworkis

considerednecessarythoughnotspeci�iedinthecontract,theChiefEngineerwiththe

approvalofcompetentauthority,shalldecidethenumber/typeofstagescorrelating

withthebillofquantitiesandsubmitastatementshowingthestage-wisebreak-upof

thecontractvalueindicatingworkprogressdetailsincludingpercentageofcompletion,

cost,andremarks, ifany,of theEngineer-in-charge/Of�icer-in-chargewithacopyto

AccountsintherespectiveDivisionforregulatingthequantityandpayment.Thisshall

formthebasisfortheEngineer-in-charge/Of�icer-in-chargetoprepareabillforactual

progressofwork.Thebasisasdecidedaboveshalluniformlybeadoptedforregulating

allRARpaymentstillthe�inalbillissubmitted.

d. However,inrespectofhiddenworks,recordingofmeasurementsinMBshallinvariably

bemadethenandthereandtheMBproducedtoAccountsatthetimeofRARpayment.

e. AccountsshallarrangepaymentforRARbillswithinafortnight'stimefromthedateof

receiptbasedonthecerti�icationoftheEngineer-in-charge/Of�icer-in-chargeandafter

necessarycheck/veri�ication.

f. AsperExpenditureManagementCommission,GovernmentofIndia,(Recommendation

no.76) in large projects above Rs.10.0 Crore, 50% of running bill amount shall be

releasedwithin7daysofsubmissionwithoutadetailedcheckontheclaim.Thebalance

shallbereleasedaftertheclaimisscrutinizedasperprocedure,inordertogetmore

competitivebidsandforspeedyexecutionascash�lowisacriticalrequirementina

project.TheclauseshallbeincorporatedintheTenderdocuments.

g. Aspertheterms&conditionsofthecontract,thecontractorshallalsobepaid'Material

Advance'forthematerialbroughttositeforincorporationintheworkdulycerti�iedby

the Engineer-in-charge/Of�icer-in-charge. For such materials brought inside by the

contractor, the contractor has to produce necessary test certi�icates from reputed

TestingLaboratoriesforsteelandhypothecationdeeddulyexecutedbythecontractorin

favouroftheCompanyonanon-judicialstamppaperofrequisitevalue.

h. Payment of 'Material Advance shall be recommended by the Engineer-in-

charge/Of�icer-in-charge formaterials required to be used in theworks as per the

plannedprogressofwork.However, paymentofmaterial advance againstmaterials

brought to site by the contractor ahead of scheduled progress of work shall be

considerednotexceeding75%ofthevalueofsuchmaterialinexceptionalcaseswiththe

approvalofCompetentAuthority,withjusti�icationrecordedinwriting.Thepayment

termsoftheContractconditionsshallalsopermitformakingsuchMaterialAdvance

payments.

I RARpayments shallbe regulated to theextentof thevalueofworkdone,withdue

adjustments for recoveries and other payments (includingmaterial advance/adhoc

paymentsmadeifany)effectedsofaragainstthecontract.

j. Civil/maintenanceworksat theRegional&DistrictOf�icesshallbeexecutedbythe

nominatedof�iceratRegional/DistrictOf�icesasdulymonitoredandcerti�iedbythe

CommitteeheadedbytheRegionalManager/DistrictManager,formedfortheworkat

therespectiveRegional/DistrictOf�iceagainstthebillsubmittedbythecontractor.

29.32 ISSUEOFMATERIALS:

a. Theissueofmaterials,custodyandusageattheworksiteshallbedulyco-ordinatedby

theEngineer-in-charge/Of�icer-in-chargenominatedbyChiefEngineer.Alldocuments

relatingtodrawal,movementandreturnofsurplusmaterialsforstorecreditshallbe

authorisedbytheEngineer-in-charge/Of�icer-in-charge.

b. MaterialsshallbeissuedtoContractorsatprescribedratesasmentionedintheschedule

'B' of the contract. While regulating the issues, the Engineer-in-charge/Of�icer-in-

chargeshallensurethereasonablenessofthequantityofthematerialsdrawninrelation

to planned progress of work so as to keep the excess issue within the limits. The

Engineer-in-charge/Of�icer-in-chargeshallensurethefollowinguponcompletionofthe

work/contract:

c. As per GFR 2017, in case of materials issued to contractor, the cost of which is

PURCHASE MANUAL PURCHASE MANUAL182 183

recoverablefromhim,theacknowledgementshallhavefullparticularsofthematerials

issued,includingtherecoveryratesandthetotalvaluechargeabletothecontractor.

i. Toreturnthesurplusmaterialsphysicallylyingintheworksitetostoresunder

storescreditwithin30daysfromthedateofcompletionofthework.Thisshallbe

subjecttoclearancebyinspectionbasedonwhichStoresDepartmentshallaccept

andaccountthesurplusmaterials.

ii. Material reconciliation statement duly reconciling the total issues/drawals of

materialswiththeactualquantityofmaterialsusedintheworkasrecordedinthe

MB,bytakingintoaccountthewastageallowanceatpermittedlimits.

iii. The surplusmaterials returnedunderStoresCreditbutphysically lyingat the

work site shall be compared with the actual position obtainable on material

reconciliationforsuchfurtheractionasshallbenecessary.

29.33 CUSTODYANDCONTROLOFMATERIALS:

a. Thecontractorhastoensuresafecustodyofthematerialsproperlystoringtheminthe

worksitegodownearmarkedassuchandshallbemadeavailableforveri�icationbythe

Engineer-in-charge/Of�icer-in-chargenominatedbyChiefEngineeratanypointoftime.

b. Thisshallalsoincludethematerialspurchasedbythecontractorsandbroughttosite.

Materialsinthesiteshallbeidenti�iablewithspeci�icworkandnormallythereshallbe

nodiversionofmaterialstootherwork/works,withoutthepermissionoftheEngineer-

in-charge/Of�icer-in-chargenominatedbyChiefEngineerinwriting.

c. Inrespectofcement,thegodownshallhavedoublelockarrangementwithonekeyinthe

custodyofEngineer-in-charge/Of�icer-in-chargesoastoensurethatthedrawalsfrom

thegodownaremadewiththeknowledgeofthecontractor/hisrepresentativeandthe

Engineer-in-charge/Of�icer-in-charge.Thematerialsdrawnfromthegodownshallbe

recorded by the Engineer-in-charge/Of�icer-in-charge, in a separate register duly

certifyingthephysicalbalanceperiodically.

d. After completion of thework, a reconciliation statement ofmaterials issued to the

contractorandquantityrequiredfortheworkdoneaspertheMBcalculatedonthebasis

ofco-ef�icientandwastageallowanceindicatedinthecontractshallbepreparedand

placedontherecords,underacopytoAccountsdepartmentalongwiththe�inalbillfully

disclosingthedispositionforexcessdrawals/issuesdulylinkedupwithStoreCredit

number, date and quantity to the extent surplus materials were returned by the

contractorandStorescredited,bytheEngineer-in-charge/Of�icer-in-charge.

e. Inrespectofscrapmaterials,thequantityandgatepassreferenceshallalsoberecorded.

f. Thecostofthebalanceunreturnedsurplusmaterials,ifany,shallberecoveredatdouble

theratespeci�iedinschedule'B'ofthecontractformaterialsagreedtobesuppliedbythe

Companyplus10%thereontowardshandlingandstoragechargesforfreesupplyitems.

TheCompany shall agree to supply structural steel itemsat ratesprescribed in the

contract,dependingontheimportanceofthework.TherespectiveChiefofDivisionshall

arrangeforprocurementofcementinconvenientbatchesdove-tailedtotheplanned

progressofworkinconsultationwiththeConstructionDepartmentoftherespective

Divisions/Corporateof�ice/RegionalandDistrictof�ices.

g. As regards structural steel items, the respective Chief of purchase shall take

procurementactionbasedon theprojectionsmadeby theChiefEngineerwhoshall

furnish size, speci�ication, and description of the item, quantity required and the

scheduleofissues.

29.34 FREESUPPLYOFMATERIALS:

a. Normally,materialsshallbeissuedtocontractorsatratesprescribedinschedule'B'of

the contract. However, the Company shall opt to issue speci�ied materials as "free

supply"dependingontheimportanceandspeci�icrequirementsoftheworkandthe

prevailingmarketconditions.Itshallbeimperativethatthefollowingpre-conditionsare

fullymetbeforematerialsareissuedas"freesupply"againstanycontract/works.

b. Speci�icapprovalofCompetentauthorityasperDoPwiththeconcurrenceofFinance

departmentbeforethetenderis�loated,indicatingthedescriptionofmaterials,quantity

andestimatedcostconsideredforissueas"freesupply'"basedontherecommendations

of theConstructionTenderCommittee.Theapproval for thesameshallbeobtained

alongwithadministrativeapproval.

c. Thereshallbeaspeci�icclauseintheTenderDocumentsandthecontractcoveringthe

followingaspects:

i. Speci�ied Materials for issue as "free supply" indicating wastage allowance

permitted.

ii. Thesurplusmaterialsof"freesupply"lyinginthesiteonthedateofcompletionof

thecontract/workshallbereturnedbythecontractorsoonaftercompletionofthe

workandinanycasewithin30daysfromthedateofcompletionoftheworkduly

supportedbyastore-creditnoteauthorisedbytheEngineer-in-charge/Of�icer-in-

charge.

iii. Thecostofsurplusmaterialsof"freesupply"unreturnedasdeterminedbetween

thetotalissuesandthequantityofmaterialsusedinthecontractasrecordedinthe

MB taking into account thewastage allowance permitted less the quantity of

materialsreturnedtostoresunderstore-creditsshallberecoveredatdoublethe

rate speci�ied in schedule 'B'of thecontractplus10%thereon towardsstores

handlingcharges.

iv. AbankguaranteehastobefurnishedbytheContractorforthevalueofthematerial

plannedforissueas"freesupplies"soastoensuresafecustodyandusagethereof.

d. Inthecaseoftenderswhereithasbeendecidedtoissuespeci�iedmaterialsas"free

supply"themonetarylimitforacceptanceofthetenderbytheCompetentAuthorityas

perDoPshallbeinclusiveofthecostoffreesupplymaterials.

29.35VALUATIONOFDEVIATIONS:

a. AsperExpenditureManagementCommission,GovernmentofIndia,(Recommendation

no.77)toovercomethedelaysinpostcontractualperiod,whenavariation/deviationis

requiredtobeexercised,inthecontractatimescheduleshallbeincludedforcritical

decisions (approval of variations) during post contractual period in the

Tender/Contractdocument,forlargevalueprojects.

PURCHASE MANUAL PURCHASE MANUAL184 185

b. Thejusti�icationfordeviationswhetheraspertherequirementsoftheuserDepartment

orfortechnicalreasonsshallaccordinglybeindicatedbytheConstructionDepartments

ofrespectiveDivisions/CorporateOf�ice/RegionalandDistrictof�ices inthenotefor

administrativeapprovalofCompetentAuthorityasperDoP.Ifthedeviationisasperthe

requirementsof theuserDepartment, itsco-ordinationshallbeobtainedbeforethe

commencementofdeviationwork. (ItisinlinewithGFR136)

c. Everydeviationshallbesubjecttothelimitsspeci�iedasunder:

i. Thenetvalueofalldeviations(additionsanddeductions)includingnontendered

items, of the value ofwork completed, shall not exceed 20% of the approved

contractvalue.Incasethedeviationsexceed20%oftheapprovedcontractvalue,

then such deviations shall be treated as amendment to contract and shall

accordingly approval shall be obtained from the authority higher than the

authoritywhohasapprovedthecontract.

ii. Evenincaseswhere,thenetvalueofalldeviationsexcludingnontendereditemsis

lessthan20%,oftheapprovedcontractvalue,butmorethan40%inrespectofany

individualitem,indicatedinscheduleA-BOQ,thensuchdeviationsshallbetreated

asamendmenttocontractandshallaccordinglyapprovalshallbeobtainedfrom

theauthorityhigherthantheauthoritywhohasapprovedthecontract.

iii. Incaseofnontendereditems,thetotalvalueofsuchnontendereditemsshallnot

exceed5%oftheapprovedcontractvalue.Incasethedeviationsexceed5%ofthe

approvedcontractvalue,thensuchdeviationsshallbetreatedasamendmentto

contract and approval shall be obtained from the authority higher than the

authoritywhohasapprovedthecontract.

d. Thebasisforascertainingthenontendereditemsshallbeasfollows:

i. Thevalueofalldeviationsshallbeascertainedbymeasurements,onthebasisof

theratesorpricesforsimilarworkinthebillofquantitiesofthesamecontractinso

farassuchratesorpricesapply.

ii. WheretheratesorpricesinBillofQuantitiesdonotapply,thevalueshallbebased

uponratesorpricesdeducedtherefromtotheextentpracticabletodoso.

iii. The rates for Non Tendered (NT) items shall be based on the SSR rates after

proportionateadjustmentincomparisonwiththetenderedratesoflikeitemsin

thecontract.ThebasistobeadoptedforworkingouttheNTrateisthecomparison

of the NT item with similar trade item in the bill of Quantity for which the

contractorhasquoted.

iv. WhereverNTitemscannotbededucedfromthelikeitemsquotedinthetenderor

SSRrates,marketrateshallbeallowedbasedonvouchers/invoicesasper the

actualsincludingtransportation,labouretc.,plus10%overheadsandthelabour

rateshallbetakenasperminimumwagesinforce,basedontherecommendations

oftheChiefEngineer.

v. Thecontractorshallprovidethesamemakeof�ittings/�ixturesspeci�iedinthe

tenderdocumentsunlesshehasquotedforotherequivalentforgenuinereasons.

Incaseduetoexigencyoftheworkanddif�icultmarketconditions,thecontractor

isnotabletoprovidethesamemake,heshallbeallowedtoprovideequivalent

approvedmakesubjecttohisobtainingtheconcurrenceoftheChiefEngineerfor

thepriceadjustmentasbetweenthequotationandthepurchasepricefortheitem

involved.Thebaseforreckoningshallbethedateofpurchase.Thecontractorshall

producepurchaseinvoiceasaproofofexpenditurefortheitemsotherthanthose

speci�ied in the tender documents allowed for incorporation in the work.

ConstructionDepartmentinrespectiveDivisions/Regional/DistrictOf�icesshall

ensure the reasonableness of the rate in the purchase bill produced by the

contractor.Thepriceadjustmentshallbethedifferencebetweenthetwomakeson

thedateofpurchase.

vi. Asa lastresorta tendershallbe �loatedtoascertain therate forNT items.All

Deviationsincontractsforworksincludingnon-tendereditemsshallbeapproved

bytheCompetentAuthorityasperDoPwithinthelimitsprescribedinthecontract.

ThedeviationsandNTitemsshallbetechnicallycheckedandprocessedbythe

respective "Engineer-in-charge/Of�icer-in-charge" in concurrencewithFinance

Departmentoftherespectivedivision.

29.36 CLASSIFICATIONOFSOIL:

a. InthecourseofexecutionofConstructionwork,itshallbenecessarytoexaminethe

strataofsoilactuallyencounteredforproperclassi�icationtoassessthedeviationfrom

thecontractawardedrelatingtotheinitialearthworkandtheclassi�icationofthesoil

based on the classi�ications given in "MES SSR". For this purpose, a Committee is

constitutedconsistingofthefollowingmembers:

i. CivilEngineerinchargeoftherespectiveDivision/CorporateOf�ice.

ii. ChiefofMaintenanceintherespectiveDivision/CorporateOf�ice.

iii. Themembernominatedby theChief of FinanceDepartment in the respective

Division/CorporateOf�ice.

b. Thecompositionofmembersofthiscommitteeshallbevariedtosuittheorganisational

structureinthedivision,asshallbeauthorisedbytheChiefoftherespectiveDivision.

29.37COMPLETIONCERTIFICATE:

a. AssoonastheContractorcompletestheworkassignedtohimthesameshallbeinspected

and if found satisfactory shall be taken over by the Chief Engineer. A "Completion

Certi�icate"shallbeissuedtothecontractorwithin30daysfromthedatethecontractorhas

givenrequestforthesame.Ifthereareminordefectswhichcanberecti�iedevenafterthe

buildinghasbeentakenover,thedefectsshallbelistedoutandthecontractorshallbeasked

torectifythesamebeforethe�inalbillissubmitted.The�inalbillalongwiththecompletion

certi�icatedulycerti�iedbytheengineerincharge/of�icerinchargeshallbesubmittedto

Finance Department for payment. The completion certi�icate shall have the following

details:

i. particularsoftheworkandContractNumber,

ii. thedateofworkordertocommencethework,

iii. dateofcompletionasperoriginalcontractagreement,

iv. Actualworkdonevalue.

e)extensionoftimeifany,granted,

Person/DepartmentResponsible

NatureofDocument/WorkTimelimit(outerlimit)

Contractorandengineer–in-

charge/Of�icer-in-charge

Finance---

To submit the Final bill to AccountsDepartment,afterensuringthattheworkisexecuted in conformity with the contractspec i � icat ion , drawings , and otherconditions, detailedcheckingof�inalbill&measurementsofrecordingsintheMBsandto endorse as "technically checked" in theMB, in all its aspects including materialreconciliationstatement,etc

---Tocheckthe�inalbillforcorrectnessinallrespects duly linking up with the rateana ly s i s f o r non t ende red i t ems ,Measurement books and to prepareremittance voucher, and to make �inalpaymentbyAccountsDepartment.

75daysfromthedateofcompletionof

thework.

50daysforthedateofreceiptof�inalbillfromConstruction

Department.

PURCHASE MANUAL PURCHASE MANUAL186 187

f) dateonwhichcontractorwasrequiredtocompletethework,

g)ActualdateofcompletionandtakingoverbyBEML.

29.38LAYOUTDRAWINGS/REVISEDCONTRACTVALUE:

Asasupportingdocument forcapitalisationofwork,acopyof theoriginaldrawing

incorporatingmodi�ications as actually executed with service points clearly indicated

shall be sent to Finance Department alongwith the �inal bill. A copy of this drawing

incorporating themodi�ications and indicating the service points shall be sent to the

Maintenance Department also for their reference and records.With themodi�ications

incorporated,itisnecessarytopreparearevisedestimateincludingalldeviationsandnon-

tendereditems,dulyapprovedbythecompetentauthorityasperdelegationofpowers,

before�inalbillissettledforthework.

29.39FINALBILL:

a. OncompletionoftheworkandtherecordingofmeasurementsintheMBs,a�inalbill

shall be submitted by the contractor. On receipt of the �inal bill duly signed by the

contractor,thesameshallbescrutinisedbytheEngineer-in-charge/Of�icer-in-chargeto

seethattheclaimisinorder.

b. The�inalbillpreparedbytheConstructionDepartmentandacceptedbythecontractor,

shallbeaccompaniedwiththefollowingdocuments:

i. OriginalCompletioncerti�icate

ii. Astatementshowingstoresissuedforincorporationinthework,storesactually

incorporatedbythecontractor,theoreticalquantityofstoresrequiredforwork

and whether there has been any over issue/under issue of the stores to the

contractors.

iii. Noclaimcerti�icatedulysignedbythecontractor

iv. OriginalContractor'sAllRiskInsurancePolicycoveringuptotheactualdateof

completionofwork.

v. ContractAgreement

vi. RevisedestimateasdulyapprovedbyCompetentAuthority.

vii. ESI&PFstatementdulyco-ordinatedbyWelfareSection.

viii. MeasurementbooksdulytechnicallycheckedbyConstructionEngineer.

ix. Anyotherdocumentswhicharespeci�iedbytheManagementfromtimetotime.

c. The Engineer-in-charge/Of�icer-in-charge has to certify in the work Completion

certi�icateaswellasintheMeasurementBook,thattheworkisexecutedinconformity

with the contract speci�ication, drawings and other conditions. The �inal bill duly

checkedandco-ordinatedbytheEngineer-in-charge/Of�icer-in-chargeshallbesentto

theFinanceDepartmentthroughChiefEngineeralongwiththedocumentsstatedabove.

d. Normally,the�inalbillistobepaidwithin125daysfromthedateofcompletionofthe

work.However,effortsshallbemadetopaythe�inalbillwithin100days.Toensure

promptpaymentof�inalbills,thetimescheduleindicatingtheouterlimitasgivenabove

shallbestrictlyadheredtobyallconcerned:

e. TheChiefEngineershallberesponsibletomonitortheoverallprogressofworkand

ensuretimelycompletionoftheworkandtoensurethatthepaymentismadetothe

contractorasperthetimescheduleindicatedabove.

29.40PRE­FINALRARS:

a. pre-�inalRARisraisedonlywhentheworkiscompletedandthecompletemeasurement

isrecordedintheMBsbytheEngineer-in-charge/Of�icer-in-chargedesignatedbyChief

Engineerdulyacceptedbythecontractor.

b. Pre �inal RAR shall be sent to the Accounts Department by the Engineer-in-

charge/Of�icer-in-charge only after Technical check of the measurements and

endorsementintheMBsbytheChiefEngineer.

c. TheEngineer-in-charge/Of�icer-in-chargeshallrecommendforpaymentnotexceeding

90%of the value ofwork completedwith due adjustments for recoveries andRAR

payments(includingMaterialadvanceifany)effectedsofaragainstthecontract.

Suchbillsshallbepaidwithin2weeksfromthedateoftheirreceiptintheFinance

Departmentafterscrutinyandcheckforthecorrectnessofthebilldulylinkingupwith

theMbs.

d. TherecommendationofPre-�inalRARisbasedonthediscretionoftheChiefEngineeron

casetocasebasis.

29.41ADHOCPAYMENTS:

a. Ifpayment for �inalbillcouldnotbearrangedwithin125days fromthedateof the

completionofthecontractforgenuinereasonsotherthanunduedelayinsubmittingthe

�inalbillbythecontractor,anAdhocpaymentnotexceeding90%ofthevalueofthework

doneaftermakingallnecessarydeductionsforstatutorydues,RARpayments,Material

advancesifanypaid,shallberecommendedbytheChiefEngineerwiththeapprovalof

respective Complex Chief. Such adhoc payment can be recommended only if the

contractorishavingconcurrentrunningcontractsintheComplex.

PURCHASE MANUAL PURCHASE MANUAL188 189

b. Thefollowingguide-linesshallbeadoptedwhilemakingsuchadhocpayment:

i. Suchpaymentshallnotexceed90%ofthe�inalbillvalue.

ii. Allconditionsofcontractandrecoveriestobeeffectedshallbetakencarebefore

effectingadhocpayment.

iii. IfacontractorhasnoothercontractconcurrentlyrunningintheDivision,adhoc

paymentneednotbemade.Instead,�inalbillshallbeexpeditedandpaidatleast

withinsixmonthsfromthedateofcompletionofthecontract.

29.42 DEFECTLIABILITYPERIOD:

a. Normallytheperiodofmaintenanceforalltheworksshallbeoneyear.Howeverfor

specialcases,viz.,waterproo�ingcontractsetc.,theDefectLiabilityPeriodshallbebased

oncasetocasebasisatthediscretionoftheChiefEngineer.

b. SimilarlytherecouldbecertainspecialworksforwhichDefectLiabilityPeriodshallnot

beapplicable.Forexample:surveyoflandetc.

c. TheapplicabilityofDefectLiabilityPeriodorotherwise,hastobedecidedbytheChief

Engineerwithspeci�icapprovalofrespectiveComplexChief

d. Duringthisperiod,thecontractorshallberesponsibletorectifyallthedefectsnoticed

andattributabletotheworkdonebyhiminrespectofworksexecutedbyhim.Assoonas

any defect in the work comes to the notice, the Chief Engineer shall inform the

contractor,inwriting,torectifythedefectandinformhimthatincasehefailstodoso

withinareasonabletime,theCompanywouldrectifythedefectsathisriskandexpense

aspertheconditionsofthecontract.

e. Ifthecontractordoesnotattendtotherecti�icationsinspiteofrepeatedrequests,the

Companyshallproceedathisriskandexpenseandgettheworkcompleted.Thecost

incurred by the Company shall be recovered from the defaulting contractor. The

Companyshallforfeitthebalance50%oftheSecurityDepositretainedandadjustthis

amountagainsttheexpensessoincurred.Thebalanceamount,ifany,afterrecovering

theexpensesincurredshallberefundedtothecontractor.Incasetheamountavailableis

insuf�icienttocovertheexpensesinfull,thatportionoftheexpenditurestillremaining

unadjustedshallberecoveredfromanyofthesubsequentbillsdueforpaymenttothe

contractoragainstanyothercontract.

f. Evenaftersuchadjustments,theamountavailableisinsuf�icienttocovertheexpensesin

full, the Company reserves the right to take legal course of action to recover such

unadjustedamount.

29.43EXTENSIONOFTIME:

a. Forallcontractsawarded,timeistheessenceofthecontract.Thecontractorisboundto

completetheworkwithinthestipulatedtime.TheChiefEngineerhastoassessthedelay

arisingoutofdefaultofthecontractor.Wherethedelayisduetodefaultofthecontractor,

andifthereisno�inanciallossduetosuchdelay,theChiefEngineercanrecommendfor

grantofextensionoftimebythesameauthoritywhoacceptedthetender/awardedthe

contract,subjecttorecordingthereasonsforgrantingsuchextensionoftime.

b. Wherethedelayisduetodefaultofthecontractor,andifthereisa�inanciallossdueto

suchdelay,theextensionoftimerequirestheapprovalofCMD.IntheabsenceofCMD's

approval, Liquidated Damages for delay in completion of the work shall become

enforceable.

c. Wherethedelayisnotduetodefaultofthecontractor,forexample:-a)notproviding

clearwork front to the contractor by theCompany, b) Company's delay in decision

makingforchangesrelatingtooriginalwork.,etcnecessaryextensionoftimeshallbe

grantedwith the approval of Competent Authority, as perDoPwithout sanctioning

escalationclaimedbythecontractorexceptstatutorylevies.

d. ExtensionoftimewhengrantedwiththeapprovaloftheCompetentAuthorityasper

Company'sDelegationofPowersshallhavetheeffectofrenderingtheclauseLiquidated

Damagesfordelayincompletionwork'inoperativeuptotheperiodofextensionoftime

sograntedunlessotherwisespeci�icallystated.

29.44LIQUIDATEDDAMAGESFORDELAYINCOMPLETIONOFWORKS:

a. IncasetheContractorfailstocompletetheworksandclearthesiteonorbeforethe

stipulatedtimementionedintheWorkorderheshallwithoutprejudicetoanyother

rightorremedyoftheCompanyinthisbehalfpay,asagreedLiquidatedDamagesandnot

aspenalty,paysumequalto0.5%oftheContractsum(excludingnontendered/extra

items,ifany)foreveryweek'sdelaysubjecttomaximumof10%ofthetotal�inalbill

valueoftheContract.

b. LiquidatedDamagesshallbeapplicableinthefollowingcases:

i. Wherethecontractorfailstocompletetheworkwithinthestipulatedtime;

ii. WheretheextensionoftimeisgrantedwithlevyofLD;

iii. WhereextensionoftimeisgrantedwithoutlevyofLDbutthecontractorhasfailed

tocompletetheworkwithintheextendedperiod.

c. TheamountofLiquidatedDamagesshallbeadjustedorsetoffagainstanysumpayable

tothecontractorunderthisoranyothercontract/sawardedbytheCompany.

d. IncasewherethecontractissubjectedtolevyofLD,theChiefEngineershallbethe

authorised person to issue 'Work Completion Certi�icate', which shall be �inal and

bindingtheCompanyaswellastheContractorconcerned.

29.45 FORECLOSUREOFCONTRACT:

a. The tender documents shall provide a clause to the effect that at any time after

acceptanceofthetender,theCompanycandecidetoabandonorreducethescopeof

workforanyreasonwhatsoever,theChiefEngineershallgivenoticeinwritingtothat

effecttothecontractor.Thecompensation,ifany,payableforsuchforeclosureofwork

shallbediscussedmutuallybetweentheCompanyandthecontractorandsettledafter

takingintoconsiderationthelosssufferedbythecontractoronaccountofforeclosureof

thecontract.Thecontractorshallhavenoclaimforanycompensationwhatsoeveron

account of any pro�it or advantage which he might have derived consequent to

foreclosureofthewholeorpartoftheworks.TheCompanyshallhavetheoptiontotake

over the contractor’smaterials or any part thereof, either brought to the site. The

PURCHASE MANUAL PURCHASE MANUAL190 191

amountofcompensationpayabletothecontractorduetoforeclosureshallbedecidedby

theauthorityonelevelabovetheleveloftheauthoritycompetenttoawardthecontract,

orbytheCMD.

29.46. DISPUTERESOLUTIONANDJURISDICTION:

a. Alldisputesordifferenceswhatsoeverarisingbetweenthepartiesoutoforrelatingto

theconstruction,meaningandoperationoreffectofthecontractorthebreachthereof

arisingduringtheprogressofworkoraftercompletionorabandonmentthereofshallbe

mutually discussed and settled amicably by conciliation Committees/ Councils

comprisingof independent subject experts constitutedbyBEML, failingwhich, the

disputeshallbesettledbyarbitrationconsistingof solearbitratorappointedbythe

CompanyinaccordancewiththeprovisionsofArbitrationandConciliationAct1996and

the arbitration proceedings shall be conducted at the place of awarding of original

contract.

b. Thecourtattheplaceofawardingofcontractonlyshallhavejurisdictiontoentertain

anydispute/matterrelatingtothecontract

c. IncaseofanydisputebetweentheCompanyandanyotherPublicSector/Government

department relating to the interpretation and application of the provisions of the

contract,suchdisputes/differencesshallbereferredbyeitherpartytothearbitrationof

oneof thearbitrators in theDepartmentofPublicEnterprises.TheArbitrationand

ConciliationAct,1996andamendmentthereofshallnotbeapplicabletothisclause.Any

partyaggrievedbysuchaward,shallmakefurtherreferencetotheMinistryofLawand

Justice,GovernmentofIndia.

d. IncaseBEMLchallengestheArbitralAwardpassedagainstit,75%oftheawardmaybe

paidtothecontractor/concessionaireagainstBankGuaranteewithoutprejudicetothe

�inalorderoftheCourtinthematterunderchallenge.Thepaymentmaybemadeintoa

designatedEscrowAccountwiththestipulationthattheamountsoreleased willbe

used,�irst,forpaymentoflenders’dues,second,forcompletionoftheprojectandthen

forcompletionofotherprojectsofBEML,asmutuallyagreed/decided.Anybalance

remaining in the Escrow Account subsequent to settlement of lenders’ dues and

completion of projects of BEML, may be allowed to be used by the contractor /

concessionairewiththepriorapprovaloftheleadbankerandBEML.

e. IncasethesubsequentcourtorderrequiredrefundofthemoneypaidbyBEMLtothe

contractor/concessionaireagainstBankGuarantee,theamountshallberefundedby

thecontractor/concessionairealongwithappropriateinterest.Therateofintereston

suchrefundamountshallbedecidedbyBEMLkeepinginviewthecostofcapitalto

BEMLor the rate of interest provided for in the Contract Agreement or the rate of

interestawardedundertheArbitralAwardunderchallenge.

29.47 CONTRACTOR'SLIABILITYANDINSURANCE:

a. From commencement to completion of the works, the contractor shall take full

responsibilitytakingprecautionstopreventlossordamage.Heshallbeliableforany

damageorlossthatshallhappentotheworksoranypartthereof.

b. Inaddition,thecontractorshallindemnifyandkeeptheCompanyindemni�iedagainst

alllossesandclaimsforinjuriesordamagestoanypersonoranypropertywhatsoever

whichshallariseoutoforinconsequenceoftheconstructionworks.Forthispurpose,

thecontractorshalltakeaninsurancepolicy-"contractorsallrisksinsurance"-tocover

therisks,aspertheConditionsoftheContract.Theinsurancepolicyhastobekeptvalid

tilltheworkiscompletedandthepossessionhandedovertotheCompany.Thepolicy

shallbetakenathiscostshowingtheCompanyasthe‘principal’tosimplifytheworkin

thematterofraisingclaimsandsettlementthereof.

29.48 PRINCIPALEMPLOYER:

a. The Contract Labour Act and the related legislations incorporate liability on the

Principal Employer in regard to variousmeasures such as Registration of the �irm,

provisionofwelfareandsafetymeasures,disbursementofwagestotheWorkmenbythe

contractor maintenance of registers, submission of periodical returns to Licensing

of�icerensuringPF&ESIcoverageetc.,

b. Inthisconnection,referenceisinvitedtotheguidelinesissuedbytheManagementfrom

time to time for strict compliance in relation to CivilWorks Contracts and Service

ContractsforexecutionwithinthefactoryPremises.Itshallbeensuredthatthecontract

isawardedtoacontractorwhohasobtainedcerti�icateofregistrationundertheActand

possessavalid licence. Itshallalsobeensuredthat thecontractormaintainsall the

registersandrecordsrequiredundertheActandproducetheregisterstothelicensing

Authorityondemand.ItisalsorequiredtoensurethatperiodicalreturnsundertheAct

aresenttolicensingOf�icer.HRDepartmentshallensurethatPFandESIprovisionsare

dulycompliedwithbythecontractorsinaccordancewiththeguidelinesissuedbythe

Management,withaviewtoenforcingstrictcomplianceoftheprovisionsoftheContract

Labour(AbolitionandRegulation)Actof1970readwithCentralRules1971.

29.49 CONSULTANTS/ARCHITECTS:

a. Incaseofneed,consultants/architectsotherthanforeignconsultantscouldbeengaged

forpreparationofdesign,buildingplansandlayoutinthefollowingarea:-

i. Architectural and Structural design, ProjectManagement consultancy for new

projectsandimportantbuildings

ii. Arch i tec tura l and s t ruc tura l des ign consu l tancy for ind iv idua l

building/structures,wheredesignsarenotavailablebutwherefromtheaesthetic

pointofview,itisdesirabletoengageaconsultantforarchitecturalandstructural

designconsultancy.

iii. Onlystructural/designconsultancyforindividualprojects/buildings/structures,

wheredesignsarenotavailable,butwherearchitecturalfeaturescanbefollowed

basedonexistingbuildings/structures.

iv. Specialisedworklike;

1. Soil investigation to determine Safe Bearing Capacity (SBC), Soil Strata,

Surveying,Geophysicalsurveyetc.,

2. StructuralRehabilitationworks

3. Interiordesignworks

PURCHASE MANUAL PURCHASE MANUAL192 193

4. waterproo�ingworks

5. Specialfoundationsformachineryetc.,

29.50 APPOINTMENTOFCONSULTANTS:(GFR177to196)

a. ForallthejobsforwhichtheestimateismorethanRs.50Lakhs,theConsultantshallbe

selectedthroughtenderingprocessbyadvertisinginnewspapers,Companywebsite

andCPPportal.

b. ForthejobswithanestimatedcostbelowRs.50Lakhs,ifthereisaneedforappointinga

Consultant, the same shall be �inalised by inviting bids from the panel of approved

consultants.Intheabsenceofanapprovedlist,thelistofsuchConsultantsshallbegot

approved by the Competent Authority before the tendering process and the panel

revisedoncein3years.

c. Pending�inalisationofthepanelforwantoftheapprovalofCompetentAuthority,we

shallfollowtheprocedureforidenti�icationoftheConsultantthroughadvertisementin

thenewspapersCompanywebsiteandCPPportal.

29.51 EMPANELMENTOFARCHITECTS/CONSULTANTS:

a. EmpanellingofArchitects/Consultantsshallbedoneinameaningfulwaytoservethe

purposeinkeepingwiththeaimofeconomyinexpenditureandtechnicalcompetenceof

the Architect. This list shall be maintained by the Corporate Materials/Purchase

DepartmentoftherespectivedivisionsdulygotapprovedbytheCompetentAuthority.

b. Asaregularmeasure,advertisementinleadingNewspapers,CompanywebsiteandCPP

Portalshallbekeptinviewforupdatingtheapprovedlistperiodically

c. BasedontheexperienceandratingoftheArchitects/Consultants,theunreliableand

unworthy�irmsshallbedeletedfromtheapprovedlist.Theadditionsanddeletionsto

thislistshallbegotapprovedbyCompetentAuthoritybasedontherecommendationsof

the Chief Engineer/Corporate Materials/Purchase Departments of the respective

divisions.

29.52 AGREEMENT/ACCEPTANCE:

a. TheengagementofConsultants/Architects/ProjectManagementConsultantshallbe

governedbyanagreement/workorderenteredintobytheCompanysettingoutthe

termsandconditions.Itisnecessarythattheapprovalofcompetentauthorityistobe

obtainedasperDelegationofPowers,beforeenteringintotheagreementandissueof

work order. It shall be made clear in the agreement/work order that the

Consultants/Architectsshallrender technicalcheck/adviceregardinganyproblems

arisingduringthecourseofexecutionoftheworkandalsofurnishthefollowing:

i. BillofQuantities.

ii. EstimatedquantitiesofStructuralSteel/reinforcementbars,

iii. Estimatedquantitiesofcement.

iv. Detailedworkingdrawing(blueprints)togetherwiththeoriginalvellums.The

drawingssoforwardedshallalsobeforexecutionpurposes.

v. Designcalculations&ThirdPartyCerti�icationofDesigncalculations.

vi. Monitoring, supervision and Execution, assistance for �inalisation of bill,

measurementsetc.

29.52 CONSULTANTS/ARCHITECTS'FEES:

a. Thefeestobepaidtotheindividualworksshallnormallybethelowestquotationfrom

amongthequotationsreceivedfromtheconsultants,subjecttoDPEnormslaiddownin

DPE's CircularNo:Adv (c)/Genl/75/71/Cir-102/73dt 9.1.1973 and amended from

timetotime.

I Originalworks---3%ofthecostofthework

ii. Repeatworks---½%ofthecostofthework

PURCHASE MANUAL PURCHASE MANUAL194 195

APPENDIXA

CONSTRUCTIONTENDERCOMMITTEE(I)

CONSTITUTION:

CHAIRMAN:

ThesecondseniormostexecutiveoftheDivisioninthetechnicaldiscipline/thesecondsenior

mostexecutiveofCorporateHRinrespectofCorporateOf�ice,inrespectofRegional/District

Of�ices,therespectiveRegional/DistrictManager.

MEMBERS:

RepresentativeChiefofFinance(GradeIIIoraboveatDivisions/CorporateOf�iceandOf�icer

GradeIIoraboveatRegional/Districtof�ices.)

ChiefEngineerinrespectofDivisions/CorporateOf�ice,Of�icerin-chargeofCivilEngineering

worksinrespectofRegionalanddistrictof�ices,whowillalsobethemember-secretaryofthe

committee.

RepresentativeofChiefofPurchase(GradeIIIoraboveatDivisions/CorporateOf�ice)

RepresentativeofChiefofHRDepartment(GradeIIIoraboveatDivisions/CorporateOf�iceand

Of�icerGradeIIoraboveatRegional/Districtof�ices).

The Chairman will have the power to co-opt a member from the user department in the

respectivedivision,whereverconsiderednecessary.

ii. TermsofReference:

1. Screeningofthecontractorsifany,whoarenotinthe‘Empanelledlistofcontractors’,in

responsetopublictender.

2. EvaluationandrecommendationofacceptabletenderfortheapprovalofCompetent

AuthorityasperDOP,wherethelowesttenderistobeaccepted.

3. RecommendationforfurtherdiscussiononTechno-commercialissues,especiallywhen

thelowestofferisfelttobeunreasonable.Withreferencetotheestimatedcostorresort

tore-tender.

4. Recommendationofacceptanceofcontractonsingletenderbasisinemergentcasesas

perDOP.

5. Speci�iccasesthatmaybereferredtothisCommitteebytheComplex/DivisionalChief

inthematterofCivilWorks.

6. HoldingTechno-commercialdiscussionwiththeL1bidderasapprovedbyCompetent

Authority.

Note:

1. The minutes of meeting of this Committee, will form the basis for further action by

PurchaseDepartment.

2. Ifthiscommitteeisunabletotakeadecisioninaspeci�iccase,suchcaseshallbereferredto

thehighpowercommitteei.e.CTC(II).

APPENDIXB

CONSTRUCTIONTENDERCOMMITTEE(II)

CONSTITUTION:

CHAIRMAN:

TheComplex/DivisionalChiefinrespectofDivisionsandinrespectofCorporateOf�ice,Chiefof

HR(in-chargeofCivilEngineeringDepartment)andinrespectofRegionalandDistrictOf�ices

–respectiveRegionalManager.

Members:

ChairmanofCTC-I,whoshallalsobethemember-secretary

ChiefofFinanceofDivisions/CorporateOf�ice.

ChiefofHRDepartmentofDivisions/CorporateOf�ice.

ChiefofConstructionDepartmentoftherespectivedivisions/Corporateof�ice.

The Chairmanwill have the powers to co-opt amember from the User Department in the

respectivedivision,whereverconsiderednecessary.

TERMSOFREFERENCE:

1. Evaluation of tenders, including holding the techno-commercial discussion with the

approvaloftheCompetentAuthority.

2. RecommendationofthetenderforacceptancebyCMDasperDoP.

3. Casesasmaybespeci�icallyreferredtothiscommitteebyCTC(I).

4. Speci�iccasesthatmaybereferredtothisCommitteebytherespectiveFunctionalDirector.

5. The minutes of meeting of this Committee, will form the basis for further action by

PurchaseDepartment.

PURCHASE MANUAL PURCHASE MANUAL196 197

APPENDIXC

CONTRACTAGREEMENT

WORKORDERNO:____________________

CONTRACTFOR:__________________________________________________.

THISAGREEMENTismadeandexecutedonthis___dayofTWOTHOUSAND___________

BETWEEN

M/sBEMLLimited,aGovernmentCompanycomingwithinthemeaningofSec617ofCompanies

Act,1956havingitsCorporateOf�iceat“BEMLSOUDHA”,4thMainRoad,S.R.Nagar,Bengaluru-

560 027 through its __________ (*Designation of the authorised Of�icial) at ________ (here

incorporate the address) represented by____________ (Name of the Authorised Of�icial)

(Hereinafterreferredtoas‘BEML’whichexpressionshall,unlessrepugnanttocontextmeans

andincludesitssuccessorsandpermittedassigns)oftheFirstPart.

AND

M/s. _________________ (Nameof theContractor)a __________ (Constitutionof theContractor i.e.

Firm/Company/LLP,etc)incorporated/registered(deletewhichevernotapplicable)underthe

provisions of ________ Act, having its Registered Of�ice/Principal place of business (delete

whichevernot applicable) at ______ (*Designationof the authorisedOf�icial) at ________ (here

incorporate the address) represented by____________ (Name of the Authorised Of�icial)

(hereinafterreferredtoas‘Contractor’,whichexpressionshallunlessrepugnanttothecontext

meansandincludesitssuccessorsandpermittedassigns)oftheSecondPart

Hereinafter, “BEML” and the “Contractor” shall individually be referred to as ‘Party’ and

collectivelyas‘Parties’.

WHEREASBEMLisamultitechnologyheavyengineeringcompanyhavingfourmanufacturing

divisions at Bengaluru, KGF, Mysore and Palakkad and marketing/ regional/district of�ices

acrosstheCountry.

WhereasContractorisa______________(incorporatebriefpro�ileoftheContractor)

WHEREAS BEML, �loated tender Ref: _______ dated __________ (Hereinafter referred to as the

Tender)for_______________at________________hereinaftercalledthe“WORK”)

WHEREAStheContractorsubmittedhisofferinresponsetotheTender�loatedbyBEMLasabove

andbecomethesuccessfultendererandhasagreedtoexecutetheWorkasperthetermsand

conditions of the Tender. Consequently BEML issued Work Order No. _______ dated _____

(hereinaftertheWorkOrder)totheContractor.

WHEREAStheContractorhasdulyacceptedtheWorkOrderand agreedtoexecutethe Work

strictlyinaccordancewiththeworkorderandonthetermsandconditionshereinforatotalsum

ofRs__________/-(Rupees_____________only)asconsiderationfortheWorkbeingcarriedout.

TobeexecutedinaNonJudicialStampPaperofrequisitevalue

In consideration of the above, ‘BEML’ and the ‘Contractor’ agreed to reduce the terms and

conditionsintowritingashereinaftermentioned.

SCOPEOFWORK:

TheScopeofWorktobeexecutedbytheContractorisasmentionedatClause______totheTender

Document.

CONTRACTPERIOD:

ThecontractperiodshallbetheperiodmentionedintheWorkOrderatPara______

Timeistheessenceofthecontract.TheContractorshallstrictlyadheretotheTimeSchedulefor

commencementandcompletionasstipulatedintheWorkOrderandshallcompletetheWorkin

allrespecttothecompletesatisfactionofBEMLonorbeforetheCompletiondate.

PENALTY

Incasetheworkisnotcompletedinthemannermentionedabovetothecompletesatisfactionof

BEMLineveryrespectwithinthetimelimitstipulatedintheWorkOrder,thentheContractor

shallbecomeliableforpaymentofcompensation/penaltyfordelayincompletionofwork,in

accordancewith Clause _____ of theTenderDocument /WorkOrder irrespective ofwhether

extensionoftimegrantedornotunlessotherwisespeci�icallystated.

The saidPenaltypayablebytheContractorshallbewithoutprejudicetoanyotherrightor

remedy available to BEML on account of such delay in completion ofwork. The amount of

compensationmightbeadjustedorset-offagainstanysumpayabletotheContractorunderthis

oranyothercontractwithBEML.TheChiefEngineer,BEMLLimited,____shallbetheauthorized

person to certify whether the Work has been completed within stipulated time and his

certi�icationshallbe�inalandbindingontheparties.

PAYMENT

BEMLshallmakethepaymenttothecontractorinthesums,proportionsandmannerfromtime

totimeinaccordancewiththeClause(s)_______oftheTenderDocument.Thepaymentshallbe

madeafterallthestatutorydeductionsasmaybeapplicable.

SECURITYDEPOSIT/BANKGUARANTEE:

TheContractorhasfurnishednon-interestbearingSecurityDepositinaccordancewithClause

_____bywayof___(incorporatethemode). TheContractoragreestoextendthevalidityofthe

SecurityDeposit,whereverrequiredlikeextensionofperiodofcontractorasmayberequiredby

theCompany.TheCompanyshallhavethefullpowertoenforcetheSecurityDepositincaseof

non-performanceorviolationorbreachofanyofthetermsofthisAgreementbytheContractor.

COMPLIANCEOFSTATUTORYPROVISIONS:

The contractor shall complywith all requirementsundervariousadministrativeorders and

statutesincludingbutnotlimitedtoContractLabour(RegulationandAbolition)Act,1970and

Rules1971,MinimumWagesAct,1948,PaymentofWagesAct,1936,Employers’LiabilityAct

1938,Shops&EstablishmentsAct(relevanttotheState),FactoriesAct,1948,Employees’State

InsuranceAct,1948,EmployeesProvidentFundandMisc.ProvisionsAct,1952,Paymentof

BonusAct,1965,PaymentofGratuityAct,1972,EmployeesCompensationAct,1923,Industrial

DisputesAct,1947,ChildLabour(Prohibition&Regulation)Act,1986,SexualHarassmentof

PURCHASE MANUAL PURCHASE MANUAL198 199

WomanatWorkplace(Prevention,ProhibitionandRedressal)Act,2013 oranyotherrelevant

Actsorenactmentsrelatingtheretoanditsamendments(State/Central)andrulesframedthere

under from time to timeasmaybe relevantwhileexecuting theWork andperforming the

obligationsunderthisAgreement. TheContractoragreestoindemnifyBEMLforanylossor

damagecausedtoitduetoviolation/non-complianceofanyadministrativeordersorstatutory

provisionsinrespectof/inconnectionwiththeExecutionoftheWork.

All claims arising at the instance or on account of the persons employed by the contractor

includingbutnotlimitedtoonaccountofwages,allowances,PF,ESI,GratuityorCompensation

undertheEmployeeCompensationAct,orotherwiseshallbemetbythecontractoronhisown

account and the Company shall be kept fully indemni�ied. BEML shall have no liability

whatsoeverinthatbehalf.

NONCOMPLIANCEOFTERMS:

Non-compliance of any of the terms of this Agreement shall amount to breach leading to

cancellationofcontract,besidesother legalactions, includingbutnot limited torecoveryof

lossestoBEML.

FALLSCLAUSE:

IfthecontractorfailstoExecutetheWorkasperTenderDocument,WorkOrderandtheTerms

andConditionshereincontained,atanytimeduringthecurrencyofthecontractoriftheBEML

hasreasonstobelievethattheContractor’sworkisnotsatisfactoryandthattheinterestofBEML

istherebyaffectedinanyway,BEMLshallhavetherighttoExecutetheWorkbyitselforthrough

anyotheragency,inwhichcasethecontractorshallmakegoodthelosstoBEMLincludingcost

andexpenseswhicharisestherefrom.TheextracostbeingincurredbyBEMLinthisregard

shouldbe to the account of theContractor,whichmaybe adjusted against security deposit

and/or deducted from any pending bills or any payment to be made to the contractor or

otherwise.

INDEMNIFICATION

Intheeventofthenon-ful�ilmentofanyofthecovenants,terms,agreements,obligationsand

conditions mentioned in the Tender Document or Work Order or in this Agreement, the

ContractorshallpaytoBEMLalllosses,damages,costs,chargesandexpensesincurredbyBEML

LimitedasresultoftheNonful�ilmentoftheobligationsunderthecontract.Thedecisionof

BEMLshallbe�inalinthisregardandtheContractorshallpaythesamewithoutanydemurand

protest.

TheContractorshallberesponsibleforalloranykindoflosses/damagescausedtoorsufferedby

BEMLor its employees/of�icersdue to any act or negligence of the labourdeployedby the

ContractorandtheContractorshallmakegoodthesaidlosssame.BEMLshallhavetheabsolute

right to recover such losses/damages from any and all amounts payable to the Contractor,

including pending Bills. The Contractor will ensure that there are no thefts or loss of

property/propertiesbythelabourersdeployedbythecontractor.

CARPOLICY:

Contractorshalltake‘ContractorAllRiskCoveragePolicy’(CARPolicy)tocoverallrisks,losses,

claimsforinjuriesordamagetoanypersonoranypropertyaspertheTenderDocument/Work

ordermorespeci�icallystipulatedinclause_____oftheTenderDocument.Theinsurancepolicy

hastobekeptvalidtilltheWorkiscompletedinaccordancewiththeTenderDocument/Work

OrderandtothecompletesatisfactionofBEML.Thecontractorhastotakepolicyathisowncost

showingBEMLasthe“Principal”toenableBEMLtomakethesettlementofclaimsattheearliest.

LICENSESANDPERMISSIONS:

ContractorshallprocurealltheLicenses,Permissions,Sanctions,etc.asmayberequiredfor/in

thecourseofperformanceofthecontract/executionoftheWorkorasrequiredunderstatutes.

AnylapseinthisregardshallbesolelyattributabletotheContractorandBEMLshallinnoway

responsibleforthesame.TheContractorundertakestoindemnifyBEMLinthisregard.

SUB-CONTRACT:

Thecontractorshallnotsub-contract,assignormakeoverthecontracttoanythirdpartyeither

infullorpartiallywithoutpriorwrittenconsentofBEML.

CONFIDENTIALITY:

TheContractororhisemployeesoragentoranybodyengagedbytheContractortoexecutethe

Workshallmaintainutmostfaithandcon�identialityofallinformationanddocumentscomeinto

theirpossessionorknowledgeandshallnotdivulgesuchinformationtoanythirdparties,inany

case,withoutpriorwrittenconsentofBEML.TheContractorundertakestoindemnifyBEMLfor

any loss caused to it by reason of breach of the above obligation by the Contractor or his

employeesoragentoranybodyengagedbytheContractor.

ENTIRECONTRACT

TenderDocumentandWorkOrderdated______shallformpartandparcelofthisAgreementand

incaseofinconsistency,theorderofprecedencewillbeasfollows:

(a) ThisAgreement;

(b) WorkOrder;and

(c) Tenderdocument.

TERMINATION:

BEMLcanterminatethecontractbygivingthirtydayswrittennoticeincaseofthefollowing

reasonsandiftheContractorfailstorectifythesamewithinthenoticeperiod;

a) Failureofthecontractortocommencetheworkwithinastipulatedperiod.

b) Iftheperformanceofthecontractorisfoundtobeunsatisfactoryorifhefailstogive

thedesiredprogressoftheworkorthereisbreachoftermsoftheagreement.Inthis

regard,non-performanceinwholeorinpartbythecontractorofanyobligationdueto

thereasonswithhiscontrolshallbetreatedasbreachofthecontract.

However,BEMLshallhaverighttoterminatetheAgreementatanytimebygiving____months

noticeinwriting,withorwithoutmentioningthereasons.

TheContractorshallhavetherighttoterminatetheAgreementincaseofbreachofthetermsand

conditionsbyBEML.

Theterminationshallnotprejudicetherightsandobligationsaccruedonthepartiestill the

effectivedateoftermination.

PURCHASE MANUAL PURCHASE MANUAL200 201

JURISDICTION&DISPUTERESOLUTION:

Disputes,ifany,betweenthePartiesarisingoutoforinconnectionwiththisAgreementorany

mattersconnectedtherewith,shallbediscussedandamicablysettledbythepartiesthrough

ConciliationbysubjectexpertsappointedbyBEML.

TheunresolveddisputesshallbereferredtoasoleArbitratortobeappointedbyBEML.The

arbitrationproceedingsshallbeinaccordancewithArbitrationandConciliationAct,1996and

Rulesframedthereunder,asmaybeamendedfromtimetotime.ThecourtsatBengalurualone

shallhavejurisdictiontotryandadjudicateanymatterinconnectionwiththisAgreement.The

languageofarbitrationshallbeEnglish.

(IftheContractorisaGovt./CPSU,thefollowingArbitrationClausemaybeincorporatedand

aboveArbitrationClausemaybedeleted)

Disputes ifany,arisingbetweentheParties, inconnectionwiththisAgreementoranyother

mattersconnectedtherewith,thesamewillbemutuallydiscussedandamicablysettledbetween

theparties, failingwhich, thedisputes shallbe referred to the soleArbitratorofPermanent

MachineryforArbitrationinDepartmentofPublicEnterprisestobenominatedbytheSecretary

totheGovernmentofIndia,inchargeoftheDepartmentofPublicEnterprises.TheArbitration

andConciliationAct,1996shallnotbeapplicabletothearbitrationunderthisclause.Theaward

oftheArbitratorshallbebindinguponthepartiestothedispute,provided,however,anyparty

aggrievedbysuchAwardmaymakefurtherreferenceforsettingasideorrevisionoftheAwardto

theLawSecretary,DepartmentofLegalAffairs,MinistryofLawandJustice,GovernmentofIndia.

Upon such reference, the dispute shall be decided by the Law Secretary or the Special

Secretary/Addl.Secretary,whensoauthorizedbytheLawSecretary,whosedecisionshallbind

theparties �inally and conclusively.Theparties to thedisputewill shareequally the costof

ArbitrationasintimatedbytheArbitrator.

SEVERABILITYANDWAIVER:

Ifanyprovisionof thisAgreement isheldtobe invalidorunenforceable foranyreason, the

remainingprovisionsshallcontinueinfullforcewithoutbeingimpairedorinvalidatedinany

way.ThePartiesshallreplaceanyinvalidprovisionwithavalidprovision,whichmustclosely

approximatetheintentandeconomiceffectoftheinvalidprovision.

NOTICES

AllNoticesandcommunicationsshallbesenttothefollowingaddressesofthePartiesorany

otheraddressdulynoti�iedinwritingfromtime-to-timebytheparties:

BEML :

Contractor:

TheNoticesissuedotherthanasaboveshallnotbeconsideredaseffectivenotice.

ASSIGNMENT:

TheobligationsunderthisAgreementshallnotbeassignedbyeitherPartytoanythirdparty

withoutpriorwrittenconsentoftheotherParty.

AMENDMENT:

NoAmendmentorvariationofthisAgreementshallbevalidunlessitisinwritingandsignedby

oronbehalfofeachoftheParties.

MISCELLANEOUS:

ThisagreementfurtherwitnessesthattheContractorisresponsibleforanyaccidentorother

compensation payable to the workers employed by and working under the control of the

ContractorandthattheCompanySHALLHAVEnosortofliabilityinthematter,andthatany

paymentwouldhavetobemadebyBEML,thesameshallbereimbursedbytheContractoror

otherwisethesameshallberecoveredfromtheBillspayabletotheContractor.

Theemployees/agentsoftheContractorinnocasewillbetreatedastheemployeesofBEMLand

there shall not be any master and servant relationship whatsoever between BEML and

labour/employees being deployed by the Contractor for the Work. Further, discharging

obligationsundertheAgreementbylabourshallnotbeconstruedtobelievethattheyarethe

employeesofBEMLandshallatalltimesbetheemployeesofthecontractoronly.Thecontractor

willbeindividuallyandentirelyresponsibleforallandanyliabilitiesinthatregard.

Alltheagreements,letters,documentsexchangedbetweenparties,ifany,havebeenmergedwith

thisagreementandshallhavenoeffectfromtheeffectivedateofthisagreement.

INWITNESSWHEREOF,thepartieshereto,havesettheirhandsandseal,onthisday,monthand

yearhereinabovementionedinthepresenceofthefollowingwitnesses.

ForBEML forCONTRACTOR

Witnesses:

1.

2.

NOTEtotheUserDepartment:

a. AlltheBlanksneedtobeduly�illedup

b. All facts and �igures are to be incorporated in tandem with the Tender

Document/WorkOrder

c. StamppapertobeoftheStatewheretheAgreementisbeingsigned/executed

d. SignaturesofContractorandBEMLneedtobeaf�ixedonallpages.IftheContractoris

aCompanyandaspertheirMoA/AA,CommonSealisrequiredtobeaf�ixed,thesame

tobeaf�ixedinthelastpage.Tobeexecutedatastretchandsamepenneedstobeused

throughout.

e. TheAuthorityofthepersonsigningtheAgreementneedtobeveri�iedandcon�irmed

byobtainingcopyofPoA/LoA/Resolution,etc.

f. Correctionsoroverwritingstobedulyauthenticatedwithfullsignature

g. Figurestobeincorporatedinwordsalso

h. Thewords/clauses/sentenceswhicharenotapplicabletothecontractneedtobe

deleted.

PURCHASE MANUAL PURCHASE MANUAL202 203

AnnexureA

MATERIALPURCHASECOMMITTEE­PRODUCTION

I. CONSTITUTION

01.Complex/DivisionalHead-Chairman

02.ChiefofProduction

03.ChiefofPlanning

04.ChiefofFinance

05.In-chargeofPurchaseScrutiny

07.ChiefofMaterialsManagement

08.RepresentativeofMaterialsDept.

09.HeadoftheDesignDepartment

10.HeadoftheQualityDepartment

11.HeadofDivisionalService

RepresentativeofMaterialsDeptwillbetheConvenorofthisCommittee.TheCommitteewill

havethepowerstoco-optmembersfromindenting/userdepartmentinregardtoparticular

caseswhereadvicefromsuchdepartmentswouldhelptheCommitteeintheexaminationofthe

cases. All cases of deviation from the Purchase Procedure/Manual shall be referred to this

Committee as per details given below. Where the views/suggestions of Finance are not

acceptabletotheCommitteethesameshallbereferredtoFinanceChief,CorporateFinanceby

Division.

II. TERMSOFREFERENCE

TheMaterialPurchaseCommitteewillexamineallordersandamendmentsthereofrequiring

approvalofFunctionalDirector/CMDasperdelegationofpowers.However,ordersplacedat

controlledratesorspeci�icceilingratesapprovedbytheGovernment(includingJPCratesfor

steel),orbytheBoard,purchasesmadefromcollaboratorsatratesprescribedintheagreement

andpurchasesofEnginesfromKCLundertripartitepricingformulaneednotbereferredtothis

Committee.

AllcaseswhichfallunderthefollowingcategoryandrequirestheapprovalofFunctionalDirector

andaboveasperDoP.

1. Where only one valid quotation is received against the tender and requires the

approvalofFunctionalDirectorandaboveasperDoP.

2. Acceptanceofofferswherespeci�icationsarerelaxed fromthose indicated in the

tender.Thisdoesnotincludecaseswhereanequivalentspeci�icationcerti�iedtobe

suchbythedesign/IndentingDepartmentisproposedtobeaccepted.

3. Procurement of proprietary items / procurement on single tender basis which

requirestheapprovalofFunctionalDirectorandabove.

4. Acceptanceofexcesssupply/changeinquantityupto10%oftheorderedquantityor

asperquantitytolerancesspeci�iedinB/S3469(PartI)-1974,Table1.7,whicheveris

lessinthecaseofforgingsandupto5%oftheorderedquantityinthecaseofcastings

AmendmenttoPurchaseOrderforadmittingexcesssupplieswillbeapprovedbythe

sameAuthoritywhichapprovedtheoriginalPurchaseOrderprovidedtheamended

valueiswithinthe�inancialpowerandsubjectto�inancialconcurrence.

5. Standardizationofbrand/speci�icmake

6. Emergent/ExpresspurchasesaboveRs.2lakhs(PostfactoapprovalisSuf�icient).

7. AmendmentstoPurchaseOrder/contractswith�irmpriceinvolvingpriceincrease.

8. Proposalsforenteringintolong-termcontracts.

9. Waivingliquidateddamages.

10. AnyguidelinesonprocurementwithintheframeworkofPurchaseDepartment.

11. Anyothercase,whichmaybespeci�icallyreferredtothisCommitteebythePurchase

department. However, cases for relaxation in admitting the bills of suppliers for

paymentwithout proper evidence for receipt ofmaterials and/or �inalization of

documents.

NOTE:

(i) DraftAgendadulycoordinatedby�inanceshallbecirculatedtoallthemembersofthe

Committee.

(ii) Copies of theMinutes of theMPCmeetingsmust bemarked to D(F), concerned

DirectorandAgendaandMinutestoC(A)fortheirperusal.

(iii) TheminutesoftheMPCmeetingsonissue,willformthebasisforfurtheractionby

Purchasedepartmentandwheresoindicated,byotherdepartmentconcerned.

PURCHASE MANUAL PURCHASE MANUAL204 205

AnnexureB

MATERIALPURCHASECOMMITTEE­MARKETINGDIVISION

I. CONSTITUTION

01. DivisionalMarketingChief-Chairman

02. DivisionalChiefofParts

03. DivisionalChiefofService

04. DivisionalChiefofFinance

05.DivisionalrepresentativeofPurchaseConvenor

DivisionalrepresentativeofPurchasewillbetheConvenorofthisCommittee.TheCommittee

willhavethepowerstoco-optmembersfromindenting/userdepartmentinregardtoparticular

caseswhereadvicefromsuchdepartmentswouldhelptheCommitteeintheexaminationofthe

cases. All cases of deviation from the Purchase Procedure/Manual shall be referred to this

Committee as per details given below. Where the views/suggestions of Finance are not

acceptabletotheCommitteethesameshallbereferredtoChiefofFinanceofComplexorChiefof

MarketingFinance(HQ)

II.TERMSOFREFERENCE

TheMaterialPurchaseCommitteewillexamineallordersandamendmentsthereofrequiring

approvalofFunctionalDirector/CMDasperdelegationofpowers.

AllcaseswhichfallunderthefollowingcategoryandrequirestheapprovalofFunctionalDirector

andaboveasperDoP.

1. Where only one valid quotation is received against the tender and requires the

approvalofFunctionalDirectorandaboveasperDoP.

2. Acceptanceofofferswherespeci�icationsarerelaxed fromthose indicated in the

tender.Thisdoesnotincludecaseswhereanequivalentspeci�icationcerti�iedtobe

suchbythedesign/IndentingDepartmentisproposedtobeaccepted.

3. Procurement of proprietary items / procurement on single tender basis which

requirestheapprovalofFunctionalDirectorandabove.

4. Acceptanceofexcesssupply/changeinquantityupto10%oftheorderedquantityor

asperquantitytolerancesspeci�iedinB/S3469(PartI)-1974,Table1.7,whicheveris

lessinthecaseofforgingsandupto5%oftheorderedquantityinthecaseofcastings

5. AmendmenttoPurchaseOrderforadmittingexcesssupplieswillbeapprovedbythe

sameAuthoritywhichapprovedtheoriginalPurchaseOrderprovidedtheamended

valueiswithinthe�inancialpowerandsubjectto�inancialconcurrence.

6. Standardizationofbrand/speci�icmake

7. Emergent/ExpresspurchasesaboveRs.2lakhs(PostfactoapprovalisSuf�icient).

8. AmendmentstoPurchaseOrder/contractswith�irmpriceinvolvingpriceincrease.

9. Proposalsforenteringintolong-termcontracts.

10. Waivingliquidateddamages.

11. AnyguidelinesonprocurementwithintheframeworkofPurchaseDepartment.

Any other case, which may be speci�ically referred to this Committee by the Purchase

department.However,casesforrelaxationinadmittingthebillsofsuppliersforpaymentwithout

properevidenceforreceiptofmaterialsand/or�inalizationofdocuments.

NOTE:

(i) DraftAgendadulycoordinatedby�inanceshallbecirculatedtoallthemembersofthe

Committee.

(ii) Copies of theMinutes of theMPCmeetingsmust bemarked to D(F), concerned

DirectorandAgendaandMinutestoC(A)fortheirperusal.

(iii) TheminutesoftheMPCmeetingsonissue,willformthebasisforfurtheractionby

Purchasedepartmentandwheresoindicated,byotherdepartmentconcerned.

PURCHASE MANUAL PURCHASE MANUAL206 207

AnnexureB1

MATERIAL PURCHASE COMMITTEE – Corporate Of�ice (Contracts/Purchases by Corporate

MaterialsonmattersdirectlyconnectedwithHumanResourcesFunctions/Administration)

I. CONSTITUTION

01.ExecutiveDirector-Chairman

02.ChiefofPurchase

03.ChiefofFinance

04.In-chargeofPurchaseScrutiny

05.Rep.ofHRDept./Medicalcentres/MMfromDivisionconcerned

06.HeadoftheCorporateQualityDepartment

07.HeadofManagementServices

RepresentativeofMaterialsDeptwillbetheConvenorofthisCommittee.TheCommitteewill

havethepowerstoco-optmembersfromindenting/userdepartmentinregardtoparticular

caseswhereadvicefromsuchdepartmentswouldhelptheCommitteeintheexaminationofthe

cases. All cases of deviation from the Purchase Procedure/Manual shall be referred to this

Committee as per details given below. Where the views/suggestions of Finance are not

acceptabletotheCommitteethesameshallbereferredtoFinanceChief,CorporateFinanceby

Division.

II.TERMSOFREFERENCE

TheMaterialPurchaseCommitteewillexamineallordersandamendmentsthereofrequiring

approval of FunctionalDirector / CMD/ProcurementCommittee (PC) as per delegation of

powers.However,ordersplacedat controlledratesorspeci�ic ceilingratesapprovedby the

Government(includingJPCratesforsteel),orbytheBoard,purchasesmadefromcollaborators

atratesprescribedintheagreementandpurchasesofEnginesfromKCLundertripartitepricing

formulaneednotbereferredtothisCommittee.

AllcaseswhichfallunderthefollowingcategoryandrequirestheapprovalofFunctionalDirector

andaboveasperDoP.

1. Where only one valid quotation is received against the tender and requires the

approvalofFunctionalDirectorandaboveasperDoP.

2. Acceptanceofofferswherespeci�icationsarerelaxed fromthose indicated in the

tender.Thisdoesnotincludecaseswhereanequivalentspeci�icationcerti�iedtobe

suchbythedesign/IndentingDepartmentisproposedtobeaccepted.

3. Procurement of proprietary items / procurement on single tender basis which

requirestheapprovalofFunctionalDirectorandabove.

4. Acceptanceofexcesssupply/changeinquantityupto10%oftheorderedquantityor

asperquantitytolerancesspeci�iedinB/S3469(PartI)-1974,Table1.7,whicheveris

lessinthecaseofforgingsandupto5%oftheorderedquantityinthecaseofcastings.

5. AmendmenttoPurchaseOrderforadmittingexcesssupplieswillbeapprovedbythe

sameAuthoritywhichapprovedtheoriginalPurchaseOrderprovidedtheamended

valueiswithinthe�inancialpowerandsubjectto�inancialconcurrence.

6. Standardizationofbrand/speci�icmake

7. Emergent/ExpresspurchasesaboveRs.2lakhs(PostfactoapprovalisSuf�icient).

8. AmendmentstoPurchaseOrder/contractswith�irmpriceinvolvingpriceincrease.

9. Proposalsforenteringintolong-termcontracts.

10. Waivingliquidateddamages.

11. AnyguidelinesonprocurementwithintheframeworkofPurchaseDepartment.

NOTE:

(i) DraftAgendadulycoordinatedby�inanceshallbecirculatedtoallthemembersofthe

Committee.

(ii) Copies of theMinutes of theMPCmeetingsmust bemarked to D(F), concerned

DirectorandAgendaandMinutestoC(A)fortheirperusal.

(iii) TheminutesoftheMPCmeetingsonissue,willformthebasisforfurtheractionby

Purchasedepartmentandwheresoindicated,byotherdepartmentconcerned.

PURCHASE MANUAL PURCHASE MANUAL208 209

AnnexureB2

MATERIALPURCHASECOMMITTEE

CorporateOf�ice(Contracts/PurchasesbyCorporateMaterials

onmattersconnectedwithManufacturingActivities)

I. CONSTITUTION

01.ExecutiveDirector-Chairman

02.ChiefofPurchase

03.ChiefofFinance

04.In-chargeofPurchaseScrutiny

05.RepresentativeofMaterials/StoresDepartmentfromDivisionconcerned

RepresentativeofMaterialsDeptwillbetheConvenorofthisCommittee.TheCommitteewill

havethepowerstoco-optmembersfromindenting/userdepartmentinregardtoparticular

caseswhereadvicefromsuchdepartmentswouldhelptheCommitteeintheexaminationofthe

cases. All cases of deviation from the Purchase Procedure/Manual shall be referred to this

Committee as per details given below. Where the views/suggestions of Finance are not

acceptabletotheCommitteethesameshallbereferredtoFinanceChief,CorporateFinanceby

Division.

II.TERMSOFREFERENCE

TheMaterialPurchaseCommitteewillexamineallordersandamendmentsthereofrequiring

approvalofFunctionalDirector/CMDasperdelegationofpowers.However,ordersplacedat

controlledratesorspeci�icceilingratesapprovedbytheGovernment(includingJPCratesfor

steel),orbytheBoard,purchasesmadefromcollaboratorsatratesprescribedintheagreement

andpurchasesofEnginesfromKCLundertripartitepricingformulaneednotbereferredtothis

Committee.

AllcaseswhichfallunderthefollowingcategoryandrequirestheapprovalofFunctionalDirector

andaboveasperDoP.

1. Where only one valid quotation is received against the tender and requires the

approvalofFunctionalDirectorandaboveasperDoP.

2. Acceptanceofofferswherespeci�icationsarerelaxed fromthose indicated in the

tender.Thisdoesnotincludecaseswhereanequivalentspeci�icationcerti�iedtobe

suchbythedesign/IndentingDepartmentisproposedtobeaccepted.

3. Procurement of proprietary items / procurement on single tender basis which

requirestheapprovalofFunctionalDirectorandabove.

4. Acceptanceofexcesssupply/changeinquantityupto10%oftheorderedquantityor

asperquantitytolerancesspeci�iedinB/S3469(PartI)-1974,Table1.7,whicheveris

lessinthecaseofforgingsandupto5%oftheorderedquantityinthecaseofcastings

5. AmendmenttoPurchaseOrderforadmittingexcesssupplieswillbeapprovedbythe

sameAuthoritywhichapprovedtheoriginalPurchaseOrderprovidedtheamended

valueiswithinthe�inancialpowerandsubjectto�inancialconcurrence.

6. Standardizationofbrand/speci�icmake.

7. Emergent/ExpresspurchasesaboveRs.2lakhs(PostfactoapprovalisSuf�icient).

8. AmendmentstoPurchaseOrder/contractswith�irmpriceinvolvingpriceincrease.

9. Proposalsforenteringintolong-termcontracts.

10. Waivingliquidateddamages.

11. AnyguidelinesonprocurementwithintheframeworkofPurchaseDepartment.

NOTE:

(i) DraftAgendadulycoordinatedby�inanceshallbecirculatedtoallthemembersofthe

Committee.

(ii) Copies of theMinutes of theMPCmeetingsmust bemarked to D(F), concerned

DirectorandAgendaandMinutestoC(A)fortheirperusal.

(iii)TheminutesoftheMPCmeetingsonissue,willformthebasisforfurtheractionby

Purchasedepartmentandwheresoindicated,byotherdepartmentconcerned.

PURCHASE MANUAL PURCHASE MANUAL210 211

AnnexureC

GUIDELINESFOREVALUATIONOFCAPITALITEMS

In order to ensure satisfactory process capability andmaximumavailability in the effective

working period of themachines, by supplier providing a good and satisfactory after-sales-

service,thecapitalitemswillbecategorisedintotwocategories.

CategoryA:

AllCNCmachines,specialpurposemachines,machiningcentresandHydraulicpresses.

CategoryB:

AllotherGeneralpurposemachinescostinglessthanRs.10.00lakhseach.

AllnecessaryprecautionsasdetailedbelowshallbetakenwhileprocuringCategorymachineries

andwhererequiredtheseprecautionswillbetakenfor'CategoryB'machineriesalso.

(a) FacilitiesPlanningdepartmentshallstudytheproductionrequirementsbasedonthe

loadvs.capacitymatrix(workcentrewise)evolvedforassessingsub-contracting

assistanceandidentifythemachinesinconsultationwithMethodsPlanning,User

department,IEDandMaintenancedepartment.FacilitiesPlanningdepartmentwill

discussourrequirementswiththeprospectivesuppliersandobtainallthetechnical

detailsoftheirmachinesforourdetailedstudy.

(b) Basedondetailedstudyofthedrawingsandrequirementsofthemachinetoperform

thegivenoperations,thespeci�icationofthemachineshallbeclearlyspeltoutinPR.

Spares to be procured along with themachine tool shall be limited to one-year

consumption. In addition,where there existsmore than onemachine tool of the

same/similar type, procurement of spares along with the newmachine may be

scrutinizedbyMaintenancebeforeordering.

(c) ThePRwillindicatethefollowingdetailsfortakingappropriatetenderingaction:

i. Acleardescription&speci�icationsofthemachines/equipmenttobeprocured.

ii. Scopeofsupplycovering-design,speci�ication,manufacturingandsupplytothe

requiredgeometricalaccuracies,erectionandcommissioning,provingtrialsof

componentsforwhichthemachine/equipmentistooledupetc.,

iii. Requirementtosupplyfoundation/erectiondrawingsetc.,bythevendor.

iv. The capability of the machine/equipment required in terms of respective

accuracies,cycletimes(�loorto�loortime)andotherrequirementstogivethe

requiredoutputwithinthespeci�iedtimeetc.,

v. RequirementoftheSub-systemsofthemachine

vi. Requirementofstandardandoptionalaccessoriesforsupplyalongwiththe

machine.

vii. Requiring the tenderer to indicate the spares for maintenance during the

warrantyperiodandthereafterforproperupkeepofthemachine, including

insurancespares.

viii. Training requirements of our personnel for erection and commissioning,

operation,maintenanceetc.,atourworks/atsuppliersworks.

ix. Aftersalesservicerequirements.

x. SupplyofTechnicalliteraturesinsuf�icientnumberofcopies,suchas

• Operation/ServiceManual

• TroubleShootingCharts

• Electronic/ElectricalCircuit

• Hydraulic/PneumaticCircuit

• LubricationCircuitsetc.,

xi. Tendererstofurnishtherequirements,ifany,ofthespecialenvironmentfor

normalfunctioningoftheequipment.

xii. RequirementregardingsuitabilityofthemachinetotheElectricalandother

Systemsexistinginourfactoryandotheroptionalitemsrequiredtomakeit

suitabletooursystem.

xiii. BEML Inspection speci�ication including testing of Process capability of the

machines

xiv. Packingspeci�ications

xv. DeliverySchedule-Datefordespatch,erectionandcommissioningschedule,

handingover themachine toBEMLafterprovingetc.,Penalty clauses tobe

providedfor,ifthesearenotmaintained.

xvi. AnyotherimportantpointswhichrequiremeritforincorporationinthePR

(d) Whileissuingthetenderstoobtaintechnicaldetails,therequirementsasindicated

aboveinthePRshallbeclearlybroughtouttoenabletheprospectivevendorstosend

the technical details and to enable BEML to select the correct vendors for

consideration.

(e) TendersforCapitalitemsshallbecalledforintwoparts:(forvaluemorethanRs.5

lakhsincludingspares)

i. Atechnicalquotespellingoutthescopeofsupplybeingmadebythetenderer

vis-a-visthattenderedout.

ii. Acommercialquotespellingoutthepricesandothercommercialtermslike

payability of GST. terms of despatch, payment terms, delivery, rendering of

servicelikeerection/commis¬sioningetc.,

These twoquotesshallbereceived in twodifferentenvelopesclearlysuper

scribed as "Technical-Quote" and "CommercialQuote" andput in oneouter

envelopeandreceivedonorbeforethetenderclosingdate.Astatementbythe

vendor con�irming his acceptance against each technical parameters

mentionedinthetenderistobeobtainedalongwithtechnicalbid.

PURCHASE MANUAL PURCHASE MANUAL212 213

TheTenderOpeningCommittee,atthetimeofopeningthetenders,willopen

only the covers containing the Technical quotes. The covers containing the

Commercial quoteswill notbeopenedbutwill be attested forhavingbeen

receivedbeforetheduedatebytherepresentativesofPurchase,Financeand

User.

TheTechnicalquotesinoriginalwillbesenttoFacilitiesPlanningdepartment

whowillmakeadetailedstudyoftheTechnicalquotes.TheCommercialquotes

willnotbesenttoFacilitiesPlanningdepartmentandthecoverscontainingthe

commercialquoteswillbekeptinthepersonalcustodyoftheChiefofPurchase

department. The Facilities Planning Department, after going through the

technical quotes will prepare a comparative statement and give their

recommendation with regard to acceptability or non-acceptability of the

technical offers and rank the acceptable offers. The facilities planning

departmentafterscrutinyofsuchtechnicalbidsshallobtainBusinessGroup

Headsapprovalforthelistofcommercialoffersthataretobeopened.Onsuch

approvalPurchaseDepartmentwillopensuchbidswithFinanceandUser.The

commercialquotesofvendorswhosetechnicalquotesarenotacceptablewill

notbeopenedandreturnedbacktothebidderaftertheapprovalofcompetent

Authority.

A comparative statement of the Commercial quotes for the technically

acceptableoffersshallbemadebythePurchasedepartmentandsentto�inance

alongwiththePurchaseOrderforpre-scrutinyandco-ordination.

(f) The tenders shall indicate that the supplier shall agree for the following special

conditionsofcontract,inadditiontoourgeneraltermsandconditionsofTenderand

Contracts.

i. To prove initially the performance of the machine during the trial period

immediatelyaftercommissioning.

ii. FurnishingofperformanceBankGuaranteeforanamountnotlessthan10%of

the total value of themachine including accessories and spares, during the

warranty period and the Bank Guarantee shall be kept valid for a period

coveringthedeliveryperiodand18monthsfromthedateofcommissioning.

TheperformanceBankGuarantee shallbe furnishedby successful tenderer

within1monthfromthedateofreceiptofletterofintent/PurchaseOrderasper

proformatobesuppliedbyBEML.

iii. Ifduringthewarrantyperiodthemachineisnotavailablefor90%ofthetime

duetobreakdown,penaltytotheextent10%ofthetotalvalueofthemachine

includingaccessoriesandspareswillberecoveredfromtheBankGuarantee

withoutanylegalrecourse.

Themachineavailabilitytimewillbecalculatedasunder:

=(ProductionshiftHours-Breakdownhours)x100

ProductionShifthours

iv. Ifthepercentageofavailabilityofthemachinefallsbymorethan10%ofthe

guaranteed availability, BEML shall have option to reject themachine after

levyingthepenaltyasstatedaboveandthesupplierwillhavetoreplacethe

machine/part equipment at his cost to meet the guaranteed percentage

availability.

v. ForLatedeliverypenaltyandriskpurchaseanother5%ofthetotalvalueofthe

machines with accessories and spares shall be given as Bank Guarantee,

wherever,100%paymentisagreedonproofofdespatchetc.,

vi. Tobuybackatamutuallyagreedpricethesparesnotconsumedduringthe

initialperiodofthreeyears.

vii. Thesuppliershallensureatleast 85%availabilityoftheequipmentafterthe

warrantyperiodbyprovidingadequate,aftersalesservice

(g) Where procurement is through imports, the facilities planning department shall

arrangetoobtaininadvancebudgetaryapprovalbeforereleaseofPRandCARfor

procurementactionbyPurchasedepartment.

(h) Negotiations: Invariably price negotiations shall be conducted subject to the

guidelinesdiscussedundertheChapter–Negotiations,forallcapitalitemstoreduce

thepriceasmuchaspossiblewithoutaffectingtheQualityandspeci�icationsofthe

machine.Alsothenegotiationswillcoverallotherimportantaspectslikedelivery

schedule, packing inspection details, third party inspection where required,

Guarantee/Warranty provisions, payment terms, performance guarantee, L.D. for

delayeddeliveriesetc.,sothatvariousconditionsofthePurchaseOrderaremutually

agreedto,beforeincorporationinthePurchaseOrder.

The Purchase Order shall be issued within the validity period of the offer for

acceptanceandallspecialtermsandconditionsstipulatedinthetenderandagreedto

inthenegotiationsshallbe incorporatedclearly inthePurchaseOrder.Wherever

negotiationsareconducted,minutesofthenegotiationsshallbemadeandsignedby

BEML and vendor's representative which shall be quoted as a reference in the

PurchaseOrder.

PURCHASE MANUAL PURCHASE MANUAL214 215

AnnexureD

IMPORTANTTERMSANDCONDITIONSOFTENDER

1. Please ensure that offers are submitted against individual enquiries in separate

coversdulysuperscribingcorrectreferenceandClosingdate:-applicableformanual

tender.

2. Offersreceivedaftertheclosingtimeanddatewillnotbeconsidered.

3. Thequotationshallbekeptvalidforaminimumperiodofsixtydaysfromthedateof

closingthetender.

4. Pleasereturnthedrawingsalongwiththequotationasotherwisethequotationis

liabletobeignored.

5. Thepricequotedshallbebothin�iguresandwords.Incaseofvariation,pricewritten

inwordswillbeultimatelyconsideredforcommercialevaluation.

6. PricesshallbeonFORBEMLbasisand�irmtillcompletionofsuppliesagainstthe

PurchaseOrder.Underanycircumstances,noincreaseinpriceduringthecurrencyof

thecontractisadmissibleunlessother-wiseagreedspeci�icallyinthecontract.

A) Please indicate the exact Taxes and duties etc and other levies applicable

extra/includedintheprice.

B) IncaseofGST,allrelevantregistrationanddocumentationthroughonlinetobe

compliedwith.

7. Ifanypackingchargesareapplicableextra,theexactamountshallbeindicatedinthe

offer.

8. BEMLreservestherighttoavailthepriceofferedforfullquantityofthetenderorpart

thereof or ignore the offer completelywithout assigning any reasonwhatsoever.

BEMLalsoreservestherighttoincreasetheorderquantityatthesameratesand

termsandconditionsduringthependencyofthecontract.

9. Thesupplierswillberesponsibleforthematerialtoreachdestinationintact&the

transit insuranceshallbearrangedbythemonly.Deliveryindicatedinthetender

enquiryistobeadheredto. DelayindeliverywillresultinlevyofLD attherateof

0.5%perweeksubjecttomaximumof5%purchasevalue.TheextentofLDapplicable

isonlyfortheundelivereditems.

10. Theinspectionchargeswillbetotheaccountofthevendors.

11. PAYMENT

Pleasenotethatourtermofpaymentis100%paymenton30thdayforMSEs&for

otherson60thdayfromthedateofreceiptofmaterialatBEMLStoressubjectto

inspectionandacceptanceofmaterials.Biddersnotagreeingwithaboveterms,the

quotations will be suitably loaded with applicable cash credit interest while

evaluationofbids.

12. SECRECY

(i) All the information, know-how, technical data, speci�ication and drawing

modelsorspecimensfurnishedbyBEMLforthepurposeoforinconnection

withthemanufactureandsupplyofthestoresherebytenderedconstitutethe

propertyofBEMLandthesuppliershallkeeptheminstrictcon�idenceandhe

shallnotdivulgethesametoanyoneelseexceptundertheAuthorityandforthe

purposeofBEML.Allsuchdocuments,data,drawing,modelsandspecimensare

thepropertyofBEMLandshallbereturnedwhendonewithorwhendemanded

byBEML.

(ii) Thesupplier shallnot supply thematerialorderedbyBEML toanyoneelse

other than BEML and shall not disclose any initiations, development or

adaptationsthereoftoanyone.

(iii) BEMLshallbeentitledtopreventabreachoftheaboveandclaimdamagesin

caseofbreach.

Incaseofnon-performanceinthisPO,BEMLwillhavetotakeprocurementactionat

yourisksandcostapartfromlevyofliquidateddamages.

13. WARRANTY

Theitemsshallbewarrantedagainstdefectsinmaterial,workmanship,dimensions

etc.,foraperiodof12monthsfromthedatetheyareputtoactualuseor18months

fromthedateofdeliverywhicheverisearlier.Defectiveitemsshallbereplacedfreeof

costatourworks.

14. Samplesshallbegotapprovedbeforeeffectingbulksupplieswhereverapplicable.

15. FORFORGINGSONLY

16. Theforgingsshallbefreefromcracks,seamsandlaps,�lashandscaletoberemoved

byvendorbeforedespatch.

(i) The forgings shall be supplied in shot blasted, normalised condition to the

hardnessandonecoatofredoxidezincchromateprimer.

(ii) Thesuppliershall forward thematerial testcerti�icatewithdetailsasgiven

belowwitheachdeliverychallan.

(iii) Raw material size (b) Quantity forged (c) Heat number (d) Chemical

composition(e)Grainsize(f)inclusionrate(g)Heattreatment(h)Resultsof

heattreatmenti.e.Hardness,microstructureetc.,(i)Internalsoundness.

17. FORCASTINGSONLY

Thecastingsshallbe free from internal �lawsuchasblowholes, sand intrusions,

chillingeffecthardspots,hottearsetc.thecastingsshallbecoatedwithonecoatof

redoxidezincchromateprimer.Atestcerti�icateindicatingthephysicalandchemical

propertiesincomparisonwithspeci�icationinthePurchaseOrdertobeincluded.

18. TESTBAR

Onetestpiecefortensiletestofsize30mmx250long,representingeachheatofthe

forgings/castings shall be sent along with each supply free of cost to evaluate

mechanicalproperties.

PURCHASE MANUAL PURCHASE MANUAL216 217

19. Suppliershallembosstheirvendorcodenumbersontheforgings/castingsinaplace

toidentifythesourcesofsupply.

20. APPLICABILITYOFENTRYTAX(PurchaseDepartmenttoscoreoffwhicheverisnot

applicable)

(i) Itisnotpayablefortheitem(s)ordered,eitherbyBEMLorbythesupplier,

(ii) It is payable and the same will be paid by BEML directly to the entry tax

authorities.

(iii) It ispayableandwhere the localdealerpays theentry taxand includes the

amountinthebills,thevendorshallseparatelyindicateintheinvoicetheentry

tax amount paid (or) certify to the effect that an amount of Rs…………..

representing entry tax is included in the bill. Also the vendor shall give a

declarationinForm30oftheEntryTaxAct.

(iv) OnimplementationofGSTw.e.f01-07-2015theentrytaxwillbesubsumedand

notpayable

21. SI.No.……………arenotapplicableagainstthistender.

22. PRICEFALLCLAUSE

i) ThepriceschargedforthematerialssuppliedunderthisPObythetendershall

in no event exceed the lowest price bywhich vendor sells thematerials of

identicaldescriptiontoanyotherbuyerinclusiveBEMLof�ice/divisionduring

thependencyofthisPO.

ii) Ifatanytime,duringthesaidperiod,thevendorreducesthesalepriceofsuch

materialsorsellssuchmaterialstoanyotherbuyerincludingBEMLof�ice/

divisionatapricelowerthanthepricechargeableunderthisPO,thevendor

shallforthwithnotifysuchreductionorsaletotheAuthoritywhichhasplaced

thePOandthepricepayableunderthisPOforthematerialssuppliedafterthe

date of coming into force of such reduction, shall stand correspondingly

reduced.

iii) Thevendorshallfurnishtotheconsignee/payingAuthorityconcernedofthis

PO the following certi�icate alongwith the invoice for the supplies effected

underthisPO.

I/wecertifythatthematerialsofdescriptionidenticaltothestoressuppliedto

theconsigneeconcernedunderthisPOhavenotbeensoldbyme/ustoany

othervendorinclusiveBEMLof�ice/divisionfromthecommencementofthe

contractuptotheperiodofcompletionofdeliveryatapricelowerthanthe

pricechargedtotheconsigneeconcernedofthisPO.

iv) Failureinsubmissionofthisaforesaidcerti�icatebythevendorwillresultin

withholdingofthepaymentoftheirbillsagainstsupply,ifany.

AnnexureE

GENERALTERMS&CONDITIONSFORMINGPARTOF

INDIGENOUSPURCHASEORDERS

ThefollowingtermsandconditionsformpartofthePurchaseOrdersplacedonthesuppliersby

BEMLLimited,forsupplyofrawmaterials,components,plantandmachinery,toolsetc.These

termsandconditions,unlesstheyarerepugnanttothespecialtermsandconditionsindicatedin

eachofsuchPurchaseOrders,shallbebindingontheSuppliersirrespectiveoftheirexpress

communicationofacceptance.

1. DEFINITIONS&INTERPRETATIONS

Unlessthecontextotherwiserequires,

a) “Tender“meansandincludesOffer/Quotation

b) “AcceptanceofTender”meanstheletterofmemorandumcommunicatingtothe

supplier,theacceptanceoftheTender/of�icer/quoteandincludesanadvance

acceptanceoftender.

c) “PurchaseOrder”meansandincludestheinvitationtotender,instructionsto

Tenders, tender,minutesofdiscussions/negotiationsacceptanceof tender,

generaltermsandconditionsofPurchaseOrder,SpecialconditionsofPurchase

Order,particulars,descriptions,speci�icationsandotherconditionsspeci�iedin

theacceptanceoftenderandincludesarepeatorderwhichhasbeenaccepted

oracteduponbythe/forthesupplierforsupplyofstoresandincludesanorder

forperformanceofserviceandaformalagreement,ifexecuted.

d) “Supplier”meansandincludeaContractorandalsomeansaperson,�irmor

companywithwhomtheorder forsupply isplacedandshallbedeemedto

include the Supplier’s Successors, representatives, heirs, executors and

administratorsasthecasemaybeunlessexcludedbythetermsofPurchase

Order.

e) “Stores”meansthegoodsandservicesspeci�iedinthePurchaseOrder.

f) Wordsinsingularincludethepluralandviceversa.

g) Wordsimportingthemasculinegendershallbetakentoincludethefeminine

gender and words importing persons shall include any �irm, company or

associationorbodyofindividualswhetherincorporatedornot.

h) The wording of these conditions shall not affect the interpretation or

constructionthereof.

i) BEML/Companymeans “BEMLLIMITED”,a companyregisteredunder the

CompaniesAct,1956andamendedCompaniesAct2013.

2. AUTHORITYOFPERSONSSIGNINGDOCUMENT

ApersonsigningthetenderoranyotherdocumentinrespectofthePurchaseOrder

shallbedeemedtohavepowertodosoonbehalfoftheSupplier.

(i) FIRMPRICE

Thepricesremain�irmfortheentiresuppliesofthePurchaseOrderandno

escalationshallbeentertainedunderanycircumstances.

PURCHASE MANUAL PURCHASE MANUAL218 219

3. ACCEPTANCE&ACKNOWLEDGEMENT

Within 15 days of receipt of the Order, the Supplier shall forward an

acknowledgementinacceptanceorotherwiseofthesamefailingwhichitshallbe

deemedthatthePurchaseOrderhasbeenacceptedintoto.

4. SECURITYDEPOSIT/PERFORMANCEGUARANTEE

1.1 10%ofPOvaluehastobedepositedasinterestfreesecuritydeposit/Performance

Guaranteeatthetimeofacceptanceofofferinrespectofallservicecontractsand

majorCapitalgoodslikePlantandmachinery,etcasfollows:

(i) Bankguaranteeforfaithfulperformance(FPBG),CombinedBankGuaranteefor

contractperformancecoveringdeliveryobligationandwarranty(CBG)clause

for 10% of the total order value shall be applicablewhere the order value

exceedsRs.5.00lakh.Bankguaranteeforfaithfulperformance,combinedbank

guaranteecoveringbothcontractperformanceandwarranty,AdvancePayment

guaranteeetc.,shallbeindicatedwhereverapplicable.

(ii) A period of 60 days time from the date of Purchase Order or the delivery

schedule, whichever is earlier shall be stipulated for submission of Bank

Guaranteesothatcontractualremediescouldbeenforced,ifrequired.

5 AbankguaranteeforanominalamountofRs.5000/-mustbeobtainedfrom each

Sub-contractorvalidforayear,onyearlybasis.

5.1 BEMLreservestherighttoconsideracceptanceofBankGuaranteeinlieuofBanker’s

cheque/DemandDraft/fromany“ScheduledCommercialBanksauthorizedbyRBI

excludingRegionalRuralBanks/CooperativeBanksforalikeamountormoreatits

solediscretion.

5.2 In respect of Bank Guarantee for claiming advance payment, the amount of

Guaranteeshallbeenhancedtoincludetheamountofinteresti.e.totaling110%.

5.3NoclaimshalllieagainstBEMLinrespectofinterestonBanker’scheque/Demand

DraftforSecuritydeposits.

5.4 BEMLshallbeentitledtoanditshallbelawfulonitsparttoforfeitthesaidSecurity

Deposit/toencashtheBankGuaranteeinwholeorinpartintheeventofanydefault,

failureorneglectonthepartofthesupplierintheful�illmentorperformanceeitherin

fullorinpartofthePurchaseOrder.ThedecisionofBEMLinthisregardshallbe�inal

andbindingonallconcerned.

6. VALIDITYPERIOD

ThePurchaseOrderunlessotherwisestated isvalid foramaximumperiodof24

months fromthedateof issuewithinwhich time thesuppliershall complete the

suppliesfailingwhichthePurchaseOrdershallbetreatedascancelled/shortclosed

unlessitisrevalidatedagainstspeci�icrequestforreasonsacceptabletoBEML.

7. QUALITY&WORKMANSHIP

Thestoressuppliedshallbeofthebestqualityandworkmanshipandshallbeinstrict

conformitywithallthedrawingsandspeci�icationsfurnishedtothesuppliereither

earlieroralongwiththePurchaseOrdersandshallanswertothedescriptioninall

respects. All supplies shall be accompanies by suppliersworks inspection / test

certi�icatedulycertifyingthatthestoresareinstrictconformitywiththedrawings/

speci�ications/descriptions.However,�inalacceptanceofthestoressuppliedwillbe

subjecttoinspectionandapprovalbyBEMLattheirworks.Oncethematerialsare

rejectedandcommunicatedtothesupplier,norequestshallbeentertainedforre-

inspectionor acceptanceof the stores. However,BEML reserves the right to re-

inspectthestoresandconsideracceptanceatitsdiscretion.

8. WARRANTY

All the stores supplied shall be warranted against any defect in material,

workmanship,designordimensionetc.,foraperiodoftwelvecalendarmonthsfrom

thedatetheyareactuallyputtouseoreighteenmonthsfromthedateofreceiptof

supplyinBEMLwhicheverisearlierandthesuppliershallremedysuchdefectsathis

/theirowncostorreplacefreeofchargesuchstoreswhencalledupontodosoby

BEMLwho shall state inwriting inwhat respect the stores are defective. BEML

reservestherightfor

a) Acceptanceoftheproposalofthesuppliertoremovethedefectsbyreworking

and

b) Subjectingthereworked/replacedgoodstoinspectionbyBEMLattheirworks.

Warrantycerti�icateshallbefurnishedbythesupplierintriplicateasunder

coveringtheentiresuppliestobemadeagainstthisorderwithin15daysfrom

thedateoforder,butbeforecommencementofsupplies:“Thesuppliescovered

under PO No………………. dt.……………be warranted against all defects in

material,workmanship,design,dimensionsetc.,foraperiodof12monthsfrom

thedatetheyareputtoactualuseor18monthsfromthedateofreceiptofthe

supply inBEMLwhichever isearlierandifanydefectsarefoundwithinthe

above period for any of the reasons stated, theywill be replaced at BEML

premisesfreeofcostwithinareasonabletime”.

9. SUPPLYOFSAMPLE

Beforeeffectingthebulksupplies,anacceptablesampleshallbesubmittedwithout

anyobligationonthepartofBEMLasregardsacceptance,paymentandsafecustody

thereofandsuppliershallobtainnecessaryclearanceforeffectingbulksuppliesas

perscheduleofdelivery.SamplessosuppliedshallbeclearlylabeledwithSupplier’s

name,addressandPurchaseOrdernumber.Inrespectofanycerti�iedsamplesentby

BEML,thesuppliershallberesponsibleforthesafecustodyandreturnofthecerti�ied

sampleintactwithoutdamage,afterthepurposeforwhichitwasgivenisserved,

withoutdelayorwhendemandedback.Anyclari�icationregardingsubmissionof

sampleshallbeobtainedfromconcernedChiefofQuality.Ifthesuppliersubmitsa

sample whether with, before or after the tender, the same shall not govern the

standardofsupplyexceptwhenithasbeensospeci�icallystatedintheacceptanceof

tender.

PURCHASE MANUAL PURCHASE MANUAL220 221

10. DESPATCHINSTRUCTIONS

The despatches shall be made only through approved transport contractors as

indicated in BEML Purchase Order. Otherwise, any extra freight charges and

incidentalsincurredbyBEMLshallbechargedtotheSupplier’saccount.Incaseofany

disputeinthematter,thedecisionoftheconcernedChiefofstoresshallbe�inaland

binding.TheSuppliershallberesponsibleforproperandsuf�icientpackingofstores

fortransportationbyrail,road,seaorairaspertermsofPurchaseOrderandshall

ensure delivery at destination free from loss, damage or injury, due to improper

packingandeachpackageshallbedistinctlymarkedasperPurchaseOrdertermsand

shallobtainapackingnotequotingPONo. anddateanddetailsof contents.The

supplierisresponsibleforobtainingaclearreceiptfromtheTransportContractor

specifyingthegoodsdespatched.Thesuppliershallnotbookanyconsignmentona

“saidtocontain”and/or“self”basis.Ifhedoessohedoesitonhisownresponsibility.

BEMLwilltakenoresponsibilityforshortdeliveriesorwrongsupplyofgoodswhen

the samearebookedon “said to contain / self” basis and fornon-clearance and

demurrageincurredontheconsignmentdespatchedon“self”basis.Inrespectofall

modesofdespatch,BEMLshallpayfor,onlysuchstoresasareactuallyreceivedby

theminaccordancewiththePurchaseOrderterms.

11. RAWMATEIALSARRANGEMENT

Thesuppliershallmakehisownarrangementtoprocureallrawmaterialsrequired

and BEML shall not be responsible for any assistance in such procurement or

whatsoever.

12. IDENTIFICATIONOFITEMS/PIECES

ThesuppliershallindicateBEMLstocknumber,suppliercodenumberandBEMLPO

No.anddateinalldeliverydocuments,invoicesandcorrespondence.Alsoheshall

emboss/engravethesuppliercodeno.oneachitem/pieceataconvenientnon-

machinableplace,failingwhichthesuppliesareliableforrejection.

13. DELIVERY

ThetimeforandthedateofdeliveryofthestoresstipulatedinthePOshallbedeemed

tobetheessenceofthePurchaseOrderanddeliverymustbecompletednotlaterthan

thedatesspeci�iedtherein.Thesuppliershallstrictlyadheretothedeliveryschedule

indicatedinthePO.Anysuppliesmadeaheadofthisscheduleareliableforrejection

at the discretion of BEML. Shall the supplier fail to deliver the stores or any

consignmentthereonwithintheperiodprescribedforsuchdelivery,BEMLshallbe

entitledattheiroptioneither:

a) To accept the delayed supply and to recover from the supplier as agreed

liquidateddamages,andnotbywayofpenalty,asumof0.5%ofthepriceofany

storesperweeksubjecttoamaximumof5%ofthevalueofthePurchaseOrder

which the supplier has failed to deliver as aforesaid for eachweek or part

thereofduringwhichthedeliveryofsuchstoresmaybeinarrears(or)

b) Topurchaseelsewhere,withoutnoticetothesupplierontheaccountandatthe

riskand costof the supplier, the storesnotdeliveredorothersof a similar

description(wherestoresexactlycomplyingwiththedescriptionandreadily

procurable)withoutcancelingthePOinrespectofconsignmentsnotduefor

delivery(or)

c) TocancelthePurchaseOrder.

Intheeventofactionbeingtakenunder(b)or(c)thesuppliershallbeliableforany

loss,whichBEMLmaysustainonthataccountbutthesuppliershallnotbeentitledto

any gain or purchases made against default. As soon as it is apparent that the

scheduleddatescannotbeadheredto,anapplicationshallbesentbythesupplierto

BEML,wellbeforetheexpiryofthedeliveryperiodspeci�iedinthePurchaseOrder.

Withoutprejudicetotheforegoingrights,ifsuchfailuretodeliverinpropertimeas

aforesaidshallhavearisenfromanycausewhichBEMLmayadmitasareasonable

groundforanextensionofthetime(andtheirdecisionshallbe�inal)theymayallow

suchadditionaltimeastheymayconsiderjusti�iedbycircumstancesofthecase.

Deliveryrequiredtobemadeinlotsshallbemadeinlotsonlyandanyextradeliveries

involvedeitheronaccountofrepeatedrejectionsorvarianceinsupplyoflotsshallbe

liableforservicechargesof5%ofthePurchaseOrdervalueforeachextradelivery.

14. PLANT&MACHINERYSUPPLY

IncaseofaPurchaseOrderforsupplyofplantandmachineryandsuppliesrequiring

inspectionandtestaftererectionatsiteifthecompletedplantoranythereoforafter

itistakenoverisfoundtobedefectiveorfailstoful�illtherequirementsofthePO,

BEMLshallgivethesuppliernoticesettingforthdetailsofsuchdefectsorfailure,and

thesuppliershallforthwithmakethedefectiveplantgood,orafterthesametomake

itcomplywiththerequirementsofthePO. Shallhefailtodosowithinareasonable

time,BEMLmayrejectandreplaceatthecostofthesupplierwholeoranyportionof

theplant,asthecasemaybewhichisdefectiveorfailstoful�illtherequirements.

15. INSPECTION&CONSEQUENCEOFREJECTION

Maximumcareshallbeexercisedbythesuppliertoavoidanyrejections.Heavyor

frequentrejectionsshallbeagroundforterminationofthePurchaseOrderandBEML

shall be entitled for any remedy as provided in clause-13 of these terms and

conditions.

Incasethestoresgetrejectedeitherduringthe initial inspectionstageorduring

furtherprocessingstage,therejectedmaterialsshallbearrangedtobecollectedby

the supplier at his own costwithin thirty days from the date of intimating such

rejectionfailingwhichtherejectedmaterialshallbedisposedoffatthediscretionof

BEMLattheriskandcostofsupplier.Theamountpaidtothesuppliertowardsthe

rejectedmaterialincludingfreight,salestax,GST,insuranceandanyotherexpenses

incurredbyBEMLinthisregardshallbepaidbythesupplierbeforecollectingthe

rejected material or the same shall be recovered / recoverable from any of the

outstanding/futurebillsofthesupplier.Anyamountaccruedbydisposalorrejected

materialshallbeappropriatedtowardsthecostandexpensesincurredinthisregard.

PURCHASE MANUAL PURCHASE MANUAL222 223

16. PAYMENTPROCEDURE

AllbillsshallbesubmittedintriplicatetotheconcernedAccountsdepartmentasper

termsofthePO.WheneverthetermsofPOstipulateforbalancepayment,aseparate

billintriplicateforthebalanceamountshallbesubmittedafterthereceiptofGoods

ReceiptNotequotingtheGRNo,dateandadvance/partpaymentdetails.

Paymentshallberecommended/arrangedonlywhensuppliesaremadestrictlyin

linewith the supply schedule of the PO.Requests for piecemeal payments after

making staggered supplies deviating from the supply schedule may not be

entertained.

17 IncaseofGST,GSTRNnoandotherdetailstobefurnishedforcompliance.

18. LAWSAPPLICABLE

ThisP.O. shallbegovernedby theLawsof India for the timebeing in forceoras

amendedfromtimetotime.Themakingofallstoressuppliedmustcomplywiththe

requirementsofIndianActsrelatingtotradeandmerchandisemarksandalltherules

madeundersuchacts.

19. INDEMNITY

ThesuppliershallatalltimesindemnifyBEMLagainstallclaimswhichmaybemade

inrespectofthestoresforinfringementofanyrightprotectedbypatent,registration

ofdesignortrademarkandshalltakeallriskofaccidentsordamagewhichcausesa

failureofthesupply.ThesuppliershallcomplywiththeprovisionsofContractLabour

(Regulation and Abolition) Act, 1970 and the Contract Labour (Regulation and

Abolition)CentralRules1971asmodi�iedfromtimetotimewhereverapplicableand

shallalsoindemnifyBEMLfromandagainstanyclaimsundertheaforesaidActand

theRules.

20. BRIBESANDGIFTS

Anybribe,commission,giftoradvantagegiven,promisedorofferedbyoronbehalfof

thesupplierorhispartner,agentorservantoranyoneonhisortheirbehalftoany

of�icer,servant,representativeoragentofBEMLoranypersononhisortheirbehalf

inrelationtotheobtainingortotheexecutionoforanyothercontractwithBEML

shallinadditiontoanycriminalliabilitywhichthesuppliermayincur,subjectthe

supplier to thecancellationof thisandallothercontractswithBEMLandalsoto

paymentofanylossordamageresultingfromanysuchcancellationtolikeextentasis

providedincaseofcancellationunderClause-13hereof.Anyquestionordisputeasto

thecommissionofanyoffenceunderthepresentclauseshallbesettledbyBEMLin

suchmannerandonsuchevidenceofinformationastheymaythink�itandsuf�icient

andtheirdecisionshallbe�inalandconclusive.

21. JURISDICTION

ThecourtofKarnatakaStateonlyshallhavejurisdictiontodealwithanddecideany

legalmatterofdisputewhatsoeverarisingoutofthisPurchaseOrder.

22. ARBITRATION

Allotherdisputes/differencesexceptas toanymatters thedecisionofwhich is

speciallyprovidedforbytheseconditionsoranyotherspecialconditionsoftheP.O.

whatsoeverarisingbetweenthepartiesoutoforrelatingtothecontractmeaningand

operationoreffectofthecontractorthebreachthereofshallbesettledbyArbitration

inaccordancewiththerulesofArbitrationoftheIndianCouncilofArbitrationandthe

awardmadeinpursuancethereofshallbebindingontheparties.

23. FORCEMAJEURECLAUSE

a) BEML shall in addition its power under other clauses to determine this

PurchaseOrderhavepowertoterminateitsliabilitythereunderatanytimeby

givinganoticeofreasonabletimeinwritingtothesupplierofBEML’sdesireto

do so and upon the expiration of the notice the Purchase Order shall be

determinedwithoutprejudicetotherightsofthepartiesaccruedtothedateof

determination.

b) Furtherintheeventofanysituationarisingoutoforcausedbyanyactwhichis

beyondthecontrolofBEML,whichresultsinstoppageofproduction,orinthe

eventofanypolicydecisionmadeintheinterestofBEMLwhichmaynecessitate

theshortclosureofthePurchaseOrder,BEMLbygivinganoticeofreasonable

timetothesupplier,canterminatethePurchaseOrderwithoutprejudicetothe

rightsofthepartiesaccruedtothedateoftermination.

24. SECRECY

a) All information, of Proprietarynaturewhetherwritten or oral deliveredby

BEML to supplier in connectionwith or related to potential quotations for

supplyofcomponents/parts/etc.including,withoutlimitation,technicaldata,

speci�ications,drawings,models,samples,specimensfurnishedbyBEMLfor

thepurposeoforinconnectionwiththemanufactureandsupplyofthestores

herebyorderedconstitute thepropertyofBEMLand that thesuppliershall

keeptheminstrictcon�idenceandheshallnotdivulgethesametoanyoneelse

exceptundertheAuthorityandforthepurposeofBEML. Allsuchdocuments,

dataanddrawings,modelsandspeci�icationsshallbethepropertyofBEMLand

bereturnedtoitwhendonewithorwhendemandedbyBEML.

b) ThesuppliershallnotsupplythestoresherebyorderedbyBEMLtoanyoneelse

other than BEML and shall not disclose, any initiations, developments or

adaptations,thereoftoanyoneelseexceptwiththewrittenconsentofBEML.

c) PurchaseOrderorcopyofthesameinfullorpartthereofshallnotbeproduced

toanyoneelseotherthantostatutoryauthorities.

d) BEMLshallbeentitledtopreventthebreachoftheaboveandtodamagesincase

ofbreach.

25. DURINGARBITRATION

Thesuppliesunder thisPurchaseOrdershall, if reasonablypossible, continueby

mutual agreement during the arbitrationproceedings andnopayment due to or

PURCHASE MANUAL PURCHASE MANUAL224 225

payablebyBEMLbewithheldonlyonaccountofthependencyofsuchproceedings.

26. RIGHTTOVARYQUANTITIES

BEML reservestherighttoincreaseordecreaseupto50%ofthequantityspeci�ied

inthescheduleofrequirementswithoutanychangeintheunitpriceorotherterms

andconditionswithintheagreeddeliveryschedule.

27. Con�identiality Agreement: An agreement designed to protect trade secrets and

expertisefrombeingmisusedbythosewhohavelearnedofthem.

“BEMLshallbeentitledtopreventbreachoftheagreementandtoclaimdamagesin

caseofanybreach.Itisherebymutuallyagreedthatforbreachofthisagreement,the

vendorshallpay,withoutactualproofofdamages,aliquidatedamountofRs.1.00

Crore(RupeesOneCroreonly)”

Itisproposedthatagreementneedtobeexecuted,foranyofthefollowingcondition.

a) RevisedagreementcanbesenttovendorshavingannualbusinesswithBEML

formorethanRs.50.00Lakhs.

b) Anyadvance/�inancialassistanceprovidedbyBEMLfordevelopment.

c) Anytechnicalsupport/designprovidedbyBEML.

Itwillnotbeapplicableincaseof:

a) Proprietaryitems

b) Standarditems(likefasteners,paintetc.)

c) Caseofsuppliersowndesign.

Theagreement

a) NeedtobeexecutedonaRs.100/-nonjudiciarystamppaper.

b) Alltheentriesintheagreementshallbetyped.Handwritingcanbepermitted

forthedateofagreement.

c) Allthepagesofagreementtobesigned.

d) Atvendors/suppliersend,itshallbesignedpreferablebyDirector.Innocaseit

shallbebelowGMRank.

e) AtBEML,itshallbesignedbyMaterialHeadsofrespectiveDivisions.

Incasewheretheearlieragreementissigned,clauseofLiquidationcanbesigned

separatelyasanextensiontoearlieragreement.

Con�identialityAgreementformatenclosedatAnnexureI.

28. IntegrityPact:TheIntegrityPactenvisagesanagreementbetweentheprospective

vendor/bidderandthebuyercommittingthepersons/of�icialsofboththepartiesnot

to exercise any corrupt in�luence on any aspect of the contract. Only those

vendors/bidderswhohaveenteredintosuchanIntegrityPactwiththebuyer(BEML)

wouldbecompetenttoparticipateinbiddingwithBEMLwhereverthevalueofeach

contractisequaltoormorethanRs.1Crore.

ThisPactisapreliminaryquali�icationforenteringintoanycontractwithBEML.The

PactwillbeeffectivefromthestageofInvitationofBidstillthecompleteexecutionof

theContract.

The Central Vigilance Commission (CVC) will approve an Independent External

Monitors(IEM)tooverseetheimplementationoftheIntegrityPact

IntegrityPactagreementformatenclosedatAnnexureJ.

29. Non–CompetitionAgreement:-It isatermusedincontract lawunderwhichone

party(usuallyanemployee)agreesnottopursueasimilarprofessionortradein

competitionagainstanotherparty(usuallytheemployer).

Non–CompetitionAgreementformatenclosedatAnnexureK.

30. UndertakingfromthesuppliersofITHardware/software,Desktop&

ServersasperCVCguidelines:AsperdirectivesofGovt.ofIndia–CentralVigilance

Commission,NewDelhiitismandatorytohaveanundertakingfromthesupplierof

BEMLtowardsthesupplyofIThardware,Software,Desktop&Servercertifyingtheir

authenticityandgenuinenessoftheproduct.

UndertakingfromthesuppliersofITHardware/software,Desktop&Serversformat

enclosedatAnnexureL.

PURCHASE MANUAL PURCHASE MANUAL226 227

AnnexureF

SPECIMENOFPROPRIETORYCERTIFICATE

1. ItemNomenclature

2. PartNo./Description/Qty.

3. Tobeprocuredfrom

4. Previousorderinginformation

(Ifavailable)

5. Project

(Ticktheapplicableoneandscoreoutonesnotapplicable)

i) Noequivalentisavailablefromanyothersource

ii) Anitemmadeormarketedbya�irmhavingtheexclusiverighttomarkettheproduct

iii) Procurementofaproductfromavendorwhentheproductisexclusivelydeveloped

forBEMLbythatvendor(withorwithoutNRC)

iv) ProcurementofsparesfromOEM

v) Requirementofaparticularbrandedproductamongtheclassofproductsavailable

forensuringstandardization.

vi) __________________________________________________________

(SpecifyReasonsforresortingtoproprietaryprocurement)

Example: in case of (ii) above, Certi�icate obtained from the vendor for having such

exclusiverightmaybeenclosed.Iftherequirementisclassi�iedunder(iii)above,reasons

forpreferencetoparticularbrandamongthebrandsavailablemayberecordedwiththe

concurrenceoftheindentingdepartment.

(INDENTINGDEPT.)

Signature :

Name :

Designation :

Date :

ApprovingAuthority:GM(R&D/Production)

Signaturewithdate&Seal

AnnexureG

SPECIMENOFLETTEROFINTENT

Ref: Date:

To:

DearSir,

Sub : Procurementofitem(s)

Ref : i)OurTenderEnquiryNo.dtd.

ii)YourQuotationNo.dtd.

iii)

---

BasedonyourQuotationNo.__________dtd._________againstourTenderEnquiryNo.____________

dtd. __________ and furtherdiscussions/negotiationswehadwithyouon __________,weare

pleased to place this letter of intent on you for supply of _________Nos. of ________ at a price

indicatedagainsttheitem(s).Youmaypleasetakethisletterofintentasour�irmorderonyou

andtogoaheadwiththeplanningformanufactureandsupplyoftheitem(s).

AregularPurchaseOrderbearingNo.___________indicatingourtermsandconditionsofcontract

willbeissuedtoyoushortly,andthisletterofintentisissuedonlytoinformyouinadvanceofour

intentiontoplaceaPurchase Order onyouenableyoutotakenecessaryactiontomeetthe

deliveryscheduleindicatedbyusduringourdiscussions.

Pleaseacknowledgereceiptofthisletterofintent.

Thankingyou,

Yoursfaithfully,

ForBEMLLimited

PURCHASE MANUAL PURCHASE MANUAL228 229

AnnexureH

INCOTERMS

INTRODUCTION

1. PURPOSEOFINCOTERMS

Thepurposeof‘Incoterms’istoprovideasetofinternationalrulesfortheinterpretationof

thechieftermsusedinforeigntradecontracts,fortheoptionaluseofbusinessmenwho

prefer the certainty of uniform international rules to the uncertainties of the varied

interpretationsofthesametermsindifferentcountries.

Frequentlypartiestoacontractareunawareofthedifferencesoftradingpracticeintheir

respective countries. The existing diversity of interpretations is a constant source of

frictionininternationaltrade,leadingtomisunderstandings,disputesandreferencesto

thecourtswithallthewasteoftimeandmoneythatthoseentail.Itwastheobjectofmaking

available to traders a means of overcoming the worst causes of this friction that the

InternationalChamberofCommerce�irstpublishedin1936asetofinternationalrulesfor

the interpretation of trade terms. These rules were known as ‘Incoterms 1936’.

Amendmentsandadditionswerelatermadein1953,1967,1976and1980inorderto

provideanup-to-datesetofrulesbroadlyinlinewiththecurrentpracticeofamajorityof

thebusinessmenengagedininternationaltrade.

The chief dif�iculties metwith by importers and exporters are of three kinds. First,

uncertaintyas to the lawofwhatcountrywillbeapplicable to theircontracts,second,

dif�iculties arising from inadequate information and, third, dif�iculties arising from

diversityininterpretation.Thesehandicapstotradecanbemuchreducedbytheuseof

‘Incoterms’.

2. PROVISIONFORTHECUSTOMOFTHEPARTICULARTRADEORPORT

Onsomepoints,ithasbeenfoundimpossibletogiveanabsolutelyde�initeruling.Inthat

case,theruleshaveleftthemattertobedecidedbythecustomoftheparticulartradeof

port.Everyendeavourhasbeenmadetolimitsuchreferencestocustomtotheabsolute

minimum,butithasbeenimpossibletoavoidthemaltogether.

Inordertoavoidmisunderstandingsanddisputes,thesellerandthebuyerwouldbewell

advised to keep such general and particular customs in mind when negotiating their

contract.

3. SPECIALPROVISIONSININDIVIDUALCONTRACTS

Specialprovisionsintheindividualcontractbetweenthepartieswilloverrideanything

providedintherules.

Partiesmayadopt‘Incoterms’asthegeneralbasisoftheircontract,butmayalsospecify

particularvariationsofthemoradditionstothem,suchasmaybesuitedtotheparticular

tradeorthecircumstancesofthetimeortheirindividualconvenience.Forinstance,some

merchantsrequireaCIFsuppliertoprovidewarriskinsuranceaswellasmarineinsurance.

Inthatcase,thepurchasermayspecify‘IncotermsCIFpluswarriskinsurance’.Theseller

willthenquotehispriceonthatbasis.

Someabbreviationsincommonuseindomestictrademaynotbereadilyunderstoodin

internationaltrade.Itisrecommendedthatforthesakeofclaritytheuseofsuchdomestic

abbreviationsshallbeavoided.

4. VARIATIONSOFC&FANDCIFCONTRACTS

Merchantsshallbeextremelycautiousinusing,intheircontractsofsale,variationsofthe

terms C&F and CIF such as C&F and CIF Cleared and Customs Duty paid or similar

expressions.TheadditionofawordorevenalettertoC&FandCIFmaysometimeshavean

entirelyunforeseenresult,andthecharacterofthecontractmaybechanged.Merchants

may �ind that a court will refuse to recognize certain variations as being C&F or CIF

contractsatall. It isalwayssafer insuchcasesexplicitly tostate in thecontractswhat

obligationsandchargeseachpartyismeanttoassume.

5. ‘INCOTERMS’ANDTHECONTRACTOFCARRIAGE

Merchantsadoptingthoserulesintheircontractsshallkeepclearlyinmindthefactthat

they refer solely to the relationship between seller and buyer, and that none of the

provisionsaffect,eitherdirectlyorindirectly,therelationsofeitherpartywiththecarrier

asde�inedinthecontractofcarriage.

However, the law of carriage of goods will determine how the seller shall ful�ill his

obligationtodeliverthegoods‘tothecarrier’.ThetermsFOB,C&FandCIF,whichhave

been retained unchanged in the present version of ‘Incoterms’, all conformwith the

practiceofdeliveringthegoodsonboardthevessel.Nowadaysgoodsareusuallydelivered

bythesellertoacarrierbeforeshipmentonboardtakesplace,insuchcasesmerchants

shallusethenewandamendedterms:FreeCarrier(namedpoint),Freight/Carriagepaid

to,orFreight/CarriageandInsurancepaidto.Ade�initionof‘carrier’hasbeeninsertedina

notetothetermFreecarrier(namepoint).

6. ‘DELIVERED…’TERMS

Unlessthereisaclearagreementtothecontraryexpressedinthecontractofsale,itisno

partofthedutiesofthesellertoprocureapolicyofinsuranceavailableforthebene�itofthe

buyer.

However,incertaincircumstances,suchasthosecontemplatedinArticleA.5of

therulesrelatingtothesaleofgoodson‘DeliveredatFrontier’terms,thepartiesmightbe

welladvisedjointlytoconsiderwhatduties,ifany,thesellerorthebuyershallassumein

matterspertainingtotheinsuranceofthegoodsfromthepointofdepartureinthecountry

ofdespatchtothepointof�inaldestinationchosenbythebuyer.

Unlessthereisaclearagreementtothecontraryexpressedinthecontractofsale,any

documentofthetransportplacedbytheselleratthedisposalofthebuyermustbeclean.

Unlessthecontextotherwiserequires,thefollowingexpressionshavethemeaningshereby

assignedtothem,thatistosay:

“Countryofdespatch”meansthecountryfromwhichthesellerhastodespatchthegoodsto

thenamedplaceofdeliveryatthefrontier,orinthecountryofimportation,asthecasemay

be,whetherbypubliccarrierorbyhisownmeansoftransport.

PURCHASE MANUAL PURCHASE MANUAL230 231

“Expenses”meansanycosts,chargesandexpensesoforincidentaltotheperformanceby

thepartiesoftheirrespectivedutiesandwhichshallbeincurred,borneandpaidbythe

partiesinaccordancewiththerulesapplicable.

7. DEFINITIONOFBILLOFLADING

Asusedintheserulestheterm‘billoflading’isashippedbilloflading,issuedbyoron

behalfofthecarrier,andisevidenceofcontractofcarriageaswellasproofofdeliveryofthe

goodsonboardthevessel.

Abillofladingmaybeeitherfreightprepaidorfreightpayableatdestination.Intheformer

casethedocumentisusuallynotobtainableuntilfreighthasbeenpaid.

8. SIMPLIFIEDDOCUMENTARYPRACTICES

Inlinertrade,billsofladingarefrequentlyreplacedbynon-negotiabledocuments(‘sea

waybills’,‘linerwaybills’,‘freightreceipts’,‘combinedormultimodaltransportdocuments’)

andthefeasibilityoftransmittingtherelevantinformationbyautomaticdataprocessingis

presentlybeinginvestigated.Whenbillsofladingarenotusedintherelevanttrade,the

partiesshalleitherusethefreecarrier(namedpoint)orFreight/Carriagepaidtotermsor

alternatively,stipulateintheFOB,C&FandCIFtermsthatthesellershallprovidethebuyer

withtheusualdocumentorotherevidenceofthedeliveryofthegoodstothecarrier.

Merchantswishingtousetheserulesshallspecifythattheircontractswillbegovernedby

theprovisionsof‘Incoterms’.Iftheywishtorefertoaterminapreviousversiontheyshall

speci�icallysostate.

Thistermcameintoforcein1953.

EX­WORKS

…(ex-Factory,ex-Mill,ex-Plantation,ex-Warehouse,etc.)

“Ex-works”means that the seller’s only responsibility is tomake the goods available at his

premises(i.e.,worksorfactory).Inparticularheisnotresponsibleforloadingthegoodsonthe

vehicleprovidedbythebuyer,unlessotherwiseagreed.Thebuyerbearsthefullcostandrisk

involvedinbringingthegoodsfromtheretothedesireddestination.Thetermthusrepresents

theminimumobligationfortheseller.

A. THESELLERMUST:

1. Supplythegoodsinconformitywiththecontractofsale,togetherwithsuchevidenceof

conformityasmayberequiredbythecontract.

2. Placethegoodsatthedisposalofthebuyeratthetimeasprovidedinthecontract,atthe

pointofdeliverynamedorwhichisusualforthedeliveryofsuchgoodsandfortheir

loadingontheconveyancetobeprovidedbythebuyer.

3. Provideathisownexpensethepacking,ifanythatisnecessarytoenablethebuyerto

takedeliveryofthegoods.

4. Givethebuyerreasonablenoticeastowhenthegoodswillbeathisdisposal.

5. Bearthecostofcheckingoperations(suchascheckingquality,measuring,weighing,

counting),whicharenecessaryforthepurposeofplacingthegoodsatthedisposalofthe

buyer.

6. Bearallrisksandexpensesofthegoodsuntiltheyhavebeenplacedatthedisposalofthe

buyeratthetimeasprovidedinthecontract,providedthatthegoodshavebeenduly

appropriatedtothecontract,thatistosay,clearlysetasideorotherwiseidenti�iedasthe

contractgoods.

7. Renderthebuyer,atthelatter’srequest,riskandexpense,everyassistanceinobtaining

anydocumentswhichareissuedinthecountryofdeliveryand/oroforiginandwhich

thebuyermayrequireforthepurposesofexportationand/orimportation(and,where

necessary,fortheirpassageintransitthroughanothercountry).

B. THEBUYERMUST:

1. Takedeliveryofthegoodsassoonastheyareplacedathisdisposalattheplaceandatthe

time,asprovidedinthecontract,andpaythepricesasprovidedinthecontract.

2. Bearallchargesandrisksofthegoodsfromthetimewhentheyhavebeensoplacedat

hisdisposal,providedthatthegoodshavebeendulyappropriatedtothecontract,thatis

tosay,clearlysetasideorotherwiseidenti�iedasthecontractgoods.

3. Bearanycustomsdutiesandtaxesthatmaybeleviedbyreasonofexportation.

4. Whereheshallhavereservedtohimselfaperiodwithinwhichtotakedeliveryofthe

goods and/or the right to choose the place of delivery, and shall he fail to give

instructionsintime,beartheadditionalcoststherebyincurredandallrisksofthegoods

fromthedateoftheexpirationoftheperiod�ixed,providedthatthegoodsshallhave

beendulyappropriated to thecontract, that is tosay, clearlysetasideorotherwise

identi�iedasthecontractgoods.

5. PayallcostsandchargesincurredinobtainingthedocumentsmentionedinArticleA.7,

includingthecostofcerti�icatesoforigin,exportlicenseandconsularfees.

Thistermcameintoforcein1953.

PURCHASE MANUAL PURCHASE MANUAL232 233

FOR/FOT

FREEONRAIL/FREEONTRUCK…..(Nameddeparturepoint)

FORandFOTmean“FreeonRail”and“FreeonTruck”. Thesetermsaresynonymous,sincethe

word“Truck”relatestotherailwaywagons. Theyshallonlybeusedwhenthegoodsaretobe

carriedbyrail.

A. THESELLERMUST:

1. Supplythegoodsinconformitywiththecontractofsale,togetherwithsuchevidence

ofconformityasmayberequiredbythecontract.

2. Inthecaseofgoodsconstitutingeitherawagonload(carload,truckload)lotora

suf�icientweight to obtainquantity rates forwagon loading, order indue timea

wagon(car,truck)ofsuitabletypeanddimensions,equipped,wherenecessary,with

tarpaulins,andloaditashisownexpenseatthedateorwithintheperiod�ixed,the

orderingofthewagon(car,truck)andtheloadingbeingcarriedoutinaccordance

withtheregulationsofthedespatchingstation.

3. Incaseofa load less thaneitherawagonload(carload, truckload)orasuf�icient

weighttoobtainquantityratesforwagonloading,deliverthegoodsintothecustody

oftherailwayeitheratthedespatchingstationor,wheresuchfacilitiesareincludedin

therateoffreight,intoavehicleprovidedbytherailway,atthedateorwithinthe

period�ixed,unlesstheregulationsofthedespatchingstationshallrequiretheseller

toloadthegoodsonthewagon(car,truck).

Nevertheless,itshallbeunderstoodthatifthereareseveralstationsatthepointof

departure,thesellermayselectthestationwhichbestsuitshispurpose,providedit

customarilyacceptsgoodsforthedestinationnominatedbythebuyer,unlessthe

buyershallhavereservedtohimselftherighttochoosethedespatchingstation.

4. SubjecttotheprovisionsofArticleB.5below,bearallcostsandrisksofthegoodsuntil

suchtimeasthewagon(car,truck)onwhichtheyareloadedshallhavebeendelivered

intothecustodyoftherailwayor,inthecaseprovidedforinArticleA.3,untilsuchtime

asthegoodsshallhavebeendeliveredintothecustodyoftherailway.

5. Provide at his own expense the customary packing of the goods, unless it is the

customofthetradetodespatchthegoodsunpacked.

6. Pay the costs of any checking operations (such as checking quality, measuring,

weighing,counting),whichshallbenecessaryforthepurposeofloadingthegoods,or

ofdeliveringthemintothecustodyoftherailway.

7. Givenotice,withoutdelay,tothebuyerthatthegoodshavebeenloadedordelivered

intothecustodyoftherailway.

8. At his own expense, provide the buyer, if customary, with the usual transport

document.

9. Providethebuyer,atthelatter’srequestandexpense(seeB.6)withthecerti�icateof

origin.

10. Render the buyer, at the latter’s request, risk and expense, every assistance in

obtainingthedocumentsissuedinthecountryofdespatchand/oroforiginwhich

thebuyermayrequireforpurposesofexportationand/orimportation(and,where

necessary,fortheirpassageintransitthroughanothercountry).

B. THEBUYERMUST:

1. Givethesellerintimethenecessaryinstructionsfordespatch.

2. Takedeliveryof thegoods fromthetimewhentheyhavebeendelivered intothe

custodyoftherailwayandpaythepriceasprovidedinthecontract.

3. Bearallcostsandrisksofthegoods(includingthecost,ifany,ofhiringtarpaulins)

fromthetimewhenthewagon(car,truck)onwhichthegoodsareloadedshallhave

beendeliveredintothecustodyoftherailwayor,inthecaseprovidedforinArticleA.3,

from the timewhen the goods shall have been delivered into the custody of the

railway.

4. Bearanycustomsdutiesandtaxesthatmaybeleviedbyreasonofexportation.

5. Wherehe shallhave reserved tohimself aperiodwithinwhich togive the seller

instructionsintime,beartheadditionalcoststherebyincurredandallrisksofthe

goodsfromthetimeofexpirationoftheperiod�ixed,provided,however,thatthe

goodsshallhavebeendulyappropriatedtothecontract,thatistosay,clearlysetaside

orotherwiseidenti�iedasthecontractgoods.

6. PayallcostsandchargesincurredinobtainingthedocumentsmentionedinArticles

A.9&10above,includingthecostofcerti�icatesoforiginandconsularfees.

Thistermcameintoforce1953.

PURCHASE MANUAL PURCHASE MANUAL234 235

FAS

FREEALONGSIDESHIP(Namedportofshipment)

FASmeans“FreeAlongsideShip”.Underthistermtheseller’sobligationsareful�illedwhenthe

goodshavebeenplacedalongsidetheshiponthequayorinlighters.Thismeansthatthebuyer

hastobearallcostsandrisksoflossofordamagetothegoodsfromthatmoment. Itshallbe

notedthat,unlikeFOB,thepresenttermrequiresthebuyertoclearthegoodsforexport.

A. THESELLERMUST:

1. Supplythegoodsinconformitywithcontractofsale,togetherwithsuchevidenceof

conformityasmayberequiredbythecontract.

2. Deliverthegoodsalongsidethevesselattheloadingberthnamedbythebuyer,atthe

namedportofshipment,inthemannercustomaryattheport,atthedateorwithin

theperiodstipulated,andnotifythebuyer,withoutdelay,thatthegoodshavebeen

deliveredalongsidethevessel.

3. Render the buyer at the latter’s request, risk and expense, every assistance in

obtaininganyexportlicenseorothergovernmentauthorizationnecessaryforthe

exportofthegoods.

4. SubjecttotheprovisionsofArticleB.3andB.4below,bearallcostsandrisksofthe

goods until such time as they shall have been effectively delivered alongside the

vesselatthenamedportofshipment,includingthecostsofanyformalities,whichhe

shallhavetoful�illinordertodeliverthegoodsalongsidethevessel.

5. Provideathisownexpensethecustomarypackingofthegoodsunlessitisthecustom

ofthetradetoshipthegoodsunpacked.

6. Pay the costs of any checking operations (such as checking quality, measuring,

weighing,counting),whichshallbenecessaryforthepurposeofdeliveringthegoods

alongsidethevessel.

7. Provideathisownexpensethecustomarycleandocumentinproofofdeliveryofthe

goodsalongsidethenamedvessel.

8. Providethebuyer,atthelatter’srequestandexpense(seeB.5)withthecerti�icateof

origin.

9. Render the buyer, at the latter’s request, risk and expense, every assistance in

obtaining anydocuments other than thatmentioned inArticleA.8, issued in the

countryofshipmentand/oroforigin(excludingabillof ladingand/orconsular

documents)andwhichthebuyermayrequirefortheimportationofthegoodsinto

thecountryofdestination(and,wherenecessary,fortheirpassageintransitthrough

anothercountry)

B. THEBUYERMUST:

1. Give thesellerduenoticeof thename, loadingberthofanddeliverydates to the

vessel.

2. Bearallthechargesandrisksofthegoodsfromthetimewhentheyshallhavebeen

effectivelydeliveredalongsidethevesselatthenamedportofshipment,atthedateor

withintheperiodstipulated,andpaythepriceasprovidedinthecontract.

3. Bearanyadditionalcostsincurredbecausethevesselnamedbyhimshallhavefailed

toarriveontime,orshallbeunabletotakethegoods,orshallcloseforcargoearlier

thanthestipulateddate,andalltherisksofthegoodsfromthetimewhentheseller

shallplacethematthebuyer’sdisposalprovided,however,thatthegoodsshallhave

beendulyappropriatedtothecontract,thatistosay,clearlysetasideorotherwise

identi�iedasthecontractgoods.

4. Shallhefailtonamethevesselintimeor,ifheshallhavereservedtohimselfaperiod

withinwhichtotakedeliveryofthegoodsand/ortherighttochoosetheportof

shipment,shallhefailtogivedetailedinstructionsintime,bearanyadditionalcosts

incurred because of such failure and all the risks of the goods from the date of

expirationoftheperiodstipulatedfordelivery,provided,however,thatthegoods

shallhavebeendulyappropriatedtothecontract,thatistosay,clearlysetasideor

otherwiseidenti�iedasthecontractgoods.

5. PayallcostsandchargesincurredinobtainingthedocumentsmentionedinArticles

A.3,A.8andA.9above.

Thistermcameintoforce1953.

PURCHASE MANUAL PURCHASE MANUAL236 237

FOB

FREEONBOARD(Namedportofshipment)

FOBmeans,“FreeonBoard”. Thegoodsareplacedonboardashipbythesellerataportof

shipmentnamedinthesalescontract. Theriskoflossofordamagetothegoodsistransferred

fromthesellertothebuyerwhenthegoodspasstheship’srail.

A. THESELLERMUST:

1. Supplythegoodsinconformitywiththecontractofsale,togetherwithsuchevidence

ofconformityasmayberequiredbythecontract.

2. Deliver thegoodsonboard thevesselnamedby thebuyer, at thenamedportof

shipment, in themanner customaryat theport, at thedateorwithin theperiod

stipulated,andnotifythebuyer,withoutdelay,thatthegoodshavebeendeliveredon

board.

3. At his own risk and expense obtain any export license or other Government

authorizationnecessaryfortheexportofthegoods.

4. SubjecttotheprovisionsofArticlesB.3andB.4below,bearallcostsandrisksofthe

goodsuntilsuchtimeastheyshallhaveeffectivelypassedtheship’srailatthenamed

portofshipment,includinganytaxes,feesorchargesleviedbecauseofexportation,

aswellasthecostsofanyformalitieswhichheshallhavetoful�illinordertoloadthe

goodsonboard.

5. Provide at his own expense the customary packing of the goods, unless it is the

customofthetradetoshipthegoodsunpacked.

6. Pay the costs of any checking operations (such as checking quality, measuring,

weighing,counting),whichshallbenecessaryforthepurposeofdeliveringthegoods.

7. Provideathisownexpensethecustomarycleandocumentinproofofdeliveryofthe

goodsonboardthenamedvessel.

8. Providethebuyer,atthelatter’srequestandexpense(seeB.6),withthecerti�icateof

origin.

9. Render the buyer, at the latter’s request, risk and expense, every assistance in

obtaining a bill of lading and any documents, other than that mentioned in the

previousarticle,issuedinthecountryofshipmentand/oroforiginandwhichthe

buyermayrequirefortheimportationofthegoodsintothecountryofdestination

(and,wherenecessary,fortheirpassageintransitthroughanothercountry)

B. THEBUYERMUST:

1. Athisownexpense,charteravesselorreservethenecessaryspaceonboardavessel

andgivethesellerduenoticeofthename,loadingberthofanddeliverydatestothe

vessel.

2. Bearallcostsandrisksofthegoodsfromthetimewhentheyshallhaveeffectively

passedtheship’srailatthenamedportofshipment,andpaythepriceasprovidedin

thecontract.

3. Bearanyadditionalcostsincurredbecausethevesselnamedbyhimshallhavefailed

toarriveonthestipulateddateorbytheendoftheperiodspeci�ied,orshallbeunable

totakethegoodsorshallcloseforcargoearlierthanthestipulateddateortheendof

theperiodspeci�iedandalltherisksofthegoodsfromthedateofexpirationofthe

period stipulated, provided, however, that the goods shall have been duly

appropriatedtothecontract,thatistosay,clearlysetasideorotherwiseidenti�iedas

thecontractgoods.

4. Shallhefailtonamethevesselintimeor,ifheshallhavereservedtohimselfaperiod

withinwhichtotakedeliveryofthegoodsand/ortherighttochoosetheportof

shipment,shallhefailtogivedetailedinstructionsintime,bearanyadditionalcosts

incurred because of such failure, and all the risks of the goods from the date of

expirationoftheperiodstipulatedfordelivery,provide,however,thatthegoodsshall

have been duly appropriated to the contract, that is to say, clearly set aside or

otherwiseidenti�iedasthecontractgoods.

5. PayanycostsandchargesforobtainingabillofladingifincurredunderArticleA.9

above.

6. PayallcostsandchargesincurredinobtainingthedocumentsmentionedinArticles

A.8andA.9above.

PURCHASE MANUAL PURCHASE MANUAL238 239

C&F

COSTANDFREIGHT(Namedportofshipment)

C&Fmeans“CostandFreight”.Thesellermustpaythecostsandfreightnecessarytobringthe

goodstothenameddestinationbuttheriskoflossofordamagetothegoods,aswellasofanycost

increases,istransferredfromthesellertothebuyerwhenthegoodspasstheship’srailintheport

ofshipment.

A. THESELLERMUST:

1. Supplythegoodsinconformitywiththecontractofsale,togetherwithsuchevidence

ofconformityasmayberequiredbythecontract.

2. Contractonusualtermsathisownexpenseforthecarriageofthegoodstotheagreed

portofdestinationbytheusualroute,inaseagoingvessel(notbeingasailingvessel)

ofthetypenormallyusedfortransportofgoodsofthecontractdescription,andpay

freightchargesandanychargesforunloadingattheportofdischargewhichmaybe

leviedbyregularshippinglinesatthetimeandportofshipment.

3. At his own risk and expense obtain any expert license or other governmental

authorizationnecessaryfortheexportofthegoods.

4. Loadthegoodsathisownexpenseonboardthevesselattheportofshipmentandat

thedateorwithintheperiod�ixedor,ifneitherdatenortimehasbeenstipulated,

withinareasonabletime,andnotifythebuyer,withoutdelay,thatthegoodshave

beenloadedonboardthevessel.

5. SubjecttotheprovisionsofArticleB.4below,bearallrisksofthegoodsuntilsuch

timeastheyshallhaveeffectivelypassedtheship’srailattheportofshipment.

6. Athisownexpensefurnishtothebuyerwithoutdelayacleannegotiablebilloflading

fortheagreedportofdestination,aswellastheinvoiceofthegoodsshipped.Thebill

of lading must cover the contract goods, be dated within the period agreed for

shipment,andprovidebyendorsementorotherwisefordeliverytotheorderofthe

buyerorbuyer’sagreedrepresentative.Suchbillofladingmustbeafullsetof‘on

board’ or ‘shipped’ bills of lading, or a ‘received for shipment’ bill of ladingduly

endorsedbytheshippingcompanytotheeffectthatthegoodsareonboard,such

endorsementtobedatedwithintheperiodagreedforshipment.Ifthebilloflading

containsareferencetothecharter-party,thesellermustalsoprovideacopyofthis

latterdocument.

Note:Acleanbillofladingisone,whichbearsnosuperimposedclausesexpressly

declaringadefectiveconditionofthegoodsorpackaging.

Thefollowingclausesdonotconvertacleanintoanuncleanbilloflading:

a. Clauses which do not expressly state that the goods or packaging are

unsatisfactory,e.g.,‘second-handcases’,‘useddrum’,etc.,

b. Clauses which emphasize carrier’s non-liability for risks arising through the

natureofthegoodsorthepackaging

c. Clauses,whichdisclaimonthepartofthecarrierknowledgeofcontents,weight,

measurement,quality,ortechnicalspeci�icationofthegoods.

7. Provideathisownexpensethecustomarypackagingofthegoods,unlessitisthe

customofthetradetoshipthegoodsunpacked.

8. Pay the costs of any checking operations (such as checking quality, measuring,

weighing,counting),whichshallbenecessaryforthepurposeofloadingthegoods.

9. Payanyduesandtaxesincurredinrespectofthegoods,uptothetimeoftheirloading,

includinganytaxes,foesorchargesleviedbecauseofexportation,aswellasthecosts

ofanyformalitieswhichheshallhavetoful�illinordertoloadthegoodsonboard.

10. Providethebuyer,atthelatter’srequestandexpense(seeB.5),withthecerti�icateof

originandtheconsularinvoice.

11. Render the buyer, at the latter’s request, risk and expense, every assistance in

obtaininganydocuments,otherthanthosementionedinthepreviousarticle,issued

inthecountryofshipmentand/oroforiginandwhichthebuyermayrequireforthe

importationofthegoodsintothecountryofdestination(and,wherenecessary,for

theirpassageintransitthroughanothercountry).

B. THEBUYERMUST:

1. Acceptthedocumentswhentenderedbytheseller,iftheyareinconformitywiththe

contractofsale,andpaythepriceasprovidedinthecontract.

2. Receivethegoodsattheagreedportofdestinationandbear,withtheexceptionofthe

freight,allcostsandchargesincurredinrespectofthegoodsinthecourseoftheir

transitbyseauntiltheirarrivalattheportofdestination,aswellasunloadingcosts,

includinglighterageandwharfagecharges,unlesssuchcostsandchargesshallhave

beenincludedinthefreightorcollectedbythesteamshipcompanyatthetimefreight

waspaid.

Note:Ifthegoodsaresold“C&Flanded”,unloadingcosts,includinglighterageand

wharfagecharges,arebornebytheseller.

3. Bearallrisksofthegoodsfromthetimewhentheyshallhaveeffectivelypassedthe

ship’srailattheportofshipment.

4. Incasehemayhavereservedtohimselfaperiodwithinwhichtohavethegoods

shipped and/or the right to choose the port of destination, and he fails to give

instructionsintime,beartheadditionalcoststherebyincurredandallrisksofthe

goods from thedateof the expirationof theperiod �ixed for shipment, provided

alwaysthatthegoodsshallhavebeendulyappropriatedtothecontract,thatistosay,

clearlysetasideorotherwiseidenti�iedasthecontractgoods.

5. Paythecostandchargesincurredinobtainingthecerti�icateoforiginandconsular

documents.

6. PayallcostsandchargesincurredinobtainingthedocumentsmentionedinArticle

A.11above.

7. Payallcustomsdutiesaswellasanyotherdutiesandtaxespayableatthetimeoforby

reasonoftheimportation.

8. Procureandprovideathisownriskandexpenseanyimportlicenseorpermitorthe

likewhichhemayrequirefortheimportationofthegoodsatthedestination.

Thistermcameintoforcein1953.

CIF

COST,INSURANCE&FREIGHT….(Namedportofdestination)

CIFmeans“Cost,InsuranceandFreight”.ThistermisthesameasC&Fbutwiththeadditionthat

thesellerhastoprocuremarineinsuranceagainsttheriskoflossofordamagetothegoods

duringthecarriage.Thesellercontractswiththeinsurerandpaystheinsurancepremium.The

buyershallnotethatunderthepresentterm,unliketheterm“Freight/CarriageandInsurance

paidto”,thesellerisonlyrequiredtocoverinsuranceonminimumconditions(so-calledFPA

conditions).

A. THESELLERMUST:

1. Supplythegoodsinconformitywiththecontractofsale,togetherwithsuchevidence

ofconformityasmayberequiredbythecontract.

2. Contractonusualtermsathisownexpenseforthecarriageofthegoodstotheagreed

portofdestinationbytheusualroute,inaseagoingvessel(notbeingasailingvessel)

ofthetypenormallyusedforthetransportofgoodsofthecontractdescription,and

payfreightchargesandanychargesforunloadingattheportofdischargewhichmay

beleviedbyregularshippinglinesatthetimeandportofshipment.

3. At his own risk and expense obtain any export licence or other Governmental

Authorizationnecessaryfortheexportofthegoods.

4. Loadthegoodsathisexpenseonboardthevesselattheportofshipmentandthedate

orwithintheperiod�ixedor,ifneitherdatenortimehasbeenstipulated,withina

reasonabletime,andnotifythebuyer,withoutdelay,thatthegoodshavebeenloaded

onboardthevessel.

5. Procure athisown cost and in a transferable form, apolicyofmarine insurance

against the risks of carriage involved in the contract. The insurance shall be

contractedwithunderwritersorinsurancecompaniesofgoodreputeonFPAterms,

andshallcovertheCIFpriceplustenpercent.Theinsurancesshallbeprovidedinthe

currencyofthecontract,ifprocurable(1).

Unlessotherwiseagreed,therisksofcarriageshallnotincludespecialrisksthatare

coveredinspeci�ictradesoragainstwhichthebuyermaywishindividualprotection.

Amongthespecialrisksthatshallbeconsideredandagreeduponbetweensellerand

buyer are theft, pilferage, leakage, breakage, chipping, sweat, contactwith other

cargoesandotherspeculiartoanyparticulartrade.

Whenrequiredbythebuyer,thesellershallprovide,atthebuyer’sexpense,warrisk

insuranceinthecurrencyofthecontract,ifprocurable.

CIFA.5providesfortheminimumterms(FPA)andperiodofinsurance(warehouseto

warehouse).Whenever the buyerwishesmore than theminimum liability to be

includedinthecontract,thenheshalltakecaretospecifythatthebasisofthecontract

istobe“Incoterms”withwhateveradditionherequires.

6. SubjecttotheprovisionsofArticleB.4below,bearallrisksofthegoodsuntilsuch

timeastheyshallhaveeffectivelypassedtheship’srailattheportofshipment.

PURCHASE MANUAL PURCHASE MANUAL240 241

7. Athisownexpensefurnishtothebuyerwithoutdelayacleannegotiablebilloflading

fortheagreedportofdestination,aswellastheinvoiceofthegoodsshippedandthe

insurance policy or, shall the insurance policy not be available at the time the

documentsaretendered,acerti�icateofinsuranceissuedundertheAuthorityofthe

underwritersandconveyingtothebearerthesamerightsasifhewereinpossession

ofthepolicyandreproducingtheessentialprovisionsthereof.Thebillofladingmust

cover the contract goods, be dated within the period agreed for shipment, and

providebyendorsementorotherwisefordeliverytotheorderofthebuyerorbuyer’s

agreedrepresentative.Suchbillofladingmustbeafullsetof“onboard”or“shipped”

billsoflading,ora“receivedforshipment”billofladingdulyendorsedbytheshipping

companytotheeffectthatthegoodsareonboard,suchendorsementtobedated

withintheperiodagreedforshipment.Ifthebillofladingcontainsareferencetothe

charterparty,thesellermustalsoprovideacopyofthislatterdocument.

Note: Acleanbillofladingisonewhichbearsnosuperimposedclausesexpressly

declaringadefectiveconditionofthegoodsorpackaging.

a. Clauses which do not expressly state that the goods or packaging are

unsatisfactory,e.g.,“second-handcases”,“useddrums”,etc;

b. Clauseswhichemphasizethecarrier’snon-liabilityforrisksarisingthroughthe

natureofthegoodsorthepackaging;

c. Clauseswhichdisclaimonthepartofthecarrierknowledgeofcontents,weight,

measurement,quality,ortechnicalspeci�icationofthegoods.

8. Provideathisexpensethecustomarypackingofthegoods,unlessitisthecustomof

thetradetoshipthegoodsunpacked.

9. Pay the costs of any checking operations (such as checking quality, measuring,

weighing, and counting)which shall benecessary for thepurposeof loading the

goods.

10. Payanyduesandtaxesincurredinrespectofthegoodsuptothetimeoftheirloading,

includinganytaxes,feesorchargesleviedbecauseofexportation,aswellasthecosts

ofanyformalitieswhichheshallhavetoful�ilinordertoloadthegoodsonboard.

11. Provide the buyer, at the latter’s request, risk and expense, every assistance in

obtaininganydocuments,otherthanthosementionedinthepreviousarticle,issued

inthecountryofshipmentand/oroforiginandwhichthebuyermayrequireforthe

importationofthegoodsintothecountryofdestination(and,wherenecessary,for

theirpassageintransitthroughanothercountry).

B. THEBUYERMUST

1. Acceptthedocumentswhentenderedbytheseller,iftheyareinconformitywiththe

contractofsale,andpaythepriceasprovideinthecontract.

2. Receivethegoodsattheagreedportofdestinationandbear,withtheexceptionofthe

freightandmarineinsurance,allcostsandchargesincurredinrespectofthegoodsin

thecourseoftheirtransitbyseauntiltheirarrivalattheportofdestination,aswellas

unloadingcosts,includinglighterageandwharfagecharges,unlesssuchcostsand

PURCHASE MANUAL PURCHASE MANUAL242 243

chargesshallhavebeenincludedinthefreightorcollectedbythesteamshipcompany

atthetimefreightwaspaid.

Ifwarinsuranceisprovided,itshallbeattheexpenseofthebuyer(seeA.5)

Note:Ifthegoodsaresold“CIFlanded”,unloadingcosts,includinglighterageand

wharfagecharges,arebornebytheseller.

3. Bearallrisksofthegoodsfromthetimewhentheyshallhaveeffectivelypassedthe

ship’srailattheportofshipment.

4. Incasehemayhavereservedtohimselfaperiodwithinwhichtohavethegoods

shipped and / or the right to choose theport of destination, andhe fails to give

instructionsintime,beartheadditionalcosttherebyincurredandallrisksofthe

goods from thedateof the expirationof theperiod �ixed for shipment, provided

alwaysthatthegoodsshallhavebeendulyappropriatedtothecontract,thatistosay,

clearlysetasideorotherwiseidenti�iedasthecontractgoods.

5. Paythecostsandchargesincurredinobtainingthecerti�icateoforiginandconsular

documents.

6. PayallcostsandchargesincurredinobtainingthedocumentsmentionedinArticle

A.12above.

7. Procureandprovideathisownriskandexpenseanyimportlicenceorpermitorthe

likewhichhemayrequirefortheimportationofthegoodsatdestination.

Thistermcameintoforcein1976.

FOB

AIRPORT….(Namedairportofdeparture)

TherulessetforthhereunderfordeliveryonFOBtermsforcarriageofthegoodsbyairhavebeen

carefully drafted to re�lect the usages usually observed in trade. It will be noted that the

expression“FOB”–properlymeaning“FREEONBOARD”-isnot,inrelationtoairtransportation,

tobetakenliterallybutratherasannouncingthatthenextwordconstitutesthepointwherethe

seller’sresponsibilityistoterminate.

A. THESELLERMUST:

1. Supplythegoodsinconformitywiththecontractofsale,togetherwithsuchevidence

ofconformityasmayberequiredbythecontract.

2. Deliverthegoodsintothechargeoftheaircarrierorhisagentoranyotherperson

namedbythebuyer,or,ifnoaircarrier,agentorotherpersonhasbeensonamed,ofan

aircarrierorhisagentchosenbytheseller. Deliveryshallbemadeonthedateor

withintheperiodagreedfordelivery,andatthenamedairportofdepartureinthe

mannercustomaryattheairportoratsuchotherplacesasmaybedesignatedbythe

buyerinthecontract.

3. Contractatthebuyer’sexpenseforthecarriageofthegoods,unlessthebuyerorthe

sellergivespromptnoticetothecontrarytotheotherparty.Whencontractingforthe

carriageasaforesaid, the seller shalldoso, subject to thebuyer’s instructionsas

providedforunderArticleB.1,onusualtermstotheairportofdestinationnamedby

thebuyer,or,ifnosuchairporthasbeennamed,tothenearestairportavailablefor

suchcarriagetothebuyer’splaceofbusiness,byausualrouteinanaircraftofatype

normallyusedforthetransportofgoodsofthecontractdescription.

4. Athisownriskandexpenseobtainanyexportlicenceorotherof�icialauthorization

necessaryfortheexportofthegoods.

5. SubjecttotheprovisionsofArticleB.6andB.7below,payanytaxes,feesandcharges

leviedinrespectofthegoodsbecauseofexportation.

6. SubjecttotheprovisionsofArticlesB.6andB.7below,bearanyfurthercostspayable

inrespectofthegoodsuntilsuchtimeastheywillhavebeendelivered,inaccordance

withtheprovisionsofArticleA.2above.

7. SubjecttotheprovisionsofArticlesB.6andB.7below,bearallrisksofthegoodsuntil

such time as theywill havebeendelivered, in accordancewith theprovisionsof

ArticleA.2above.

8. Provideathisownexpenseadequateprotectivepackingsuitabletodespatchofthe

goodsbyairunlessitiscustomofthetradetodespatchthegoodsunpacked.

9. Pay the costs of any checking operations (such as checking quality, measuring,

weighing,counting),whichshallbenecessaryforthepurposeofdeliveringthegoods.

10. Givethebuyernoticeofthedeliveryofthegoodswithoutdelaybytelecommunication

channelsathisownexpense.

11. InthecircumstancesreferredtoinArticlesB.6andB.7below,givethebuyerprompt

noticebytelecommunicationchannelsoftheoccurrenceofsaidcircumstances.

PURCHASE MANUAL PURCHASE MANUAL244 245

12. Providethebuyerwiththecommercialinvoiceinproperfromsofarastofacilitate

compliancewithapplicableregulationsand,atthebuyer’srequestandexpense,with

thecerti�icateoforigin.

13. Renderthebuyer,athisrequest,riskandexpense,everyassistanceinobtainingany

documentotherthanthosementionedinArticleA.12aboveissuedinthecountryof

departureand/oroforiginandwhichthebuyermayrequirefortheimportationof

thegoodsintothecountryofdestination(and,wherenecessary,fortheirpassagein

transitthroughanothercountry).

14. Renderthebuyer,athisrequest,riskandexpenseandsubjecttotheprovisionsofArticle

B.9below,everyassistanceinbringinganyclaimagainsttheaircarrierorhisagentin

respectofthecarriageofthegoods.

B. THEBUYERMUST:

1. Give the seller due notice of the airport of destination and give him proper

instructions(whererequired)forthecarriageofthegoodsbyairfromthenamed

airportofdeparture.

2. Ifthesellerwillnotcontractforthecarriageofthegoods,arrangeathisownexpense

forsaidcarriagefromthenamedairportofdepartureandgivethesellerduenoticeof

saidarrangements,statingthenameoftheaircarrierorhisagentofanyotherperson

intowhosechargedeliveryistobemade.

3. Bearallcostspayableinrespectofthegoodsfromthetimewhentheyhavebeen

deliveredinaccordancewiththeprovisionsofArticleA.2above,expectasprovidedin

ArticleA.5above.

4. Paythepriceinvoicedasprovidedinthecontractaswellasthecostofairfreightif

paidbyoronbehalfoftheseller.

5. Bearallrisksofthegoodsfromthetimewhentheyhavebeendelivered,inaccordance

withtheprovisionsofArticleA.2above.

6. Bearanyadditionalcosts incurredbecause theaircarrier,hisagentoranyother

personnamedbythebuyerfailstotakethegoodsintohischargewhentenderedby

theseller, andbearall risksof thegoods fromthe timeof such tender,provided,

however,thatthegoodswillhavebeendulyappropriatedtothecontract,thatistosay,

clearlysetasideorotherwiseidenti�iedasthecontractgoods.

7. Shallhe fail toprovideproper instructions (where required) to the seller for the

carriageofthegoods,bearanyadditionalcostsincurredbecauseofsaidfailureandall

risksofthegoodsfromthedateagreedfordeliveryorfromtheendoftheperiod

agreed for delivery, provided, however, that the goods will have been duly

appropriatedtothecontract,thatistosay,clearlysetasideorotherwiseidenti�iedas

thecontractgoods.

8. Bearallcosts,feesandchargesincurredinobtainingthedocumentsinArticleA.13

above,includingthecostsofconsulardocuments,aswellasthecostsofcerti�icatesof

origin.

9. Bearallcosts,feesandchargesincurredbythesellerinbringingandpursuingany

claimagainsttheaircarrierorhisagencyinrespectofthecarriageofthegoods.

AnnexureI

CONFIDENTIALITYAGREEMENT

This Con�identiality Agreement is made and entered into between M/s BEML Limited,

(hereinafterreferredtoasBEML),aGovt.of IndiaUndertakingunderMinistryof Defence,

having its Registered Of�ice at BEML Soudha, No.23/1, 4th Main, Sampangirama Nagar,

Bangalore–560027andM/s------(hereinafterreferredasXXXX)havingitsRegistered Of�ice

at………………….. . M/s. BEML, has been patronizing XXXX for components / spares listed in

Annexure hereto. A need has been felt to revitalize the business relationship for mutual

advantage.

1. It is mutually, therefore, agreed that the following shall form part of the terms and

conditionsforcontinuedbusiness:

a. ThesuppliershallnotdivulgetoanyoneelseexceptundertheAuthorityandforthe

purposedofBEML,allinformationsuchastechnicaldata,speci�ications,drawings,

modelsofspecimensfurnished/suppliedbyBEMLforthepurposeofmanufactureor

inconnectionwithdevelopmentalactivities,constitutethepropertyofBEMLandthe

suppliershallkeeptheminstrictcon�idence.Thishasbeenexplicitlystatedinallthe

detailstothesupplierthroughPurchaseOrder/Drawingsetc.,released.

b. Thesuppliershallnotsupplythecomponents/sparesexclusivelymanufacturedfor

BEMLLimitedwith theTechnicalData / Speci�ications / assistance furnishedby

BEMLandshallnotdisclosemyinitiations,developmentofadaptationsthereofto

anyoneelseexceptwiththewrittenconsentofBEML.

c. BEMLshallbeentitledtopreventbreachoftheaboveandtoclaimdamagesincaseof

anybreach.ItisherebymutuallyagreedthatforbreachofthisagreementtheVendor

shallpay,withoutactualproofofdamages,aliquidated amount of Rs. 1.00 Crore

(RupeesOneCroreonly).

d. ARBITRATION: In the event of any question or disputes arising under these

conditionsoranyothertermsandconditionsofcontractorinconnectionwiththis

contract(exceptastoanymattersthedecisionofwhichisspeciallyprovidedforby

theseconditions)thesameshallbereferredtoanawardofaSoletobeappointedby

BEMLwith the consent of the Contractor / Vendor Supplier and the Arbitration

proceedingsofArbitrationandConciliationAct1996.TheCourtsinBangalorealone

shallhave jurisdiction todealanddecideany legalmatterordisputewhatsoever

arisingoutofthisContract.

2. BEMLshallbeentitledtopreventbreachoftheaboveandtoclaimdamagesincaseofany

breach.

3. TheSignatoriesheretodeclarethattheyhavethesanctionandpowertoexecuteanddeliver

thisbindingagreement.

PURCHASE MANUAL PURCHASE MANUAL246 247

INWITNESSWHEREOF,thepartiesheretohavesettheirrespectivehandstothisCon�identiality

Agreementon…………………..writteninthepresenceof

Witness.

ForBEMLLimited ForM/s.XXXX

WITNESS: WITNESS:

1. 1.

2. 2.

ListofItems:

AnnexureJ

(Tobeexecutedonplainpaperandapplicableforalltendersofvalue��Rs1Crore)

INTEGRITYPACT

PrecontractINTEGRITYPACTisreproducedasbelow:

Between

BEMLLimited(BEML)hereinafterreferredtoas“ThePrincipal”

and

………………………….hereinafterreferredtoas“The

Bidder/Contractor”

Preamble

The Principal intends to award, under laid down organizational procedures, contract/s for

…………………………………….ThePrincipalvaluesfullcompliancewithallrelevantlawsoftheland,

rules,regulations,economicuseofresourcesandoffairness/transparencyinitsrelationswith

itsBidder(s)and/orContractor(s).

Inorder toachieve thesegoals, thePrincipalwill appoint an independentExternalMonitor

(IEM),whowillmonitorthetenderprocessandtheexecutionofthecontractforcompliancewith

theprinciplesmentionedabove.

Section1–CommitmentsofthePrincipal

(1) ThePrincipalcommitsitselftotakeallmeasuresnecessarytopreventcorruptionandto

observethefollowingprinciples:

a. NoemployeeofthePrincipal,personallyorthroughfamilymembers,willinconnection

withthetenderfor,ortheexecutionofacontract,demand,takeapromisefororaccept,

forselforthirdperson,anymaterialorimmaterialbene�itwhichthepersonisnotlegally

entitledto.

b. ThePrincipalwill,duringthetenderprocesstreatallBidder(s)withequityandreason.

ThePrincipalwill inparticular,beforeandduring the tenderprocess,provide toall

Bidder(s) the same information andwill notprovide to anyBidder(s) con�idential/

additional information through which the Bidder(s) could obtain an advantage in

relationtothetenderprocessorthecontractexecution.

c. ThePrincipalwillexcludefromtheprocessallknownprejudicedpersons.

PURCHASE MANUAL PURCHASE MANUAL248 249

(2) If theprincipal obtains informationon the conduct of anyof its employeeswhich is a

criminaloffenceundertheIPC/PCAct,orifthereisasubstantivesuspicioninthisregard,

thePrincipalwillinformtheChiefVigilanceOf�icerandinadditioncaninitiatedisciplinary

actions.

Section2–CommitmentoftheBidder(s)/contractor(s)

(1) TheBidder(s)/Contractor(s)committhemselvestotakeallmeasuresnecessarytoprevent

corruption. He commits himself to observe the following principles during his

participationinthetenderprocessandduringthecontractexecution.

a. TheBidder(s)/Contractor(s)willnot,directlyorthroughanyotherpersonor�irm,offer,

promiseorgivetoanyofthePrincipal’semployeesinvolvedinthetenderprocessorthe

executionofthecontractortoanythirdpersonanymaterialorotherbene�itwhich

he/sheisnotlegallyentitledto,inordertoobtaininexchangeanyadvantageofanykind

whatsoeverduringthetenderprocessorduringtheexecutionofthecontract.

b. TheBidder(s)/Contractor(s)willnotenterwithotherBiddersintoanyundisclosed

agreementorunderstanding,whetherformalorinformal.Thisappliesinparticularto

prices, speci�ications, certi�ications, subsidiary contracts, submission or non-

submission of bids or any other actions to restrict competitiveness or to introduce

cartelizationinthebiddingprocess.

c. TheBidder(s)/Contractor(s)willnotcommitanyoffenceundertherelevantIPC/PC

Act; further, the Bidder(s) / Contractor(s)will not use improperly, for purposes of

competition or personal gain, or pass on to others, any information or documents

providedbythePrincipalaspartofthebusinessrelationship,regardingplans,technical

proposals and business details, including information contained or transmitted

electronically.

d. TheBidder(s)/Contractor(s)offoreignoriginshalldisclosethenameandaddressofthe

Agents/RepresentativesinIndia,ifany.Similarly,theBidder(s)/Contractor(s)ofIndian

NationalityshallfurnishthenameandaddressoftheforeignPrincipals,ifany.Further,

as mentioned in the “Guidelines on Indian Agents of Foreign Suppliers” shall be

disclosedbytheBidder(s)/Contractor(s).Further,asmentionedintheGuidelinesallthe

paymentsmadetotheIndianagent/representativehavetobeinIndianRupeesonly.

Copyofthe“GuidelinesonIndianAgentsofForeignSuppliers”isplacedatAnnexureJ-1.

e. The Bidder(s) / Contractor(s) will, when presenting his bid, disclose any and all

paymentshehasmade,iscommittedtoorintendstomaketoagents,brokersorany

otherintermediariesinconnectionwiththeawardofthecontract.

(2) TheBidder(s)/Contactor(s)willnotinstigatethirdpersonstocommitoffencesoutlined

aboveorbeanaccessorytosuchoffences.

Section3–Disquali�icationfromtenderprocessandexclusionfromfuturecontracts

IftheBidder(s)/Contractor(s),beforeawardorduringexecutionhascommittedatransgression

through a violation of Section 2, above or any other form such as to put his reliability or

creditabilityinquestion,thePrincipalisentitledtodisqualifytheBidder(s)/Contractor(s)from

thetenderprocessortakeactionaspertheprocedurementionedinthe“GuidelinesonBanning

ofbusinessdealings”.

Section4–CompensationforDamages

i. IfthePrincipalhasdisquali�iedtheBidder(s)fromthetenderprocesspriortotheaward

according to Section 3, the Principal is entitled to demand and recover the damages

equivalenttoEarnestMoneyDeposit/BidSecurity.

ii. IfthePrincipalhasterminatedthecontractaccordingtoSection3,orifthePrincipalis

entitledtoterminatethecontractaccordingtoSection3,thePrincipalshallbeentitledto

demandandrecoverfromtheContractorliquidateddamagesofthecontractvalueorthe

amountequivalenttoPerformanceBankGuarantee.

Section5–PreviousTransgression

I TheBiddersdeclaresthatnoprevioustransgressionsoccurredinthelastthreeyearswith

anyotherCompanyinanycountryconformingtotheanticorruptionapproachorwithany

otherPublicSectorEnterprisesinIndiathatcouldjustifyhisexclusionfromthetender

process.

ii. IftheBiddermakesincorrectstatementonthissubject,hecanbedisquali�iedfromthe

tenderprocessoractioncanbetakenaspertheprocedurementionedin“Guidelineson

Banningofbusinessdealings”.

Section6–EqualtreatmentofallBidders/Contractors/Sub­contractors

I The Bidder(s)/ Contractor(s) undertaker(s) to demand from all sub-contractors a

commitmentinconformitywiththisIntegrityPactandtosubmitittothePrincipalbefore

contractsigning.

ii. The Principal will enter into agreementwith identical conditions as this onewith all

Bidders,Contractorsandsub-contractors.

iii. ThePrincipalwilldisqualifyfromthetenderprocessallbidderswhodonotsignthisPactor

violateitsprovisions.

Section7–CriminalchargesagainstviolatingBidder(s)/Contractor(s)/Sub­contractor(s)

IfthePrincipalobtainsknowledgeofconductofaBidder,ContractororSub-contractor,orofan

employeeorarepresentativeoranassociateofaBidder,ContractororSub-contractorwhich

constitutescorruption,orofthePrincipalhassubstantivesuspicioninthisregard,thePrincipal

willinformthesametotheChiefVigilanceOf�icer

Section8–IndependentExternalMonitor/Monitors

I ThePrincipalappointscompetentandcredibleIndependentExternalMonitorforthisPact.

ThetaskoftheMonitoristoreviewindependentlyandobjectively,whetherandtowhat

extentthepartiescomplywiththeobligationsunderthisagreement.

ii. The Monitor is not subject to instructions by the representatives of the parties and

performshisfunctionsneutrallyandindependently.Itwillbeobligatoryforhimtotreatthe

informationanddocumentsoftheBidders/Contractorsascon�idential.Hereportstothe

CMD,BEML.

iii. TheBidder(s)/Contractor(s) accepts that theMonitorhas the right to accesswithout

restrictiontoallProjectdocumentationof thePrincipal includingthatprovidedbythe

Contractor.TheContractorwillalsogranttheMonitor,uponhisrequestanddemonstration

PURCHASE MANUAL PURCHASE MANUAL250 251

ofavalidinterest,unrestrictedandunconditionalaccesstohisprojectdocumentation.The

sameisapplicabletoSub-contractors.TheMonitorisundercontractualobligationtotreat

theinformationanddocumentsoftheBidder(s)/Contractor(s)/Sub-contractor(s)with

con�identiality.

iv. ThePrincipalwillprovidetotheMonitorsuf�icientinformationaboutallmeetingsamong

thepartiesrelated to theProjectprovidedsuchmeetingscouldhavean impacton the

contractualrelationsbetweenthePrincipalandtheContractor.Thepartiesoffertothe

Monitortheoptiontoparticipateinsuchmeetings.

v. AssoonastheMonitornotices,orbelievestonotice,aviolationofthisagreement,hewillso

informtheManagementofthePrincipalandrequesttheManagementtodiscontinueor

takecorrectiveaction,or to takeother relevantaction.Themonitor can in this regard

submitnon-bindingrecommendations. Beyondthis,theMonitorhasnorighttodemand

fromthepartiesthattheyactinaspeci�icmanner,refrainfromactionortolerateaction.

vi. TheMonitorwillsubmitawrittenreporttotheCMD,BEML,within8to10weeksfromthe

dateofreferenceorintimationtohimbythePrincipaland,shalltheoccasionarisesubmit

proposalsforcorrectingproblematicsituations.

vii. IftheMonitorhasreportedtotheCMD,BEML,asubstantiatedsuspicionofanoffenceunder

relevantIPC/PCAct,andtheCMD,BEMLhasnot,withinthereasonabletimetakenvisible

action toproceedagainst suchoffenceor reported it to theChiefVigilanceOf�icer, the

MonitormayalsotransmitthisinformationdirectlytotheCentralVigilanceCommissioner.

viii. Theword‘Monitor’wouldincludebothsingularandplural.

Section9–PactDuration

Thispactbeginswhenbothpartieshavelegallysignedit.ItexpiresfortheContractor12months

afterthelastpaymentunderthecontract,andforallotherBidders6monthsafterthecontract

hasbeenawarded.

Ifanyclaimismade/lodgedduringthistime,thesameshallbebindingandcontinuetobevalid

despitethelapseofthispactasspeci�iedabove,unlessitisdischarged/determinedbyCMDof

BEML.

Section10–Otherprovisions

i. This agreement is subject to Indian Law. Place of performance and jurisdiction is the

CorporateOf�iceofthePrincipal,i.e.Bangalore.

ii. Changesandsupplementsaswellasterminationnoticesneedtobemadeinwriting.Side

agreementshavenotbeenmade.

iii. IftheContractorisapartnershiporaconsortium,thisagreementmustbesignedbyall

partnersorconsortiummembers.

iv. Shalloneorseveralprovisionsofthisagreementturnouttobeinvalid;thereminderofthis

agreementremainsvalid.Inthiscase,thepartieswillstrivetocometoanagreementto

theiroriginalintensions.

v. IntheeventofanycontradictionbetweentheIntegrityPactanditsAnnexure,theClausein

theintegritypactwillprevail.

----------------------------------------------- -----------------------------------------------

(For&OnbehalfofthePrincipal) (For&OnbehalfofBidder/Contractor)

(Of�iceSeal) (Of�iceSeal)

Place-------------------- Place--------------------

Date-------------------- Date--------------------

Witness1: Witness1:

(Name&Address)------------------------------- (Name&Address)-------------------------------

------------------------------- -------------------------------

------------------------------- -------------------------------

------------------------------- -------------------------------

Witness1: Witness1:

(Name&Address)------------------------------- (Name&Address)-------------------------------

------------------------------- -------------------------------

------------------------------- -------------------------------

------------------------------- -------------------------------

PURCHASE MANUAL PURCHASE MANUAL252 253

AnnexureJ1

GUIDELINESFORINDIANAGENTSOFFOREIGNSUPPLIERS

1.0 ThereshallbecompulsoryregistrationofagentsforallGlobal(Open)TenderandLimited

Tender.AnagentwhoisnotregisteredwithBEMLLTDshallapplyforregistrationinthe

prescribedApplication-Formavailableonwww.bemlindia.com.

1.1 Registeredagentswill�ileanauthenticatedPhotostatcopydulyattestedbyaNotary

Public/Original certi�icate of the principal con�irming the agency agreement and

giving the statusbeingenjoyedby theagentand the commission/remuneration/

salary/retainershipbeingpaidbytheprincipaltotheagentbeforetheplacementof

orderbyBEMLLTD.

1.2 Wherever the Indian representatives have communicated on behalf of their

principals and the foreign parties have stated that they are not paying any

commissiontotheIndianagents,andtheIndianrepresentativeisworkingonthe

basisofsalaryorasretainer,awrittendeclarationtothiseffectshallbesubmittedby

thePrincipalbefore�inalizingtheorder.

2.0 DISCLOSUREOFPARTICULARSOFAGENTS/REPRESENTATIVESININDIA,IFANY:

2.1 TenderersofForeignnationalityshallfurnishthefollowingdetailsintheiroffer:

2.1.1Thenameandaddressoftheagents/representativesinIndia, ifanyandthe

extentofauthorizationandAuthoritygiventocommitthePrincipals.Incasethe

agent/representativeisaforeignCompany,itshallbecon�irmedwhetheritis

realsubstantialCompanyanddetailsofthesameshallbefurnished.

2.1.2Theamountofcommission/remunerationincludedinthequotedprice(s)for

suchagents/representativesinIndia.

2.1.3Con�irmation of the Tenderer that the commission/ remuneration if any,

payabletohisagents/representativesinIndia,maybepaidbyBEMLLTDin

IndianRupeesonly.

2.2TenderersofIndianNationalityshallfurnishthefollowingdetailsintheiroffers:

2.2.1Thenameandaddressoftheforeignprincipalsindicatingtheirnationalityas

well as their status, i.e., whether manufacturer or agents of manufacturer

holding the Letter of Authority of the Principal speci�ically authorizing the

agenttomakeanofferinIndiainresponsetotendereitherdirectlyorthrough

theagents/representatives.

2.2.2Theamountofcommission/remunerationincludedintheprice(s)quotedby

theTendererforhimself.

2.2.3Con�irmationoftheforeignprincipalsoftheTendererthatthecommission/

remuneration,ifany,reservedfortheTendererinthequotedprice(s),maybe

paid by BEML LTD in India in equivalent Indian Rupees on satisfactory

completionoftheProjectorsuppliesofStoresandSparesincaseofoperation

items.

2.3 In either case, in the event of contract materializing, the terms of payment will

provide for payment of the commission /remuneration, if any payable to the

agents/representatives in India in Indian Rupees on expiry of 90 days after the

dischargeoftheobligationsunderthecontract.

2.4Failuretofurnishcorrectanddetailedinformationascalledforinparagraph-2.0above

will render the concerned tender liable to rejectionor in the event of a contract

materializing,thesameliabletoterminationbyBEMLLTD.Besidesthistherewould

beapenaltyofbanningbusinessdealingswithBEMLLTDordamageorpaymentofa

namedsum.

PURCHASE MANUAL PURCHASE MANUAL254 255

AnnexureK

NON­COMPETITIONAGREEMENT

THIS NON COMPETITION AGREEMENT is made and executed on this the………day of

………………atBangaloreBETWEENM/s.BEMLLtd,aGovernmentofIndiaundertaking,having

itsRegisteredof�iceatNo.23/1,“BEMLSOUDHA”,4thMainRoad,SampangiramNagar,Bangalore

–560027(hereinaftercalled“BEML”)andmanufacturingunitsatKolarGoldFields,Mysoreand

Bangalore,whichexpressionshallunlessrepugnanttothesubjectorcontextthereofmeanand

includeitsrepresentatives,administrators,successorsandassignsetcoftheFIRSTPART.

AND

M/s………………………Company,withitsRegisteredOf�iceat……………………..….andmanufacturing

unitat…………………………..……………representedbytheirShri……………..alawfulAttorney,residing

at………………………….(hereinaftercalled“VENDOR”)whichexpressionshallunlessrepugnantto

thesubjectorcontextthereofmeanandincludeitsrepresentatives,administrators,successors

andassignsetcoftheSECONDPART.

NOWTHISAGREEMENTWITNESSETHANDITISAGREEDBYANDBETWEENTHEPARTIES

HERETOASUNDER:

Whereas,BEMLwillplacePurchaseOrderNo…………..Dated……..ontheVENDORforsupplyof

………………………………………………………………………………..which products are exclusively

manufacturedtothedesignsandspeci�icationsofBEML.

In pursuance of the placement of the above Purchase Order on M/s………………or

M/s……………………..oranyotherAuthorizedDealer/Distributoroforanypersonauthorizedby

……..theVENDORherebyagreeandundertakenottoquoteorsupply…........................................…………

……………………………………………………………………………toanyotherpartiesinIndiaandassuchthe

VENDOR isprohibitedtoquoteorsupplytheproductsspeci�iedintheinstantAgreement. In

contraventionofthisterm,TheVENDORoranyotherAuthorizedDealer/Distributor/Agentof

oranypersonauthorizedbytheVENDORweretoquoteandsupply…….........................................………

..............………………………………………………………..toanyotherpartiesinIndiaand/orabroad,BEML

would,aftergivingareasonableopportunitytoexplainsuchquoteandsupplybeentitledtolevy

apenaltytotheextentoflossoccasionedtoBEML.

This Non-Competition Agreement will be valid for a period of �ive years from the date of

placement of Purchase Order by BEML on the VENDOR and for all Government / Quasi-

GovernmentcompaniesinIndiaandallnon-GovernmentCompaniesinIndiaandabroad.

Disputesifany,arisingbetweenthepartiesinconnectionwiththisNon-CompetitionAgreement

oranyothermattersconnected therewith, thesamewillbemutuallydiscussedandsettled,

failingwhich,thedisputesshallbereferredtoaSoleArbitratortobeappointedbyBEML. The

Arbitration proceedings shall be in accordance with the provisions of Arbitration and

Conciliation Act, 1996 and Rules framed there under. The place of Arbitration shall be at

BangaloreandallArbitrationproceedingsshallbeconductedinEnglishlanguageandgoverned

bytheabovesaidActandRulesframedthereunder. CourtsatBangaloreshallalonehavesole

jurisdiction to decide any issue arising out of the Arbitration or this Non-Competition

Agreement.

INWITNESSWHEREOFTHEPARTIESHERETOHAVESETTHEIRRESPECTIVEHANDSAND

SEALSONTHEDAY,MONTH,ANDYEARFIRSTABOVEWRITTEN.

M/s.BEMLLIMITED. M/s.

WITNESSES:

1)

2)

PURCHASE MANUAL PURCHASE MANUAL256 257

AnnexureL

SUB:UNDERTAKINGOFAUTHENTICITYFORDESKTOPSAND

SERVERSUPPLIES:

Sub:SupplyofITHardware/Software-DesktopsandServers.

Ref: 1.YourPurchaseOrderNo…………………………….Dated…………………..

2.OurInvoiceNo./QuotationNo………………………Dated…………………..

With reference to theDesktops andServersbeing supplied/Quoted to youvideour Invoice

No/QuotationNo/OrderNo.citedabove………………………………………………….

Weherebyundertakethatallthecomponents/Parts/assembly/softwareusedintheDesktops

and Servers under the above like Hard Disk, Monitors, Memory etc., shall be original new

components/parts/assembly/softwareonly,fromrespectiveOEMsoftheproducts,andthatno

refurbished/duplicate/secondhandcomponents/parts/assembly/softwarearebeingusedor

shallbeused.

WealsoundertakethatinrespectoflicensedoperatingsystemifaskedforbyyouinthePurchase

Order,thesameshallbesuppliedalongwiththeauthorizedlicensecerti�icate(e.g.Product,keys

onCerti�icationofAuthenticityincaseofMicrosoftWindowsOperatingSystem)andalsothatit

sl1all be sourced from the authorized source (e.g. AuthorizedMicrosoft channel in case of

MicrosoftOperatingSystem).

Shallyourequire,weherebyundertaketoproducethecerti�icate fromourOEMsupplier in

supportofaboveundertakingatthetimeofdelivery/installation.Itwillbeourresponsibilityto

producesuchlettersfromourOEMsupplier'satthetimeofdeliverywithinareasonabletime.

Incaseofdefaultandweareunable tocomplywithaboveat the timeofdeliveryorduring

Installation,fortheITHardware/Softwarealreadybilled,weagreetotakebacktheDesktopsand

Serverswithoutdemur,ifalready•suppliedandreturnthemoneyifanypaidtousbyyouinthis

regard.

We(SystemOEMname)alsotakefullresponsibilityofbothParts&ServiceSLAasperthecontent

evenifthereisanydefectbyourauthorizedserviceCentre/Reseller/SIetc.,

AuthorizedSignatory

Name :

Designation :

Place :

Date :

AnnexureM

LISTOFITEMSRESERVEDFORPURCHASEFROMSMALLSCALE

INDUSTRIAL

UNITSINCLUDINGHANDICRAFTSECTOR.

Sl.No.ItemDescription

1. AAC/andACSRConductorupto19strands

2. AgriculturalImplements

(a) HandOperatedtoolsandimplements

(b) Animaldrivenimplements

3. Air/RoomCoolers

4. Aluminiumbuilder'shardware

5. Ambulancestretcher

6. Ammeters/ohmmeter/Voltmeter(ElectromagneticuptoClassIaccuracy)

7. AnkletsWebKhaki

8. Augur(Carpenters)

9. AutomobileHeadlightsAssembly

10. Badgesclothembroideredandmetals

11. Bagsofalltypesi.e.madeofleather,cotton,canvasandjuteetc.includingkitbags,mail

bags,sleepingbagsandwater-proofbag.

12. Bandagecloth

13. BarbedWire

14. Basketcane(ProcurementcanalsobemadefromStateForestCorpn.andStateHandicrafts

Corporation)

15. Bathtubs

16. BatteryCharger

17. BatteryEliminator

18. BeamScales(upto1.5tons)

19. Beltleatherandstraps

20. BenchVices

21. BituminousPaints

22. BlottingPaper

23. BoltsandNuts

24. BoltsSliding

25. BoneMeal

26. BootPolish

27. BootsandShoesofalltypesincludingcanvasshoes

PURCHASE MANUAL PURCHASE MANUAL258 259

28. Bowls

29. BoxesLeather

30. Boxesmadeofmetal

31. Braces

32. BracketsotherthanthoseusedinRailways

33. BrassWire

34. BriefCases(otherthanmouldedluggage)

35. Brooms

36. Brushesofalltypes

37. Bucketsofalltypes

38. Buttonofalltypes

39. CandleWaxCarriage

40. CaneValves/stockvalves(forwater�ittingsonly)

41. Cansmetallic(formilkandmeasuring)

42. CanvasProducts

(a) WaterProofDeliver,Bagstospec.No.IS-1422/70

(b) BonnetCoversandRadiatorsMuff.tospec.Drg.Lv7/NSN/IA/130295

43. CapesCottonandWoollen

44. CapesWaterproof

45. CastorOil

46. Ceilingrosesupto15amps

47. Centrifugalsteelplateblowers

48. CentrifugalPumpssuctionanddelivery150mm.x150mm

49. ChaffCutterBlade

50. Chainslashing

51. Chappalsandsandals

52. ChamoisLeather

53. Chokesforlight�itting

54. ChromeTannedleather(Semi-�inishedBuffaloandCow)

55. Circlips

56. ClawBarsandWires

57. CleaningPowder

58. ClinicalThermometers

59. ClothCovers

60. ClothJaconet

61. ClothSponge

62. Coir�ibreandCoiryarn

63. Coirmattresscushionsandmatting

64. CoirRopehawserlaid

65. CommunityRadioReceivers

66. Conduitpipes

67. Coppernail

68. CopperNapthenate

69. Coppersulphate

70. CordTwineMaker

71. CordageOthers

72. CorrugatedPaperBoardandBoxes

73. CottonAbsorbent

74. CottonBelts

75. CottonCarriers

76. CottonCases

77. CottonCordTwine

78. CottonHosiery

79. CottonPacks

80. CottonPouches

81. CottonRopes

82. CottonSinglets

83. CottonSling

84. CottonStraps

85. Cottontapesandlaces

86. CottonWool(Nonabsorbent)

87. CratesWoodenandplastic

88. CruciblesuptoNo.200(b)CruciblesGraphiteuptoNo.500(c)OtherCruciblesupto30kgs.

89. Cumbliesandblankets

90. Curtainsmosquito

91. Cutters

92. Dibutylphthalate

93. Dieselenginesupto15H.P

94. DimethylPhthalate

95. DisinfectantFluids

96. DistributionBoardupto15amps

97. DomesticElectricappliancesasperBISSpeci�ications:--ToasterElectric,Elect.

Iron,HotPlates,Elect.Mixer,Grinders,Roomheatersandconvectorsandovens

98. Domestic (House Wiring) P.V.C. Cables and Wires (Aluminium) Conforming to the

prescribedBISSpeci�icationsandupto10.00mmsq.nominalcrosssection

PURCHASE MANUAL PURCHASE MANUAL260 261

99. DrawingandMathematicalInstruments

100. DrumsandBarrels

101.DustBins

102.DustShieldleather

103.DustersCottonalltypesexcepttheitemsrequiredinKhadi

104.Dyes:

(a) AzoDyes(DirectandAcid)

(b) BasicDyes

105.ElectricCallbells/buzzers/doorbells

106.ElectricSolderingIron

107.ElectricTransmissionLineHardwareitemslikesteelcrossbars,crossarmsclamps,arching

horn,brackets,etc

108.Electronicdoorbell

109.EmergencyLight(Rechargeabletype)

110.EnamelWaresandEnamelUtensils

111.Equipmentcamou�lageBamboosupport

112.ExhaustMuf�ler

113.ExpandedMetal

114.Eyelets

115.FilmPolythene-includingwidewidth�ilm

116.Filmspoolsandcans

117.FireExtinguishers(walltype)

118.FootPowder

119.Frenchpolish

120.Funnels

121.FuseCutouts

122.FuseUnit

123.Garments(excludingsupplyfromIndianOrdnanceFactories)

124.Gasmantels

125.Gauzecloth

126.Gauzesurgicalalltypes

127.Ghamellas(Tasllas)

128.GlassAmpules

129.GlassandPressedWares

130.Glue

131.GreaseNipplesandGreaseguns

132.Guncases

133.GunMetalBushes

134.Gumtape

135.Handdrawncartsofalltypes

136.Handglovesofalltypes

137.HandLampsRailways

138.Handnumberingmachine

139.HandpoundedRice(polishedandunpolished)

140.Handpresses

141.HandPump

142.HandToolsofalltypes

143.Handleswoodenandbamboo(ProcurementcanalsobemadefromStateForestCorpn.

andStateHandicraftsCorporation)

144.HarnessLeather

145.HaspsandStaples

146.HaverSacks

147.HelmetNon-Metallic

148.Hideandcountryleatherofalltypes

149.Hinges

150.Hobnails

151.Holdall

152.Honey

153.HorseandMuleShoes

154.HydraulicJacksbelow30toncapacity

155.InsecticidesDustandSprayers(Manualonly)

156.Invalidwheeledchairs.

157.Invertordomestictypeupto5KVA

158.Iron(dhobi)

159.Keyboardwooden

160.KitBoxes

161.Kodali

162.Laceleather

163.Lampholders

164.Lampsignal

165.LanternsPostsandbodies

166.Lanyard

167.Latexfoamsponge

168.Lathies

PURCHASE MANUAL PURCHASE MANUAL262 263

169.LetterBoxes

170.LightingArresters-upto22kv

171.LinkClip

172.LinseedOil

173.LintPlain

174.Lockers

175.Lubricators

176.L.T.PorcelainKITKATandFuseGrips

177.MachineScrews

178.MagnesiumSulphate

179.MalletWooden

180.Manholecovers

181.MeasuringTapesandSticks

182.Metalcladswitches(upto30Amps)

183.MetalPolish

184.MetalliccontainersanddrumsotherthanN.E.C.(Notelsewhereclassi�ied)

185.Metricweights

186.Microscopefornormalmedicaluse

187.Miniaturebulbs(fortorchesonly)

188.M.S.TieBars

189.NailCutters

190.NaphthaleneBalls

191.Newar

192.NickelSulphate

193.NylonStocking

194.NylonTapesandLaces

195.OilBoundDistemper

196.OilStoves(Wickstovesonly)

197.Padlocksofalltypes

198.Paintremover

199.PalmaRosaOil

200.Palmgur

201.PansLavatoryFlush

202.Paperconversionproducts-paperbags,envelops,Ice-creamcup,papercupandsaucers

andpaperPlates

203.PaperTapes(Gummed)

204.Pappads

205.PicklesandChutney

206.Pilesfabric

207.Pillows

208.PlasterofParis

209.PlasticBlowMouldedContainersupto20litreexcludingPolyEthyleneTerphthalate(PET)

Containers

210.Plasticcane

211.PlayingCards

212.PlugsandSocketselectricupto15Amp

213.Polythenebags

214.PolythenePipes

215.PostPicket(Wooden)

216.PostalLeadseals

217.PotassiumNitrate

218.Pouches

219.PressureDieCastingupto0.75kg

220.PrivyPans

221.PulleyWire

222.PVCfootwears

223.PVCpipesupto110mm

224.PVCInsulatedAluminiumCables(upto120sq.mm)(ISS:694)

225.Quilts,Razais

226.Rags

227.RailwayCarriagelight�ittings

228.RakesBallast

229.Razors

230.RCCPipesupto1200mm.dia

231.RCCPolesPrestressed

232.Rivetsofalltypes

233.RollingShutters

234.RooflightFittings

235.RubberBalloons

236.RubberCord

237.RubberHoses(Unbranded)

238.RubberTubing(Excludingbraidedtubing)

239.RubberisedGarmentsCapandCapsetc

240.Rust/ScaleRemovingcomposition

PURCHASE MANUAL PURCHASE MANUAL265264

241.Safemeatandmilk

242.Safetymatches

243.SafetyPins(andothersimilarproductslikepaperpins,staplespinsetc.)

244.SanitaryPlumbing�ittings

245.SanitaryTowels

246.Scienti�icLaboratoryglasswares(Barringsophisticateditems)

247.Scissorscutting(ordinary)

248.ScrewsofalltypesincludingHighTensile

249.Sheepskinalltypes

250.Shellac

251.Shoelaces

252.Shovels

253.SignBoardspainted

254.Silkribbon

255.SilkWebbing

256.Skibootsandshoes

257.SluiceValves

258.Snapfastner(Excluding4pcs.ones)

259.SoapCarbolic

260.SoapCurd

261.SoapLiquid

262.SoapSoft

263.Soapwashingorlaundarysoap

264.SoapYellow

265.Socket/pipes

266.SodiumNitrate

267.SodiumSilicate

268.Soleleather

269.Spectacleframes

270.Spikedboot

271.Sportsshoesmadeoutofleather(forallSportsgames)

272.SquirrelCageInductionMotorsuptoandincluding100KW440volts3phase

273.Staplingmachine

274.SteelAlmirah

275.Steelbedsstead

276.SteelChair

277.Steeldesks

278.Steelracks/shelf

279.Steelstools

280.Steeltrunks

281.Steelwool

282.Steelandaluminiumwindowsandventilators

283.Stockinet

284.Stoneandstonequarryrollers

285.Stonewarejars

286.StrandedWire

287.Streetlight�ittings

288.StudentMicroscope

289.Studs(excludinghightensile)

290.SurgicalGloves(ExceptPlastic)

291.Tableknives(ExcludingCutlery)

292.TackMetallic

293.Taps

294.Tarpaulins

295.Teakfabricatedroundblocks

296.TentPoles

297.TentageCivil/MilitaryandSalitahJuteforTentage

298.TextilesmanufacturesotherthanN.E.C.(notelsewhereclassi�ied)

299.Tiles

300.TinBoxesforpostagestamp

301.Tincanunprintedupto4gallonscapacity(otherthancanO.T.S.)

302.TinMess

303.TipBoots

304.ToggleSwitches

305.ToiletRolls

306.TransformertypeweldingsetsconformingtoIS:1291/75(upto600amps)

307.TransistorRadioupto3band

308.TransistorisedInsulation-Testers

309.Trays

310.Traysforpostaluse

311.Trolley

312.Trollies-drinkingwater

313.TubularPoles

314.TyresandTubes(Cycles)

PURCHASE MANUAL 266

315.Umbrellas

316.Utensilsalltypes

317.ValvesMetallic

318.VarnishBlackJapan

319.VoltageStabilisersincludingC.V.T's

320.Washersalltypes

321.WaterProofCovers

322.WaterProofpaper

323.Watertanksupto15,000litrescapacity

324.Waxsealing

325.Waxedpaper

326.WeighingScale

327.WeldedWiremash

328.Wheelbarrows

329.Whistle

330.Wickscotton

331.WingShieldWipers(ArmsandBladesonly)

332.WirebrushesandFibreBrushes

333.WireFencingandFittings

334.WirenailsandHorseshoenails

335.Wirenettingsofgauzethickerthan100meshsize

336.WoodWool

337.Woodenammunitionboxes

338.WoodenBoards

339.WoodenBoxforStamps

340.WoodenBoxesandCasesN.E.C.(Notelsewhereclassi�ied)

341.WoodenChairs

342.WoodenFlushDoorShutters

343.Woodenpackingcasesallsizes

344.Woodenpins

345.Woodenplugs

346.Woodenshelves

347.Woodenveneers

348.Woollenhosiery

349.ZincSulphate

350.ZipFasteners

PURCHASE MANUAL267

HANDICRAFTITEMS

Sl.No.ItemDescriptionSourceofSupply

351 Cane furniture North Eastern Handicrafts and Handlooms Development Corporation

Assam Govt. Marketing Corpn. Craft Society of Manipur Nagaland Handicrafts and

HandloomsDevelopmentCorpn.

352.Bamboo�iletray,-do-Baskets,Pencilstand,sideracksetc.

353.ArtisticWoodenFurnitureRajasthanSmallIndustriesCorpn.,U.P.ExportCorporation.

354. Woodenpaperweight,racksetc.-do-

355. Glasscoversmadeofwoodandgrassjute-do-

356.Jute furnitureWestBengalHandicraftsDev.Corpn. JuteMfg.DevelopmentCorporation

OrissaStateHandicraftsDev.Corpn.

357.Jutebags,�ilecover-do-

358.WoollenandsilkcarpetsU.P.ExportCorporationJandKSaleandExportCorporation

PURCHASE MANUAL 268 PURCHASE MANUAL269

AnnexureN

GUIDELINESOFPROTECTIONOFEXCHANGERATE

VARIATIONINCONTRACTS

1. ParameterstobekeptinviewwhileformulationERVClause.

(a) IncontractswithIndianVendorsinallcategoriesofcapitalacquisitionswherethere

isanimportcontent,ERVclausewillbeprovided.However,ERVclauseshallnotbe

applicabletocontractsinfollowingconditions:-

(i) Thedeliveryperiodislessthanoneyear;or

(ii) Therateofexchangevariationiswithinthebandof+/-2.5%.

(b) ERVclausewillbeframedaccordingtothespeci�icrequirementsofthecontract.

While calling for informationat theRFP stage/formulationofERVclauses in the

contracts,thefollowingfactorsaretobetakenintoconsiderationdependinguponthe

requirementsoftheindividualcontracts:-

(i) Yearwiseandmajorcurrencywiseimportbreakupistobeindicated.

(ii) Detailedtimescheduleforprocurementofimportedmaterialandtheirvalueatthe

FEratesadoptedforthecontractistobefurnishedbythevendoraspertheformat

givenbelow:-

YEAR TOTALCOSTOFIMPORTEDMATERIAL(Inrupees)

DOLLARDENOMINATED

EURODENOMINATED

POUNDSDENOMINATED

OTHERCURRENCIESDENOMINATED(asapplicable)

FECONTENT-OUTFLOW(equivalentinrupees₹incrore)

(iii)ERVclausewillnotbeapplicableincasedeliveryperiodsforimportedcontentare

subsequently to be re�ixed/extended unless the reasons for delivery period

extensionareattributabletothebuyer.

(iv) Forpurposesofensuringuniformity,theBaseExchangeRateontheERVreckoning

datewillbeadoptedforeachofthemajorforeigncurrencies.TheBaseExchange

RatewillbetheBCSellingRateoftheParliamentStreetBranchofStateBankof

India,NewDelhi.TheERVreckoningdatewillbethelastdateofsubmissionof

commercialbidsasperRFP.

(v) ERVclauseinthecontractistoclearlyindicatethatERVispayable/refundable

depending upon exchange rate as prevalent on the date of transaction with

referencetoBaseExchangeRateontheERVreckoningdate.

(vi) Otherissueswhicharepeculiartothecontract.

2. MethodologyforClaimingERV

“The prices �inalised in the contract are based on the base exchange rates indicated in the

contract.

Theyear-wiseamountofforeignexchangecomponentoftheimporteditemsasindicatedinthe

contractshallbeadjustedfortheimpactofexchangeRateVariationoftheRupeebasedonthe

exchangerateprevailingonthedateofeachtransaction,asnoti�iedbytheSBI,ParliamentStreet

Branch,NewDelhi.Theimpactofnoti�iedExchangeRateVariationshallbecomputedonayearly

basisfortheout�lowastabulatedinAnnexure…..(ThetableatPara1(b)(ii)istobeanAnnexure

tothecontract)andshallbepaid/refundedbeforetheendofthe�inancialyearbasedonthe

certi�icationofFinanceHeadoftheconcernedDivision…..”

3. DocumentationforClaimingERV.Thefollowingdocumentswouldneedtobesubmitted

insupportoftheclaimonaccountofERV:-

(a) AbillofERVclaimenclosingworksheet.

(b) Banker’sCerti�icate/debitadvicedetailingForeignExchangepaidandExchangerate

asondateoftransaction.

(c) Copiesofimportordersplacedonthesuppliers.

(d) Invoiceofsupplierfortherelevantimportorders.

AsperAnnexureIofDPP

PURCHASE MANUAL PURCHASE MANUAL270 271

FormatF1

PURCHASEPROPOSAL

PROPOSALFORAPPROVALFORPROCUREMENTOFPROJECTMATERIAL

(GUIDELINESFORFILLINGPROPOSAL)

RefNo.: Date:

1 Proposal Proposal for placement of order on ……… for supply of

………foravalueof……….OnEx-works/FORplusED……..

Tax……….Andfreight………..payableby………….

Sl.No HEADING DETAILS

2

3

4

5

Background

Tendering

Technicalevaluation

Commercial

Evaluation

Pleasespecifythefollowing:

a)Project:quantity/equipment-totalquantityrequired

(justi�ication)–PRNo.&date.

b)LPPparticulars–PONo.,date,project;value/unitrate

(landedcost)

• Procedurefollowedforsourcing/vendorselection.

• Modeoftendering.

• Analysisofresponses– i.e.,No.of �irmscontactedand

responsereceived.

• Tocon�irmwhethertenderingwasinlinewithlaiddown

procedures.

• Con�irmwhetherapprovalofcompetentAuthorityhas

beenobtainedasperDoP.

• Incaseofsingletender,furnishproperjusti�ication.

• In caseof proprietary items, the certi�icate asper the

enclosedformat,tobeplacedinthe�ile.

• Indicate summary of Divisional Technical Committee

Recommendation.

• Provide technical evaluation statement of offer and

recommendations duly vetted by Divisional Technical

Committee,whereverapplicable.

• Comparative statement of prices duly checked by

Purchase&FinanceDept.tobeenclosed.

• Levelpricescorrectlyandcon�irm

• Uniformbasistobeadoptedforcomparison

• Indicatewhetherprices are �irm& �ixedor subject to

Escalation.Ifsoindicatedetails.

6 Pricereasonability • Justi�icationofpriceincomparisontopastprocurement

pricesoronbasisoftechnicalestimates.

• Recommendationforacceptingproposedprices

7 Negotiation • Providepoints/agendafornegotiationw.r.t.comments

intechnical/commercialevaluationstatements.

• Provide justi�ication ifnegotiationsareproposedwith

otherthantechnicallyacceptablelowestbid.

• Indicatetheamountofsavingsobtainedonaccountof

negotiation.

• Minutestobeenclosedforanynegotiationconducted.

Sl.No HEADING DETAILS

8 Delivery/Leadtime • Indicate delivery time and con�irm whether it meets

productionprogrammerequirement.

• Con�irmstaggereddelivery.

• IfLDclauseisnotprovided;indicatereasonsforthesame

andapprovalofBusinessGroupDirectortobetaken

9

10

Paymentterms

Pricerecoverability

• Specify clear payment terms as speci�ied by �irm in

quotationoragreedsubsequently.

• Con�irm that the proposed price is within the price

projectedinthequotetothecustomerandisrecoverable

fromthecustomer.

• In case of new projects, con�irm that the proposal is

coveredwithintheapprovalofGovt./Board(asthecase

maybe),inrespectofmaterialestimatesincludedinthe

approvedprojectreport/sanction(asapplicable)forthe

relevantphase/production.

11

12

13

ReferencetoDOP

Validityofoffer

Recommendation

• ReferenceofDOPtobeindicated

• Validityofoffertobeindicated

• Proposaltobesentbefore2to3weeksofexpiryofoffer.

• Clearrecommendationforwhichapprovalisrequested.

• Reasonstobeindicatedforapprovalssoughtforother

thantechnicallyacceptableL1offer.

ProposedbyChiefofMaterials Co-ordinatedbyChiefofFinance

PURCHASE MANUAL PURCHASE MANUAL272 273

FormatF2

CHECKLIST

FORCOORDINATIONOFPURCHASEORDERS

RefNo. Date:

Purchase-Requisition

1

2

3

4

5

6

Yes/No

Yes/No

Yes/No

Yes/No

Yes/No

Yes/No

WhetherthePRisapprovedbycompetentAuthority?

Ensurecorrectnessofdeliveryschedule/stakingintoaccountthestocks

onhand,mater5ialsinpipeline,shoploadingalreadydoneforproduction,

leadtimeforprocurementandtheschedules�ixedforproductionetc.

Whether scope of supply is �irmed up including various technical

parameters.

Whether2-Bidsystemsisproposediftheitemismachinery/equipment/

othercapitalitems/asapplicableforothermaterials.

WhethercompetentAuthority’sapprovalhasbeenobtainedfor:

a)ContactinglessernumberofsourcesintheTenderthanprescribed

inthemanualbasedoncompetencyofthesuppliers.

b)Isitensuredthatnosupplieryettobedeveloped/provedorwhose

supplies are not satisfactory are eliminated from the list to be

contacted.

c) Relaxingthemodeoftenderingasperthedelegationofpowers.

WhetherPR is coordinatedandapprovedby competentauthoritiesas

speci�iedinthePurchaseManual/DelegationofPowers.

3

4

5

6

7

8

9

Yes/No

Yes/No

Yes/No

Yes/No

Yes/No

Yes/No

Yes/No

WhethertheDueDate/Timehasbeenspeci�iedasperprocedure

Whether the tenders are opened by the Tender Team If no, whether

approvalofcompetentAuthorityfordeviation�iled

Alloffersreceivedagainstthetenderaremarked‘intime’/‘late’bytheteam

membersandallcorrectionsattestedandsignedonallpagesoftheoffers.

In case any deviation is noticed in the above, whether approval of

competentauthoritiesasperProcedurehasbeenobtained/�iled.

WhetherTendersummarysheethasbeen�iled,dulysigned.

Comparativestatementtobe�iled,dulysigned.

WhetherthecaserequiresapprovalofMPC/competentAuthorityandif

yes,whetherapprovalisenclosed.

TENDERING

1

2

1/2/3

Yes/No

Whethertenderedonce/twice/thrice(indicatereasonsforretendering)

WhetherallestablishedsourcesarecontactedintheTenderincludingthe

previoussupplier.

Ifno,whetherapprovalofcompetentAuthorityis�iled.

PURCHASE MANUAL PURCHASE MANUAL274 275

DRAFTPURCHASEORDER

1

2

3

4

5

6

Yes/No

Yes/No

Yes/No

Yes/No

Yes/No

Yes/No

Yes/No

Yes/No

Yes/No

Yes/No

Yes/No

Yes/No

Yes/No

Yes/No

Yes/No

Yes/No

Yes/No

Checkwhetherthefollowingareindicatedcorrectly:

a)Name&addressofthe�irmasperQuotation

b)Descriptionofitem/speci�ication

c) PartNo./StockNo./MaterialCodeNo.

d)ScopeofsupplyasperDrawing/TenderEnquiry

e)VendorCodeNo.

f) Quantityandunitofpurchase

g)Deliveryschedules:

(Thisshalltallywiththe�irm’soffer,ourmanufacturingplantaking

intoaccountthestocksandWIP)

h)Shippinginstructions

i) Freight&Insurance

j) PaymentTerms

k)Terms&conditionsindetailsasAnnexure

l) ED&Taxes/GST

CheckthecorrectnessofComparativestatementofoffersandensurethat

all offers received are considered for comparison as per the Tender

SummarySheet.

WhethertheComparisonisdoneonlike-to-likebasisandatlandedcost.

WhetherthePOisproposedonintimecheapesttechnicallyacceptable

offer In case cheapest L1 is ignored whether approval of competent

authorities has been obtained with proper justi�ication and Finance

Coordination.

DoesthisproposalinvolveavailingLaterOfferIfyes,hastheapprovalof

competentauthoritiesasperPurchase

Whetherpaymenttermwith60dayscreditareincorporatedotherwise,

whetherapprovalofcompetentAuthorityisobtainedfordeviationfrom

theaboveTermsofPayment.

3

4

5

Yes/No

Yes/No

Yes/No

IfNO,whetherpricenegotiationisconductedasperCorporatedirectives.

Whether the price negotiation completed is with the technically

acceptableL1vendorandRecordNoteofdiscussiondulysignedbyall

concernedis�iled.

Whether the coverage indicated in the PO is correct in all respects

includingthePDOs/WSOs/MPRRs

1

2

Yes/No

Yes/No

Whethertheitemsisprocuredforthe�irsttime.

Whethertheunitrateindicatediscomparablewithin-housecost/FOB/

LPP(pleasefurnish�igures)andjusti�ied.

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

Yes/No

Yes/No

Yes/No

Yes/No

Yes/No

Yes/No

Yes/No

Yes/No

Yes/No

Yes/No

Yes/No

Yes/No

Yes/No

Yes/No

Yes/No

Yes/No

Yes/No

Yes/No

Yes/No

Yes/No

Whetherthepriceis�irm

Ifescalationisinvolvedspecifythesame

(Thisistobespeci�iedonthePOfacesheet)

Whether approval of MPC is obtained where deviations from normal

PurchaseProceduresareexisting(NotetoMPC&ExtractofMPCdecision

tobe�iled).ThisreferencetoberecordedondraftPO.

Whether scope of supply, duly certi�ied by Technical Authority /

ApprovingAuthority.

(Incaseofnewdevelopmentthescopehastobecon�irmedbyD&D)

AnymaterialassistanceisinvolvedandapprovalofcompetentAuthority

obtained.

If,YES,specifyfreeorloan/sale

WhetherLDstampisaf�ixedonfacesheetofPO

WhetherprovisionismadeonthePOforapprovalofCompetentAuthority

asperDOP.

WhetherthePOandAnnexuresaresignedonallpages.

InrespectofDevelopmentOrderwhetherthequantityproposediswithin

IfNo,whetherapprovalofcompetentAuthorityis�iled.

Furnish details of other Development Orders existing on this �irm

indicatingtheitemandstatus.

WhetheranyDevelopmentOrder isexistingforthis itemonanyother

source(furnishdetailsincludingcurrentstatus)

InrespectofCapitalItems

i) whether the Commercial offer of only those technically acceptable

tendershavebeenopened

ii)whethertechnicalacceptanceisun-ambiguousandimpartial

ForCapitalitemswhetherthetermsofwarranty/performanceBG/Buy

back guarantee and detailed write-up obligations of suppliers are

incorporated.

Forpurchaseofready-to-�itAssemblieswhetherSecrecyAgreement is

obtainedfromthevendor.

InrespectofSub-Contract,whetherapprovalofCompetentAuthorityand

alsoin-houselabourestimatesare�iled.

InrespectofPOamendment,whetherapprovalofCompetentAuthority

MPChasbeenobtained/�iled.

ForRepeatOrders,whethertheinstructionsinProcedureisfollowed

6 Yes/NoWhetherDivisionofPatronage, ifproposed, isapprovedbyCompetent

authoritiesasperprovisionsofPurchaseProcedures/DOP

PURCHASE MANUAL PURCHASE MANUAL276 277

26

27

Yes/No

Yes/No

Incase theproposal isalreadyapprovedbyCorporateOf�ice -please

checkandcon�irm

WhereallpagesincludingcoversinthePOfolderareindividuallypage

numbered,serially.

25

Yes/No

Yes/No

Yes/No

Isitregularization/con�irmatoryPO.Ifso,

i) WhetherapprovalofCompetentAuthorityobtainedonaNoteSheet

ii)Con�irmatoryPRdulyapprovedis�iled

iii)WhetherthepricesofferedareinlinewithLPP

POInitiatingOf�icer PurchaseSectionHead

FormatF3

TYPESOFBANKGUARANTEES

a) FORMATOFBIDGUARANTEEFORM

b) FORMATOFCOMBINEDBANKGUARANTEEFORCONTRACTPERFORMANCE

c) FORMATOFBANKGUARANTEEFORPERFORMANCEOFCONTRACT

d) FORMATOFGUARANTEEFORWARRANTY

e) FORMATOFINDEMNITYBONDFORGUARANTEEDPERFORMANCE

f) FORMATOFBANKGUARANTEEFORADVANCEPAYMENT

g) FORMATOFRETENTIONMONEYBANKGUARANTEE

h) FORMATOFPERFORMANCEBANKGURANTEEFORSERVICECONTRACTS

PURCHASE MANUAL PURCHASE MANUAL278 279

a) FORMATOFBIDGUARANTEEFORM

Note:

1. ThisguaranteeshallbefurnishedbyScheduledCommercialBanksauthorisedbyRBIto

issueaBankGuarantee.

2. ThisbankguaranteeshallbefurnishedonstamppapervalueasperprevailingStampAct.

(AtpresentnotlessthanRs.80./-)

3. The stamp paper shall have been purchased in the Name of the Bank executing the

Guarantee.

4. InthecaseofforeignbiddertheB.G.maybefurnishedbyaninternationalreputedbank

acceptabletothePURCHASERcountersignedbyanyScheduledCommercialBankinIndia

authorizedbyReserveBankofIndia.

DATE:

BIDGUARANTEENO:

Ref:

To,

BEMLLIMITED

(AddressofconcernedDivision/CorporateOf�ice)

DearSirs,

...................................................................................................................................................................................................

Inaccordancewithyour‘TenderEnquiry’underyourTenderNo:,…………dated……..

M/s........................................................................................hereinaftercalledtheBidder,withthefollowing

DirectorsontheirBoardofDirectors/partnersofthe�irm.

1. 2.

3. 4.

5. 6.

7. 8.

9. 10.

Wishtoparticipateinthesaidtenderfor..............................................................................................……………

…………………………………………………………………………………………………………....................................………

……………………………………………………………………………………………………………………………………………

……………………………………………………………………………………

As an irrevocable Bank Guarantee against Bid Guarantee for an amount of

Rs…………………………………………….. (In words and �igures) valid for ….. ………….. days from

…………………………………………..isrequiredtobesubmittedbytheBidderasaconditionprecedent

forparticipation inthesaidbid,whichamount is liabletobe forfeitedbytheBEMLLimited

(hereinaftercalledPURCHASER)(1)thewithdrawalorrevisionoftoeofferbytheBidderasa

conditionwithinthevalidityperiod.(2)Non-acceptanceofthe‘LetterofIntent/PurchaseOrder’

bythebidderwhenissuedwithinthevalidityperiod.(3)Failuretofurnishthevalidcontract

performanceguaranteebythebidderwithinonemonthfromthereceiptofthePurchaseOrder

and(4)onthehappeningofanycontingenciesmentionedinthebiddocuments.

We,the…………………………………………..Bankat.................................................HavingourHeadof�iceat

…………………………………………….(Localaddress)Guaranteeandundertaketopayimmediatelyon

�irstdemandbyBEMLLIMITED,theamountofRs…...........................................................................…………

………………………………………………………………………(in�igureandwords)withoutanyreservation,

protest,demurandrecourse.AnysuchdemandmadebythePurchasershallbeconclusiveand

bindingontheBankirrespectiveofanydisputeordifferenceraisedbythepurchaser.

Theguaranteeshallbeirrevocableandshallremainvalidupto………………………………………….

……………………………………..(Thisdateshallbe60daysafterthedateforwhichthebidisvalid).If

anyfurtherextensionofthisguaranteeisrequiredthesameshallbeextendedtosuchrequired

period(notexceedingoneyear)onreceivinginstructionfromM/s…………………………………..on

whosebehalfthisguaranteeisissued.

InwitnesswhereoftheBank,throughitsauthorizedof�icerhassetitshandandstamponthis

…………………dayof……………………………..at………………………………………………..

witness (Signature)

WITNESS (Signature)….

Namein(Blockletters)

Designation……………………………

(StaffNo.)……………………….

(Bank'scommonSeal)

Of�icialaddress:

AttorneyasperpowerofAttorneyNo

Date:

PURCHASE MANUAL PURCHASE MANUAL280 281

b) FORMATOFCOMBINEDBANKGUARANTEEFORCONTRACTPERFORMANCE

(CoveringDeliveryObligations&Warranty)

Note:

1. ThisguaranteeshallbefurnishedbyScheduledCommercialBanksauthorisedbyRBIto

issueaBankGuarantee.

2. ThisbankguaranteeshallbefurnishedonstamppapervalueasperprevailingStampAct.

(AtpresentnotlessthanRs.100./-)

3. The stamp paper shall have been purchased in the Name of the Bank executing the

Guarantee.

4. InthecaseofforeignbiddertheB.G.maybefurnishedbyaninternationalreputedbank

acceptabletothePURCHASERcountersignedbyanyScheduledCommercialBankinIndia

authorizedbyReservebankofIndia.

5. Thisbankguaranteeshallbefurnishedwithinonemonthfromthedateofreceiptofthe

supplyorder.

Date:

BankGuaranteeNo:

To,

BEMLLIMITED,

(AddressofconcernedDivision/CorporateOf�ice)

DearSirs,

InconsiderationofBEMLLimited,BangalorehereinafterreferredtothePURCHASER,which

expressionshall,unlessrepugnant tothecontextormeaning, thereof include itssuccessors,

representativesandassignees,havingawardedinfavourofM/s.…..............................................…………

……………………..............................................................................................……………havingregisteredof�iceat

…………………………………………………………...................................…………………..hereinafterreferredtoas

theCONTRACTOR,whichexpressionshallunlessrepugnanttothecontextormeaningthereof

include itssuccessors,administrators, representativesandassignees,aContract,hereinafter

“referredastheCONTRACTOR”forthe…………………………………………….ontermsandconditions

setoutinteralia;thePURCHASER'Scontract/LetterofIntentNo.......................................Datedaswell

as“CONTRACT”documents,valuedat…………………………………………………………..(inwords)and

the same having been unequivocally accepted by the CONTRACTOR and the CONTRACTOR

havingagreedtoprovideacontractperformanceguaranteeforthefaithfulperformanceofthe

entire“contract”includingthewarrantyobligations/liabilitiesunderthecontractEquivalentto

10%ofthesaidvalueofcontracttothePURCHASERamountingto…............................................…………

……………………………………………(Inwords)asContractSecurityintheformofaBankGuarantee.

2. We, …………………………………………….(name) …………………………………………………. address)

hereinhereinafterreferredtoasthe"Bankwhichexpressionshall,unlessrepugnanttothe

contextormeaning theof~ include its successors, administrators, representativeand

assigneesdoherebyirrevocablyguaranteeandundertaketopaythePURCHASERmerely

ondemandwithoutanypreviousnoticeandwithoutanydemurandwithoutreferringto

anybyothersource,anyandallmoniespayablebytheCONTRACTORbyreasonofany

breachbythesaidCONTRACTincludingnon-executionofthe

“CONTRACT AGREEMENT” to the extent of 10% of the contract price at any time up

to…………………(Day/month/year).AnysuchdemandmadebythePURCHASERonthe

bank shall be conclusive and binding, absolute and unequivocal notwithstanding any

disputesraised/pendingbeforeanycourt,tribunal,arbitrationoranyotherAuthority.The

bankagreesthattheguaranteehereincontainedshallcontinuetobeenforceabletillthis

sum due to the PURCHASER is fully paid and claims satis�ied or till the PURCHASER

dischargesthisguarantee.

3. TheBankfurtherirrevocablyguaranteesandundertakestopayanyandallmoneydueand

payable by the CONTRACTOR by reasons of non-ful�illment of any of the following

obligations.

3.1 Forthesuccessfulandsatisfactoryoperationoftheequipmentfurnishedanderected

underthesaidcontractasperthespeci�icationsanddocuments.

3.2 Thatthematerialsuppliedunderthesaidcontractshallbenewandinaccordance

with CONTRACT Documents and be free from all defects in design, engineering,

materialworkmanshipandperformanceincludingmodi�ications,improvementsand

replacements for a period of ……………….calendar months, from the date of

commissioning …………………months from the date of receipt of material at site

whichever is later. Immediately upon commissioning of the equipments and

successfulcompletionoftakeovertestoftheequipmentandthatimmediatelyupon

intimation/writtennoticefromthePURCHASER,theCONTRACTORshallremedy

freeofexpensestothePURCHASERsuchdefectsasnoticesanddevelopedunderthe

normaluseofthesaidequipment,withinthesaidguaranteeperiod.

4. ThePURCHASERshallhavethefullestlibertywithoutaffectinginanyawaytheliabilityof

theBankunderthisguarantee,fromtimetotime,toextendthetimeofperformancebythe

CONTRACTOR.Thebankshallnotbereleasedfromitsliabilitiesunderthesepresentsby

anyexerciseofthePURCHASERofthelibertywithreferencetothematteraforesaid.

5. ThePURCHASERshallhavethefullestliberty,withoutaffectingthisguaranteetopostpone

fromtimetotimetheexerciseofanypowersvestedinthemorofanyrightwhichtheymight

haveagainsttheCONTRACTORandtoexercisethesameatanytimeinanymanner,and

either to enforce or to forbear to enforce any covenants, contained or implied in the

CONTRACT between the PURCHASER and the CONTRACTOR or any other course or

remedyorsecurityavailabletothePURCHASERandthebankshallnotbereleasedofits

obligations/ liabilitiesunderthesepresentsbyanyexercisebythePURCHASERofhis

libertywithreferencetothemattersaforesaidoranyofthemorbyreasonofanyotheract

orforbearanceofotheractsofomissionorcommissiononpartofthePURCHASERorby

any other indulgence shown by the PURCHASER or by any other matter or thing

whatsoeverwhichunderlawwould,butforthisprovision,havetheeffectofrelievingthe

bank guarantee. The bank further undertakes not to revoke this guarantee during its

currencywithoutthepreviousconsentofthePURCHASER.

PURCHASE MANUAL PURCHASE MANUAL282 283

6. TheBankfurtheragreesthatthedecisionofthePURCHASERastothefailureonthepartof

theCONTRACTORtoful�illtheirobligationsasaforesaidand/orastotheamountpayable

bytheBANKtothePURCHASERhereundershallbe�inal,conclusiveandbindingonthe

bank.

7. TheBankalsoagreesthatthePURCHASERshallbeentitledathisoptiontoenforcethis

guaranteeagainsttheBANKasaprincipaldebtor,inthe�irstinstancenotwithstandingany

otherSecurityorguaranteethatitmayhaveinrelationtotheCONTRACTOR'sliabilities.

8. ThisguaranteewillnotbedischargedduetothechangeintheconstitutionoftheBANKor

theC0NTRACTOR(S)/SUPPLIER(S).

9. Notwithstandinganythingcontainedhereinabove,our liabilityunderthisguarantee is

restricted to …………………………………and it will remain in force up to and including

……………………..........................................................……………………………………………………………………

………………………………………………………………………………………….andshallbeextendedfrom

timetotimeforsuchperiodasmaybedesiredbyM/s…………………………………….onwhose

behalfthisguaranteehasbeengiven.Datedat………………….this……..dayof………20

WITNESS:

1 SIGNATURE

(Signaturewithnameinblockletters (PrintednameDesignation

andwithdesignation) StaffcodeNo.Bank’scommonSeal)

2

(Signaturewithname Attorneyasperpowerofname

Designationinblocklettersand AttorneyNo.

withdesignation) Dated.

c) FORMATOFBANKGUARANTEEFORPERFORMANCEOFCONTRACT

(CoveringDeliveryobligations)

1. ThisguaranteeshallbefurnishedbyScheduledCommercialBanksauthorisedbyRBIto

issueaBankGuarantee.

2. ThisbankguaranteeshallbefurnishedonstamppapervalueasperprevailingStampAct.

(AtpresentnotlessthanRs.100/-)

3. The stamp paper shall have been purchased in the Name of the Bank executing the

Guarantee.

To

BEMLLIMITED,

(AddressofconcernedDivision/CorporateOf�ice)

PursuanttoadeliverycontractNo……….................…………………………………………………………….which

M/s………………….....................................................................……………………………………concludedwithyou

on…….……………….theaforementioned�irmundertooktodeliverthefollowing:-

S.No Description Quantity

ValueinRs.

We,theundersigned(NameoftheBank)……………………………………………….herewithassumethe

guaranteefortheful�illmentofthecocontractualobligations,inaccordancewiththestipulations

of the above mentioned contract entered into by and between you as buyer and

M/s………………………………………………as seller, to the amount of Rs.……………. viz., 10% of the

contractvalue,totheeffectthatweirrevocablyundertaketopayyouuponyour�irstdemandthe

abovesumorpartthereofprovidedyouadviseusthatM/s………………………………………havefailed

to ful�ill the terms and conditions of contract including the delivery obligations stipulated

therein.

Inaccordancewiththestipulationoftheclauseoftheinstructionsappendedtothecontract,this

guaranteewillbecomeinvalidaftercompletionofsuppliesorassoonasthisletterofguarantee

hasbeenreturnedtous,atthelatest,however,on……………………………………(herementionthe

periodorduedate)unlessaclaimhasbeenlodgedagainstusunderourguaranteeuntilthatdate.

Inanycase,ourliabilityunderthisguaranteeofperformancedoesnotexceedRs.………………….

Thisguaranteedeedmustbereturnedtousuponexpirationoftheperiodofguarantee.

Seal: (Countersigned)

NameoftheBank

PURCHASE MANUAL PURCHASE MANUAL284 285

d) FORMATOFGUARANTEEFORWARRANTY

(TobefurnishedinStamppaperasperStampAct)

(AtpresentnotlessthanRs.80/-StampPaper).

To

BEMLLIMITED,

(AddressofconcernedDivision/CorporateOf�ice)

WetheUndersigned…………....................................………………………………………………………………hereby

guaranteeSatisfactory……………........………………………………………………………………………..operation

suppliedbyus……………………….....................................……………………………………………….toyouagainst

yourorderNo……………………………………………..foraperiodof…………….calendarmonthsfromthe

dateofcommissioningor………..monthsfromthedateofreceiptofthematerialatsitewhichever

is later and shall be responsible for failure of the material to con�irm to the standard of

performance,pro�iciency,productionand/orout-turnstipulatedorimplicitintheorderandfor

anydefectsthatmaydevelopunderproperusearisingfromtheuseoffaultymaterials,designor

workmanshipinthesupplymadeandshallremedysuchdefectsatourcost.

Station: for…………………………………….

Dated:

Witness:

1.…………………………............…………………… (SignatureandDesignation)

(CompanySeal)

Designation&Address.

2.………………………………………………………….

Designation&Address.

e) FORMATOFINDEMNITYBONDFORGUARANTEEDPERFORMANCE

(TobefurnishedinStamppaperasperStampAct)

(AtpresentnotlessthanRs.80/-stamppaper)

ThisdeedofIndemnityexecutedby……………………………………………………………………….hereinafter

referredtoas“Indemni�ier”whichexpressionshall,unlessrepugnanttothecontextormeaning

thereof,includeitssuccessors,administrators,representativeandassigneesinfavourofM/s.

BEMLLIMITED,Bangalore,hereinafterreferredtoasthe“Indemni�ied”whichexpressionshall

unless repugnant to the context of meaning thereof, include its successors and assignees

witnessesusto.

Whereastheindemni�iedhereinhasawardedtotheIndemni�ierhereinacontractforthesupply

of.....................................................……………ontermsandconditionssetoutinteraliainthepurchaser's

contract/Awardno………………………....................…………………………….Aswellasthecontractvalued

atRs.………………………..(Rupees……………………………………………………………………………..only)

AndWhereas,clauseoftheabovementionedcontract/Awardprovidesfarguarantee(i.e.)tobe

freefromdefectduetofaultymaterialorworkmanshipforaperiodof........................................…………

…………………………….Calendarmonthsfromthedateofreceiptof itemor………....…………actual

workinghoursfromthedateofcommissioningwhicheverislaterofthematerialitemssupplied

bytheIndemni�iertotheindemni�ied.

Theindemni�ierherebyirrevocablyagreestoindemnifytheindemni�iedthatintheeventofthe

beltitemnotachievingthelifeguarantee,theindemni�iershallasmaybedeemednecessary

repairofthedefectivebeltmaterialatsite,freeofcost,withinareasonabletimespeci�iedbythe

indemni�iedorreimbursethepro-ratacostofthebeltmaterialtotheextentalifenotachievedas

pertheguarantee,orsupplyasparebeltitemforthedefectiveportiononlyfreeofcostatsitein

respectofhiscontractualobligationsemanatedfromthecontract/Awardalreadyreferredtothe

extentofRs.…………………………(Rupees……………………………………………………………….only).

Thisindemnityshallbeinforceuptothedateoftheitemfromourend

Name:

Designation

WITNESS:

1.

2.

PURCHASE MANUAL PURCHASE MANUAL286 287

f) FORMATOFBANKGUARANTEEFORADVANCEPAYMENT

Note:

1. ThisguaranteeshallbefurnishedbyScheduledCommercialBanksauthorisedbyRBIto

issueaBankGuarantee.

2. TheBankGuaranteeshallbefurnishednStamppaperasperStampPaperAct(atpresent

notlessthanRs.80StampPaper).

3. The stamp paper shall have been purchased in the name of the Bank executing the

Guarantee.

AdvancePaymentGuaranteeNo:

Place…………………………………………………

Date:………………………

To

BEMLLIMITED,

(AddressofconcernedDivision/CorporateOf�ice)

DearSir,

1. Pursuant to the contract, hereafter referred to as “The CONTRACT” which M/s.

.............……………....……………................................……hereafterreferredtoasthe“CONTRACTOR”,

whichexpressionshall,unlessrepugnanttothecontextormeaningthereof, includeits

successors, administrators, representatives and assignees, have concludedwith BEML

LIMITED,BANGALORE,hereinafterreferredtoas the“PURCHASER”,whichexpression

shall, unless repugnant to the context or meaning thereof, include its successors,

administrators, representatives and assignees, on……………20videLetter of IntentNo.

……………………………………………...dated……………………….theContractorhaveundertakento

…………............................................................................................………………………………………………………

……………………………………………………………………………………………………………………………………

…………………………………..manufactured in ……………………………………………………………………..

andsuppliedonEx-Worksbasis………………………………………………………………….particularly

listed in ………………………………….of the contract as per the prices indicated hereunder

againsteach:

a. ……………………………………………….....………..

b. ……………………………………………………………

c. ……………………………………………………………

2. According to the said contract, the PURCHASER has undertaken to make an advance

paymentofRs…...........................................................................................................……………………………...

(Rupees……………………………………………………………………………………………only) being the

payment of…………..% for …………………………………………..against issuance of an advance

paymentguaranteebyaBank.

3. Forthisadvancepayment,we,theundersigned……………………………………………(address),

hereinafterreferredtoatBank,whichexpressionshallunlessrepugnanttotheCONTRACT

ormeaningthereof,includeitssuccessors,administrators,representativesandassignees,

herebyguaranteetotheeffectthatweirrevocablyundertaketopayuponthePURCHASER

mereondemandwithoutanypreviousnoticeandwithoutanydemurandwithoutrecourse

totheContractorandwithoutreferringtoanyothersource,anyandallmoneypayableby

the Contractor towards the advance or part thereof paid by the PURCHASER, but not

exceeding Rs................……………..............................................................................………….(Rupees

……………………………………………………………………..only) provided thePURCHASER advises

usthattheContractorhasrailedtoful�illhiscontractualobligationsstipulatedinthesaid

Contract,AnysuchdemandmadebythePURCHASERontheBankshallbeconclusiveand

binding, absolute and unequivocal not withstanding any difference between the

PURCHASERandtheCONTRACTORoranydisputeordisputesraised/pendingbeforeany

court,.Tribunal,ArbitratororanyotherAuthority.

4. ThisGuaranteewillnotbedischargedduetothechangeintheconstitutionoftheBankor

theCONTRACTOR(S)/SUPPLIER(S).

5. This guarantee will become invalid ……………………months after the completion of the

…………………………………….bythecontractorofallthepartsofthe……………..........equipment

underthecontractorassoonasthisletterof guarantee has been returned to us, at the

latest, however, on ……………200 unless a claim has been lodged with us under this

guaranteebeforethedate.

6. We,the………………………………………. (Bank),furtheragreesthatifthesaidcontractorfails

toadheretothetotalorindividualtimeschedulesstipulatedinthesaidContractand i f

therebedelayinthe-------------to reimburse, to the PURCHASER, INTEREST AT THE

PREVAILINGBANKRATEAPPLICABLEFORcash/Creditfacilitiesontheamountofadvance

paymentmadebythePURCHASER.

7. ThePURCHASERshallhavethefullestlibertywithoutaffectinginanywayliabilityofthe

Bankunderthisguaranteefromtimetotimetoextendthetimeofperformancebythe

CONTRACTOR.TheBankshallnotbereleasedfromitsliabilityunderthesepresentsbyany

exerciseofthePURCHASERofthelibertywithreferencetothematteraforesaid.

8. TheBankalsoagreesthatthePURCHASERshallbeentitledathisoptiontoenforcethis

guaranteeagainsttheBankasaPrincipalDebtor,inthe�irstinstancenotwithstandingany

otherSecurityorguaranteethatitmayhaveinrelationtotheContractor'sliabilities.

9. Thisguaranteeshallremaininforceuptotheincluding………………............................……………….

and shall be extended from time to time for such period as may be desired by M/s.

……………………………………………………onwhosebehalfthisguaranteehasbeengiven.

10. TheBankfurtheragreesthatthedecisionofthePURCHASERastothefailureonthepartof

the CONTRACTOR to ful�ill the contractual obligations stipulated in the said contract

and/ortotheamountpayablebytheBanktothePurchasershallbe�inal,conclusiveand

binding.

11. ThisguaranteeisrevocableonlywiththewrittenconsentofthePURCHASER.

PURCHASE MANUAL PURCHASE MANUAL288 289

12. In any case, our liability under this advance payment guarantee does not exceed

Rs……………………Rupees…………………………………………………………………………….) subject,

however,totheapplicationoftheinterestclauseenvisagedinpara-6abovewhichwillbe

paidinadditiontothesaidguaranteeamount.

13. Thisguaranteedeedmustbereturnedtousupontheexpiration,oftheguarantee.

Datedthis………………………..dayof……………..20…

Witness:

1.……………………………………….. SINGNATURE……………………..

SignaturewithnameinBlockLetters

withdesignation

2.……………………………………….. PrintedName………………………..

SignaturewithnameinBlockLetters

withdesignation Designation:

Banker’s

CommonSeal………………………..

g) FORMATOFRETENTIONMONEYBANKGUARANTEE

Note:

1. ThisGuaranteeshallbefurnishedbyScheduledCommercialBanksauthorisedbyRBIto

issueaBankGuarantee.

2. TheBankGuaranteeshallbefurnishednStamppaperasperStampPaperAct(atpresent

notlessthanRs.80–StampPaper).

3. The stamp paper shall have been purchased in the name of the Bank executing the

Guarantee

To

BEMLLIMITED,

(AddressofconcernedDivision/CorporateOf�ice)

DearSirs,

1. Pursuant to the contract hereinafter referred to as “The Contract” which

M/s……......………………........…………............................................................................……… hereinafter

referred to as “Contractor” have concluded with M/s. BEML LIMITED, Bangalore,

hereinafterreferredtoasthe“Purchaser”ontheContractorhasundertakento(Design,

manufacture,supply,transportincludingpackingforwardingunloadingandhandlingat

site,erection,testingandcommissioningof……………………………)asperthepricesindicated

hereunder.

2. Accordingtothesaidcontract,thepurchaserhasundertakentomakethebalancepayment

ofRs.……………………being the…….%of the supplyportion/ErectionPortion/contract

value(deletewhicheverisnotapplicable)againstissuanceofRetentionMoneyGuarantee

byaBankfor……...%ofthevalueofthesupplyportion/erectionportion/contractvalue

(Deletewhicheverisnotapplicable.

3. We,theundersigned…………………….herebyguaranteesandirrevocablyundertaketopay

thePurchaseruponthePurchaser'smerelyondemand,andwithoutanydemurtheamount

paidbythePurchaser,butnotexceedingRs.………………..............................…..................…(Rupees

…………………………………………………………….only) on the purchaser advising us that the

suppliershavefailedtoful�illtheircontractualobligationsstipulatedinthesaidcontract.

4. This Guaranteewill become invalid after complete discharge of all obligations by the

ContractorinaccordancewiththetermsandconditionsofthesaidContractorassoonas

thisletterofGuaranteehasbeenreturnedtousandatthelatesthoweveron……………………

(Shallcoverthreemonthsbeyondtheduedateforcompletionofsupplies)unlessaclaim

hasbeenlodgedonusundertheguaranteebeforethatdate.Thevalidityoftheguarantee

shall be extended from time to time for such periods as maybe designed by M/s.

……………………………………………….onwhosebehalfthisguaranteehasbeengiven.

PURCHASE MANUAL PURCHASE MANUAL290 291

5. In any case,our liabilityunder thisRetentionMoneyBankGuaranteedoesnot exceed

Rs………………………..only)andanyclaimunderthisguaranteeshallbelodgedwithusonor

before.

Thisguaranteedeedmustbereturnedtousuponexpirationoftheperiodoftheguarantee.

Signature:……………………………

(PrintedName):…………………….

Designation:………………………..

Banker’scommonseal

Witness:

1)………………………………………..

SignaturewithnameinBlockLetters

Blockletterswithdesignation

2)………………………………………..

SignaturewithnameinBlockLetters

Blockletterswithdesignation

h) FORMATOFPERFORMANCEBANKGUARANTEEFORSERVICECONTRACT

Note:

1. ThisguaranteeshallbefurnishedbyScheduledCommercialBanksauthorisedbyRBIto

issueaBankGuarantee.

2. ThisbankguaranteeshallbefurnishedonstamppapervalueasperprevailingStampAct.

(AtpresentnotlessthanRs.100./-)

3. The stamp paper shall have been purchased in the Name of the Bank executing the

Guarantee.

----------------------------------------------------------------------------------------------------------------

BankGuaranteeNo……………

Dated…………………………….

Amount………………………….

Validupto……………………….

Claimupto………………………

TheGeneralManager(…)

BEMLLimited

…………………

…………………

…………………

M/s………………………….(NameoftheTransportContractor)havingtheirof�iceat…………..

and its Registered of�ice at ……………………………………………. (hereinafter called the

contractor)hasenteredintoanagreementNo:…………………………….(hereinaftercalledthe

saidagreement)withM/sBEMLLimited,Bangalore(hereinaftercalledBEML)forunder

mentionedtransportofEquipmentonthetermsandconditionsinthesaidagreement.

IntermsofthesaidagreementtheTransporterisrequiredtoandhasagreedtofurnishto

BEMLaBankGuaranteeforasumofRs…….(Rupees……only)towardssecurityforthedue

andfaithfulperformanceofthetermsofthesaidagreementandagainstanylossordamage

causedtoorwouldbecausedtoorsufferedbyBEMLbyreasonofanybreachbythesaid

Transporterofanyofthetermsorconditionscontainedinthesaidagreement.

PURCHASE MANUAL 292 PURCHASE MANUAL293

(NameoftheBANK)havingitsof�iceat………………………………………………………hasagreed

attherequestofthecontractortogivetheguaranteehereinaftercontained.

We,(NameoftheBANK)doherebyundertaketopaytheamountsdueandpayableunder

thisGuaranteewithoutanydemurorprotestmerelyonademandfromBEMLinwriting

statingthattheamountduebywayofanylossordamagecausedtoorwouldbecausedtoor

sufferedbyBEMLbyreasonsofanybreachbythesaidcontractor(s)ofanyoftheterms&

conditionscontainedinthesaidagreementorbyreasonofthesaidcontractor’sfailureto

perform the said agreement. Any such demandmade on the Bank by BEML shall be

conclusiveasregardstheamountdueandpayablebytheBankunderthisGuaranteeupto

xx/xx/xxxx(date)ortheextendedperiodifany.However,ourliabilityunderthisGuarantee

shallberestrictedtoanamountnotexceedingRs………(Rupees………..only).Anychangeor

variationintheconstitutionofBEMLshallnotdischargetheBankfromitsliabilitytopay

theamountunderthisGuarantee.

We,(NameoftheBANK)furtheragreethattheGuaranteehereincontainedshallremainin

fullforceandeffectduringtheperiodthatwouldbetakenfortheperformanceofthesaid

agreementandthatitshallcontinuetobeenforceabletillalltheduesofBEMLorbyvirtue

ofthesaidagreementhavebeenfullypaidanditsclaimssatis�iedordischargedortillBEML

certi�iesthatthetermsandconditionsofthesaidagreementhavebeenfullyandproperly

carriedoutbythesaidcontractor(s).

Unlessademandorclaimunder thisGuarantee ismadeonus inwritingonorbefore

xx/xx/xxxx(date)ortheextendedperiodifany,weshallbedischargedfromallliability

underthisGuaranteethereafter.

We,(NameoftheBANK)furtheragreewithBEMLthatBEMLshallhavethefullestliberty

withoutourconsentandwithoutaffecting inanymannerourobligationshereunderto

vary any of the terms and conditions of the said agreement or to extend the time of

performancebythesaidcontractor(s)fromtimetotimeortopostponefromanytimeor

fromtimetotimeanyofthepowersexercisablebyBEMLagainstthesaidcontractor(s)and

tofor-bearortoenforceanyoftheterms&conditionsrelatingtothesaidagreementandwe

shallnotberelievedfromourliabilitybyreasonofanysuchvariationorextensionbeing

grantedtothesaidcontractor(s)orbyanysuchmatterofthingwhatsoeverwhichunder

thelawrelatingtosuretieswouldbutforthisprovisionhaveeffectofsorelievingus.

We,(NameoftheBANK)lastlyundertakenottorevokethisGuaranteeduringitscurrency

exceptwiththepreviousconsentofBEMLinwriting.

ThisGuaranteeiseffectivefromxx/xx/xxxx(date)toxx/xx/xxxx(date)ortheextended

periodifany,includingtheclaimperiodof6(six)monthsandthesameshallbeextendedat

theinstanceofBEML.

ThisGuaranteewill remainvalid foraperiodof30months fromxx/xx/xxxx (date) to

xx/xx/xxxx (date) oranyextended timeandanyclaimunder thisGuaranteemustbe

preferredontheBankinwritingwithin6(six)monthsfromthedateofexpiryi.e.onor

beforexx/xx/xxxx(date)ortheextendedperiod.

NotwithstandinganythingcontainedhereinaboveourliabilityunderthisGuaranteeis

limitedtoRs………(Rupees……..only) inaggregateanditshallremaininfull forceupto

xx/xx/xxxx(date)unlessextended.AnyclaimunderthisGuaranteemustbereceivedbyus

onorbeforexx/xx/xxxx(date)ortheextendedperiodandifnosuchclaimisreceivedbyus

withinxx/xx/xxxx(date) ortheextendedperiod.Company’srightunderthisGuarantee

willceaseandweshallberelievedanddischargedfromallliabilitiesunderthisGuarantee

thereafter.

Date:

Place:

PURCHASE MANUAL 294

Annexure­O

INDIGENIZATIONPLAN

As per the order vide no.P-45021/2/2017-B.E.-II dated 15/06/2017, ofMinistry of

CommerceandIndustry,DepartmentofIndustrialPolicyandpromotionandGovt.ofIndia

forPublicProcurement(PreferencetoMakeinIndia),Order2017.

ConsideringthePolicyoftheGovernmentofIndiatoencourage“MakeinIndia”and

promotemanufacturingandproductionofgoods inIndiathefollowingorderhasbeen

issued:-

1. De�initions:ForthepurposesofthisOrder:

Localcontent'meanstheamountofvalueaddedinIndiawhichshall,unlessotherwise

prescribedbytheNodalMinistry,bethetotalvalueoftheitemprocured(excludingnet

domestic indirecttaxes)minusthevalueof importedcontent inthe item(includingall

customsduties)asaproportionofthetotalvalue,inpercent.

'Localsupplier'meansasupplierorserviceproviderwhoseproductorserviceofferedfor

procurementmeetstheminimumlocalcontentasprescribedunderthisOrderorbythe

competentMinistries/Departmentsinpursuanceofthisorder.

L1'meansthelowesttenderorlowestbidorthelowestquotationreceivedinatender,

biddingprocessorotherprocurementsolicitationasadjudgedintheevaluationprocessas

perthetenderorotherprocurementsolicitation.

'Marginofpurchasepreference'meansthemaximumextenttowhichthepricequotedbya

localsuppliermaybeabovetheL1forthepurposeofpurchasepreference.

'Procuringentity'meansaMinistryordepartmentorattachedorsubordinateof�iceof,or

autonomous body controlled by, the Government of India and includes Government

companiesasde�inedintheCompaniesAct.

2. RequirementofPurchasePreference:

SubjecttotheprovisionsofthisOrderandtoanyspeci�icinstructionsissuedbyMinistryof

Defence(MoD)orinpursuanceofthisOrder,purchasepreferenceshallbegiventolocal

suppliersinallprocurementsundertakenbyprocuringentitiesinthemannerspeci�ied

hereunder:

a. In procurement of goods in respect of which Ministry of Defence (MoD) has

communicatedthatthereissuf�icientlocalcapacityandlocalcompetition,andwhere

theestimatedvalueofprocurementisRs.50Lakhsorless,onlylocalsuppliersshallbe

eligible.IftheestimatedvalueofprocurementofsuchgoodsismorethanRs.50Lakhs,

theprovisionsofsub-paragraphborc,asthecasemaybe,shallapply.

b. Intheprocurementsofgoodswhicharenotcoveredbyparagraph2aandwhichare

divisibleinnature,thefollowingprocedureshallbefollowed.

i. Amongallquali�iedbids,thelowestbidwillbetermedasL1.IfL1isfromalocal

supplier,thecontractforfullquantitywillbeawardedtoL1

ii. IfL1bidisnotfromalocalsupplier,50%oftheorderquantityshallbeawardedto

L1.PURCHASE MANUAL295

Thereafter,thelowestbidderamongthelocalsupplierswillbeinvitedtomatchthe

L1price for theremaining50%quantitysubject to the localsupplier'squoted

price falling within the margin of purchase preference, and contract for that

quantityshallbeawardedtosuchlocalsuppliersubjecttomatchingtheL1price.In

casesuchlowesteligiblelocalsupplierfailstomatchtheL1priceoracceptsless

than the offered quantity, the next higher local supplierwithin themargin of

purchasepreferenceshallbeinvitedtomatchtheL1priceforremainingquantity

andsoon,andcontractshallbeawardedaccordingly.Incasesomequantityisstill

leftuncoveredonlocalsuppliers,thensuchbalancequantitymayalsobeordered

ontheL1bidder.

c. Inprocurementsofgoodsnotcoveredbysub-paragraph2aandwhicharenotdivisible,

andinprocurementofserviceswherethebidisevaluatedonpricealone,thefollowing

procedureshallbefollowed:

Amongallquali�iedbids,thelowestbidwillbetermedasL1.IfL1isfromalocalsupplier,

thecontractwillbeawardedtoL1.

ii. IfL1isnotfromalocalsupplier,thelowestbidderamongthelocalsupplierswillbe

invitedtomatchtheL1pricesubjecttolocalsupplier'squotedpricefallingwithin

themarginofpurchasepreference,andthecontractshallbeawardedtosuchlocal

suppliersubjecttomatchingtheL1price.

Incasesuch lowesteligible localsupplier fails tomatch theL1price, the local

supplierwiththenexthigherbidwithinthemarginofpurchasepreferenceshallbe

invitedtomatchtheL1priceandsoonandcontractshallbeawardedaccordingly.

In case none of the local suppliers within themargin of purchase preference

matchestheL1price,thenthecontractmaybeawardedtotheL1bidder.

3. Exemptionofsmallpurchases:

Notwithstanding anything contained in paragraph 2, procurements where the

estimatedvaluetobeprocuredis lessthanRs.5lakhsshallbeexemptfromthisOrder.

However, itshallbeensuredbyprocuringentitiesthatprocurementisnotsplit forthe

purposeofavoidingtheprovisionsofthisclause.

4. Minimumlocalcontent:

Theminimumlocalcontentshallordinarilybe50%.MinistryofDefence(MoD)may

prescribeahigheror lowerpercentage in respectofanyparticular itemandmayalso

prescribethemannerofcalculationoflocalcontent.

MARGINOFPURCHASEPREFERENCE:

Themarginofpurchasepreferenceshallbe20%

5. Requirementforspeci�icationinadvance:

Theminimumlocalcontent,themarginofpurchasepreferenceandtheprocedure

forpreferencetoMakeinIndiashallbespeci�iedinthenoticeinvitingtendersorotherform

of procurement solicitation and shall not be varied during a particular procurement

transaction.

PURCHASE MANUAL PURCHASE MANUAL296 297

6. GovernmentE­marketplace:

InrespectofprocurementthroughtheGovernmentE-marketplace(GeM)shall,asfar

as possible, speci�icallymark the itemswhichmeet theminimum local contentwhile

registeringtheitemfordisplay,andshall,whereverfeasible,makeprovisionforautomated

comparisonwithpurchasepreferenceandwithoutpurchasepreferenceandforobtaining

consentofthelocalsupplierinthosecaseswherepurchasepreferenceistobeexercised.

7. Veri�icationoflocalcontent:

a. The local supplier at the timeof tender, biddingor solicitation shall be required to

provideselfcerti�icationthattheitemofferedmeetstheminimumlocalcontentand

shallgivedetailsofthelocation(s)atwhichthelocalvalueadditionismade.

b. IncasesofprocurementforavalueinexcessofRs.10crores,thelocalsuppliershallbe

required to provide a certi�icate from the statutory auditor or cost auditor of the

company(inthecaseofcompanies)orfromapracticingcostaccountantorpracticing

chartered accountant (in respect of suppliers other than companies) giving the

percentageoflocalcontent.

c. FalsedeclarationswillbeinbreachoftheCodeofIntegrityforwhichabidderorits

successorscanbedebarredforuptotwoyears.

d. AsupplierwhohasbeendebarredbyanyprocuringentityforviolationofthisOrder

shall not be eligible for preference under this Order for procurement by any other

procuring entity for the duration of the debarment. The debarment for such other

procuringentitiesshalltakeeffectprospectivelyfromthedateonwhichitcomesinto

effect.

8. Speci�icationsinTendersandotherprocurementsolicitations.

a. BEMLshallensurethattheeligibilityconditionsinrespectofpreviousexperience�ixed

inanytenderorsolicitationdonotrequireproofofsupplyinothercountriesorproofof

exports.

b. BEML shall endeavor to see that eligibility conditions, including on matters like

turnover,productioncapabilityand �inancial strengthdonot result inunreasonable

exclusionoflocalsupplierswhowouldotherwisebeeligible,beyondwhatisessential

forensuringqualityorcreditworthinessofthesupplier.

c. Procuringentitiesshall,within2monthsoftheissueofthisOrderreviewallexisting

eligibilitynormsandconditionswithreferencetosub-paragraphs'a'and'b'above.

d. Forthepurposeofsub-paragraph10dabove,asupplierorbiddershallbeconsideredto

befromacountryif(i)theentityisincorporatedinthatcountry,orii)amajorityofits

shareholdingoreffectivecontroloftheentity isexercisedfromthatcountry;or(iii)

morethat50%ofthevalueoftheitembeingsuppliedhasbeenaddedinthatcountry.

Indiansuppliersshallmeanthoseentitieswhichmeetanyofthesetestswithrespectto

India."

10. Powers to grant exemption and to reduce minimum local content: Ministries /

Departments of Government of India and the Boards of Directors of Government

companiesorautonomousbodiesmay,bywrittenorder,

a. reducetheminimumlocalcontentbelowtheprescribedlevel;

b. reducethemarginofpurchasepreferencebelow20%

c. Exemptanyparticularitemorprocuringorsupplyingentitiesorclassorclassesofitems

orprocuringorsupplyingentitiesfromtheoperationofthisOrderoranypartofthe

Order.

PURCHASE MANUAL PURCHASE MANUAL298 299

FormatF4

Non­DisclosureAgreementtoIEMs

1. ThisNon-DisclosureAgreementismadeandenteredintobetweenM/sBEMLLtd(herein

afterreferredtoasBEML),aGovernmentofIndiaUndertaking,havingitsRegisteredOf�ice

atBEMLSoudha,No.23/1,4thMainRoad,SampangiramaNagar,Bangalore-560027,and--

------------,IndependentExternalMonitor(hereinafterreferredtoasIEM),havinghisof�ice

at..........

2. BEMLhasappointedtheaforesaidIEMforMonitoringtheTenderingProcessinorderto

ensureTransparency,EquityandCompetitivenessinPublicProcurements,inCompliance

withthePrinciplesofIntegrityPactaspertheguidelinesofCentralVigilanceCommission

(CVC),andasperthescopementionedinAnnexure­P.

3. It is therefore mutually agreed that the following shall form part of the Terms and

ConditionsofthisAgreement.

a. IEMshallNOTdivulge/discloseanyinformation/documentsuchasTechnicalData,

Speci�icationsandDrawingsetcfurnished/discussedduringIntegrityPactMeetingsor

duringanyotherinteractionswithBEML,toanyoneelse,anyotherthirdpartyorto

Public,withoutpriorwrittenconsentofBEML.

b. The Validity of this Non-Disclosure Agreement is till the IEM has completed all his

obligationsundertheAppointmentletterplacedonhim,andevenafterexpiryofthis

Non-DisclosureAgreement,totheextentofCon�lictofInterest.

c. IfitcomestotheKnowledgeofBEMLatanypointoftimethattheIEMhasmisusedthe

Information/ Technical Data/ Speci�ications etc, BEML shall have the Right to take

appropriatelegalactionagainsttheIEM.

d. BEMLshallbeentitledtopreventbreachofanyclauseandtoclaimdamagesincaseof

anybreach.Itisherebymutuallyagreedthatafterprovidingareasonableandsuf�icient

opportunitytoexplainthebreachofthisAgreement,BEMLisentitledtolevyapenaltyto

theextentofdamage/lossoccasionedasassessedbyBEML.

e. IEMshallherebydeclaretheAbsenceofCon�lictof Interest inmatterspertainingto

BEML,withanyotheradditionalAssignmentsthatheundertakes.Incaseofanycon�lict

ofinterestarisingatalaterdatefromanentitywhereinhehasbeenaconsultant,theIEM

shouldinformtheCEOandrecusehimselffromthatcase.

4. Legality:IntheeventofanydisputearisingundertheseconditionsoranyotherTermsand

Conditionsofthecontract,thesameshallbereferredtotheCentralVigilanceCommission

(CVC)ortoanArbitratorappointedbyBEMLwiththeconsentofIEM.Allproceedingsin

this aspectwill bewithin the Jurisdiction of Bangalore, and shall be governed by the

provisionsofArbitrationandConciliationAct1996.TheCourtsinBangalorealoneshall

havejurisdictiontodealanddecideanylegalmatterordisputewhatsoeverarisingoutof

thisAgreement.

5. TheSignatoriesheretodeclarethattheyhavethesanctionandpowertoexecuteanddeliver

thisbindingAgreement.

6. In Witness whereof, the parties hereto have set their respective hands to this Non-

DisclosureAgreementonthisDay.............................(Date)writteninthepresenceofwitness.

ForBEML IEM

WitnessWitness

1............................................... 1........................................

2................................................ 2........................................

PURCHASE MANUAL PURCHASE MANUAL300 301

SCOPEOFWORK

FORINDEPENDENTEXTERNALMONITOR/MONITORS

1. The task of the Monitor is to review independently and objectively, whether and to

whatextentthepartiescomplywiththeobligationsunderIntegrityPact.

2. The Monitor is not subject to instructions by the representatives of the parties and

performshisfunctionsneutrallyandindependently.Itwillbeobligatoryforhimtotreatthe

informationanddocumentsoftheBidders/Contractorsascon�idential.Hereportstothe

CMD,BEML.

3. BEMLwillprovide to theMonitorsuf�icient informationaboutallmeetingsamong the

parties related to the Project provided such meetings could have an impact on the

contractual relations between the BEML and the Contractor. The parties offer to the

Monitortheoptiontoparticipateinsuchmeetings.

4. AssoonastheMonitornotices,orbelievestonotice,aviolationofIntegrityPact,hewillso

informtheManagementoftheBEMLandrequesttheManagementtodiscontinueortake

correctiveaction,ortotakeotherrelevantaction.Themonitorcaninthisregardsubmit

non-bindingrecommendations.Beyondthis,theMonitorhasnorighttodemandfromthe

partiesthattheyactinaspeci�icmanner,refrainfromactionortolerateaction.

5. TheMonitorwillsubmitawrittenreporttotheCMD,BEML,within8to10weeksfromthe

dateofmeetingand,shouldtheoccasionarisesubmitproposalsforcorrectingproblematic

situations.

6. IftheMonitorhasreportedtotheCMD,BEML,asubstantiatedsuspicionofanoffenceunder

relevantIPC/PCAct,andtheCMD,BEMLhasnot,withinthereasonabletimetakenvisible

action toproceedagainst suchoffenceor reported it to theChiefVigilanceOf�icer, the

MonitormayalsotransmitthisinformationdirectlytotheCentralVigilanceCommissioner.

7. Theword‘Monitor’wouldincludebothsingularandplural.

Adhocpayments 181,187

Advancepayment 35,42,95,96,97,135,181,218,277,286,287,288.

Airfreightcharges 83,

Airport 69,243,244,

AmendmenttoPurchaseorder 43,83,84,114,203,204,207,208,

Appealagainstdecision 111.

Appropriation 21,140,167,168,

Arbitration 109,124,126,141,142,143,171,190,200,222,223,

245,254,281,298,

Auctionadministration 54,

AVL 5,12,75,104,154,161,

Bankguarantee 9,28,35,36,42,78,86,87,88,89,92,95,96,97,113,

124,125,135,153,157,178,183,190,197,212,218,

249,277,278,280,281,283,286,289,290,291,

Banning/blacklistingof�irms 105,

Bidguaranteeform 277,278,

Bidsecurity 17,27,28,36,51,249,

Billoflading 69,230,234,236,237,238,241,

Blockingofvendors 13,104

Budgetprovision 24,99,116,164,165,168,173,

Buybackoffer 31,

Capitalitem 5,8,10,11,21,23,27,41,42,43,59,96,97,161,210,

211,213,272,275,

CARpolicy 177,198,

Centralexcise 76,78,126,

Centralpublicprocurementportal 5,17,18,

Centralpurchaseorganisation 17,

Certifyingauthority 48,49,

Changeinprice 84,161,

Chiefengineer 165,169,178,179,180,181,182,183,184,185,186,

187,188,189,192,194,197,

Civilworksprocedure 164,

Codeofintegrity 18,118,296,

Collaborator 5,16,64,65,202,206,208,

Competentauthority 2,7,8,13,14,19,21,22,24,26,31,33,42,43,56,57,

GLOSSARYReferencePagenosDescription

Annexure­P

PURCHASE MANUAL PURCHASE MANUAL302 303

59,60,61,62,64,65,67,68,74,75,76,83,84,99,100, 102,

106,107,108,109,110,111,112,114,117,131,147,

150,154,155,156,164,165,166,168,169,172,173,

174,176,177,179,180,181,183,184,185,186,189,

192,194,195,212,270,272,273,

Completioncerti�icate 185,

Con�identialityagreement 245,

Constructiontendercommittee 173,174,176,177,178,183,194,195,

Consultants/architects 191,192,193,

Consultingservice 31,32,

Consumptionbasedplanning(CBP)Contract 20,

Contractforservices 99,

Contractmanagement 121,

Costandfreight 238,

Cost,insurance&freight 240

Customerorders 66,117,

CVCguidelines 28,39,45,57,92,153,164,225,

Debarmentfrombidding 17,

Delayindeliveryofsupplies 83,

Delayedoffer 165,

Developmentalorders 12,90,92,116,149,

Digitalsignaturecerti�icate 48,

Displaycentre 163,

Disputeresolutionandjurisdiction 190,

Divisionofpatronage 44,275,

Divisionaltechnicalcommittee 10,21,23,43,270

DoP 7,8,9,10,11,14,20,21,22,26,34,43,55,56,59,60,

61,64,65,67,74,76,83,95,99,102,117,154,162,

164,166,169,172,174,176,183,184,185,189

Earnestmoneydeposit(emd) 9,27,28,41,51,121,

Economicadvisory 62,122,

Educationalorders 12,153,

Emergent/express 8,67,

E-procurement 2,17,38,46,47,48,52,163,

E-reverseauction 46,47,48,49,52,53,54,

ERPT-codes 2,36,58,69,82,

Executionofwork 164,165,168,179,

Excesssupply 43,83,84,128,202,204,206,208,

Establishedweight 151,152,

Exportadministrationregulations 145

Expressionofinterest(EoI) 28,45,163,

FallclauseFinalbill 143,216,

Filingsystem 120,

Financialconcurrence 56,

Forcemajeureclause 24,223,

Foreignexchange 42,63,115,122,123,269

Forex 122

Foreigntradejournal 5

Freealongsideship 234

Freeonboard 236,243

Freeonrail/Freeontruck 232

GFR136 164,184

GFR148 9

GFR149 68

GFR151 18

GFR161 27

GFR163&164 27

GFR167 52

GFR169 99

GFR171 36

GFR176 31

GFR177 32,192

GFR197 32

GFR209 117

GFR21 19

GFR214 19

GFR37 119

Globaltender 5,11,26,27,33,43,49,50,95

Goodsreceiptnote(GRN) 22,222

Governmente-marketplace(GeM) 9,68

Grievanceredressal 131,

Handicraft 257,261,267

ReferencePagenosDescriptionReferencePagenosDescription

PURCHASE MANUAL PURCHASE MANUAL304 305

Highseasales(HSS) 69,70

Importlicense 8,239

Importprocurement 52,

Importedcomponent 163

Incoterms 114

Indemni�ication 198

Indemnitybond 88,277,285

Independentexternalmonitors(IEM) 225

Indianprivateindustries 162

Indiantradejournal 5

Indigenizationdevelopmentcell 90,91,150,152

Indigenisationplan 93,

Industrialengineeringdepartment(IED) 22

Integritypact 300,108,112,113,172,174,224,225,247,249,250,298

Intellectualpropertyrights 141

Inventorycontrol 1,116

Issueoftender 32,95

Jobcards 79,158,

Lateoffer 7,38,50

Layoutdrawings 186,

Legaladvice 121,124,130

Legalaspectsofprocurement 126,

Letterofcredit 8,63,64,95,97

Letterofintent(LOI) 212,227,279,280,286

Levyof�inancialpenalty 112,

Licensor 5,147,149

Limitedtender 5,7,9,11,12,13,17,26,27,33,38,39,57,60,92,110,

150,151,152,173,174,252

Local/bazaarpurchase 8,

Longtermcontract 8,26,43,61,65,122,146,151,160,203,204,206,208,

Maintenanceservice 94,99,

MakeinIndia 163,294,295,

Managementofcontracts 124,

ManualPurchaseorder 69,

Manualtender 6,7,11,27,32,38,39,46,214,

Marketsurvey 11,

MaterialPurchaseCommittee: 10,43,71,202,204,206,208,

Measurementbook 165,179,180,187

Measurementofoutsourcing 146

MiningandConstruction 117,163

MPCRA 66

Mse’s 35,95,172

MSMe 15,17,27,34,94,163,172

Nonconsultingservice 32

Nontendered(NT)items 184,

Non-competitionagreement 225,254

Non-projectitems 4,8,19,33,42,56,160

Numberofvendorstobecontacted 13

Outsourcingandvendordevelopmentpolicy 146

Packinganddispatch 137

Patent 129,141,222

Patterncharges 62

Pattern/die/tools 62

Paymenttosuppliers 94,96

Penalty/liquidateddamages(LD) 70,

Performancebankguarantee 9,35,42,97,113,212,249,291

Performancesecurity 36

Postponementoftenderclosingdate 39

Potentialvendors 120,147,148,160,

Pricevariationclause 84,85,86,121,122,

Principalemployer 191,

Productdevelopment 90,91,146,152,

Productionitems 9,11,19,20,23,38,40,42,61,66,67,74,75,84,116,154,161

Proprietorycerti�icate 226,

Proprietarytender 6,11,26,27,

Publictender 5,7,11,26,27,33,38,161,173,176,194,

Purchasebudget 115,117,

Purchasecontract 127,128,129,130,

Purchasefromcollaborators 64,

Purchaseprogression 83,

Purchaserequisition(PR) 4,8,19,20,21,24,56

Purchasetendercommittee 39,

ReferencePagenosDescriptionReferencePagenosDescription

PURCHASE MANUAL PURCHASE MANUAL306 307

Purchase/pricepreferencepolicy 34,

R&Dprojects 22

RailandMetro 117,163

Ratecontract 96,117,146,160,165,166,172

Refundofbidsecurity 28

Refundofsecuritydeposit 178

Regretoffer 7

Repeatorder 9,10,60,134,217

Reserveditems 34,257

Re-tendering 44,57,150,177

Revenuepurchases 56

Runningaccountremittances 180

Securitydeposit 28,35,135,177,178,188

Servicecontract 191,218,277

Showcausenotice 110

Singleoffer 7

Singletender 5,7,10,11,14,22

Smallvalueitems 9,72

Sourcedevelopment 90,149

Sparepartsforsale 22,65

Spotpurchase 67

Standardstockitems 20,21

Startup’s 125

Statutorylevies 43,60,71,84,139,144,189

Sub-contract 12,22,74,153

Supplyofsample 137,219

Suspensionofbusinessdealing 107,108

Technicalevaluationcommittee 40,51,

Technicalsanction 164,169,

Technicalsupport 162,224,

Commercialdiscussion 9

Tendercommittee 120,164,173,178,183,

Tenderfee 27,

Tenderquantity 44,161,

Tenderingprocess 27,28,41,46,51,131,192,

Termcontract 166,169,170,172,179,

Testbar 215,

Timeschedule 33,57,151,183,186,187,197,268,287,

Tools,jigs,gauges 80,159,

Tradejournal 5,49,

Transferoftechnology 5,147,

Transparencyintendering 28,

Turnkeycontracts 172,

Two-bidtendering 50,

Unsolicitedoffer 7

Validoffer 7,

Validityperiod 27,42,57,71,88,135,218,

Valuationofdeviations 183,

Vendordevelopmentcell 15,162,

Vendorevaluation 12,13,

Vendorrating 12,162,

Vendorregistration 14,161

Vetting/coordinationby�inance 59,

Warranty 144,215,219,284

ReferencePagenosDescriptionReferencePagenosDescription