GOVERNMENT OF KERALA STORES PURCHASE MANUAL Revised Edition 2013 (Revised as per G.O (P) No.3/2013/SPD, dated 21.06.2013) Issued by The Authority of the Government of Kerala Stores Purchase Department Official Website: www.kerala.gov.in (Link: Reports & Manuals) GOVERNMENT OF KERALA STORES PURCHASE MANUAL Revised Edition 2013 (Revised as per G.O (P) No.3/2013/SPD, dated 21.06.2013) Issued by The Authority of the Government of Kerala Stores Purchase Department Official Website: www.kerala.gov.in (Link: Reports & Manuals) © Government of Kerala 2013 PREFACE TO THE REVISED STORES PURCHASE MANUAL Stores Purchase Manual forms the basis for the procurement system of Government Departments, Public Sector Undertakings, Local Self Government Institutions, Universities and Autonomous Bodies. The Stores Purchase Manual being followed in the State is a publication as amended upto 1989. However there are orders and instructions issued thereafter. It has become necessary to revise the Manual incorporating all amendments and orders issued so far and modifying the same to take care of the latest technological and procedural advancements in making purchase decisions. Accordingly, this Manual has been prepared taking into account the need for making purchases efficiently, economically and following a transparent procedure. This Manual is meant for official use and is not intended for the use of non- officials or private parties. Nothing contained in this Manual shall be construed as a presentation meant for contractors or other members of the public having dealings with the Purchasing Departments. The provision in this Manual, therefore, shall not modify in any way the incidence of any existing or future contracts. Any errors or omissions noticed may be brought to the notice of the Stores Purchase Department for correction/inclusion as the case may be. Dr. V.P. JOY Principal Secretary to Government Finance & Stores Purchase Department Thiruvananthapuram 21-06-2013. CONTENTS Page No. CHAPTER 1 INTRODUCTION 1 Transparency, Competition, Fairness and 1 Elimination of Arbitrariness Efficiency, Economy and Accountability 3 Guidelines for Public Procurement 4 Present Manual 4 E-Procurement 5 Definition of “Stores” 8 Standard Tender Enquiry Documents 8 CHAPTER 2 AUTHORITIES COMPETENT TO PURCHASE 9 STORES CHAPTER 3 GENERAL PRINCIPLES OF ENTERING INTO 10 CONTRACTS Introduction 10 Elementary Legal Practices 10 Competency of Parties 11 Consent of both Parties 12 Free Consent of both Parties 13 Consideration 13 Lawfulness of Object 13 Communication of an Offer or Proposal 14 Communication of Acceptance 14 Acceptance to be Identical with Proposal 14 Withdrawal of an Offer or Proposal 15 Withdrawal of Acceptance 15 Changes in terms of a Concluded Contract 15 Discharge of Contracts 16 Stamping of Contracts 16 Contract Effective Date 17 CHAPTER 4 SPECIFICATION AND ALLIED TECHNICAL 18 PARTICULARS OF STORES Basic Guidelines 18 Essential Technical Particulars 19 Certification 20 CHAPTER 5 SOURCES OF SUPPLY AND REGISTRATION OF 21 SUPPLIERS Eligible and Qualified Supplier 21 Registration of Suppliers – Basic Guidelines 21 Registration of Firms 22 Authorities Competent to deal with the 24 applications for registration and grant of Registration Application for Registration 24 Registration Fee 25 Procedure for Registration 25 Printing of Lists of Approved Firms 26 Refusal of Registration 26 Communication of Deficiencies to Firms 27 Performance of Contracts 27 Renewal of Registration 28 Cancellation of Registration 29 Printing of Lists of Approved Firms 29 Blacklisting and Banning of Business with Firms 29 Grounds for Suspension of Business Dealings with 30 Firms Grounds for Banning of Business Dealings 30 CHAPTER 6 FORECAST OF REQUIREMENTS, ASCERTAINMENT 32 OF SURPLUS STORES, PREPARATION OF INDENTS AND ADMINISTRATIVE SANCTION Forecast of Requirements 32 Ascertainment of Surplus Stores 33 Preparation of Indents 33 Administrative Sanction 33 CHAPTER 7 MODES OF PURCHASE, RECEIPT AND OPENING OF 35 TENDERS General 35 Dividing Demand into Smaller Quantities 3 5 Purchase of Stores without Quotation 35 Purchase of Stores by Local Purchase Committee 35 Purchase of Stores by Obtaining Tenders/ 36 Quotations Types of Tenders 37 Limited Tender 37 Advertised Tender (Open Tender) 38 Single Tender (Private Purchase) 40 Format for Tenders 41 Cost of Tender Documents 42 Invitation of Tenders 43 Text of Tender Notice 49 Sale of Tender Documents 50 Pre-bid Conference 50 Sealing and Marking of Tenders 50 Modification of Tender Documents and Extension 51 of Tender Opening Date Amendments/Modifications to Tenders by 52 Tenderers Receipt and Custody of Tenders 52 Late Tender 53 Opening of Tenders 53 Responsibility of the Tender Opening Officials 54 Two Bid System 55 CHAPTER 8 EARNEST MONEY AND PERFORMANCE SECURITY 56 Earnest Money Deposit 56 Exemption from Payment of EMD 56 Payment of EMD 57 Validity of EMD 58 Forfeiture of EMD 58 Refund of EMD 58 Performance Security 59 Forfeiture of Performance Security 61 Verification of the Bank Guarantees 61 Safe Custody and Monitoring of EMDs, 61 Performance Securities & Other Instruments CHAPTER 9 RECEIPT AND EVALUATION OF TENDERS, 63 FORMULATION OF PURCHASE PROPOSAL AND PLACEMENT OF CONTRACT Introduction 63 Receipt and Opening of Tenders 63 Preliminary Examination and Consideration of 65 Tenders Non-conformities between the Figures and Words 68 of Quoted Prices Discrepancies between Original and Additional 69 Copies of a Tender Acceptance of Tenders 69 Price Preference 70 Purchase from Government Sources 73 Price Variation Clause 76 Conversion of Currencies 80 Evaluation and Ranking 80 Reasonableness of Price 81 Dividing the Quantity 83 Award of Contract and Communication of 83 Acceptance Tolerance Clause 85 Publication of Tender Result 85 Tenderer’s Right to Question Purchaser 86 Extension of Tender Validity Period 86 Agreement 86 Annual Maintenance Contract 87 CHAPTER 10 DELIVERY PERIOD, TERMS OF DELIVERY, 90 TRANSPORTATION, TRANSIT INSURANCE, DELAY IN SUPPLY, CANCELLATION OF CONTRACT Delivery Period 90 Terms of Delivery 90 Specification of Stores 90 Sample 91 Packing 92 Delivery 92 Extension of Delivery Period 92 Delay in Supplies for which Supplier is not 93 Responsible Despatch of Stores after Expiry of Delivery Period 94 Linkage between Terms of Delivery and Date of 94 Delivery Instructions for Transportation of Imported Stores 95 INCOTERMS 96 Air Consignment 97 Insurance 97 Insurance of Imported Stores 97 Insurance on Railways or Lorry Transport or Inland 98 Water Transport Distribution of Despatch Document for Clearance/ 98 Receipt of Stores For Domestic Stores 98 For Imported Stores 98 Instalment Delivery 99 Force Majeure 100 Remedies to Purchaser for Delay in Supply – Non- 100 Supply for which Supplier is Responsible Liquidated Damages 101 Token Liquidated Damages 101 Performance Notice 102 Correspondence with the Supplier after Breach of 102 Contract Cancellation of Contract for Default 103 Termination of Contract for Insolvency 103 Termination of Contract for Convenience 103 Claims in Respect of Imported Stores lost or 104 Damaged CHAPTER 11 QUALITY CONTROL AND INSPECTION OF 105 ORDERED STORES Introduction 105 Stages and Modes of Inspection 105 Inspection Procedure 106 Inspection Document 106 Outside Testing Laboratories 107 Handling of Inspection Stamps /Inspection 107 Documents Custody of Inspection Notes 108 Inspection of Stores tendered at the Fag End or on 108 the Last Date of the Contract Delivery Period Acceptance of Stores against Suppliers In-house 109 Inspection Report and Warranty Purchaser’s Right of Rejection 109 Acceptance of Stores Vis-à-vis Warranty Provisions 110 Joint Investigation against Complaints relating to 110 Quality of Stores Measures to curb the menace of counterfeit and 110 refurbished IT products CHAPTER 12 ELEMENTS OF PRICE AND TERMS OF PAYMENT 111 Introduction 111 Firm Price vis-à-vis Variable Price 111 Exchange Rate Variation (ERV) 112 Duties and Taxes on Domestic Stores 113 Levies of Local Bodies 114 Custom Duty on Imported Stores 114 Duties/Taxes on Raw Materials 115 Terms of Payment for Imported Stores 115 Payment of Air Freight Charges 116 Advance Payment to Supplier 116 Documents for Payment 117 Modes of Payment 117 Payment for Stores Purchased in India 117 Payment to Foreign Suppliers 119 Payment by Letter of Credit 121 E – Payment 121 Deduction of Income Tax, Service Tax, etc. at 122 Source from Payments to Suppliers Recovery of Public Money from Supplier’s Bill 122 Refund from Supplier 122 Payment against Time Barred Claims 122 CHAPTER 13 OTHER MODES OF PURCHASE 123 Rate or Running Contract 123 Bringing more and more Common User Items on 125 the Rate Contract Conclusion of Rate Contracts for Automobiles, 125 Sophisticated Equipment, Machinery etc., on the basis of discounts on Net Dealer Price Period of Rate Contract 126 Criteria for Award of Rate Contract 126 Special Conditions Applicable for Rate Contract 127 Fall Clause 127 Performance Security for Rate Contract 128 Placement of Supply Orders for Rate Contract 128 Renewal of Rate Contracts 129 Negotiated Contracts 129 Supply of Articles in the High Ranges 130 Purchase of Furniture 130 Examination of Contracts by Accountant General 130 CHAPTER 14 CONTRACT MANAGEMENT 131 Introduction 131 Text of Contract 131 Performance Security 131 Acknowledgement of Contract 131 Coordination 131 Amendment to Contract 132 Payment to the Supplier 132 Monitoring of Securities and other Instruments 133 Closure of Purchase File 133 CHAPTER 15 SETTLEMENT OF DISPUTES