GFR – 2017

(Procurement Management)

M.C.Panda
Fmr Addl Secretary, Min. of Commerce
Presently, consultant to Unicef and
Member of Expert Committees of ONGC, NTPC, IOC, GAIL & OIL

NIFM-7.11.17
 We are going to discuss…

◼ Concept of Public Procurement

◼ Provisions of GFR -2017
◼ Bid documents, Specs, Quantity, Eligibility Criteria,
firm price, Variable Price
◼ Evaluation of bids, Contract award, DP Extension
◼ GeM,Consultancy, QCBS, LCS
◼ Non-consulting services
◼ Case studies
◼ Any other topics which you would like
 What is Procurement?

▪ Procurement , in simple terms ,means obtaining

of goods and services to conduct business
operations of an organisation.
▪ It includes logistics management
▪ It provides us with an option whether or not to
be the owner of goods
 What makes PP important?

Public Procurement

Public Procurement
Pub service; Pub money Obtaining goods and
Economy; Transparency services
 Procurement objectives
Classic 5 R’s

◼ Right quality
◼ Right time
◼ Right price
◼ Right quantity
◼ Right source
 Fundamental principles of public proc

◼ Transparency

◼ Accountability

◼ Value for Money

◼ Efficiency
 What is value?

F V : Value GFR 137 :

V= C F : Function Specs to exclude
C : Cost superfluous features

This is similar to equation for happiness.

R When ‘N’ is reduced,

H=N
happiness increases
even if ‘R’ remain same.
 Best value

Bal Spec Competition

Over Spec

Best value Price

Compt
 What is GeM?
◼ Government e-marketplace (GeM) is for Govt.
users to cater to their demand for goods/
services
◼ Purchasers are the contract placing authority,
i.e. Govt. Departments, CPSUs etc
◼ Vendors / Sellers are the firms who offer their
goods/services on GeM as per GeM terms.
They may be OEMs or their channel partners.
 Procuring through GeM

◼ The Govt buyers shall utilize GeM portal for

direct on-line purchase as under:
◼ Upto Rs. 50000/ through any of the available
suppliers on the GeM meeting the required
quality, specs and delivery period
 Procuring through GeM

◼ Above Rs. 50000/ and upto Rs. 30 000 00

through the GeM seller having the lowest price
amongst the available sellers of at least three
different manufacturers on GeM meeting the
required quality, specs and delivery period
 Procuring through GeM

◼ Above Rs. 30 000 00/ through the supplier

having the lowest price (and) meeting the
required quality, specs and delivery period after
mandatorily obtaining bids, using on-line bidding
or reverse auction tool provided by the GeM
 Procuring outside GeM

◼ For procurement outside GeM, the relevant rules

shall be applicable.
◼ Purchase without quotation - Rs. 25000/
◼ Purchase Committee – Rs. 2 50 000/
◼ LTE – Upto Rs. 25 00 000/
◼ ATE – Rs. 25 00 000 and above
 Purchase of goods without quotation
◼ Purchase of goods upto Rs. 25000/- 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. Rule 145
◼ “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.”
 Purchase of goods by purchase committee

◼ Purchase of goods costing above Rs. 25,000/-

and upto Rs. 2,50,000/- on each occasion may
be made on the recommendations of a duly
constituted Local Purchase Committee
consisting of three members of an appropriate
level as decided by the Head of the Department.
 Committee to assess reasonableness of price

◼ The committee will survey the market to

ascertain the reasonableness of rate, quality and
specifications and identify the appropriate
supplier. Rule 155
◼ Before recommending placement of the
purchase order, the members of the committee
will jointly record a certificate as follows:
 Committee to assess reliability of supplier

◼ “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.
 Purchase of goods by inviting bids

Ministries or Departments shall procure goods

by following the standard method of obtaining
bids which are: Rule 158
◼ Advertised Tender Enquiry
◼ Limited Tender Enquiry
◼ Single Tender Enquiry
◼ Two-stage bidding (St age I- ATE; Stage II- LTE)
◼ Electronic reverse auction
 Two-stage bidding
◼ Stage I- Invite bids through ATE without price.
◼ Evaluate bids of eligible firms.
◼ Hold discussions with firms; amend specs, terms
and evaluation criteria if necessary.
◼ Stage II- Invite bids from all those bidders
(whose bids at the first stage were not rejected)
to present final bid with bid prices in response to
the revised requirement
 Two-stage bidding- (Withdrawal of a bid)
◼ Any bidder (who has been invited but not in a
position to supply the subject matter of
procurement due to modification in the specs or
terms and conditions) may withdraw in the
second stage without its bid security getting
forfeited.
 E- Procurement
◼ It is mandatory for Min/Dept to receive all bids
through e-procurement portals in respect of all
procurements Rule 160(i)
◼ This will not apply to (a) Procurement through
DGS&D R/C, (b) Cases where national security
and strategic considerations require
confidentiality, (c) Tenders floated by Indian
Missions abroad and (d) GTE. Rule 160 and 161
(iv)
 Single tender enquiry
Procurement from a single source may be
resorted to in the following circumstances :
◼ It is in the knowledge of the user department that
only a particular firm is the manufacturer of the
required goods.
◼ 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.
 Single tender enquiry

◼ 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), the required item is to be purchased
only from a selected firm.
 Proprietary article certificate

The following certificate is to be provided before

procuring the goods from a single source:
◼ (i) The indented goods are manufactured by M/s..
◼ (ii) No other make or model is acceptable for the
following reasons..
◼ (iii) Concurrence of finance wing to the proposal
obtained vide…
◼ (iv) Approval of the competent authority obtained
vide…
 Limited tender enquiry

◼ This method may be adopted when estimated value

of the goods to be procured is up to Rs 25 Lakhs.
Rule 162
◼ Copies of the bidding document should be sent
directly to more than 3 firms which are borne on the
list of registered suppliers for the goods.
◼ Further it should be published on CPPP and
organization’s website
 Limited tender enquiry

◼ The number of supplier firms in LTE should be

more than three. Efforts should be made to
identify a higher number of approved suppliers
to obtain more responsive bids on competitive
basis. Rule 162(i)
◼ Sufficient time should be allowed for submission
of bids in LTE. Rule 162 (iv)
 LTE- When advt. not in public interest
◼ The Ministry or Department should also put on
record the nature of the urgency and reasons
why the procurement could not be anticipated.
◼ b) There are 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.
 LTE- When sources are known

◼ (c) The sources of supply are definitely known

and possibility of fresh source(s) beyond those
being tapped, is remote.
 Advertised tender enquiry

◼ ATE to be normally adopted for procurement of

goods of estimated value Rs. 25 lakhs and above
Rule 161
◼ Advertisement in such cases should be given on
CPPP at eprocure.gov.in and on GeM An
organisation having its own web site should also
publish all its ATE on the website
 ATE - Tender documents

◼ The organisation should also post the complete

bidding document in its web site and CPPP to
enable prospective bidders to make use of the
document by downloading from the web site.
◼ To promote wider participation and ease of
bidding, No cost of tender document may be
charged for downloaded document
 Global tender enquiry

◼ Where the Ministry or Department feels that the

goods of the required quality, specifications etc.,
may not be available in the country
◼ The Ministry or Department may send copies of
the tender notice to the Indian embassies abroad
as well as to the foreign embassies in India. Rule
161(iv)
 Contents of Bidding documents

◼ Section – 1 : Instructions to Bidders.

◼ Section – 2 : Conditions of Contract.
◼ Section – 3 : Schedule of Requirements.
◼ Section – 4 : Specifications and allied Technical
Details.
 Contents of Bidding documents

◼ Section – 5 : Price Schedule(to be utilised by the

bidders for quoting their prices).
◼ Section – 6 : Contract Form.
◼ Section – 7 : Other Standard Forms, if any, to be
utilised by the purchaser and the bidders.
 Bidding documents- Specs

◼ The specifications should be broad-based to the

extent feasible Rule 173(ix)
◼ The specifications should meet the basic needs
without including superfluous and non-essential
features, which may result in unwarranted
expenditure. Rule144 (ii)
 Bidding documents- (Eligibility Criteria)
◼ Eligibility and qualification criteria such as minimum
level of experience, past performance, technical
capability, manufacturing facilities and financial
position or limitation for participation of bidders, if
any should be clearly spelt out. Rule 173(i)(b)
 Bidding documents- ( Special Terms etc)

◼ The Special terms should also be clearly spelt

out 173 (f)
◼ The Criteria for evaluation of bids should be
spelt out 173(e)
◼ The bidders to be given reasonable time to send
their bids/documents/clarifications Rule 173 (vii)
◼ The bids should be opened in public Rule 173(viii)
 Bidding documents- (Res Criteria)
◼ Criteria for determining responsiveness (of bids
criteria as well as factors to be taken into account
for evaluating the bids) such as (a) Time of
delivery, (b) Performance/ Effy/ Env
characteristics, (c) Terms of Payment and
guarantee, (d) Price, (e) cost of operating,
maintaining and repairing etc. Rule 173(xi)
(should be clearly stipulated in the bidding
documents)
 Bidding documents- (Price variation)
◼ Price variation clause can be included only in
long-term contracts, where the delivery period
exceeds 18 months
◼ In short-term contracts, firm and fixed prices
should be provided for. Rule 225(viii)
 Procurement planning-Price, Quality

◼ Price can be firm for short-duration contracts

◼ For long-duration contacts, it is advisable to
permit price variation so that risks are shared and
◼ Formulate a price variation clause incorporating
floor, ceiling of permissible variation etc
◼ Also formulate a clause for quality if desired
 Bid evaluation
◼ Bids should be evaluated as per criteria already
incorporated in the bidding documents; no new
condition which was not incorporated in the
bidding documents should be brought in for
evaluation of the bids
◼ Determination of a bid’s responsiveness should
be based on the contents of the bid itself without
recourse to extrinsic evidence Rule173 (xii)
 Negotiation
◼ Negotiation with bidders must be severely
discouraged. However in exceptional
circumstances, where price negotiation is
necessary due to some unavoidable
circumstances, the same may be resorted to only
with the lowest evaluated responsive bidder-Rule:
173 (xiv)
Purchaser-Supplier relationship

Treat as equal, find time, lend

a ear, appreciate, let them
know they are important
 Contract award (to L1)

◼ 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 as
per terms and conditions incorporated in the
bidding documents Rule173 (xvi)
 Contract award (Allocating quantity)

◼ Where L1 is not in a position to supply the full

quantity, the remaining quantity as far as
possible be ordered from the next higher bidder
at the rates offered by L1. Rule173 (xvi)
 Code of integrity
◼ No official or a bidder shall act in contravention
of the code which includes:
◼ (i) Prohibition of making offers, solicitation or
acceptance of bribe, reward or gift or any
material benefit, either directly or indirectly in
exchange for an unfair advantage in the
procurement process or to otherwise influence
the procurement process. Rule No 175
 What is integrity Pact?

Integrity Pact

Integrity Pact

Doing right things Agreement

 Contract Management (Liquidated Damages)

◼ All contracts shall contain a provision for recovery

of liquidated damages for defaults on the part of
the contractor
◼ Exemption from such a provision can be made
only in exceptional circumstances to be justified in
writing. Rule 225(xvi)
 Contract Management (Extension of DP)

◼ Normally, no extension of scheduled delivery or

completion date should be granted except where
events constituting force majeure, as provided in
the contract, have occurred or terms and
conditions include such a provision for other
reasons
◼ Such extensions may be allowed through
amendments. Rule 225 (xv)
 Contract Management- Dealing with changes

◼ The terms of a contract including the scope and

specifications should not be materially varied.
◼ Whenever such variation becomes unavoidable,
financial and other effects involved should be
examined and approval of competent authority
(for revised financial & other commitments)
obtained before accepting the variations.
◼ All such changes should be in the form of
amendments to the contract. Rule 225 (xiv)
 Advance payment

◼ Advance payment may be made in special cases

◼ Advance payment to be restricted to (a) 30% for
private firms, (b) 40% for PSUs and (c) amount
payable for 6 months under for AMC in case of
maintenance contracts Rule 172 (1)
 Advance payment

◼ While making any advance payment, adequate

safeguard in the form of Bank Guarantee should
be obtained from the firm-Rule 172(1)
◼ (Old GFR-In case any bank guarantee is
furnished by a foreign bank, the same should be
got duly endorsed by a Public Sector Bank.)
 Engagement of consultant

◼ Consultants may be engaged in situations

requiring high quality services for which the
organization does not have requisite expertise.
◼ Approval of competent authority is to be
obtained before engaging the consultant. Rule
No 180
 Terms of reference

TOR should include:

◼ Precise statement of objectives
◼ Outline of tasks to be carried out
◼ Schedule for completion of tasks
◼ Support/ Inputs to be provided by client Dept
◼ Final output that will be required from the
consultant. Rule No 185
 Identification of consultants

Estimated service upto Rs 25 lakhs:

◼ Prepare a list of potential consultants on the basis
of formal or informal enquiry from Depts involved
in similar activities, Chambers of Commerce &
Industry, Association of consultancy firms etc

Estimated service above Rs 25 lakhs:

◼ Prepare a list of potential consultants in the same
manner; expand it through EOI to be published on
CPPP, GeM and own website. Rule No 183
 Identification of consultants

◼ Seek EOI by publishing the requirement on

CPPP, GeM and own website.
◼ Specify the scope of service
◼ Incorporate qualifying criteria
◼ Invite suggestions on the scope of service
◼ Allow adequate time
◼ Short- list consultants
◼ Number of short- listed consultants should not
be less than three Rule No 184
 Request for proposal

◼ Letter of invitation
◼ Information to consultants
◼ Terms of reference
◼ Qualifying criteria if same has not been ascertained
◼ List of key positions whose CV and experience
would be evaluated. Rule No 186
 Request for proposal

◼ Bid evaluation criteria and selection procedure

◼ Standard formats for technical and financial
proposal
◼ Proposed contract terms
◼ Procedure to be adopted for mid-term review of
progress and review of the final report. Rule No
186
 Bid evaluation and contract award

◼ Evaluate technical bid by consultancy evaluation

committee (CEC)
◼ Open financial bids of only those who have been
declared acceptable by CEC
◼ Select the Bidder/ Consultant
◼ Place the Contract. Rule No 189 and 190
 Quality and cost based selection (QCBS)

◼ QCBS may be used for procurement of

consultancy service where quality of consultancy
is of prime concern. The RFP shall specify the
weightage to be given to quality, which shall not
exceed 80%. The offer with highest total score
shall be selected Rule 192
◼ Least Cost System (LCS) The responsive
technically qualified offer with lowest evaluated
cost shall be selected
 Quality and cost based selection (QCBS)

◼ L1-- Rs I Cr ; Tech Ev —80 Marks

◼ L2-- Rs 1.2 Cr; Tech Ev—90 Marks
◼ F1=100 F2 = 1/1.2X100=83
◼ If weightage for quality is 90% & price 10%,
◼ L1 scores 80x0.9+100x0.1=82
◼ L2 scores 90X0.9+83X0.1 =89.3
◼ If weightage for quality is 50% & price 50%
◼ L1 scores 80x0.5+100x0.5=90
◼ L2 scores 90x0.5+ 83x0.5=86.5
 Consultancy by nomination

◼ Select a particular consultant where adequate

justification is available for single-source selection
◼ Obtain approval of competent authority before
resorting to single-source selection. Rule No 194
 Monitoring the contract

◼ Dept should be involved throughout the currency

of the contract.
◼ A Task Force may be set up and there should be
continuous monitoring of the contract. Rule No
195
 Non-consulting services

◼ Min/ Dept may procure certain non-consulting

services in the interest of economy and
efficiency.
◼ It may formulate detailed procedure for this
purpose. Rule No 198
 Identification of contractors

◼ Prepare a list of potential contractors on the

basis of formal or informal enquiry from other
Depts involved in similar activities, scrutiny of
yellow pages, trade journals, websites etc Rule
199
 Identification of contractors (OLD)

◼ Prepare a list of potential contractors on the

basis of formal or informal enquiry from other
Depts involved in similar activities, scrutiny of
yellow pages, trade journals, websites etc Rule
199
◼ Number of should potential contractors not be
less than six (OLD)
 Preparation of tender enquiry

◼ Details of work or services to be performed.

◼ Facilities and inputs which will be provided.
◼ Eligibility and qualification criteria
◼ The statutory and contractual obligations to be
complied with by the contractor Rule No 200
 Mode of tendering
Estimated service upto Rs 10 lakhs:
◼ Prepare a list of potential contractors on the basis
of formal or informal enquiry from Depts involved
in similar activities and others(Ref 199) and issue
Limited Tender Enquiry. The number of
contractors should be more than three.

Estimated service above Rs 10 lakhs:

◼ Issue Advertised Tender Enquiry. Rule No 201
 Bid evaluation and contract award

◼ Evaluate the bids.

◼ Segregate the responsive and non-responsive
bids.
◼ Rank the responsive bids.
◼ Select the Bidder
◼ Place the Contract Rule No 203
 Non-consulting service by nomination

◼ Select a particular contractor in an exceptional

situation where adequate justification is available
for single-source selection
◼ Obtain approval of competent authority and
Finance before resorting to single-source
selection. Rule No 204
 Monitoring of the contract

◼ Dept should be involved throughout the currency

of the contract.
◼ There should be continuous monitoring of the
contract. Rule No 205
 Disposal

◼ Constitute a committee comprising officers of

procurement, user and finance wings to
declare items as surplus / obsolete /
unserviceable.
◼ Fix GP and RP.
◼ Decide mode of disposal. Rule 217
◼ Consult regulatory authorities if necessary.
 Modes of Disposal

◼ Value < Rs 2 lakhs – Competent authority to

decide mode of disposal keeping in view,
accumulation, blockage of space, deterioration of
value etc
◼ Value above Rs 2 lakhs – obtaining bids through
advertised tender or public auction. Rule 218
 Sale of hazardous goods

◼ Scrap lots comprising hazardous waste, scrap

batteries etc shall be sold keeping view the
guidelines of MoEF.
◼ Bidders of such stores (hazardous waste, scrap
batteries, e-waste etc) should have registration
valid on the date of auction and on the date of
delivery, as recycler/ pre-processor agency. Rule
217
 Disposal through tender
◼ Advertised tender:
◼ Prepare bidding documents
◼ Bid security should normally be 10%
◼ Arrange wide publicity
◼ Permit bidders to inspect stores
◼ Invite bids allowing reasonable time
◼ Evaluate bids Rule 219
 Disposal through tender

◼ Select the highest responsive bidder

◼ Negotiate with HRB if necessary
◼ If negotiation doesn’t get desired result, counter-
offer acceptable price to next higher responsive
bidder(s)
◼ Collect sale price
◼ Issue sale release order
◼ Release the stores Rule No 219
 Disposal through auction

◼ Engage auctioneer if necessary

◼ Prepare sale list and terms and conditions
◼ Decide composition of Auction team
◼ Arrange wide publicity through auctioneer or Dept
◼ Segregate stores for inspection by bidders
◼ Keep them in separate places. Rule No 220
 Disposal through auction

◼ Permit bidders to inspect stores.

◼ Announce terms & Conditions at the start of auction.
◼ Read out changes in sale list if any.
◼ Determine lot size
◼ Build a competitive atmosphere
◼ Conduct auction. Rule No 220
 Disposal through auction

◼ Announce acceptance or rejection of highest bid

◼ Collect earnest money on the spot.
◼ Obtain balance payment
◼ Issue sale release order
◼ Release the stores. Rule No 220