Procuemennt Manual AVNL 1

PROCUREMENT MANUAL (STORES & SERVICES) -2021
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PROCUREMENT MANUAL
(STORES & SERVICES)-2021
(Version.1)
A vision for an
AATMA-NIRBHAR
Armoured Vehicles Nigam Limited (AVNL), Chennai-600054

Department of Defence Production, Ministry of Defence
Govt of India
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Foreword
1) AVNL Procurement Manual is a manual for procurement of stores & services for
production in AENL.
2) AVNL Factories have the responsibility of ensuring timely supply of military

hardware to Defence Forces and other customers. The significance of availability
of right material at right time and at right price, therefore, cannot be undermined.
Considering the production requirement of AVNL Factories, it is always desirable
to have separate exclusive Procurement Manual for the AVNL Units including
factories for stores and services procurement cases especially for Made-to-Order
(MTO) items which are ensuring expeditious processing of stores procurement
proposals, facilitating faster decision making and consequently timely availability
of input materials.
3) The provisions in AVNL Procurement Manual 2021 are within the ambit of DPM
2009 (or amended from time to time), GFR 2017 (or amended from time to time)
as also other policies / guidelines / instructions issued by MOD, DIPP, MOF,
MOMSME, CVC and ATN on CAG observations keeping in view the speciflc
requirements of production and to ensure timely availability of input materials for
continuity of production in AVNL Factories, maintaining transparency and probity
in procurement.
4) AVNL Procurement Manual 2021 is more user and vendor friendly and has
covered latest provisions and initiatives of the Government of India like Public
Procurement (Preference to Make in India) Order 2017, Ease of Doing Business,
level playing fleld with indigenous vendors, GeM, Start-ups among other things.
The applicability of all these provisions will further boost and enhance the Defence
Manufacturing eco system especially with MSMEs.
5) The AVNL Procurement Manual 2021 has been finalized and approved by Board
of AVNL vide AVNL Board Meeting No.05/ 2021 -22 held on 27 January 2022.
Avadi, Chennai-600 054. (Sanjeev Kishore)

CMD / AWL
Date:
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Preamble
"In the new world it is not the big fish which eats the small fish; it's the fast fish
which eats the slow fish"
-Klaus Schwab, founder and chairman of World Economic Forum
The AVNL Procurement Manual (Stores & Service)-2021 is aimed at: imbibing the
best possible supply-chain-management practices being followed across defence
industries, harnessing the potential of well established Indian Defence Eco-system to
offer `Womb' to `Tomb' solution to its customer. The manual does address important
aspects of the industry such as: hand-holding in developing the complex defence
platforms/systems/sub-systems, offering level playing field to eligible and potential

vendors and, most importantly, ensuring commercial viability of the whole
procurement cycle. Nevertheless, the provisions made in this procurement manual are
within the ambit of DAP-2020 (amended form time to time) and GFR 2017 (amended
form time to time) and derive its ethos and spirit from the principles of highest
standards of transparency, fairness, competition, integrity and public accountability.
And therefore, it offers a balance between complex procurement procedure and
ensuring input store of the highest standard of quality at right cost; though decision
making pertaining to this class of purchase always remains distinctive and complex.
While forging the AVNL procurement manual, the core spirit of the supply-chain-
management, that is to say, sourcing the right material, within the reasonable time, at
right cost, has traveled along adamantine. And for that raison d'etre, this manual is not
only coherent with laid down fundamental principles of public procurement, but also
offers, pari-passu, an impetus to the clarion call of an `4/7"cr#z.rbfeczr Bfeczrcr/', as
envisaged by the Govt of India.
Needless to mention that the Defence manufacturing is unique and complex due to
fast changing cutting-edge technologies. It demands major thrust in Research and
Development, creation of intellectual capital, and substantial investment in defence
production facilities within the country. A smooth, efficient and well defined
procurement procedure, duly encapsulate in the form of a procurement manual, is the
indispensable written document of any organization to shape its future.
Philosophy
" Dare to be free, dare to go as far as your thought leads, and dare to carry that out
in your life. "
-Swami Vivekananda
The Procurement Manual of an organization is a sacrosanct document which not only

lays down the fundamental principle of procurement but also, to a large extent,
synergies the defence eco-system mandatory for its existence. It broadly deals with
the objectives and functions of purchase department and essentially lists out the
procedure to be followed for procurement of stores and services. The core philosophy
of this procurement manual is not exceptional either. Owing to above, the
procurement manual is prepared:
1. Duly aligning its principle with GFR-2017 & DAP-2020.
2. Encompassing the CVC guidelines issued from time to time.
3. Adhering the regulations and directives issued by various Ministries of Central and
State Goverrments.
4. Adhering to policies, guidelines, instructions issued by MOD, DIPP, MOF,

MOMSME, CAG.
5. And, directives issued by any other statutory bodies that have a bearing on the
procurement process.
6. This manual covers latest provisions and initiatives of Govt of India like public
procurement (Preference to Make-in-India) order 2017, Ease-of-Doing-Business, level

playing field with indigenous vendor, GeM, Start-Up, so on and so forth.
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7. Any instance of variance with GFR 2017 & DAP-2020 (amended from time to time)
is noticed, the matter should be referred to AVNL for clarification. However, the
ongoing procurement may not be stopped pending receipt of such clarification, if
there is an operational urgency and the associated delay is likely to have adverse
implications on the nation' s interest.
8. Since the stores procurement of AVNL shall be governed by the provisions made in
this manual, all associated sops, guidelines, instructions, orders, must be coherent
with its fundamental principles.
9. All existing sops, guidelines, instructions, orders, shall be updated accordingly.
10. No modifications /amendments will be made to the AVNL Procurement Manual-

2021 without prior approval of AVNL.
11. However, changes in policies issued by MOD/MOF and suitably communicated by

AVNL - Chemai necessitating amendments in the manual may be implemented
immediately.
12. Any amendment issued shall be attached to the associated chapter/chapters by

assigning the page numbers: the last page number of the chapter with suffix (.)
followed by numbers in roman.

Draft & Approval
" Freedom is not worth having if it does not include the freedom to make mistakes. "
-Mahatma Gandhi
A. Constitution of Draft Committee: The Armoured Vehicles Nigam Limited
(AVNL) through a Vlitten document O{o: AVNL/CMD/001/PROCEDURE

MANUALS, Date: 02.09.2021) appointed a draft committee to draft a Procurement
Manual for Store & Services procurement which shall be applicable to newly created
Defence Public Sector Unit-AVNL. The Drafting Committee has two members:
i. Alok prasad-Chairman
ii. Anurag Kumar sharma-Member
8. Draft Review: On 30.09.2021, the Member Drafting Committee (Anurag Kumar

Sharma) submitted the very first draft to the Chairman (Alok Prasad) and AVNL for
review and seasoned input, if any.
C. Enactment: The procurement manual of AVNL came into force with effect from
01.04.2022.
PROCUREMENT MANLIA-L (STORES & SERVICES) -2021
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TABLE 0F CONTENTS
Chapter No Title Page No

I Introduction 12
11 Classification of Goods & Services 17

Ill Salient Features of Procurement 23
IV Development of Micro, Small and Medium Enterprises 29
V Startups 30
VI Categorization of Procurement 32
VII Purchase Procedure 35
VIII Mode of Procurement and Selection 43
IX Procurement of Stores from other Units of AVNL 54
X Procurement Without Tendering 58
XI Procedure for COTS Items (Other than MTO Items) 62
XII Procedure for MTO Items 64
XIII Tendering 71
XIV Tender Evaluation 88
XV Terms & Conditions of purchase Order 102
XVI Order & Order Amendment 123
XVII Inspection of Store 128
XVIII Delivery & Pen.alties 134
XIX Incoterms 143
XX Rate Contract 148
XI Contract 154
XXII Consulting Services 166
XIII Guideline for Procurement under Make-II 172
XXIV Preference to Make in India 180
XV Acquisition Of Contract Services For R&D 191
XXVI Arbitration 197
XXVII Ethics of Procurement 201
XVIII Grievance Redressal 202

rmx Conclusion 204
Armexures 205
I. INTRODUCTION
1. Challenges: Ensuring the right input material at right time is an inevitable
requirement of a defence manufacturing unit for its survival of the fittest. The AVNL,
being one of such prominent establishments of the country, has to perform this
inescapable activity with utmost preciseness and in a transparent marmer. The
challenges in material procurement are as follows:
1. Stringent specifications of majority input materials: not applicable in commercial

settings and are available only as Made-to-Order.
2. Inconsistent demand: both in terms of quantity and periodicity.
3. Stringent qualifying criterion: mostly governed by JSS, GOST and Military (MIL)
standards.
4. Diverse product range with common procurement procedure.
5. Requirement of customized production lille for specific input requirement.
6. And therefore, it is imperative that material purchase be made following systematic,

efficient and cost effective way, in compliance with laid down procedure in this
Procurement Manual, while ensuring timely positioning of the material.
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2. Objective: The principle of procurement function is to ensure efficiency, economy,
transparency and competition wherever it is non-proprietary, non-licensor
procurement and non-customer nominated source/equipment. The purchase procedure

outlined in this manual aims to fulfill the following objectives:
i. To ensure uninterrupted/timely flow of materials, equipment & services of goods

of required quality to meet and support production plans and other requirements
of internal and external customers.
ii. To procure competitively and wisely authorize supplies to desired speciflcations

from approved / reliable sources at the available reasonable prices within the time
schedule to support production plans and other requirements.
iii. To ensure that fair open and uniform purchase practices are followed to develop
healthy and long term relationship with suppliers and to foster the commercial
and technological interest of AVNL in the local, national and international market.
iv. To ensure timely formulation and commitment of purchase budget, including

foreign exchange requirements, if any.
v. To serve as information center on materials knowledge prices, sources of supply,

specifications etc. to all other departments.
vi. To ensure that investment made on inventory is at an optimum level and

continuously strive for reduction in material costs, Capital costs and Overhead
expenses.
vii. Develop sources of supply to maintain competition and sustained supplies.
viii. Training of purchase personnel in the latest techniques of Materials Management.

ix. To keep management appraised of the likely shortfalls in purchase performance
by introducing appropriate reporting systems with a view to seek management's
intervention in time.
x. To adhere to commercial procedures & maintain cannons of financial propriety to

safeguard economic, legal and other interests of AVNL. Commercial procedures
cover the Purchase Manual as well as guidelines issued by way of Materials
Management Circulars/ CVC guidelines/ MOD instructions etc. from time to time.
xi. Maintain and improve the quality of materials procured. Lay emphasis on Quality
Management.
3. Purchase Functions : Purchase Department is responsible for the following

functions:
i. Creation of a comprehensive and regularly updated directory of selected reliable

vendors and exchange the same with other Divisionsrunits to expand sources of
supply.
ii. Maintenance of vendor evaluation and rating records.
iii. Carry out market surveys with a view to establishing/developing new reliable and
better sources of supply and keep updated with information on latest products
/developments.
iv. Analyzing bids/offers for decision-making by the Competent Authority.
v. Arranging negotiations with vendors, when necessary.
vi. Issue of purchase Orders in time.
PROCUREMENT MANUAL (STORES & SERVICHS) -2021
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vii. Follow-up of Purchase Orders till the arrival of materials and acceptance at
destination and to ensure after sales service during warranty and post-warranty
periods.
viii. To finalize the required rate contracts/Long Term Agreements for regular stock
items.
ix. To work out periodically procurement lead time for various categories of items
from international and local markets and advise the same to user departments so
that they take timely action in initiating purchase requests.
x. Maintaining a library of product catalogs and manufacturers/distributor's price

lists etc.
xi. Maintaining up to date information regarding sales tax, excise and custom duty-
rates etc.
xii. Entering into service contracts in line with the DOFP.
xiii. Entering into Transit Insurance agreements for goods in transit.
xiv. Finalization of Commercial Terms & Condition and operation of licence

agreements in coordination with proj ect/production engineering.
xv. To ensure that objectives of purchase are realized.
xvi. To be alert about and responsive to the changes in production programme and
change in requirements of material.
xvii. Ensure timely payments to suppliers.
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4. Terminology (used interchangeably): Following terms have been used
interchangeably.
i. The Head of unit, Unit Head: Sr GM/GM ®resently)

ii. Stores and Goods
iii. AVNL- All matters related to Armoured Vehicles Nigam Limited (irrespective
of powers vested therein as per DOFP)
iv. The term referred AVNL in the manual implies the Armoured Vehicles Nigam
Limited, Head Office Located at HVF Road, Bhaktavatsalapuram Avadi,
Chemai- 600054.
11. CLASSIFICATION 0F GOODS & SERVICES
1. Introduction: For efficient implementation of purchase manual and guidelines
(issued from time to time), it's imperative that the relevant classification of materials
is properly understood, so that appropriate purchase procedure may be adopted for the
purchases in question. This chapter contains the general rules applicable to AVNL &
its associated units regarding procurement of goods & services required for use in the
public service. Detailed instructions/sops relating to procurement of goods may be

issued by the procuring units/departments broadly in conformity with the general
guidelines contained in this Chapter. The broad definitions of terms goods & services
(consulting & non-consulting) are given for better understanding the subject of
procurement.
2. Goods: The term `goods' used in this chapter includes all articles, material,
commodity, livestock, furniture, fixtures, raw material, spares, instruments, machinery,
equipment, industrial plant, vehicles, medicines, railway rolling stock, assemblies,
sub-assemblies, accessories, a group of machineries comprising of an integrated
production process or such other category of goods or intangible products like

software, technology transfer, licenses, patents or other intellectual properties
purchased or otherwise acquired for the use of Government but excludes books,
publications, periodicals, etc. for a library. The term `goods' also includes works and
services which are incidental or consequential to the supply of such goods, such as,
transportation, insurance, installation, commissioning, training and maintenance
[GFR-2017,Rule-143].
3. Non-Consulting Services: Services (non-consulting) means any subject matter of
procurement (which as distinguished from `Consultancy Services'), involve physical,

measurable deliverables/outcomes, where performance standards can be clearly
identified and consistently applied, other than goods or works, except those incidental
or consequential to the service, and includes maintenance, hiring of vehicle,
outsourcing of building facilities management, security, photocopier service, j anitor,
office errand services, drilling, aerial photography, satellite imagery, mapping etc
[GFR-2017,Rule-197].
4. Consulting Services: "Consulting Service" means any subject matter of
procurement (which as distinguished from `Non- Consultancy Services' involves

primarily non-physical project-speciflc, intellectual and procedural processes where
outcomes/deliverables would vary from one consultant to another), other than goods
or works, except those incidental or consequential to the service, and includes
professional, intellectual, training and advisory services or any other service classified
or declared as such by a procuring entity but does not include direct engagement of a
retired Government servant. Note: These Services typically involve providing expert
or strategic advice e.g., management consultants, policy consultants, communications
consultants, Advisory and project related Consulting Services which include,
feasibility studies, project management, engineering services, finance, accounting and
taxation services, training and development etc [GFR-2017, Rule-177].
5. Works: Works means all new constructions, site preparation, additions and
alterations to existing works, special repairs to newly purchased or previously
abandoned buildings or structures, including re-modelling or replacement. Minor
works mean works which add capital value to existing assets but do not create new
assets. Repair works means works undertaken to maintain building and fixtures.
Works will also include services or goods incidental or consequential to the original
or repair works [GFR-2017, Rule-130] .
6. Capital Equipment: Capital equipment consists of machine, plant, office,

equipment, workshop/office furniture, vehicles etc. The requirements of capital items
for the unit are sanctioned by the competent flnancial authority (CFA) as per the
delegation of financial power. The procurement of Machine/PlantIvehicle & `work'
and capital equipment does not fall under the category of `stores & services'
procurement and is to be purchased as per the AVNL Procurement Manual (P&M).

7. Scope of Manual: This manual deals with procurement of goods (stores) and
services as classified in subsequent paragraphs of this chapter.
8. Direct Project Materiav Production Material: Direct Project Materials or

Production Materials are those which form part of the end product and are either
directly consumed in production/ Overhaul or are required for supply against
contracts/ orders. These are raw materials, consumables, components, spares and
accessories, castings and forgings etc., which go into the manufacture/repair/overhaul
of end products. The bulk of the production materials in the defence industry is
required to be purchased only from approved/established sources. Such stores are
required to be covered by certificate or any other document as prescribed by Quality,
bearing the signature of an approved inspection authority. The requirement of
production material is linked with production programme of the unit and Material
Purchase Requests are to be raised by Material Planning/Control Department.
9. Overhead MaterialsITndirect Materials: All other types of materials which are

not directly used in production but are required for the production process or
functioning of the organization are classified as overhead/indirect materials. Such
materials fall under two main categories:
9.1 Stock Items: These are regular consumption items where stock levels are
maintained and procurement initiated based on re-order levels. Such items are
required to be stocked for issue as and when required. The demand of such stock
items shall be generated by the Material Planning (MP) Section.
9.2 Non-stock Items: Demand for such specific items is raised by the user
departments/section in the form of Material Purchase Requisition (MPR). In such
cases approved MPR to be provided by Indenting Department to Purchase Department
for procurement. Such materials will generally be issued to respective users
immediately upon receipt against the demand note.
10. Tool, Gauges& Measuring Instruments : The material purchase request for
these items shall originate from Tool Plaming Department/production shop. This
category of items includes hand tools, standard/special cutting tools, measuring
gauges& instruments, jigs, fixtures, grinding wheels and honing stones. Quality and
volume of production largely depends on timely supply of accurate tools and
precision gauges. It is therefore necessary that purchase of such tools, gauges&

instruments are restricted to only reliable sources which should be approved after
visiting the manufacturers, facilities and surveying their processes and quality
assurance methods, financial soundness and commercial standing.
11. Maintenance Spares Including Vehicle Spares: The supply of Maintenance

spares is vital to keep the capital equipment/plant in serviceable condition. At the time
of selecting plant and equipment, special care shall be taken to study in detail the
after-sales services offered by the Supplier and Plant Maintenance Department shall
undertake VED analysis in order to restrict purchases only to inescapable insurance
items. Commonly available spares of general nature, like belts, bearings, lamp
filaments etc. shall not be purchased in bulk and attempts shall be made to establish
local reliable sources and where possible rate contracts shall also be finalized so that
plant maintenance can avail of these facilities directly avoiding delay. Material
Purchase Requests for these items shall be raised by Plant Maintenance Department.
12. Civil Engineering Requirements: Generally, the civil work is executed through
the civil contract. However, civil items of emergent nature may be purchased by the
Civil department directly by raising the demand. Material Purchase Requests for
items of Civil Works like steel, Cement, Pipes, Sand, Bricks, Sanitary items etc. will
be raised by Civil maintenance and approved by competent authority for provisioning.
13. Welfare Items: Human Resource (HR) Department shall raise Material Purchase
Requisition for welfare items such as uniforms, personal utility items and requirement
for rurming the canteen services etc. and approved by the competent authority for
provisioning as delegated flnancial power. Generally non-provisioning/non - receipt

of welfare items in time can create industrial umest. Therefore, their timely
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availability even on short notice needs to be ensured. Welfare items of emergent
nature may be purchased by HR department directly through Cash-Purchase as
given/Local Purchase Committee through Spot tendering. Local Purchase committee

will have representatives of HR, Material Management (MM) and Finance.
14. Medicines and Hospital Requirements: The Chief Medical Offlcer/Appointed

Committee authorized by him/her shall assess the requirements of Hospital related
items including medicines and other pharmaceutical items, based on projected
consumption, stocks available and shelf life. The sources and mode of procurement
(including proprietary) shall be indicated by the authorized officer/committee. Offlcer

nominated by Chief Medical Officer shall raise MPRs for the requirements so
assessed and approved by the competent authority for provisioning. Committee to
maintain a directory of approved suppliers and periodically review and update. In
order to control inventory and to ensure prompt supply of correct medicine, the
ordering and receipt shall be handled in close association with the Chief Medical
Officer who will nominate a Medical Officer for the sane. The requirements of flrst
aid centre located at various divisions/sections to be procured by purchase department
of the unit in consultation with Medical and Safety section. The Purchase Department,
in co-ordination with the Chief Medical Officer, shall carry out market survey and
enter into rate contracts (if possible) with manufacturers/authorized dealers for supply
of medicines at the Hospital/Government controlled bulk rates. For emergent
requirements of medicines needed infrequently or in small quantities, local reliable
dealers shall be appointed. In order to meet the day to day requirement of Medical &
Health Department/Hospital including the requirement of inpatient, if considered
appropriate, rate contract(s) may be explored as an option with sources that are in the
local vicinity offering the best discount from MRP at the same time ensuring the
maximum available shelf life.
15. Commercially-off-the-Shelf (COTS): Stores under this category are available

commercially and have application in fields other than defence. These stores are
easily available in the market. Standard Procurement Procedures of the Government
of India can be applied while procuring COTS items. Both direct and indirect items
may fall under the category of COTS.
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16. Made-to-Order (MTO): Stores under this class do not have commercial
applications. They are made specifically for the defence application, against specified
drawings of AVNL units/collaborators/design agency or JSS/ other defence
specification. MTO items, therefore, have limited sources and are difficult to procure.
Consequently, for timely & reliable positioning of MTO items for production, special
procurement procedures are necessary without compromising on transparency,

competition or fair treatment of vendors.
17. Services: "Services" will mean any subject matter of procurement other than
"Goods" or "Works" and include all Outsourced services such as Hiring &
Maintenance of Transport, Canteen, Repair/AMC/Calibration of Machinery

/Equipment/Computer including Medical & Offlce equipment, Repair of furniture,
Operation & Maintenance Contracts, Performance Base Maintenance,
Repair/Overhaul of Vehicle/System/Sub-systems, engagement of agency for
recruitment of persomel, Freight Forwarder, IT implementation/support, Printing,
Publication, Laundry, Binder or any other activities not covered under the "Works".
For "Services" purchase procedure stipulated in this manual will apply. After award
of the contract by the Purchase Department, the monitoring of the
execution/completion of the contract along with required certification and other
technical and statutory compliance shall be the responsibility of the Indentingruser
Department.
18. Ofrlce Hquipment & IT Related Stores: All office related equipments including:
office furniture, Personal Computers, Printer, offlce and antivirus software, and
related accessories fall under the scope of this manual and can be purchased as per
provisions made in this manual, subject to the availability of fund under the specific
heads (Furniture & IT).
1.1 Approval for MPRs: MPRs raised by various groups as identified above has to
be coordinated by Finance and approved by CFA for provisioning as per Delegation
of Financial Power (DOFP).
Ill. SALIENT FEATURES 0F PROCUREMENT
Procurement of store by AVNL and its associated units falls under the category of
Public Procurement and accordingly be done in a transparent manner to bring
competition, fairness and which eliminates arbitrariness in the system. Accordingly,
certain features of procurement have been derived:
i. The tender document should be comprehensive, unambiguous, and relevant to the

objective of the purchase. The right and commonly used technical and industrial
parlance need to be used.
ii. The specifications bf the required goods should be framed giving adequate details.
The specifications must be broad-based and meet the essential requirements, without
including superfluous or non-essential features, which may result in unwarranted
expenditure.
iii. The tender document should clearly mention the eligibility criteria such as
minimum level of production experience, past performance, technical capability,
manufacturing facilities, financial position, ownership or any legal restriction, etc. that
need to be made by the bidders.
iv. Eligibility criteria should conform to extant Government policies (which includes
the provisions of this Manual) and be judiciously chosen so as not to stifle
competition amongst potential suppliers.
v. All aspects pertaining to tender preparations, submission, deadlines, acceptance,

evaluation, ranking and conclusion of contract should be unanbiguously and
explicitly detailed.
vi. Offers should be invited following a fair, transparent and reasonable procedure.
Tender enquiries (and subsequent anendments etc., if any) shall be given wide
publicity, including display at the AVNL offlcial website and mirrored at the Central
Public Procurement Portal (CPP Portal).
vii. Sufficient time should be allowed to the bidders to prepare and submit their
tenders. Suitable provisions should be kept in the tender document allowing the
bidders a reasonable opportunity to enquire about the tender conditions, tendering
process, and/ or rejection of its tender and the settlement of disputes, if any,
emanating from the resultant contract.
viii. Bidders must not be permitted to alter or modify their tender responses after the
expiry of their deadlines for submission; such modified bids will be summarily
rejected.
ix. Tenders should be evaluated only as per the evaluation details provided in the
tender documents. No new condition, which was not incorporated in the tender
document, should be brought into consideration while evaluating the tenders.
x. Negotiations with the bidders must be avoided. However, under some

circumstances, where price negotiations are considered unavoidable, they may be
resorted to only with the lowest evaluated responsive bidder, with the approval of the
CFA only after duly recording reasons for such action.
xi. At every stage of procurement, the procuring authority must place on record, in
precise terms, the considerations which weighed with it while taking the procurement
decision.
xii. The name of the successful bidder to whom the contract is awarded should be
appropriately notified for the information of general public, through the AVNL and
Central Public Procurement Portal. Wherever display in website is prescribed in this
manual, it shall also imply mirroring at the Central Public Procurement Portal
(CPPportal).
PROCUREMENT MANUAL (STORES & SHRVICES) -2021 i
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1. e-Procurement: Except purchases through Cash-Purchase, Local Purchase
Committee (LPC), all purchases to be done through e-procurement system available at
GeM, CPP / DDP DoO e-procurement portal or any other e-procurement portal
approved by AVNL, strictly adhering to guideline and directives issued by MOD from
time to time. The e-procurement system adopted should support all modes of
tendering like OTE, LTE, GTE, and STE.
There may be instances where considering the type of product (or

services)/procurement, e-procurement may not be the appropriate procurement
process, in such cases manual tendering process may be followed with the prior
approval of Director/Operation, AVNL, duly recording the reasons for the same.
2. Consideration for Purchase Quantity: Purchase quantities in excess of

requirement are not permitted. A demand should not be split into small quantities for
the purpose of avoiding the necessity of taking approval of the higher authority
required for sanctioning the purchase of the original demand.
3. Timely Procurement: To reduce delays, the time-frame stipulated for each stage
of procurement should be adhered to. The contract should be concluded within the
original validity of the tenders. Extension of tender validity must be discouraged and
resorted to only in absolutely unavoidable, exceptional circumstances.
4. Competent Financial Authority: Financial powers have been delegated to various

authorities in AVNL and its units, through the DOFP. These powers are to be used
within the framework of laid down procedures, canons of financial propriety and
amplificatory instructions.
i. The powers so delegated also imply accountability; and the CFA must ensure that
financial propriety and probity are observed in all cases.
ii. All financial powers are to be exercised by the appropriate CFA. Where financial
powers have been delegated to more than one authority under the same item/ head
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of delegation, authority with next higher delegated financial powers
constitute the `next higher CFA'.
iii. The financial powers delegated by AVNL to various authorities in AVNL and its
units/establishments carmot be further sub-delegated by the delegate. However,
on the strict understanding that the sole responsibility rests on them, the
authorities to whom financial powers have been delegated may authorize officer(s)
to sign communications and flnancial documents on their behalf conveying the
sanction of the original delegate provided that the name of the officer who is so
authorized is communicated to the Audit Officer concerned.
iv. The recommendations of TPC will be concurred by Chief Financial

Advisor/Financial Advisor and approved by CFA in the same TPC. CFA is the
Chairman of relevant TPC/TEC. In case of dissent note/different opinion
(Financial Advisor or any other TPC/TEC member), the decision of CFA will be
final. CFA can overrule Financial Advisor or any other TPC/TEC member after
recording reasons for overruling.
v. The constitution of the TEC/TPC shall be as notifled in the DOFP. However, the
Chairpersons of these Committees (CFA), if necessary, may co-opt other relevant
experts on the Committee. Reference in this manual to VSL TPC (Vendor
Selection TPC) is to the appropriate TPC while performing initial activities for
procurement (including vendor selection amongst other activities) indicated in

subsequent chapters of this manual.
vi. The CFA will be decided taking into consideration, the value of the original
quantity to be ordered plus the Option Clause quantity. In case of foreign

procurement, the current Exchange Rate of SBI, Parliament Street Branch/ RBI as
on Tender bid closing date, shall be taken into consideration for determining the
CFA. For the purpose of cost reduction and convenience, number of items or
group of items may be clubbed for tendering, provided the CFAs are defined in
advance before floating the TE by VSL TPC i.e. individual item wise or all items
together.
\ ty &w
vii. In umbrella agreements of multi-years (including RCs), CFA shall be decided on
the basis of average annual requirement and not the sum of annual contracts.
viii. In respect of cases beyond the powers of unit/TPC-I that have been duly approved,
unless speciflcally decided otherwise by the CFA, subsequent operations shall be
done by the relevant CFA (TPC) after strictly complying with the provisions of
this Manual.
5. Consultation with Finance: Procurement above the prescribed threshold limit in

the DOFP shall be done only with the concurrence of Finance at all the prescribed
stages. Though Finance is an integral part of the TPC/TEC structure, a financial
concurrence will also be required on the recommendations of the TPC prior to CFA's
approval in the same TPC. In case of disagreement/ non concurrence by the Financial
Advisor (FA), the CFA can overrule the Financial Advisor (FA) after recording
reasons for overruling the views of FA. In all cases where the CFA has overruled the
advice of Finance, the Secretary of the TPC shall send a copy of the TPC minutes to
the Director Finance, AVNL. Consequently, the Director Finance to exanine the
merits of case and issue necessary directives to the unit for each such cases. However,
the CFA is accountable and responsible for herthis decision and accordingly, t.he
decision of the CFA (although by overruling) shall stand firm and flnal.
6. Responsibility of Competent Financial Authority: CFA is the Chairman of

relevant TPC/TEC. The CFA must consider all aspects of the case, including the
quoted price, terms and conditions of the contract, delivery period, warranty, freight,
insurance and other charges and the compliance with the technical specifications/QR
before a purchase decision is taken. Conditional offers and those with specifications
not in conformity with the tendered specifications (Essential QRs), normally should
not be considered. However, in exceptional cases of any justifiable minor
discrepancies, CFA (Chairman of relevant TPC/TEC) may take appropriate decision
with recorded reasons. Wherever as per DOFP, delegated powers are exercisable
subject to financial concurrence, it shall be ensured before according sanction that the
requisite financial consultations have been done at all the prescribed stages. While
making the purchase decision, the CFA needs to satisfy himselfTherself that: (i) proper
procedures have been followed at various stages of procurement, (ii) purchase policies
of the Government have been complied with, and (iii) capacity and financial status of
the firm have been checked. Purchase decisions should be communicated only
through a formal order in a written form.
7. Hxemption/Relaxation: Government of India has issued general directives on (i)

mandatory/preferential purchase of specified goods from specified suppliers (ii)
extension of price preference (iii) exemptions/ relaxation from certain tender
conditions like tender fee, EMD, PSD, etc., to certain categories of suppliers. In
procurements attracting these general directives, the contemporary directives of the

Government of India should be checked (from the relevant website) for necessary
action. These contemporary directives shall apply in the procurement of
Commercially-off-the-shelf (COTS) as well as Made-to-order (MTO) items. DDP
may issue separate directives indicating the eligibility and nature of
concession/relaxation in order to promote MSEs (Micro & Small Enterprises), Start-
ups, Stand-ups etc. to be followed.
8. Standard Tender Document: Standard forms of tender are to be used as enquiry

documents and contracts in line with the extant rules, regulations, directives,
procedures etc. Deviations in the standard provisions of the standard documents may
be permitted by an authority competent to grant waiver/ relaxation for the provision as
per the DOFP. Extent of deviation that may be permitted by the said competent
authority shall be as per the powers available to him under the DOFP for granting
waiver/ relaxation.
9. Time Frame: All activities must be undertaken expeditiously, and consultations/

advice rendered within a specifled time frame. The time-frame, as envisaged by the
AVNL units (in the form of SOP), shall be adhered to in the procurement process to
ensure that the bids are finalized within validity period. In case the prescribed time
frame cannot be adhered to in any specific case, suitable extension of validity of the
bids should invariably be asked for, after recording valid reasons justifying extension
of the said validity.
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IV. DEVELOPMENT 0F MICRO, SMALL & MHDIUM
ENTERPRISES
1. The Micro, Small and Medium Enteaprises Development Act 2006 provides that:
"For facilitating promotion and development of micro and small enterprises, the
Central Government or the State Government may, by order, notify from time to time
the preference policies in respect of procurement of goods and services produced and
provided by micro and small enterprises by its Ministries or departments, as the case
may be, or its aided institutions and public sector enterprises".
2. Any order issued by Central Government in relation to Micro, Small or other

sections of Industries relevant to procurement shall be followed by all units under
AVNL.
3. Currently, one such Public Procurement Policy for Micro and Small Enterprises
(MSEs) Order, 2012 w.e.f 01.04.2012(subsequent amendment DPE.OM. No. PP-

7(4)/2007-Fin dated 14.11.2018 ), is in force and should be strictly adhered to.
4. The Public Procurement Policy shall apply to Micro and Small Enterprises
registered with District Industries Centers or Khadi and Village Industries
Commission or Khadi and Village Industries Board or Coir Board or National Small
Industries Corporation or Directorate of Handicrafts and Hand-loom or any other
body specified by Ministry of Micro, Small and Medium Enterprises (MSME).
5. Declaration of Udyog Aadhaar Memorandum (UAM) number by the MSME

vendors on CPPP/AVNL e-procurement portal should be made. The MSE bidders
who fail to submit UAM number will not be able to avail the benefits available to
MSEs as contained in Public Procurement Policy for MSEs Order, 2012 issued by
MSME for tenders invited electronically through CPPP/AVNL e-procurement portal.
V. STARTUPS
1. Definition Of Startup: An entity is considered to be working towards innovation,

development, deployment or commercialization of new products, processes or
services driven by technology or intellectual property, if it aims to develop and
commercialize: (i) A new product or service or process, or (ii) A significantly
improved existing product or service or process that will create or add value for
customers or work-flow. Provided that the mere act of developing: (i) Products or
services or processes which do not have potential for commercialization, or (ii)
Undifferentiated products or services or processes, or (iii) Products or services or
processes with no or limited incremental value for customers or work-flow would not
be covered under this definition. Here, the term Entity means a private limited
company (as defined in the Companies Act, 2013), or a registered partnership firm
(registered under section 59 of the Partnership Act, 1932) or a limited liability

partnership (under the Limited Liability Partnership Act, 2002).
2. Relaxation Of Norms For Start-Ups: AVNL shall relax the following eligibility
criteria for registration from Start-Ups in order to encourage them to participate in
supplies for AVNL procurement:
2.1 Prior Turnover
2.2 Prior Experience
3. Start-Up Recognition: Start up is a Company that has been in existence for less
than Five years and with sales revenues not exceeding Rs 25 crore. Apart from
irmovation, such Start-Ups will be expected to be engaged in the development,
deployment or commercialization of new products, processes or services driven by
technology or intellectual property.
4't
) ly &v\-
4. Identification Of Area: AVNL shall identify areas of Start-Ups which will be
hosted in AVNL website under `separate tab' and Vendors need to contact R&D
division of AVNL for Start-Up activities.
5. Payment For Start-Up: Advances up to 15% may be considered if request is

received by AVNL against Bank Guarantee. The interest on the advance amount is
not to be insisted from Start-Ups.
6. Start-Ups & iDEX Challenges: Under the Chapter-III (PROCEDURE FOR

PROCUREMENT UNDER `MAKE' AND `INNOVATION' CATEGORIES) of
DAP-2020, MOD has set up Innovations for Defence Excellence (iDEX) initiative
under the Defence Innovation Organization (DIO) and Technology Development fund
( TDF) under DRDO to use a multi-pronged approach and reach out/engage a large
pool of innovators/technocrats/professionals/academicians including amongst the
smaller enterprises, start-ups and MSMES, to foster innovation in a coherent,
strategized, and integrated manner.
7. Procurement of Stores/Sub-System/System developed under iDEX Challenge:

In this regard communication (via email) received from iDEX-DIO, DDP, MOD
Dated: 19.01.2022, and the same has been incoaporated: The products developed by
any innovator / Startup/Company under iDEX initiatives need to be treated at par with
Proprietary sources and taken up for procurement under that category. In case more
than one innovator/ Startup / Company has accepted the challenge and accomplished
the same, the procurement would be done on limited tender basis restricting the tender
to such successful innovator / startup / company.
\v4m,
VI. CATEGORISATI0N 0F PROCUREMENT
The requirement for procurement of goods may arise for catering to the annual
production and allied activities, building up authorized stocks, repair and maintenance
of assets. Similarly, the need for procurement of services may arise for maintenance
of equipment/assets, outsourcing the services that can be economically performed in
trade or where facilities are not available/not adequate in-house, and for engaging
experts and consultants.
1. Ex-Import: An item already established by any of the AVNL unit or indigenized,

should normally not be .imported. However, decision to import can be taken
considering the in-house production capacity, delivery timelines, the product mix,
availability of manpower, condition of plant & machinery etc. and after duly
recording specific reasons with the approval of Head of Unit. While initiating the case,
at the time of taking decision for placement of order as well as taking all subsequent
decisions like extension/re-flxation of delivery period etc., all relevant aspects like
capacity of the concerned AVNL unit, availability of indigenous sources, capacity and
reliability of indigenous sources, cost of indigenous supplies v/s the import cost etc.
should be kept in view. The supply position of indigenous sources should be
ascertained at every stage of procurement.
2. Import Restriction: Vide notiflcation F.NO. 12/17/2019-PPD, Dt 15.05.2020,
Ministry of Finance, Department of Expenditure, Public Procurement Division, has

issued the amendment in General Financial Rule (GFR), 2017- Global Tender Inquiry.
With regard to all import actions, all AVNL unit shall adhere to Amended Rule 161
(iv) and subsequent amendments/clariflcations issued from time to time. In this regard,
the office Memorandum: No. F.41112021-PPD dated 03.08.2021, Government of
India Ministry of Finance, Department of Expenditure Procurement Policy Division,

shall prevail till further orders.
h 4y\J
3. Make or Buy Decision: Policy on make or buy (including import substitution)
decision should be such that it not only promotes optimum utilization of in-house
capacity in AVNL but also lays equal emphasis on cost of production being
reasonable. After weighing all facts, an appropriate make or buy decision shall be
taken by Empowered Committee of Procurement.
4. Outsourcing: Non-core activities should, as far as possible, be outsourced, if

cheaper options can be found outside AVNL & resources thus released should be
utilized for core activities.
5. Empowered Committee of Procurement (ECoP):
5.1 Constitution: The constitution of Empowered Committee of Procurement at Unit

level shall be as under:
i. Head of the unit-Chairman

ii. Head of planning-Member
iii. Head of Material Management-Member
iv. Chief Financial Advisor-Member.
v. All Heads of production-Member
5.2Role & Responsibility: The prime responsibility of the Empowered Committee of

Procurement (ECoP) shall be:
i. Categorization of Stores under the class A, 8 & C considering the cost and lead
time for procurement (periodicity two years).
ii. Categorization of stores: Indigenous/Ex-Import considering Indian Defence Eco-

System of the country (periodicity two years).
iii. Decision for not resorting to SD-OTE to develop the further sources for critical
stores having sufficient (more than three) and reliable vendor base (periodicity
two years).
iv. Decision for not resorting to SD-OTE to develop the further sources for critical
stores having two or three sources. However, such decision shall be taken
considering the merit of the stores and previous efforts made to develop further
sources (periodicity three years).
v. To review the list of critical stores for decision taken under above para.
vi. Identify the activities for outsourcing.
vii. Review of all BNE (Buyer's Nominated Equipments) or User/Designer's

Designated Equipments used in the platform with regard to their availability &
pricing and suggest the actions to be taken as per procurement manual.
viii. Review of list of stores procured from all Public Sectors Units (PSUs) and take
appropriate decision to develop alternate sources through SD-OTE considering
the facts: (a) supplies from these PSUs in accordance with production schedule of
the unit (b) rates reasonability (c) after sale service during warranty and
thereafter.
ix. Review of all stores procured on SKS/PAC basis and suggest the future course of
action so that the scope for competition can be explored.
\ y#y\,
VII. PURCHASE PROCEDURE
1. Authority of Procurement: Contracts/Deemed Contract/Agreements signed with

any customer including with Units under AVNL and DPSUs, Supply Plans issued by
AVNL and Purchase Requisition raised by the user section are the required authority
for procurement.
2. Specification: Every authority delegated with the financial powers of procuring
goods in public interest shall have the responsibility and accountability to bring
efficiency, economy, and transparency in matters relating to public procurement and
for fair and equitable treatment of suppliers and promotion of competition in public
procurement. The procedure to be followed in making public procurement must

conform to the following yardsticks :
i. The description of the subject matter of procurement to the extent practicable

should be objective, functional, generic and measurable and specify technical,
qualitative and performance characteristics.
ii. Where applicable, the technical specifications shall, to the extent practicable, be
based on the national technical regulations or recognized national standards,
wherever such standards exist, and in their absence, be based on the relevant
international standards.
iii. All procurements have to meet the stringent specifications prescribed. In addition
to qualitative requirements, the specifications indicate the detailed qualitative
requirements of the item being procured and shall indicate all relevant
requirements/parameters like: (i) material composition (ii) physical (iii)
dimensional (iv) performance (v) tolerances (if any) (vi) manufacturing process
(where applicable) (vii) test/inspection schedule (viii) acceptance criteria (ix)

preservation & packing (x) transportation requirements (especially relevant for
chemicals), etc, without any superfluous requirements that may have the effect of
stifling competition or increasing expenses.

~
\ry4n,
iv. AHSP/Specifications promulgating authority should periodically forward copies
of specifications/amendments to all agencies concerned to ensure that goods of
current specification are purchased.
2.1 Proprietary Article Specification: These are available only with the proprietary
firm (OEM) and are protected by the intellectual property rights. PAC specifications
are normally not available with the purchaser and therefore these stores may be
accepted based on the firm's certificate of quality.
2.2 Branded Product Specification (Reference to Brands in specification): To the

extent possible, broad-based specifications, use of industry standards in the
specification, etc., will promote healthy competition in procurement. Therefore, a
specific brand or catalogue number of a brand, etc. should not be referred to in the
tender. However, in some unavoidable situations (while purchasing the spare parts
required for machine/equipment, transport vehicle, inserts for specific cutting tool
holders) if it is essential to buy an item of a specific brand name, then LTE shall be
issued to all known authorized dealers for that brand or OTE to be resorted to get
competitive offers from authorized dealers. The specifications for branded
commercial product are not available with the purchaser or the inspecting agency and
these are to be accepted on the firm' s guarantee/warranty and certificate of conformity.
2.3 Industrial Specifications: There are standard industrial specifications like: IS, BS,
DIN and GOST available for sale in the market. In the case of medical stores standard
specifications are issued by WHO, FDA, CE etc. Every procuring and inspecting
agency should acquire such specifications for reference to ensure quality standard of
the product being procured.
2.4 Defence Specifications: There are defence specifications for specific items for
use by the defence departments, particularly the defence services. These are Joint
Services Specifications, Mil-specs, etc. Copies of such specifications should be
available with the procuring agency, inspecting authority and the AHSP.
n,
2.5 Indigenized Item Specification: The manufacturing agency, QA agency, DRDO,
AVNL and Service Headquarters, involved in the indigenization efforts often
successfully indigenize some items as import substitutes. In such cases, the
specifications, including the drawing and other details, are formulated by these
agencies in consultation with the user, manufacturing firms, and QA agency, Design
agency, Service Head Quarters (as the case may be) to guide future production. Such
specifications should be available with the purchase agency as well as the inspecting
authority so as to ensure conformity with the required quality standards of the items
being supplied.
2.6 Ad-hoe Specifications:There may be items for which neither the industrial nor
the defence specifications are available. In such cases, the Indentor must indicate the
general parameters, normally the dimensions, mechanical parameters, chemical

composition, performance parameters, etc. to enable procurement and inspection.
Such ad-hoc specifications must be broad enough to permit wider participation by the
suppliers and should not be restrictive.
2.7 As per Sample Specification: There are occasions when items, normally PAC
products, cannot be procured from the original manufacturer and have to be procured
from another manufacturer as per sample in the absence of detailed specifications or
drawing. For such items, the supplier prepares detailed specifications as well as the
drawing and gets it approved by the purchaser. The purchaser and the inspecting
authority should acquire such specifications and drawings and retain with them to
guide future production and inspection.
2.8 Common Use Items Specification: There are a large number of items used by the
AVNL units which are common/generic in nature, freely available in the open market.
As in the case of ad-hoc specifications, specifications of common use items should
also be broad enough to permit wider participation by the suppliers and should not be
restrictive to stifle competition.
3. Store Holders Inability/Material planning Sheet: For procurement of any item a
Store Holder Inability Sheet (SHIS)/Material Plarming Sheet (MPS) shall necessarily
be prepared, duly indicating the requirement, present stock, dues and the net
requirement. The Store Holders Inability Sheet and the Material Plaming Sheet
together provide the complete details of the computation of quantities to be procured.
Normally, the amual requirement is taken into consideration for preparation of
SHIS/MP Sheet. The reference to annual requirement in respect of direct material
shall include the requirement for the flrst quarter of the subsequent year. SHIS/MPS
for multiple year requirements can also be generated wherever relevant. Attention
shall be paid to the shelf life (where relevant) of the item to eliminate avoidable losses
in storage. In such cases staggered deliveries should necessarily be resorted to.
Following guidelines to be followed in respect of SHIS/MPS:
i. If valid labour estimate exists in the AVNL Units for the item (or operation)
being procured (or outsourced) from trade then justification for the procurement
(or outsourcing) shall be recorded, and the Unit shall ensure that payments for the
same work (or operations) are not claimed for departmental labour also.
ii. The SHIS/MPS has to be vetted by QC/Pattern Offlce/Design Office/Standard

Cell for the technical specification to ensure that material is procured as per the
latest drawings/ technical specifications.
iii. Direct material SHIS/MPS is not required to be vetted by the Finance but to be
signed by the Group In charge.
iv. SHIS/MPS will have a life of 12 months (i.e. SHIS generation to issue of tender)
and will need re-validation thereafter by Group Officer of Material Plarming
Section.
v. The cases where contracts are delayed or existing supply orders not likely to
fructify, then to save time, procurement action can be initiated on provisional
y4nv
SHIS/MPS and can be processed up to Tender opening stage with the approval of
Head of Unit.
4. Quantity to be Purchased: Following guidelines shall be followed while deciding

the quantity to be procured:
4.1 Direct Material: The procurement for all direct materials would be taken based
on the delivery schedule indicated in the contracts/agreements entered into by AVNL
or its units. This procurement could be covering one year or multiple years
requirement. The VSL TPC shall, as a part of due diligence, after considering the
nature of the store, lead-time & difficulty involved in procurement, vendor
development, need for indigenization etc. take an appropriate decision as to whether it
would be prudent or/and advantageous to procure:
i. The amual requirement or part ofarmual requirement or
ii. The multi-year requirement. However, prior approval of the Director Operations
shall be taken for initiating any multi-year procurement.
4.2Multi-Year Procurement Procedure (Long-Term Umbrella Agreement) for

MT0 Stores:
I. Such Agreement/Contracts may be concluded up to Five years for MTO items with
suitable PV clause, if required.
II. Such Agreement/Contracts shall be on agreed delivery schedule/period

commensurate with production program.
Ill. Such Agreement/Contracts may even be concluded at the same rate parallel with
multiple vendors to ensure reliability, continuity and ease of supply.
IV. CFA in such Agreement/Contracts shall be decided on the basis of total tendered
quantity of contract years.
\ny a"v
4.3Indirect Material: Procurement of indirect materials (not required directly for
production) shall be made on the basis of monthly average consumption during the
preceding 24 months, duly making an allowance for relevant factors like the quantum
of production, machines being utilized, product-mix, etc. For new indirect materials
the necessity for procurement shall be approved by the Head of the Unit.
4.3 Quantity Justification: The Vendor Selection TPC shall also deliberate on the
justification for the quantities proposed for procurement and record such decision
taken for all items (direct & indirect).
4.4Provision for Excess Procurement: There may be a case where despite covering
full requirement (as per available contract) through supply order (s), the materials are
not being supplied by the suppliers as per contractual schedule. For such cases, if it is
feasible to manufacture the item in-house, the required raw materials or any other
inputs, covering up to 25% of the supply order (s) qty can be purchased additionally
withthepriorapprovalofDirector(Operation),AVNL,withoutcancelingtheexisting
supply order. This additional provisioning, as mentioned in this para, can also be done
via means of outsourcing the required store from other established supplier.
5. Procurement Lead Time: Timely procurement action should be initiated duly

taking into account the procurement lead-time and the production throughput-time so
that the end-product issue plan matches with the requirement projected by the
Indentor. Apart from initiating timely action, the case shall also be processed
expeditiously at every stage of examination and the model time-frame as decided by
the respective units shall be complied with.
5.1 Prompt and timely action should be taken, for both indigenous as well as imported
items, so that stock-out situations are avoided to ensure continuity of production while
at the same time maintaining the overall SIH inventory within the authorized limit.
\ty4th,
The authorized SIH inventory level is six months to one year for all AVNL units.
However, the overall inventory shall be maintained by the Units within the limit
specified by AVNL. A higher SIH inventory holding can be authorized under
exceptional circumstances by AVNL.
5.2 Stocking of COTS and Rate contract items are to be decided on the basis of
contract terms and conditions (should not be more than 6 months).
5.3 In the event of any AVNL unit holding inventory in excess of their authorized
limit, the unit shall work out a time-bound action plan for liquidation of the excess
inventory.
5.4 The unit shall closely monitor & progress the action plan duly associating the
Financial Advisor.
5.5 AVNL shall also monitor the progress of liquidation on yearly basis.
5.6 Since procurement of stores is based on the SHIS with the deflciency being
worked out after considering the stocks, work-in-progress (WIP) and dues, it will not
result in the procurement resulting in holding stock of the item in excess of the
requirement. However, any change in production programme of any end product due
to increase or decrease in demand or any other reason will necessitate mid-course
review.
5.7 The provisioning period comprises of: (i) the lead time, intended to cover all
actions right from assessment of net requirement up to completion of delivery by the
supplier, and (ii) the period of utilization, which is the production period during which
the entire ordered quantity (including the stocks and dues existing at the time of the
provisioning action) will be utilized for meeting the production target. Normally the
period of utilization is 12 months ®lus the first quarter of the subsequent year).
6. Stockpile: Stockpile is an emergency reserve of imported and difficult to procure

indigenous stores clearly identified as such, held for the puapose of enhancing the
\y4o/
responsiveness of production units to unexpected demand surges and stock out
situations. Once an item is identified for stockpiling and its quantity determined, the
competent authority shall be approached for sanctioning the stockpile creation.
Maximum permissible Stockpile for imported and difficult-to-procure indigenous
stores is 12 months and 8 months respectively, unless otherwise higher levels have
been specifically authorized by AVNL through a separate order.
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VIII. MODES OF PROCUREMENT AND SELECTION
Tendering method should be flexible enough to accommodate different procurement

methods. The most transparent method is to allow all the potential suppliers to
participate in the tendering process without limitations. However limited tendering is

justiflable wherever it is not feasible or efficient to consider and evaluate large
number of potential suppliers considering the complex nature of the store. The limited
tendering should be equally transparent and to be conducted in accordance with the
procedures laid down in this manual. Selection of suppliers for limited tendering
should ensure that items planned for procurement is in the supply range of the bidders.
The procurement of non-project material (indirect items) through Proprietary/single
tendering could be used only in exceptional circumstances since the selection criterion
for suppliers are not available. Once in every year review of the items procured on
proprietary/single tender to be made and the scope for competition to be explored. An

Empowered Committee of Procurement needs to be constituted with the approval of
Head of the Unit to carry out the review. This chapter principally deals with the
procurement through tendering.
1. Purchase Through Tendering: Procurement of stores by obtaining tenders shall

be done by adopting the following standard methods. These standard methods shall
also apply for procurement of services, subject to other instructions contained in this
Manual being followed.
i. Advertised Tender Enquiry (OTE/ GTE)

ii. Limited Tender Enquiry (LTE)
iii. Single Tender Enquiry (STE)
iv. Proprietary Article procurement
v. Single Known source (SKS)
vi. Electronic Reverse Auction
\ty&flv/
2. Tendering (e-Procurement): In stores procurement all tendering shall be done
I
through e-procurement mode only. The Manual Tendering, in exceptional cases, be

resorted only after obtaining prior concurrence of Director (Operation) - AVNL,
citing reasons for such exemption. I
3. Open Tender Enquiry/Global Tender Enquiry: Open Tendering is the most
preferred method to be followed. Open tendering is a system whereby even nonL I
registered vendors are free to participate and allowed to quote against the tender
I
advertised on the GeM, CPP Portal, and AVNL website. In case the procurement is
I
intended to be on global basis then the tender to be advertised in the Indian Trade
Journal/Indian Export Service Bulletin (IESB). In addition, copies of the tende+
documents may be made available to the Indian Embassies in potential vendqr
I
countries abroad for issuing the tenderers besides making the documents available tb
I
the Trade Commissioners of Foreign Embassies in India. In open tendering, all the
known and possible sources for the supply of the particular material are made aware
of the requirements by sending to them a copy of the advertisement. The
advertisement is also to be hosted in the AVNL's website. The purchase section to
ensure that the complete bid document should be available on the website, till last date
of submission of tenders, for purposes of downloading. This system (OTE/GTE) is
not mandatory for purchase of production items from already approved/proprietary/
developed sources and also where Licence Agreements/Long Term Contracts are in
force besides such other items where prices are controlled / administered by the
Goverrment.
Procurement by advertisement should normally be used for procurement of stores
(other than Made-to-Order (MTO) stores) with an estimated value more than Rs.25
lakh, subject to the exceptions prescribed in this Manual. OTE procurement may also
be with a pre-qualification requirement. OTE being the preferred mode for
procurement, the CFA may resort to it even in those cases where other modes for
\v4y\v
procurement from trade have been prescribed in this manual. No manual tendering for
OTE/GTE cases.
4. Source Development: The source development OTE (SD-OTE) is done to develop

new sources for both MTO & COTS items.
5. Limited Tender Enquiry [for Store Value< 25 Lakh]: LTE may be adopted (for
other than MTO items) when estimated value of stores to be procured is up to Rs.25
lakh (including the OC quantity). Tender should be issued (only through e-
procurement mode) free of cost simultaneously to all the firms, which are borne on
the list of registered suppliers or established suppliers for the stores after due
consideration of their past performance/ response, if any. The number of supplier
firms in LTE should invariably be three or more [GFR-2017, Rule-162]. Efforts
should be made to identify a higher number of approved suppliers to obtain more
responsive bids on competitive basis. LTE can be issued to foreign vendors also.
Sufflcient time should be allowed for submission of bids in Limited Tender Enquiry
cases [GFR-2017, Rule-162]. Further, an organization should publish its limited
tender enquiries on Central Public Procurement Portal (CPPP) as per GFR-2017,
Rule-159. Apart from CPPP, the organization should publish the tender enquiries on
the Department's or Ministry's websites. In the case of procurements made though
DGS&D Rate Contracts (GeM) or through any other Central Procurement
Organizations (CPOs) only award details need to be published. These instructions
would not apply to procurements made in terms of provisions of Rules 154 (Purchase
of goods without quotations) or 155 (Purchase of goods by purchase committee) of
General Financial Rules.
6. Limited Tender Enquiry [for Store Value >25 Lakh]: Purchase through LTE
may be adopted (for other than MTO items) when the estimated value of the
procurement is more than Rs.25 lakh (including the OC quantity), in the following
circumstances, with the approval of Head of Unit (If CFA is Head of Unit, then
approval of next higher CFA) :
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i. The competent authority certifies that the demand is urgent and any additional
expenditure involved by not procuring through advertised tender enquiry is
justified in view of urgency. The competent authority should also put on record
the nature of the urgency and reasons why the procurement could not be
anticipated earlier.
ii. The sources of supply are definitely known and possibility of fresh source(s)
beyond those being tapped is remote.
iii. The item to be procured is such that pre-veriflcation of competence of the firm is
essential, hence requires registration of firms.
iv. To prevent stock out situations, to cater unforeseen requirements of the Armed
Forces/ MHA and on the ground of national security as per directive of MOD. The
CFA shall certify and record justification.
7. Limited Tender Enquiry [for MT0 Store Value <25 Lakh]: If the estimated
value of the proposal for a MTO item, is up to Rs. 25 lakh (including the OC quantity),
then the entire deficient quantity may be procured through LTE without insisting on
Source Development Open Tender Enquiry (SD-OTE), provided there are minimum 3
established vendors with valid registration and no cartel is suspected (to be recorded
after due diligence by the relevant TPC). If the number of established & registered
vendors is less than 3, then, established & registered vendors for the same range of
products/ goods/ services/ technology can also be included for the LTE. If the number
of established vendors with valid registration for the same range of products/ goods/
services/ technology is less than three or cartel formation is suspected / confirmed,
then procurement shall be done as per the procedure detailed for MTO items in the
Chapter- XI. Further, an organization should publish its limited tender enquiries on
Central Public Procurement Portal (CPPP) as per GFR-2017, Rule-159. Apart from
CPPP, the organizations should publish the tender enquiries on the Department's or
Ministry' s websites.
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8. MTO Store Procurement [Store Value >25 Lakhs]: If the MTO procurement is
above Rs. 25 lakhs (including the OC quantity); or (ii) there are less than 3 established
vendors with valid registration for the same range of products/goods/services/
technology or (iii) cartel formation is suspected/confirmed, then procurement will be
done as per the procedure detailed for MTO items in the Chapter-XI.
9. Limited Tender Inquiry & Last Supplier: In all LTE cases, it is mandatory to
include the name of last supplier unless the performance in terms of delivery, quality
etc has been recorded unsatisfactory.
10. Single Tender Enquiry (STE): When the purchase is finalized on the basis of an
offer from a single source, it is called a `Single Tender Purchase'. It needs to be
recognized that the competition is totally eliminated and the possibility of paying
higher prices cannot be ruled out. It is imperative that the purchase on single tender
basis be made with the detailed justification in its support and with the approval of
Competent Authority, including associated finance. Therefore, this mode of purchase
should be resorted to only in unavoidable situations. Purchase through STE may be
adopted when:
i. It is in the knowledge of the user (for indirect item)/ purchase department (for
direct material) that only a particular firm is manufacturing the required stores.
The reason for arriving at this conclusion is to be recorded and approval of the
competent authority obtained.
ii. In a case of emergency, the required stores are necessarily to be purchased from a
particular source, subject to the reason for such decision being recorded and
approval of the competent authority obtained.
iii. For standardization of machinery or components or spare parts to be compatible

to the existing sets of machinery/equipment (on the advice of a competent
technical expert and approved by the competent authority), the required goods are
to be purchased only from a selected firm.
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iv. The relevant Proprietary Article/ Single Known Source Certificate (in the format
given at the end on this Manual) should be provided by the CFA as per the DOFP
before procuring the stores from a single source under the provision of sub-
paragraphs (i) & (iii) above as applicable.
v. Suitable tender document, containing required terms & conditions are to be

issued to the selected firm for preparing and sending its quotation. The question
of `late tender' as well as elaborate process of receipt & opening of tender, as
applicable for advertised tenders and LTE, will not apply in case of procurement
through STE.
vi. PAC/ SKS sources at times do not accept some of the standard tender conditions.
In such cases, the firms should be persuaded to comply with the standard terms &
conditions. If they are still unwilling to accept the standard terms & conditions,
then, since no other alternative source is available, HOD (for unit level cases) &
Director-Operation (for AVNL level cases) can grant relaxation/ exemption. In
such cases of SKS procurements, the AVNL unit shall necessarily increase its
efforts to develop alternate sources.
vii. In case of repetitive STE for speciflc stores, the efforts made in the past to
develop alternate sources be recorded while issuing SKS/PAC Certificate.
viii. Once the SKS/PAC certificate is issued by the Competent Financial Authority in
consultation with Finance, Vendor Selection (VSL-TPC) TPC becomes redundant
and therefore no such VSL TPC is required.
11.Proprietary Article Procurement: Certain items, particularly

equipments/machine spares, are the propriety product of a manufacturing firm. Such
items are only available with that flrm or their dealers or distributors since detailed
specifications are not available to others for manufacturing the item. Situations may
also arise when, for standardization of machinery or ensuring compatibility of spare
parts with the existing sets of equipment, goods and services have to be obtained from
a particular source. In such situations, a Proprietary Article Certificate may be issued
\ ry 6T)V
to the original equipment manufacturer (OEM)/Authorized Dealer and items procured
on PAC basis from that particular firm or its authorized dealers or distributors.
Following guidelines to be followed for PAC purchases:
i. While PAC is issued in favour of the concerned OEM, the item to be purchased
from OEM only (not through authorized dealer).
ii. In case the OEM insists that purchase to be made through an authorized
dealer/system-house/system-integrator, the PAC to be issued in the name of
dealer authorized by OEM, only and only when the OEM has one dealer in the
country (India).
iii. In case the OEM insists that purchase to be made through an authorized
dealer/system-house/system-integrator and the OEM has multiple dealers in the
country, no PAC shall be issued in the name of a specific dealer and LTE/OTE to
be resorted, giving equal opportunity to all authorized dealers.
iv. In case of procurement through dealer, the purchaser must insist for documents: (i)
Authorized Dealer Certificate issued by OEM, (ii) and Certificate of Originality
of the store issued by OEM.
v. The purchase will be made as per the DOFP for PAC cases. These provisions
would also apply to repairs and servicing of equipment through the OEM/sole
dealer/servicing agency, authorized by the OEM (as the case may be).
vi. PAC bestows monopoly and obviates competition. Therefore, PAC status should
be granted only after careful consideration of all relevant factors like fitness,
availability, standardization and value for money. The CFA for issuing PAC shall
be as notified in the DOFP.
vii. It is common for OEMs to outsource their components/sub-assemblies/

assemblies and not manufacture these themselves. Hence, such items may be
available at a cheaper price with the actual manufacturers. The indenting/
procurement officers must, therefore, keep abreast of the probable sources and
may procure items from the right source to protect the interest of the State.
However, machinery spares should be sourced only from the OEM or OEM
approved/recommended manufacturers to make the OEM responsible for
malfunctioning, if any, of the main equipment in which the spares will be fitted
beyond warranty period.
12. Procurement from a Single Known Source: New sources are to be developed
through Open Tender Enquiry (OTE). At times OTEs may result in development of
only one source. Pending development of more sources, 80% of requirement with
25% option clause may be procured on Single Known Source mode on the basis of an
SKS Certificate to be issued in the prescribed format by the Competent Authority
notified in the DOFP. The balance 20% of the requirement may be procured through
SD-OTE, without option clause.
13. RC concluded by AVNL: AVNL may, where feasible, conclude Rate Contracts
(RCs) through OTE on a 2- bids system for stores of standard type that are identified
as common items and are needed on recurring basis by its units. RCs can be finalized
through LTE with PSUs in respect of items which are known to be manufactured only
by them. The AVNL units, as Direct Demanding Offlcer, can procure the items under
the RC concluded by AVNL. The AVNL units can also conclude RCs under their
delegated powers, if such RCs not covered by AVNL. When such RCs are concluded
the specifications, prices and other salient details of the rate contracted items shall be
posted on the common website, and appropriately updated, for use by all units under
AVNL. The RCs concluded by the AVNLrunits shall be operated to the maximuni
extent possible.
14. LicensorELicense Agreements: Tender is addressed to only Licensor/ Licensor

nominated sources, and designated sources based on inter Goverrmental Agreements
and General Contracts approved by Government of India. In case of License
Manufacture, the licensor's document invariably indicates the details of items and the
specific OEMs/Vendors from whom these items are to be procured. Procurement from
Licensor nominated sources will be treated as proprietary, unless otherwise special
financial powers have been delegated as per DOFP.
15. Procurement under Licence Agreement & Manual Tendering: All
procurements from the Licensor (OEM of Technology Provider) or procurements

under Licence agreement/Joint Ventures/Designers/Buyer' s Nominated Equipments
can be done via Manual Tendering (without prior approval of Director/Operation-
AVNL), if the vendor doesn't agree for e-procurement.
16. Procurement from Customer Nominated Source: This mode of single source
procurement is resorted to from a specific source nominated by name in writing by the

customer. The following care should be taken while resorting to this mode of
purchase:
i. Procurement from customer nominated source can be resorted to only in case the
purchase order/contract with the customer provides for such nomination by the
customer. The same shall be regulated in the following manner.
ii. Reference of specific part numbers of OEM in respect of BNE the contract
entered with customer can be considered as basis for procurement of stores on
SKS/PAC.
iii. In case the nominated vendor quotes uureasonable price/Terms and Conditions
and does not agree for reduction and waiving of uureasonable conditions, Unit
should take up the matter with the customer for their concurrence to accept price /
terms and conditions of the vendor. Accordingly, Unit to be compensated for
extra cost incurred due to customer nominated items.
iv. It should be ensured that the customer nominated source essentially originates
from the customer.
v. Procurement from customer nominated single source shall be done as per Single
Known Source/PAC.
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17. Electronic Reverse Auction (ERA): Electronic Reverse Auction means an
online real-time purchasing technique utilized by the procuring entity to select the
successful bid, which involves presentation by bidders of successively more
favourable bids during a scheduled period of time and automatic evaluation of bids
GFR-2017,Rule-176].
17.1 Criterion for Electronic Reverse Auction: A procuring entity may choose to
procure a subject matter of procurement by the electronic reverse auction method, if:
i. It is feasible for the procuring entity to formulate a detailed description of the

subj ect matter of the procurement.
ii. There is a competitive market of bidders anticipated to be qualified to participate

in the electronic reverse auction, so that effective competition is ensured.
iii. The criteria to be used by the procuring entity in determining the successful bid
are quantifiable and can be expressed in monetary terms.
17.2 Procedure for ERA: The procedure for electronic reverse auction shall include
the following, namely:
i. The procuring entity shall solicit bids through an invitation to the electronic
reverse auction to be published or communicated in accordance with the
provisions similar to e-procurement; and
ii. The invitation shall, in addition to the information as specified in e-procurement,

include details relating to access to and registration for the auction, opening and
closing of the auction and Norms for conduct of the auction.
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18. Procurement from Defence Public Sector Undertakings: Goods and Services
may be procured from Defence Public Sector Undertakings through tender. Any items
developed / manufactured by a Defence PSU specifically for the Defence Services,
with transfer of technology or through design and development, should be procured
from the concerned Defence PSU only. Similarly, Defence PSUs shall be approached
for providing any service, such as repairs and overhauling, if facility for providing
such services has been set up by a Defence PSU exclusively for the Defence Services.
The nature of such procurement (STE/PAC), however, shall be decided as per DOFP
of AVNL. Reasons for invoking this provision shall be recorded. However, this clause
shall not be applicable once the decision is taken by the Empowered Committee of
Procurement (ECoP) to develop alternate sources for a specific store (Para-5,
Chapter-VI).
18.1 For cases other than category stated above, Defence Public Sector Undertakings
(or Central Govt. Public Sector Undertakings) will have to bid for contracts through a
tendering process open to private sector enteaprises, for supplying goods and services
to AVNL.
IX. PROCUREMENT 0F STORES FROM OTHER UNITS
0F AVNL
1. Introduction: In addition to the procurement of stores from the trade, many direct
items/stores/services are being manufacture and supplied by the sister units of AVNL
to the final issuing Unit. And therefore, this particular chapter deals with procurement
of stores and services from the Units under AVNL.
2. Demand Generation: Formal Material Planning Sheet (MPS) shall be generated

based on Contracts/Deemed Contract/Agreements and the same shall be processed as
per procedure laid down in this chapter. However, this procurement activity shall be
dealt by the Planning Section of the respective Units.
3. Methodology: Following methodology shall be followed by all AVNL Units while

sourcing the stores from the sister AVNL Units:
i. No tendering to be resorted for procurement of stores from units under AVNL.
ii. Separate IFD shall be placed for each store/service.
iii. The demand, in the form of IFD, can be placed by the Indenting Unit on the
Supplying Unit (s) for full contract quantity along with monthly & yearly supply
schedule so that the supplies can be planned in a more efficient manner.
iv. Since there is no tendering (competitive bidding) mechanism is in place for
procurement of such stores, the cost ®ricing) and other terms & conditions shall
be decided by AVNL HQ on yearly basis at the beginning of every financial year.
v. Any store (s) developed / manufactured by a AVNL unit (s) speciflcally for the
other AVNL Unit, with transfer of technology or through design and
development, should be procured from the concerned AVNL Unit (s) only.
vi. Similarly, the Unit shall be approached for providing any other service, such as
repairs and overhauling, if facility for providing such services has been set up by
the supplying Unit exclusively for the other Unit (s).
vii. All Units of AVNL shall create a template in their PPC (Information
Management System) in line with the IFD format specified in this chapter for
data mining and analysis.
viii. The indenting unit can resort to the tendering process for procurement of such
stores with prior approval of Director (Operation), AVNL, giving grounded
reason for doing so (this situation may also arise if the supplying unit is not in a
position to accept the IFD & supply the stores as demanded).
ix. However, before seeking the AVNL approval for resorting to tendering, the
subject matter shall be deliberated by the ECoP of the concerned unit and the
decision of the committee shall be communicated well in advance to the Unit
Head of the supplying Unit.
x. Head of Units (indenting & supplying) shall make all possible efforts to resolve
the issue related to IFD supplies at their level before approaching AVNL.
4. placement of Demand: Indenting Unit of AVNL (user), after ensuring that the
particulars mentioned in the Inter Factory Demand (IFD) are correct, shall place IFD
on the supplying unit in the prescribed form giving, inter-alia, following particulars:
i. Related contractNo and Date
PROCUREMENT MANUAL (STORES & SERVICES) -2021 55 .,,
\tJelvi
ii. Correct nomenclature of the stores demanded together with the relevant
manufacturing particulars etc.
iii. Purpose for which the stores are required
iv. Delivery Schedule (both monthly & yearly)
v. Indenting factory shall also provide the feeder factory all particulars/drawings/
specifications referred in the IFD and are required for execution of the IFD.
vi. Copies of IFDs should be endorsed, among others, to the concerned AHSP/QA of
indenting factory/Finance of indenting & supplying factories for necessary action
by these authorities.
5. Format of IFD: Following format shall be followed for sourcing the stores from
Sister AWL Units:
INTER FACTORY DEMAND

Demanding Unit with Code Supplying Unit with Code
SINo Description Entrymemark

1. Inter Factory Demand No:
2. IFD Date:
3. Description of Store
4. Part/Drg. No
5. Quantity
6. Cost (Price) in Rs
7. Date of Commencement of
Supply
8. Supply Schedule (Monthly)
9. Supply Schedule (Yearly)
10. Inspection Agency
11. IFD Vetting Authority with
Signature (Chief Financial
Advisor)
12. IFD Approving Authority with
Signature (Head of Unit)
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6. General Terms & Conditions: Followings are the general terms & conditions in
respect of stores being outsourced from sister AVNL Units:
i. The supplying Unit shall ensure that the Inspection Note has been issued by the
agency mentioned in IFD.
ii. The supplying Unit shall support the Indenting Unit towards repair/rectification
and service support as and when demanded with or without financial obligation,
as the case may be.
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X. PROCUREMENT WITHOUT TENDERING
1. Cash and Carry Procurement: Cash and carry purchase is resorted to in cases of
extreme urgency or when the supplier is not willing to supply the required item on
credit. Such procurement should be made only in exceptional cases. The cash
payment is initially made from the Imprest fund of the unit and the same, on being
claimed, is reimbursed by the paying authority after due audit of the transaction. This
class of purchase does fall under the category Purchase of goods/services without
quotation (tendering). Purchase of goods/services up to the value of Rs. 25,000

(Rupees twenty five thousand) only on each occasion may be made without inviting
quotations or bids on the basis of a certificate to be recorded by the competent
authority in the following format [GFR-2017, Rule-154] :
Cemfj+cute.." I am personally satisfied that these goods/services purchased are Of the

requisite quality and specification and have been purchased from a reliable supplier
at a reasonable price. "
2. Purchase of goods/services by Purchase Committee (LPC): Purchase of
goods/services costing above Rs. 25,000 (Rupees twenty five thousand only) and up
to Rs.2,50,000/- (Rupees two lalch and fifty thousand only) on each occasion may be
made on the recommendations of a duly constituted Local Purchase Committee
consisting of three members of an appropriate level as decided by the Head of the
Unit. The committee will survey the market to ascertain the reasonableness of rate,
quality and specifications and identify the appropriate supplier. Before recommending
placement of the purchase order, the members of the committee will jointly record a
certificate as under [GFR-2017, Rule-155] :
\ 1 &nJ
Corariroate.. "Certified that we, members Of the purchase committee, are jointly and
individrally satisfied that the goods recommended fior purchase are Of the requisite
specification and quality, priced at the prevailing market rate and the sapplier
recommended is reliable and competerit to supply the goods in question, and it is not
debarred by Department Of commerce or Ministry/ Department concerned. "
3. Purchase Through GeM: Government of India has hosted an online Government

e-Marketplace (GeM) for co]rm.on use Goods and Services. As per Rule 149 of GFR
2017, GeM has been made mandatory for procurement of Goods and Services
available on GeM. The procuring authorities will certify the reasonability of rates.
The GeM shall be utilized by all the Units of AVNL for direct on-line purchases as
per procedure given below:
i. Up to Rs 25,000/-through any of the available suppliers on the GeM, meeting the

requisite quality, specification and delivery period.
ii. Above Rs. 25,000/- and up to Rs. 5,00,000/- through the GeM Seller having
lowest price amongst the available sellers (excluding automobile where current
limit of 30 lalch will continue), of at least three different manufacturers, on GeM,
meeting the requisite quality, specification and delivery period. The tools for
online bidding and online reverse auction available on GeM can be used by the
Buyer if decided by the competent authority.
iii. Above Rs. 5,00,000/- through the supplier having lowest price meeting the
requisite quality, specification and delivery period after mandatorily obtaining
bids, using online bidding or reverse auction tool provided on GeM (excluding
Automobiles where current limit of 30 lakh will continue).
iv. The invitation for the online e-bidding/reverse auction will be available to all the
existing Sellers or other Sellers registered on the portal and who have offered
their goods/services under the particular product/service category, as per the
terms and conditions of GeM.
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v.
in
The above mentioned monetary ceiling is applicable only for purchases made
through GeM. For purchases, if any, outside GeM, relevant provision of this
Procurement Manual shall apply.
vi. The Government Buyers may ascertain the reasonableness of prices before
placement of order using the Business Analytics (BA) tools available on GeM
including the Last Purchase Price on GeM, Department's own Last Purchase
Price etc.
vii. A demand for goods shall not be divided into small quantities to make piecemeal
purchases to avoid procurement through L-1 Buying / bidding / reverse auction

on GeM or the necessity of obtaining the sanction of higher authorities required
with reference to the estimated value of the total demand.
viii. The detailed guidelines issued by Ministry of Defence/Ministry of Expenditure

from time to time to be adhered to with respect to procurement through GeM.
4. AVNL Rate Contract: The Corporate Office of AVNL shall, except in case of
purchase of production items from already approved/proprietary/developed sources

and where License Agreements/Long Term Contracts are in force, to the maximum
extent possible, enter into Rate Contracts for items which are commonly used by
different units of AVNL. Such contract should be made with reliable and established
sources of supply after obtaining competitive offers through Open Tender. The
advantages of this arrangement are:
i. Supplier is assured of expected volume of business and hence can offer better
prices.
ii. AVNL is assured of continuous supply as per requirement.

iii. Assurance of sustained quality supplies.
iv. Effective controls on inventory buildup.
v. Purchasing cost is kept low.
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5. AVNL Licence Agreements: At the time of finalization of licence agreements,
Purchase Agreements are also entered which enable AVNL or its units to procure its
requirements without calling for offers. The Purchase Agreement is valid for the
period of main Licence Agreement and an agreed escalation clause governs the prices
applicable on supplies to AVNL or its units.
PROCUREMENTMANUAL(STORES&SERyl:E%0:,
XI. PROCEDURH FOR COTS ITEMS
1. The standard procurement procedure contained in the preceding Chapter-VIII
(Mode of Procurement and Selection) shall apply while procuring other than MTO
items. Advertised OTE shall be the preferred mode for procurement of common use
items/commercial specifications which are readily available in the market from a wide
range of sources/vendors. However, depending on the value of the procurement the
appropriate mode of procurement i.e. OTE, LTE, STE, RC, CP (Cash-Purchase) and
LPC as contained in the Manual may be followed within the financial limits specified
therein. In procurement of direct material (falling in the category `other than MTO')
through LTE, only established vendors with valid registration as per the SOP for
vendor registration shall be allowed to participate.
2. Under advertised tenders (OTE/GTE), procurement shall be made through OEMs/

Manufacturers or their authorized dealers/distributors, if it is the policy the OEM/
Manufacturer to deal through their authorized dealers/distributor.
3. Similarly, in case of imported stores including raw material/tools & gauges/

machinery spares, the procurement can be made through authorized dealers/entities if
the OEMs/ Manufacturers deal through them.
4. The long term requirement, if known, shall be indicated in the tender notice/ tender
to attract more firms to quote.
5. Sometimes, due to short shelf-life, high volatility or high storage losses, difficulties
are experienced in procurement, and vendors also normally provide very short validity
for their bids. These items being commercially available there are normally adequate
number of sources in the market. Therefore, there may not be a need for any special
source development exercise. In such case, procurement may be made from
registered/government licensed/ reputed vendors through LTE issued to minimum
three vendors. Considering the shelf-life and storage losses, the VSL TPC, after duly
PROCUREMHNT MANUAL (STORES & SERVICES) -2021
\rv&T\U
recording reasons, shall decide the optimal frequency at which the procurement will
be made.
6. For limited tender enquiry of COTS items, para 5 & 6 of the Chapter-VIII may be
referred.
7. Against OTE, (other than MTO) items shall be procured generally through GeM,
however competent authority (i.e. relevant TPC as per DOFP of AVNL) may decide to
buy through other mode of e-procurement/ paper tender after following the relevant
instructions in the matter as notified by Gol from time to time. Level of TPC is
decided considering procurement value including option clause quantity.
8. For COTS items, the entire deficient quantity with 50% option clause may be
procured through OTE.
\y%v\`
XII. PROCEDURE FOR MADH-TO-ORDER STORHS
The challenges in procurement of Made-to-Order (MTO) items are many and complex
to handle. These challenges necessitate special procedure for MTO items to ensure
delivery of quality end-products according to the targeted production program. The
following procedure shall be followed for procuring Made-to-Order items:
i. The quantity to be procured is to be worked out as per para-4, Chapter-VII of this

manual.
ii. MTO items are manufactured against speciflc requirements and their sources are
limited. And therefore, in order to generate healthy competition, the source
development exercise shall necessarily be undertaken through Source
Development OTE so as to have adequate sources for a specific item. Advance
Vendor Registration (AVR) for new vendors should be done twice a year through
open advertisement during the lst fortnight of January and July of every year.
However, in addition, vendor can also apply for registration throughout the year.
If no response received in AVR or AVR not floated due to non availability of
requirement, then the unit may float SD-OTE in two bids.
iii. Vendors become established source for a particular item after securing order by
participation in a SD-OTE for the item and successfully delivering at least 60% of
ordered quantity against the supply order, and the same being accepted on
conformity to the qualitative requirements. However, supplies against subsequent
LTE orders shall be accepted subject to completion of the supplies under the SD-
OTE.
iv. Established vendors for aggregates, assemblies and sub-assemblies shall be

considered as established vendors for components and sub-assemblies that go into
making of the aggregate, assembly and sub-assembly.
\ty4vJ
v. The Option Clause (OC) is provided in the LTE (associated with SD-OTE) to
take care of the eventuality of the SD-OTE supplies not materializing in time for
meeting the targeted production. Accordingly, the OC shall be exercised when it
becomes evident that supplies from SD-OTE will not materialize in time for
meeting the targeted production. The OC may also be exercised in case the
supply plan/contract quantity has been enhanced from that considered while
calculating the net deficiency.
vi. If the value of the net deficiency worked out for a MTO item is up to Rs. 25 lakh
(including the OC quantity), then without insisting on SD-OTE, the entire net
deflciency may be procured through LTE provided there are minimum three
established vendors with valid registration and no cartel is suspected (to be
recorded after due diligence by the relevant TPC). If the number of established
vendors is less than three, then registered vendors for the sane range of products/
goods/ services/ technology can also be included for the LTE.
vii. MTO items are specialized items that do not have commercial application.
Therefore, keeping established sources active/alive is the most important aspect
of supply-chain-management. Established production lines in the trade remain
alive when established sources get periodical orders to keep their facilities active.
Thirming out orders on too many established sources has a potential risk of
established sources dying out due to non-availability of adequate work to keep
established facilities alive/active. To avoid such a situation, for MTO items more
than Rs 25 lakh (including option clause quantity), where three or more
established sources is existing for an item, the VSL-TPC, with prior approval of
Head of Unit (if Head of Unit is CFA, then next higher CFA), may decide not to
undertake further source development, provided the existing established sources
are not acting in collusion/ cartel. In such case the entire net deflciency may be
procured through LTE.
viii. For items other than those exempted from SD-OTE (as per para-vii) following
provision shall prevail:

a) 80°/o of the net deficiency shall be procured with a 25% option clause through
LTE issued to only established sources with valid registration. All the established
sources, including sources developed by other Units for that particular item, shall
be allowed to participate in the LTE.
b) Balance 20°/o of the net deficiency shall be procured without option clause
through SD-OTE following a two-bid system where established sources shall not
be allowed to participate. However, to prevent stock out situations and (or) cater
to unforeseen requirements of the Armed Forces/MHA and on the ground of
national security as per directive of MOD, LTE can be resorted to for even the
balance quantity. In such cases, approval of Head of Unit shall be obtained for
resorting to LTE.
c) With low volume/quantity, if considered necessary by VSL-TPC, LTE of 50%
quantity with 1000/o option clause and SD-OTE with balance 50% quantity
without option clause can be initiated.
ix. The efforts should be made to finalize the SD-OTE in a time bound mamer and
its progress be closely monitored.
x. If the Supply Order(s) placed against OTE is not being executed by the
supplier(s), even after DP extension (including staggered DP) and the material is
urgent, 25% extra quantity with 100% option clause may be procured through
LTE from the established and registered flrms. The decision to be taken by the
same TPC of supply order which is not being executed. However, resulting
excess procurement, if any, should be adjusted in subsequent procurement cycle.
xi. Normally, bids are not invited from both established as well as non-established
vendors in the same TE. However, where necessary this may be resorted after
recording detailed reasons for the same. In such cases the entire net deficiency
may be procured through OTE, following a two-bid system, and allowing
established and non-established sources to participate on a level playing field. In

ffiERE
\-1 e\Tiv
this context capacity assessment/verification of non-established or uuregistered
firms shall not be considered as un-equitable treatment, since capacities of
established firms are known from the fact that they have supplied the item, and
the capacity of firms are required to be verified prior to their registration.
However, the TPC, if considered necessary, is competent to seek fresh capacity
assessment/verification of established or registered flrms also.
xii. In LTE for a particular item, tender shall be issued to all established and
registered source(s), including sources developed by other units of AVNL/Ex
OFs/DPSUs/MOD/User for that particular item. In cases where established &
registered sources are less than three, LTE shall be issued to minimum two
established and registered sources. If the established & registered source is only
one, then procurement shall be on Single Known Source basis after rendering the
requisite SKS Certificate (or PAC if a proprietary item).
xiii. If distribution of quantity is necessary for having more than one source for
strategic reasons, the distribution ratio shall be indicated in the tender (60:40). No
distribution of quantity is permitted, if LTE has been issued to two established
sources.
xiv. Sources unambiguously approved for a particular item(s) by collaborators and

design agencies shall also be considered as established sources for that item. They
shall be subjected to the normal vendor rating as per SOP.
xv. SD-OTE will be on the two bids system wherein the technical bid will lay down
the qualifying criteria, such as minimum turnover of the firm, production
facilities, supplies of similar products made in required quantity/quality control
arrangements etc. The financial bid will contain (i) Item-wise price (ii) Details of
applicable taxes & duties and (iii) All other commercial terms & conditions.
xvi. Indication of the long term requirement, if known, shall be specified in the SD-
OTE to invoke interest in sources to quote.
\v4n,
xvii. Established sources for an item will not be eligible to participate in the SD-
OTE for that item. The status whether a firm is established or not shall be
reckoned as on the last date of the previous month in which vendor selection TPC
is held.
xviii. There may be attempts by established manufacturers/suppliers/sources for an

item to prevent new manufacturers/sources from being developed. Therefore
following precaution may be taken:
a. The open tender for developing new sources will be in two bid system, however
in the technical bid, only those firms will be short listed that have the capacity for
making/developing the said item in terms of machineries, capital, skilled
manpower, technology, etc.
b. Any quote that is less than 70% of simple average of the basic rate (LTE and
successfully executed SD-OTE/OTE) at which orders (excluding import orders)
have been placed over the preceding three years (reckoned from the date of tender
opening) shall be deemed as freak rate and rejected.
c. To have more firms developing an item and thereby improve the probability of
developing new sources in SD-OTE, the L-2 firm may be given 40% of the
tendered quantity on accepting the L-1 rates, provided this was indicated in the
tender.
d. If a firm on which source development order has been placed is unable to develop
the item within the specified time frame, existing provision of AVNL DOFP
should be followed.
e. In the re-tender (or the next OTE, if relevant as mentioned in preceding
paragraph), the firm that was unable to develop the particular item even with the
extended time-frame that resulted in the re-tender shall not be allowed to
participate.
\tyay\u
xix. To develop vendors for new items, development orders for value not exceeding
delegated powers contained in the DOFP, may be concluded when SD-OTE
efforts have not been successful.
xx. If two SD Supply Order (s) for an item have already been placed against SD-
OTEs (irrespective of availability of number of established vendors), further SD-
OTE will not be processed till any of these SD-OTE Supply Orders is completed/
short closed/canceled. The firm having one SD-OTE supply order is also not
allowed to participate in other SD-OTE for the same item, floated by the same or
any other unit of AINL.
xxi. The manufacturing of certain items sourced from the trade may require multiple
diverse technologies, e.g. manufacture of certain type of shells require forging as
well as machining facilities/technologies. Trade firms generally do not possess
the entire range of diverse technologies that are required for the manufacture of
such items. In such cases, the appropriate Vendor Selection TPC after due
deliberations may decide that firms not possessing required facilities with them,
but having agreement (self-declared by vendors) with other firms for these
facilities can also participate in the tender. This is subject to the assessment that
such bidding firm has adequate facilities to ensure the quantitative and qualitative
output as per the tender enquiry. In case the TEC/TPC considers it necessary, the
capacity of the firm(s) with whom the bidding firm has such agreement(s) can
also be verified for the facilities outsourced by the bidding firm. The bidder shall
facilitate such capacity verification. It should, however, be ensured that the
bidding firm has the capacity for the important operations in-house. The VSL
TPC should deliberate and decide, prior to issue of the TE, the facilities are
necessarily to be possessed by the bidding firm and should be duly incorporated
in the tender enquiry.
xxii. VSL TPCs may also consider for participation of firms those having
facility/capabilities of integration with testing facilities (System Integrators).
These flrms may not have manufacturing facilities but have agreement (self-

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PROCUREMENT MANUAL (STORES & SERVICES) -2021

Armoured Vehicles Nigam Limited (AVNL), Chennai-600054

PROCUREMENT MANUAL (STORES & SERVICES) -2021

2) AVNL Factories have the responsibility of ensuring timely supply of military

Avadi, Chennai-600 054. (Sanjeev Kishore)

PROCUREMENT MANUAL (STORES & SERVICES) -2021

-Klaus Schwab, founder and chairman of World Economic Forum

platforms/systems/sub-systems, offering level playing field to eligible and potential

envisaged by the Govt of India.

The Procurement Manual of an organization is a sacrosanct document which not only

procurement manual is prepared:

1. Duly aligning its principle with GFR-2017 & DAP-2020.

2. Encompassing the CVC guidelines issued from time to time.

4. Adhering to policies, guidelines, instructions issued by MOD, DIPP, MOF,

procurement (Preference to Make-in-India) order 2017, Ease-of-Doing-Business, level

PROCUREMENT MANUAL (STORES & SERVICES) -2021

9. All existing sops, guidelines, instructions, orders, shall be updated accordingly.

10. No modifications /amendments will be made to the AVNL Procurement Manual-

11. However, changes in policies issued by MOD/MOF and suitably communicated by

12. Any amendment issued shall be attached to the associated chapter/chapters by

PROCUREMENT MANUAL (STORES & SERVICES) -2021

A. Constitution of Draft Committee: The Armoured Vehicles Nigam Limited

(AVNL) through a Vlitten document O{o: AVNL/CMD/001/PROCEDURE

8. Draft Review: On 30.09.2021, the Member Drafting Committee (Anurag Kumar

PROCUREMENT MANLIA-L (STORES & SERVICES) -2021

Chapter No Title Page No

11 Classification of Goods & Services 17

XXVI Arbitration 197

XXVII Ethics of Procurement 201

XVIII Grievance Redressal 202

1. Stringent specifications of majority input materials: not applicable in commercial

2. Inconsistent demand: both in terms of quantity and periodicity.

4. Diverse product range with common procurement procedure.

5. Requirement of customized production lille for specific input requirement.

6. And therefore, it is imperative that material purchase be made following systematic,

PROCUREMENT MANUAL (STORES & SERVICES) -2021

procurement and non-customer nominated source/equipment. The purchase procedure

i. To ensure uninterrupted/timely flow of materials, equipment & services of goods

ii. To procure competitively and wisely authorize supplies to desired speciflcations

iv. To ensure timely formulation and commitment of purchase budget, including

v. To serve as information center on materials knowledge prices, sources of supply,

vi. To ensure that investment made on inventory is at an optimum level and

vii. Develop sources of supply to maintain competition and sustained supplies.

viii. Training of purchase personnel in the latest techniques of Materials Management.

x. To adhere to commercial procedures & maintain cannons of financial propriety to

3. Purchase Functions : Purchase Department is responsible for the following

i. Creation of a comprehensive and regularly updated directory of selected reliable

ii. Maintenance of vendor evaluation and rating records.

iv. Analyzing bids/offers for decision-making by the Competent Authority.

v. Arranging negotiations with vendors, when necessary.

vi. Issue of purchase Orders in time.

PROCUREMENT MANUAL (STORES & SERVICHS) -2021

x. Maintaining a library of product catalogs and manufacturers/distributor's price

xii. Entering into service contracts in line with the DOFP.

xiii. Entering into Transit Insurance agreements for goods in transit.

xiv. Finalization of Commercial Terms & Condition and operation of licence

xv. To ensure that objectives of purchase are realized.

xvii. Ensure timely payments to suppliers.