Developmental Order
Source: Click for Railway Board Letter No. 99/RS(G)/709/1Pt. dated 13.01.2015
Developmental Orders - Percentage of NPQ
Background: Railway Budget 2014-15 emphasised the “Indigenisation and economy in Railway purchases”
Nomenclature: Trial Order / Developmental Order / Education Order have been interchangeably used in the past. To avoid ambiguity, the term Developmental Order should be used for all such orders and should be written on all such purchase orders
Developmental Order considered only, if
Where the approved sources are not adequate or
The rates received from new sources are lower than those applicable to approved sources
To bring in more competition or improvement in quality or indigenisation.
Where new sources are having potential for supply of quality material and are having infrastructure of plant and machinery and testing equipment
Developmental Orders - Two broad categories: A. Ordered through Regular Tenders B. Ordered through Developmental Tenders
Category A - Ordered through Regular Tender - Two sub divisions
A (i) - Grading of Vendors as Part I and Part II (by Vendor approving agencies)
up to 5% of NPQ - The Developmental order quantity - Net Procurable Quantity (can be within or outside the NPQ)
In case, Such items, the number of sources is considered inadequate or for developing indigenous sources for imported items - 5% quantity restriction will not apply - Can exceed 5% limit (outside NPQ) subject to the
Justification
Concurrence of associate finance
The ordered quantity which can be ordered as a Developmental Order on a vendor may be the minimum quantity required for approval of a Vendor as part I / Part II status
A (ii) - No grading of Vendors as Part I and Part II (by Vendor approving agencies)
Up to 20% of the NPQ (within the NPQ only) - on unregistered / untried firms
The firms about whom Railway is prima facie satisfied that they are capable of executing the order.
Can permit differential rates within reasonable limits to different firms in order to develop the multi sources in the Railways interest.
Category B - Ordered through Developmental Tender
Resort to where the number of sources is considered inadequate or for developing indigenous sources for imported items or for new product development
Quantity percentage not specified (unlike in Category A). However the quantity ordered should be enough for an entrepreneur to acquire or develop the know-how and also to absorb the expenses of making investment in M&P (Machinery & Plant)
Can permit differential rates within reasonable limits to different firms in order to develop the multi sources in the Railways interest.
Developmental Tender - Approved vendors for an item will not be permitted to quote
Pre-bid conference: To understand the quantity to be ordered through Developmental Tender, assess suitable eligibility criteria.
Identification of Firms for Development:
Ascertain the capacity or capability of firms for Developmental Orders in the shortest possible time say within 6 months of advice from purchase authority.
Call for EOI - Expression Of Interest by giving wide publicity for development of Sources.
Ensures QAP - Quality Assurance Programme, technical capability, adequate testing equipment for maintaining quality standards, adequate capacity, financial status etc.
Upgradation: Developmental Vendors to Approved Vendors by the Vendor Approving agencies in a transparent procedure in a time frame subject to fulfilling the required criteria and satisfactory performance.
Key Points:
Developmental Orders - Railway Board Policy 2015
Trial Order / Developmental Order / Education Order have been interchangeably used in the past. To avoid ambiguity, the term Developmental Order should be used for all such orders and should be written on all such purchase orders.
Developmental Orders - Two broad categories: Ordered through A. Regular Tenders B. Developmental Tenders
Category A - Ordered through Regular Tender - Two sub divisions (i) Grading of Vendors as Part I & Part II (ii) No grading of Vendors
5% of NPQ (within or outside NPQ) - (i) Grading of Vendors as Part I & Part II
Up to 20% of the NPQ (within the NPQ only) - (ii) No grading of Vendors
NPQ - Net Procurable Quantity
QAP - Quality Assurance Programme
EOI - Expression Of Interest
Quantity percentage not specified (unlike in Category A) - Category B - Ordered through Developmental Tender
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