301.    Sources of Supply.—There are four sources of supply or receipt of materials required by Railways :— 

(a)   Purchases, 

(b)   Manufactured by Railway Workshop, 

(c)  Returned Stores ; and 

(d)   Transfer of Stores from other Railways or departments. 

Of these, the purchase of stores is the most important and this chapter deals with the rules prescribed for the purchase of stores, (other than printing and stationery stores). The rules are in accordance with the policy of the Government of India to make their purchases of stores for the Public Service in such a way as to encourage the development of the industries of the country to the utmost possible extent, consistent with economy and efficiency. 

302.    Order of Preference.—In making purchases, preference will be given in the following order :— 

Firstly, to articles which arc produced in India in the form of raw materials, or are manufactured in India from raw materials produced in India, provided that the quality is sufficiently good for the purpose; 

Secondly, to articles wholly or partially manufactured in India from imported material provided that the quality is sufficiently good for the purpose; 

Thirdly, to articles of foreign manufacture held stock in India provided that they are of suitable type and requisite quality; 

Fourthly, to articles manufactured abroad which need to be specially imported. 

303.    Quality.—In the case of the first two categories mentioned in paragraph 302 above the condition is that the quality is sufficiently good for the purpose, and for the third category the condition is that the articles arc of suitable type and requisite quality. This means that articles coming under the first two categories should be accepted unless it is considered that the quality is definitely not up to the standard required, even though the imported articles may be considered to be of better quality. 

304.    DELETED  (Authority – Ministry of Railways

(Railway Board’s) letter No. 95 /RS (G) / 768 dt 17.08.1995 conveying Ministry of Finance S.O.M No. F. 23 (2) –E.II(A)/92 dt. 24.6.92)--acs no.3  page no.58

304.  (A).  Price Preference to Products of Small Scale Industries: - For this purpose, Railway purchases for the items of stores other than textile items reserved for purchase from Handloom Sector, may be categorised under 2 broad heads:-


(i)       Those reserved for exclusive purchase from KVIC/Women’s Development Corporations/Small Scale Sectors Units.


(a)      At present 409 items are reserved for exclusive purchase from KVIC/Womens’s Development Corporations/Small Scale Sectors Units.


(b)      Items falling under this category shall be subject to revision from time to time by Railway Board, as per guidelines issued by Department of Supply, Government of India.


(ii)      Others not so reserved.


(Authority: Railway Board’s letter No. 98/RS(G)/779/10(CS) dated 30.05.2000 --acs no.11 page no.59

304(B). Preference to Products of  Public Sector Undertakings.—Purchase / Price preference to products of Public Sector Undertakings is given as per the directives issued by Govt. of India from time to time ( Public Sector Undertakings here means companies where not less than 51% of the paid up share capital is held by the Central or State Govt.)

Authority:- Board's letter No. 92/RS (G)/565/1/PEs dt. 23.06.1992 conveying Ministry of Industry, Bureau of Public Enterprises O.M.No. DPE/13 (19)/ 91-Fin. dt. 07.05.1992 and Board's letter No. 92/RS (G)/ 363 /1/ PEs dt. 17.12.97 conveying Ministry of Industry, Bureau of Public Enter-prises O.M.No. DPE/l3 (19) /91-Fin. dt.31.10.1997.---acs no.2 page no.59

305.    Currency of payment.—All articles required to be purchased for Indian Railways, except those which need to be specially imported, should be purchased on the condition that delivery is made in India for payment in rupees in India.  For articles needing import, the payment should be in the currency of the country of origin of the article imported or a currency widely used in international trade, except for expenditure incurred in India including agency commission, if any, which should be paid for in Indian Currency. 

306.    Deleted. 

307.    Payment.—Except in special cases, full payment for stores should not be made against shipping or other despatch documents, but only after delivery of stores has been taken by the Receiving Officer and stores are found to be satisfactory in all respects. Should the firms insist, advance payment, within limits specified by the Railway Board, may be made to firms of repute and commercial standing against shipping documents or a Railway Receipt provided the stores have been inspected by the purchaser's nominee prior to the despatch and found satisfactory in all respects and documentary evidence of such inspection is produced while claiming payment.    Where in an exceptional case involving import, such inspection prior to despatch is not possible, payment against shipping documents shall be made in consultation with Financial Adviser and Chief Accounts Officer and after obtaining a bank guarantee for the amount of payment. 

308.     In order to obtain adequate publicity and so ensure economic purchase, tenders should be invited in India and abroad also, if considered necessary or desirable to do so, for supply of all articles unless the value of order to be placed is small, or sufficient reasons to be recorded exist which indicate that it is not in public interest to call for tenders. 

309.    Powers of General Managers.—Subject to guidelines issued by the Railway Board from time to time and issue of indigenous clearance by the appropriate authority, the discretion to invite tenders from abroad will rest in the General Manager. 

310.    Publicity.—Tenders should be invited from abroad as well as in India, wherever it is considered necessary or desirable to do so in order to obtain adequate publicity and so ensure economic purchase. The Indian Trades Journal published by the Director General of Commercial Intelligence and Statistics, which is a government publication, should be regarded as the standard medium for public advertisements in India.   Advertisements should also be inserted in the principal newspapers in India at the discretion of the Purchasing Officer. 

In the case tenders are invited from abroad, agencies of the Indian Embassies abroad may be utilised for giving additional publicity to the tender. Sufficient supply of tender documents, specifications and drawings should be sent to them for sale to intending tenderers. Tender Notices may also be sent to local Embassies or Trade Commissioners of countries likely to be interested in supply of stores tendered. The tenderers will normally be instructed to submit their tenders direct to the General Manager/ the Controller of Stores concerned in India. 

Barring exceptional circumstances, sufficient time as required by circumstances of each case should be given for submission of tenders. Where purchases are to be financed through foreign loans or bilateral agreements, the terms and conditions relating to the loan or agreement should be given due consideration while inviting the tenders. 

311.     If the response to any invitation to tender is poor owing to inadequate publicity or some other reason, fresh tenders should be invited and measures taken to bring the invitation to tender to the special notice of all likely tenderers. 

312.    Deleted. 

313.    Deleted. 

314.    Country of Manufacture.—Tenderers should be requested to furnish information in regard to the country of manufacture and/or origin of the material used in the manufacture of the articles. 

315.    Evaluation of offers involving payment in a foreign currency.—Offers for imported articles, involving payment in a foreign currency shall, for the purpose of comparison, be converted into Indian Currency at the official rate of B.C. selling foreign exchange ruling on the date of opening of the tender.

(Authority: Board's letter No. 92/F(FEX)1/1 dt.10.08.1994.)--acs no.4 page no.60

316.    Place of Delivery.—When specifying the point or place of delivery, endeavour shall be made to lay down terms which give all tenderers equal opportunities to put forward their lowest prices. Subject to this, the purchase officers may exercise full discretion regarding the point or place of delivery for articles available in India.  For articles needing import, the contracts should be finalised on F.O.B./ F.A.S. basis.  Where circumstances or a case justify, import on C.F.R., C.I.F., F.O.R. Indian Port etc., may also be made subject to the terms and conditions laid down by the Government of India from time to time. 

316A. Price preference for early delivery.—The following clause should be invariably included in all tenders to enable a higher quotation being accepted for earlier delivery in preference to a lower quotation :— 

Clause 'A' 

"Special Condition.—It should be noted that if a contract is placed on a higher tenderer as a result of this invitation to tender, in preference to the lowest acceptable offer, in consideration of offer of earlier delivery, the contractor will be liable to pay to the Government the difference between the contract rate and that of the lowest acceptable tenderer on the basis of final price, f.o.r. destination including all elements, of Freight, Sales tax, Local taxes, duties and other incidentals in case of failure to complete supplies in terms of such contract within the date of delivery specified in the tender and incorporated in the contract.   This is in addition and without prejudice to other rights under the terms of contracts". 

In the acceptance of tender the following clause should be incorporated after obtaining the specific acceptance of the tenderer wherever necessary :— 

Clause 'B' 

"Special Condition.—It should be noted that on the assurance of the earlier delivery at the rate of Rs...............................F.O.R..................................offered by you this contract has been  placed on you in preference to the lowest acceptable offer the rate of  Rs.............................................. F.O.R....................................................   In case of failure to complete supplies against this contract in terms hereof within the date of delivery specified herein, you would be liable to pay to Government the difference between the contract rate and that of the lowest acceptable tenderer on the basis of final price F.O.R. destination including all elements of Freight, Sales tax, Local taxes, Duties and other incidentals. This is in addition and without prejudice to the rights of the Government to recover all other losses and damages resulting from delayed supplies including the right of cancellation and repurchase at your risk and expense". 

317.    Indian Agents for tenderers abroad.—The tenderers abroad should be required to specify if they have agents in India and if so the extent of authority delegated to such agents and the duties they are expected to perform.  They should also indicate the commission payable to the Indian agents and whether they are agreeable to payment of the commission in Indian currency. 

318.    Where tenders are invited for plant and equipment, in which the erection of the plant at site is to be undertaken by the successful tenderer, appropriate terms in regard to delivery at site, erection, testing and commissioning should be included in the invitation to the tender or in general specification and in the resulting contract.  In cases involving import, tenderers abroad should be required to specify their agents in India, through whom delivery will be arranged and who will arrange for erection at site and for carrying out such tests on completion as may be specified in the contract. 

319.     Cost of tender forms.—No account adjustments will be made between the Indian Missions abroad and the purchasing departments in India on the value of tender forms sent and issued on behalf of the purchasing authorities in India and the expenditure on advertisement, postage charges, etc. in the Missions aborad. 

320.    Deleted. 

321.      Deleted. 

322.      Deleted. 

323.     Classes of tenders.—The following are amongst the different methods of obtaining tenders that may be adopted :— 

(1)   By advertisement ("Open" Tender); 

(2)   By direct invitation to a limited number of firms ("Limited" Tender); 

(3)   By invitation to one firm only ("Single" Tender or "Private" purchase). 

The primary aim is to obtain the best value possible for the money spent, and the tender system, in one form or another, should be given very careful and serious consideration in all cases as one of the most effective methods for keeping down rates. The exceptions made to the general rule that tenders should be called for in all cases, arc based only on practical considerations in order to avoid delay and unnecessary work in cases of comparatively small value. 

324.    The "OPEN" Tender System.This system of invitation to tender by public advertisement in the most open and public manner possible, should be used as a general rule and must be adopted, subject to the exceptions noted in paragraphs 331 and 332 in all cases in which the estimated value of purchase is (i) over Rs. 10 lakh in normal circumstances, for procurement of items other than safety items (ii) over Rs. 2 Crore in cases of emergencies and (iii)over Rs. 2 crores in cases of procurement of safety items and procurement of items whose approved list of vendors is issued by centralised approving agency i.e. RDSO/PU/CORE etc."


(Authority Board's letter No. 98/RS(G)/779/10 Pt. I & 2008/RS(G)/779/9 dated 02.07.99 & 06-02-2009) --acs no. 7 & 17---page no. 62

325.    When tenders are invited by public advertisement, the issue of the tender forms need not be restricted to firms whose names are on the list of approved contractors (see paragraph 329).  Firms not on the list, should, on enquiry, be informed that they are at liberty, on payment of the prescribed fee, to tender for the advertised requirements. Firms which are not borne on the list of approved contractors should be asked to furnish following details along with their quotation, in the prescribed proforma supplied to them with the tender documents :— 

(a)   Income tax clearance certificate,    (b) the name and full address of their Bankers, (c) particulars of their previous performance regarding supply of stores similar to those under purchase, (d) details of equipments they possess for manufacture of the stores including quality control and (e) the details of technical staff employed by them. 

When a tender which p'rima facie appears to be satisfactory has been received from an unknown firm, steps should be taken before any order is placed to ascertain whether the firm is capable of executing the contract in a proper manner. If the enquiries prove satisfactory the order, or a portion of it, may be placed with the firm. If the order or the portion thereof is satisfactorily executed, the name of the firm should be added to the list of approved contractors. If, on the other hand, the enquiries prove unsatisfactory in consequence of which the order is not placed with the firm, the result of the enquiries must invariably be recorded. 

326.    Deleted. 

327.    Deleted. 

328.    The "Limited" Tender System.Except in the case of procurement of safety items, in case of procurement in emergency and in case of procurement of items whose approved list of vendor is issued by centralised agency, this system may ordinarily be adopted when it is considered to be advantageous, in the case of orders the estimated value of which does not exceed Rs. 10 lakh. In case of safety items, in case of emergency and in case of items whose approved list of vendors is issued by centralised agency i.e. Research Design Standards Organisation (RDSO)/ Production Units(PUs)/ Central Organisation for Railway Electrification (CORE), this system may be adopted in the case of purchases, the estimated value of which does not exceed Rs. 2 Crore.

(Authority Board's letter No. 98/RS(G)/779/10 Pt. I & 2008/RS(G)/779/9 dated 02.07.99 & 06-02-2009) --acs no. 7 & 18 page no. 62

329.     List of Approved Firms.—For the purpose of the "Limited" tender and "Single" tender procedures, a list of firms, both Indian and Foreign, of known reliability, which have been able to satisfy that they possess the necessary equipment and facilities for production of stores which they offer to supply, shall be maintained.    The list should be subjected periodically to examination and revision to weed out firms which have proved unreliable.    Any application from a new firm for inclusion in the list should be considered on its receipt. Registration of firms as approved suppliers should be done carefully after assessing the capacity-cum-capability and financial standing of the firm.   If need be, services of Research Design & Standards Organisation, Lucknow, R.I.T.E.S., New Delhi or Inspection Wing of DGS & D may be utilised for this purpose. Monetary limit upto which individual orders could be placed on a firm should be carefully fixed keeping in view, Bankers Report, capacity-cum-capability and other financial information contained in firms balance sheet, profit and loss account etc.   And registration should be done grading the firms according to following categories :— 

(a)        Those firms capable of executing supply orders valuing Rs. 40 Lakhs and above.

(b)        Those firms capable of executing supply orders valuing Rs. 10 Lakhs to Rs. 40 Lakhs.

(c)         Those firms capable of executing supply orders valuing Rs. 5 Lakhs to Rs. 10 Lakhs.

(d)        Those firms capable of executing supply orders valuing each above Rs. One Lakh upto Rs. 5 Lakhs.

(e)        Those firms capable of executing supply orders valuing upto Rs. one Lakhs.

It has also been decided to revise the existing limits of Rs. 25,000/- and Rs.1 lakh    as    last   revised   from   those    as    mentioned    under Recommendation Nos. 66 and 67 of the said committee to Rs. 1 Lakh and Rs. 5 Lakh, respectively.

The firms that are registered for supply of orders valued above Rs. 1 Lakh should invariably be a manufacturer or his authorised agent. The firms who are registered for executing supply orders valued above Rs. 1 lakh should be pre-inspected by an appropriate officer for assessing capacity-cum -capability including effective quality control. The registration should be treated as provisional, fill the firm satisfactorily executes one order, but once the registration is confirmed, no discrimination may be made between new and old registered firms. From this list of approved suppliers, names of the firms to be invited to tender, shall be selected by all the purchase officers.

                    (Authority Board's letter No. 2008/RS(G)/779/9 dated 0 6-02-2009)--acs no. 19 page no. 62-63

Note 1.—Firms who are pre-inspected and considered fit for inclusion in approved list for one Railway should be considered for inclusion in the approved list of other Railways as well. 

2.— If for sufficient reasons, which should be recorded, it is decided to issue limited tender enquiries to firms not on the approved list, approval of the next higher authority not below the rank of a Deputy Controller of Stores shall be obtained. At the same time such firms should be asked to get themselves registered with the Railway following prescribed formalities. 

3.— Limited tender enquiries should preferably be issued to a minimum of three firms and the last successful supplier should invariably be included. 

330.    The "Single" Tender System.This system may be adopted with regard to small orders not exceeding Rs. 3 lakhs in value in the case of non­proprietary articles (provided decision to adopt single tender system for articles exceeding Rs. 5,000/- but less than Rs. 10,000/- in value is taken at a level not lower than a Junior Administrative Grade Stores Officer) and Rs. 5 lakhs in case of proprietary articles (with PAC 'a' certificate) and articles in the process of indigenous development subject to the rates quoted being reasonable.

In the event of an emergent situation affecting repair, maintenance, out turn, operation etc., which should be recorded in writing, the purchase of non­proprietary articles may be made on single tender basis: -

(i)        Up to Rs. 5 lakh per item by Controller of Stores; and

(ii)       Up to Rs. 7,500/- per item by Divisional Railway Managers in consultation with Associated Finance.

There should be no re-delegation of powers of Divisional Railway Managers at (ii) above.

(Authority Board's letter No. 2008/RS(G)/779/9 dated 0 6-02-2009)--acs no. 20 page no. 63

331.     Powers of General Managers to cover exceptional cases.—The "Limited" tender system may be applied to orders the estimated value of which exceeds the limits specified in paragraph 324 & 328 and the single tender system may be applied to orders the estimated value of which exceeds the limits specified in paragraph 330 with sanction of the General Manager and the concurrence of FA & CAO subject to the following conditions :— 

(a)   that sufficient reasons exist which indicate that it is not in the public interest to call for tenders by advertisements ; 

(b)   that the demand is so urgent that any additional expenditure involved by the elimination of open competition must be incurred ; and 

(c)   that in the case of the proprietary articles, the sanction of the General Manager is necessary only if it is not possible to certify that a similar article is not manufactured or sold by any other firm which could be used in lieu. 

In each case a note should be recorded giving the reasons for authorising the exception to general rule. 

Note.— The Controllers of Stores are authorised to exercise General Manager's Power under this paragraph to purchase Steel Items on single tender basis from Stock Yards/buffer imports of M/s. SAIL, TISCO, TISCO at main producer's stock yard prices for the steel items as fixed by Joint Plant Committee or the Government. 

332.    The General Manager may also decide not to call for tenders of any category in cases where sufficient reasons exist to indicate that it is not in the public interest to call for tenders. In all cases (except those of works contracts based on schedule rates in force on the railway, the individual value of each of which is estimated not to exceed Rs. 50,000/-), where the General Manager decides not to call for tenders, the reasons shall be recorded and communicated by the General Manager to his Financial Adviser.    Should the General Manager's power of decision under this rule be delegated to a lower authority (who will exercise it subject to the same proviso) and should the Financial Adviser consider the reasons adduced by such authority to be insufficient or other than in the public interest, he shall represent his views to the authority concerned and, if necessary, consult the General Manager. 

333.    Deleted. 

334.    Deleted. 

335.      Deleted. 

336.    Deleted. 

337.    Deleted. 

338.    Tender Notices shall state.—(a) The short particulars of stores to be supplied or work to be done, specifications, quantity etc. 

(b)  Where and when the tender documents can be seen and obtained also the amount, if any, to be paid for such documents. 

(c)  The place where, the date and time upto which the completed tender forms will be received and time fixed for opening of the tender.

65 338A.    Tender Documents.—Tender documents usually comprise of :— 

(a)   Instructions to tenderers. 

(b)   I.R.S. and/or Special Conditions of Contract. 

(c)   Specifications standard or special (and plans/drawings as necessary). 

(d)   Schcdule(s) to the tender giving full particulars of stores to be supplied or work to be done. 

(e)   Agreement form, to be signed by the tenderer in token of his undertaking to supply the stores/carry out the work detailed in the schedule at the rates indicated therein, on the terms and conditions specified in the tender and his agreeing to keep the offer open for acceptance upto a specified date. 

(f)   A statement of deviations from the specifications. 

(g)   A statement of deviations from the conditions of contract. 

339.    Tender forms shall state inter alia :— 

(a)   The amount of earnest money to accompany the tender and the nature of security deposit, if any, required in the case of an accepted tender ; 

Note .—The amount of earnest money to be deposited should be sufficiently large to be a security against loss, in the event of contractor failing to furnish the required security within the appointed time after acceptance of his tender, or until such time as the sums due to him form a sufficient guarantee, as the case may be. The earnest money should be in cash or in the form of Deposit Receipts, Pay Orders, Demand Drafts and Guarantee Bonds, which could be either of State Bank of India, or any of the Nationalized Banks or any other Scheduled Commercial Bank. 

(b)   With whom or what authority the acceptance of the tender will rest. 

(c)   Whether or not tenders containing erasures and alterations or the tender documents will be considered. 

Note .—Such alterations constitute a fresh proposal and cannot be disregarded but must definitely be accepted or rejected. All tenders should, therefore, in equity be placed on the same footing in this respect. 

The forms for tender enquiries must provide for the acceptance by the tendering contractor of I.R.S. conditions of contract and special conditions of contract (if any). Form S-339 gives a specimen tender form, which can conveniently be adopted. 

Form No. S-339 

Tender be received upto

11.00 hrs.on......................................................

Tenderer/s Name......................................................................................................  

Item No.


Specification or drawing ref.

Price List No.

Approx. Quantity

Rate unit

Destination at which required










Special Instructions, if any…………………………………………………………………………To be filled in by Tenderer(s) 

(1) Tenderer(s) Registration No.………………………………………………………………………………… 

(2) Registration No. with National Small Scale Industries Corporation  Ltd...............

(For Small Scale Units only).

Item No.

Rate Inclusive of all charges

In Figure     In Word

 Rs. P

F.O.R (Station of Dispatch)

Make or Brand offered

Delivery By










Note 1.— In the case of imported goods, the country of origin, maker's name and brand must be mentioned. In the case of indigenous goods the tenderer(s) must specify maker's name, brand and whether the stores offered are a product of Cottage or Small Scale Industry or medium/large scale industry.


2.— Tenderers while submitting their quotations on forward delivery subject to assistance for grant of Import Licence, should also furnish the following information alongwith their R.O.R. price to enable this office to arrange for necessary foreign exchange expenditure.


(i)  C.I.F. value in Indian  Currency........................................................................ 

(ii)  Customs duty at.......................................................................................%. 

(iii)  Port clearance, transport, profit etc................................................................... 

(iv)  Total value of quotations.............................................................................. 

(v)  Country of Origin....................................................................................... 


The President of India,  

Through :  

Controller of Stores………………………………………….Railway.  

I/we agree to supply the stores noted above at the rates quoted by me/us in accordance with the current I.R.S. Conditions of Contract and the Instructions to Tenderers contained in pamphlet issued by the Controller of Stores,...................................................Railway, as amended upto date. 

                                                                                                 Signature of the Tenderer(s)..............................

339A. Waiver of Earnest Money.—In the case of tenders for the purchase of stores, where the tenderers arc unwilling to pay earnest money, the Controller of Stores, in specific cases, may, in consultation with Financial Adviser, relax the condition of earnest money. 

340.    The right should invariably be reserved to reject any or all of the tenders received without the assignment of a reason. 

341.    Opening of Tenders.—Tenders should be opened at the specified time and place by the officer nominated for this purpose in the presence of an accounts representative, who shall not be lower in rank than an Assistant/Section Officer . 

Unless good and sufficient reasons exist (which must be recorded) all advertised tenders where estimated value of purchase exceeds rupees 3 lakhs, should be opened in presence of such of the tenderers or their agents who may choose to attend and the names of the tenderers and rates quoted by them should be read out to the tenderers present. While opening the tenders no opportunity should be given to any tenderer to repudiate, amend or explain the rate or any condition quoted in the tender. 

 No tenders should be entertained from any party in his private capacity who is directly or indirectly connected with Government service. 

 (Authority Board's letter No. 98/RS(G)/779/10 Pt. I dated 02.07.99 acs no.7 page no. 67

341A. Total value of the tender shall be the criterion for deciding the "competent authority" for acceptance of a tender irrespective of whether the tender is decided in parts or as a whole. 

341B. Constitution of Tender Committee.—Subject to directives issued by Railway Board, a Tender Committee, consisting of a minimum of three members, one each from Stores, Accounts and Indenting Departments, shall be constituted by the authority competent to accept the tenders, to deal with and render advice in all cases of tenders valued over rupees ten lakhs. When General Manager is the authority competent to accept a tender, the Head of Department concerned shall arrange to constitute the Tender Committee.

The Tender Committee should be so constituted that an Officer recommending acceptance of a tender in his capacity as a member of the Tender Committee shall not also be the accepting, authority of the same tender. In such cases, the Officer concerned should put up the Tender Committee's proceedings to the next higher authority for acceptance, not withstanding the fact that the Tender Committee's recommendations are within his own powers of acceptance.

(Authority Board's letter No. 98/RS(G)/779/10 Pt. I & 2008/RS(G)/779/9 dated 02.07.99 & 06-02-2009) --acs no. 7 & 21 page no. 67

341C. A statement of comparative rates and other tender conditions should be prepared by the branch concerned and verified by the Accounts Department. It must be ensured that all tenders received, including late and delayed tenders, are tabulated in the comparative statement and put up to the Tender Committee constituted for the purpose, for its consideration. 

341D. As far as practicable, tenders should be finalised within the initial validity of offers. To facilitate this all the information/clarifications necessary for consideration of offers should be called for at one time and not piecemeal. Such clarification should not change the substance or price of the original offer. 

342.    The lowest tender should ordinarily be accepted.  Acceptance or rejection of tender is left entirely to the discretion of the authority entrusted with this duty and no explanation can be demanded of the cause of rejection of his offer by any person making a tender. Such an explanation should, however, be recorded and may be called for by superior authority. Reasons for departing from recommendations of the Tender Committee should also invariably be recorded by the accepting authority. 

342A. Where special terms and conditions are accepted, they should be incorporated in the contracts issued which should ultimately contain no more or no less than what is contained in the accepted tender or mutually agreed to in post tender correspondence or negotiations with the tenderer, and approved by the accepting authority. Incorporation of terms and conditions which are not in the tender or which have not been specifically agreed to by the tenderer will not create a legally binding agreement but will amount to a "counter offer" only, which shall require consent of the tenderer before a binding contract takes effect. 

342B. Intimation of Acceptance of Tenders.—A contract is concluded upon communication of the acceptance which must be within the time prescribed. Where post is the medium of communication between the parties, the acceptance is complete as soon as it is posted by registered post or under certificate of posting.

343.    Freight Factor in Purchase of Material.—Railways should in purchasing their requirements of stores or materials, ordinarily obtain quotations from supplying firms,   F.O.R. destination and, in selecting tenders, also take into consideration the freight element in finally determining the cheapest source of supply. 

344.    Dividing of Contracts.—Where warranted, (for reasons to be recorded), the tender quantity may be split and tender decided in favour of one or more firms depending on merit of each case, in consultation with FA & CAO and approval of the authority competent to accept the tender, having regard to the following factors :— 

(i)   Vital or critical nature of items. 

(ii)  Quantity to be procured, 

(iii)   Delivery requirements, 

(iv)  Capacity of firms in the zone of consideration. 

(v)  Past performance of firms. 

Where parallel rate contracts are awarded on two or more firms, care should be taken that, subsequently each of the firms is afforded relatively equal opportunity for making supplies to the railway by purchase orders being placed on each in turn for quantities proportionate to the quantity notified in the rate contract. 

345.    Locomotive and Rolling Stock Components.—If after inviting tenders for locomotive and rolling of stock components of any considerable value, which are manufactured by firms in India, it is intended to place an order for imported articles, the sanction ot the Railway Board should be obtained. 

346.    Contracts for Works & Stores.—All tenders for Works and Stores valued over Rupees 8 crores in case of indigenous tender and over Rupees 2 crores involving F.E. should be sent to Railway Board with recommendations for their acceptance. 

(Railway Board’s letter No. 98/RS(G)/779/10 Pt. I dt. 02.07.99) --acs no. 09 page no. 68

Note.—Girders, structural steel work, rolling stock and other like materials which involve manufacture come under category of works and not stores for the purpose of determining the powers to enter into contracts.

347.    Deleted. 

348. & 349.    DELETED 

(Railway Board’s) letter No. 95 /RS (G) / 768 dt 17.08.1995 conveying Ministry of Finance S.O.M No. F. 23 (2) –E.II(A)/92 dt. 24.6.92)--acs no.3  page no.68 & 69

350. Inspection.—All articles whether manufactured in India or abroad should be subject to inspection before acceptance and articles for which specifications and/or tests have been prescribed by competent authority, should be required to conform to specifications and/or to satisfy the prescribed test or tests which may be carried out during manufacture or before or after despatch from suppliers premises. 

351. Nomenclature.—As far as practicable, standard forms Of nomenclature or description should be employed in the invitation to the tender to encourage free competition and the terminology in all cases should be such as to show beyond all reasonable doubt what exactly is required, the place of delivery or installation, the warranty and maintenance requirements and other pertinent terms. 

The appropriate specifications should be annexed to or quoted in the invitations to tender, it should be stipulated in the condition of contract that the articles supplied will be subject to inspection and/ or tests prescribed in the specifications before acceptance. In cases where the specifications or drawings cannot be annexed to the invitations to tender, it must be specified where the specifications or drawings can be had or seen. 

Note 1. In case of stores, no particular make or brand should be specified in the invitations to the tender, except in those cases where a particular plant or machine patented under a particular name is required or when spare parts are needed for such plant or machinery. 

2. Any additional information, clarification, correction of errors or alterations of tender documents should be promptly advised to all those who had requested the original tender documents and additional time as warranted should be given for submission of tenders. 

352.    In the case of important construction works let out on contract, articles required for the construction of such works may be supplied by the contracting firm provided that when specifications and/or tests have been prescribed for such articles they should conform to such specifications and/or satisfy such tests. 

353.    When tenders for important construction works are invited, the officer concerned should also stipulate in the invitation to tender, that the articles required for the construction of such works must comply with specifications prescribed for such articles, which should be annexed to or quoted in the invitation to the tender. The articles should be inspected and/or tested in accordance with provisions of the specifications before acceptance and use on the work. 

354.    All purchase officers should take steps to ensure that adequate inspection arrangements are made in each case.  Services of Research Design and Standards Organisation, Lucknow, Rail India Technical and Economic Services Ltd., New Delhi, Railway Adviser, London or Director General of Supplies and Disposals as required may be utilised for, this purpose. 

355.    Deleted. 

356.    As soon as contract has been awarded for articles which require inspection and/or test during manufacture or before despatch/shipment from abroad, a complete copy of the contract with specifications, drawings, conditions of contract and all other relevant documents should be sent to the nominated inspecting agency with complete instructions for inspection and full address of the manufacturers.   The contractors should also be informed of the agency, nominated to carry out the inspection during manufacture or before shipment against the contract, with whom they should further co-ordinated. 

357.    Deleted.         

358.    In case of orders for plant and machinery, whether purchased in India or obtained from abroad, which include erection and test at site of work, arrangements for inspection and tests after erection at site can also be made through Research Design & Standards Organisation, Lucknow, Rail India Technical & Economic Services or the Director General of Supplies & Disposals. 

359.     Inter-Departmental Purchases.—Nothing in this chapter shall be deemed to prohibit the purchase of articles by one department of railway from another. 

360.    Deleted. 

361.    Deleted. 

362.    Deleted. 

363.    Deleted. 

364.    Deleted. 

Composition of Tender Committee for dealing with tenders for purchase of Stores & Powers of Stores Officers for acceptance of tenders as determined by Rly. Board

Paras 341 (b) & 342


Value limit

Acceptance by


Consuming Deptt.

Finance  I

(1)Rs. 10 Lakhs to Rs. 30 Lakhs


Sr. Scale

Sr. Scale

Jr. Scale

(2) Rs. 30 lakhs to Rs. 1 Crore




Sr. Scale

(3) Rs. 1 Crore to Rs. 2 Crore





(4) Rs. 2 Crore to Rs. 15 Crore





(5) Rs. 15 Crore to Rs. 25 Crores.





(6) Rs. 25 Crores and upto Rs. 50 Crore.





Note: -  *In units where there is no AGM, the accepting authority will be GM against item 5 as well of above table.

(Authority Board's letter No.  98/RS(G)/779/10/Pt. I  & 2008/RS(G)/779/9 dated 02.07.99 & 06-02-2009) acs no. 10 & 22 page no. 71