PROCUREMENT OF GOODS AND SERVICES BY GOVERNMENT As per GFRs-2017, the following provisions have been laid down in GFR-142 to GFR-206 for purchase

PROCUREMENT OF GOODS AND SERVICES BY GOVERNMENT

DEFINITION OF GOODS

As per GFRs-2017, the following provisions have been laid down in GFR-142 to GFR-206 for purchase of Goods and Services by the Govt. for use in their Departments/ Offices:-

Definition of Goods

The term ‘goods’ includes all articles, material, commodity, livestock, stationery, furniture, fixtures, medicines, Instruments, machinery, equipment, industrial plant, vehicles, aircraft, ships, railway rolling stock, assemblies, spares, accessories, intangible products like software, technology transfer, licenses, patents or other intellectual properties to be purchased. The term ‘goods’ also includes transportation, installation, training and maintenance in respect of those goods already purchased. But the term ‘goods’ excludes books, publications, periodicals, etc. required in Library.

(GFR-143)

Fundamental Principles of Govt. Purchase

a) Transparency: Transparency must be maintained during the whole process of procurement.

b) Fairness: Be fair and neutral. Equitable treatment should be given to all suppliers.

c) Competition: Competition must be promoted in public procurement.

The public procurement must conform to the following yardsticks:

Requirement of goods should not be for a particular trade mark, trade name or trade brand. Only specification as per actual requirement should be given.
The specification and quality of goods should be clearly spelt out as per the basic needs of the Deptt. Superfluous and non-essential features should be avoided.
Purchase of goods in excess quantity should be avoided.
A complete schedule of procurement cycle should be published when the tender is issued.
Annual Procurement Plan before the start of the year should be prepared and placed on their website.

(GFR-144)

Authorities / Powers

Authorities competent to Purchase Goods

As per Delegation of Financial Powers Rules, an authority which is competent to incur expenditure may sanction the purchase of goods.

(GFR-145)

Powers for Procurement of Goods

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

PROCUREMENT OF GOODS AND SERVICES BY GOVERNMENT (GFR-147)

GOVERNMENT E-MARKETPLACE (GeM)

An online GeM portal has been established by GOI for purchase of common use Goods and Services. The procurement of Goods and services through GeM will be mandatory for those goods and services which are available on GeM. The concerned Deptt. will certify the reasonability of rates. The Departments shall utilize the GeM portal for direct online purchases, meeting requisite quality, specification and delivery period, as under:

a) Upto Rs 25000/- through any of the available suppliers on GeM.

b) Above Rs 25000/- and upto Rs 5,00,000/- having the lowest price amongst available sellers(excluding Automobiles where limit of Rs 30 lakh continue) of at least three different manufacturers on GeM. Tools for online bidding available on GeM can be used by the Deptt. even if procurement is less than Rs 5 lakh.

c) Above Rs 5,00,000/-, through the supplier having lowest price after mandatorily obtaining bids using online bidding or reverse auction tool provided on GeM. In case of automobiles, limit of Rs 30 lakh will continue.

d) The above mentioned ceiling is applicable only for purchases made through GeM.

e) The Govt. Deptt. may ascertain the reasonableness of prices before placement of order using the Business Analytics tools on GeM and Last Purchase Price on GeM and Department’s own.

(https://gem.gov.in.) (GFR-149)

Debarment from Bidding

A bidder shall be debarred if he has been convicted of an offence under Prevention of Corruption Act, IPC or any other law. The bidder or any of his successor shall not participate in Govt. biddings for a period not exceeding three years. List of such debarred bidders will be displayed on CPPP. If a bidder breached the code of integrity, he and his successor will be debarred from bidding for a period upto two years. List of such case be maintained by concerned Ministry/ Department and be displayed on its website. The bidder shall not be debarred unless he has been given reasonable opportunity to represent against his debarment.

(GFR-151)

PROCUREMENT OF GOODS AND SERVICES BY GOVERNMENT

Purchase of Goods without Quotation

Purchase of goods upto Rs. 25000/- on each occasion may be made without quotation on the basis of the following certificate to be recorded by the competent authority.

“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.”

(GFR-154)

Purchase of Goods by Purchase Committee

In case a certain item is not available on GeM, purchase of goods costing above Rs.25000/- and upto Rs.2,50,000/- on each occasion may be made on the recommendations of a Local Purchase Committee, duly constituted by H.O.D., consisting three members of appropriate level. The committee will survey the market and record the following certificate before placement of purchase order.

“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 Deptt. of Commerce or Ministry/Deptt. concerned.”

(GFR-155)

Purchase of Goods

Reserved Items & other Purchase/Price Preference Policy

Govt. has reserved all items of hand spun, hand-woven and handloom required by the Departments for exclusive purchase from KVIC.

(GFR-153)

Split of Order/Demand

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 and to follow the proper purchase procedure with reference to total value of demand.

(GFR-157)

Purchase of Goods directly under Rate Contract

The DGS&D was closed on 31.10.2017 and all departments and suppliers were re-directed to GeM for all procurement activities. Name of DGS&D has been replaced by GeM and Rules 148, 156, 159(iv), 160(iii), 173(xv) and 174(iv) related to Rate Contract have been deleted vide GOI, Min. of Finance OM dated 2.4.2019.

PROCUREMENT OF GOODS AND SERVICES BY GOVERNMENT

Purchase of Goods by obtaining Bids

Except in cases covered under GFR-154and 155, Departments shall procure goods by adopting standard method of obtaining bids in Advertised Tender Enquiry, Limited Tender Enquiry, Two Stage Bidding, Single Tender Enquiry and E-Reverse Auction.

(GFR-158)

E-Publishing – 1

E-Procurement - 2

E-Publishing

It is mandatory for all Govt. Departments and Autonomous/Statutory Bodies to publish their tender enquiries, corrigendum thereon and details of bids awards on the Central Public Procurement Portal (CPPP) and their own websites. Individual cases, where confidentiality is required for national security, may be exempted with the approval of the concerned Secretary and with the concurrence of FA. These instructions do not apply for purchase made under GFR-154 and 155.

(GFR-159)

E-Procurement

It is mandatory for all Departments to receive all bids in respect of all procurements online through E-Procurement Portals. For this purpose, E-procurement solution developed by NIC may be used. Deptts. which have a large volume of purchase may engage any other service provider after following due process. In individual case, where national security demands confidentiality, may be exempted from E-procurement with the approval of the concerned Secretary with the concurrence of FA.

(GFR-160)

Advertised Tender Enquiry

a) Subject to exceptions incorporated in GFR-154, 155, 162 and 166, tenders should be invited by advertisements for procurement of goods of estimated value of Rs. 25.00 lakh and above. Advertisement in such cases should be given on CPPP (at www.eprocure.gov.in), GeM and also on the website of the concerned Department.

b) Complete bidding documents should be posted by the Deptt. on CPPP and on its own website to enable prospective bidders to download the same for bidding free of cost.

c) Ordinarily, the minimum time of three weeks should be allowed for submission of bids from the date of publication of NIT or availability of bidding document for sale whichever is later.

(GFR-161)

Limited Tender Enquiry

a) This method may be adopted when the purchase value is upto Rs. 25.00 lakh. Limited tender enquiries should be published on CPPP and own website of the concerned Deptt. Copies of bidding documents should be sent by speed post/registered post/courier/email to more than three suppliers firms.

b) The unsolicited bids should not be accepted.

c) LTE may be adopted even when the procurement is involved of more than Rs. 25.00 lakh – i) Demand is urgent , ii) Advertised tender enquiry is not in public interest and iii) Sources of supply are definitely known. In such cases sufficient reasons should be given in writing.

(GFR-162)

Two Bid System – 1
Single Tender Enquiry - 2

Two Bid System

a) Technical Bid consists of all technical details alongwith commercial terms and conditions.

b) Financial Bid indicates the itemwise price.

c) First, technical bids are opened/downloaded and evaluated by a Purchase Committee as per terms and conditions contained in the Bidding Documents. Thereafter, financial bids of only those bidders which are found technically successful are opened and evaluated by the committee.

(GFR-163)

Single Tender Enquiry

a) This method is adopted in urgent cases or for purchase of proprietary articles.

(GFR-166)

Two-stage Bidding

In this method financial bids are receipt after receipt and evaluation of technical bids. Two-stage bidding system is adopted where it is not feasible to formulate detailed specifications or specific characteristics for the subject matter of procurement without receiving the inputs from the bidders due to technological advances. The bidder is expected to carry out a survey or investigation and undertake assessment of risks and costs associated with the particular procurement before submitting his final bid.

(GFR-164)

Electronic Reverse Auction

E-Reverse Auction means an online real-time purchasing technique which is used to select the successful bid. It involves presentation by many bidders of successively more favourable bids during the prescribed time and automatic evaluation of bids. This method is used where it is feasible to formulate a detailed description of the goods.

(GFR-167)

Contents of Bidding Documents

All terms, conditions, stipulations and information to be incorporated in the bidding document are to be mentioned in the following chapters/annexures:

1) Instructions to Bidders.

2) Conditions of Contract.

3) Schedule of Requirements.

4) Specifications and allied Technical Details.

5) Price Schedule to be utilised by bidders for quoting rates.

6) Contract Form.

7) Other Standard Forms, if any.

(GFR-168)

Maintenance Contract

Maintenance contracts are especially needed for sophisticated and costly equipment and machinery. It may be necessary to enter into MC of suitable period either with the supplier of the goods or with any other competent firm. It may be kept in mind that during warranty period maintenance of machinery is free of cost and the paid MC will starts only after expiry of warranty period.

(GFR-169)

Bid Security

a) To safeguard against a bidder’s withdrawing or altering its bids during the bid validity period in the case of advertised or limited tender enquiry, Bid Security (EMD) is to be obtained from the bidders.

b) Bid security should range between 2% to 5% of the estimated cost of purchase.

c) It may be accepted in the form of Demand Draft, Fixed Deposit Receipt, and Bank Guarantee from any Commercial Bank or online payment.

d) Its validity period is 45 days beyond the final bid validity period.

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

f) In place of a Bid security/EMD, the Departments may require bidders to sign a Bid Securing Declaration regarding if they withdraw or modify their bids during its validity or if they fail to sign the contract or in submitting Performance Security, they will be suspended to participate in the bidding for a period specified in the bidding document.

(GFR-170)

Performance Security

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

b) Performance Security will be 5% to 10% of the value of contract in the form of Demand Draft, Fixed Deposit Receipt, and Bank Guarantee from a Commercial Bank or online payment.

c) It should remain valid for a period of 60 days beyond the date of completion of all contractual obligations including warranty obligation.

(GFR-171)

Advance Payment

Ordinarily, payments are released only after services have been rendered or supplies have been made. However, sometimes it has become necessary to make advance payments in the following types of cases:

Advance payment demanded by firms holding maintenance contract for Air-conditioners, computers, other costly equipment, etc. Advance payment should not exceed the amount payable for six months.
Advance payment for fabrication contract, turn-key contracts, etc.
30% of the contract value to private firms.
40% of the contract value to Central or State Govt. agency or a PSU.
Advance payment may be released only against Bank Guarantee.

(GFR-172)

Transparency, Competition, Fairness and elimination of Arbitrariness in the Procurement Process
(1/4)

a) Transparency: Must be maintained during the whole process of procurement.

b) Fairness: Be fair and neutral and equitable treatment should be given to all suppliers.

c) Competition: Competition must be promoted in the public procurement.

To ensure the above and to secure the best value for Govt. money, some of the measures are as follows:

The text of the bidding documents should be self-contained, comprehensive and in simple language without any ambiguities.
The minimum level of experience, past performance, technical capability, manufacturing facilities and financial position should be required so that maximum bidders may participate in the procurement process.
The procedure as well as date, time and place for sending and opening of the bid should clearly be mentioned in bidding documents.
A clause should be included in the Bidding Document that “if a firm quotes NIL rates/charges, the bid shall be treated as unresponsive and will not be considered.”

Transparency, Fairness and Competition – Fundamental Principles of Govt. Purchase (2/4)

Provision should be kept in bidding documents to enable bidder to question the bidding conditions, process and/or rejection of its bid.
Criteria for determining responsiveness are to be taken into account for evaluating the bids such as time of delivery, performance/efficiency/environmental characteristics, terms of payment and of guarantees, price and cost of operating, maintaining and repairing, etc.
Negotiation after bid opening must be severely discouraged. However, in exceptional circumstances, where price negotiation against ad-hoc procurement is necessary due to some unavoidable circumstances, the same may be resorted to only with lowest evaluated (L-1) bidder.
Contract should be awarded to the L-1 bidder. However, where L-1 bidder against ad-hoc requirement is not in a position to supply the full quantity required, the remaining quantity, as far as possible, be ordered to L-2 bidder at the rates offered by L-1 bidder.
Bids received should be evaluated in terms and conditions already incorporated in the bidding document and no new condition should be brought in for evaluation of the bids.

Transparency, Fairness and Competition – Fundamental Principles of Govt. Purchase (3/4)

Rejection of all Bids justified when -

a) Effective competition is lacking.

b) All Bids and proposals are not responsive to the requirements of the procurement documents.

c) The Bids’/proposals’ prices are substantially higher than the updated cost estimate or available budget.

d) None of the technical bids meets the minimum technical qualifying score.

Lack in 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 valid provided following conditions are satisfied –

a) The procurement was satisfactorily advertised and sufficient time was given for submission of bids.

b) The qualification criteria were not unduly restrictive.

c) Prices are reasonable in comparison to market rates.

When a Limited or Open tender results in only one effective offer, it shall be treated as a Single tender contract.

Transparency, Fairness and Competition – Fundamental Principles of Govt. Purchase (4/4)

No member of the Purchase Committee should be reporting directly to any other member of such Committee in case estimated value of procurement exceeds Rs, 25.00 lakh.

(GFR- 173)

Buy-Back Offer

When it is decided to replace an existing old item(s) with a new and better version, the Department may trade the old item while purchasing the new one. For this purpose, a suitable clause is to be incorporated in the bidding documents so that the prospective and interested bidders formulate their bids accordingly.

(GFR-176)

PROCUREMENT OF SERVICES BY GOVERNMENT