GENERAL FINANCIAL

RULES (GFR),
2017

Ver: 24.08
 SYLLABUS FOR AAO LDCE 2024
Chapter – : 1 : Introduction.

Chapter–: 2 : General System of Financial Management.

Chapter – : 3 : Budget Formulation and Implementation.

Chapter – : 6 : Procurement of Goods and Services.

.
Chapter – : 8 : Contract Management.
 BACK STORY
The General Financial Rules (GFRs) are rules and orders are basic
financial instructions dealing with matters involving public finances.
General Financial Rules were issued first in the year 1947 bringing
together in one place all existing orders and instructions pertaining to
financial matters. These have subsequently been issued as GFRs 1963/
GFRs 2005 and now modified as GFR 2017 with effect from 08.03.2017.
Our P&T FHB Vol-I was last issued by the DG, P&T in the year 1970 with
the GFRs of 1963. Subsequently, Shri P. Muthuswamy has updated this
FHB with reference to the GFR as issued from 2005 and 2017.
Recently, Sr. DDG (PAF) of Postal Dte, New Delhi has formed a committee
to revise the Postal FHB Vol-I with the CSI implementation perspective
and a new FHB Vol-I and II are likely to publish on 09/2021.
 CHAPTER -1 : INTRODUCTION
Rule -1 : Commencement : General Financial Rules, 2017 made effective
from 08.03.2017 and applicable to all Central Government Ministries/Departments.

Rule -2 : Important Definitions.

(i) “Accounts Officer” means the Head of an Office of Accounts or the Head of a Pay and
accounts Office set up under the scheme of departmentalization of accounts.
(iii) “Appropriation” means the assignment to meet specified expenditure of funds
included in a primary unit of appropriation.
(xxvi) “Re-appropriation” means the transfer of funds from one primary unit of
appropriation to another such unit.
(v) “Competent Authority” means in respect of the power to be exercised under any of
these rules, the President or such other authority to which the power is delegated by or
under the rules, Delegation of Financial Power Rules or any other general or special
orders issued by the Government of India.
(x) “Controlling Officer” means an officer entrusted by a Department of the Central Govt.
with the responsibility of controlling the incurring of expenditure and /or the collection of
revenue. The term shall include Head of Department and also an Administrator.
 CHAPTER -1 : INTRODUCTION
 Rule -2 : Important Definitions (Contd...)
(vii) “ Consolidated Fund” means the Consolidated Fund of India referred to in
Article 266(1) of the Constitution.
(ix) “ Contingency Fund” means the Contingency Fund of India established under
the Contingency Fund of India Act, 1950, in terms of Article 267(1) of the
Constitution.
(xii) “ Drawing and Disbursing Officer (DDO)” means a Head of Office and also any
other Gazetted Officer so designed by a Department of the Central Government, a
Head of Department or an Administrator, to draw bills and make payments on
behalf of the Central Government. The term shall also include a Head of
Department or an Administrator where he himself discharges such function.
(xvi) “ Government Account” means the account relating to the Consolidated Fund,
the Contingency Fund and Public Account, as defined in these rules.
(xxiv) “Public Account” means the Public Account of India referred to in Article
266(2) of the Constitution.
 CHAPTER -1 : INTRODUCTION
 Rule -2 : Important Definitions (Contd...)
(xvii) “Head of the Department (H.O.D.)” means an authority or person (not
below the rank of a Deputy Secretary to the Govt. of India), declared by the
concerned Department in the Govt. of India as Head of the Department in
relation to an identifiable establishment or establishments to exercise the
delegated financial powers under these Rules.

(xviii) “Head of Office (H.O.O.)” means

(a) A Gazetted Officer declared in Rule 14 of the Delegation of Financial
Powers Rules, 1978 and
(b) Any other authority declared as such under any general or special orders
of the Competent Authority.
 CHAPTER -1 : INTRODUCTION
 Rule -2 : Important Definitions (Contd...)
(xxviii) “Reserve Bank” means the Reserve Bank of India (RBI) or any office or agency of the RBI
and includes any Bank acting as the aget of RBI in accordance with RBI Act,1934.
(xxix) “Subordinate authority” means a Department of the Central Government or
any authority subordinate to the President.
(xxxi) “CAPEX Model” In the CAPEX Model, Capital expenditures is used by the
buyer to straightway purchase goods followed by procurement of consumables,
arranging comprehensive maintenance contract after warranty period and finally
disposing the product after useful life.
“OPEX Model” In the OPEX Model, the Seller provides the goods,
(xxxii)
maintains it and also provides the consumables as required and finally takes
back the goods after useful/contracted life. The expenditure is made by the
Buyer in a staggered manner as per the terms and conditions of the contract.
Rule 5 : Removal of Doubts .-Where a doubt arises as to the interpretation of
these rules, the matter shall be referred to the Ministry of Finance for decision.
CHAPTER - 2 GENERAL SYSTEM OF FINANCIAL MANAGEMENT
Rule-7: All moneys received by or on behalf of the Government either as dues of
Government or for deposit, remittance or otherwise, shall be brought into
Government account without delay as per the provision laid down in the Articles
150 and 283(1) of the Constitution.
(Note : Please read this Rule with Rule 4(1) of P&T FHB Vol.-I)
Rule-8(1): As per Article 284 of the Constitution, all money received by or
deposited with any officer employed in connection with the affairs of the Union in
his capacity as such, shall be paid into the Public Account.
Rule-8(2) : The Head of Account to which such moneys shall be credited and the
withdrawal of moneys therefrom shall be governed by the relevant provisions of
Government Accounting Rules (GAR),1990 and the Central Government Account
(Receipts and Payments) Rules,1983 or such other orders as may be issued in
this behalf.
CHAPTER - 2 : GENERAL SYSTEM OF FINANCIAL MANAGEMENT
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.
Rule-10 : The Controlling Officer shall arrange to obtain from his
subordinate officers monthly accounts and returns in suitable form.
Accordingly, each Accounts Officer will send an extract from his accounts
showing the amount brought to credit in the accounts in each month to the
Controlling Officer concerned.
Rule-12. Amounts due to Government shall not be left outstanding without
sufficient reasons. Where such amount is to be recoverable, the order of
the competent authority shall be obtained for their adjustment.
 CHAPTER - 2 : GENERAL SYSTEM OF FINANCIAL MANAGEMENT
GENERAL PRINCIPLE RELATING TO EXPENDITURE AND PAYMENT OF MONEY.
Rule-21: Standards of financial Propriety.
Every officer incurring or authorizing expenditure from public money should be guided
by high standards of financial propriety. Every officer should also enforce financial order
and strict economy and see that all the relevant financial rules and regulations are
observed, by his own office and by subordinate disbursing officers. Among the
principles on which emphasis is generally laid are the following :-
(i) Every officer is expected to exercise the same vigilance in respect of expenditure
incurred from public money as a person of ordinary prudence would exercise in respect
of expenditure of his own money.
ii) The expenditure should not be prima facie more than the occasion demands.
(iii) No authority should exercise its power of sanctioning expenditure to pass an order
which will be directly or indirectly to its own advantage.
CHAPTER - 2 GENERAL SYSTEM OF FINANCIAL MANAGEMENT
(iv) 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.
(Note : Please read this Rule 21 with Rule 60 of P&T FHB Vol.-I)

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 unless the same has been sanctioned by a Competent
Authority.
CHAPTER - 2 GENERAL SYSTEM OF FIN. MANAGEMENT
RULE- 23 : Delegation of Financial Powers. The financial powers of the Government have
been delegated to various subordinate authorities vide Delegation of Financial Power Rules
as amended from time to time. The financial powers of the Govt., which have not been
delegated to a subordinate authority, shall vest in the Finance Ministry.
Rule-25(1) : Provision of funds for sanction. All sanctions to the expenditure shall
indicate the details of the provisions in the relevant grant or appropriation where from such
expenditure is to be met.
Rule-25(2) : All proposals for sanction to expenditure shall indicate whether such
expenditure can be met by valid appropriation or re-appropriation.
Rule-26 : The duties and responsibilities of a Controlling Officer.
They are to ensure that the expenditure
(i) does not exceed the budget allocation;
(ii) is incurred for the purpose for which funds have been provided ;
(iii) it is incurred in public interest ;
(iv) existence of adequate control mechanism.
 CHAPTER - 2 GENERAL SYSTEM OF FINANCIAL MANAGEMENT
Rule-27 : Date of effect of sanction :- Sanctions shall come into force from the
date of issue unless any other date from which they shall come into force is specified therein.
Rule-29 : Procedure of communication of sanction. – All financial sanctions
and orders issued by the competent authority shall be communicated to the Audit Officer and
the Accounts Officer.
Rule-30 : Lapse of sanction. – A sanction is normally valid during a period of twelve
months from the date of issue of sanction.
Rule-33(1) : Reporting of Loss.- Petty losses of value exceeding Rs 10,000/-
(Rupees ten thousand only) shall immediately be reported by the subordinate authority to
next higher authority as well as to the Statutory Audit Officer and to the concerned Pay
Accounts Officer, even when such loss has been made good by the party responsible for it.
(Please link Exception to Rule 53 and GID thereafter of P&T FHB Vol-I)
Rule-34 : Loss of Govt. property due to fire, theft, fraud with an amount of exceeding Rs
50,000/- (Rupees fifty thousand only) shall be reported to the Police for investigation as early
as possible.
CHAPTER - 2 : GENERAL SYSTEM OF FINANCIAL MANAGEMENT
Rule-36: Report to Audit and Accounts Officers. - After a full enquiry as to the
cause and the extent of loss has been made, the detailed report should be sent by the
subordinate authority to Head of Circle through proper channel with a copy to the
Audit officer and Pay and Accounts Officer.
Rule-37: Responsibility of losses : An officer shall be held responsible for any loss
sustained by the Govt. through fraud or negligence on his parts established through
Departmental enquiry.
Rule-38: Prompt disposal of loss cases :- Action at ach stage of detection,
reporting, write of, 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 strength the
control system.
Rule-39: Demand for information by Audit and Accounts Officer : - A subordinate
authority shall afford all reasonable facilities to the Audit and Accounts Officer or the
discharge of his functions and furnish fullest possible information required by him for
the preparation of any official account or report, payments and internal audit.
Rule-40: Submission of Records for information. - A subordinate authority shall
not withhold any information, books or other documents required by the Audit Officer
or Accounts Officer.
 CHAPTER-3 Budget Formulation and Implementation
Rule 42. Financial Year.-
Financial year of the Government shall commence on the 1st day of April of each year and end on the 31st day of
March of the following year.
Rule-43(1): Presentation of Budget to Parliament : As per Article 112(1) of the Constitution, the
Finance Minister shall arrange to lay before both the Houses of Parliament, an Annual Financial Statement also
known as ‘Budget’ showing the estimated receipts and expenditure of the Central Government in respect of a
financial year, before the commencement of that year.
Rule-44 : The budget shall contain the following :-
(i) Estimates of all Revenue to be raised during the financial year to which the budget relates ;
(ii) Estimates of all Expenditures for each Programme, scheme and project in that financial year ;
(iii) Estimates of all interest and debt servicing charges and any repayments on loans in that Fin year;
(iv) Any other information as may be prescribed.
Rule- 45: Receipt Estimates. : The details estimates of receipts shall be prepared with six tier
classification i.e. Major Head, Sub Major Head, Minor Head, Sub Head, Detailed Head and Object Head.
Rule-46 : Non-Tax Revenue : Revenue are two types.
(i) Tax revenue which is collected by Ministry of Finance and
(ii) Non Tax Revenuer which is collected through all Ministries/Departments and other autonomous bodies
and implementing agencies.
 CHAPTER-3 Budget Formulation and Implementation
Rule-51 - Demands for Grants.
The estimates for expenditure for which vote of Lok Sabha is required shall be in
the form of Demand for Grants.
(1) Generally, one Demand for Grant is presented in r/o each
Ministry/Department. Each Demand normally includes provisions required for a
service, i.e. provisions on account of revenue expenditure, capital expenditure,
grants to the State and Union Territory Governments and also Loans and
Advances relating to the service.
(2)The Demand for Grants shall be presented to Parliament at two levels. The
main Demand for Grants shall be presented to Parliament by the Min. of Fin.,
Budget Division a/w the Annual Financial Statement while the Detailed Demands
for Grants for consideration by the “ Departmentally Related Standing Committee
(DRSC) of the Parliament, are laid on the Table of the Lok Sabha by the
concerned Ministry/ Departments, as per dates approved from time to time.
 CHAPTER-3 Budget Formulation and Implementation
Rule -54 : Outcome Budget- After finalization of the estimates for budgetary
allocations, the Dept. of Expenditure in consultation with NITI Aayog and the concerned
Ministries shall prepare an Outcome Budget statement linking outlays against each
scheme/project with the outputs/deliverables and medium term outcomes.
Rule -55 : Vote on Account – If the Appropriation Bill seeking authorization of the
Parliament to make expenditure in consonance with the Budget proposal is likely to be
passed after the start of the financial year to which it corresponds then pending the
completion of the procedure prescribed in Article 116 of the Constitution for the passing of the
Budget, the Finance ministry may need to obtain a ‘Vote on Account’ to cover expenditure for
a brief period in accordance with the provisions of Article of the constitution. Funds made
available under Vote on Account are not to be utilized for expenditure on a ‘New Service’.
Rule -56 : Communication and distribution of grants and appropriations –
After the Appropriation Bill relating to Budget is passed, the Min. of Fin. Shall communicate
the came to the Ministries/Departments , which in turn, shall distribute the same to their
subordinate formations. The distributions so made shall also be communicated to the
respective Pay and Accounts Officers who will exercise check against the allocation to each
subordinate authority.
 CHAPTER-3 Budget Formulation and Implementation
Rule-57 : Responsibility for Control of Expenditure.
The departments of the Central Government shall be responsible for the control of
expenditure against the sanctioned grants and appropriations placed at their disposal. The
control shall be exercised through the Heads of Departments and other Controlling Officers,
if any, and Disbursing Officers subordinate to them.
(1) A Grant or Appropriation can be utilized only to cover the charges which are to be paid
during the financial year of the Grant or Appropriation and adjusted in the account of
the year. No charges against a Grant or Appropriation can be authorized after the
expiry of the financial year.
(2) No expenditure shall be incurred which may have the effect of exceeding the total grant
or appropriation authorized by Parliament by law for a financial year, except after
obtaining a supplementary grant or appropriation or an advance from the Contingency
Fund. Since voted and charged portions as also the revenue and capital sections of a
grant/Appropriation are distinct and re-appropriation inter se is not permissible, an
excess in any portion or section is treated as an excess in the Grant/Appropriation.
 CHAPTER-3 Budget Formulation and Implementation
Rule 61: Excess Expenditure.
The Accounts Officer shall not allow any payment against sanctions in excess of the Budget
provisions unless there is specific approval of the Chief Accounting Authority.
The Financial Advisors and Chief Accounting Authority, before according concurrence for
excess under any Head, shall ensure availability of funds through Re-appropriations/
Supplementary Demands for Grants.
Duties and Responsibilities of the Chief accounting Authority Rule 70 :-
(i) Be responsible and accountable for financial management of his Ministry/Department ;
(ii) Ensure that the public funds appropriated to the Ministry or Department are used for the
purpose for which they are meant ;
(iii) Be responsible for the effective, efficient, economical and transparent use of the
resources of the Ministry/Department in achieving the stated project objectives of that
Ministry or Department;
(iv) Appear before the Committee on Public Accounts (PAC) and any other Parliamentary
Committee for examination .
CHAPTER - 6 PROCUREMENT OF GOODS AND SERVICES
Rule-143 : Definition of Goods:
The term ‘Goods’ include -
all articles, commodity, livestock, furniture, raw-material, spares,
instruments,
machinery, equipment, Industrial plant, vehicles, aircraft, ships etc. or
intangible products like software, technology transfer, licenses,
patents or other intellectual properties purchased or acquired for the
use of govt.
but excludes – books, publications, periodicals etc. for a
Library.
The term ‘Goods’ also includes works and services like
transportation, insurance, installation, commissioning, training and
maintenance.
 PROCUREMENT OF GOODS AND SERVICES
Rule. 144 – Fundamental Principle 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.
(i) The procedure to be followed in making public procurement must conform to the
following yardsticks that thee procurement to the extent practicable should.-
(a) be objective, functional, generic and measureable and specify technical,
qualitative and performance characteristics,
(b) not indicate a requirement for a particular trade mark, trade name or brand.
(ii) the specifications in terms of quality, type etc., as also quantity of goods procured, should be
clearly spelt out.
(iii) where applicable, the technical specifications should be clearly mentioned on the basis of
National technical regulations.
 PROCUREMENT OF GOODS AND SERVICES
(iv) care should also be taken to avoid purchasing quantities in excess of requirement
to avoid inventory carrying costs.
(v) offers should be invited following a fair, transparent, and reasonable procedure.
(vi) the procuring authority should be satisfied that the selected offer adequately meets
the requirement in all respects.
(vii) the procuring authority should satisfy itself that the price of the selected offer is
reasonable and Consistent with the quality required.
(viii) At each stage of procurement, the concerned procuring authority must place on
record, in precise terms, the considerations which weighed with it while taking the
procurement decision.
(ix) a complete schedule of procurement cycle from date of issuing the tender to date
of issuing the contract should be published when the tender is issued.
(x) All Ministries/Departments shall prepare Annual procurement plan before the
commencement of the year and the same should also be published on their website.
PROCUREMENT OF GOODS AND SERVICES
Rule 145. Authorities competent to purchase goods.
An authority which is competent to incur expenditure may
sanction the purchase of goods required for use in public service
in accordance with provisions in the Delegation of Financial
Powers Rules.
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 on GeM are required to be procured mandatorily
through GeM as per Rule 149.
Note : Rule- 148. Rate Contract (Deleted vide Dept. of
Expenditure OM dated 02.04.2019).
PROCUREMENT OF GOODS AND SERVICES
Rule -149 : Government e-Marketplace (GeM) :
GOI has established the GeM for common use of 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 or Services by all Departments will be mandatory for Goods or
Services available on GeM.
The GeM portal shall be utilized by the Govt. buyers for direct online purchases as under :-
(i) Up to Rs 50,000 through any of the available suppliers on the GeM, meeting the
requisite quality, specification and delivery period.
(ii) Above Rs. 50,000/- and upto Rs. 10,00,000 (For automobile Rs 30,00,000/-) through the
GeM Seller having lowest price amongst the available sellers of at least three different
manufactures, on Gem, meeting the requisite quality, specification and delivery period.
The tools for online bidding and online reverse auction available on GeM can be used
by the Buyer even for procurements less than Rs. 10,00,000/-
(iii) Above Rs. 10,00,000 through the supplier having lowest price meeting the requisite
quality, specification and delivery period and mandatorily obtaining bids, using online
bidding or reverse auction tool provided on GeM.
 PROCUREMENT OF GOODS AND SERVICES
Rule 150 : REGISTRATION OF SUPPLIERS.
(i) A Head of Department may also register suppliers of goods which are specifically required
by that Department or office, periodically. Registration of the supplier should be done in a
fair, transparent and reasonable procedure and after giving due publicity.
(ii) Credentials, manufacturing, capability, quality control systems, past performance, after-
sales service, financial background etc. of the suppliers should be verified carefully before
registration.
(iii) The suppliers will be registered for a fixed period between 1 to 3 years. New suppliers
should be considered for registration at any time, provided they fulfil all the required
conditions.
(iv) Performance or conduct of every registered supplier is to be watched by the concerned
Ministry of Dept. The registered suppliers are liable to be removed from the list of approved
suppliers if they fail to abide by the terms and conditions of the registration or fail to supply
the goods in time or make any false declaration to any govt. agency or for any ground which,
in the opinion of the govt., is not in public interest.
(v) Registered suppliers are ordinarily exempted from furnishing bid security along with their
bids.
 PROCUREMENT OF GOODS AND SERVICES
Rule-151 : DEBARMENT FROM BIDDING.
(i) A bidder shall be debarred for a period not exceeding three years
commencing from the date of debarment. A bidder shall be debarred if he
has been convicted of an offence under the Prevention of Corruption Act,
1988 or for causing any loss of life or property or causing a threat to
public health as part of executing of a public procurement contract.
(ii) Debarment of bidders will also be displayed on the website of DGS&D
as well as Central Public Procurement Portal (CPPP).
(iii) A procuring entity may debar a bidder or any of its successors, from
participating in any procurement process undertaken by it for a period
not exceeding 2 years, if it determines that the bidder has breached the
code of integrity. The Ministry/Department will maintain such list which
will be displayed on their website.
 PROCUREMENT OF GOODS AND SERVICES
CENTRAL PUBLIC PROCUREMENT PORTAL (CPPP):
CPPP is e-procurement system of India enables the Tenders to
download the tender schedule free of cost and then submit the bids
online through this portal. Procurement website is eprocure.gov.in
Rule -154 : Purchase of goods without quotation.
Purchase of goods up to the value of Rs 50,000/- 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 :-
“ 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 “
 PROCUREMENT OF GOODS AND SERVICES
Rule-155 : PURCHASE OF GOODS BY LOCAL PURCHASE COMMITTEE:
In case not available in GeM--- Purchasing of goods costing above Rs.
50,000 and up to Rs. 5,00,000 by Local Purchase Committee (LPC)
consisting of 3 members appointed by the Head of the Department. The
committee survey the market and bring the quotations from the suppliers or
bidders. Finally the supplier whose quotation contain least price with proper
quality and specifications is selected. The members of the committee will
jointly record a certificate as under :-
“ Certified that we, the members of the LPC 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
the Department of Commerce or Department concerned.”
Rule 157. A demand for goods should not be divided into small quantities to
make piecemeal purchases to avoid the necessity of obtaining the
sanctioning of higher authority required with reference to the estimated
value of the total demand.
 PROCUREMENT OF GOODS AND SERVICES
Rule 158. - Purchase of goods by obtaining bids.-
Except in cases covered under Rules 154 and 155, Ministries or Departments
shall procure goods by following the standard method of obtaining bids in :-
(i) Advertised Tender Enquiry ;
(ii) Limited Tender Enquiry ;
(iii) Two- Stage Bidding ;
(iv) Single Tender Enquiry and
(v) Electronic Reverse Auctions.

Rule -159. - E-Publishing.- It is mandatory for all Ministries/Departments of

the Central Govt. to publish their tender enquires, corrigenda and details of bid
awards on the Central Public Procurement Portal (CPPP).
These instructions would not apply to procurements made without quotations
and by LPC vie Rule 154 and 155.
CHAPTER - 6 : PROCUREMENT OF GOODS AND SERVICES
Rule -160. E- Procurement:
It is mandatory for Departments to receive all bids through e-procurement
portals in respect of all procurements.
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 though any other solution provided so far may use e-
procurement solution developed by National Information Centre (NIC). Other
Departments may either use e-procurement solution developed by NIC or engage
any other service provider following due process.
In individual case, where National security and strategic considerations demands
confidentiality, Ministries/Departments may exempt such cases from e-
procurement after seeking approval of concerned Secretary and Financial
advisers.
In case of tenders floated by Indian Missions Abroad, Competent Authority (CA) to
decide the the tender, may exempt such case from e-Procurement.
PROCUREMENT OF GOODS AND SERVICES
Rule 161. Advertised Tender Enquiry.
(i) Except under Rules 154,155, 162 and 166 special procedure ,Invitation
to tenders by advisement should be used for procurement of goods of
estimated value of Rs 50 lakhs and above. Advertisement in such cases
should be given on Central Public Procurement Portal (CPPP) at
www.eprocure.gov.in and on GeM. An organization having its own website
should also publish all its advertised tender enquiries on the website.
(ii) The organization should also post the complete bidding documents in its
website and on CPPP to enable prospective bidders to make use of the
documents by downloading the website.
(iii) Ordinarily, the minimum time to be allowed for submission of bids should
be three weeks from the date of publication of tender notice. In case of
obtaining bids from abroad, the minimium period should be four weeks.
CHAPTER - 6 : PROCUREMENT OF GOODS AND SERVICES
Rule-161 : ADVERTISED TENDER ENQUIRY:
When estimated procurement of goods is more than Rs. 25 lakhs, Advertised
Tender Enquiry is adopted. Advertisement should be given on Central Public
Procurement Portal (CPPP) at www.eprocure.gov.in and on GeM.
An Organisation should publish the tender Enquiries on its own website. The
Organisation should also post the complete bidding documents in its website and
CPPP to enable prospective bidders to make use of the document by downloading
from the website.
The advertisements for invitation of tenders should give the complete web address
from where bidding documents can be downloaded. In order to wider participation
and case of bidding, on cost of tender may be charged for the tender documents
downloaded by the bidders.
The minimum time to be allowed for submission of bids should be 3 weeks from
the date of publication for Domestic bidders. When the Departments contemplated
obtaining bids from Abroad, the minimum period should be kept as 4 weeks for
Foreign bidders.
 PROCUREMENT OF GOODS AND SERVICES
Rule-162 : LIMITED TENDER ENQUIRY.
This method adopted when estimated value of the procured goods upto Rs.
50,00,000/-. Copies of the bidding documents should be sent to the registered
bidders though speed post, Registered post, Courier and e-mail to the firms
which are borne on the list of registered suppliers for the goods in question as
reffered under Rule 150 above. The number of supplier firms in Limited tender
should be greater than three. . An organisation should publish its limited tender
enquires on Central Public Procurement Portal (CPPP).
The organisations publish the tender enquires on the Department’s website or
Subordinate offices of the Departments publish their tender enquires on their
official websites. The number of suppliers in Limited Tender Enquiry should be
more than three. In special case, On the following conditions, the estimated
value of the procurement is more than Rs. 50 lakh through Limited Tender
Enquiry.
In urgent condition, the Department does not want to make additional
expenditure to procure the goods through Advertised Tender Enquiry.
 CHAPTER - 6 : PROCUREMENT OF GOODS AND SERVICES
Rule -163 : TWO BID SYSTEM (Single Stage two envelopes System)
For purchasing high value plant, Machinery etc. of a complex and technical nature, bids obtained
in two parts:
Technical bid consisting of all technical details along with commercial terms and conditions.
Financial bid indicating item-wise price for the items mentioned in the technical bid.

First Envelope: called the techno-commercial bid, contains the eligibility and performance
aspects, commercial terms and conditions and documents sought in the tender.

Second Envelope: called the Financial bid, the price quotations along with other financial details
are submitted. Both the envelopes are to be submitted together in a sealed outer envelope.

If required, Technical specification and Techno-commercial conditions should be modified in a

pre-bid conference and it would be desirable not to invite fresh financial bids after opening of the
Techno-commercial bids.
CHAPTER - 6 : PROCUREMENT OF GOODS AND SERVICES
The Techno-commercial bids are to be opened in the first instance
on the bid opening date and time, and scrutinised and evaluated by the
competent committee or authority and technically compliant bidders
are decided.
In the second instance, the financial bids of only the Techno-
commercially compliant offers are to be opened after intimating them
the date and time of opening of financial bid for further evaluation and
ranking before awarding the contract.
The financial bids of technically non-compliant bidders should be
returned unopened to the respective bidders by registered
acknowledgement/reliable courier or any other mode with proof of
delivery. In e-procurement, financial bids of technically non-compliant
offers would not get opened.
CHAPTER - 6 : PROCUREMENT OF GOODS AND SERVICES
Rule-164 :TWO STAGE BIDDING SYSTEM/EXPRESSION OF INTEREST TENDERS/MARKET
EXPLORATION:
Where the equipment/plant to be procured is of complex nature and the procuring Department may not
possess full knowledge of either the various technical solutions available or the likely sources for such
products in the market.
First Stage:
 The procuring entity shall invite Expression Of Interest (EOI) bids through Advertised Tender containing
the broad objectives, technical and financial eligibility criteria, terms and conditions of the proposed
procurement etc. without a bid price.
 On receipt of the EOI, technical discussions/presentations may be held with the short-listed
manufacturers/suppliers, which are considered technically and financially capable of supplying the
material or executing the proposed work, giving equal opportunity to all such bidders to participate in
the discussions.
 In revising the relevant terms and conditions of the procurement, if found necessary as a result of
discussions with the shortlisted bidders, the procuring entity shall not modify the fundamental nature
of the procurement itself, but may add, amend or omit any specification of the subject matter of
procurement or criterion for evaluation.
CHAPTER - 6 : PROCUREMENT OF GOODS AND SERVICES
Second Stage:
In second stage, the procuring entity shall 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 a revised set of terms and conditions of the procurement.
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, by
declaring his intention to withdraw from the procurement proceedings with adequate
justification.
In case EOI Tenders, bidders short-listed on the basis of Weightage evaluation
grading/marking scheme for allotting marks (out of 100) for various parameters. All
bidders who secure the minimum required marks, normally 60% should be short-
listed. The minimum qualifying marks should be specified in the EOI documents.
Alternatively instead of weighted evaluation, the EOI document may specify a ‘fail-
pass criteria’ with the minimum qualifying requirement for each of the criteria, such
as minimum years of experience, minimum number of assignments executed and
minimum turnover. The short-list should normally comprise at least 4 firms.
CHAPTER - 6 : PROCUREMENT OF GOODS AND SERVICES
Basic Concepts on Bid and Bidder.:
Bid : It include ‘tender’, ‘offer’, ‘quotation’ or ‘proposal’ means an offer to supply
goods, services or execution of works made in accordance with terms and
conditions set out in a document inviting such offers.

Bidder Including the term ‘tenderer’, ‘consultant’ or ‘service provider’ means any
eligible person or firm or company participating in a procurement process with a
Procuring Entity.

Standard Bid Documents (SDB):It including ‘Tender Enquiry Documents’ or

Request For proposal Documents (REP)’ means a document issued by the Procuring
Entity, including any amendment thereto, that sets out the terms and conditions of
the given procurement and includes the invitation to bid.

Rule 165: Late Bids – In case of advertised tender enquiry or limited tender
enquiry, late bids (ie. Bids received after the specified date and time for receipts of
bids) should not be considered.
CHAPTER - 6 : PROCUREMENT OF GOODS AND SERVICES
Rule 166 : SINGLE TENDER ENQUIRY (STE) WITH A
Proprietary Article Certificate (PAC).
In procurement of goods, certain items are procured only from Original Equipment
Manufacturer (OEM)) or Manufacturer has proprietary right (or its authorised dealers/
stockists) against a Propriety Article Certificate (PAC signed by the appropriate authority.
Once a PAC is signed at the designated level as per Schedule of the delegation of
powers.
Reports relating to such awards should be submitted to Ministry every quarter. Internal
audit may be required to check at least 10% of such cases. Details of such contracts
should be published on the website of the procuring entity.
Single Tender Enquiry (STE) without a PAC: A tender invitation to one firm only
without a PAC is called a single tender.
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.
CHAPTER - 6 : PROCUREMENT OF GOODS AND SERVICES
Rule-167 : Electronic Reverse Auction (eRA):

Electronic Reverse Auction means an online real-time

purchasing technique utilised by the procuring entity to
select the successful bid which involves presentation
by bidders of successively more favourable bids during
a schedule period of time and automatic evaluation of
bids.
CHAPTER - 6 : PROCUREMENT OF GOODS AND SERVICES
Rule-168. Contents of bidding documents.
– All the terms , conditions, stipulations and information to be incorporated
in the bidding document are to be shown as under :-
Chapter -1 : Instructions to bidders.
Chapter -2 : Conditions of contract.
Chapter -3 : Schedule of requirements.
Chapter -4 : Specifications and allied Technical Details.
Chapter -5 : price Schedule
Chapter -6 : Contract Form.
Chapter -7 : Other Standard Forms, if any.
CHAPTER - 6 : PROCUREMENT OF GOODS AND SERVICES
Rule -169. Maintenance Contract.-
Depending on the cost and nature of the goods to be purchased, it may also be necessary to
entered into a maintenance contract of suitable period either with the supplier of goods or
with other competent firm. Such maintenance contracts are especially needed for
sophisticated and costly equipment and necessary.
Rule 170. Bid Security/Earnest Money :
(i) 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/Earnest Money is to be
obtained from all bidders except Micro and Small Enterprises (MSEs).
(ii) Amount of Bid Security should ordinarily range between two percent to five percent of the
estimated value of goods to be procured.
(iii) It should be accepted in the form of Account Payee Demand draft, Fixed Deposit Receipt,
Banker’s Cheque or Bank Guarantee from any of the commercial banks or payment online in
an acceptable form, safeguarding the purchaser’s interest in all respects.
(iv) 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.
CHAPTER - 6 : PROCUREMENT OF GOODS AND SERVICES
Rule 171. Performance Security :-
(i) To ensure due performance of the contract, Performance Security is to be obtained from
the successful bidder awarded the contract.
(ii) It should be for an amount of five to ten percent of the value of the contract as
specified in the bid document.
(iii) It should remain valid for a period of sixty days beyond the date of completion of all
contractual obligations of the supplier including warranty obligations.
(iv) Bid security should be refunded to the successful bidder on receipt of Performance
Security.
Rule 172. Advance payment to Supplier.
Ordinarily, no advance payment. However, it may become necessary on
(i) In case of maintenance contract for servicing air conditioners, computers, costly
equipment's.
(ii) Against turnkey contracts.
Limit of ADVANCE - Private party – 30% of the Contract and State, Central Agency
and PSU – 40%.
CHAPTER - 6 : PROCUREMENT OF GOODS AND SERVICES
Rule 175. : Code of Integrity.
(1) No official of a procuring entity or a bidder shall act in contravention of
the codes which includes –
(i) Prohibition of
(a) Acceptance of bribe, reward opr gift or any material benefit, either
directly or indirectly.
(b) Any coercion or any threat to impair or harm, direct or indirectly, any
party or its property to influence the procurement process.
(c) Making false declaration for participation in a tender process or to
secure a contract.
(2) The procuring entity, after giving a reasonable opportunity of being hard,
comes to the conclusion that a bodder has contravened the code of
integrity, may take appropriate measures.
CHAPTER - 6 : PROCUREMENT OF GOODS AND SERVICES
Rule 176. Buy-Back Offer.-When it is decided that with
the approval of the competent authority to replace an existing
old items with a new and better version, the department may
trade the existing old item while purchasing the new one.
Rule 202.(Rule 165 and Rule 188) Late Bids .- Late
bids received after the specified date and time of receipt
should not be considered.
Rule 205. Monitoring of the Contract.- The ministry or
Department should be involved throughout in the conduct of
the contract and continuously monitor the performance of the
contractor.
CHAPTER - 8 : CONTRACT MANAGEMENT
Rule 224(1) : All contracts shall be made by an authority empowered to do so by under
the orders of the President in terms of Article 299(1) of the Constitution.
Rule 224(2) : All the contracts and assurances of property made in the exercise of the
executive power of the Union shall be executed on behalf of the President. The words
“for and on behalf of the President of India” should follow the designation appended
below the signature of the officer authorised in this behalf.
Rule 225 : General Principles for contract.-
The following general principles should be observed while entering into the contracts :-
(i)The terms of contract must be precise, definite and without any ambiguities. The terms should
not involve an uncertain or indefinite liability.
(ii)Standard forms of contracts should be adopted, wherever possible, with the modifications as
are considered necessary in respect of individual contracts. The modifications should be carried
out only after obtaining financial and legal advice.
CHAPTER - 8 : CONTRACT MANAGEMENT
Rule-226 : Management of Contracts.-
(i) Implementation of the contract should be strictly monitored and
notices issued promptly whenever a breach of provisions occurs.
(ii) Proper procedure for safe custody and monitoring of Bank Gurantees
or other Instruments should be laid down. Monitoring should include a
monthly review of all Bank Guarantees or other instruments after
three months, along with a view of the progress of supply or work.
Extension of Bank Guarantees or other instruments, where
warranted, should be sought immediately.
Rule-227 : Legal Advice.- Wherever disputes arise during
implementation of a contract, legal advice should be sought before
initiating action to refer the dispute to conciliation.
Presented
By