WIXLIB

STANDARD OPERATIONAL PROCEDURE FORPURCHASING FUNCTION AT NAC AND ITS CONSTITUENTUNITSNATIONAL ACADEMY OF CONSTRUCTIONA ROLE MODELDISPLAY CENTRE & AUDITORIUMNATIONAL ACADEMY OF CONSTRUCTIONHYDERABAD

PREFACEPlace :Dated :Director General, NAC

esPurchase requisitions/ IndentsScrutiny of purchase requisitions/ IndentsFloating of enquiresReceipt of quotations andallocation of ordersRelease of purchase orderProcurement of governmentcontrolled materialsRejected materialsDevelopment of alternatematerials / sources of supplySources of InformationVendor contactRelations with suppliersVendors evaluation systemDisposal of scrap/surplus/oldnews papers/cardboard cartonsetc.AppendicesConclusionPAGENO

1.0INTRODUCTIONPURCHASING IS A CHALLENGING NEVER ENDING JOB WITH ASIGNIFICANT FINANCIAL GAIN FOR EFFECTIVE WORK1.1Purchasing function is described as the business activity directed to securingthe materials, supplies and equipment required in the operations of anorganisation. It has a long range objective of ensuring continuity of costeffective supplies of materials and services.1.2Purchasing function operates within a framework determined by themanagement. No other function has greater inter-relationships not only withinthe organisation but also with outside supplier organisations. It is a managerialactivity that includes planning and policy activities covering a very wide rangeof related and complimentary activities such as:Market research for new materials and development of new sources ofsupply.Follow up to ensure proper deliveryInspection of materials for quality and compliance with specifications.Development of proper systems and procedures to enable the purchasefunction to be carried out efficiently.Coordination with other activities within the materials department liketransportation, receiving, storekeeping, inventory control, accounting,disposal of scrap and surplus etc.1.32.0Considering that the purchasing rupee forms a significant percent of totalexpenses, the importance of the purchasing function need not beoveremphasized in today s economic environment.PURPOSETo provide a framework for managing the purchasing function in an ethical, effectiveand uniform manner by :2.1 Defining the Objectives and Scope of the purchasing function.2.2 Establishing the Purchasing Policies.2.3 Describing the Procedures to be followed in the implementation of the policies.2.4 Issuing Authority Level / Limits / and Guidelines to purchasing officials.

3.04.0OBJECTIVES3.1Make purchase commitments for materials, equipment and services at thelowest possible price, consistent with quality and delivery requirements.3.2Ensure deliveries of purchase materials are available to meet Training,Operational and Maintenance requirements and that equipment is deliveredand services are performed as required and agreed to by user, buyer andsupplier.3.3Explore and capitalize on all legally permissible opportunities for costreduction on purchase of materials.3.4Ensure suppliers adhere strictly to brand or make and test specifications andthat materials and equipment received meet specified quality standards and allstated performance criteria.3.5Develop local suppliers.3.6Establish and maintain good relations with suppliers.3.7Implement buyer rotation plan.SCOPEThis Standard Operational Procedure covers all the purchasing activities of thefollowing:4.1All materials required for tradesmen training at Hyderabad and outstationtraining centers, tradesmen tool kits, personnel protective equipment.4.2Construction materials and machinery including spares, parts, tools andequipment.4.3All capital equipment / items.4.4All project purchases including tenders for civil and electrical work.4.5Office equipment and stationery.4.6House keeping materials.4.7Uniforms for staff / trainees4.8Fire fighting equipment4.9All other items of purchase of goods and / or services not specifically includedunder Exceptions at Para 5.0.

5.06.0EXCEPTIONS5.1Published materials including books, periodicals etc.5.2Professional fees / services.5.3Personnel services.5.4Advertising services.5.5Data processing software services.5.6Administrative services including travel, hotel and hiring of cars.5.7Canteen services including cooking gas, crockery, cutlery etc.5.8Mementos, souvenirs and gifts to employees.5.9Hiring office space.POLICIES6.1Except as otherwise specified under Exceptions entire purchasing for NACand its constituent units shall be made by the designated purchasing officialsonly.6.2The purchasing official is empowered to act on the basis of an approvedExpenditure Sanction or Indent. Sample pro forma for Expenditure Sanctionand Indent as applicable to C.T.T.I are placed at Appendix A and AppendixB respectively. In an emergency situation, there must be documentation onfile explaining the emergency and why the normal purchasing process was notfollowed.6.3Purchasing official will have the following responsibilities:6.3.1 Identify suppliers, obtain appropriate information, such as quality,delivery, pricing etc. and make all purchasing commitments afterobtaining approval from purchase committee of HQ NAC. A purchasecommittee has been appointed by the DG to oversee local purchase /and proposals of NAC / its constituent units for procurement proposalsbeyond @ Rs.5000/-.6.3.2 Solicit quotations only from suppliers who are qualified or can bequalified to meet all requirements. An approved suppliers list as perAppendix C must be maintained for all purchases of repetitive nature.Examination of the financial status of a company, facilities, its abilityto perform timely, meet commitments should be part of the criteriaconsidered to select a supplier.

6.4The user and purchasing officials shall be jointly responsible for identifyingacceptable suppliers with the user responsible for the technical evaluation andpurchasing officials responsible for financial and service evaluation. Onceacceptable suppliers have been identified, purchasing official will recommendto purchase committee for the selection of a supplier who can best respond tothe organizational requirements.6.5The materials specifications shall take into consideration the price andavailability factors without compromising on quality. The quality standardsshall not be unnecessarily rigid to preclude competition or economicpurchasing.6.6All items and service purchases must be properly covered by an appropriateand duly authorized purchase requisition or indent setting forth all the requiredinformation including date, specifications, delivery instructions and availablebudget provisions.6.7Items of regular consumption shall be bought on a contract basis by sendingannual enquiries every year. Other items shall be purchased by invitingquotations as and when the indents are received.6.8Enquiries shall indicate the approximate quantity likely to be purchased totake advantage of bulk purchases. The quantities to be indicated in the enquiryletters shall first be cleared by the authorized purchasing official with theindenter.6.9Sealed quotations shall be obtained for all purchases.6.9.1 Items cost below Rs.500/- can be directly purchased by paying cash.6.9.2 Minimum one written quotation shall be obtained for items less thanRs.5000/- and more than Rs.500/- after proper assessment of marketrates.6.9.3 Purchasing officials are responsible for obtaining at least three writtenquotations for purchase of materials, services or equipment in excessof Rs.5000/-6.10If quotations from less than three suppliers are obtained, appropriatejustification should be recorded in the Comparative Statement and purchaseapproval form as to the reasons why three quotations are not obtained.6.11All supply orders shall normally be awarded to the lowest bidder. In case ofdeviations from this policy, proper justification must be recorded in the CST.6.12Purchase orders should not be issued after delivery of goods or work hasstarted or services rendered merely to facilitate payment. In exceptional casessuch confirmatory orders have to be approved by the Director General.

7.06.13A normal credit period of 20 days from the date of receipt of materials shall beobtained from suppliers. Advance payments against orders, cash againstdelivery and documents through bank shall be restricted to the barestminimum.6.14The prices quoted by any supplier and his identity shall not be disclosed toother suppliers until finalization of the supplier and release of supply order.6.15All suppliers quoting on the business shall be informed that the process hasbeen completed and an award made.6.16Settlement of suppliers bills for procurement of materials and / or servicesshall be by way of cheque crossed Payees Account only or Demand Draft.Non-negotiable cash disbursements up to Rs.5000/- per transaction of a nonrecurring nature may be permitted as an exception.6.17All rejections and returns of the suppliers shall, as far as possible, be at thesuppliers cost and risk. Purchasing officials shall immediately inform thesupplier of such rejection for replacement or return.6.18Other things being equal, local suppliers shall be given preference overoutstation suppliers. Development of alternate suppliers should be pursued asan objective to reduce costs, provide flexibility and improve quality.6.19Relationship of purchasing personnel with suppliers and their representativesshould be in a manner that will promote public goodwill in every respect andat all times. Dealings with suppliers will be conducted with utmost integrity,adhering to the highest standards of ethical and just conduct. Gifts,entertainment or consideration of any kind or value from any source will notbe accepted unless recognized as proper. (Inexpensive advertising /promotional items carrying the suppliers logo like calendars, pens etc, are notconsidered as gifts with in the definition of this policy).PURCHASE REQUISITIONS / INDENTS7.1All procurement of materials and / or services covered by this policy shall beinitiated through a purchase requisition / indent duly approved by DG.7.2Designated purchasing official is empowered to act only on the basis of anapproved purchase requisition / indent.7.3The requirement of stores to be procured through local purchase must beproperly assessed by the procurer and should only cover the minimuminescapable requirement. Once the need has been established, after taking intoconsideration the stock already available and availability of budget provisions,action will be initiated as at Para 7.1 above.7.4In case of stores required by the Finance / Administration Department, the filewill be processed by Director (Finance) / DDG through ADG (Infrastructure)for approval of DG.