Clauses in Stores - IRS Conditions
Click for Revised IRS Conditions latest version 1.0 September 2022
Warranty/guaranty clause - 3200
The Contractor guarantees that the said goods would continue to conform to the description and quality for a period of 30 months after their delivery or 24 months from the date of placement in service whichever shall be sooner.
At times, Warranty Clause is also specified in the specifications made by Technical departments, which many times, is at variance with the warranty Clause as per IRS conditions of the contract.
While procuring the material, it should be ensured that the applicable Warranty Clause is specified in tender documents clearly and in unambiguous terms
Statutory Variation Clause:
Allows- variation in taxes and duties, or fresh imposition of taxes and duties by state/central government in respect of the items stipulated in the contract (and not the raw materials thereof), within the original delivery period stipulated in the contract.
Only such variation shall be admissible which takes place after the submission of bid.
No claim on account of statutory variation in respect of existing tax/duty will be accepted unless the tenderer has clearly indicated in his offer the rate of tax/duty considered in his quoted rate.
No claim on account of statutory variation shall be admissible on account of misclassification by the supplier/contractor.
Ex: GST Rate increased from 5% to 12% w.e.f 1.10.19 for Railway Coach/Wagon/Loco items
Option Clause
Source: Railway Board letter dated 04.03.2022 Click here for download
Applicable for all tenders wherever specifically mentioned in the tender as a Special condition.
For Fixed Quantity Contracts only
The purchaser (i.e., Railways) reserves the right to increase the order quantity by a quantity not exceeding 30 % of the ordered quantity.
Provision of Minus 30 % Option Clause shall not be inserted in the Tenders.
The minimum Purchase value is Rs. 1.5 Crores
There is no bar to include this clause for the below value of Rs. 1.5 Crores, if accrues the benefits to the Railways.
Example: As per the contract, the quantity ordered is 100 Nos. Under this clause, Purchaser has the right to increase up to 130 Nos depending on the requirements.
Same price, same terms & conditions are applicable.
During the currency of the contract including the extension period, if any.
Before resorting to such an increase, reasonable notice and time should be given to the contractor/supplier.
Railways can resort to increasing the quantity, though the contractor/supplier who delivered the ordered quantity has been supplied in full before the last date of delivery.
Approval of Option Clause: While deciding the acceptability of Tenders/Contracts, the value of +30% quantity will be excluded from the value of Tenders for determining the level of Competency of sanction.
The performance of the firm on whom the option is proposed to be exercised should be satisfactory.
Operated only where there is a clear demand for additional quantities and benefits accrue to Railways in terms of existing contractual rates being reasonable or lower than newly opened tendered rates, if available.
Operation of Option Clause:
TC cases - Finance Concurrence is not required. By Competent authority within his powers of Tender acceptance (original quantity plus 30 % under option clause. Operation of plus 30% clause, Finance vetting of modification advice is required.
Non TC cases - Finance concurrence is required -If the value of contract (including plus 30%) is within vetting limit of PO - Purchase Order.
Price Variation Clause
Price Variation Clause-Allows variation in price during the currency of contract under certain conditions
Normally a contract should be entered into on a fixed-price basis. Nevertheless, in the fluctuating market conditions, it may sometimes become necessary in the case of long-term contracts to consider variable price quotes given by the Sellers.
Common Items where PVC applicable- Lead Acid Batteries, Signaling Cables, Transformers,Copper Centenary Wire, etc
PRICE VARIATION CLAUSE-GUIDELINE
Price Variation Clause can be provided only in long-term contracts
Where a PVC is provided, the price agreed upon should specify the base level viz., the month and year to which the price is linked, to enable variations being calculated with reference to the price levels prevailing in that month and year.
A formula for calculation of the price variations that have taken place between the Base level and the Scheduled Delivery Date should be included in this clause.
The variations are calculated by using indices published by Governments or Chambers of Commerce periodically. Ex: Indexes published by Ministry of Economic Affairs,Labor Index by Ministry of Labor,HZL Price circulars,SAIL price circulars,BME price circulars,IEEMA circulars
The Price Variation Clause should also specify cut-off dates for material and labor, as these inputs taper off well before the scheduled delivery dates.
No price variation will be admissible beyond the original Scheduled Delivery Date for defaults on the part of the Seller.
The buyer should ensure a provision in the contract for benefit of any reduction in the price in terms of the Price Variation Clause being passed on to him.
Denial Clause (DC)
No increase in price on account of PVC/SVC in respect of the stores specified in the Contract which takes place after the date of the delivery period originally stipulated in the contract shall be admissible on such of the said store as are delivered after the date of the delivery originally stipulated in the contract.
Nevertheless, the purchaser shall be entitled to the benefit of any decrease in price on account of reduction as stipulated in the price variation clause, which takes place after the expiry of the date of delivery originally stipulated in the Contract
Force Majeure Clause
If at any time during the continuance of the contract, the performance shall be prevented or delayed by the reasons beyond the control of the supplier, such as, but not restricted to, reasons of any war, hostility, acts of the public enemy, civil commotion, sabotage, fires, floods, explosion, epidemics, quarantine restrictions, strikes, lockouts and freight embargoes,neither party shall by reasons of such event, be entitled to terminate this contract nor shall have any claim for damages against the other in respect of such non-performance
provided notice in writing of happening of any such event is given by either party to the other within 21 days from the date of occurrence with reasonable evidence thereof,
If the performance is prevented for a period exceeding 60 days, either party may at its option terminate the contract
Force Majeure Clause will not be used by any party to effectively escape liability for bad performance
Force Majeure Clause shall be available and applicable to the Purchaser also.
EX:Due to Covid lockdown,GOI permitted refixation of DP for all contracts by 3 to 6 months ( Rly.Bd, Lr.NO 2020/RS(G)11/15 Dt. 9/6/2020 )
FALL CLAUSE
Ex: Fall Clause is incorporated as Special Condition (as it is not in IRS conditions)
Fall Clause. Deleted
CAN BE INCLUDED AS SPECIAL CONDITION
Fall Clause: In case special condition specifically exist in the tender document that Fall Clause is applicable, then following provisions will apply for that particular tender only:
The price charged for the stores supplied under the contract by the contractor shall in no event exceed the lowest price at which the contractor sells the stores or offer to sell stores of identical description to any persons/organizations including the purchaser or any Department of Central Government or any Railway Office during currency of the contract.
Such lower price will be applicable to supplies made after the date of coming into force of such reduction or sale or offer to sell at a reduced rate.
If at any time during the said period the contractor reduces the sale price, they shall forthwith notify such reduction to the Purchaser and the price payable under the contract for the stores supplied after the date of coming into force of such reduction shall stand correspondingly reduced.
The Fall Clause stipulates bidders not to quote prices higher than that quoted to organizations under state governments, Central government, and local bodies. ... The goal of any procurement authority or government is to get quality medicines at affordable prices.
Time Preference Clause
Time preference clause : Purchaser reserves the right to place order on higher tenderer, in preference to the lowest acceptable offer, in consideration of offer of earlier delivery.
It should be noted that the higher tenderer will be liable to pay to the Government the difference between the contract rate and of the lowest acceptable tenderer on the basis of final price, in case of failure to complete supplies in terms of such order within the date of delivery specified in the tender and incorporated in the purchase order.
Foreign Exchange Variation
Where contracts are for supply of equipment, goods, etc., imported -the percentage and element of duties and taxes included in the price should be specifically stated, along with the selling rate of foreign exchange element taken into account in the calculation of the price of the imported item.
The mode of calculation of variations in duties and taxes and Foreign exchange rates and the documents to be produced in support of claims for such variations should also be stipulated in the Contract.
The clause should also contain the mode and terms of payment of the price variation admissible.
This clause is only to be included in the contracts concluded with the sellers, in case the delivery period exceeds one year from the date of contract which involves import content (foreign exchange).
Base Exchange rate of each major currency used for calculating FE content of the contract is to be indicated.
The base date for ERV to be admissible would be the contract date and variation on the base date can be given up to the midpoint of manufacture unless the firm has already indicated the time schedule within which materials will be exported by the firm.
Documentation for Claiming ERV: (a) A bill of ERV claims enclosing worksheet. (b) Banker’s Certificate / debit advice detailing FE paid & Exchange rate. (c) Copies of import orders placed on the Sellers. (d) Invoice of Seller for the relevant import orders.
Purchase Preference
Railways reserves the right to procure stores with preferential treatment as per the Public Procurement Policies of Government of India
Public procurement policy for goods produced and services rendered by Micro and Small Enterprises
Public procurement policy for preference to Make in India
Preference to Domestically manufactured electronic products
Policy for providing Preference to Domestically Manufactured Iron & Steel Products in Government Procurement
PURCHASE PREFERANCE-MSE POLICY
In tenders, participating MSEs quoting a price within price band of L1 + 15% shall be allowed to supply a portion of the requirement by bringing down their price to L1 price, in a situation where L1 price is from someone other than a MSE and such MSEs can be together ordered up to 25% value out of the net procurement quantity.
A minimum of 4% of total procurement, within the 25% earmarked for MSEs will be from MSEs owned by Scheduled Caste/ Scheduled tribe (SC/ST) Entrepreneurs.
A minimum of 3% of total procurement, within the 25% earmarked for MSEs will be procured from women owned MSEs.
Traders and agents are not eligible to avail the benefits extended under the Public Procurement
MSE POLICY
MSEs must upload with their offer, the proof of their being MSE registered with any of the agencies mentioned in the notification of the Ministry of MSME indicated below
District Industries Centers
Khadi and Village Industries Commission
Khadi and Village Industries Board
Coir Board
National Small Industries Corporation (NSIC)
Directorate of Handicraft and Handloom
Those having UdyogAadhar Memorandum/Udyam Registration
Any other body specified by Ministry of MSME
Note: Trading enterprises are not covered under the definition of Micro and Small Enterprises.
EXAMPLEMSE POLICY(QUANTITY DIVISIBLE)
Public Procurement Policy for Preference to Make in India
The Government has issued Public Procurement (Preference to Make in India), Order 2017 laying down the policy to encourage ‘Make in India’ and promote manufacturing and production of goods and services in India.
Book Examination Clause:
1300. Inspection by Inspecting Officer. 1301. (a) When inspection during manufacture or before delivery or dispatch is required, notice in writing shall be sent by the Contractor to the Inspecting Officer when the stores or material to be supplied are ready for inspection and test, and no stores shall be delivered or dispatched until the no stores shall be delivered or dispatched until the Inspecting O Inspecting Officer has officer has certified in writing that such stores have been inspected and approved by him
(b) In cases where the Inspecting Authority specified in the contract requires on behalf of the Purchaser that during the manufacture behalf of the Purchaser that during the manufacturing process of the ing process of the component/stores, etc. is also to be done, notice in writing shall be sent by the Contractor to the Inspecting Officer to visit his premises/works to test the raw materials and/or conduct necessary inspection during the manufacturing process the manufacturing process of the component / stores, etc. as deemed essential.
The tenderers are to agree for the Standard Book Examination Clause as stated below. In case thetenderer do not agree to this clause, it is made clear that under Section 209-A of Companies Act,(Section 209A in The Companies Act, 1956)
Inspection of books of account, etc., of companies
(1) The books of account and other books and papers of every company shall be open to inspection during business hours-
(i)by the Registrar, or
(ii)by such officer of Government as may be authorised by the Central Government in this behalf: Provided that such inspection may be made without giving any previous notice to the company or any officer thereof.
(2) It shall be the duty of every director, other officer or employee of the company to produce to the person making inspection under sub- section (1), all such books of account and other books and papers of the company in his custody or control and to furnish him with any statement, information or explanation relating to the affairs of the company as the said person may require of him within such time and at such place as he may specify.
(3) It shall also be the duty of every director, other officer or employee of the company to give to the person making inspection under this section all assistance in connection with the inspection which the company may be reasonably expected to give.
(4) The person making the inspection under this section may, during the course of inspection,-
(i) Make or cause to be made copies of books of account and other books and papers, or
(ii) Place or cause to be placed any marks of identification thereon in token of the inspection having been made.
(5) Notwithstanding anything contained in any other law for the time being in force or any contract to the contrary, any person making an inspection under this section shall have the same powers, as are vested in a civil court under the Code of Civil Procedure,
1. Subs. by Act 65 of 1960, s. 60, for" fine which may extend to one thousand rupees".
2. Ins. by Act 41 of 1974, s. 21 (w. e. f. 1- 2- 1975).
1908 (5 of 1908), while trying a suit, in respect of the following matters, namely:-
(i) The discovery and production of books of account and other documents, at such place and such time as may be specified by such person;
(ii) Summoning and enforcing the attendance of persons and examining them on oath;
(iii) Inspection of any books, registers and other documents of the company at any place.
(6) Where an inspection of the books of account and other books and papers of the company has been made under this section, the person making the inspection shall make a report to the Central Government.
(7) Any officer authorised to make an inspection under this section shall have all the powers that a Registrar has under this Act in relation to the making of inquiries.
(8) If default is made in complying with the provisions of this section, every officer of the company who is in default shall be punishable with fine which shall not be less than five thousand rupees, and also with imprisonment for a term not exceeding one year.
(9) Where a director or any other officer of a company has been convicted of an offence under this section he shall, on and from the date on which he is so convicted, be deemed to have vacated his office as such and on such vacation of office, shall be disqualified for holding such office in any company, for a period of five years from such date.]
The Government have got powers to examine the book of the company. The Book Examination Clausecan be invoked wherever it is felt by the purchaser that the rates quoted by the firm is unreasonable with due regard to the previous purchase rates, price trends intrinsic worth of the items.
(i) The contractor shall whenever called upon and requiring to produce or cause to be produced forexamination by the Government Officer duly authorized in that behalf, any cost or other account bookof account voucher, receipt, letter, memorandum paper and writing or any other copy or extract from any other such documents and also furnish information relating to such transaction and produce before the duly authorized Government Officer returns verified in such manner as may be required relating in any way to the execution of this contract or relevant for verifying or ascertaining the cost of execution of this contract ( the decision of such Government Officer on the question of relevancy ofany document, information or return being final and binding on the parties). The obligation imposed by this clause is without prejudice to the obligation of the Contractor under any statue, rules or ordersshall be binding on the contractor.
(ii) The Contractor shall, if the authorized Government Officer so requires (whether before or after the prices, have been finally fixed), afford facilities to the Government Officer concerned to visit the Contractors works for the purpose of examining the process of manufacturing and estimating orascertaining the cost of production of the articles. If any portion of the work be entrusted or carried outby a sub-contractor or any of its subsidiary or allied firm or company, the authorized Government
Officer shall have the power to examine all the relevant book of such sub-contractor or anysubsidiary or allied firm or company and it shall be opened to his inspection as mentioned in clause (I)
(iii) If on such examination, it is established that the contracted price is in excess of the actual cost plusreasonable margin of profit, the purchaser shall have the right to reduce the price and determine theamount to a reasonable level.
(iv) Where a contract provided for book examination clause the Contractor or its agency bound toallow examination of its books within a period of 60 days from the date the notice is received by the Contractor, or his agencies calling for the production of documents as under clause (i) above.
In the event of Contractor’s or his agencies failure to do so, the contract price would be reduced and determined according to the best judgement of the purchase which would be final and binding on theContractor and his agencies.
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