What is Rate Contract ?
In certain situations , mostly in case of manufacturing
units but otherwise also, there are items of regular use
for which it is advantageous on
commercial as well as
technical grounds to have one long term order / contract
with one or more than one vendors to meet the recurring
The rate contract is entered into when
the total annual
requirement of certain items is large
but not fixed.
Rate contracts may also be
entered into for items which are identified as of
What is normally
done is that a rate is fixed ,through tendering and
selection process of a vendor and then repeated orders
are placed depending on as and when the requirement
How it is done ?
entering into rate contracts / long term contracts, the
mode of tendering to
be followed may be decided as per the nature of the
item, the available
Thus, rate contract enquiries may be
either Open Tender/
Limited Tender/ Single Tender , depending upon the nature
of the item.
All other conditions applicable to issuing tenders are
same, such as while issuing LTE for rate contract, it should be
ensured that only reliable
and reputed manufacturers/ suppliers/ contractors are
contacted or else if the source is not known clearly
Open tendering may be resorted to.
Items such as Chemical & Reagents, Oil & Lubricants
procured on Rate
DGS&D RATE CONTRACT
D is a Central Purchasing & Quality Assurance Organisation of Govt. of India, Department
of Supply, Ministry of Commerce.
In the year 1860, the British Govt. evolved
a concept of Central buying & set up India
Stores Department in London for meeting
procurement needs of Govt. of India.
Established in 1951 in its present form for
rendering procurement services to Central &
State Govt. by placing Rate Contracts for
common user items & contracts against their
Adhoc procurement decentralized in December,
1991. Main function now is to conclude RATE
assurance functions continue to
remain centralized as before
- Continues to be the NODAL Agency of Govt. of
India for purchase policy & procedure.
- Govt. Departments/Organisations, who have
not built-up their own infrastructure for
purchase, can raise their demands on DGS&D
for ad-hoc procurement.
- Handling procurement against several World
Bank & Asian Development Bank aided projects
for modernisation of Polytechnics &
Vocational Training Centres, National Aids
Control. National / State Highways, Hydrology
- Services continue to be available to Public
Sector Undertaking & Autonomous bodies.
It enters into Rate contracts for a
number of items of
wide demand by the different ministries and Public
Sector Undertakings (
Such demanding agencies are known
as Direct Demanding Office
under the DGS&D
DGS & D fixes rates and terms and contracts with many
firms and for many items yearly and thus the interested
buyers, mostly the direct demanding agencies and PSUs
can place orders on such firms for meeting their
The advantage is in economy of time s the buyer
doesn't have to go through the tendering process
which certainly is time
consuming ,at times.
The DGS & D finalises the rate contracts in the start of
a financial year and the rate, terms and conditions
usually hold for the entire financial year. Sometimes,
the rates do undergo changes with the consents of the