Development Order
(2006
without books - General expenditure - short notes)
Ø Object:
To develop new sources or indigenous
(native) sources for development of Imported Items or for Major items to avoid monopoly / cartel .
Ø
Placement
of development orders should not be considered as routine but considered only
in the following situations:-
i) Where the approved sources are not adequate and
it is desirable to develop more sources for bringing in more competition or
improvement in quality.
ii) Where the rates received from the new sources
are lower than those applicable to approved sources and where new sources are
having potential for supply of quality material and are having infrastructure
of plant and machinery and testing equipment as per the quality assurance
programme.
Indigenous Development of
Imported Items.
Ø
Central/Regional Railway equipment
advisory committees has initiated the action duly inviting prospective
manufacturers to enter the field and produce prototypes( samples).
Ø Requirements: If annual
requirements are not enough for an new entrepreneur (industrialist) to develop
and absorb the expenses and there being
reluctance on the part of the firm to develop unless the quantity ordered is
worthwhile, Railways / Production Units may give an advance commitment to the
firm giving an assurance to the effect that orders for the following two/three
years will be placed on the new firms. But the order will be placed like as
follow.
Ø First Year: 100 % of requirements placed on new firm.
Ø Second year: 80 % of requirements placed on new firm. The remaining 20 % will be obtained through
open Tender.
Ø Third year: 60 % of requirements placed on new firm. The remaining 40 % will be obtained through
open Tender.
Ø Fourth Year and onwards : Through Open Tenders only.
Special features of
Development orders
ü No clause for Liquidated Damages. ( Because delays may be happened due to manufacture of items first time by
the firms)
ü
Extension of Delivery period should
be granted on a more liberal basis, at the discretion / prudence of the
Purchase Officer.
ü
In cases of
the late supplies and complete failures, the case should be decided on
merits. Resort to 'Risk Purchases'
should occur only in rare cases and generally if the Administrative
Officer concerned is satisfied that the party has made sincere efforts and yet
failed, the question of risk purchase should not arise.
ü
Price Escalation may be incorporated to
allow for variations in cost on account of Governmental action, i.e. Customs
Duty, Sales Tax-, as also basic raw materials such as 'Steel'.
ü
But no wage escalation clause should be
permitted.
ü To establish the indigenous manufacture of some items, import of some
raw materials may be required. If the
entrepreneur is not able to offer from his own open general licenses, the
purchaser may provide foreign exchange and recommend actual user import licence
for the requisite quantity of raw material.
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