Presentation on Comml. Procedure

8/6/2019 Presentation on Comml. Procedure

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GIST OF COMMERCIALPROCEDURES

PS :

Some of the common points in commercial procedures are being highlighted in the

following slides. However, these are only indicative and not exhaustive. The

purchase manual may referred for the detailed procedures.


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A. ESTIMATED COST1. The estimated cost is a vital element in establishing the

reasonableness of prices.2. It is important that the same is worked out in a realistic

and objective manner on the basis of:

a) prevailing market rates,

b) last purchase prices,c) economic indices for the raw material / labour,

other input costs, wherever applicable etc.,

The preparation of estimate is vital to ascertain thereasonability of price and the need for going to price

negotiation. It should be ensured that the estimates arekept confidential and not accessible to outsideagencies.

A proper estimate can immensely help in CostSaving for the Company.


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B

. SELECTION OF VENDORS

In order to ensure that enquiries are sent to right source, the

purchase groups shall use the approved suppliers list both for

imported & indigenous purchases.

The vendor directory needs to be up-dated periodically. In

order to obtain multiple response from suppliers, it is essential

to have latest names & addresses of the probable vendors,duly updated in the vendor directory.


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C. MODES OF TENDERING

i. Open tenderingThe open tendering method has to be adopted for alltenders whose estimated value is above Rs. 5 Crores.However due to special circumstances of the purchase, forvalid reasons to be recorded, the open tender procedure can

be waived off and limited tender can be issued with priorapproval of Chairman.

ii. Global Tendering

Global tendering is same as open tendering except whereitems to be procured are not indigenously available.

.


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iii. Limited Tender.

In limited tender, only the most likely and suitablesources are addressed. To invite adequate competition, it

is necessary that at least five sources of supply areaddressed. Where the number of available sources ofsupply is less than as specified, the number of suppliersto be addressed may be reduced at the discretion of theGeneral Manager.

iv. Single tender

When the purchase is finalised on the basis of an offersent to a single source, this is called a Single tender

purchase. It is imperative that the purchase on Single

tender basis be made with the detailed justification in itssupport and with the approval of competent authority.The single tender enquiry can be sent only under thefollowing cimcumstances:


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(a) OEM / Licenser / Collaborator,

(b) Nominated by the OEM, other than the agent,(c) Vendor developed by HAL,

(d) Joint venture companies promoted by HAL,

(e) Sources specifically nominated by the customer,

(f) Procurement of strategic material fromindigenous sources,

(g) Manufactures retail outlet for an item

proprietary in nature.

Note: Quarterly Report on order placed on single tenderbasis be submitted to the Board and 10% of such cases bereported to Audit Committee as per CVC guidelines.


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v. Proprietary tender

This is a tender which is addressed only to a proprietarymanufacturer / his authorised agent because no equivalent

or near equivalent is available from any other source and /

or all possible suppliers quote only the product of one

manufacturer.

vi. Spot Tendering

Spot tendering is to be resorted only for emerge

requirements.


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D. TENDER EVALUATION

The technical evaluation committee report in the prescribed format shall bring out in detail compliancereport of each technical feature of the RFQ , deviation ifany & the reason for acceptance / rejection of bid & should

be signed by all members of the committee.

The report shall bring out acceptance or otherwise of the bids without any ambiguity & make clear recommendations.

TEC shall be headed by ED/ GM of the Division forproposals to be approved by Complex/ Corporate Office.


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E. SPECIAL CONDITIONS TO BE INCLUDED IN THE

RFQ FOR DESIGN & DEVELOPMENT.

As per para no 7.10 of Annexure IV of DOP, whileprocessing orders for procurement of material required inDesign & Development, the future requirement in respectof series production over the length of the project are alsoto be taken into consideration at the time of placement oforder for development phase. Accordingly, the RFQ has toinclude the following parameters and vendors has to quoteaccordingly:

(i) Quantities required for prototype phase.

(ii) Quantities required for production phase.(iii) Transfer of Technology for Repair & Overhaul.

(iv) Integrated Logistic Support (ILS).

.


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The following terms needs to be specifically indicated in

the RFQ:(a) The commercial evaluation will be based on the

total value for development phase, production

phases, integrated logistic support and transfer of

technology for repair and over haul.(b) Initial PO will be placed for development items

only. Subsequently Production Orders may be placed

only after obtaining firm orders for helicopters from

the customers and fulfillment of other terms of PO.


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F. OTHER IMPORTANT TERMS AND CONDITIONS

TO BE INCLUDED IN THE RFQ

1. The RFQ for the system should clearly bring out the

anticipated quantity & the period of requirements.

2. Non involvement of Indian agents.

3. Terms of payment4. Settlement of disputes and Arbitration clause.

5. Security deposit and Performance Bank Guarantees.

6. Liquidated Damage clause.

7. Price Variation formula.

8. Immunity to Govt. of India.


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09. Integrity pact clause:

Signing of an integrity pact would be consideredbetween HAL & the bidders for contracts exceeding Rs.

20 Crores.

10. Offsets clause:

Where the indicated cost of the contract is Rs.300 Crores

or more, the inclusion of an offset clause may included.

11. Warranty period.

12. Spares and Product support.

13. Export License.

14. Taxes / Duties.


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G. CORRESPONDENCE WITH VENDORS

Indenting department should not carry out any

correspondence with suppliers.

While Methods Engg / Facility Planning responsible for

preparing specification etc, may correspond with variousmanufacturers to firm up their specifications, once a

demand has been raised & sent to IMM for processing for

any item / equipment, all correspondence with Vendors,

whether on technical or commercial points, has to becarried only by IMM Department.


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H. SUB - CONTRACTING

The Sub-Contracting may be resorted to due to:-

a) Lack of internal capacity

b) Lack of time to complete target.

c) Special purpose facilities not available

d) Cost factor

e) Reduction in cycle time of the final product.

f) Any other reasons, to be recorded.

The process of sub-contracting is covered by a separate

Sub-Contracting Procedure including instructions

issued on the subject vide HAL/CD/552(1)/2007 dtd14.02.07 as amended from time to time.


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I. GENERAL POINTS OF OBSERVATION WHILEPROCESSING THE PURCHASE PROPOSALBY FINANCE:

i) Quoted price is substantially on the higher sidecompared to estimates. However no justification isavailable.

ii) The comparison between estimated / budgetary quote

/previous procurements and quote received notavailable.

iii) Absence of correct project chargeability with relevanthead.

iv) The correct reason for sub-contracting as required

under sub-contracting procedure not indicated.v) Receipt of single response or single offer acceptance

in a limited tender. As per para no. 4 of Corporateoffice letter no. HLA/CD/617 &CO/FIN/08 dtd24.09.08, the following points needs to be comply:


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- Retraction of RFQ and review of the requirement tobe carried out by the TEC to derive the cause of suchsingle vendor situation at TEC stage and details to be

brought out in its report.

- The RFQ is to be re-issued if considered necessary,with the approval of CFA after taking suitablecorrective measures including re-formulating thespecification.

vi) Reason indicated for Single Tender either not availableor not as per para no 7.3 of Annexure IV of DOP.

vii) The recommendation of TEC is not clear

viii) The non-availability of ordering information along

with TEC recommendation in the case of sub itemsand optional accessories involved.

ix) Order proposed on a particular DGS&D Rate Contractwhen multiple DGS&D Rate Contracts are available forsame item from different vendors.

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Presentation on Comml. Procedure