Policy & Guidelines
Definition of Rate Contract
Rate Contract is a contract for the supply of stores at specified rates during the period covered by the contract. No quantities are ordinarily mentioned in the rate contract and the contractor is bound to execute any order which may be placed upon him during the currency of the contract at the rates specified therein.
There exists following provision in the Stores Purchase Rules relating to rate contract
- Rule 19 of Stores Purchase Rules states that Haryana Stores Depar- ment shall arrange rate contracts for as many articles of common use as possible after inviting open tenders in the manner laid down above (Chapter IV of this manual)
- Rule 23 of Stores Purchase Rules lays down that
“Where the Haryana Stores Department arranges a rate or running contract, the Indenting Officers in the State shall be under contractual obligation to draw their requirement of these articles in terms of rate or running contract and no indent shall be sent either to Director Supplies & Disposals or supply arranged of such items even of slightly varying specifications, direct from the market”,
Rate Contracts are arranged for stores of standard types, other than those required in small quantity only, which are in common and regular demand, the price of which is not subject to appreciable & frequent market fluctuations.
Procedure for arranging Rate Contract
The following procedure is adopted for arranging a rate contract
- Major consuming departments are consulted regarding the specifications and likely turn over before a rate contract is arranged
- Tenders are invited and technical and commercial scrutinizes arranged in the same manner as laid down in Chapter VI of this manual
- After the completion of technical and commercial scrutiny of all the offers a draft proposal is submitted to the Government in the form of self contained U.O. Note in duplicate along with the concerned file. When the approximate turnover exceeds Rs 5 lakh the case is put up to High Powered Committee for approval
- After the receipt of the approval of the Government/H.P.C. The acceptance is issued and security is required along with the complete contract documents from the firm approved for rate contract in the manner laid down in Chapter VI of this manual
- After the receipt of security and contract documents the rate contract is issued to the party approved for rate contract under registered cover
Before issuing a rate contract the purchase section concerned should obtain a rate contract number from Statistical Section. The file number of the rate contract case shall be allotted in the same manner as in the case of ad hoc purchase case with the only difference that in place of ‘”HR” the word “RC” shall be substituted. For instance if the serial number of the RC indent is 100, the dealing assistant is E-1 and the year of starting the file is 1985-86, case No. of the rate contract file shall be 100/RC/E-1/85-86. Statistical Section will maintain a register for this purpose having columns for rate contract number, Particulars of rate contracts, Purchase Section concerned & currency of rate contract
The serial number of the arte contract before issue shall be obtained from the Statistical Section and the same shall be added at the end of the dispatch number. For instance, the first rate contract issued in 1985-86 shall be given the following number in the above mentioned case, assuming that the dispatch number is 325 “100/RC/E-1/85-86/325/1”
- Each page of the rate contract should be initialed by the Officer signing the rate contract
Standard form of Rate Contract
The standard form of rate contract is given in Annexure I and comprises of the following
- Covering letter conveying acceptance of firm’s offer
- Schedule of prices showing the technical particulars of the stores and the rate thereof, general conditions of the rate contract e.g. F.O.R. Excise Duty and Taxes, Payment terms, Delivery period, terms of inspection etc. etc
- Endorsement of the rate contract to the Direct Demanding Officers alongwith the instructions for the Indenting Officers
Period of currency
The ordinary period of the currency of the rate contract is limited to one year but in special cases a shorter or longer period may be provided for as per Government orders.
Stipulation of Fall Clause in Rate Contracts
In the case of drugs, covered under the Drugs (Price Control) Order 1979, items of proprietary nature or whenever considered necessary by Director Supplies & Disposals, in public interest, the following fall clause shall be incorporated in the NIT and also in the rate contract
- The price charged for the stores supplied under the contract by the contractor shall in no event exceed the lowest price at which the con-tractor sells the stores of identical description to any other person during the period of contract and that the prices charged by the con-tractor are not in any way higher than those quoted to or charged from the D.G.S. & D. or any other State Government or Government institutions
- If at any time during the period of rate contract, the firm reduces the sale price of such stores or sells such stores to any other person at a price lower than the price chargeable under the rate contract, they shall forthwith notify such reduction to the Director Supplies & Disposals Haryana, and the price payable under the rate contract of stores supplied after the date of coming into force of such reduction shall stand correspondingly reduced for supplies made or to be made under the rate contract.This will, however, not apply to
- Export by the Contractor
- Sales of Goods or original equipment at price lower than the pric charged for normal replacement
- Sales of goods such as Drugs which have expiry dates
- The contractor holding the rate contract shall furnish the certificate to the Director Supplies & Disposals, Haryana, that the provisions of this clause have been complied with in respect of supplies made or billed for up to the date of this certificate. On the conclusion of the rate contract the contractor shall furnish a certificate that the provision of this clause have been complied with during the period of rate contract
Special points to be kept in view while entering into Rate Contract
When entering into rate contract the following points must be kept in view
- Rate Contract should normally be awarded only to registered and. established firms who are capable of supplying the stores required. Such contracts should not ordinarily be awarded to the firms whose antecedents are not clear or which are not capable of meeting the demand
- If two parties, of which one belongs to Haryana State, quote identical rates for a particular item(s) of store(s) the rate contract should be entered into with the party based in the Haryana State
- It should be seen that the item is suitable for entering into a rate con-tract. The main criteria should be that the store is in repetitive demand and is of common use type
- As many items as possible should be brought an Rate Contracts, so that the indenters can draw upon them without undergoing the formality of placing indents
- The rates must be shown in figures as well as in words
- Rate contracts should be renewed in time and for this purpose Purchase Section should draw up a timetable for conclusion of such contracts. Preferably it should be so managed that all rate contracts in respect of items which have not so far been brought on rate contract are finalized by September each year. In other cases it should be finalized at least one month ‘before the expiry of the current rate contract so that there is no rush toward the end of the financial year and department can operate the contracts conveniently. Renewal of such contracts should also be properly staggered throughout the year to avoid rush of work in any one month. It normally takes about three months to finalize a rate contract. The action schedule should be drawn up accordingly
- The question as to whether such contracts should be entered into for a period of more than one year should be carefully examined. Normally rate contract for medicines are arranged for two years
- A “Fall Clause” as indicated, in para 7.7 above should be include I in the rate contract, Cases. Where firms do not agree to “Fall Clause” would be brought to pointed notice of Government/H.P.C. for their orders
- Two or more firms may be brought on rate contract if so required by the Indenting Departments or where it is found that a single firm will not be in a position to meet the total requirements because of its limited manufacturing capacity or where the requirement is to be met within a shorter delivery schedule
Direct Demanding Officers
Direct demanding officers are authorized to draw their supplies against the rate contract. The officers who are not direct demanding officers have to place their indents with D.S.D. The responsibility for declaring any new Indenting Officers as Direct Demanding Officers is that of Director Supplies and Disposals. He declarers the Direct Demanding Officers in consultation with the various Heads of the Departments and reviews the position from time to time. The criterion for inclusion of Indenting Officer in the list of Direct Demanding Officers is that he had large and recurring demand for the particular stores. In practice it will not be possible to rigidly adhere to any particular status of the Direct Demanding Officers. The decision regarding the inclusion of any Officers in the list of direct demanding Officer against rate contract is arrived at on the merits of each case. For example in the case of construction of works or projects it may be necessary to authorize even a junior officer as Direct Demanding Officer if the exigencies of work so require.
Latest date upto which a supply order may be placed against the Rate Contract
A supply order can be placed against a rate contract so long as it reaches the contractor on or before the last date of the currency of the contract.
Limitation on Direct Demanding Officers with regard to placing orders against Rate Contract: Following are the limitations on placing supply order against Rate Contract by Direct Demanding officers
- Whenever an order exceeds the value of Rs 5 lakh an indent in Form SP8 should be placed I with the Director who will put up the case to the High Powerei Committee for its approval. The order will be placed by D.D.O. after approval of that Committee
- Rate Contract shall not be operated in respect of such items for which any approved source has been declared by Govt. without first obtaining the non-availability certificate from such approved source. But rate contract can be operated without obtaining such nonavailability certificate if the rates quoted by the approved source happen to be higher than those given in the rate contract. But this will not apply to HSSI & EC in the case of reserved items
Signing of Supply Orders
The officers who are authorized to operate the rate contract as direct demanding officers should sign the supply orders themselves. If a subordinate officer (who must invariably be a Gazetted Officer) is allowed to sign the supply order in exceptional cases, his name and designation should be intimated by the direct demanding officer to the firm with a copy to the Director Supplies & Disposals, Haryana.
Inspection, Payment, Delivery period and Penal action
The provisions of Chapter 6 to 10 relating to inspection, payment, delivery period and penal action etc. etc. will apply in cases of purchases under rate contract also. However, date of expiry of delivery period of each order placed against any rate contract has to be calculated with reference to the date of placement of relevant supply order. In the event of default on the part of the contractor to make/complete the supplies within the stipulated delivery period, the risk purchase proceedings have to be completed within six months from the date of the expiry of the delivery period of the relevant supply order and not from the date of expiry of the rate contract. L.R.”s advice on the subject is given in Annexure X to Chapter VI. As such, any case of default or breach of contract in the matter of execution of the supply order should be reported immediately and not later than 15 days from the date of expiry of delivery period of the particular supply order to the Directorate to enable them to initiate risk purchase or any other proceedings against the firm. It must be borne in mind that these proceedings have to be completed within six months from the date of expiry of delivery period, otherwise they become time barred and the firm can get away with the default with impunity.
Maintaining Statistics of supplies made against Rate Contract
A condition is stipulated in every rate contract making it incumbent upon the contractor holding the rate contract to supply the information of the quantity and value of the orders executed quarterly during the currency period of the contract. The report should be in the form prescribed under condition 12(iv) of Schedule ‘B’ of Tender Form This information is entered in the relevant register by the Statistical Section. The Indenting Department is also required to endorse a copy of the supply order to the Director. Supplies & Disposals and intimate quarterly outstanding supplies against the supply order. The contractor should submit the nil report even if there is no transaction in a particular quarter. The progress report to be sent by the contractor should also indicate the supply orders which are outstanding for compliance. The report be continued after the expiry of the contract till all supplies are completed.
Supplies against Rate Contract arranged by D.G.S. & D
Where there is a rate contract arranged by D.G.S. & D., as far as pos-sible all supplies should be ordered by Government Departments against that rate contract. The officers who have been declared as direct demanding officers to operate D.G.S. & D. rate contracts may draw their supplies by placing orders direct in form D.G.S. & D. 131 (Annexure) II but the officers who are not direct demanding officers should place indents in UF 88 (Form SP 8) on the Directorate for arranging the supplies
The Dealing assistant should maintain up to date record of the rate con-tracts issued by the D.G.S. & D. in respect of items which are required by various State Government Deptts. He should take particular care to write well in advance to the D G.S. & D. New Delhi for obtaining copies of the relevant rate contracts before the expiry of the particular rate contract
While placing supply order against DCS. & D. rate contract in form D.G.S. & D. 131 copy of the order should be endorsed to the Statistical section for making requisite entries in the statistical register. He must take particular care that copies of supply order are duly endorsed to all concerned namely the Indenting Officer, Consignee/s, the Inspecting Officer concerned, and Pay and Accounts Officer concerned of Department of Supplies and Disposals Govt. of India, New Delhi. He should also see that the inspecting officer to whom the copies are to be sent are clearly mentioned and such copies should be addressed to the concerned inspecting officer and Pay & Accounts Officer only
Whenever any complaint is received from any Indenting Officer/consignee about the default on the part of the rate contract firm in the execution of the supply order as per. terras of the D.G.S. & D. rate contract, the matter should be examined carefully bv the office with reference to the terms & condition mentioned in the D.G.S. & D. rate contract and the firm concerned should be addressed to take appropriate action as considered proper in the circumstances of the case, within the specified period and if the firm does not comply with the request of the office or does . not show just & sufficient cause for having committed the default of breach of terms of the contract. the matter should be reported to the D.G.S. & D. New Delhi in detail-with a copy-to the Indenting Officer concerned for taking necessary action under the terms of the contract. It may be noted that the appropriate authority for taking penal action against the rate contract is aot this Directorate but the D.G.S & D. and therefore no show cause notice is to be issued by this office
Where the demand is very small and urgent or where the question of selection of colour involved e.g. in the ease of Gars an order is generally placed on the authorised local dealers of the rate contract firm on the usual supply order form as prescribed in Store Purchase Rules of this Directorate on the same terms and con-ditions as contained in the D.G.S. & D. except inspection and payment terms. In such cases the inspection is carried out by the Indenting Officer or any other officer authorised by the Directorate in this bahalf as stipulated in the supply order and 100% payment is made to the local dealer against physical delivery after inspection and acceptance of stores. Such orders should not be placed in routine but only in urgent cases No. penal action can be taken by this Directorate agp.inst the authorised local dealer, nor anv sesurity/earnest money forfeited because no such earnest money/security is actually demanded from the firm before the supply order is placed. No contract documents are executed in such cases
In appropriate cases the Directorate may enter into rate contract with some of the firms which are on the D.G.S & D . rate contract for any particular item. This practice is invoked only where the item required is of large quantities and the inspection charges payable to the D.G.S & D. work out to be quite heavy and no special expertise is required in carrying out the inspection; e.g. in the case of Bitu-men, Such parallel rate contracts are ‘ entered into with the supplier firms which are mostly Government of India undertakings after obtaining their consent. By and large the rate contracts are on the identical terms and conditions but they can be varied as per requirements by mutual consent. In such cases the inspections are to be carried out by the State agencies and the payments have to be made to the firm direct by the Indenting Departments.
Since these rate contracts are entered into by the State Government, the penal action against the defaulting firms can be taken by the State Government at their own level.
In all cases where the value of any purchase order exceeds Rs. 5 lacs, no Indenting Officer even though he is a Direct Demanding Officer shall operate the rate contract whether arranged by the Directorate or D.G.S. & D. without obtaining the prior approval of thigh Powered Committee headed by Chief Minister mentioned inpars 6.12 of Chapter VI and shall place an indent in Form UF 88 (SP8) on the Directorate for this purpose.
An illustrative list of important items in respect of which rate contract have been finalized by this Directorate and D.G.S. & D. is given in Annexure III to this chapter.
Record of Rate Contracts
The record of Rate Contracts will be maintained as follows
- The Statistical Section will maintain a Register of Rate Contracts in Form SP-24. It will have columns for : Rate Contract number as indicated in Para 7.5(f); Particulars of Rate Contract; Purchase Section concerned; Currency of Rate Contracts. All the rate contracts should be entered in it at the time of issue in chronological order irrespective of purchase section
- Statistical Section, Purchase section and Branch officers will maintain master files of Rate Contract arranged for each financial year. All the Rate Contracts will be filed in these files in chronological order of rate contract. The file will have an index in the beginning having columns prescribed for Register of Rate Contracts at P. 17(1) above