PART VI / CHAPTER VII
PROCUREMENT OF PROPRIETORY ARTICLE
7.1
The following procedure should be followed by the Railways in the matter of
procurement of proprietary articles.
1. The proprietary article certificate shall be issued as per proforma given in the
Annexure VI/7-01 to Board's letter No.76/RS (G) 779/55 dated 21.05.1982.
2. The proprietary article certificate shall be signed by an officer of the consuming
department, for whom the stores are procured, of the appropriate level, depending on the
value of the material indented. The value limits are as follows:
Indenting Officer:
Upto Rs.5, 000/-
JAG/Selection Grade officer:
Upto Rs. 25, 000/-
SAG officer:
UptoRs.1 Lakh
PHOD of the user Dept:
Above Rs. 1 lakh
Authority: Bd’s letter No. 76/RS (G)/779/55 of 21.05.1982 (Annexure VI/7-01) &
88/RS (G)/779/28 of 25.03.1992 (Annexure VI/7-07)
3.
(i ) The powers of purchase of Stores Officer in the case of proprietary articles
through Single Tender where it is certified that a similar article, which could be
used in lieu, is not manufactured or sold by any other firm (vide item 6(c) of the
(Annexure VI/7-01) will be limited to his normal purchase powers.
(ii). The powers of purchase of Stores Officers in the case of Proprietary Articles
through Single Tender where item 6(c) is deleted and the certificate as required
against item 6(c) of (Annexure VI/7-01) is not given, is up to Rs. 50,000/- The
purchase of Proprietary articles on Single Tender beyond Rs. 50, 000/- in each
such case would require the sanction of General Manager as prescribed in subpara (c) of para 331-S.
4. Procurement of stores on proprietary basis completely eliminates competition and
could lead to higher prices. The indenting authorities before indenting for proprietary
articles and certifying them so, should therefore fully satisfy themselves that no
acceptable substitutes are available.
5. The Proprietary Articles should not be accepted by Purchase officer as a matter of
course and Indenting Officers should be advised to carefully evaluate the merits before
signing such a certificate.
Authority:
Board's letter No.76/RS (G) 779/55 of 21.05.1982 (Annexure VI/7-01)
83/F (S)I/PW-7/1 of 04.04.1983 (Annexure II/1-21)
76/RS (G)/ 779/55 of18.04.1983 (Annexure VI/7-02)
6. The details of proprietary items purchased by Railways should be published in the
Railways Stores Bulletin / Indian Trade Journal once in every 6 months i.e. during April
& October.
Authority: Letter No. 84/RS (G)/363/EC63/Recm: 124 dt 20.11.1985 (Annexure VI/7-04)
7.2 The Board has desired that henceforth D.G.S.&D will not entertain any indent supported by
Proprietary Article Certificate. All the indenting Ministries/departments etc. are authorised to
make purchase of proprietary Articles directly with immediate effect.
Authority: Board’s letter No. 88/ RS(G)/779/39 of 17.06.1992 (Annexure VI/7-08)
7.3 Procurement of spares for Diesel & Electric Locomotives on proprietary basis.
In the cases of certain items obtained on proprietary article certificate, it was observed
that the same firm had quoted different rates to different Railways and when items were procured
against limited tenders instead of proprietary basis the rates obtained were lower than those
quoted by the firms against proprietary tenders. In view of these Board have decided as under:
i). All Railways shall ensure publication of rates of PAC purchase and that items procured on
PAC are separately grouped while publishing the particulars in the Indian Trade Journal.
ii)
The Railways will issue advertised tenders once in 2years in cases of value
exceeding Rs. 2 lakhs even for sophisticated spares certified as single source items. The
bulk procurement will, however, be restricted to firms approved by DLW/CLW or by the
concerned Railways.
iii). The firms who are not in the approved list and firms whose drawings had been authenticated
by any Railway other than the one which issued the tender can be considered for educational
orders if their rates are competitive and after verifying the capability of the firms thoroughly.
iv). There should be quarterly meeting of Stores/Mechanical/Electrical Officers of the
Railways in the Metropolitan Cities for exchanging the information on the firms
approved during the previous quarter for various items.
Authority: Board's letter No.73/RS (G) 779/30 pt. II dated 30.03.1987 (Annexure VI/7-05) &
No. 73/RS (G) 779/30 pt. II dated 17.02.1989 (Annexure VI/7-06)
7.4
Procedure and policy of procurement in cases where a sole indigenous manufacturer of
equipment is involved.
In all cases involving purchases of materials from a single monopoly source, the Railway
Administration should endeavour to prevail upon the firm to accept the Railway's Book
Examination Clause. If they are not agreeable it should be made clear to them that under section
209-A of the Companies Act, the Government have got the powers to examine the books of the
company.
ii)
The Book Examination Clause can be invoked whenever it is felt that the rate
quoted by the firm is unreasonable and the Railways are unable to persuade the firm to reduce
the rate through negotiations. Such cases may be referred to the Board for deciding for invoking
the Book Examination Clause in consultation with MRTP Commission of the Ministry of
Industrial Development. The following details should be furnished by the Railways.
a). Whether the item under procurement was imported in the past and if so, whether
efforts were made by the Railway to obtain the current international prices (Dept. of
Supply have suggested that to discipline any monopolist supplier, imports can be resorted
to);
b). Whether negotiations were held with the firm indicating the remedies available to the
Government for Examination of books including the possibility of import at cheaper
international price-.
If the requirement is operationally very urgent and cannot wait for the detailed procedure
for invoking the Book Examination Clause. the tender may be finalised for an appropriate
minimum quantity duly reporting the position to the Railway Board. In such cases, the
possibility of import for meeting the requirement of the future contract period should be
considered in consultation with the Railway Board. All these proposals should have the personal
approval and concurrence of Controller of Stores and F.A. & C.A.O. respectively.
Authority: Board's letter No. 82-BC-PAC/VII/102 of 25.03.1985 (Annexure VI/7-03)
ANNEXURE VI/7-01
Copy of letter No. 76 RS (G)/779/55 dated 21st May 1982 received from Shri A. K. DasGupta,
Dy Director, Railway Stores (G), Railway Board, addressed to General Managers, All Indian
Railways, P. Units and M. T. Ps.
Sub: Procurement of proprietary Articles,
Ref: Board's letter of even No. dated 20th July 1979, 11th September 1979, 26th May
1980 and 27th January 1981.
Ministry of Railways have issued instructions from time-to-time stipulating the procedure
to be followed by the Railway in the matter of procurement of proprietary articles. The matter
has been reconsidered and the Ministry of Railways have now decided that in supersession of
previous orders, the following instructions on the subject will be followed: (1) The proprietary articles certificate shall be issued as per proforma given in the
Annexure.
(2) The proprietary article certificate shall be signed by an officer of the consuming
department, for whom the stores are procured, of the appropriate level depending on the
value of the material intended. The value limits are indicated at the foot of the Annexere.
(3) (i) The powers of purchase of a Stores Officer in the case of proprietary articles
through single tender where it is certified that a similar article, which could be used in
lieu, is not manufactured/sold by another firm (vide item 6(C) of the Annexere) will be
limited to his normal purchase powers.
(ii) The power of purchase of Stores Officers in the case of proprietary articles through
single tender where item 6(c) is deleted and the certificate as required against item 6(c)
of the Annexere is not given, is up to Rs. 10,000. The purchase of proprietary articles
on single tender beyond Rs. 10,000 in each such case would require the sanction of
General Manager as prescribed in sub para (c) of Para 331-S.
(4) Procurement of stores on proprietary basis completely eliminates competition and
could lead to higher prices. The indenting authorities before indenting for proprietary
articles and certifying them so, should therefore fully satisfy themselves that no
acceptable substitutes are available.
(5) The proprietary articles should not be accepted by Purchase Officer as a matter of
course and indenting officer should be advised to carefully evaluate the merits before
signing such a certificate.
This issues with the concurrence of the Finance Directorate of the Ministry of Railways.
Annexure to letter No. 76/RS (G)/779/55 dated 21st May 1982.
Certificate for Purchase of Proprietary Article
.
(1) Description of Article ---------------------------------------------------------------------------------------------------------------------------------(2) Quantity
------------------------------------------------------------------(3) Approximate cost, if known ----------------------------------------------------------(4) Maker's name and address -----------------------------------------------------------(5) Name of Local Agents ----------------------------------------------------------------------------------------------------------------------------(6) I approve the above purchase and I certify that: -(a) No other make/brand will be suitable.
(b) This is the only firm who is manufacturing/stocking this item.
(c) A similar article is not manufactured/sold by any other firm, which could be
used in lieu.
Note- Delete (a) or (c) whichever is not necessary.
Date -------------------
Signature --------------------------------Designation of Officer -------------------
To be signed: -- For items valuing upto Rs. 2,000 by the Indenting Officer.
- For items valuing beyond Rs. 2,000 to Rs. 10,000 by Dy. Head of Consuming Department.
- For items valuing beyond Rs. 10,000 to Rs. 50,000 by Addl. Head of Consuming Department.
- For items valuing beyond Rs. 50,000 by the Head of Consuming Department.
ANNEXURE VI/7-02
Copy of letter No. 76/RS (G)/779/55 dated 18th April 1983 to General Manager/All Indian
Railways/P. Units, M.T. P. (Railways)/Calcutta W. &A. Plant, Banglore.
Sub: Procurement of proprietary articles.
Ref: Board's letter of even No dated 20th July 1979, 11th September 1979, 26th
May 1980, 27th January 1981 and 21st May 1982.
The matter has been reviewed by the Ministry of Railways and it has been decided to
amend the Para 6 (c) of the Certificate for P. A. C. circulated with the above noted letters, as
under6 (c) “similar article is not manufactured or sold by any other firm which could be used in
lieu”
Sd/(JOGINDER SINGH)
Dy. Director, Railway Stores (G).
Railway Board.
ANNEXURE VI/7-03
Copy of Board's letter No. 82-BC-PAC/ VII/ 102 dated 25th March 1985 addressed to General
Managers, All Indian Railways and others.
Sub:
Laying down procedure and policy of procurement in cases where a sole
Indigenous manufacturer of equipment is involved- 02nd report of P. A. C.
(7th Lok Sabha)
Ref: Board's letter No. 82/RS (G)/777/2 dated 18th March 1983
Instances have come to light of cases involving purchase of proprietary nature where the
concerned firms have not agreed to the 'Book Examination Clause'. With a view to deal with
such situations on a uniform basis in all Government Department, this matter has been examined
in consultation with the Department of supply and the Department of Law, Justice and Company
Affairs and it has been decided to adopt the following Procedure in future.
(i) In all cases involving purchase of material from a single monopoly source, it should be
the endeavour of the Railway Administration to prevail upon the firms to formally accept the
Railway's Book Examination clause'. If they are not inclined to agree, it should be made clear to
them that under section 209-A of the Companies Act the government have got the powers to
examine the books of the company.
(ii) The 'Book Examination clause can be invoked wherever it is felt that the rate quoted
by the firm is unreasonable with due regard to the previous purchase rates, price trends and
intrinsic worth of the item. However, where the Zonal Administration considers the rate to be
unreasonably high with the differences in value being, in excess of Rs. 1 lakh in each case and
are unable to persuade the firm to reduce the rate through negotiations, such cases may be
referred to the Board for deciding on invoking the book examination clause, in consultation with
M. R. T. P. Commission and the Ministry of Industrial Development alongwith the following
details.
(a) Whether the item under procurement was imported in the past and if so, whether
efforts were made by the Railway to obtain the current international prices, Department
of Supply have suggested that to discipline any monopolist supplier, imports can be
resorted to.
(b) Whether negotiations were held with the firm indicating the remedies available to the
Government for examination of books including the possibility of import at cheaper
international price.
(iii) Whether the requirement is operationally very urgent and cannot wait for the detailed
procedure mentioned in Sub-para (ii) above, the tender could be finalised for an appropriate
minimum quantity duly reporting the position to the Railway Board.
ANNEXURE VI/7-04
Copy of Board's letter No. 84/RS (G) 363/EC 83/Rec. No. 1.24 dated 20th November 1985
addressed to General Manager (S) Southern Railway, Madras 23, and others.
Sub:
Purchase of proprietary items--Publishing the details in the Railway Stores
Bulletins/Indian Trade Journal
Ref: Your Dy. C. O. S. / I.C s letter No. S/93/EC/ 12/ Policy dated 25th October 1985
It is clarified that instructions issued under Boards letter of even number dated 17th
August 1985 supersedes instructions issued vide letter No. 84/RS (G) 363/1/EC 79/Pt. XIV
dated 29th May 1985. The details of proprietary items purchased by Railway should be
published once in every six months i. e. during April and October.
*********
ANNEXURE VI/7-05
Copy of Board's letter No. 73/RS (G)/779/30 Pt. II dated 30th March 1987 addressed to General
Managers, All Indian Railways and others.
Sub: Procurement of spares for Diesel and Electric locos
It has come to the notice of the Board that in the case of certain items obtained on
proprietary Article Certificate, the same firm has quoted different rates to different Railways.
Also, when items formerly procured on proprietary Articles Certificate were instead procured
against limited Tenders, the rates quoted by some firms were lower than those quoted by them
against Tenders on proprietary Certificate basis. There have been complaints from the Members
of Parliament and Parliamentary Committees on these issues as also the practice on the Railways
of restricting the purchase to a few firms approved by the Consumers without keeping the door
open for new entrants having merit and capabilities.
2.The matter was, therefore, discussed in a meeting of Mechanical and Stores Officers held on
28th January 1987 with the Board. In the light of these discussions, the Board have decided as
under:-(i) All Railways shall ensure Publication of rates of P. A. C. purchase (in accordance
with the instructions contained in the Board s letter No. 84/RS (G)/363/EC 63/Rec. No.
124 dated 20th November 1985) and that items procured on P. A. C. basis are separately
grouped while Publishing particulars in the Indian Trade Journal.
(ii) Railway will invariably issue advertised Tenders in cases exceeding Rs. 1 lakhs
including even sophisticated spares certified as single source items. The bulk
procurement will however, be restricted to firms approved by either D. L W/C. L W. or
by the concerned Railways. The Tender should specified that material should be to C. L
W./ D. L W./ R. D. S. O. Drawing or any other drawing authenticated by the Railways.
(iii)
The purchase Officers concerned should invariably list the approved firms on the
file before issuing the Tenders.
(iv). The following condition should be mentioned in the Tender notice.
"The Railway reserves the right to order either the entire or the bulk quantity on
approved firms and only consider other firms for educational orders."
(v). The offers of the firms whose drawing have been authenticated by any Railway other
than the one which has issued the Tender should also be considered, at least for an
educational order, if their rates are competitive and their credentials are known to the
Tendering Railway. Further, the credentials of such firms should be considered and
decided in the next quarterly meeting of the Railways to be convened in accordance with
item (vi) below. The Railways while authenticating any supplier's drawing should
consider the capability of the firm thoroughly, including inspection standards,
manufacturing processes etc., to ensure broad basing of approved sources. The
instructions contained in the Board's letter No. 73/RS (G)/779/30 dated 8th January
1986 authorise firm to approach C. O. Ss. for getting approval for supply of sophisticated
spares. C. O. S. after satisfying himself on the firms credentials/capabilities should send
the standard questionnaire prepared by R.D.S.O.to the firm. On receipt of the same duly
filled up it should be sent to C.M.E/C.E.E. for taking action in regard to Inspection of the
firm either by their own Organisation or by R I. T. E S. Thereafter C. M.E/C.E E should
give clear reasons for approving or not approving a particular firm. It is to be clearly
understood that placement of educational orders should not be at the cost of quality or
competitiveness.
(vi)
There should be a quarterly meeting of Stores/Mechanical/Electrical Officers of
the Railways in the 4 Metropolitan cities by rotation where information regarding firm
approved during the previous quarter for various items should be exchanged. In additiion
the subject would be discussed in detail in the annual D.M.G/E.M.G as well as in the
discussion of which subject the concerned Stores Officers would also participate.
(vii). P. A. C. purchases would continue only in the case of fuel injection spares obtained
from M/s. M. I. C. O. for Diesel Locos and a few spares cornponents rows of D. J. Tap
Changer, Pantograph, Relays of Electric Locos until further orders. For all other items
limited/weekly bulletins/ advertised Tenders should be adopted. In all cases below Rs. 1
lakhs Railways may follow the mode of weekly bulletins or limited Tenders. In case of
limited tenders, besides the firms borne on the approved list of the concerned Railway/D.
L W/ C. L W., exchange of information during the quarterlv meeting regarding sources of
supply on other Railways may prove helpful. Specific attention of approved firms may
be drawn to the weekly bulletins wherever this mode is employed. As mentioned earlier,
bulk procurement in these cases will however, continue to be restricted to the approved
sources of the concerned Railway and even educational orders should be placed only
offers received from unapproved sources are competitive and otherwise satisfy the
standards required for the purpose.
3. The procedure outlined in Para 2 (ii) to (v) and (vii) will be reviewed after 1 year based on the
experience gained by feedback received from the Railways.
4. This superseeds all previous instructions issued by the Board on the subject and issues with
the concurrence of Mechanicl and Electrical Directorate.
*******
ANNEXURE VI/7-06
Copy of Board letterNo.73/RS (G)/779/3O/Pt Il dated/ 7th february l989 addressed to General
Managers, All Indian Railways and others.
Sub:
Procurement of spares for Diesel and EIectric Locos
Ref: Board's letters of even No. dated 30th March 1987 and 20th July 1997
Based on the reports received from Zonal Railways/Production Units; the instructions
issued vide Board's letter of even number dated 30th March, 1987 have been reviewed and
keeping in view the difficulties experienced by Railway/Production Units it has been decided
that instead of issuing advertised Tender in each case, every year as mentioned in Para 2 (ii) of
the said letter, the advertised Tender need be issued only once in two years.
2. Your attention is also drawn to Railway Board's letter No. 83/FS (I)/PW-7/1 dated 14 th
February 1989 vide which existing limit of Rs. 1 lakh for issue of advertised Tenders has been
enhanced to Rs. 2 Lakhs.
3. Boards also desire that to enable frequent exchange of information the current list of approved
sources maintained by each Railway/ Production Unit, be regularly circulated to all other
Railway/Production Units.
**********
ANNEXURE VI/7-07
Government of India
Ministry of Railways
(Railway Board)
No. 88/RS(G)779/28
New Delhi, dt: 25.03.1992
The General Managers (Stores),
All Indian Railways & Production Units.
Sub: Procurement of Proprietary Articles.
Ref: Board's letter of even No. dated 20th July 1979, 11th September 1979, 26th
May 1980, 27th January 1981 and 21st May 1982.
The Railway Board have had under consideration for some time, the need for revision of
the value limits for signature of PAC by the Officers of the User Departments as fixed earlier
vide Board’s letter No. 88/RS (G)779/55 Dated 20th July 1979.
It has now been decided to enhance the powers to sign the Proprietary Articles Certificate
as under: Value of Items
Level of Officers authorised to sign the PAC
1.
Upto Rs. 5,000/-
Indenting Officer
2.
Upto Rs. 25,000/-
JAG/Selection Grade Officers.
3.
Upto Rs. 1 lakh
SAG Officer.
4.
Above Rs. 1 lakh
PHOD of the User Department.
This issues with the concurrence of the Finance Directorate of the Ministry of Railways.
Sd/(Om Prakash)
Executive Director, Rly. Stores (G)
Railway Board.
ANNEXURE VI/7-08
Copy of Rly. Board's letter No. 88/RS(G)/779/39 dated 17.06.1992 from Dy. Director, Railway
Stores (G), Railway Board, New Delhi to GMs (Stores), Southern Railway and others.
Sub: Procedure for procurement of items supported by Proprietary Article Certificate.
A copy of OM No. P-III-1 (13) 91 dated 01.05.1992, received from the Ministry of
Commerce, Deptt of Supply of the above subject is sent herewith for information and guidance.
Consequent upon Govt's decision to transfer the work of procurement against adhoc
indents to user departments the item supported by PAC hitherto being purchase by DGS&D will
also not be procured by the DGS&D. It has, therefore, been decided that hereinafter the item
supported by Proprietary Articles Certificate earlier procured through the agency of DGS&D
may be purchased directly by the Zonal Railways/Production Units. All extent instructions
relating to purchase of proprietary stores will be applicable for such direct purchase.
This supersedes the earlier instructions issued vide Bd’s letter of even number dated
19.12.1988 circulating Ministry of Commerce, Deptt of Supply’s letter No P.III (21)88 Dated
24.10.1988 on the above subject.
This issues with the concurrence of Finance Directorate of Bd’s Office.
Please acknowledge the receipt.
******
Copy of O.M. No. PIII-I(13)/91 Dt. 01.05.1992 from Ministry of Commerce, deptt. of supply,
Govt. of India, NDLS addressed to all Ministries/Deptts of Govt. of India.
Sub: Procurement of Stores on the basis of proprietary Article Certificate.
The undersigned is directed to refer to this Department’s O.M. No. I.III-I (21)/88 dated
24.10.1988 regarding the role of the DGS&D and the procedure to be followed with regard to
procurement of items supported by Proprietary Article Certificate.
2. Consequent upon work of procurement against adhoc indents having been transferred from the
DGS&D to the indenting Ministries/Departments, it has been decided that henceforth DGS&D
will not entertain any indent supported with PAC. All the indenting Ministries/Departments etc.
are authorised to make purchase of Proprietary Articles directly with immediate effect.
………………..