Para 4.7 — GOODS_MANUAL

GOODS_MANUAL

2. Approved Vendor Lists: In such situations, a separate phase of PQB tendering (as in para 4.6.1 above) is done with a much more stringent PQC, but the resultant shortlist of qualified vendors is kept valid for an extended period (Say 2 to 5 years) as stipulated in the PQB documents. These are called Approved Vendor Lists (AVL). In some countries, these may be referred to as multi-use lists.
3. Categories of Approved Vendors: There may be gradation in the category of Approved vendors. The initial category may be called “Developmental Vendors” (may be named as ‘Temporarily or Provisionally Approved Vendors’ in some organisations), where approval is granted based on an assessment of infrastructure facilities available and satisfactory production of samples as per specification, but their capability to consistently produce the quality material giving satisfactory service life in the field, is yet to be established. After these Development Vendors demonstrate a capability to produce consistent quality Goods with required service life over a period (say 2 years), they are upgraded to the regular category of “Approved Vendors”.
4. Procurement Restricted to AVL: In all subsequent procurements, eligibility criteria restrict participation to the “Approved Vendor List” (Regular and Developmental), and all other bids are treated as unsolicited offers, which are normally rejected. Only a part (say not more than 20%) of the total tendered quantity is distributed among Development Vendors, provided they quote lower than the regular Approved Vendors. The rest of the quantity (say 80% or more) is awarded to ‘Approved Vendors’. This ensures that Development Vendors are able to demonstrate their capabilities for upgradation to the regular Approved Vendor Category. Thus, it should be ensured that development orders are for a viable quantity for production and for the purpose of proving their capability.
5. Benefits of AVL: An AVL is a powerful tool that contributes to cost control, reliability, and overall efficiency in procurement for strategic, safety and security Goods. It ensures that vendors have undergone rigorous vetting and have demonstrated stability and reliability.
4.7. Approved Vendor List (AVL) 1. Strategic, Safety and Security Requirements: Many Organisations have regular and continuous requirements of tailor-made items (for which the procuring entity is the monopoly buyer), which are critical for the safety and security of its operations and where large investments and gestation periods are needed for developing manufacturing and quality control infrastructure/ processes for its production. In view of heavy investments, vendors need regular and sustained offtake for financial viability. Such procurement needs to be done over an extended period of time only from vendors who have undergone rigorous pre-qualification. The firms are assessed for requisite infrastructure to produce consistent quality goods up to the assessed production capacity with regular monitoring of the quality assurance system. It may even involve, if required, extended field trials of products and inspection of manufacturing/ quality assurance facilities and processes. Such time-consuming pre-qualification would not be feasible for each individual procurement. An example is the requirement for Railway Signalling equipment, Locomotive assemblies, and Track fittings. A quality glitch in these would be disastrous.
Risk Mitigation 1. Dependency on Vendors: It can shift the balance of power to the hands of vendor – leading to many disadvantages: 1.1 Anti-competitive Practices: These Approved vendors can easily form a cartel and indulge in Anti-competitive practices. 1. Diversify the Approved Vendor List (AVL) by including multiple reliable vendors for critical goods. Maintain a backup list of Development Vendors to mitigate sudden disruptions. Regularly monitor and update the AVL as per para 4.6-6.
Working with approved vendors instils confidence in the quality of materials and components purchased and reduces the chances of defects. Downtime due to failures and repairs is also minimized.
6. Monitoring and Updation: An AVL is a dynamic tool, and its effectiveness depends on proactive management and adaptability. Updating an Approved Vendor List (AVL) over time is crucial to maintain its effectiveness and relevance. If a new vendor applies for inclusion in AVL, it may be added to AVL if it meets the PQC in the original PQB. Key performance indicators (KPIs) for vendors should be part of the PQB document, including on-time delivery, product quality, and responsiveness. These metrics may be used to conduct periodic reviews of the AVL (e.g., annually, or biannually) and vendors who consistently fail to meet standards or demonstrate poor performance may be downgraded or removed from the AVL. Audits of existing vendors may be conducted to assess financial stability, production capabilities, and adherence to contractual terms. The procuring Entity should monitor industry trends, technological advancements, and new suppliers. Feedback may be gathered from stakeholders who use or maintain the Goods. Their insights can highlight areas for improvement or identify potential issues with specific vendors. Vendors may be given support to enhance their capabilities and training, share best practices, and encourage continuous improvement.
7. Where AVL is not Desirable: The same contra-indications as in PQB mentioned in para 4.6.1-3 are much more accentuated in the case of AVL, as the list is used over prolonged periods. Hence, the AVL mode for an item for should be approved at the highest level in the Procuring Organisation. Since the AVL system strains the transparency principle and there is a heightened risk of cartelization and collusion, AVL should not be a routine/ normal mode of procurement of goods and should be done only as an exception under specified circumstances as mentioned in sub-para 1) above, otherwise PQB modes of procurement (para 4.5) may be used. AVL is contraindicated in the following circumstances:
a) Where the requirement is not related to Strategic, Safety or Security. b) Where the item is not tailor-made, nor is the Procuring Entity a monopoly buyer. c) Where the item is not regularly and continuously procured. d) Where the requirement is technically and commercially not complex enough; e) Where large investment and prolonged gestation period are not required in developing manufacturing/ quality assurance facilities/ processes. f) Where the technology is not stable and is evolving/ changing at a fast pace. g) Where procurement can be done through limited tender enquiries;
4.7.1 Approved Vendor Lists –Risks and Mitigations: The same risks and mitigations as in para 4.6.3 apply in this case to a deeper level:
Chapter 4: Modes of Procurement and Tendering Systems
Risk Mitigation This includes a significant risk of collusion due to power in the hands of the Procurement Entity’s personnel who inspect/ monitor the facilities/ quality. 1.2 Cost Escalation: Over time, vendor costs may increase, affecting overall procurement expenses. 1.3 Supplier Ethics and Compliance: Approved vendors may engage in unethical practices or violate compliance standards. 1.1 Be alert about cartel/ pool rates. Include a Cartel clause and take mitigation measures as per para 7.6.8 and 2.5.1-2-i). The personnel in such jobs may be rotated frequently and should not be allowed to be in the same position for more than 3 years. If the same personnel who created the AVL are also given the task of monitoring it, it may create a conflict of interest. So, personnel for these two tasks should be different. The KPIs and PQC should be objectively measurable. Every three years a fresh PQB may be done for new vendors. 1.2 Benchmark costs periodically against market trends. Negotiate long-term contracts with price stability clauses. 1.3 Conduct due diligence on vendors’ ethical practices. Include compliance clauses for the Code of Integrity in contracts and monitor adherence. 2. Lack of Monitoring and Updation: AVL is a dynamic tool that needs constant monitoring and updating to deliver the intended benefits while mitigating the associated risks. 2.1 Complacency: Once vendors are approved, complacency may set in, leading to reduced performance. 2.3 Quality Fluctuations: Even approved vendors may occasionally deliver subpar quality due to production issues or changes in their processes. 2. Monitor and update the AVL lists (Refer to para 4.6-6). 2.1 Continuously engage with vendors, encourage innovation, and set improvement targets. 2.2 Regularly audit vendors to ensure consistent quality. 3. Market Dynamics: Market dynamics (e.g., price fluctuations and technological advancements) impact vendor capabilities and competitiveness. 3.1 Innovation Gap: Sticking to the same vendors may hinder access to innovative solutions. A non-approved vendor offers an innovative solution that could significantly improve operations. 3. Stay informed about industry trends and adjust the AVL accordingly. 3.1 Encourage vendors to propose new technologies or approaches. Consider adding emerging vendors to the AVL. Evaluate the benefits and risks. Seek approval for a temporary exception or consider adding the vendor to the AVL.
Risk Mitigation 4. Inadequate or Too-many Vendors on AVL: Both an inadequate number of vendors and too many vendors on AVL may be detrimental to the intended benefits of AVL. Too many vendors may force vendors to cartelise for survival – having invested heavily in creating infrastructure. Too few vendors may create supply chain disruption and increased prices. 4. Such situations may be specially monitored. In the PQB document, an upper limit may be indicated for the maximum number of suppliers to be taken on AVL. A large number of vendors getting cleared for AVL is an indication that this item is not a fit case for AVL mode. In case of inadequate numbers on AVL, a repeat PQB may be done, and efforts may be made to induce new vendors with technological and preferential help in setting up infrastructure.
4.8. Arbitral Award The decision of the arbitral tribunal is termed as 'arbitral award'. The decision of arbitral tribunal shall be by majority. The arbitral award shall be in writing, mentioning the place and date, and signed by the members of the tribunal. It must state the reasons for the award. A copy of the award should be given to each party. The tribunal can make interim award also. An arbitral award is enforceable in the same manner as if it were a decree of the court.
a) Determine the admissibility, relevance, materiality, and weight of any evidence; b) Decide on their jurisdiction; c) Decide on interim measures; d) Termination of proceedings; and e) Seek court assistance in taking evidence.
4.7. Conduct of Arbitral Proceedings – Ad-hoc Arbitration The parties are free to agree on the procedure to be followed for conducting proceedings, as well as the location, language of hearings, and written proceedings. If any agreement fails, the arbitral tribunal may decide on these aspects. The parties shall be treated equally, and each party shall be given a full opportunity to present its case. The arbitral tribunal shall observe the rules of natural justice but is bound neither by Civil Procedure Code 1908 nor by the Indian Evidence Act145, 1872. Limitation Act, 1963, is applicable from the date of commencement of arbitral proceedings. Arbitral tribunals have powers to do the following:

GOODS_MANUAL

2. Approved Vendor Lists: In such situations, a separate phase of PQB tendering (as in para 4.6.1 above) is done with a much more stringent PQC, but the resultant shortlist of qualified vendors is kept valid for an extended period (Say 2 to 5 years) as stipulated in the PQB documents. These are called Approved Vendor Lists (AVL). In some countries, these may be referred to as multi-use lists.
3. Categories of Approved Vendors: There may be gradation in the category of Approved vendors. The initial category may be called “Developmental Vendors” (may be named as ‘Temporarily or Provisionally Approved Vendors’ in some organisations), where approval is granted based on an assessment of infrastructure facilities available and satisfactory production of samples as per specification, but their capability to consistently produce the quality material giving satisfactory service life in the field, is yet to be established. After these Development Vendors demonstrate a capability to produce consistent quality Goods with required service life over a period (say 2 years), they are upgraded to the regular category of “Approved Vendors”.
4. Procurement Restricted to AVL: In all subsequent procurements, eligibility criteria restrict participation to the “Approved Vendor List” (Regular and Developmental), and all other bids are treated as unsolicited offers, which are normally rejected. Only a part (say not more than 20%) of the total tendered quantity is distributed among Development Vendors, provided they quote lower than the regular Approved Vendors. The rest of the quantity (say 80% or more) is awarded to ‘Approved Vendors’. This ensures that Development Vendors are able to demonstrate their capabilities for upgradation to the regular Approved Vendor Category. Thus, it should be ensured that development orders are for a viable quantity for production and for the purpose of proving their capability.
5. Benefits of AVL: An AVL is a powerful tool that contributes to cost control, reliability, and overall efficiency in procurement for strategic, safety and security Goods. It ensures that vendors have undergone rigorous vetting and have demonstrated stability and reliability.
4.7. Approved Vendor List (AVL) 1. Strategic, Safety and Security Requirements: Many Organisations have regular and continuous requirements of tailor-made items (for which the procuring entity is the monopoly buyer), which are critical for the safety and security of its operations and where large investments and gestation periods are needed for developing manufacturing and quality control infrastructure/ processes for its production. In view of heavy investments, vendors need regular and sustained offtake for financial viability. Such procurement needs to be done over an extended period of time only from vendors who have undergone rigorous pre-qualification. The firms are assessed for requisite infrastructure to produce consistent quality goods up to the assessed production capacity with regular monitoring of the quality assurance system. It may even involve, if required, extended field trials of products and inspection of manufacturing/ quality assurance facilities and processes. Such time-consuming pre-qualification would not be feasible for each individual procurement. An example is the requirement for Railway Signalling equipment, Locomotive assemblies, and Track fittings. A quality glitch in these would be disastrous.
Risk Mitigation 1. Dependency on Vendors: It can shift the balance of power to the hands of vendor – leading to many disadvantages: 1.1 Anti-competitive Practices: These Approved vendors can easily form a cartel and indulge in Anti-competitive practices. 1. Diversify the Approved Vendor List (AVL) by including multiple reliable vendors for critical goods. Maintain a backup list of Development Vendors to mitigate sudden disruptions. Regularly monitor and update the AVL as per para 4.6-6.
Working with approved vendors instils confidence in the quality of materials and components purchased and reduces the chances of defects. Downtime due to failures and repairs is also minimized.
6. Monitoring and Updation: An AVL is a dynamic tool, and its effectiveness depends on proactive management and adaptability. Updating an Approved Vendor List (AVL) over time is crucial to maintain its effectiveness and relevance. If a new vendor applies for inclusion in AVL, it may be added to AVL if it meets the PQC in the original PQB. Key performance indicators (KPIs) for vendors should be part of the PQB document, including on-time delivery, product quality, and responsiveness. These metrics may be used to conduct periodic reviews of the AVL (e.g., annually, or biannually) and vendors who consistently fail to meet standards or demonstrate poor performance may be downgraded or removed from the AVL. Audits of existing vendors may be conducted to assess financial stability, production capabilities, and adherence to contractual terms. The procuring Entity should monitor industry trends, technological advancements, and new suppliers. Feedback may be gathered from stakeholders who use or maintain the Goods. Their insights can highlight areas for improvement or identify potential issues with specific vendors. Vendors may be given support to enhance their capabilities and training, share best practices, and encourage continuous improvement.
7. Where AVL is not Desirable: The same contra-indications as in PQB mentioned in para 4.6.1-3 are much more accentuated in the case of AVL, as the list is used over prolonged periods. Hence, the AVL mode for an item for should be approved at the highest level in the Procuring Organisation. Since the AVL system strains the transparency principle and there is a heightened risk of cartelization and collusion, AVL should not be a routine/ normal mode of procurement of goods and should be done only as an exception under specified circumstances as mentioned in sub-para 1) above, otherwise PQB modes of procurement (para 4.5) may be used. AVL is contraindicated in the following circumstances:
a) Where the requirement is not related to Strategic, Safety or Security. b) Where the item is not tailor-made, nor is the Procuring Entity a monopoly buyer. c) Where the item is not regularly and continuously procured. d) Where the requirement is technically and commercially not complex enough; e) Where large investment and prolonged gestation period are not required in developing manufacturing/ quality assurance facilities/ processes. f) Where the technology is not stable and is evolving/ changing at a fast pace. g) Where procurement can be done through limited tender enquiries;
4.7.1 Approved Vendor Lists –Risks and Mitigations: The same risks and mitigations as in para 4.6.3 apply in this case to a deeper level:
Chapter 4: Modes of Procurement and Tendering Systems
Risk Mitigation This includes a significant risk of collusion due to power in the hands of the Procurement Entity’s personnel who inspect/ monitor the facilities/ quality. 1.2 Cost Escalation: Over time, vendor costs may increase, affecting overall procurement expenses. 1.3 Supplier Ethics and Compliance: Approved vendors may engage in unethical practices or violate compliance standards. 1.1 Be alert about cartel/ pool rates. Include a Cartel clause and take mitigation measures as per para 7.6.8 and 2.5.1-2-i). The personnel in such jobs may be rotated frequently and should not be allowed to be in the same position for more than 3 years. If the same personnel who created the AVL are also given the task of monitoring it, it may create a conflict of interest. So, personnel for these two tasks should be different. The KPIs and PQC should be objectively measurable. Every three years a fresh PQB may be done for new vendors. 1.2 Benchmark costs periodically against market trends. Negotiate long-term contracts with price stability clauses. 1.3 Conduct due diligence on vendors’ ethical practices. Include compliance clauses for the Code of Integrity in contracts and monitor adherence. 2. Lack of Monitoring and Updation: AVL is a dynamic tool that needs constant monitoring and updating to deliver the intended benefits while mitigating the associated risks. 2.1 Complacency: Once vendors are approved, complacency may set in, leading to reduced performance. 2.3 Quality Fluctuations: Even approved vendors may occasionally deliver subpar quality due to production issues or changes in their processes. 2. Monitor and update the AVL lists (Refer to para 4.6-6). 2.1 Continuously engage with vendors, encourage innovation, and set improvement targets. 2.2 Regularly audit vendors to ensure consistent quality. 3. Market Dynamics: Market dynamics (e.g., price fluctuations and technological advancements) impact vendor capabilities and competitiveness. 3.1 Innovation Gap: Sticking to the same vendors may hinder access to innovative solutions. A non-approved vendor offers an innovative solution that could significantly improve operations. 3. Stay informed about industry trends and adjust the AVL accordingly. 3.1 Encourage vendors to propose new technologies or approaches. Consider adding emerging vendors to the AVL. Evaluate the benefits and risks. Seek approval for a temporary exception or consider adding the vendor to the AVL.
Risk Mitigation 4. Inadequate or Too-many Vendors on AVL: Both an inadequate number of vendors and too many vendors on AVL may be detrimental to the intended benefits of AVL. Too many vendors may force vendors to cartelise for survival – having invested heavily in creating infrastructure. Too few vendors may create supply chain disruption and increased prices. 4. Such situations may be specially monitored. In the PQB document, an upper limit may be indicated for the maximum number of suppliers to be taken on AVL. A large number of vendors getting cleared for AVL is an indication that this item is not a fit case for AVL mode. In case of inadequate numbers on AVL, a repeat PQB may be done, and efforts may be made to induce new vendors with technological and preferential help in setting up infrastructure.
4.8. Arbitral Award The decision of the arbitral tribunal is termed as 'arbitral award'. The decision of arbitral tribunal shall be by majority. The arbitral award shall be in writing, mentioning the place and date, and signed by the members of the tribunal. It must state the reasons for the award. A copy of the award should be given to each party. The tribunal can make interim award also. An arbitral award is enforceable in the same manner as if it were a decree of the court.
a) Determine the admissibility, relevance, materiality, and weight of any evidence; b) Decide on their jurisdiction; c) Decide on interim measures; d) Termination of proceedings; and e) Seek court assistance in taking evidence.
4.7. Conduct of Arbitral Proceedings – Ad-hoc Arbitration The parties are free to agree on the procedure to be followed for conducting proceedings, as well as the location, language of hearings, and written proceedings. If any agreement fails, the arbitral tribunal may decide on these aspects. The parties shall be treated equally, and each party shall be given a full opportunity to present its case. The arbitral tribunal shall observe the rules of natural justice but is bound neither by Civil Procedure Code 1908 nor by the Indian Evidence Act145, 1872. Limitation Act, 1963, is applicable from the date of commencement of arbitral proceedings. Arbitral tribunals have powers to do the following:

Para 4.7 — GOODS_MANUAL

Original Rule Text

Para 4.7 — GOODS_MANUAL

Original Rule Text