ANNEXURE - 5

SUPPLY DIVISION
The Supply Division in the Ministry of Commerce and Industry is the nodal agency for purchase and inspection of stores for the Ministries/Departments and offices of the Central Government. It also arranges purchases and inspection of stores for the State Governments, Public Sector Undertakings, Autonomous Bodies and Quasi-Public Bodies at their request. Related functions like timely payment to suppliers, shipment and clearance of stores are also looked after by this Division. DG(S&D) is the Cadre Controlling authority for Indian Supply service and Indian Inspection Service. The following Organisations form part of the Supply Division: DIRECTORATE GENERAL OF SUPPLIES & DISPOSALS (DGS&D), an Attached Office; and CHIEF CONTROLLER OF ACCOUNTS (CCA), a Subordinate Office.

DIRECTORATE GENERAL OF SUPPLIES & DISPOSALS (DGS&D)

DGS&D is the Central Purchase and Quality Assurance Organisation of the Government of India working under the aegis of the Ministry of Commerce & Industry, Department of Commerce (Supply Division). It is an attached office of the Ministry of Commerce & Industry, Department of Commerce (Supply Division) and is headed by DG(S&D) who is also ex-officio Additional Secretary to the Government of India, with its Headquarters at New Delhi and three Regional Offices located at Chennai, Mumbai and Kolkatta. The concept of Central Purchase dates back to the year 1860 when India Stores Department was set up by British Government in London for purchase of imported stores. Later, in 1917, Central Purchasing in India began to take shape when the Indian Munitions Board was established for controlling purchases and expanding indigenous base for Government purchase. The need for establishing an expert purchase agency equipped with data base of the manufacturing resources throughout the country and competent to purchase efficiently in domestic market and also to carry out inspection to ensure quality of goods was felt and India Stores Department was set up in Jan 1922 to arrange purchases for Government Civil Departments. The Organisation underwent many changes thereafter and the DGS&D as the Central Purchase Organisation in its present form came into being in 1951 for procurement of stores required by various Central Government Ministries/Departments. A series of measures were taken thereafter for decentralisation of ad-hoc purchases to Central Government Departments/ Ministries in 1991 Procurement against ad-hoc indents was decentralised to the indenting Ministries and Departments. DGS&D has since completed 50 years of service to the Nation.

DGS&D is the executive arm of the Supply Division in matters relating to conclusion of Rate Contracts for common user items, procurement of stores, inspection of stores, shipment and clearance of imported stores/cargo.

RATE CONTRACT
The main function of DGS&D is to conclude Rate Contracts of various common user items frequently required by various Ministries and Departments. The system of Rate Contracts enables the user Departments to place orders directly on the firms without going through the process of tendering. Beside advantages of prices due to bulk buying there is considerable saving in time and expenditure by avoiding repeated tendering at multiple user locations. In addition, the R/C system promotes decentralisation of the procurement activity, while maintaining uniformity of prices in the procurement made by different user Departments. Advantages of the Rate Contract system are:

To buyers

Facility of bulk rate at lowest competitive price.

Saves time and efforts in tedious & frequent tendering at multiple user locations.

Enable buying as and when required.

Affords low level of inventory by timely supplies with minimal leadtime.

Availability of quality goods with full quality assurance backup. Acts as benchmark for State Governments/PSUs.

To Suppliers
Access to large volume of purchase without going through repeated tendering and follow up at multiple user locations, which results in saving in administrative and marketing efforts and overheads.

Rate Contract lends respectability and image enhancement. Technical guidance is available, especially to Small Scale Units.

The DGS&D purchase and inspection procedures are guided by the instructions laid by DGS&D Manual. These guidelines and instructions are based on General Financial Rules (GFRs) of Ministry of Finance. As a major step towards transparency in procurement, the DGS&D Manual is now on sale and is accessible to all. DGS&D's procurement policies and procedures and quality assurance techniques are time-tested. These are trendsetters and generally followed by other Government procurement/inspection Agencies.

Review and simplification of procedures has been the thrust area through out this period. Review of some of DGS&D Manual procedures is being undertaken to simplify the procurement process and make it convenient to the suppliers & users. Registration procedures/criteria are also being simplified. It has been considered that there is no need for re-registration of suppliers for any minor changes in specifications or models. Regular meetings with industry/associations and users are also being held and views of users, manufacturers are duly incorporated in the specifications & procedures. DGS&D in line with the stated objective and matter of policy would be procuring products having ISI Marks to the extent of availability and feasibility. DGS&D has formulated broad guidelines/procedures to bring specialised hi-tech procedure on "most favoured price agreements" with reputed manufacturers. In the interest of transparency and speed in decision suppliers have been informed that if the tenders are not accompanied by the requisite documents/particulars/information/performance as required by the Tender Enquiries, the tenders would be considered as incomplete and are liable to be ignored. DGS&D is also finalizing price variation formulae in the changed scenario of economic liberalization to maintain continuity of R/Cs in respect of the products where the cost element of raw material constitutes major portion of the price of the product. The endeavor of DGS&D is to bring more and more such common user items on its Rate Contracts fold. As on 31.03.2004, there are 339 broad categories of stores available on DGS&D Rate Contracts. The details of these Rate Contracts are available in the yearly book titled "Directory of Stores on Rate Contracts". The details of the various Rate Contracts concluded by the DGS&D and other related information is also available on its web site. DGS&D has commodity wise purchase directorates such as Information Technology, Electrical Stores, Mechanical Engineering, Automobiles, Steel & Cement, Structural Engineering, Hardware, workshop Machine Tools, Wool & Leather, Paper &Paper Products, Oil & Chemical etc. The handling of work commodity-wise facilitates maintenance of data bank on prices, venders, specifications, market trends etc.

PAYMENTS MADE BY CCA TOWARDS PROCUREMENT MADE BY DGS&D

The following table indicates the purchases effected in terms of indents, number of contracts and value of contracts placed by DGS&D for the last 5 years :

SHIPPING AND CLEARANCE OF CARGO

DGS&D also handles clearance of shipments against its own contracts and also against the contracts placed by other agencies, if so desired by them. In addition it also handles sensitive cargo required by Security Presses , Andaman and Nicobar Administration, ISRO etc. The shipping and clearance work is handled by the Regional Offices of the DGS&D located at Mumbai, Kolkatta and Chennai. Clearing Agents have been appointed for Ports located at Mumbai and Chennai regions. For Kolkatta region, the work is handled departmentally. Presently, clearance arrangements are available at the following Ports: Sea Ports - Kolkata, Haldia, Chennai, Vizag, Mumbai and Cochin. Air Ports - Kolkata, Chennai, Bangalore and Mumbai. The cargo (tonnage) handled by DGS&D during the last five years by the Regional Directorates at Mumbai, Kolkatta and Chennai is given below: Cargo Tonnage handled (M/T)

*up to 31st December, 2003

Consultancy Services
Consultancy Services offered by DGS&D to Central & State Govts. / PSU's & other organizations are in the area of procurement. Consultancy package includes formulation of bidding documents/technical particulars, invitation of bids, bidding strategy, commercial and/or technical evaluation of bids, technical assistance, vendor development, quality assurance / Pre-despatch inspection, contract management etc. It provides necessary inputs on different areas of procurement activity. Users would utilize necessary inputs and take administrative approval of their competent authorities as per their rules and administrative delegations. The emphasis is to provide expertise to ease decision-making for which DGS&D would charge a fee on mutually agreed terms. DGS&D has signed MOUs with Chhattisgarh State Industrial Development Corporation (CSIDC), a nodal agency of Chhattisgarh Government for procurement, Indira Gandhi National Open University (IGNOU), Punjab School Education Board (PSEB), Central Power Distribution Company of Andhra Pradesh (CPDCL) and J&K State Board of

School Education (JKSBSE). An agreement has also been signed with ONGC. MOUs provide for a comprehensive consultancy package. The agreement signed with ONGC, which have a full-fledged material management department shows recognition of DGS&D expertise in procurement management. In Hyderabad, a team of DGS&D officers have been posted exclusively for providing consultancy services to CPDCL. MOU with Punjab School Education Board (PSEB) which was valid up to 19.12.2003 has been extended up to 18.12.2004 as requested by PSEB. Similarly MOU with CSIDC which was expiring on 31.03.2004 has been extended up to 31.03.2006 on the request of Chattisgarh State Industrial Development Corporation Ltd (CSIDC Ltd) Raipur.

QUALITY ASSURANCE WING

In DGS&D, Purchase & Quality Assurance functions are under one umbrella. The Quality Assurance Wing of DGS&D is the technical arm of the DGS&D providing technical support in its purchase functions. The technical support in purchase functions is rendered by laying down the procurement specifications, assessing the vendors and ensuring the quality of stores. Its service are available to all Central Government Departments/Offices, State Governments etc. both for contracts placed by DGS&D on their behalf or against direct orders placed by them. QA Wing of DGS&D carries out predespatch inspection of stores against contracts placed by DGS&D on behalf of the Central Government Departments, State Governments and Public Sector Undertakings and also accepts inspection assignments against the contracts placed directly by them. For the services rendered, QA Wing charges a nominal fee as a percentage of the value of stores inspected (0.5% for Departmental orders and 0.25% - 2% for non-Departmental orders depending upon the nature and volume of the stores).

STRUCTURE
The Quality Assurance Wing with its Headquarters in Delhi is headed by the Additional Director General (Quality Assurance) who reports to DG(S&D) and is assisted by five Deputy Director Generals (Quality Assurance), one at Hqrs & one each at the four zones i.e. North, South, East & West with zonal Hqrs. at New Delhi, Chennai, Kolkatta and Mumbai respectively. Each zone has two or more Directorates each with a Director as a Head of Directorate and sub offices at major industrial centres. At present there are 10 field Directorates situated at New Delhi, Chandigarh, Kanpur, Kolkatta, Jamshedpur, Mumbai, Ahmedabad, Chennai, Hyderabad & Bangalore and other field offices. The Quality Assurance Wing has centres with its offices at almost all the major industrial production centres with its presence in every major states of the country. The presence of QA Wing office nearer to the production centres helps in dealing with the inspection work in an efficient manner with the advantage for the contractors to have direct communication for any guidance needed in operation of the contract.

PRE DESPATCH INSPECTION/QUALITY ASSURANCE

This is a major area of activity in Quality Assurance Wing. QA Wing Officers are called upon to carry out pre despatch inspection of stores against contracts concluded not only by DGS&D, but also directly by other Government Departments as well. The following table indicates the Inspection/Quality Assurance work done by the Quality Assurance Wing:

QUALITY AUDIT AND JOINT INVESTIGATIONS/FAILURE ANALYSIS OF STORES AT THE CONSIGNEE'S END
Quality Assurance Wing follows a system of quality audit for checking quality of stores received by the consignees. Basic purpose of this quality audit is to reassure the compliance of the quality of stores received by the consignees. The test check is done on a random basis and is being monitored by the zonal Deputy Director Generals with the following objectives: To ensure that only the stores inspected at pre-despatch stage are received by the consignees.

REGISTRATION OF FIRMS
The registration activity of DGS&D provides the basis for development through interaction and preparation of approved list of vendors for supply of items required by Government Departments/Agencies. DGS&D registers the firms in various categories e.g. Manufacturers both indigenous and foreign, authorized agents/distributors of manufacturers, assemblers, converters and stockists of indigenous and imported stores, suppliers of imported stores. Compulsory enlistment of Indian Agents of foreign suppliers is carried out under the scheme of Ministry of Finance for items falling in the restricted list of exim Policy of Government of India. The registration of Indian manufacturing firms has been decentralized and is handled from 19 different QA Wing centres for convenience of the firms. Registration of firms for enlistment and foreign manufacturer with or without Indian Agent, Supplier & Stockist, is however, centralised at Registration Branch in DGS&D, New Delhi. The process of registration includes assessment of manufacturing capacities, quality control arrangement and seeking confirmation of financial status of the firms from their Bankers. Quality Assurance Wing also carries out assessment of manufacturing capacity/capability of unregistered manufacturers on specific requests from the purchase organisations. This helps the purchase organisation in identification and proper selection of vendors before placement of orders. Following are the details of work done by QA Wing in this area during the year 2003-04:

STATUS OF APPLICATIONS MADE FOR REGISTRATION

a) Applications brought : 113 forward as on 01.04.2003 b) Fresh applications : 1393 received upto 31.03.2004 c) Total No. of applications : 1435 disposed of in the period d) Balance as on 31.03.2004 : 71

FRESH REGISTRATION GRANTED

RENEWAL/ADDITIONAL ITEMS REGISTRATION

Renewals/Addl. Items : 163 registration granted 4. a) Application rejected : 94 b) No. of adverse inspections : 297 reports c) Tech. Reports : 5. a) No. of firms banned : Nil b) No. of firms de-registered : 14

MARKETING OF QUALITY ASSURANCE SERVICES

After de-centralisation of purchase activities of the DGS&D, efforts were made to generate additional work for QA Wing by marketing its services to various Government/Semi-Government Agencies. This is done by making presentations to potential customers as well as by competing with other leading inspection agencies like RITES, Engineers India Ltd., Project Development (India) Ltd. multi-nationals like Lloyds, SGS, etc. in open tenders invited by the Government Departments/agencies for the purpose. QA Wing has thus been able to procure extensive work by its efforts on the strength of their experience and standing in the field.

MANAGEMENT INFORMATION SERVICES (MIS) DIRECTORATE

The Management Information Services (MIS) Directorate is primarily engaged in providing necessary information for monitoring the progress in the coverage of indents, right from the stage of receipt in DGS&D to the completion of supplies both at micro and macro levels, through computerized information system. The MIS Directorate also provides data on various aspects of purchase, inspection activities of DGS&D for administration, policy and analytical purposes. Information for monitoring of contracts pending for finalization after the completion of supplies, contractual documents (like A/T, S/O, R/Cs drawls etc.), amendment letters and other documents are also provided by MIS Directorate. MIS Directorate brings out Monthly Bulletin on Market prices, indicating the price trends of selected commodities for the use of purchase officers, fortnightly Economic Intelligence Bulletin to acquaint the purchase officers with the latest fiscal policies of Government influencing the purchases of DGS&D, the Directorate also brings out the Annual Administration Report of DGS&D. All data on R/Cs are computerized and modifications / additions are carried out. A scrutiny programme has also been developed to check for the vital entries pertaining to Excise Duty, Sales Tax, and Freight etc. so that the errors could be rectified and R/Cs data are made correct and complete in all aspects.

MIS Directorate receives various indents from Indenting Departments. The indents received are entered in the database, acknowledgements are sent indicating DGS&D Indent No. and dealing Directorate/Section for their convenience. New R/C Nos. are allotted to the existing / expired Rate Contract items for further renewal. R/C number is also allotted to all new/renewed items as recommended by Review Committee. Directorate General of Supplies & Disposals has a website http://dgsnd.nic.in, maintained by N.I.C, which gives details on the Role and Functions of its various Wings. The website provides information on Rate Contracts, Tender Notices, registration procedure and other related information. MIS is coordinating all information to be posted on website by NIC. R/C and Tender notice information is being updated on regular basis.

LITIGATION BRANCH
DGS&D has thousands of court / arbitration cases pertaining to various purchase Directorates. DGS&D has a legal wing called Litigation Branch headed by the OSD (Lit.) and Addl. Legal Adviser, an officer of Ministry of Law. Litigation Branch is handling the issues relating to appointment of Arbitrators / Govt. counsels and payments relating to their legal matters. The litigation cases pertaining to Regional office are conducted by the Regional officer concerned in consultation with Branch Sectt of Ministry lf Law. Litigation Branch was also entrusted with additional responsibility of dealing with legal matters pertaining to Sales Tax. Two Deputy Directors are assigned the responsibility of ensuring effective monitoring to the litigation cases of DGS&D. The details of pending Arbitration and court cases at Headquarters as on 31.03.2004 are given as under: Court cases at Headquarters : 566 Arbitration cases at Headquarters : 225

RATE CONTRACT PROMOTION (RCP) DIRECTORATE

The RCP Directorate has mainly been entrusted with Processing of new items proposed to be brought/dropped on Rate contract. The Sub committee headed by ADG (S) screens and evaluates the proposals for either bringing new items on rate contract or for dropping the existing items on rate contracts and recommends for final decision of the Standing Review Committee headed by DG (S&D). The users, trade, industry and their associations are represented in the SRC. During the period 1.4.2003 to 31.03.2004, the SRC recommended 19 new items.

COMPUTERIZATION PROJECT
DGS&D is implementing Computerization Project under a plan scheme to reduce the processing time as also to make the procurement function more transparent. The project involves creation of a total web-based computerized working environment and is being implemented through NIC.

The Project which was originally scheduled to be completed by 31-3-2006 has been significantly advanced. Hardware for the project has been procured and installed at Headquarters and at Regional/Field Offices. Training in basic computers, working on MS programmes and introduction to Internet was imparted to the officers in Headquarters and Regional/Field Offices. Necessary Networking Hardware is in position and connectivity with regional/field provided. DGS&D website (dgsnd.gov.in) has become operational and details of tender notices, tender enquiries, parallel rate contracts and list of firms registered with DGS&D region-wise are available on the website. In compliance of CVC instructions, DGS&D Forms and booklets containing Conditions of Contract, Instruction to Bidders, application for registration, bill form, request for refund of security deposit, etc. are also available on the website which can be downloaded by the prospective tenderers. All major DGS&D activities like finalization of technical particulars, planning note, tender notices/enquiries, bid processing, comparative/ranking statements, references, issue of parallel fresh rate contracts, proposals for new products to be brought on rate contract and their processing, submission of application for registration and its processing and issue of registration certificate would be performed on-line through the software models developed and tested. Software to facilitate on-line placement of supply orders, submission of inspection call, issue of inspection notes, furnishing of dispatch details by suppliers, submission of bills, processing of bills, raising of debits to the indentors is under development and would be operational soon. DGS&D has also tied up for e-tendering with Messrs. C 1 India Pvt. Ltd. For the present, the suppliers would have the option to submit bids both electronically and/or through the present system of paper bids. Necessary software for e-tendering has been developed and both backward integration with tender enquiry and forward integration with bid submission have been completed. Security Audit of the Software is being conducted by STQC in the Department of Science & Technology. Once the software is proved, etendering will be made mandatory. DGS&D also has made on line payment to supplier and electronic transfer to their bank accounts as essential objective of computerisation programme.

CHIEF CONTROLLER OF ACCOUNTS (CCA)

The O/o the Chief Controller of Accounts, Department of Commerce (Supply Division), is the Departmental Accounting Organisation and came into existence w.e.f. 01.07.1976 under the erstwhile Department of Supply. The Secretary of the Department of Commerce is the Chief Accounting Authority for discharging of accounting functions. The Secretary is assisted by the Additional Secretary and Financial Advisor (Commerce) and the Chief Controller of Accounts (Supply). The payment and accounting functions of the Division, including those of DGS&D are performed by the Chief Controller of Accounts (CCA) under the Departmentalised Accounting System.

The Chief Controller of Accounts (Supply) has its Headquarters at New Delhi and its Regional offices are located at Mumbai, Kolkatta & Chennai. The CCA is assisted by 4 Deputy Controller of Accounts, one each at New Delhi and Regional offices in Mumbai, Chennai and Kolkata.

VOLUME OF PAYMENTS
During the period 01-04-2003 to 31-03-2004, payments amounting to Rs.3200.57 Crores were made against various contracts placed by DGS&D.

STAFF STRENGTH OF SUPPLY DIVISION

The actual staff strength of Supply Division including its attached and Subordinate Organisations, as on 31-03-2004 is as under: