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Rate Contracts: E-tender route for purchases over Rs 1 cr notified 2 years ago

In 2013 meeting headed by then chief secretary, it was felt that the government was losing out on bulk discounts for large orders by placing orders based on rate contracts.

Written by MANASI PHADKE | Mumbai | Published: July 4, 2015 12:06 am
rate contract, e-tender, electronic tender, industries department, DGS&D, Directorate of industries, mumbai news, local news, city news, maharashtra news, Indian Express In 2013 meeting headed by then chief secretary, it was felt that the government was losing out on bulk discounts for large orders by placing orders based on rate contracts.

A directive had been issued to electronically tender purchases of over Rs 1 crore two years ago, well before the controversy broke over procurement through rate contracts, according to officials.

The industries department had on July 24, 2013 circulated minutes of the meeting where this decision was taken by secretaries of all state government departments for action but departments continued to make bulk purchases based on rate contracts, with the women and child development department, now at the centre of the controversy having made procurements of Rs 402 crore in 2013-14 and 2014-15.

Rate contracts take into account the lowest prevailing rates for purchases commonly made by government departments, which include office stationery, steel furniture, computer furniture, polythene bags and bicycles, states a 1992 government resolution. Agencies such as the Directorate of Industries or the Union government’s Director General of Supplies and Disposals (DGS&D) fix rate contracts that are usually valid for a year, though they can be extended. Individual departments place orders with companies without spending time on tendering. It was also to avoid different rates for different departments for the same purchases.

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In the 2013 meeting headed by then chief secretary JK Banthia, it was felt that the government was losing out on bulk discounts for large orders by placing orders based on rate contracts. The minutes say, “If the annual purchase of every item is Rs 1 crore or more, then instead of purchases based on rate contracts, the departments should make the purchase through e-tendering after their administrative heads’ approval. This way, departments can avail of discounts for bulk purchases from companies. However, care should be taken that such purchases are not at a higher rate than the one given in the rate contract for similar specifications.”

Many government departments still stuck to the rate contract system despite the directive for e-tendering, as it was never formalised. The BJP government eventually did it through a government resolution in April 2015. A senior bureaucrat who attended the 2013 meeting said it was then felt there was no need to put these down in a resolution. “These are procedural matters for how things should be done. Not every small procedure of the government needs to be put down as a resolution,” the official said.

An official from the women and child development department said, “We were aware of the directive of 2013. However, there was no formal government resolution. We even approached the Directorate of Industries about our planned purchases. The department said we can go ahead since there is no government resolution.”

Opposition parties have charged the Pankaja Munde-led women and child development department with misappropriation by approving 24 orders worth Rs 206 crore on a single day, based on rate contracts. Steel plates, medical kits, chikkis, educational material, plastic mats, water filters, purifiers and so on were purchased on rate contracts of the Directorate of Industries and the DGS&D.

A large part of the Rs 402 crore the department spent on rate contract procurements over the past two years included the Rs 206-crore procurements made in February 2015, under Munde. The minister had said that prior to her taking over, the department led by Congress leader Varsha Gaikwad made rate contract purchases worth Rs 127 crore in 2013-14, and Rs 69 crore in 2014-15.

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  1. T
    Jul 4, 2015 at 9:19 am
    Why you some thing different from Pankaja Munde who happens to be neice of Pramod Mahajan
    1. M
      Jul 4, 2015 at 4:08 pm
      Till March this year the Minister has followed the system followed by the previous Government -- so why the fuss from Congress The decision to follow new system was taken only in April 2015 -- some media men in print and TV need to make a story out of half truths as a means to make a living - they are to pitied