Procurement Rules

A. Step-by-Step Guide to Government Procurement of Goods and Services

1. Identify the Need:

   • Determine the requirement for goods or services based on departmental needs or projects.

2. Define Specifications:

   • Clearly outline the specifications, quantity, quality, and scope of goods or services required.

3. Prepare a Budget/ make a DPR :

   • Based on market analysis, EOI prepare a budget and make a DPR

4. Approval and Sanction:

   • Obtain necessary approvals from competent authorities for the procurement and budget allocation. Technical, financial, administrative sanction .

5. Prepare Bid Documents:

   • Draft tender documents, including Request for Proposal (RFP), Request for Quotation (RFQ), or Notice Inviting Tender (NIT), specifying terms and conditions, evaluation criteria, and contract details.

6. Advertise the Tender:

   • Publish the tender notice on government portals (like the Government e-Marketplace (GeM), Central Public Procurement Portal (CPPP)), newspapers, and other relevant platforms to invite bids.

7. Pre-Bid Meeting (if necessary):

   • Conduct a pre-bid meeting to clarify any doubts or questions from prospective bidders.

8. Receive and Open Bids:

   • Collect bids within the stipulated time and open them in the presence of a committee to ensure transparency.

9. Evaluate Bids:

   • Evaluate the bids based on predefined criteria, including technical and financial aspects.

10. Award the Contract:

    • Select the best-suited bidder based on evaluation and issue a Letter of Intent (LoI) or Work Order (WO).

11. Sign the Contract:

    • Enter into a formal contract with the selected vendor, detailing all terms and conditions.

12. Monitor and Manage the Contract:

    • Oversee the execution of the contract to ensure compliance with specifications, timelines, and quality standards.

13. Payment Processing:

    • Process payments as per the contract terms upon satisfactory delivery of goods or services.

14. Completion and Feedback:

• Complete the procurement process with a performance review and feedback for future reference.

B. Rules Codifying Procurement

1. General Financial Rules (GFR) 2017:

   • Provides a comprehensive framework for procurement policies, including the principles of transparency, competition, fairness, and accountability.
   • Key chapters: Chapter 6 (Procurement of Goods and Services) and Chapter 7 (Contract Management).

2. Manual for Procurement of Goods, 2017:

   • Detailed guidelines and procedures for the procurement of goods, issued by the Department of Expenditure, Ministry of Finance.

3. Manual for Procurement of Consultancy & Other Services, 2017:

   • Provides procedures for procuring consultancy and other services, ensuring value for money and quality.

4. Central Vigilance Commission (CVC) Guidelines:

   • Guidelines to prevent corruption and ensure transparency in public procurement.

5. Government e-Marketplace (GeM) Rules:

   
   

   C. Detailed Project Report (DPR) vs. Request for Proposal (RFP)’

   
   
   A Detailed Project Report (DPR) and a Request for Proposal (RFP) serve distinct purposes in project management and procurement. A DPR is a comprehensive document that details all aspects of a proposed project, including its objectives, background information, technical specifications, feasibility studies, cost estimates, financial analysis, implementation plan, risk assessment, and regulatory compliance. It is used primarily for internal planning, securing approvals, and guiding project implementation. In contrast, an RFP is a formal document issued to solicit detailed proposals from vendors or service providers for the procurement of specific goods or services. It includes a project overview, scope of work, technical specifications, evaluation criteria, submission guidelines, terms and conditions, and timelines. The RFP is used to invite, evaluate, and select the best proposal based on predefined criteria, forming the basis for contract formation with the chosen vendor. The key differences lie in their purpose and stage of use: the DPR focuses on detailed project planning and feasibility analysis, while the RFP focuses on the procurement process and vendor selection after the project's needs have been clearly identified.
   
   

   D. Request for Proposal (RFP)

   A Request for Proposal (RFP) is a formal document issued by an organization to solicit detailed proposals from potential vendors or service providers for the procurement of specific goods or services. The RFP outlines the project requirements, expectations, and evaluation criteria, providing a structured process for selecting the most suitable proposal. It ensures a competitive and transparent procurement process.

   Contents of an RFP

   1. Introduction:

      • A brief overview of the issuing organization and the context of the RFP, including the purpose and objectives of the procurement.

   2. Project Overview:

      • Description of the project or procurement need, including background information and the scope of work.

   3. Scope of Work:

      • Detailed description of the tasks, services, or products required, including technical specifications, deliverables, and performance standards.

   4. Requirements:

      • Detailed specifications and requirements that proposals must meet, including technical, functional, and operational criteria.

   5. Evaluation Criteria:

      • The criteria that will be used to evaluate proposals, including technical capabilities, financial stability, past performance, and other relevant factors.
      • Weightage or scoring system for each criterion.

   6. Submission Guidelines:

      • Instructions on how to prepare and submit proposals, including format, required documents, and submission deadlines.
      • Information on where and how proposals should be submitted (e.g., electronically, in hard copy).

   7. Terms and Conditions:

      • Legal and contractual terms, including payment terms, warranties, penalties for non-compliance, and other relevant conditions.

   8. Timelines:

      • Key dates related to the RFP process, including the issue date, deadline for submission of proposals, evaluation period, and anticipated award date.

   9. Proposal Format:

      • A specified structure for the proposal to ensure consistency and completeness, often including sections such as:
        • Executive Summary
        • Technical Proposal
        • Financial Proposal
        • Experience and Qualifications
        • Project Plan and Timeline
        • References

   10. Vendor Qualifications:

       • Minimum qualifications or experience required for vendors to be considered, including any certifications, past project experience, and financial stability.

   11. Contact Information:

       • Details of the contact person or team responsible for the RFP, including how to submit questions or request clarifications.

   12. Q&A Process:

       • Procedures for submitting questions about the RFP and how answers will be communicated to all potential vendors.

   13. Confidentiality and Proprietary Information:

       • Guidelines on how proprietary and confidential information should be handled during the RFP process.

   14. Disclaimers:

   • Any disclaimers regarding the RFP process, such as the right to reject any or all proposals, the possibility of changes to the RFP, and the non-binding nature of the document.

   
   

   E. Contents of a DPR

   1. Executive Summary:

      • A brief overview of the project, including its objectives, key findings, and recommendations.

   2. Project Objectives:

      • Clear and concise statements of the goals and intended outcomes of the project.

   3. Background Information:

      • Context and justification for the project, including historical data, current status, and the need for the project.

   4. Technical Specifications:

      • Detailed descriptions of the technical aspects of the project, including design drawings, engineering plans, and technical requirements.

   5. Feasibility Studies:

      • Analysis of the project's viability from various perspectives:
        • Economic Feasibility: Cost-benefit analysis, economic impact, and return on investment.
        • Technical Feasibility: Evaluation of technical aspects and potential challenges.
        • Environmental Feasibility: Assessment of environmental impacts and mitigation measures.
        • Social Feasibility: Consideration of social impacts and benefits.

   6. Cost Estimates:

      • Detailed breakdown of capital and operational costs, including estimates for materials, labor, equipment, and contingencies.

   7. Financial Analysis:

      • Projections of the project's financial performance, funding requirements, revenue models, and payback period.

   8. Implementation Plan:

      • Detailed timeline and schedule for project execution, including key milestones, phases, and tasks.

   9. Risk Assessment and Management:

      • Identification of potential risks and challenges, along with strategies for risk mitigation and management.

   10. Regulatory Compliance:

       • Documentation of required approvals, permits, and compliance with relevant laws and regulations.

   11. Sustainability and Environmental Impact:

       • Assessment of the project's sustainability, environmental impacts, and proposed measures to minimize negative effects.

   12. Stakeholder Analysis:

       • Identification and analysis of key stakeholders, their interests, and strategies for stakeholder engagement and communication.

   13. Operational Plan:

       • Plan for the operational phase of the project, including maintenance, staffing, and operational procedures.

   14. Monitoring and Evaluation:

       • Framework for monitoring project progress, evaluating performance, and ensuring quality control.

   15. Annexures:

       • Supplementary information, including detailed technical drawings, survey reports, data tables, and references.

   A well-prepared DPR provides a solid foundation for project planning, implementation, and management, ensuring that all critical aspects are thoroughly considered and documented.

   
   

   F. Contents of an EOI

   1. Introduction:

      • Brief overview of the project or procurement opportunity, including the purpose of the EOI and the organization issuing it.

   2. Background Information:

      • Context and justification for the project or procurement need, including any relevant history or background.

   3. Scope of Work:

      • Description of the goods or services required, including key deliverables, objectives, and outcomes.

   4. Objectives:

      • Clear statement of the goals and objectives of the project or procurement.

   5. Criteria for Selection:

      • Minimum qualifications, experience, and other criteria that potential suppliers must meet to be considered.

   6. Submission Guidelines:

      • Instructions on how to submit an EOI, including the format, required documents, and submission deadline.

   7. Contact Information:

      • Details of the contact person or team responsible for the EOI process, including how to submit questions or request clarifications.

   8. Confidentiality and Proprietary Information:

      • Guidelines on how proprietary and confidential information should be handled during the EOI process.

   9. Evaluation Process:

      • Overview of how EOIs will be evaluated, including the criteria and process for shortlisting potential suppliers.

   10. Timeline:

       • Key dates related to the EOI process, including the submission deadline and anticipated timeline for further steps in the procurement process.

   11. Budget:

       • Indication of the budget or budget range for the project or procurement, if available.

   12. Terms and Conditions:

       • Any specific terms and conditions that potential suppliers should be aware of, including any legal or contractual requirements.

   13. Disclaimers:

       • Any disclaimers regarding the EOI process, such as the organization's right to reject any or all EOIs, the non-binding nature of the document, and the organization's right to cancel or modify the procurement process at any time.

   Key Considerations

   • Prequalification: EOIs are used to prequalify potential suppliers before issuing a formal RFP or inviting bids.
   • Information Gathering: EOIs help organizations gather information about potential suppliers' capabilities, qualifications, and interest in the project or procurement opportunity.
   • Efficiency: EOIs can help streamline the procurement process by identifying and shortlisting qualified suppliers early in the process.

   An EOI is an important tool in the procurement process, helping organizations identify and prequalify potential suppliers before issuing a formal RFP or inviting bids. By clearly communicating the project's requirements and selection criteria, an EOI helps ensure that the organization receives competitive and qualified proposals from interested parties

   * Prequalification is not necessary. You can use it to finalise specifications and cost as well .

   
   

   G. If I am purchasing say boats for my municipal corporation for tourism promotion and I do not have SOR available to determine rates nor I have a clarity of specifications that suit my need. How should I go about making a procurement in such a case

   In situations where you lack a Schedule of Rates (SOR) and clear specifications for purchasing boats for tourism promotion, you can follow these steps to ensure a transparent, competitive, and efficient procurement process:

   1. Conduct a Market Survey:

      • Purpose: To gather information about available boats, their specifications, prices, and suppliers.
      • Approach: Reach out to multiple vendors, visit boat exhibitions, and consult industry experts. Collect brochures, catalogs, and technical details of various types of boats.

   2. Engage a Consultant or Expert:

      • Purpose: To get professional advice on the most suitable specifications for the boats based on your specific needs.
      • Approach: Hire a marine consultant or expert with experience in boat procurement. They can help define the technical specifications, usage requirements, safety standards, and cost estimates.

   3. Prepare an Expression of Interest (EOI):

      • Purpose: To invite potential suppliers to express their interest and provide preliminary information about available boats.
      • Contents: Include a brief project description, intended use of the boats, basic requirements, and a request for suppliers to provide details of their offerings, including technical specifications and indicative prices.
      • Outcome: Shortlist suppliers who meet your basic requirements and show genuine interest.

   4. Hold a Pre-Bid Conference:

      • Purpose: To engage with potential suppliers, clarify your needs, and refine the specifications based on supplier feedback.
      • Approach: Organize a meeting with shortlisted suppliers to discuss your requirements in detail, ask questions, and seek suggestions. This will help you refine your specifications and ensure they are realistic and achievable.

   5. Prepare a Request for Proposal (RFP):

   • Purpose: To solicit detailed proposals from shortlisted suppliers based on refined specifications.
   • Contents: Include detailed technical specifications, scope of supply, delivery timelines, evaluation criteria, and terms and conditions. Allow flexibility for suppliers to propose alternative solutions that meet your objectives.
   • Outcome: Receive comprehensive proposals from suppliers, providing detailed information on boat types, technical specifications, pricing, and delivery terms.

   
   

   H.Procurement of Goods and Services

   
   

   Principles of Public Buying

   1. Efficiency, Economy, and Transparency: These are the foundational principles in public procurement to ensure resources are used effectively, costs are minimized, and the procurement process is open and transparent.
   2. Fair and Equitable Treatment: Suppliers should be treated fairly and equitably, ensuring that all potential vendors have a fair chance to compete.
   3. Promoting Competition: Competition is promoted to obtain the best value for money. This ensures that the government receives high-quality goods and services at the most competitive prices.

   Modes of Procurement

   1. Direct Purchase: For low-value items.
   2. Rate Contracts: Pre-negotiated agreements for specific goods or services.
   3. GeM (Government e-Marketplace): Preferred method for procurement. If items are not available on GeM, other methods like e-tendering can be used.

   Procurement on GeM

   1. Up to ₹25,000: Direct purchase can be made.
   2. ₹25,000 to ₹5,00,000: Purchase from the lowest seller among at least three sellers.
   3. Above ₹5,00,000: Invite bids. Reverse tendering can be used if desired.

   Debarment from Bidding: Debarment is applicable under the Prevention of Corruption Act, 1988, or for a breach of the code of integrity:

   • Typically 3 years for corruption-related offenses.
   • Typically 2 years for breaches of integrity.
   • The supplier must be given a chance to be heard.

   Purchase of Goods Not Available on GeM

   1. Up to ₹25,000: Direct purchase.
   2. ₹25,000 to ₹2,50,000: Purchase through quotations.
   3. Above ₹2,50,000: Tender process (advertised, limited, single, two-stage, e-reverse, single tender inquiry).
   • Limited Tender: Allowed below ₹25,00,000; invite bids from a minimum of three vendors.
   • Single Tender Inquiry: Allowed for proprietary items or emergencies; requires a proprietary article certificate.
   • QCBS (Quality and Cost-Based Selection): Allowed for procurement of services.

   
   

   Bid Security (EMD) and Performance Security

   • EMD (Earnest Money Deposit): Between 2-5% of the estimated value of the goods/services. Exemptions are available for MSMEs and registered contractors. EMD should be valid for 45 days beyond the final bid validity period.
   • Performance Security: Between 5-10% of the contract value. This should be valid for 60 days beyond the completion of all contractual obligations.

   Finalizing on a Single Bid

   A single bid can be accepted if it is satisfactorily advertised and the price is reasonable.

   Advance Payment to Suppliers

   • Maintenance Contracts: Up to 6 months of advance payment.
   • Fabrication and Turnkey Contracts: Private firms can receive up to 30% advance, and government firms can receive up to 40%.

   
   

   
   

   J. Rule 136 of GFR

   What does Rule 136 of GFR state about work sanction and approval? No work should commence without administrative, technical, and expenditure sanctions to ensure well-planned projects and appropriate fund allocation.

   Starting Work Without ApprovalCan work start without prior approval?Generally, no. Exceptions are made for emergencies, natural disasters, minor works, and safety/security concerns, but retrospective approval is required.

   Can financial sanction powers be delegated to a subordinate? Yes, as per Rule 13, delegation must be in writing, clearly specifying scope and limits, with periodic review and accountability.

   
   

   K. Brief on Bids ( Modification, bid rejection, bid split, per-bid)

   - Modification : It is allowed but it should be properly advertised , extend time if required.

   - Bid rejection : non responsive , higher price, lack of competition, not meeting the technical score . Single bid cannot be a reason if proper advertisement, criteria’s were non restrictive and price are reasonable.

   - Can we break a bid to more than one player : yes splitting is allowed on L1 rates.

   - pre-bid : turn key projects of special nature projects of procurements .

   - buy back option : allowed replace old with new as per 176 rule

   
   

   L. Types of tender procedure :-

   - single stage : technical-financial together

   - two stage : technical and then financial

   - EOI followed with two stage : where specifications, vendor, cost clarity is not there. Also EOI need not be restrictively followed with the restricted entry of those participated in the EOI.

   - Pre-NIT conference : It can be done for the propose of getting more clarity on tender conditions on the project and other clarification.

   - Pre Qualification Bid : Projects of complex technical requirement can have a PQ before TQ to ensure only serious bidders are there.

   
   

   M. If I want to do a tender where I don’t want to go on QCBS and want to ensure quality of work and technicality how can I do it : Go For PQ-TQ-Financial. Put 70:30 in the TQ where 30 percent marks if for POC, approach and methodology. In that you can make a mandatory 80 percent marks in solution and approach as mandatory . Overall 70 percent as a qualifier.

   
   

   N.