General Financial Rules, 2017

Introduction

GFR 2017 Stands for General Financial Rules 2017.

History of General Financial Rules –

General Financial Rules were issued for the first time in 1947 bringing together in one place
all existing orders and instructions pertaining to financial matters.

It further modified and issued as GFRs 1963 and GFRs 2005.

Evolution of GFR

The (Parliament Advisory Committee) PAC in April 2015, Group of Secretaries in

February 2016 has recommended setting up a Task Force to review the GFRs to frame
comprehensive rules in respect of recent reforms in Government budgeting.

GFRs, 2017 have evolved as a result of wide consultations with Central Government
Ministries and Departments, some State Governments and other stakeholders at the
Task Force stage and thereafter .

Overview

GFR 2017 has total 12 chapters with 324 Rules and 3 Appendix.

Came into force w.e.f.: 01.04.2017

Chapter 1 – Introduction

Chapter 2 – General System of Financial Management

Chapter 3- Budget formulation and implementation.

Chapter 4 - Government Accounts

Chapter 5 – Works

Chapter 6 - Procurement of Goods and Services

Chapter 7 - Inventory Management

Chapter 8 - Contract Management

Chapter 9 - Grants-in-aid and Loans

Chapter 10 - Budgeting and Accounting for Externally Aided Projects

Chapter 11 - Government Guarantees

Chapter 12 - Miscellaneous Subjects

For LDCE to IP

Chapter 2 – General System of Financial Management

Rule 7 to 41

Chapter 6 - Procurement of Goods and Services

Rule 142 to 206

Chapter-II /Rule 7

All moneys received by or on behalf of the Government shall be brought into Government
Account without delay e.g.

Dues of Government or

for deposit, remittance or otherwise

Accounting shall be done in accordance with such general or special rules as may be issued
under Articles 150 and 283 (1) of the Constitution.

Do you know?

(C) Consolidated Fund: Defined in Article 266 (1) of CoI

(P) Public Accounts: Defined in Article 266 (2) of CoI

(C) Contingency Fund: Defined in Article 267 (1) of CoI

Remember: CPC

Chapter-II /Rule 8(1)

(i) Under Article 284 of the Constitution all moneys received by or deposited with any
officer employed in connection with the affairs of the Union, other than revenues or public
moneys raised or received by Government, shall be paid into the Public Account.

(ii) All moneys received by or deposited with the Supreme Court of India or with any
other Court, other than a High Court, within a Union Territory, shall be paid into Public
Account if it is not a revenue of the Govt.

Chapter-II /Rule 8(2)

The Head of Account to which such moneys shall be credited and the withdrawal of
moneys from it shall be governed by Government Accounting Rules 1990 and the Central
Government Account (Receipts and Payments) Rules, 1983 or such other general or
special orders as may be issued in this behalf.

Chapter-II /Rule 9
It is the duty of the Department of the Central Government concerned to ensure that the
receipts and dues of the Government are correctly and promptly assessed, collected and
duly credited to the Consolidated Fund or Public Account as the case may be.

Chapter-II /Rule 10

The Controlling Officer shall arrange to obtain from his subordinate officers monthly
accounts and returns in suitable form which has been accounted for by subordinate officers,
and compare them with the statements of credits furnished by the Accounts Officer to see
that the amounts reported as collected have been duly credited.

Accordingly, each Accounts Officer will send an extract from his accounts showing the
amounts brought to credit in the accounts in each month to the Controlling Officer concerned.

Subordinate officers → Controlling Officers  Account Officers

Chapter-II /Rule 11

In Departments in which officers are required to receive money on behalf of Govt shall issue
receipt in GAR-6

Detailed rules and procedure regarding assessment, collection, allocation, remission and
abandonment of revenue and other receipts shall be laid down in the regulations of the
Department responsible for the same.

Chapter-II /Rule 12

Amounts due to Government shall not be left outstanding without sufficient reasons.

Where such amounts appear to be irrecoverable, the orders of the competent authority shall
be obtained for their adjustment

Chapter-II /Rule 13

Unless specially authorized by any rule or order made by competent authority, no sums shall
be credited as revenue by debit to a suspense head.

The credit must follow and not precede actual realization.

Chapter-II /Rule 14

A Department of the Central Government, an Administrator or a Head of a Department

responsible for the collection of revenue shall keep the Finance Ministry fully informed of
the progress of collection of revenue under his control and of all important variations in
such collections as compared with the Budget Estimates

Chapter-II /Rule 15- Rents of Building and Land

15 (1)When the maintenance of any rentable building is entrusted to a civil department,
other than the Central Public Works Department, the Administrator or the Head of the
Department concerned shall be responsible for the due recovery of the rent thereof.

15(2)-The procedure for the assessment and recovery of rent of any building hired out will
be regulated generally by the rules applicable to buildings under the direct charge of the
Central Public Works Department.

Rule 15- Rents of Building and Land

15(3)- The detailed rules and procedure, regarding the demand and recovery of rent of
Government buildings and lands, are contained in the departmental regulations of the
departments in charge of those buildings

Rule 16- Fines

(1) Every authority having the power to impose and/ or realize a fine shall ensure that the
money is realized, duly checked and deposited into a treasury or bank as the case may be.

(2) Every authority having the power to refund fines shall ensure that the refunds are
checked and no double refunds of amounts of fines collected or refunds of fines not
actually paid into a treasury or bank as the case may be, are made.

Rule 17- Miscellaneous Demands

Accounts Officers shall watch the realization of miscellaneous demands of Government,

not falling under the ordinary revenue administration, such as contributions from State
Governments, Local Funds, contractors and others towards establishment charges.

Rule 18- Remission of Revenue.

A claim to revenue shall not be remitted or abandoned without the sanction of the competent
authority.

Rule 19- Annual Statement Submission

Departments of the Central Government, Administrators and Heads of Departments,

other than those in the Department of Posts, shall submit annually on the 1st of June to
the Audit Officer and the Accounts Officer concerned, statements showing the remissions
of revenue and abandonment of claims of revenue of value Rs 1000 and more sanctioned
during the preceding year by competent authorities in exercise of the discretionary
powers vested in them otherwise than by law or rule having the force of law.

Individual remissions below Rupees one thousand need not be included in the statements.

Rule 20-

Departments of the Central Government and Administrators may make rules defining
remissions and abandonments of revenue for the purpose of Rule 19.
Rule 21- Standards of financial propriety

Every officer incurring or authorizing expenditure from public moneys should be guided by
high standards of financial propriety.

Propriety means: the details or rules of behaviour conventionally considered to be correct.

Every officer is expected to exercise the same vigilance in respect of expenditure incurred
from public moneys as a person of ordinary prudence would exercise in respect of
expenditure of his own money.

The expenditure should not be prima facie more than the occasion demands

No authority should exercise its powers of sanctioning expenditure to pass an order which
will be directly or indirectly to its own advantage.

Rule 21- Standards of financial propriety

Expenditure from public moneys should not be incurred for the benefit of a particular
person or a section of the people, unless –

(a) a claim for the amount could be enforced in a Court of Law, or

(b) the expenditure is in pursuance of a recognized policy or custom.

Rule 22- Expenditure from Public Funds

No authority may incur any expenditure or enter into any liability involving expenditure
or transfer of moneys for investment or deposit from public funds (Consolidated Fund /
Contingency Fund and the Public Accounts) unless the same has been sanctioned by a
competent authority.

Rule 23: Delegation of Financial Powers

The financial powers of the Government have been delegated to various subordinate
authorities vide Delegation of Financial Powers Rules as amended from time to time.

The financial powers of the Government, which have not been delegated to a subordinate
authority, shall vest in the Finance Ministry.

Rule 24- Consultation with Financial Advisers

All draft memoranda for Expenditure shall be circulated by the Ministry or Department
concerned after consultation with the concerned Financial Adviser of the Ministry or
Department.

Rule 25- Provision of funds for sanction

(1) All sanctions to the expenditure shall indicate the details of the provisions in the
relevant grant or appropriation wherefrom such expenditure is to be met.
(2) All proposals for sanction to expenditure, shall indicate whether such expenditure can
be met by valid appropriation or re- appropriation (transfer from one fund to another).

(3) In cases where it becomes necessary to issue a sanction to expenditure before funds
are communicated, the sanction should specify that such expenditure is subjected to funds
being communicated in the budget of the year.

Rule 26: Responsibilities of Controlling Officer in Budget allocation

Controlling officer must ensure that:

Expenditure does not exceed budget allocation.

Expenditure is incurred for the purpose for which fund have been provided.

Expenditure is incurred in public interest

There exist adequate control mechanism in his Department for prevention, detection of
errors and irregularities in the financial proceedings of his subordinate offices and to
guard against waste and loss of public money.

Rule 27(1): Date of effect of sanction

Every sanction shall be valid on fulfillment of provisions contained in Delegation of

Financial Powers Rules.

Any sanction shall come into force (i.e. date of effect of sanction) from the date of issue
unless any other date is specified as date of effect of sanction in said order.

Rule 27(2): Date of creation to be indicated in sanction of temporary posts

Orders sanctioning the creation of a temporary post should specify:

The sanctioned duration

The date from which it is to be created

Rule 28: Previous consent of Finance Ministry

Except in pursuance of general delegation/ approval of the President and consent of

Finance Ministry no subordinate authority shall issue an order which-

involves any grant of land, or assignment of revenue, or concession, grant, lease or

license of mineral or forest rights, or rights to water, power or any easement or privilege
of such concessions or

involves relinquishment of revenue in any way

Rule 29: Procedure for communication of sanction

All financial sanctions and orders issued by a competent authority shall be communicated
to the Audit Officer and the Accounts Officer.

The procedure to be followed for communication of financial sanctions and orders will be as
follows:

All financial sanctions issued by a Department of the Central Government, on the basis of
which payment is to be made or authorized by the Accounts Officer, should be addressed
to him.

All other sanctions should be accorded in the form of an Order, which need not be
addressed to any authority, but a copy should be endorsed to the Accounts Officer
concerned.

Rule 29: Procedure for communication of sanction

In the case of non-recurring contingent and miscellaneous expenditure, the sanctioning

authority may accord sanction by signing or countersigning the bill or voucher, whether
before or after the money is drawn, instead of by a separate sanction.

All financial sanctions and orders issued by a Department of the Central Government with
the concurrence of the Internal Finance Wing or Finance Ministry, should be
communicated to the Accounts Officer in accordance with the Delegation of Financial
Powers Rules.

All financial sanctions and orders issued by a Department with the concurrence of the
Ministry of Home Affairs or Comptroller and Auditor General of India or Department
of Personnel and Training (DoPT) should specify that the sanction or orders are issued
with the concurrence of that Department along with the number and date of relevant
communication wherein concurrence is conveyed.

Rule 29: Procedure for communication of sanction

All orders conveying sanctions to expenditure of a definite amount or upto a specific limit
should express both in words and figures the amount of expenditure sanctioned.

Sanctions accorded by a Head of Department may be communicated to the Accounts

Officer by an authorized Gazetted Officer of his Office duly signed by him for the Head of
Department or conveyed in the name of the Head of the Department.

All orders conveying sanctions to the grant of additions to pay such as Special Allowance
[FR 9(25)- pay for additional works], Personal Pay [FR 9 (23)- to prevent loss of substantive
pay], etc., should contain a brief summary of the reasons for the grant of such additions.

Copies of all sanctions or orders other than the following shall be endorsed to the Audit
Officer:

Sanctions relating to-

grant to advances to Central Government employees

appointment or promotion or transfer of Gazetted and non- Gazetted Officers.

creation or continuation or abolition of posts.

handing over charge and taking over charge

payment or withdrawal of General Provident Fund advances to Government servants.

contingent expenditure incurred under the powers of Head of Offices

routine nature issued by Heads of Subordinate Officers (other than those issued by
Ministries or Departments and under powers of a Head of Department).

Rule 30: Lapse of Sanctions

A sanction shall lapse if no payment in whole or in part has been made during a period of
12 months from date of issue of such sanction.

Exception:

currency of the sanction is prescribed in the departmental regulations or is specified in the

sanction itself

specific provision in a sanction that the expenditure would be met from the Budget
provision of a specified financial year, it shall lapse at the close of that financial year

Rule 31

A sanction in respect of an addition to a permanent establishment, or in respect of an

allowance sanctioned for a post or for a class of Government servants, but not drawn by
the officer(s) concerned, shall not lapse on expiry of 12 months.

Rule 32: The remission of disallowances by Audit and writing off of overpayments made
to Government servants

The remission of disallowances by Audit and writing off of overpayments made to

Government servants by competent authorities shall be in accordance with the provisions of
the Delegation of Financial Powers Rules, and instructions issued thereunder.

Rule 33(1): Report to Losses

Any loss or shortage of public moneys, departmental revenue or receipts, stamps, opium,
stores or other property held by, or on behalf of, Government irrespective of the cause of loss
and manner of detection, shall be immediately reported by the subordinate authority
concerned to the next higher authority as well as to the Statutory Audit Officer and to the
concerned Principal Accounts Officer, even when such loss has been made good by the
party responsible for it.
Not to be reported:

Mistake in assessment, overruled by higher authority and time barred claim

Petty losses or value not exceeding Rupees 10,000/-

Rule 33(1): Report to Losses

Any loss or shortage of public moneys, departmental revenue or receipts, stamps, opium,
stores or other property held by, or on behalf of, Government irrespective of the cause of loss
and manner of detection, shall be immediately reported by the subordinate authority
concerned to the next higher authority as well as to the Statutory Audit Officer and to the
concerned Principal Accounts Officer, even when such loss has been made good by the
party responsible for it.

Not to be reported:

Mistake in assessment, overruled by higher authority and time barred claim

Petty losses or value not exceeding Rupees 10,000/-

Rule 33(2): Report to Losses

Cases involving serious irregularities shall be brought to the notice of Financial Adviser or
Chief Accounting Authority of the Ministry or Department concerned and the Controller
General of Accounts, Ministry of Finance.

Rule 33(3): Two stage report of loss

Report of loss contemplated in sub-rule (1) & (2) shall be made at two stages-

An initial report should be made as soon as a suspicion arises that a loss has taken place

The final report should be sent to concerned authorities after investigation indicating nature
and extent of loss, errors or neglect of rules by which the loss has been caused and the
prospects of recovery.

Rule 33(6): Recovery of Loss

In cases of loss to Government on account of culpability of Government servants, the loss

should be borne by the Central Government Department or State Government
concerned with the transaction.

Similarly, if any recoveries are made from the erring Government officials in cash, the
receipt will be credited to the Central Government Department or the State
Government who sustained the loss

Rule 33(7): Report to Controller General of Accounts

All cases involving loss of Government money arising from erroneous or irregular issue of
cheques or irregular accounting of receipts will be reported to the Controller General of
Accounts (CGA) along with the circumstances leading to the loss so that remedial action
can be taken.

Rule 34: Loss of Govt Property due to fire, theft and fraud- Moveable Property

All losses of moveable property above the value of Rupees Fifty thousand due to
suspected fire, theft, fraud, etc., shall be invariably reported to the Police for investigation
as early as possible.

All concerned should assist the Police in their investigation.

A formal investigation report should be obtained from the Police Authorities

Rule 35: Loss of immovable property due to fire, flood etc.

All loss of immovable property exceeding Rupees fifty thousand, such as buildings,
communications, or other works, caused by fire, flood, cyclone, earthquake or any other
natural cause, shall be reported at once by the subordinate authority concerned to
Government through the usual channel.

All other losses should be immediately brought to the notice of the next higher authority

Rule 36: Report to Audit and Accounts Officer

After a full enquiry of the loss a copy of the report shall be forwarded to the Audit Officer
and Accounts Officer.

Rule 37: Responsibility of Loss

An officer shall be held personally responsible for any loss sustained by the Government
through fraud or negligence on his part.

Rule 38: Prompt disposal of cases of loss

Action at each stage of detection, reporting, write off, final disposal, in cases of losses
including action against delinquents and remedial measures should be completed promptly
with special attention to action against delinquents and remedial measures, taken to
strengthen the control system

Rule 39: Demand for information by Audit or Accounts Officer

A subordinate authority shall afford all reasonable facilities to the Audit Officer and Pay
and Accounts Officer for the discharge of his functions, and furnish fullest possible
information required by him.

Rule 40: Not to withheld any information, books or other documents

A subordinate authority shall not withhold any information, books or other documents
required by the Audit Officer or Accounts Officer.

Rule 41: File categorized as Secret and Top Secret

If the contents of any file are categorized as ‘Secret’ or ‘Top Secret’ the file maybe sent
personally to the Head of the Audit Office

Who will deal with the file in accordance with the standing instructions for handling and
custody of such classified documents shall be specified.

Chapter-6

Rule 142: Applicability

Chapter 6 of GFR contains the general rules applicable to all Ministries or Departments,
regarding procurement of goods required for use in the public service.

Detailed instructions relating to procurement of goods may be issued by the procuring

departments broadly in conformity with the general rules.

Rule 143: Definition of Goods

All articles, material, commodity, livestock, furniture, fixtures, raw material, spares,
instruments, machinery, equipment, industrial plant, vehicles, aircraft, ships, medicines,
railway rolling stock, assemblies, subassemblies, accessories, a group of machineries.

Intangible products like software, technology transfer, licenses, patents or other intellectual
properties.

Works and services which are incidental or consequential to the supply of such goods, such
as, transportation, insurance, installation, commissioning, training and maintenance.

Excludes books, publications, periodicals, etc. for a library.

Rule 144: Fundamental principles of public buying

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 description of the subject matter of procurement to the extent practicable should-

be objective, functional, generic (not a particular thing) and measurable and specify technical,
qualitative and performance characteristics.

not indicate a requirement for a particular trade mark, trade name or brand.

Things to remember while purchase:

The specifications should meet the basic needs of the organisation without including
superfluous and non-essential features.

The technical specifications shall, to the extent practicable, be based on the national
technical regulations or recognized national standards or building codes.

However, procuring entity may, for reasons to be recorded in writing, adopt any other
technical specification.

Care should also be taken to avoid purchasing quantities in excess.

the procuring authority should be satisfied that the selected goods adequately meets the
requirement in all respects.

All Ministries/Departments shall prepare Annual Procurement Plan before the

commencement of the year and publish in their website.

Department of Expenditure may, by order in writing, impose restrictions, including prior

registration and/ or screening, on procurement from bidders.

Rule 145: Authorities competent to purchase goods

An authority which is competent to incur expenditure may sanction the purchase of

goods in accordance with provisions in the Delegation of Financial Powers Rules and
following the general rules.

Rule 146: Procurement of Goods during Mobilisation

Procurement of goods required on mobilization of army and/ or during the continuance of

Military operations shall be regulated by special rules and orders issued by the
Government on this behalf from time to time.

Rule 147: Powers for procurement of goods.

The Ministries or Departments have been delegated full powers to make their own
arrangements for procurement of goods and services, that are not available on GeM.

Common use Goods and Services available on GeM are required to be procured
mandatorily through GeM as per Rule 149

Rule 149: Government e-Market place (GeM)

Government of India has established the Government e-Marketplace (GeM) for common
use Goods and Services.

GeM SPV will ensure adequate publicity including periodic advertisement of the items to
be procured through GeM for the prospective suppliers.

The Procurement of Goods and Services available on GeM will be mandatorily from GeM.
The credentials of suppliers on GeM shall be certified by GeM SPV.

The procuring authorities will certify the reasonability of rates.

Rule 149: Limit of purchase from GeM

Direct Purchase from GeM:

Upto Rs 25000/-

Through any of the available suppliers on the GeM

Goods should meet requisite quality, specification and delivery period.

In case of procurement of Automobiles ceiling is Rs 30 Lakhs.

Rule 149: Limit of purchase from GeM

L1 Purchase:

Above Rs 25000/- upto Rs 5 Lakhs:

Above Rs.25,000/- and up to Rs.5,00,000/- through the GeM Seller having lowest price
amongst the available sellers

At least three different manufacturers, on GeM, meeting the requisite quality, specification
and delivery period shall be compared.

The tools for online bidding and online reverse auction available on GeM can be used by the
Buyer even for procurements less than Rs 5,00,000.

Rule 149: Limit of purchase from GeM

Online Bidding and Reverse Auction:

Above Rs 5 Lakhs:

Procurement of value more than Rs 5 Lakhs will be done only after bidding or reverse
auction.

Procurement will be made from 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.

Rule 149: Certain conditions on procurement

The invitation for online e bidding/reverse auction will be available to all the existing Sellers
or other Sellers registered on GeM.

The Ministries/Departments shall prepare their procurement requirements either on

"OPEX" model or "CAPEX" model as per their requirement/ suitability at the time of
preparation of Budget Estimates (BE) and shall project their Annual Procurement Plan
on GeM portal within 30 days of Budget approval.

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 and Department's own Last Purchase Price etc.

Rule 149: Avoid Piecemeal Purchase

A demand for goods shall not be divided into small quantities to make piecemeal
purchases to avoid procurement through L-1 Purchase / bidding / reverse auction on GeM
or the necessity of obtaining the sanction of higher authorities.

Rule 150:Registration of Suppliers

For goods and services not available on GeM, Head of Ministry/ Department may also
register suppliers of goods and services which are specifically required by that Department
or Office, periodically.

Registered Suppliers are ordinarily exempted from furnishing Bid Security along with their
bids

Credentials, manufacturing capability, quality control systems, past performance, after-sales

service, financial background etc. of the supplier(s) should be carefully verified before
registration.

The supplier(s) will be registered for a fixed period (between 1 to 3 years) depending on the
nature of the goods.

Rule 151: Debarment from bidding

A bidder shall be debarred if he has been convicted of an offence under Prevention of

Corruption Act, 1988 or Indian Penal Code or any other law for the time being in force,
causing any loss of life or property or causing a threat to public health for a period not
exceeding 3 years commencing from the date of debarment.

A procuring entity may debar a bidder (shall give reasonable opportunity) or any of its
successors, from participating in any procurement process undertaken by it, for a period not
exceeding two years, due to breach the code of integrity.

Such list which will also be displayed on their website.

Rule 152: Enlisting of Indian Agent

Ministries / Departments if they so require, may enlist Indian agents, who desire to quote
directly on behalf of their foreign principals.

Rule 153: Reserved Items

The Central Government, through administrative instructions, has reserved all items of hand
spun and hand-woven textiles (khadi goods) for exclusive purchase from Khadi Village
Industries commission (KVIC).

For purchase of textile items at least 20% shall be from amongst items of handloom origin

These items shall be purchased from KVIC, Handloom Clusters such as Co-Operative
Societies, Self Help Group (SHG) Federations, Joint Liability Group (JLG), Producer
Companies (PC), Corporations etc. including Weavers having Pehchan Cards issued by
Ministry of Textile.

Rule 154: Purchase of goods without quotations

Purchase of goods upto the value of Rs. 25,000/- 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.

Certificate proforma

"I„ am personally satisfied that these goods purchased are of the requisite quality and
specification and have been purchased from a reliable supplier at a reasonable price."

Rule 155: Purchase of Goods by LPC

Item of value exceeding Rs 25000/- upto Rs 2,50,000/- on each occasion may be purchased
on the recommendation of Local Purchase Committee.

LPC shall consists of three members of an appropriate level as decided by the Head of
Department.

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 in prescribed proforma.

Certificate of LPC

"Certified that we, members of the purchase committee are jointly and individually satisfied
that the goods recommended for purchase are of the requisite specification and quality,
priced at the prevailing market rate and the supplier recommended is reliable and
competent to supply the goods in question, and it is not debarred by Department of
Commerce or Ministry/ Department concerned.“

Member I Member 2 Member 3

Rule 157: Avoid Piecemeal Purchase(Rule 149)

A demand for goods should not be divided into small quantities to make piecemeal
purchases to avoid the necessity of obtaining the sanction of higher authority.

Rule 158:Purchase of Goods by obtaining Bids

Ministry or Department shall purchase goods in any of the following methods of bids (cases
excluding in Rule 154 and 155):

Advertised Tender Enquiry

Limited Tender Enquiry

Two Stage Bidding

Single Tender Enquiry

Electronic Reverse Auction

Rule 159: E-Publishing

Details of bid awarded shall be published on the Central Public Procurement Portal (CPPP).

Individual cases where confidentiality is required, for reasons of national security, would be
exempted from the mandatory e-publishing requirement on approval of Secretary of Ministry/
Department on concurrence with Ministry of Finance

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.

Rule 160: E- Procurement

It is mandatory for Ministries/ Departments to receive all bids through e-procurement portals
in respect of all procurements.

Ministries/ Departments which do not have a large volume of procurement or carry out
procurements required only for day-to-day running of offices and also have not initiated e
procurement through any other solution provided so far, may use e-procurement solution
developed by NIC.

Rule 161: Advertised Tender Enquiry

For procurement of value exceeding 25 Lakhs

Advertisement on CPPP (www.eprocure.gov.in) and GeM and in Organisation’s Website if

available.

Complete bidding document should be posted in CPPP Portal and in Organisation’s own
Website.
Minimum time allowed for submission of Bids is 3 weeks from date of publication of
tender notice or availability of bidding document whichever is later.

To promote wider participation and ease of bidding, no cost of tender document may be
charged for the tender documents downloaded by the bidders.

Rule 161: Advertised Tender Enquiry

Global Tender Enquiry (GTE):

When required quality, specifications may not be available in country Global Tender Enquiry
is called for.

No GTE upto 200 Crores or such limit as may be prescribed by the Department of
Expenditure from time to time

If bids contemplated from abroad-> Minimum Period: 4 weeks for both domestics and
foreign bidders.

Rule 162: Limited Tender Enquiry

This method is adopted if value of Goods is upto Rs 25 Lakhs

Number of supplier firms should be more than three.

Copies of bidding documents are sent to registered suppliers/ firms directly through speed
post/ registered post/ email/ courier.

Details of LTE to be published in the website of CPPP, Department’s or Ministry’s Website.

Rule 162: Limited Tender Enquiry

LTE is allowed even if value is more than 25 Lakhs if:

Ministry or Department certifies that demand is urgent.

The nature of urgency and why procurement could not be anticipated shall be recorded.

On sufficient reasons, to be recorded in writing by the competent authority, indicating that

it will not be in public interest to procure the goods through advertised tender enquiry.

The sources of supply are definitely known and possibility of fresh source(s) beyond those
being tapped is remote.

Rule 163: Two Bid System (Simultaneous receipt of technical and financial bids)

For purchasing high value plant, machinery etc. of a complex and technical nature, bids
may be obtained in two parts, such as:

i) Technical bid consisting of all technical details and commercial terms and conditions
ii) Financial bid indicating item-wise price for the items mentioned in the technical bid.

Both bids should be sealed in separate covers duly super-scribed

Both these sealed covers are to be put in a bigger cover which should also be sealed and duly
super-scribed

The technical bids are to be opened at the first instance

At the second stage financial bids of only these technically acceptable offers should be
opened of opening the financial bid after intimating them the date and time.

Financial bids for unsuccessful bidders of 1st instance are not opened and are returned.

Rule 164: Two Stage Biddings

Bid is obtained in two stage.

First Technical Bid is received and evaluated, then financial bids are called for.

Used for procurement of equipment of-

complex and technical nature where department does not have full knowledge about
technical solutions of it.

not feasible to formulate detailed specifications or identify specific characteristics without

receiving inputs.

the character of the subject matter of procurement is subject to rapid technological advances
or market fluctuations or both;

Department wants to enter into a contracts for research, experiment, study or development.

Rule 164: Two Stage Biddings- First Stage

In FIRST Stage Department/ Ministry invite bids through advertised tender containing the
technical aspects and contractual terms and conditions of the proposed procurement
without a bid price;

all first stage bids, which are otherwise eligible, shall be evaluated through an
appropriate committee constituted by the Ministry/ Department;

the committee may hold discussions with the bidders and if any such discussion is held,
equal opportunity shall be given to all bidders to participate in discussion.

Procurement terms and condition may be revised but shall not modify the fundamental
nature of procurement.

Rule 164: Two Stage Biddings- Second Stage

Selected Bidders submits their Financial Bid

Any bidder, invited to bid but not in a position to supply the subject matter of procurement
due to modification in the specifications or terms and conditions, may withdraw from the
bidding proceedings without forfeiting any bid security

Rule 165: Late Bids

Bids received after the specified date and time for receipt of bids is known as Late Bids.

In case of Advertised Tender Enquiry or Limited Tender Enquiry Late Bids should not be
considered.

Rule 166: Single Tender Enquiry

Procurement from Single Source.

Circumstances where Single Tender Enquiry is allowed:

It is in the knowledge of the department making the procurement that only a particular firm
is the manufacturer of the required goods. (PAC Required)

In a case of emergency, the required goods are necessarily to be purchased from a particular
source and the reason for such decision is to be recorded and approval of competent
authority obtained.

For standardisation of machinery or spare parts to be compatible to the existing sets of

equipment (on the advice of a competent technical expert and approved by the competent
authority). (PAC Required)

Rule 166: Single Tender Enquiry

Report of awarding Single Tender Enquiry shall be sent to Ministry Every Quarter.

Internal Audit requires to check at least 10% of such cases.

Details of contracts to be published in Department’s Website.

In emergency, tender may be given to any firm without Proprietary Article Certificate
(PAC).

Proprietary Article Certificate (PAC)

The indented goods are manufactured by M/s …………………….

No other make or model is acceptable for the following reason:

……………………………………………………………

Concurrence of finance wing to the proposal vide:…………………………………

Approval of competent authority vide:
……………………………………………………………….

_________________________

Signature the with date and

Designation of the indenting officer

Rule 167: Electronic Reverse Auction

This is an online real-time purchasing technique utilised by the procuring entity to select
the successful bid.

This involves presentation by bidders of successively more favorable bids during a

scheduled period of time and automatic evaluation of bids.

Electronic Reverse Auction may be opted when:

Procuring entity have detailed description on the subject to be procured.

There is a competitive market of bidders anticipated to be qualified.

The criteria to be used by the procuring entity in determining the successful quantifiable bid
are and can be expressed in monetary terms

Rule 168: Contents of Bidding Document

All the terms and conditions, stipulations and information to be incorporated in the bidding
document (7 Chapters). Such as:

Chapter 1: Instruction to bidders

Chapter 2: Conditions of Contract

Chapter 3: Schedule of Requirements

Chapter 4: :Specifications and allied Technical Details.

Chapter 5: Price Schedule (to be utilized by the bidders for quoting their prices)

Chapter 6: Contract Form

Chapter 7: Other Standard Forms, if any, to be utilized by the purchaser and the bidders.

Rule 169: Maintenance Contract

Maintenance contracts are especially needed for sophisticated and costly equipment and
machinery.

Equipment or machinery shall be maintained free of charge by the supplier during its
warranty period or such other extended periods as the contract terms may provide
The paid maintenance should commence only thereafter.

Rule 170: Bid Security

To safeguard against a bidder's withdrawing or altering its bid during the bid validity
period in the case of advertised or limited tender enquiry, Bid Security (also known as
Earnest Money) is to be obtained from the bidders along with their Bids.

Not required for Micro and Small Enterprises (MSEs),bidders registered with the Central
Purchase Organisation or concerned Ministry or Dept or from Startups recognized by
Department for Promotion of Industry and Internal Trade (DPIIT).

Range of Bid Security is 2% to 5% of the estimated value of the goods.

This shall be indicated in the Bidding Document.

This may be accepted in form of: Insurance Surety Bond, Demand Draft, Fixed Deposit
Receipt, Banker’s Cheque/ Bank Guarantee/ e Bank Guarantee of any commercial bank or
online payment.

Rule 170: Bid Security

The bid security is normally to remain valid for a period of forty-five days beyond the final
bid validity period.

Bid securities of the unsuccessful bidders should be returned to them at the earliest after
expiry of the final bid validity and latest on or before the 30th day after the award of the
contract.

In case of two packet or two stage bidding, Bid securities of unsuccessful bidders during
first stage i.e. technical evaluation etc should be returned within 30 days of declaration of
results of first stage i.e. technical evaluation etc.

In place of Bid Security, a bid securing declaration may be obtained from bidder that if
they fail to fulfil the contract or submit performance security in due period, they may be
suspended for period specified in Bid Document.

Rule 171: Performance Security

To ensure due performance of the contract, Performance Security is to be obtained from the
successful bidder awarded the contract

Performance Security should be for an amount of 3% to 10% of the value of the contract as
specified in the bid documents.

This may be accepted in form of: Insurance Surety Bond, Demand Draft, Fixed Deposit
Receipt, Banker’s Cheque/ Bank Guarantee/ e Bank Guarantee of any commercial bank or
online payment
Performance Security should remain valid for a period of sixty days beyond the date of
completion of all contractual obligations of the supplier including warranty obligations.

Bid security should be refunded to the successful bidder on receipt of Performance Security.

Rule 172 (1): Advance Payment to Suppliers

Ordinarily, payments for services rendered or supplies made should be released only after the
services have been rendered or supplies made.

In following cases advance payment may be made:

servicing of Air conditioners, computers, other costly equipment

fabrication contracts, turn-key contracts

Limit of Advance Payment:

Thirty percent. of the contract value to private firms

Forty percent. of the contract value to a State or Central Government agency or a Public
Sector Undertaking

In case of maintenance contract, the amount should not exceed the amount payable for six
months under the contract.

While making any advance payment as above, adequate safeguards in the form of bank
guarantee etc. should be obtained from the firm.

Rule 172 (2): Part Payment

Part payment to the supplier may be released after it dispatches the goods from its premises
in terms of the contract.

Rule 173: Transparency, competition, fairness and elimination of arbitrariness in the

procurement process

All government purchases should be made in a transparent, competitive and fair manner,
to secure best value for money

The Bidding Document should be self-contained and comprehensive without any

ambiguities

The condition of prior turnover and prior experience may be relaxed for Startups. However
quality & technical specifications shall be meet.

Bidding Documents should include a clause that "if a firm quotes NIL charges/
consideration, the bid shall be treated as unresponsive and will not be considered".

The reasons for rejecting a tender or non-issuing a tender document to a prospective bidder
must be disclosed if enquired.
Rule 173: Transparency, competition, fairness and elimination of arbitrariness in the
procurement process

The bids should be opened in public and authorized representatives of the bidders should be
permitted to attend the bid opening.

Contract should ordinarily be awarded to the lowest evaluated bidder whose bid has been
found to be responsive and who is eligible and qualified to perform the contract satisfactorily.

However, where the lowest acceptable bidder is not in a position to supply the full quantity
required, the remaining quantity, be ordered from the next higher responsive bidder at the
rates offered by the lowest responsive bidder.

While procuring electrical appliances ensure they carry the notified threshold or higher
Star Rating of Bureau of Energy Efficiency (BEE).

Rule 173: Transparency, competition, fairness and elimination of arbitrariness in the

procurement process

Rejection of Bid is justified when:

Effective competition is lacking

All Bids and Proposals are not substantially responsive to the requirements

The Bids/Proposals prices are substantially higher that the updated cost estimate or
available budget

None of the technical Proposals meets the minimum technical qualifying score

Lack of competition shall not be determined solely on the basis of the number of Bidders.

Even when only one Bid is submitted, the process may be considered.

When a limited or open tender results in only one effective offer, it shall be treated as a single
tender contract.

Rule 174: Efficiency, Economy and Accountability in Public Procurement System

Public Procurement procedure should ensure :

Efficiency

Economy and

Accountability

Rule 175 (1): Code of Integrity:

No official of a procuring entity or a bidder shall act in contravention of the Code of

Integrity.
In Code of Integrity:

Few acts have been prohibited, these shall not be done.

Conflict of Interest shall be disclosed.

Any previous transgressions/ violation made with any entity in any country during the
last three years or the bidder has been debarred by any other procuring entity, the matter
shall be disclosed.

Rule 175 (1): Code of Integrity: Prohibited Acts

making offer, solicitation or acceptance of bribe, reward or gift or any material benefit to
avail unfair advantage in the procurement process or to otherwise influence the procurement
process.

any omission, or misrepresentation for financial or other benefit or to avoid obligation.

any collusion, bid rigging or anticompetitive behavior

improper use of information provided by the procuring entity with an intent to gain unfair
advantage or for personal gain.

any financial or business transactions between the bidder and any official of the procuring
entity which can affect the decision of the procuring entity directly or indirectly.

any coercion or any threat to impair or harm

obstruction of any investigation or auditing of a procurement process

making false declaration or providing false information

Rule 175 (2): Reasonable Opportunity to be heard

The procuring entity, after giving a reasonable opportunity of being heard, comes to the
conclusion that a bidder or prospective bidder, as the case may be, has contravened the code
of integrity, may take appropriate measures.

Rule 176: Buy Back Offer

When it is decided with the approval of the competent authority to replace an existing old
item(s) with a new and better version, the department may trade the existing old item
while purchasing the new one.

A suitable clause is to be incorporated in the bidding document.

Chapter 6- Part II

Procurement of Services

A. Consulting Services (177-196)

 B. Outsourcing of Services

Rule 177: Consulting Service (Rule no imp)

Means any subject matter of procurement which includes professional, intellectual, training
and advisory services or any other service classified or declared as such by a procuring entity.

Goods or works and procurement incidental or consequential to the service are excluded from
Consulting Service.

Direct engagement of a Retired Govt Servant does not come under Consulting Service.

Rule 178: Hiring of Consultants

The Ministries or Departments may hire external professionals, consultancy firms or

consultants for a specific job, which is well defined in terms of content and time frame
for its completion.

Rule 178: Applicability for engagement of consultants

This chapter contains fundamental principles and is applicable to all Ministries or

Departments regarding engagement of consultants.

Rule 180: Identification of Services required to be performed by Consultants

May be resorted for high quality services where department does not have requisite expert.

Approval of competent authority should be obtained before engagement of consultants.

Rule 181: Preparation of scope of the required consultants

Ministry or Department should prepare in simple and concise language the requirement,
objectives and scope of the assignment.

The eligibility and prequalification criteria to be met by the consultants should be clearly
identified at this stage.

Rule 182: Estimating reasonable expenditure

Ministry or Department proposing the engagement of consultants should estimate reasonable

expenditure for the same.

This shall be ascertained from prevalent (common/general) market conditions and consulting
other organisations engaged in similar activities.

Rule 183: Identification of Likely Sources

Where the estimated cost is upto Rs 25 Lakhs a long list of potential consultants shall be
prepared.

For NITI Aayog Limit is Rs 50 Lakhs.

Formal or informal enquiries shall be made from:

Other Ministries or Departments or Organisations involved in similar activities.

Chambers of Commerce and Industry

Association of Consultancy Firms

Where estimated cost is above 25 Lakhs

An enquiry for seeking Expression of Interest (EOI) from consultants should be published
in CPPP (in addition to call from Long List).

Rule 184:Shortlisting of Consultants

No of shortlisted consultants shall not be less than THREE.

Rule 185: Preparation of Terms of Reference (TOR)

The Terms of Reference (TOR) should include-

Precise statement of objectives.

Outline of the tasks to be carried out.

Schedule for completion of tasks.

The support or inputs to be provided by the Ministry or Department to facilitate the

consultancy.

The final outputs that will be required of the Consultant.

Rule 186: Preparation and issue of RFP

RFP is the document to be used by the Ministry/Department for obtaining offers from the
consultants for the required service.

The RFP should be issued to the shortlisted consultants to seek their technical and financial
proposals.

RFP consists of Nine parts.

Rule 186: Contents of Request For Proposal

A letter of Invitation

Information regarding procedure for submission of proposal

Terms of Reference (TOR) – Rule 185

Eligibility and pre-qualification criteria

List of key position whose CV and experience would be evaluated

Bid evaluation selection procedure.

Standard formats for technical and financial proposal

Proposed contract terms

Procedure proposed to be followed for midterm and final review.

Rule 187: Receipt and Opening of Proposals

Proposals should ordinarily be asked for from consultants in 'Two bid' system with technical
and financial bids sealed separately.

The bidder should put these two sealed envelopes in a bigger envelop duly sealed and
submit the same to the Ministry or Department by the specified date and time at the
specified place.

On receipt, the technical proposals should be opened first by the Ministry or Department at
the specified date, time and place.

Rule 188: Late Bids

Late bids i.e. bids received after the specified date and time of receipt should not be
considered.

Rule 189: Evaluation of Technical Bids

Technical bids should be analysed and evaluated by a Consultancy Evaluation Committee

(CEC) constituted by the Ministry or Department.

The CEC shall record in detail the reasons for acceptance or rejection of the technical
proposals analysed and evaluated by it.

Rule 190: Evaluation of Financial Bids of the technically qualified bidders:

The Ministry or Department shall open the financial bids of only those bidders who have
been declared technically qualified by the Consultancy Evaluation Committee (CEC) as
per Rule 189 for further analysis or evaluation and ranking and selecting the successful
bidder for placement of the consultancy contract.

Rule 191: Methods of Selection/ Evaluation of Consultancy Proposals

The basis of selection of the consultant shall be in any of the following three methods:

Quality and Cost Based Selection (QCBS)- Rule 192

Least Cost System (LCS) – Rule 193

Single Source Selection/Consultancy by nomination – Rule 194

Rule 192: Quality and Cost Based Selection (QCBS)

QCBS may be used for Procurement of consultancy services, where quality of consultancy
is of prime concern.

In QCBS initially the quality of technical proposals is scored as per criteria announced in
the RFP.

Only those responsive proposals that have achieved at least minimum specified qualifying
score in quality of technical proposal are considered further.

After opening and scoring, the Financial proposals of responsive technically qualified
bidders, a final combined score is arrived

Rule 192: Quality and Cost Based Selection (QCBS)

Weightage is given to both Quality and Cost e.g. 70:30, 60:40, 80:20 etc. depending of
importance of quality.

Maximum weightage to Technical Parameter (i.e. Quality/ Non Financial Parameter) is 80%.

The proposal with highest weighted combined score shall be selected.

Rule 193:Least Cost System (LCS)

LCS is appropriate for assignments of a standard or routine nature

For example: Audits and engineering design of non-complex works where well established
methodologies, practices and standards exist.

Here no weightage for Technical score in the final evaluation

The responsive technically qualified proposal with the lowest evaluated cost shall be
selected.

Rule 194: Single Source Selection/Consultancy by nomination

The selection by direct negotiation/nomination, on the lines of Single Tender mode of

procurement of goods, is considered appropriate only under exceptional circumstance:

a natural continuation of previous work carried out by the firm

in case of an emergency situation, situations arising after natural disasters, situations

where timely completion of the assignment is of utmost/ extreme importance.

involve use of proprietary techniques or only one consultant has requisite expertise.

Any other special circumstances with adequate justification, reason to be recorded in

writing on approval of competent authority.
Procuring entity shall ensure prices are reasonable and consistent with market rates and has
not been split into small size procurement.

Rule 195: Monitoring the Contract

The conduct and performance of consultancy shall continuously be monitored in task force
approach so that the output of the consultancy is in line with the Ministry/Department's
objectives.

Rule 196: Public competition for Design of symbols/ logos.

Design competition should be conducted in a transparent, fair and objective manner.

Wide publicity should be given to the competition so that information is accessible to all
possible participants in the competition.

This should include publication on the website of Ministry/Department concerned, as also the
Central Public Procurement Portal.

If the selection has been by a jury of experts nominated for the purpose, the composition of
the jury may also be notified.

Chapter 6- Part II

Procurement of Services

A. Consulting Services

B. Outsourcing of Services (197-206)

Rule 197: Non-Consulting Services (Rule no imp)

Non-Consulting Services means any subject matter of procurement other than 'Consultancy
Services’ which involves physical, measurable deliverables/ outcomes, where performance
standards can be clearly identified and consistently applied.

This excludes goods or works incidental or consequential to the service.

This includes maintenance, hiring of vehicle, outsourcing of building facilities management,

security, photocopier service, janitor, office errand services (delivery/ collection services),
drilling, aerial photography, satellite imagery, mapping etc.

Rule 198: Procurement Services.

A Ministry or Department may procure certain non-consulting services in the interest of

economy and efficiency.

The detailed instructions and procedures may be prescribed for this purpose without
contravening the basic guidelines.

Rule 199: Identification of Likely Contractors

The Ministry or Department should prepare a list of likely and potential contractors on the
basis of formal or informal enquiries from other Ministries or Departments and Organisations
involved in similar activities

Scrutiny of 'Yellow pages', and trade journals and web sites shall be made if available.

Yellow Pages: is a print directory which provides an alphabetical listing of businesses

within a specific geographical area segregated under headings for similar types of
businesses

Rule 200: Preparation of Tender Enquiry

Ministry or Department should prepare a tender enquiry containing the following aspects:

The details of the work or service to be performed by the contractor;

The facilities and the inputs which will be provided to the contractor by the Ministry or
Department;

Eligibility and qualification criteria to be met by the contractor for performing the
work/service;

The statutory and contractual obligations to be complied with by the contractor.

Rule 201: Invitation of Bids for Non-Consulting Service

Upto Rs 10 Lakhs:

Issue Limited Tender Enquiry to the listed likely contractors identified as per Rule 199.

No of identified contractors should be more than 3

Above Rs 10 Lakhs:

Advertised Tender Enquiry to be issued.

Advertisement to be issued in Central Public Procurement Portal (CPPP) at

www.eprocure.gov.in , on GeM (www.gem.gov.in) and Department’s own website.

Complete web address for bidding documents to be downloaded shall also be provided.

Rule 202: Late Bids

Late bids i.e. bids received after the specified date and time of receipt should not be
considered

Rule 165: For Procurement of Products

Rule 188: For Consulting Services

Rule 202: For Out-sourcing/ non consulting Services

Rule 203: Evaluation of Bit Received

The Ministry or Department should evaluate, segregate, rank the responsive bids and select
the successful bidder for placement of the contract.

Rule 204: Procurement of Non-consulting services by nomination.

Only in an exceptional situation procurement of non-consulting service is made from a

specifically chosen contractor.

Competent Authority in the Ministry or Department may do so in consultation with the

Financial Adviser.

The detailed justification, the circumstances leading to such procurement and the special
interest or purpose it shall serve, shall form an integral part of the proposal.

Rule 205: Monitoring the Contract

The Ministry or Department should be involved throughout in the conduct of the contract and
continuously monitor the performance of the contractor.

Rule 206: Anything not contained in Rules

Any circumstances which are not covered in Rule 198 to Rule 205 for procurement of non-
consulting services, the procuring entity may refer Rule 135 to Rule 176 pertaining to
procurement of goods and not to the procurement of consulting services.

Thanks
Team Postapex Classes
To join us whatsapp: 8967 04 16 61