Effect of closure of COFMOW on Vendors, Production Units and Workshops
Difficulties to be faced by existing vendors for ongoing contracts with all Zonal Railways too
COFMOW was established under the Ministry of Railways by the Govt. of India for modernizing Indian Railway workshops. The modernization project was funded through the World Bank. Since its establishment in 1979 COFMOW has assisted in modernizing Indian Railways Production Units and maintenance workshops. This has involved purchasing over 22020 machines valued at Rs.6274 crores.
It has thus emerged as a leading specialized organization in the fields of manufacturing and maintenance technologies. COFMOW is in a position to offer its services to those needing modernization or upgradation of their manufacturing/maintenance activities. COFMOW provides professional advice and a single window service in planning and procurement of machine tools and allied equipment.
Now Railway Board has decided to shutdown COFMOW up to December 2022 and order or tender process completely stops on 15.11.2022 instead of December 2023 in phase manner as recommended by the Principal Economic Advisor (PEA). Since each contract placed on a particular vendor may have multiple consignees, it would be very difficult for the vendor to co-ordinate with a Zonal Railway office for day-to-day interactions like submission of PBG/WBG bonds, seeking extensions of delivery periods, clarifications to consignees/RITES on certain technical/commercial issues of contract etc.
A single agency, based in Delhi like COFMOW who is well versed in such matters is convenient for the vendors as well as the consignee.
The modernization of Railways has actually started in the past 5 years wherein diesel locos were phased out and high speed trains like Vande Bharat are being introduced in Railways. Work on Bullet trains is already under implementation and at this crucial stage of Railways modernization closure of COFMOW is a decision worth a second thought.
Each existing vendor of COFMOW has established an infrastructure in Delhi to interact with COFMOW on a day to basis & was both convenient & economical to carry out smooth operation from the date of tendering till complete execution.
With de-centralization of COFMOW and distributing the work to different Railway Zones, it will be difficult for vendors to carry out day to day activities associated with contracts and will add to the cost of suppliers.
Issues like return of WBGs after warranty period, extensions of PBGs/WBGs during the running contract requires interaction with purchaser on a regular basis & it will be herculean task to interact with 4 or 5 zonal railways for separate contracts & different type of M&P manufactured by a single vendor.
This effect will Defeat our PMs visionary Motto i.e. EASE OF WORK
1. Increase in cost Production due to re-establishment of New Offices/ Travelling and other direct and indirect expenses.
2. There is every chance of misplacement of files related to running COFMOW contracts while these are being transferred to other Railway zones as proposed.
3. It will amount to hardships for the vendor to execute the contract if a file by mistake is transferred to a different zone than the designated one.
4. Vendor is likely to suffer by the way of additional LD & running around various Zonal Railway offices to trace the contract file.
Effect on Railways due to COFMOW closure-
Once the procurement of M&P is taken up by respective Zonal railways, it is feared that each Zone will practice its own method of bidding thereby compromising on strict norms of tendering that was followed by COFMOW evolved over the years of experience gained by them thereby ensuring only the very best of M&P & other equipment reach the Railways PUs /workshops.
Decentralization of procurement will amount to wide variations in quality of M&P at fluctuating cost varying from zone to zone which will eventually hit the consignees in production targets & more rejections of costly resources.
The vision of our Hon’ble Prime Minister has been to promote MSME units as they are the backbone of the economy, employment and responsible for making our Nation self-reliant. By implementing closure of a central procurement agency, it defeats the very purpose of growth of MSMEs and gives an opening for random procurement with varying quality of purchase at unjustified prices.
The targets set by the Hon’ble Railway Minister for rolling out Vande Bharat Train sets may also take a direct hit and it is anticipated that in the whole process of transfer of workload from COFMOW to various zones will delay the execution of current contracts and procurement of new M&P. The modernization of existing workshops will also get delayed in the process.
All existing bank guarantees towards Performance (PBG) and warranty (WBG) which were established by various vendors of COFMOW for ongoing contracts will henceforth be of no use to Railways as the beneficiary ceases to exist after 15.11.2022 as per Railway Board directive. This means that no PBG/WBG can be extended nor encashed after 15th November 2022 and will affect pending payments to vendors as well as supply to consignees.
Loss of economy in purchase by decentralization. (Understand that the present cost to Indian Railways thru COFMOW is around 4 to 5% of Cost of Purchases, while other Railway Zones or PSUs incurring about 10 to 30% of the cost of Purchases by them). For better competitive prices and services – for all over purchases and economics to Indian Railways.
All vendors of COFMOW request the Hon’ble Minister for Railways Ashwini Vaishnaw and Chairman CEO Railway Board Vinay Kumar Tripathi to kindly consider their problems and difficulties, and kindly review the closure decision for the benefit of both sides – the Railway as well as vendors. Venders’ association has also written letters and given representations and memorandums to ministers and concerned authorities. Officers working in COFMOW as well as in Zonal Railways also in the opinion that the procedure should be implemented in a phase manner.
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