Manual for Procurement of Consultancy & Other Services — Study Notes (Ch 1–3)

Manual for Procurement of Consultancy & Other Services

The Government of India's procedural rule-book for hiring consultants and outsourcing other (non-consultancy) services. Built as a portal to the GFR 2017, DFPR and CVC guidelines — it fixes the definitions, the principles, the preference policies (MSE & Make-in-India), the governance code, and the contract & selection methods. These notes cover Chapters 1–3: the framework, the players & governance, and the contract types & systems of selection.

CH 1 · INTRODUCTION

Introduction to Procurement of Consultancy / Other Services

What this Manual is

The Manual is a portal to the framework governing public procurement of services. Ministries/Departments have full powers to arrange procurement of goods and services not available on GeM, exercised under the Delegation of Financial Power Rules (DFPR) and the Procurement Guidelines. Common-use goods and services that are on GeM must be procured through GeM (Rule 149, GFR 2017).

It does not stand alone — comprehensive rules sit in GFR 2017 (especially Chapter 6), the DFPR, purchase-preference orders, and CVC guidelines. There is no single law exclusively governing public procurement; for revision and clarification of this Manual the nodal authority is the Procurement Policy Division (PPD), Department of Expenditure, Ministry of Finance.

The statutory framework

CONSTAt the apex sits Article 299 of the Constitution — Government contracts must be in writing and executed by specifically authorised officers. Article 19(1)(g) (right to a profession) also has implications for procurement.
1872Indian Contract Act, 1872 — the general law of contracts.
1996Arbitration & Conciliation Act, 1996.
2002Competition Act, 2002.
2000Information Technology Act, 2000.

§ 1.3

Applicability & key definitions

"Services" are defined by exception: any subject of procurement other than goods or works (except those incidental to the service). The generic word "Services" means Consultancy and Other services together; it excludes appointment of an individual under any law. The guidelines do not apply to World Bank / international-agency-funded projects (covered under Rule 264, GFR 2017).

Rule 177, GFR 2017

Consultancy Services

Primarily non-physical, project-specific, intellectual & procedural processes where deliverables vary by consultant — management/policy/communications consulting, feasibility studies, project management, engineering, finance & taxation, training. Excludes direct engagement of a retired Government servant.

Defined by exclusion

Other (Non-consultancy) Services

Anything not classifiable as consultancy — routine, repetitive physical/procedural work with tangible standards: transport, logistics, clearing & forwarding, courier, upkeep of buildings/estates, drilling, aerial photography, satellite imagery, mapping.

IT Projects → treated as Consultancy

iBespoke software development.
iiCloud-based services.
iiiComposite IT system integration — design, development, deployment, commissioning, hardware supply, software, bandwidth and post-go-live operation/maintenance.

Classification — Service vs Works vs Goods

1.3.4Outsourcing = deploying outside agencies on a sustained, long-term basis (one year or more) for services traditionally done in-house — security, horticulture, catering, housekeeping, messenger services.
1.3.5Construction/repair of civil assets → handle as Works; repair/AMC/installation of mechanical, electrical or ICT assets → handle as Goods.
1.3.6When intellectual/advisory content dominates (physical part incidental) → treat the whole task as consultancy (e.g. underwater dam-safety inspection where analysis is the crux).
1.3.8Procuring Entities include Ministries/Departments, CPSEs, and bodies substantially owned/controlled or substantially financed by the Central Government — but not procurement for own use from subsidiaries/JVs in which a controlling share is held.

§ 1.4

Competent authorities & purchase powers

Sanction & SoPP — Rule 145, GFR 2017

An authority competent to incur expenditure may sanction procurement of services under the DFPR (Annexure 2A). No separate sanction is needed for services distinctly named in an already sanctioned/approved work or project. Each entity may issue a Schedule of Procurement Powers (SoPP) adding detail to DFPR delegations based on risk at each stage.

§ 1.5

Basic aims — the Five R's of Procurement

"Right" here means optimal. Every procurement seeks the right balance of cost and requirement across five parameters (framed for goods, but equally applicable to services):

Right Quality

Right Quantity

Right Price

Right Time & Place

Right Source

§ 1.6

Five principles of public procurement

iTransparency principle.
iiProfessionalism principle.
iiiBroader obligations principle (includes registration rules for bidders from countries sharing a land border with India).
ivExtrinsic legal principle.
vPublic accountability principle.

§ 1.7

Standards (Canons) of Financial Propriety — Rule 21, GFR

Rule 21, GFR 2017

iExercise the same vigilance over public money as a person of ordinary prudence over their own.
iiExpenditure should not prima facie exceed what the occasion demands.
iiiNo authority should sanction expenditure to its own direct/indirect advantage.
ivPublic money is not spent for a particular person/section unless a claim is enforceable in a Court of Law or it follows recognised policy/custom.
vAllowances must not become, on the whole, a source of profit.
viAn authority giving financial concurrence must not later be drawn into roles creating a conflict of interest.

§ 1.8

Public procurement infrastructure at the Centre

1.8.1

Procurement Policy Division (PPD)

In the Department of Expenditure, MoF — promotes uniformity/harmonisation, best practices, guidance, oversight, capacity building, issues manuals. Not meant to centralise procurement.

1.8.2

Central Public Procurement Portal (CPPP)

Designed, developed & hosted by NIC (MeitY) with DoE; has e-publishing & e-procurement modules. Mandatory for all Central Ministries/Departments, CPSEs and Autonomous/Statutory bodies to publish all tender enquiries & resulting contracts (Rule 159, GFR 2017). End-to-end e-procurement is mandatory.

§ 1.9

Preferential / Mandatory purchase from certain sources

Before applying any preference

Check the latest directives first. The purchase-preference provision must always be part of the Notice Inviting Tender (NIT) and Instructions to Bidders (ITB).

A · Policy for Micro & Small Enterprises (MSEs) — Rule 153(ii), GFR

MSE Public Procurement Policy, 2012 (amended 2018 & 2021)

Notified under Section 11 of the MSMED Act, 2006. Applies to all Central Ministries/Departments/CPSUs irrespective of value/nature (not to State Govt). Only MSEs under Udyam Registration are eligible.

FREEMSEs get tender documents free and EMD exemption; prior turnover/experience criteria may be relaxed (quality/technical specs cannot be diluted). Performance Bank Guarantee exemption is NOT covered.
PAYPayment to an MSE supplier must not exceed 45 days after supply (MSMED Act Ch. V); delay attracts compound interest at 3× the RBI bank rate.
L1+15An MSE quoting within the L1 + 15% band may supply up to 25% of tendered value by matching L1 (where L1 is a non-MSE); the 25% is shared proportionately.
SC/STWithin that 25%, a 4% purchase preference [i.e. 16% of 25%] is reserved for SC/ST-owned MSEs and 3% for women entrepreneurs; if unfilled, met from other MSEs.
OWN"SC/ST-owned": proprietor is SC/ST; or SC/ST partners hold ≥ 51%; or SC/ST promoters hold ≥ 51% in a private limited company.
SPLITIf the item cannot be split, an MSE within the L1+15% band may be awarded the full tendered value.

Startup relaxation — Rule 173(i), GFR

Prior turnover & experience may be relaxed for DPIIT-recognised Startups (specs intact). A start-up is an entity:

aUp to 10 years from incorporation/registration.
bTurnover in any financial year has not exceeded ₹100 crore.
cWorking towards innovation/improvement or a scalable, high-employment model.
dMust be recognised by DPIIT to claim benefits.

MSE policy — institutional machinery & limits

EXCLCovers only goods produced / services rendered by MSEs; traders, distributors, sole agents and works contracts are excluded.
DEFExemption: defence armament imports are excluded from the 20% goal for M/o Defence; weapon systems/missiles stay out of the reservation policy.
RCReview Committee chaired by Secretary, M/o MSME reviews the list of 358 items reserved for exclusive MSE purchase and exemption requests from the 25% target.
PORTALMSME Sambandh (8 Dec 2017) tracks CPSU procurement; CHAMPION portal redresses grievances; NSIC runs the SPRS and a National SC/ST Hub (Oct 2016).

B · Preference to Make in India — Rule 153(iii), GFR / PPP-MII Order 2017

Issued by DPIIT; applies to goods, works and services. L1 = lowest bid adjudged in evaluation; margin of purchase preference = 20%; works includes EPC contracts; services includes System Integrator (SI) contracts.

Supplier class	Min. local content	Eligibility
Class-I local supplier	≥ 50%	Eligible for purchase preference; sole eligible class where the Nodal Ministry notifies sufficient local capacity/competition.
Class-II local supplier	≥ 20%	May bid but gets no purchase preference.
Non-local supplier	< 20%	Eligible only when a Global Tender Enquiry is issued.

Purchase preference mechanics & thresholds

DIVDivisible goods/works: if L1 is not Class-I, 50% goes to L1, and the lowest Class-I within the 20% margin is invited to match L1 for the remaining 50%.
NON-DIVNon-divisible items & price-only services: the lowest Class-I within the margin is invited to match L1; if none match, award may go to L1.
₹5 lakhProcurements with estimated value below ₹5 lakh are exempt (no splitting to evade it).
₹200 crFor purchases under ₹200 crore a Global Tender Enquiry is generally not issued without competent-authority approval (Rule 161(iv)).
₹10 crLocal content is self-certified; above ₹10 crore, a statutory/cost-auditor or practising CA/cost-accountant certificate is required.
FALSEFalse declarations breach the Code of Integrity [Rule 175(1)(i)(h)] → debarment up to 2 years [Rule 151(iii)].
EXEMPTThe administrative Department, with its Minister-in-charge's approval and reasons recorded, may reduce min. local content, reduce the margin below 20%, or exempt an item/entity. A Standing Committee chaired by Secretary DPIIT oversees the Order.

§ 1.10–1.11

When is procurement of services justified?

Consultancy — Rules 178 & 180, GFR (prior CA approval required)

iInadequate in-house capability/capacity.
iiNeed for a qualified consultant for specialised, high-quality service.
iiiNeed for impartial advice free of conflicts of interest.
ivTransfer of knowledge / training / capacity-building as a by-product.
vAcquiring information / new methods & systems.
viPlanning & implementing organisational change.
viiEconomy, speed & efficiency vs. extra commitment of staff, resources, money & time.

Two-stage rule (1.11)

Consultancy is best procured by unrestricted competition among shortlisted firms in a two-stage process (quality, then cost). Other services use a simpler process like that for Goods/Works (Chapter 9). Engagements must be economical & efficient (Rule 182), with transparency & integrity (Rule 179).

§ 1.12–1.13

Law of Agency & proactive (RTI) disclosure

⚖️Law of Agency: a consultant/service provider acts as an Agent of the Procuring Entity (Principal), governed by Sections 182–238 of the Indian Contract Act, 1872. The Procuring Entity is vicariously liable for its agents' actions (e.g. labour-law violations by deputed staff); Standard Bidding Documents must address this.
📄RTI proactive disclosure: Section 4(1)(b) mandates suo-motu disclosure; Sections 4(2) & 4(3) prescribe dissemination. Procurement notices/tender enquiries, corrigenda, and bid-award details (vendor name, rate, total) must be disclosed under Section 4.

§ 1.14–1.15

Procurement cycle & the Concept Paper

iPrepare Concept Paper / Procurement Proposal and obtain in-principle approval.
iiPrepare ToR (consultancy) / Activity Schedule (other services), cost estimate; seek administrative & budgetary approval.
iiiShortlist consultants via EoI — formulate, publish, receive & evaluate.
ivIssue RfP; evaluate technical then financial proposals; select; negotiate; award.
vMonitor the assignment.

Concept Paper — Rule 181, GFR (plays the role of an Indent for goods)

iPurpose/Objective Statement — describes the subject matter; shows fit with short-term & strategic goals.
iiService Outcome Statement — qualitative/quantitative outcomes, time-frame, rough cost estimate (to fix the approval level under SoPP).
iiiJustification — required vs in-house capability, justified per para 1.10.1.

In-principle administrative approval & budgetary sanction by the Competent Authority (per SoPP) must precede further stages.

Self-test

Chapter 1 Quiz — framework, definitions & preferences

Eight UPSC-style questions from Chapter 1. Pick an answer to lock it; the explanation appears below.

Score 0 / 0

⚡ Chapter 1 — Quick Recap

Concept	Key Fact
Apex statutory provision	Article 299; no exclusive procurement law
Mandatory GeM purchase	Rule 149, GFR 2017
Consultancy definition	Rule 177 — intellectual/procedural; excludes retired Govt servants
Outsourcing duration	Sustained engagement of ≥ 1 year
Nodal authority	PPD, Dept. of Expenditure, MoF
Five R's	Right quality, quantity, price, time & place, source
Canons of propriety	Rule 21, GFR — ordinary-prudence vigilance
CPPP	Hosted by NIC (MeitY); publishing mandatory — Rule 159
MSE payment limit	45 days; delay → compound interest at 3× RBI bank rate
MSE price band	L1 + 15% → up to 25%; SC/ST 4%, women 3%
Make-in-India	Margin 20%; Class-I ≥ 50%, Class-II ≥ 20% local content
MII thresholds	Exempt below ₹5 lakh; auditor cert above ₹10 cr; GTE rule below ₹200 cr
Startup	≤ 10 yrs, turnover ≤ ₹100 cr, DPIIT-recognised (Rule 173(i))
Concept Paper	Rule 181 — Purpose + Outcome + Justification

CH 2 · GOVERNANCE

Consultants, Service Providers & Governance Issues

What this chapter covers

Who the players are, the ethics they must observe (the Code of Integrity for Public Procurement), the Integrity Pact tool with its Independent External Monitors, and the rules for debarring errant firms under Rule 151 of the GFR 2017.

2.1.1

Consortium / JV

For large/complex assignments, firms associate as a Joint Venture or sub-consultancy. In a JV all members sign and are jointly & severally liable; one becomes the lead member — the Procuring Entity deals only with the lead.

2.1.2

Consultancy / Service Firms

The main source — classed as international (international experience & rates) or national (usually domestic, lower rates).

2.1.3

Individual Consultants

Used when a full team isn't needed. If more than three experts are required, a firm's team should be used. Not normally used for project preparation unless simple/repeat.

2.1.4–2.1.5

Specialised Agencies / NGOs

Govt/semi-govt agencies, universities, institutions; NGOs are advantageous where community participation/local knowledge matters (e.g. CSR projects).

JV qualification norms (illustrative thresholds)

VALUEJVs may be allowed for complex/large assignments above a value (say ₹5 crore); maximum partners limited (say three).
SHAREEach partner should meet at least 25%, and the lead partner at least 50%, of the qualifying limit for experience & financial turnover.
ONEConflicting Association: a firm may submit only one proposal; submitting/participating in more than one → all such proposals disqualified (sub-consultant/team-member in more than one only if the RfP permits).

Retired Government Servant — Rule 177, GFR

Consulting services do not include direct engagement of retired Government servants; they cannot be engaged against regular vacant posts, only for a specific task and duration with clear output-related goals.

§ 2.2

Code of Integrity for Public Procurement (CIPP)

Officials and bidders/suppliers/consultants must sign declarations to abide by CIPP. Transgression can lead to removal from registered lists, contract cancellation, banning/blacklisting, or action before the Competition Commission of India. Six prohibited practices:

Six prohibited practices

iCorrupt practice — offering/soliciting/accepting bribes, rewards, gifts or benefits for unfair advantage.
iiFraudulent practice — any omission/misrepresentation to mislead for benefit or to avoid an obligation; false declarations/information.
iiiAnti-competitive practice — collusion, bid rigging, or arrangements under the Competition Act, 2002 setting artificial prices.
ivCoercive practice — harming/threatening persons or property to influence participation or execution.
vConflict of interest — affiliations across bids, relationships/transactions with officials, or misuse of information for unfair gain.
viObstructive practice — destroying/falsifying evidence, false statements to investigators, or impeding audit/access rights.

§ 2.2.3–2.2.5

Conflict of interest & proactive disclosure

Disqualifying situations for a consultant

A consultant must give professional, objective, impartial advice, hold the client's interest paramount, and disclose any conflict (failure → disqualification/termination). Unless the RfP data sheet says otherwise, a consultant must not be hired where there is:

aConflicting activities — a firm (or affiliate) providing goods/works/non-consultancy for a project is barred from related consultancy, and vice-versa.
bConflicting assignments — an assignment that by nature conflicts with another of the consultant.
cConflicting relationships — close business/family ties with Procuring-Entity staff involved in ToR preparation, selection or supervision, unless resolved acceptably.

Unfair Competitive Advantage is avoided by issuing the RfP and all information to all shortlisted consultants simultaneously.

Obligations for proactive disclosure (2.2.5)

iParties must suo-moto declare any conflict of interest as it arises.
iiA bidder must declare any prior transgression of an integrity code, or being debarred, in the last three years — asked or not.
iiiVoluntary disclosure does not mean automatic disqualification; the conflict may be evaluated and mitigated.

§ 2.2.6

Punitive provisions for violating CIPP

Graded measures

BIDIf bid under consideration: forfeit/encash bid security; call off pre-contract negotiations; reject & exclude the bidder.
AWARDIf contract awarded: cancel & recover loss; forfeit other security/bond; recover payments made with interest at the prevailing rate.
PLUSAdditional: removal from registered list & banning for not less than one year; reference to CCI (filed by a Joint Secretary-level officer) for anti-competitive practices; disciplinary/criminal proceedings.

§ 2.2.7

Conduct of public servants — risks & mitigations

Risk area	Mitigation
Hospitality	Never solicit, directly or indirectly. Must not involve significant travel, overnight stay or trips abroad, or publicly identify a recipient with a firm. Extra care with firms in current/imminent tenders.
Gifts	Never solicit. Do not accept/retain gifts above the conduct-rule limit. Cash, gift cheques or cash-exchangeable vouchers are never acceptable, regardless of amount. Inadvertent gifts → returned or deposited in the Toshakhana/Treasury.
Private purchases	Do not seek/accept special facilities or discounts on private purchases from suppliers/contractors with whom there are official dealings (especially Rate-Contract holders).
Event sponsorship	Never engage in non-official pecuniary transactions — no soliciting sponsorship/donations for cultural, social, sporting, religious or charitable events from contractors/suppliers.

§ 2.3

Integrity Pact (IP) & Independent External Monitors

What the Pact does

A pre-bid Integrity Pact binds buyer and seller to ethical conduct/transparency from pre-selection through completion. Entering it is a preliminary qualification — a bid without a duly signed IP is non-responsive and rejected. MoF/DoE mandated 15 Ministries/Departments to adopt IP above a threshold value; the threshold should cover the bulk (80–90%) of procurement expenditure, decided with the Minister-in-charge's approval.

Essential ingredients of the Pact

iProcuring Entity promises equity & reason; no illegitimate benefit sought/accepted.
iiBidders promise no illegitimate benefit to officials; no offence under the Prevention of Corruption Act, 1988 or IPC 1860.
iiiNo undisclosed agreement among bidders on prices/specs/sub-contracts.
ivFall Clause — bidders have not / will not sell the same item below the bid price.
vForeign bidders disclose Indian agents; Indian bidders disclose foreign principals.
viDisclose payments to agents/brokers/intermediaries; and past transgressions over the specified period.

Independent External Monitors (IEMs)

NUMUp to three IEMs, of high integrity, below 70 years, selected in consultation with and approved by the CVC.
WHOOfficers retired from top management of GoI departments/PSUs (not the same organisation); eminent persons, retired High/Supreme Court judges and senior private-sector executives may also qualify.
TERMInitial 3 years, extendable by 2 years — maximum tenure 5 years. At least one IEM is named in the NIT.
ROLEIndependent & neutral; access to all documents/books on allegation; ideally meet once every two months; recommendations are advisory, not legally binding; may report serious irregularities directly to the CVC. The CVO's role is unaffected.

§ 2.4

Debarment of suppliers / contractors / consultants

Rule 151, GFR 2017 — debarment from bidding

iA bidder is debarred if convicted under the Prevention of Corruption Act, 1988, or under the IPC/any law for loss of life/property or threat to public health during a public procurement contract.
iiSuch a bidder (or successor) is ineligible across any procuring entity for a period not exceeding 3 years.
iiiA procuring entity may debar for breaching the Code of Integrity for a period not exceeding 2 years.
ivNo debarment without a reasonable opportunity to represent.

Type 1

Debarment by a Single Ministry

Issued by the Ministry itself; period ≤ 2 years; applies only to that Ministry & its attached/subordinate offices, autonomous bodies, CPSUs — not circulated. A JS/Additional Secretary may be the competent authority. Debarment is an executive function, not for the Vigilance Department.

Type 2

Debarment across All Ministries

Issued by DoE, MoF after the proposing Ministry (with Secretary's approval) sends a self-contained note; DoE verifies conformity with Rule 151. The firm stays in suspension only in the proposing Ministry pending DoE's decision; DoE may also act suo-moto.

Key definitions & common provisions

ALLIED"Allied firms" — concerns under the debarred firm's effective influence (common management, majority interest/shares, control). All successor firms are allied; debarment extends automatically to all allied firms.
JVIf a JV/consortium is debarred, all partners stand debarred for the specified period (named in the order).
MINOrdinarily, the debarment period should be not less than six months.
L1A debarred firm's bid is ignored; if it was L-1, the next lowest becomes L-1 and its bid security is returned.
STARTPeriod starts from the date of issue of the order. Contracts concluded before the order are unaffected. GeM may debar up to 2 years.
REVOKEAn order is automatically revoked on expiry (no formal order needed); early revocation by the competent authority if the disability already suffered is adequate.

Self-test

Chapter 2 Quiz — players, integrity & debarment

Eight UPSC-style questions from Chapter 2. Pick an answer to lock it; the explanation appears below.

Score 0 / 0

⚡ Chapter 2 — Quick Recap

Concept	Key Fact
Individual vs team	More than 3 experts → use a firm's team
JV liability	Jointly & severally liable; lead ≥ 50%, others ≥ 25% of qualifying limit
One-proposal rule	Multiple proposals by one firm → all disqualified
CIPP prohibited practices	6: corrupt, fraudulent, anti-competitive, coercive, conflict of interest, obstructive
Cash gifts	Never acceptable; inadvertent → Toshakhana/Treasury
CCI referral	Filed by a Joint Secretary-level officer
Integrity Pact reach	15 Ministries; threshold to cover 80–90% of spend
IEMs	Max 3, age < 70, term 3+2 = 5 yrs, CVC-approved, advice not binding
Debarment — conviction	≤ 3 years, all entities (Rule 151)
Debarment — integrity breach	≤ 2 years, single entity; ordinarily ≥ 6 months
All-Ministry debarment	Issued by DoE, MoF; allied & successor firms auto-included

CH 3 · CONTRACTS & SELECTION

Types of Contracts & Systems of Selection

What this chapter does

It fixes how payment is linked to performance (contract types) and how the right consultant is chosen (LCS, QCBS, SSS, FBS). The choice of contract type should follow Value-for-Money (VfM); an inappropriate type can cause poor competition, disputes and failure.

iLump Sum (Firm Fixed Price).
iiTime-Based (Retainer-ship).
iiiPercentage (Success Fee).
ivRetainer-ship cum Success Fee (combination).
vIndefinite Delivery contract.

For other (non-consultancy) services

Depending on nature: Lump-sum, Time-based, or unit/item-rate contracts (e.g. taxi per km) — as in Goods/Works — or a mix. Indefinite-delivery (time or unit-rate) suits uncertain but regular needs.

§ 3.2

Lump Sum (Firm Fixed Price) Contract

The preferred default

Fixed price for a fixed scope; payments linked to clearly specified outputs/milestones/deliverables. The consultant's proposal includes all prices — no arithmetical correction or price adjustment during evaluation. Easy to administer. Used for simple planning/feasibility studies, environmental studies, standard design, data-processing systems.

Risk	Mitigation
Quality/scope of output not linked to payment — temptation to cut corners; disputes over interpretation.	Use where quality, scope & timing are clearly defined; record acceptance; pay only against a certificate of acceptance.
Time over-run, since time is not linked to payment.	Monitor output per month against the planned time-line.

§ 3.3

Time-Based (Retainer-ship) Contract

When scope is hard to define

Payment on agreed hourly/daily/weekly/monthly rates for staff (named in consultancy) plus reimbursables; rates include salary, social costs, overhead, fee/profit, allowances. Used when Lump Sum isn't feasible — complex studies, construction supervision, advisory services, most training.

Risk	Mitigation
Quality/scope not linked to payment.	Evaluate quality/scope; release payment only against acceptance certificates.
Performance per period not linked to payment — dilatory use of paid staff.	Close monitoring; monthly reporting of payouts & work achieved to the CA.
Time & cost over-run — major risk; delay benefits the consultant.	Include an upper limit of total payments; once reached or period exceeded, the CA reviews any extension.

§ 3.4–3.5

Percentage & Retainer-cum-Success Fee Contracts

3.4

Percentage (Success / Contingency Fee)

Fee tied to estimated/actual project cost (or cost of goods procured/inspected); paid after success. Selection: among technically qualified, the lowest percentage quoted wins. Used for architectural services, procurement & inspection agents. Risk: bias against economic design — so for architectural services, recommended only on a fixed target cost with precisely defined services.

3.5

Retainer + Success Fee

Combines a time-based retainer (monthly) with a percentage success fee. Used when banks/financial firms prepare companies for sales/mergers (notably privatisation) and for organisational restructuring. All risks of both Percentage and Time-Based apply, with the same mitigations.

§ 3.6

Indefinite Delivery Contract (Price Agreement)

"On-call" services

For specialised services whose extent/timing cannot be defined in advance — akin to Rate/Framework Contracts for goods. No commitment on quantum; parties agree unit rates and payment follows actual time/quantum used; the provider is selected on the unit rate quoted. Used for on-call advisers, dispute-resolution adjudicators, procurement advice, document management, taxi services, temporary manpower — usually over a year or more.

Risk	Mitigation
Over-utilisation — usage may exceed actual need as scrutiny is less intense.	Scrutinise need assessment; lay down a maximum contract value; CA approval to exceed it; escalate reporting above a monthly payout benchmark.
Quality/scope & per-period performance not linked to payment.	Pay only against acceptance certificates; close monitoring with monthly reporting.
Time & cost over-run.	Include an upper limit of total payments; CA reviews extension once reached/exceeded.

§ 3.7

Systems of selection of service providers

Two-stage process & shortlist size

Because consultancy quality is not tangibly measurable, selection is normally a two-stage process: first shortlist capable sources (via EoI advertisement), then invite shortlisted firms to submit technical & financial proposals in separate sealed envelopes. Technical proposals are evaluated without access to the financial part; financial proposals open only after quality evaluation.

Minimum shortlist size

Maximum shortlist size

Stages of selection

iLeast Cost Selection (LCS) — price-based.
iiQuality & Cost Based Selection (QCBS).
iiiSingle Source Selection (SSS) — direct.

Other services & the single-bid question

Other (non-consultancy) services normally use lowest-price (L-1) selection (like Goods/Works); SSS only in special cases. A single bid is not automatically invalid — re-bidding has costs (re-tender cost, delay, possibly higher price). A single bid is valid if: (1) the procurement was satisfactorily advertised with sufficient time, (2) qualification criteria were not unduly restrictive, and (3) prices are reasonable vs market values.

§ 3.8

Least Cost Selection (LCS) — Rule 193, GFR

How LCS works — the default method

Technical & financial proposals are submitted together. A minimum qualifying mark (benchmark normally 75 out of 100) is set, or a simpler pass/fail criterion (e.g. ≥ 2 similar assignments; turnover ≥ ₹10 crore). Technical proposals open & are evaluated first; only technically responsive offers proceed and the financial bids of non-responsive bidders are returned unopened. Among the responsive, the L-1 offer wins on price alone — no weightage to technical marks.

LCS is the simplest and quickest method and the default for standard/routine assignments; any other method needs justification. (In the 2006 MoF Manual this was confusingly called QCBS.)

§ 3.9

Quality & Cost Based Selection (QCBS) — Rule 192, GFR

How QCBS works

Benchmark for quality is normally 70–80 out of 100. Each responsive bid gets a quality score /100; financial proposals of responsive bidders open (others returned unopened) and get a cost score (100 for the lowest, pro-rated for higher). The weighted total decides the winner. Typical weightage: cost 30% / technical 70% (technical should never exceed 80%); 40:60 or 50:50 are also used. A 100% cost weight approximates LCS. Used for highly complex, critical assignments. (In the 2006 Manual: "CQCCBS".)

Assignment description	Remarks	Quality / Cost (%)
Highly complex / downstream consequences / specialised	QCBS with higher technical weightage	80 / 20
Moderate complexity	Majority of cases fall here	75–65 / 35–25
Standard / routine (auditors, procurement agents)	LCS is appropriate	60–50 / 40–50

QCBS — key risks

SELQCBS chosen where LCS/other would fit better — justify & apply only in the right circumstances.
WTWeightage other than 70:30 must be adequately examined & justified.
SUBJMarking subjectivity — lay down objective marking; grade unavoidable subjectivity; have conciliation/moderation of disparate marks.

§ 3.10

Single Source Selection (SSS) — Rule 194, GFR

When direct selection is permissible

iA natural continuation of previous work by the firm.
iiEmergency/post-disaster situations where timely completion is critical.
iiiProprietary techniques or only one consultant with the requisite expertise.
ivUsing expertise of other PSUs/Government organisations.
vSpecial circumstances with full justification recorded in file & competent-authority approval beforehand.

Prices must be reasonable & consistent with market rates and services not split to avoid competition.

Reporting of nomination awards (3.10.2)

WHOReported to the Secretary (ministries/departments), the Board of Directors (PSUs/banks/insurers), or the Chief Executive where no board exists.
FREQA report on nomination awards is submitted every quarter.
AUDITThe audit committee may be required to check at least 10% of such cases.

§ 3.11

Fixed Budget – based Selection (FBS)

FBS — budget specified in the tender

Beyond QCBS, LCS and SSS, FBS is also allowed. The cost of consulting services is fixed as a budget stated in the tender document. FBS is used when:

iThe services are simple and/or repetitive and can be precisely defined.
iiThe budget can be reasonably estimated from credible estimates/previous successful selections.
iiiThe budget is sufficient for the consultant to perform the assignment.

Selection is by either (i) a competitive process based only on quality [Rule 192(i)] — the highest technical score within budget wins; or (ii) empanelment for repetitive assignments, then choosing on public-interest considerations (timeliness, practicability, prior assignments) with a fixed budget per assignment.

Self-test

Chapter 3 Quiz — contract types & selection methods

Eight UPSC-style questions from Chapter 3. Pick an answer to lock it; the explanation appears below.

Score 0 / 0

⚡ Chapter 3 — Quick Recap

Concept	Key Fact
Preferred contract	Lump Sum — no price adjustment; pay against acceptance certificate
Time-Based safeguard	Include an upper limit of total payment; CA reviews extension
Percentage contract pick	Lowest percentage wins; discouraged for design (no economy incentive)
Indefinite Delivery	Like a Rate Contract; selected on unit rate; set a max value
Shortlist size	Not fewer than 3, not more than 8 firms
LCS (Rule 193)	Default method; benchmark ~75/100; L-1 wins on price alone
QCBS (Rule 192)	Benchmark 70–80/100; typical weight 70:30, technical ≤ 80%
QCBS Table 3	Complex 80/20; moderate 75–65/35–25; routine 60–50/40–50
SSS (Rule 194)	Justification + CA approval; report quarterly; audit ≥ 10%
FBS	Budget fixed in tender; simple/repetitive work; highest tech score within budget
Single bid	Valid if well-advertised, non-restrictive criteria & reasonable price

CH 4 · PREPARING

Preparing for Procurement of Consultancy Services

Terms of Reference (ToR) — Rule 185, GFR

The ToR is the consultancy equivalent of the Description, Quantity & Technical Specification used for goods (4.1.1). It states the purpose/objectives, scope of work, tasks, the respective responsibilities of the Procuring Entity and consultant, expected results and deliverables. It must be comprehensive and unambiguous — yet not so detailed/inflexible that competing consultants cannot propose their own methodology and staffing.

Describe activities, not methodology

In consultancy, the Detailed Scope of Work should describe only the activities, not the approach or methodology (which is the consultant's task — suggestions may still be offered). Tasks are sequenced over a timeline, best shown as a bar/Gantt chart. Such ToRs are activity-based (a single description of what the team as a whole will provide) rather than position-based — preferred where the team is small and flexibility is needed. Key professionals are usually named, and their credentials carry weightage in technical evaluation.

§ 4.1.3

Deliverables & the four reports

Reporting requirements (format, frequency, content, copies, language)

INCEPTInception Report — submitted about six weeks after commencement; flags ToR inconsistencies, staffing problems or deficiencies in the Entity's assistance, giving confidence the assignment can proceed as planned.
PROGProgress Reports — keep the Entity informed; monthly or bimonthly (feasibility/design studies: two-month intervals; technical assistance & construction supervision: monthly). Time-stamped photographs are encouraged.
INTERIMInterim Reports — for phased assignments; the Entity should take no more than 15 days to review & approve a draft interim report.
FINALFinal Report — at completion; consultants alone are responsible for findings; if they reject the Entity's comments, the reasons are noted in the report.

The ToR template (Annexure 4) also covers

Background & project context; Purpose & Service Outcomes statement; detailed scope with schedule; expected key professionals & expertise; capacity-building / transfer of knowledge; deliverables; background material to be provided; facilities (conveyance, office space, secretarial assistance — a real-cost reality check is essential); institutional arrangements; and the Consultancy Monitoring Committee (CMC) review procedure after award.

§ 4.2

Estimating costs, setting the budget & seeking approval

Category (a)

Fee / Remuneration

According to the contract type. Staff remuneration rates include basic salary, social charges, overheads, fees/profit and allowances; estimate provides for forecast inflation over the assignment.

Category (b)

Reimbursable Costs

Logistics (city/national/international travel & stay), physical inputs (vehicles, lab equipment), support services, contingencies & profit, taxes & duties.

Costs are normally estimated using unit rates × quantities (some items — contingencies, support services — on a lump-sum or percentage basis). A mismatch between cost estimate and ToR misleads consultants on the desired scope/depth and causes problems at negotiation or implementation.

§ 4.3

Finalising & approving the ToR

Budget must match the ToR

The scope in the ToR must be compatible with the available budget — confirm all required tasks are included and adequate budget allocated (a series of iterations may be needed). CA approval of the ToR should be taken before proceeding; after administrative approval, budget provision is made (or confirmed for the Revised Estimate stage). Procurement may be initiated only after such budgetary provisions/confirmations.

§ 4.4

Developing a procurement plan

A consultancy is often part of a larger project with other components. The Entity develops a synchronised procurement plan sequencing all components, choosing the selection method & contract type, and timing consultant selection to meet implementation needs — e.g. a construction-supervision consultant must be mobilised before the award of the construction contract.

§ 4.5

e-Procurement — Rule 160, GFR

Mandatory, with limited exemptions

MANDIt is mandatory for Ministries/Departments to receive all bids through e-procurement portals for all procurements.
NICLow-volume Departments may use the NIC e-procurement solution; others may use NIC or another service provider via due process.
GeMThese instructions do not apply to procurements made through GeM.
SECURITYCases of national security / strategic confidentiality may be exempted with the concerned Secretary's approval and the Financial Adviser's concurrence.
ABROADFor tenders floated by Indian Missions abroad, the Competent Authority deciding the tender may grant exemption.

Self-test

Chapter 4 Quiz — ToR, costs & e-procurement

Seven UPSC-style questions from Chapter 4. Pick an answer to lock it; the explanation appears below.

Score 0 / 0

⚡ Chapter 4 — Quick Recap

Concept	Key Fact
ToR analogue	Description, Quantity & Technical Spec for goods (Rule 185)
ToR describes	Activities, not methodology (consultant's task)
Inception Report	~ 6 weeks after commencement
Progress Reports	Monthly/bimonthly; feasibility 2-month, construction monthly
Interim report review	Entity takes ≤ 15 days to approve a draft
Cost categories	(a) Fee/remuneration · (b) Reimbursable costs
Review committee after award	Consultancy Monitoring Committee (CMC)
ToR approval	CA approval + budget provision before initiating procurement
e-Procurement	Mandatory (Rule 160); not for GeM
e-Proc exemption	National security — Secretary approval + FA concurrence

CH 5 · SHORTLISTING

Shortlisting Stage in Procurement of Consultancy Services

Why shortlist — the two-stage logic

Because consultancy quality is non-measurable, it is too costly to invite and evaluate proposals from everyone. So selection rests on limited proposals from a short list of qualified firms. Stage 1: qualified firms are shortlisted transparently. Stage 2: an RfP (technical + financial) is invited from the shortlist. Avoid unreasonable qualification criteria that restrict participation.

Other (non-consultancy) services — single stage

Done by a simpler, single-stage RfP process (like Goods/Works). Above ₹10 lakh → normally an advertised RfP; below ₹10 lakh → RfP issued to a selected shortlist of likely providers.

§ 5.1.3

Advertised EoI & the shortlisting thresholds

> ₹50 lakh

Rule 183(ii): openly advertised competitive shortlisting — Expression of Interest (EoI) on CPPP & GeM.

≤ ₹50 lakh

Rule 183(i): no formal published EoI — akin to a Limited Tender Enquiry; long-list of not less than three.

3 – 8

Short list: minimum three (Rule 184), generally not more than eight.

The Request for EoI (REoI)

Advertised on CPPP (eprocure.gov.in) and GeM (and the Entity's own website). A complete ToR must be ready before requesting EoI, but the REoI itself shall not include the assignment ToR. The REoI asks for: core business & years in business; qualifications in the field; technical/managerial organisation; and number of key staff. Consultants must not be asked about their approach or to submit CVs (those belong in the RfP); brevity is stressed. Where Indian consultants may be unavailable, EoI may use the Global Tender Enquiry (GTE) route.

§ 5.1.4

Global Tender Enquiry (GTE) — Rule 161, GFR

No GTE up to ₹200 crore

BARNo GTE shall be invited up to ₹200 crore (or such limit as DoE prescribes). Exceptional cases need detailed justification & prior approval of the competent authority specified by DoE.
WHOThe proposal is submitted by the Administrative Ministry with the Financial Adviser's concurrence and the Secretary's approval; proposals from individual offices/autonomous bodies/CPSUs are not entertained.
DOMFirst a domestic open tender (after 15.05.2020) must be floated to identify domestic providers; the 3/5-year procurement plan (PPP-MII) must be published.
RESEARCHFor specialised research equipment (up to ₹200 crore) for Educational/Research Institutes, the Secretary of the Ministry is the competent authority, subject to non-availability certificates and use of the I-STEM portal.

§ 5.1.9–5.1.10

Below ₹25 lakh & empanelment

Limited-tender-style shortlisting

A long list is built from enquiries to other Ministries/Organisations, Chambers of Commerce, consultancy associations, etc., then moderated to prima-facie eligible firms — not less than three (if fewer are available, proceed with fewer but never below three, with CA approval). Entities doing frequent consultancy procurement may maintain a Panel of qualified consultants (like vendor registration for goods). A formal EoI may still be advertised below ₹25 lakh, with CA approval, if complexity justifies. Empanelled contractors' performance is reviewed periodically; the list is updated and members upgraded/downgraded/de-listed.

§ 5.2

The short list & qualification weightages

Qualification criterion (Table 2)	Weightage
Past experience / track record of the consultant	60%
General profile of qualification, experience & number of key staff (not individual CVs)	25%
Overall financial strength (turnover, profitability, cash flow)	15%

Scoring & the turnover caution

75%Shortlist all consultants who secure the minimum required marks (normally 75%), specified in the EoI. A simplified fail/pass benchmark may be used instead (e.g. ≥ 2 similar projects; key staff ≥ 7 years & a Master's; turnover ≥ ₹10 crore).
WHYScoring is not merely for disqualification but to establish relative strengths and arrive at a robust short list.
TURNOVERKeeping minimum qualifying turnover at 5–10 times the estimated cost appears high — it reduces competition; criteria should be reasonable and such high turnover kept only if adequately justified.
CONCURRENTIf a firm is considered for concurrent assignments, the Entity assesses its overall capacity before placing it on more than one short list — pre-declared in the EoI.

§ 5.3

Shortlisting — risks & mitigation

Risk	Mitigation
Conflict-of-interest situations not reported/declared (by consultants or evaluation-committee members).	Signed declarations in specified formats — at the EoI bid stage, in the technical proposal, and by CEC members before evaluation.
Qualifications leasing — weak local bidders show association with well-qualified (foreign/local) firms only to borrow their credentials, then contribute little at execution.	From the EoI stage, clearly identify the qualified applicant and put the partner's guaranteed contribution on record / in the contract.

Self-test

Chapter 5 Quiz — EoI, thresholds & the short list

Seven UPSC-style questions from Chapter 5. Pick an answer to lock it; the explanation appears below.

Score 0 / 0

⚡ Chapter 5 — Quick Recap

Concept	Key Fact
Advertised EoI threshold	Procurement above ₹25 lakh → open EoI on CPPP & GeM (Rule 183(ii))
Below ₹25 lakh	No formal EoI — LTE-style long-list of ≥ 3 (Rule 183(i))
Other services RfP	> ₹10 lakh advertised; < ₹10 lakh selected shortlist
Short list size	Minimum 3 (Rule 184), generally ≤ 8
REoI does NOT include	The assignment ToR, approach, or CVs
GTE bar	No GTE up to ₹200 crore without competent-authority approval
GTE approval route	Admin Ministry + FA concurrence + Secretary approval
Qualification weights	Experience 60% · key staff 25% · finance 15%
Shortlist cut-off	Normally 75% of marks
Turnover caution	5–10× estimated cost is high — keep reasonable

CH 6 · COMPETITIVE SELECTION

Selection of Consultants by Competitive Process

The evaluation process (6.1)

Nine steps: (i) prepare & issue the RfP; (ii) pre-proposal meeting; (iii) receipt of proposals; (iv) technical evaluation (quality); (v) public opening of financial proposals; (vi) financial evaluation; (vii) selection of the winning proposal; (viii) negotiations, if required; (ix) award of contract.

§ 6.2

Request for Proposals (RfP)

Who receives it & what it contains

For consultancy, the RfP is sent only to the shortlisted consultants; for other (non-consultancy) services there is no EoI, so the RfP is advertised — except where value is under ₹10 lakh. Sections: Letter of Invitation; Information to Consultants (ITC) + data sheet; ToR; list of key experts; firm/expert qualification requirements; evaluation criteria & selection procedure; standard technical & financial formats; proposed form of contract (GCC + Special Conditions); mid-term & final-review procedure. Use the standard RfP with minimal changes.

6.2.2

Simplified Technical Proposal (STP)

For LCS, where technical scores aren't weighted/added, fail-pass benchmarks suffice and an STP (not a Full Technical Proposal) is called for. Used when the assignment: (i) is unlikely to have downstream impact; (ii) is routine with a well-defined ToR; (iii) needs no detailed evaluation of experience (auditors, accountants, consulting engineers).

6.2.4

Instructions to Consultants (ITC)

Two parts — standard info + assignment-specific (via data sheet). Brings transparency on evaluation criteria, weights & minimum passing score. Shall not indicate the budget (except in FBS) but indicates expected key-staff input. Proposal validity normally 60 days.

§ 6.2.6

Important provisions — currency, PVC, advances & securities

Currency & Price Adjustment (PVC)

INRContracts are normally in Indian Rupees; if another currency is allowed, the conversion date (normally the date of opening the Technical Bid) is fixed in the RfP.
18MIf a time-based or indefinite-delivery contract is expected to exceed 18 months, include a price-adjustment provision based on the Consumer Price Index. Lump-sum contracts are generally not subject to price adjustment (except small multi-year contracts, e.g. auditors).
PVCPVC elements: a stated base date; a minimum % threshold below which no adjustment applies; and a ceiling on variation. Provide your own formula to keep bids comparable.

Advance payments & their limits

30%Up to 30% of contract value to private firms.
40%Up to 40% to a State/Central Government agency or PSU.
6MFor a maintenance contract, not exceeding the amount payable for six months.
SAFECeilings are relaxable by the Ministry with FA concurrence; a bank guarantee safeguard is taken. Advance for pre-paid electricity meters to authorised DISCOMs needs no BG.

Feature	Bid Security — Rule 170	Performance Security — Rule 171
When	Not usual in consultancy; optional for time-critical cases.	From the successful bidder, to ensure due performance.
Amount	2%–5% of estimated value.	5%–10% of contract value (reduced to 3% till 31.03.2023).
Validity	45 days beyond final bid validity.	60 days beyond completion of all obligations.
Timing	Released to unsuccessful bidders within 30 days of award (or of the first-stage result).	Furnished within 14 days of award notification.
Exemptions	MSEs & Startups exempt; alternative is a Bid Securing Declaration.	Not needed for contract value up to ₹1 lakh; GTE → URDG 758.

Other RfP/contract clauses

Standard Form of Contract is preferred; GCC should not be altered — project-specific changes go through Special Conditions. Also: professional liability (no limitation for gross negligence/wilful misconduct; never below a stated multiple of contract value); staff substitution only with equally-qualified replacements approved by the Entity; applicable law is Indian law; training/transfer-of-knowledge cost stated explicitly. A pre-bid conference may be held for large-value tenders.

§ 6.3–6.4

Pre-proposal meeting & receipt of proposals

Timelines

15–30A pre-proposal meeting is normally held 15–30 days after RfP issue. Significant changes go out as a formal corrigendum, leaving bidders not less than 15 days to respond.
4w–3mTime to prepare proposals: normally not less than 4 weeks, not more than 3 months; with international participation, not less than 8 weeks.
SEALTechnical & financial proposals are submitted together, in separate sealed envelopes inside an outer envelope. Technical bids open immediately; financial bids open only for technically qualified firms.
LATELate bids are not considered and are returned unopened (Rules 187 & 188).

§ 6.5

Consultancy Evaluation Committee (CEC) — Rule 189

Constitution & conduct

>₹10LConstituted for cases with financial implication over ₹10 lakh; normally three members including the Financial Adviser/representative and a user representative (who acts as convenor).
RULENo member may report directly to another CEC member. The CEC handles all stages — EoI, shortlist, ToR, RfP, technical & financial evaluation, negotiation, selection. No separate technical committee is needed.
GRADEA grading system of 3–4 grades is defined before proposals are opened, to prevent bias.
NOCOMMMembers must have no communication with shortlisted firms from appointment until award.
DISSENTDifferences resolved by discussion; persistent dissent is recorded, the majority view prevails, and the CA may overrule with recorded reasons.

Rating scale (for unquantifiable criteria)

Grade	Assessment	Marks
A	Very Good	Full marks
B	Good	80%
C	Satisfactory	60%
D	Unsatisfactory	30%
E	Not Relevant	10%

§ 6.6–6.7

Responsiveness & technical evaluation

First stage — responsiveness

Summarily rejected as non-responsive: proposals without bid security, unsigned, incomplete (required formats not submitted), not fully responding to the ToR, or with shorter validity than prescribed. A technical proposal containing material financial information is also rejected.

Second stage — quality (absolute, not comparative)

Each proposal is judged on its own merits and given an absolute grade against predefined criteria — total max technical score 100. Criteria: (a) relevant experience; (b) methodology; (c) qualifications of key staff; (d) transfer of knowledge. Minimum qualifying mark normally 75. The technical evaluation report is confidential and needs CA approval.

Rated criterion (Table 3)	Range of %
Consultancy firm's specific experience	5–10%
Methodology	20–50%
Qualification & relevant experience of key staff	30–60%
Transfer of knowledge	0–10%

§ 6.8

Evaluation of cost — Rule 190

Opening & scoring the financial proposals

NOTIFYNon-qualified/non-responsive consultants are notified; their financial proposals are returned unopened.
3WIn QCBS, financial opening is not later than three weeks after notification, conducted publicly; names, quality scores & prices are read aloud.
CORRTime-based proposals: arithmetical errors are corrected. Lump-sum: no correction — all prices deemed included.
SCOREIn QCBS the lowest price gets 100; others score inversely proportional to price.
FXCosts convert to INR using the SBI BC selling rate on the date of opening the technical bids.
ALBAbnormally Low Bid: seek written price analysis; reject if the bidder fails to demonstrate capability — but no fixed normative % is prescribed.

§ 6.9

Selecting the winning consultant

LCS, QCBS & the combined-score formula

LCS: proposals ranked by total cost; the least-cost (L-1) is recommended for award. QCBS (Rule 192): technical 70% / cost 30% (or 60:40, 50:50, but technical not > 80%). Combined evaluated score:

Evaluated Bid Score
B = (Clow / C) · X + (T / Thigh) · (1 − X) — where C = evaluated price, Clow = lowest price, T = technical score, Thigh = best technical score, X = price weight. Highest combined score = H-1; a tie is broken in favour of the highest technical score.

Worked example (70:30, qualifying 75)

Technical: A 75, B 80, C 90 → normalised (T/T_high) 83 / 89 / 100. Prices: A ₹120, B ₹100, C ₹110 → financial (C_low/C) 83 / 100 / 91. Combined: A = 83×0.30 + 83×0.70 = 83 (H-3); B = 100×0.30 + 89×0.70 = 92.3 (H-2); C = 91×0.30 + 100×0.70 = 97.3 (H-1). Proposal C wins at ₹110. (SSS: the single source is called for negotiation after its financial proposal is opened.)

§ 6.10–6.13

Negotiations, award & risks

Negotiation & award rules

NEGNegotiations are not essential; they freeze the ToR/methodology in the "Description of Services" but must not substantially alter or dilute the ToR.
FINFinancial negotiation only if a scope change has a financial bearing or quoted costs are unreasonable — and in no case an increase above the quoted price. If negotiation fails → cancel & re-invite.
WEBThe winning bidder's name & cost are posted on the website after award. Evaluation details stay confidential until award (overall technical scores may be shared).

Risk	Mitigation
A JV wins on the lead partner's qualifications, but proposes no key expert/team leader from that firm.	RfP should require the team leader to have worked 2–3 years with the main qualifying firm; non-compliance → non-responsive.
Request to substitute key experts at negotiation.	Examined very closely; agreed only if the RfP permits and the process was unreasonably delayed.
Unsigned CVs in the technical proposal.	Evaluate without the unsigned CVs; never allow substitution at negotiation; if most CVs are unsigned → reject as non-responsive.

Self-test

Chapter 6 Quiz — RfP, CEC, evaluation & award

Eight UPSC-style questions from Chapter 6. Pick an answer to lock it; the explanation appears below.

Score 0 / 0

⚡ Chapter 6 — Quick Recap

Concept	Key Fact
RfP recipients	Shortlisted firms (consultancy); advertised for other services unless < ₹10 lakh
Proposal validity	Normally 60 days; ITC shall not show budget (except FBS)
Price adjustment	Time-based/indefinite contracts > 18 months → PVC on CPI
Advance limits	30% private · 40% Govt/PSU · 6 months for maintenance
Bid security (Rule 170)	2–5%; valid 45 days beyond bid validity; MSE/startup exempt
Performance security (Rule 171)	5–10% (3% till 31.03.2023); within 14 days; nil up to ₹1 lakh
Proposal time	4 weeks–3 months; international ≥ 8 weeks
CEC (Rule 189)	For cases > ₹10 lakh; 3 members; user rep = convenor
Rating scale	A full · B 80% · C 60% · D 30% · E 10%
Technical eval	Absolute grade /100; qualifying normally 75
FX conversion	SBI BC selling rate on date of opening technical bids
QCBS (Rule 192)	70:30 (≤ 80% technical); tie → highest technical = H-1
Financial negotiation	Never above the quoted price; failure → cancel & re-invite

CH 7 · SPECIAL ENGAGEMENTS

Special Types of Engagements

When the standard competitive route is varied

This chapter sets the method for special cases: Single Source Selection, individual consultants, specialised agencies & NGOs, procurement & inspection agents, financial advisors, auditors, and public logo/symbol design competitions.

7.1 · Single Source Selection (SSS)

Direct negotiation lacks the benefits of competition and transparency, so powers must be severely restricted — used only in exceptional, inescapable circumstances. Reasons & the choice of firm are recorded and approved by the CA (per DPFR/SoPP) before single tendering. For downstream continuity, the initial RfP should outline the prospect; but if the initial assignment was not competitive or the downstream work is substantially larger, a competitive process is followed (the initial firm not excluded). Per CVC guidelines, the CFA reports all selections by nomination every month to the Secretary/Head of Department.

§ 7.2

Selection of individual consultants

When teams aren't needed

WHENUsed where a team isn't required, no outside support is needed, and the individual's experience/qualifications are paramount.
3Selected by comparison of qualifications of at least three candidates who expressed interest or were approached; advertised on CPPP & GeM.
CECThe CEC awards marks for education & experience (may interview) and recommends remuneration.
DNDirect negotiation only in exceptional cases — continuation of competitively-won work, natural-disaster emergencies, or sole qualified individual. Conflict-of-interest rules apply to the parent firm of an employed candidate.

§ 7.3–7.4

Specialised agencies, institutions & NGOs

7.3

Specialised Agencies / Institutions

Government/semi-government agencies, universities, professional institutions. Where they hold special expertise or back-up facilities, SSS may be appropriate with full justification that it is in the Entity's best interest. For Government & semi-Government agencies, SSS is an appropriate method.

7.4

NGOs

Shortlists for community/participatory assignments may comprise NGOs entirely; then QCBS is used, with criteria reflecting grassroots experience, participatory approaches, committed leadership & beneficiary participation. SSS may hire a local NGO for a very small assignment in a remote area where only one is available.

§ 7.5–7.6

Procurement & inspection agents

QCBS with cost weight up to 50%

PAProcurement Agents handling specific items are paid a percentage of value handled and selected under QCBS with cost weight up to 50% — but at 50% finance dominates, so the quality threshold must be set high. Advisory-only PAs use QCBS time-based contracts.
IAInspection Agents (pre-shipment/on-arrival quality, quantity, price) — also QCBS, cost up to 50%, paid as a % of goods inspected. Clauses making the supplier pay inspectors' travel/stay/hospitality must be avoided — they compromise inspection independence.

§ 7.7–7.8

Financial advisors & auditors

7.7

Financial Advisors

For studies/financial consultancy — any suitable method. For restructuring, M&A, demerger, privatisation — QCBS, with remuneration as a lump-sum retainer + a success fee (preferably a % of transaction value). Cost weight may exceed the standard (e.g. 30%), or LCS may be used.

7.8

Auditors

Auditing runs under well-defined ToR and professional standards, so auditors are selected by the LCS system, with cost as the selection factor.

§ 7.9

Public competition for logo / symbol design — Rule 196

Transparent, fair & objective

PUBWide publicity on the Ministry's website and the CPPP (e-publishing module).
LAWKeep in view the Official Languages Act and the Emblems & Names (Prevention of Improper Use) Act.
NOTICEA detailed Competition Notice states objectives, qualification & evaluation criteria (single/multi-stage, or public voting for items of national importance), submission format, prizes, and jury composition.
IPRIt is clearly stipulated that the intellectual property rights of the winning design rest with the sponsoring agency.

Self-test

Chapter 7 Quiz — special engagements

Seven UPSC-style questions from Chapter 7. Pick an answer to lock it; the explanation appears below.

Score 0 / 0

⚡ Chapter 7 — Quick Recap

Engagement	Method / Key Fact
SSS nomination report	CFA reports all nominations monthly to Secretary/Head (CVC)
Individual consultant	Compare qualifications of ≥ 3 candidates; CEC scores & may interview
Specialised Govt agency	SSS appropriate, with full justification
NGOs	QCBS (SSS for a remote single-NGO micro-assignment)
Procurement agents	QCBS, cost weight up to 50% (keep quality bar high)
Inspection agents	QCBS, cost up to 50%; supplier must not fund inspectors
Financial advisors	Restructuring/M&A → QCBS; retainer + success fee
Auditors	LCS
Logo competition (Rule 196)	Wide publicity; IPR of winner rests with sponsoring agency

CH 8 · MONITORING

Monitoring the Consultancy / Other Services Contract

Monitoring — Rule 195, GFR

The awarding Ministry stays involved throughout so the output matches the contracted objectives. A Contract Monitoring Committee (CMC) is formed and a counterpart Project Manager (the nodal person) is designated, enabling Management by Exception against the risk-and-mitigation milestones.

8.2 · Contract Monitoring Committee (CMC)

Constituted after selection, with at least three members at the appropriate level including the user's representative (CEC members may be reused). It monitors progress, ensures the assignment runs per contract, assesses deliverables, accepts/rejects parts of the work, and levies liquidated damages or penalty. Its functions span the notice to proceed, inception review, contract variations, progress & expenditure monitoring, dispute handling, termination, final payment/closure and post-contract evaluation.

§ 8.6–8.7

Monitoring time-based vs lump-sum contracts

8.6

Time-based

Mobilisation/demobilisation of key experts is watched carefully — the contract amount can be fully spent while the supervised work (e.g. construction) is barely half done, leading to claims & disputes.

8.7

Lump-sum

Draft-report quality is checked carefully before releasing stage payments. For extra services, amend the contract promptly — generally the increase should be not more than 10–15%.

§ 8.10

Issuing contract variations

When changes have a cost/timing impact

10%If a variation increases the contract amount by more than 10%, the CA's prior approval is required; the amendment is published on the same e-procurement portal as the original tender.
ITFor IT projects, change-request value should generally be within ±15%, handled via a mechanism in the RfP and a Change Control Board (academic/industry experts) whose technical & financial decisions are final.

§ 8.11

Substitution of named key personnel

Tightly controlled, with remuneration penalties

QUALA replacement must be equally or better qualified; remuneration not more than for the original; the consultant bears all substitution costs.
30%Substitution ordinarily limited to not more than 30% of total key personnel.
SLABRemuneration reductions: first 10% of replacements → 5%; next 10% → 10%; third 10% → 15% (illustrative slabs, specified in the tender).
IT-SYSIT-enabled attendance systems may verify key personnel are present per the deployment schedule.

§ 8.13

Disputes & arbitration

Resolve early; appeal sparingly

ADRBefore arbitration/litigation, parties may try mutual discussion, mediation & conciliation; the arbitral award is binding, governed by the Arbitration Clause.
APPEALAwards against the Government are not appealed routinely — a board/committee weighs legal merit and realistic chances before appealing; casual appeals cause heavy damages/interest.
75%Where an award is challenged, 75% of the arbitral award is paid against a Bank Guarantee into a designated Escrow Account (new Rule 227A) — used first for lenders' dues, then project completion.

§ 8.14–8.16

Force majeure, termination & closure

FMForce Majeure suspends — not excuses — performance; notice must be given when it occurs (not ex-post-facto). If it prevents performance for over 90 days, either party may terminate without financial repercussion.
TERMTermination may be for external factors, convenience (e.g. budget shortage) or breach; the contract provides a 30-day notice period and payment of legitimate outstanding fees/wind-up costs.
CLOSEThe contract is closed the day after the completion date; later expenditure is unlikely to be paid. The final claim must be submitted within 60 days of completion.

§ 8.17

Monitoring — risks & mitigation

Risk	Mitigation
Request to substitute key experts during implementation (citing non-availability, health).	Allow only per contract — exceptional cases like death/medical incapacity — with equal or better credentials, utmost scrutiny, and no undue financial benefit to the contractor.
Cost overruns in time-based contracts — delay benefits the consultant.	Include an upper limit of total payment; CA reviews extension once reached; build contract-management capacity; track progress at 50% and 80% milestones; scrutinise timesheets & reimbursables.

Self-test

Chapter 8 Quiz — monitoring, variations & disputes

Seven UPSC-style questions from Chapter 8. Pick an answer to lock it; the explanation appears below.

Score 0 / 0

⚡ Chapter 8 — Quick Recap

Concept	Key Fact
Monitoring rule	Rule 195; CMC + counterpart Project Manager
CMC size	At least 3 members incl. user representative
Lump-sum extra services	Increase generally ≤ 10–15%
Contract variation > 10%	Needs CA prior approval; published on e-portal
IT change request	Within ±15%; Change Control Board decision final
Key-staff substitution cap	Ordinarily ≤ 30%; reductions 5% / 10% / 15% by slab
Challenged arbitral award	75% paid against BG into Escrow (Rule 227A)
Force majeure	Suspends performance; > 90 days → either party may terminate
Termination notice	30 days
Final claim	Within 60 days of completion

CH 9 · OTHER SERVICES

Procurement (Outsourcing) of Other (Non-consultancy) Services

Self-contained chapter

Other services are defined by exclusion — routine, repetitive physical/procedural work with tangible standards (transport, logistics, courier, upkeep, drilling, aerial photography, mapping). For anything not covered here, refer to the Manual of Policies & Procedures for Procurement of Goods — not the consultancy provisions.

Classification (9.1)

≥1yrOutsourcing = sustained, long-term deployment (one year or more) of outside agencies for work once done in-house (security, horticulture, housekeeping, catering, messenger services).
WORKSConstruction/repair of civil assets → handle as Works.
GOODSRepair/AMC/installation of mechanical, electrical or ICT assets → handle as Goods.
CONSWhere the intellectual/advisory part dominates (physical incidental) → handle as Consultancy (e.g. underwater dam-safety analysis).

§ 9.4

Contract period & principles

Activity Schedule, period & multiple L1s

SCHEDInstead of a ToR, other services use an Activity Schedule (well-defined scope & time-frame).
2yrInitial contract period is normally two years.
+1yrExtension by a further one year if service is satisfactory; but if a cumulative penalty of 5% of contract value has been levied, no extension beyond the initial two years.
L1sFor multiple L-1 bidders, GeM offers system-determined selection or purchaser selection — the method must be decided before the tender is issued.
HRHiring manpower through contracts is avoided (regularisation risk); I-cards must identify the holder as the contractor's representative.

§ 9.5–9.6

Contract types & system of selection

Single-stage, lowest-price (Rules 201, 204, 206)

TYPELump-sum, time-based, unit/item-rate (e.g. taxi per km) or indefinite-delivery contracts.
1-STAGEA simpler single-stage RfP process (Rule 206); a pre-qualification (PQB) stage may be added for highly technical services (seismic surveys, airborne data).
₹10LAbove ₹10 lakh → advertised RfP; below ₹10 lakh → shortlist of more than three from a moderated long-list, or a panel (Rule 201).
L-1Selection is normally on lowest price (L-1) among technically responsive offers (Rule 204); SSS only in special circumstances.

§ 9.7

Government e-Marketplace (GeM) — Rule 149

Mandatory for goods/services available on GeM

End-to-end online procurement; supplier credentials certified by GeM SPV; procuring authorities certify rate reasonableness. Direct online-purchase ceilings:

Value band	Mode of purchase on GeM
Up to ₹25,000	Any available supplier meeting quality, specification & delivery.
₹25,000 – ₹5,00,000	GeM seller with the lowest price among ≥ 3 different manufacturers.
Above ₹5,00,000	Lowest-price supplier after mandatory online bidding / reverse auction.
Automobiles	Direct-purchase ceiling is ₹30 lakh (instead of ₹25,000).

GeM discipline

The Annual Procurement Plan is projected on GeM within 30 days of Budget approval; reasonableness is checked via Business Analytics (Last Purchase Price). A demand must not be split into small quantities to avoid L-1 buying or higher-authority sanction.

§ 9.7.7

GeM payment — CRAC & PRC

Receipt, acceptance & deemed receipt

CRACGoods: 100% payment (incl. GST) after receipt & acceptance and generation of the Consignee Receipt & Acceptance Certificate (CRAC), less recoveries/LD. Services: 100% per payment cycle after the Service CRAC.
INSTALLInstallation-intensive goods: 80–90% on delivery (Delivery CRAC), balance 10–20% after installation, testing & commissioning (Installation CRAC).
PRCThe consignee issues a Provisional Receipt Certificate (PRC) within 48 hours; if not acknowledged, a Deemed PRC auto-generates after 96 hours. A 10-day rejection/return window applies from the receipt date.
PFMSPayments run through PFMS or the GeM Pool Account; on sanction, funds are blocked in PFMS for the contract/payment cycle.

§ 9.18–9.19

Service Level Agreement & monitoring

SLA — a balanced, two-sided framework

An SLA creates common understanding of services, priorities & responsibilities. It is specified in the bidding document and finalised before services start, must be balanced to both parties with penalties on both sides, and has Service elements (scope, availability, standards, responsibilities, escalation) and Management elements (tracking, reporting, dispute resolution, revision). Contract monitoring follows Chapter 8 (Rule 205), with the provider submitting a Programme before commencement.

Self-test

Chapter 9 Quiz — other services & GeM

Eight UPSC-style questions from Chapter 9. Pick an answer to lock it; the explanation appears below.

Score 0 / 0

⚡ Chapter 9 — Quick Recap

Concept	Key Fact
Fallback manual	Procurement of Goods manual (not consultancy)
Civil vs mechanical asset	Civil → Works; mechanical/electrical/ICT → Goods
Scope document	Activity Schedule (not a ToR)
Contract period	2 years initial, extendable +1 year if satisfactory
No extension if	Cumulative penalty of 5% of contract value levied
Selection	Single-stage, L-1 among responsive (Rules 204, 206)
Below ₹10 lakh	Shortlist of > 3 (Rule 201)
GeM direct purchase	≤ ₹25,000 any seller · ₹25k–₹5L lowest of ≥3 makers · >₹5L bidding
Automobiles ceiling	₹30 lakh
Annual Procurement Plan	On GeM within 30 days of Budget approval
GeM acceptance	CRAC; PRC in 48 hrs; Deemed PRC at 96 hrs
SLA	Balanced, penalties both sides; finalised before services start