0.1Purpose and Scope of this Manual

This Manual consolidates, into a single continuous text, the four procurement Manuals issued by the Department of Expenditure, Ministry of Finance, Government of India. It is written for officers preparing for departmental promotion and competitive examinations, and for practitioners who must work across more than one category of procurement.

Each of the four source Manuals is complete in itself, and each is written as though the other three did not exist. In practice they overlap heavily, diverge sharply at particular points, and use different chapter numbers for the same subject matter. A candidate who studies them separately must hold four parallel structures in mind and reconcile them under examination conditions.

This Manual removes that burden. Where the four Manuals agree, the provision is stated once. Where they differ, the divergence is stated openly, with the position of each Manual identified. Nothing has been dropped in the process of merging: every provision of every source Manual appears somewhere in this text.

0.2The Four Source Manuals

0.3How to Read this Manual

Untagged text applies to all four categories. Where a provision is confined to one or more categories, the relevant tag appears against the heading or in the body of the text:

Tags may be combined. A heading marked G + W is common to Goods and Works but absent from the two services Manuals.

Shaded panels carry three kinds of material: a divergence between the Manuals that a reader must not merge in the mind; a passage from a source Manual reproduced because its exact wording matters; or a caution that the source Manual itself states in emphatic terms.

Bold within the running text marks the operative words of a provision — the words on which its legal effect turns. It is used sparingly and deliberately.

Every chapter closes with a table of points of difference between the four Manuals. That table is the single most useful revision aid in this Manual, and should be read before and after the chapter body.

0.4Contents

0.5Master Concordance — Chapter Numbering across the Four Manuals

The single most frequent source of error in examination is that the same subject carries a different chapter number in each Manual. This table should be memorised before anything else in this book.

Three consequences follow, and each has been the subject of examination questions:

1. The Works Manual runs one chapter behind the others from Bidding Design onwards, because it places governance and debarment at the end, as Chapter 8, rather than early, as Chapter 3.
2. The Consultancy Manual runs one chapter ahead from Bid Evaluation onwards, because it inserts an entire chapter on Shortlisting of Consultants, which has no counterpart anywhere.
3. The Works Manual has no chapter on special types of procurement at all. Its variants — EPC, PPP, piece Work and stalled contracts — are dealt with inside its Bidding Design chapter.

0.6Master Concordance — Where the Four Manuals Stand Alone

A provision found in only one Manual cannot be inferred from the others. The following are the principal bodies of material that exist in a single Manual, and they account for most of the difference in length between the four.

0.7Master Concordance — The Principal Numerical Divergences

Where the four Manuals prescribe different figures for the same thing, the difference is almost always examinable. These are collected here for revision; each is dealt with in its place in the text.

0.8A Note on the Source Texts

Two errors in the source Manuals have been retained and flagged rather than silently corrected, because a candidate may be examined on the text as printed:

1. The Goods Manual states the threshold below which performance security is not necessary as "Rupees 50 (twenty-five) lakh" — the figure and the word do not agree.
2. The Goods and Consultancy Manuals cite the rule on enlistment of Indian agents as "Rule 52"; the Works and Non-Consultancy Manuals correctly cite Rule 152 of the General Financial Rules, 2017.

A third point of substance should also be noted. The Consultancy Manual assigns 70% weight to the technical score and 30% to cost, and then states two paragraphs later that "the weightage of the cost element adopted in Consultancy services is as high as 70 per cent." That sentence is correct in the Non-Consultancy Manual, where cost does carry 70%, but is internally inconsistent in the Consultancy Manual. Both sentences are reproduced in this Manual at paragraph 7.20.

1.1Procurement Rules and Regulations; and this Manual

1. Various Ministries, Departments, attached and subordinate offices, local urban bodies, public sector enterprises, and other Government (including autonomous) bodies (hereinafter referred to as 'Procuring Entities') spend a sizeable amount of their budget on the Procurement of goods, works and services to fulfil their stated objectives, assigned duties/ obligations/ responsibilities/ functions, and activities in alignment with desired policy outcomes.
2. GCNC The Ministries/ Departments have been delegated full powers to make their own arrangements for the procurement of goods and services that are not available on the Government e-Marketplace (GeM). These powers must be exercised as per the Delegation of Financial Power Rules and in conformity with the 'Procurement Guidelines' described below. Common use Goods and Services available on GeM are required to be procured mandatorily through GeM as per Rule 149 of GFR, 2017.

W The Ministries/ Departments have been delegated powers to make their own arrangements for procurement of works under the Delegation of Financial Power Rules, which have to be exercised in conformity with the 'Procurement Guidelines' described below.

1. To ensure that these procurements are made by following a uniform, systematic, efficient and cost-effective procedure, and also to ensure fair and equitable treatment of suppliers/ bidders/ contractors/ consultants/ service providers, there are guidelines comprising a hierarchy of Statutory framework, Rules and Regulations, Manuals of Procurement and Procurement Documents as detailed in Annexure 1 of the Manual for Procurement of Goods, Second Edition, 2024 (hereinafter referred to as 'Procurement Guidelines').

1. At the apex of the Statutory framework governing public Procurement is Article 299 of the Constitution of India, which stipulates that contracts legally binding on the Government must be executed in writing by officers specifically authorised to do so. The Constitution also enshrines Fundamental Rights — in particular Article 14 (Right to Equality before Law) and Article 19(1)(g) (Right to practise any profession, or to carry on any occupation, trade, or business) — which have implications for Public Procurement.

Further:

• GCNC The Indian Contract Act, 1872 and the Sale of Goods Act, 1930 are significant legislations governing contracts of sale/ purchase of goods in general.
• W The Indian Contract Act, 1872 is a significant legislation governing contracts in general.

There are other mercantile laws that may be attracted in Public Procurement transactions:

• Arbitration and Conciliation Act, 1996
• Mediation Act, 2023(in G, W, NC)
• Competition Act, 2002
• Information Technology Act, 2000
• Indian Stamp Act, 1899 (in W, C, NC)

— all as amended from time to time.

1. In the Central Government, there is no law exclusively governing public procurement. However, comprehensive Rules and Regulations in this regard are available in:
2. General Financial Rules (GFR), 2017 — especially [G, C, NC] Chapters 6 to 9; W Chapters 5 to 9;
3. Delegation of Financial Powers Rules (DFPR) — [W, C, NC] cite DFPR, 2024;
4. Government orders regarding purchase preference/ restrictions, such as the Public Procurement (Preference to Make in India) Order, 2017; facilities to Micro and Small Enterprises and Start-ups; Restrictions on Entities from a Class of Countries (Rule 144(xi), GFR 2017); and W relaxation of the conditions of prior turnover and prior experience for start-up enterprises.
5. Without purporting to be a comprehensive compendium of all such 'Procurement Guidelines', this Manual is intended to serve as a portal to enter this vast area and draw attention to basic norms and practices governing public procurement.

1.2Clarification, Amendments and Revision of this Manual

The Procurement Policy Division, Department of Expenditure, Ministry of Finance would be the nodal authority for this Manual's revision, interpretation, and clarification.

1.3Applicability of this Manual

1.3.1Category of Procurements

G The Goods Manual applies to the Procurement of all "Goods" as defined in the 'Procurement Glossary' section. What is unique about the Procurement of goods (as compared to services and works) is the ability to precisely describe the technical specification and scope of the requirement. The other Manuals (Consultancy Services, Non-consultancy Services and Works) are generically based on the Goods Manual. Hence, for any topic for which guidance cannot be found in those Manuals, the Manual for Procurement of Goods shall apply mutatis mutandis. For the sake of brevity, those Manuals refer to some of the sections of the Goods Manual without reproducing them.

W The Works Manual applies to procurement of all "Works" as defined in the 'Procurement Glossary' section.

C The Consultancy Manual applies to procurement of "Consultancy Services" as defined in the 'Procurement Glossary' section. For any circumstances not covered, the Procuring Entity may refer to the Manual for Procurement of Goods, 2024.

NC The Non-Consultancy Manual applies to procurement of "Non-consultancy Services" (including "Outsourcing of Services") as defined in the 'Procurement Glossary' section. For any circumstances not covered, the Procuring Entity may refer to the Manual for Procurement of Goods, 2024 (Rule 206 of GFR, 2017).

1.3.2Classification of WorksW

1.3.3Procuring Entities

1. This Manual shall apply to all Procuring Entities covered by Rule 1 of GFR, i.e., all Central Government Ministries/ Departments, attached and subordinate bodies. These provisions shall also apply, as per the same rule, to autonomous bodies except to the extent that the bye-laws of an autonomous body provide separate procurement guidelines* that the Government has approved.

1. W — additional provisions on addressees:
2. This Manual inter alia covers fundamental provisions relating to the Constitution; Government instructions relating to Preferential Procurement Policies; GTE; Land Border restriction; and General Instructions on Procurement and Project Management (No. F.1/1/2021-PPD dated 20.10.2021), which are mandatory for all entities of Central Government.
3. This Manual is addressed to Ministries/ Departments, their attached and subordinate offices, and autonomous bodies whose in-house capabilities are limited to repair works of up to Rs 60 lakh and who assign larger repair works (and original works) to third parties (Public Works Organisations or CPSEs) — Rule 133 of GFR, 2017 (as amended). Refer para 3.1 of the Works Manual for further details.
4. This Manual may also be useful for Ministries/ Departments, their attached and subordinate offices, and autonomous bodies who have in-house capabilities for direct execution of larger works but may not have their own detailed procurement guidelines.
5. The Manual does not purport to address procurement of larger works for which major works procuring Ministries/ Departments — like the Central Public Works Department (CPWD); Military Engineering Service (MES); Border Roads Organisation (BRO); Ministries of Railways; Information & Broadcasting; and Departments of Posts and Space, etc. — already have their own detailed guidelines tailored to unique individual requirements. They may, however, ensure that their procurement guidelines comply with the mandatory provisions mentioned in sub-para (a) above.

1.3.4Statutory Bodies and CPSEs

These guidelines shall also be applicable to bodies substantially owned or controlled by, or receiving substantial financial assistance from, the Central Government — inter alia:

• Central Public Sector Enterprises (CPSEs or undertakings, including their subsidiary companies/ Ventures);
• Public Sector Banks (PSBs);
• Public Sector Insurance Companies (PSICs);
• Public Sector Financial Institutions (FIs);
• Constitutional or Statutory Bodies;
• Public Academic Institutions (National/ Central institutes); and
• Commissions created under the Constitution of India or specific legislations

— except to the extent of deviations that have been approved by their competent authority (e.g., Board of Directors in CPSEs).

1.3.5Indian Missions and CPSE Units Abroad

While the applicability of the Manual in the case of Indian Missions abroad and CPSE Units abroad shall be as per paras 1.3.3 and 1.3.4 above respectively, the following is clarified:

a) Adopting Financial Limits/ Thresholds in Local Currency: For procurements done and for use outside India, in the host country's local currency, Indian Missions and CPSE units abroad may adopt General Financial Rules (GFR) financial limits/ thresholds of procurements (as mentioned in this Manual at various instances, e.g., selection of mode of Procurement etc.) by using the latest INR-PPP conversion rates for the local currency as published by the IMF (International Monetary Fund). For convenience, such converted limits/ thresholds may be reviewed annually. Even if the Procurement is to be done in a currency other than the local currency, the applicable financial limits/ thresholds of procurements shall be in terms of the INR-PPP conversion rate for the local currency only. If the IMF does not publish the PPP conversion rate for local currency, then the conversion may be done to the currency most relevant to that mission/ unit in consultation with the Financial Adviser.

b) Exemptions: For exemptions from restrictions relating to Global Tenders, bidders from Land-border countries, and eProcurement for bona fide procurements and use outside India by Indian Missions and CPSE Units abroad, please refer to paragraphs 4.3.2-4-g)(W cites 4.3.2-4-h), 1.11.4-3-f)ii), and 4.17.1-4(W cites 4.17.1-5) respectively, in the Manual for Procurement of Goods, 2024.

1.3.6Portals

• G GeM portal, GePNIC portal (Government e-Procurement of NIC, eproc.gov.in), and various such platforms of different Organisations carry out a substantial proportion of Public Procurement. Hence, the procedures for such platforms should conform to these 'Procurement Guidelines'.
• W Central Public Procurement Portal (CPPP of NIC, eproc.gov.in), and various such platforms.
• CNC GeM portal, CPPP (Central Public Procurement Portal), and various such platforms — the procedures for such platforms should generally conform to these 'Procurement Guidelines'.

1.3.7Outsourced Procurement

These procurement guidelines would continue to apply if these procuring entities:

• outsource the procurement process, or
• bundle the procurement process with other contractual arrangements, or
• utilise the services of a procurement support agency or procurement agents to carry out the Procurement on their behalf.

1.3.8Customisation

This Manual is to be taken as generic guidelines, which are necessarily broad in nature. (CNC add: Subject to the observance of these generic guidelines,) Procuring Entities are advised to customise these Manuals, with the approval of competent authority and financial concurrence, to suit their local/ specialised needs by issuing their own detailed Manuals (including customised formats); Model Tender Documents; Schedule of Procurement Powers; and Checklists — to serve as practical instructions for their officers and to ensure completeness of examination of cases.

For procuring organisations that have their own detailed manuals or procedure orders, the initiation, authorisation, Procurement, and execution of contracts undertaken by them shall be regulated by detailed rules and orders contained in their respective regulations and by other special orders applicable to them.

1.3.9Exemptions

These procurement guidelines would not apply to procurements by procuring entities mentioned above for their own use from their subsidiary companies, including Joint Ventures, where they have a controlling share.

Moreover, by a general or special notification, the Government may permit certain 'Procuring Entities' mentioned above, considering unique conditions under which they operate, for all or certain categories of procurement, to adopt detailed approved guidelines for procurement which may deviate in some respects but conform with all other essential aspects of these 'Procurement Guidelines'.

1.3.10Procurements financed by Loans/ Grants extended by International Funding Agencies

1. For projects funded by the World Bank, Asian Development Bank, and other International Funding Agencies (IFA), the Articles of Agreement, with the approval of the Ministry of Finance, stipulate either the Indian (or State) Government's own procurement procedures or the IFA's specific procurement procedures to be followed by the borrowers.
2. These guidelines would not be applicable to projects funded by the World Bank using the Investment Project Financing (IPF) instrument and similar instruments of other IFAs, as stipulated under Articles of Agreement as mentioned under sub-para (a) above. IFA's specific procurement procedures shall be applicable as permitted under Rule 264 of GFR, 2017.
3. However, for projects financed using instruments such as Program-for-Results (PforR) of the World Bank, and Results-based Lending (RBL) of the Asian Development Bank, and similar instruments of other IFAs, the application of these guidelines as expressly agreed in the legal agreements shall be followed.

1.4Categorisation of Procurements

1.4.1Categories

Categorisation of Procurements helps prepare guidelines for Procurements and Model Tender Documents, which cater to peculiar contractual conditions of the categories of procurements. G These categories may be further sub-categorised, e.g., Capital Equipment procurement in Goods.

Following are the categories of procurements (please refer to their definitions in the 'Procurement Glossary' section):

• a) Goods
• b) Services
• i) Consultancy Services, and
• ii) Non-consultancy services (NC services)
• c) Works

1.4.2Distinctive Features

Normally, such categorisation is evident from their definition, and Procurement should be done accordingly, following the relevant guidelines and Model Tender Documents. The boundaries between such categorisation may not be clear-cut and may overlap. It may neither be possible nor necessary to distinguish precisely between the categories in overlapping areas. Though simplistic, the main distinguishing factors between these are:

1. While both Goods and Works lead to tangible outputs (with some exceptions like IPR materials), the main difference between goods and works is that the manufacture of goods is done on the supplier's own premises (other than installation/ commissioning), whereas 'Works' is executed on the premises of the procuring entity (other than pre-fabricated components). Works may include incidental 'Goods' and vice versa.
2. The main difference between 'Goods' or 'Works' on the one hand and 'Services' on the other is the intangibility of the outputs of Services.
3. The main difference between Consultancy and Non-consultancy services is the level of intellectual input, which is predominant in Consultancy and not central to Non-consultancy. Another difference is that non-consultancy services are repetitive routines with measurable and standardised outputs, while consultancy services are one-off and non-routine, with outputs that are neither precisely measurable nor standardised.

1.4.3In Case of Doubt

Procurement in cases of doubts about categorisation may be handled as follows:

a) Simpler procedure rule: In the case of blurred border lines and grey areas, a simpler procurement procedure should be followed. In case of doubt between:

• i) Goods and works/ NC services/ consultancy → process as Procurement of Goods;
• ii) Works and NC service/ consultancy → process as Procurement of Works;
• iii) Non-consultancy and Consultancy services → process as Procurement of Non-consultancy services.

b) IT Projects: The Procurement of IT projects should usually be carried out as a procurement of Consultancy services, as the outcomes/ deliverables vary from one service provider to another. The IT Projects may include:

• i) tailor-made/ bespoke software development;
• ii) cloud-based services;
• iii) composite IT system integration services involving the design, development, deployment and commissioning of IT systems, including hardware supply, software development, bandwidth, and operation/ maintenance of the system for a defined period after going live, etc.

c) Composite Contracts(PPD's OM No. F6/2/2023-PPD dated 13.01.2023): Composite contracts may involve mixed elements of Goods, Works, and Services. For example, in the Procurement of large machinery, some works and services like Installation, Commissioning, Training, Annual Maintenance Contract (AMC) or a Comprehensive Maintenance Contract (CMC), and so on, may be incidental to the supply of goods. The relationship of primacy between the goods element and the works/ services element may be examined, irrespective of the relative values.

• If the primary intention/ objective is the Procurement of goods with services/ works being incidental to it, it may be processed as Procurement of Goods.
• However, if the primary intention/ objective is Procurement of Works/ Services with Procurement of goods being incidental, then it should generally be processed as Procurement of Works/ Services (as the case may be), irrespective of the relative values.
• A possible alternative approach could be to have separate but linked contracts for such elements of Goods, Works, and Services, but implementation may become challenging.

WCNC — further refinements:

• i) Procurement of "new product" viz. Mechanical, Electrical or ICT assets etc. of the nature of Machinery and Plant, with incidental works/ services like fabrication, installation, erection, commissioning, AMC/CMC, should be handled as procurement of Goods — except for procurement of IT Projects as specified above.
• ii) AMC/ CMC of existing Mechanical, Electrical or ICT assets of the nature of Machinery and Plant should be treated as procurement of Non-Consultancy Services.

d) Consultancy vs Non-Consultancy — the "primary objective" test WCNC: It is possible that, depending on the nature and complexity of the assignment, a task could be dealt with either as a consultancy or a non-consultancy service. In essence, if the intellectual and advisory part of services is the primary objective (irrespective of the relative value of this component), the selection needs to be dealt with in Consultancy mode.

1.5Authorities Competent to Incur Expenditure on Procurements and Consultation with Financial Advisers

1. The first step in procurement is the decision to procure something — goods, services, works, etc. — involving a formal decision to procure along with the exact or approximate expenditure to be incurred. A Competent Authority that is competent to incur expenditure may accord administrative sanction/ approval to incur expenditure on a specific procurement in accordance with the Delegation of Financial Powers Rules (DFPR) by following the 'Procurement Guidelines' (Rule 145 of GFR 2017).

Each 'Procuring Entity' may issue a Schedule of Procurement Powers (SoPP), adding further details to the broad delegations in the DFPR based on assessing risks involved in different decisions/ approvals at various stages of the Procurement Cycle.

1. Being a decision with a financial bearing, it invariably requires consultation of the Financial Adviser (unless validly re-delegated within permissible limits or otherwise permitted by DoE through specific orders). The extent of involvement of the Financial Adviser and the Integrated Finance Division (IFD) in subsequent stages of procurement matters may be based on one of the following procedures (Para 19, Charter for Financial Advisers, 2023):

a) Normal Procedure: Under this procedure, the concurrence of the Financial Adviser/ IFD shall be required on all procurement matters, except for matters where re-delegation has been done within the permissible limits under the rules/ general orders/ general instructions of DoE. Unless the Secretary of the Department approves a special procedure with the concurrence of DoE, this procedure shall be followed.

b) Special Procedure: With the prior concurrence of Secretary (Expenditure), the Secretary of the Department may decide on a different level of involvement of the Financial Adviser/ IFD specific to the Department. The procedure shall lay out the types/ classes of cases where the Financial Adviser/ IFD consultation would be required, which may be in terms of:

• threshold financial limits,
• stages in Procurement, or
• types of Procurement and contracts, viz. consultancy (NC adds: / non-consultancy), goods and works contracts, etc.,
• or any permutation thereof.

G clarification: It is further clarified that this system will be applicable only to Ministries/ Departments etc. covered under the FA Charter. All other organisations, including CPSEs, are free to devise their own system.

1. In all procedures, payments under approved contracts shall not require IFD consultation, except in cases where the payments are in relaxation/ variation to approved contract conditions.

1.6Basic Aims of Procurement — the Five R's of Procurement

In every Procurement, public or private, the basic aim is to achieve just the right balance between costs and requirements with respect to five parameters called the Five 'R's of Procurement. The entire process of Procurement — from the time the need for an item, facility or service is identified till the need is satisfied — is designed to achieve such a right balance. The word 'Right' is used in the sense of 'optimal balance'.

The Five R's are: 1. Right Quality; 2. Right Quantity; 3. Right Price; 4. Right Time and Place; and 5. Right Source.

1.6.1Right Quality

Procurement aims to buy just the right quality that will suit the needs — no more and no less — with precise specifications of the procuring entity's requirements, a proper understanding of the functional value and cost, and an understanding of the bidder's quality system and quality awareness. The concept of the right balance of quality can be further refined to the concept of utility/ value (refer para 1.7 below). Technical specifications and quality assurance plans are the most vital ingredients for the right quality. In public procurement, it is essential to give due consideration to value for money while preparing the specifications.

1.6.2Right Quantity

There are extra costs and systemic overheads involved with both procuring a requirement too frequently in small quantities and buying significant quantities for prolonged use. Hence, the right quantity should be procured (in the appropriate size of the contract), which balances extra costs associated with larger and smaller quantities.

1.6.3Right Price

It is not correct to aim at the cheapest materials/ facilities/ services available. The price should be just right for the quality, quantity, and other factors involved — or should not be abnormally low for facilities, works, or services, which could lead to a situation of non-performance or failure of contract. The concept of price can be refined further to consider not only the initial price paid for the requirement but also other costs such as maintenance costs, operational costs, and disposal costs (also termed life cycle costing — refer para 1.7 below).

1.6.4Right Time and Place

If an organisation needs the material (or facility or services) in three months, it will be costly to procure it too late or too early. Similarly, if the vendor delivers the materials/ facilities/ services in another city, extra time and money would be involved in logistics. An unrealistic time schedule for completion of a facility may lead to delays, claims, and disputes.

1.6.5Right Source

The source of delivery of Goods, Works and Services must have just the right financial capacity and technical capability for our needs — demonstrated through satisfactory past performance of contracts of the same or similar nature. Buying a few packets of printer paper directly from a large manufacturer may not be the right strategy. On the other hand, if our requirements are large, buying such requirements through dealers or intermediaries may also not be right.

1.7Refined Concepts of Cost and Value — Value for Money

The concept of price or cost has been further refined into:

• Total Cost of Ownership (TCO),
• Life Cycle Cost (LCC), or
• Whole-of-Life (WOL) cost

— to consider not only the initial acquisition cost but also the cost of operation, maintenance, and disposal during the lifetime of the external resource procured.

Similarly, the concept of quality is linked to the need and is refined into the concept of utility/ value.

These two, taken together, are used to develop the concept of Value for Money (VfM) — also called Best Value for Money in certain contexts.

VfM means the effective, efficient, and economical use of resources, which may involve the evaluation of:

• relevant costs and benefits, along with
• an assessment of risks,
• non-price attributes — e.g., goods and/or services that contain recyclable content, are recyclable, minimise waste and greenhouse gas emissions, conserve energy and water, minimise habitat destruction and environmental degradation, are non-toxic, etc., and/or
• life cycle costs, as appropriate.

Price alone may not necessarily represent VfM.

In public Procurement, VfM is achieved by attracting the widest competition by way of:

• optimal description of need;
• development of value-engineered specifications/ Terms of Reference (ToR);
• appropriate packaging/ slicing of requirement;
• selection of an appropriate mode of Procurement and tendering system.

1.8Fundamental Principles of Public Procurement

General Financial Rules, 2017 (Rule 144) lay down the Fundamental Principles of Public Procurement. These principles and other additional obligations of procuring authorities in public Procurement can be organised into five fundamental principles of public Procurement, which all procuring authorities must abide by and be accountable for:

1. Transparency Principle
2. Professionalism Principle
3. Broader Obligations Principle
4. Extended Legal Responsibilities Principle(C terms it "Extrinsic legal principle"; W terms it "Extended legal principle")
5. Public Accountability Principle

1.8.1Transparency Principle

All procuring authorities are responsible and accountable for ensuring transparency, fairness, equality, competition, and appeal rights. This involves simultaneous, symmetric, and unrestricted dissemination of information to all likely bidders, sufficient for them to know and understand the availability of bidding opportunities and the actual means, processes and time-limits prescribed for completion of registration of bidders, bidding, evaluation, grievance redressal, award, and management of contracts.

It implies that such officers must ensure:

• consistency (absence of subjectivity),
• predictability (absence of arbitrariness),
• clarity,
• openness (absence of secretiveness), and
• equal opportunities (absence of discrimination) in processes.

In essence, the Transparency Principle also enjoins upon the Procuring Authorities to do only that which they professed to do as pre-declared in the relevant published documents, and not to do anything that had not been so declared.

As part of this principle, all procuring entities should ensure that offers are invited following a fair and transparent procedure and ensure publication of all relevant information on the Government e-Marketplace (GeM) and GeM-Central Public Procurement Portal (CPPP).

1.8.2Professionalism Principle

1. As per these synergic attributes, the procuring authorities have a responsibility and accountability to ensure professionalism, economy, efficiency, effectiveness, and integrity in the procurement process. They must avoid wasteful, dilatory, and improper practices violating the Code of Integrity for Public Procurement (CIPP). They should, at the same time, ensure that the methodology adopted for Procurement is reasonable and appropriate for the cost and complexity and that it effectively achieves the planned objective of the Procurement. As part of this principle, the Government may prescribe professional standards and specify suitable training and certification requirements for officials dealing with procurement matters.
2. In reference to the above two principles — Transparency and Professionalism — it may be useful to refer to the following provision in the General Financial Rules, 2017:

1. The procedure to be followed in making public Procurement must conform to the following yardsticks (Rule 144, GFR 2017):
2. offers should be invited following a fair, transparent, and reasonable procedure;
3. the procuring authority should be satisfied that the selected offer adequately meets the requirement in all respects;
4. the procuring authority should satisfy itself that the price of the selected offer is reasonable and consistent with the quality required.

1.8.3Broader Obligations Principle

1. Over and above transparency and professionalism, the procuring authorities also have the responsibility and accountability to conduct public Procurement in a manner that facilitates the achievement of the broader objectives, social policies and programme objectives of the Government — for example, economic growth, strengthening of local industry (Make in India), Ease of Doing Business, job and employment creation, and so on — to the extent these are specifically included in the 'Procurement Guidelines'. These policies are detailed in para 1.11 below.
2. To support social policies — reservation of Procurement of specified goods from MSEs, weaker sections, backward regions, and reservation of Procurement of certain goods from MSEs.
3. To strengthen local industry and job/ employment creation — preferential Procurement of locally manufactured goods or services (Rule 153(iii) of GFR, 2017) and support to Start-up enterprises (Rule 170(i), 173(i) of GFR, 2017).
4. To achieve programme objectives — reservation of Procurement of a specified class of goods from or through certain nominated CPSEs or Government Organisations.
5. On grounds of defence of India or matters directly or indirectly related thereto, including national security — impose restrictions, including prior registration and/or screening, on Procurement from bidders from, or bidders having commercial arrangements with an entity from, a certain country or countries, or a class of countries — Rule 144(xi) of GFR, 2017.
6. Facilitating broader objectives of other Departments of Government — for example, ensuring tax or environmental compliance by participants, Energy Conservation, accessibility for People with Disabilities, etc. Procurement policies and procedures must comply with accessibility criteria that the Government may mandate from time to time.

1.8.4Extended Legal Responsibilities Principle

Procuring authorities must fulfil additional legal obligations in public Procurement, over and above mere conformity to the mercantile laws (which even private sector procurements must comply with).

The Constitution of India has certain provisions regarding fundamental rights and public Procurement. Courts have, over time, taken a broader view of public Procurement as a function of the 'State', interpreting these to extend the responsibility and accountability of public procurement authorities. Courts in India thus exercise additional judicial review (beyond contractual issues) over public Procurement in relation to the manner of decision-making with respect to fundamental rights, fair play, and legality.

Similarly, procuring authorities also have the responsibility and accountability to comply with the laws relating to Governance Issues like the Right to Information (RTI) Act and the Prevention of Corruption Act, and so on.

1.8.5Public Accountability Principle

1. Procuring authorities are accountable for all the above principles to several statutory and official bodies in the Country — the Legislature and its Committees, Central Vigilance Commission, Comptroller and Auditor General of India, Central Bureau of Investigation and so on — in addition to administrative accountability. As a result, each individual public procurement transaction is liable to be scrutinised independently and in isolation, besides judging the overall outcomes of the procurement process over a period. Procuring authorities thus have responsibility and accountability for compliance with rules and procedures in each individual procurement transaction, as well as the achievement of overall procurement outcomes.
2. The procuring authority, at each stage of Procurement, must therefore place on record, in precise terms, the considerations that weighed with it while making the procurement decision — from need assessment to fulfilment of need (Rule 144(viii), GFR 2017).
3. Such records must be preserved, retained in easily retrievable form, and made available to such oversight agencies on demand. The procuring entity shall therefore maintain and retain audit trails, records and documents generated or received during its procurement proceedings in chronological order. The files shall be stored in an identified place and retrievable for scrutiny whenever needed without wasting time.

1.9Standards (Canons) of Financial ProprietyGW

1.10Public Procurement Infrastructure at the Centre

Public Procurement is a complex function, and the infrastructure needed to execute it is equally complex. In India, the following administrative, oversight, and digital infrastructure exists for Public Procurement:

1. Procurement Policy Division (PPD)
2. Central Public Procurement Portal (CPPP)
3. Government e-Marketplace (GeM)
4. Comptroller and Auditor General (CAG) of India
5. Lokpal/ Lokayukta — Anti-corruption Ombudsman
6. Central Vigilance Commission (CVC)
7. Central Bureau of Investigation (CBI)

1.10.1Procurement Policy Division (PPD)

The Procurement Policy Division (PPD) in the Department of Expenditure, Ministry of Finance has been created to encourage uniformity and harmonisation in public procurement processes by:

• disseminating best practices,
• providing guidance, oversight and capacity building,
• issuing procurement manuals and Model Tender Documents.

However, centralisation of Procurement or involvement in procurement processes is not the intended purpose of the creation of PPD.

1.10.2Central Public Procurement Portal (CPPP)

The Central Public Procurement Portal (CPPP) has been designed, developed and hosted by the National Informatics Centre (NIC, Ministry of Electronics & Information Technology) in association with the Department of Expenditure to ensure transparency in the public procurement process.

• Primary objective: to provide single-point access to the information on procurements made across various Ministries and Departments.
• The CPPP has e-publishing and e-procurement modules.
• It is mandatory for all Ministries/ Departments of the Central Government, CPSEs, and Autonomous and Statutory Bodies to publish on the CPPP all their tender enquiries and information about the resulting contracts.
• CPPP provides access to information on documents relating to pre-qualification, bidders' registration, Tender Documents, details of bidders, their pre-qualification, registration, exclusions/ debarments, decisions taken regarding pre-qualification and selection of successful bids.
• Implementing end-to-end e-procurement for all procurements is now mandatory — either through the CPPP portal or any other suitable GCQE-compliant portal.

1.10.3Government e-Marketplace (GeM)

GeM is the 'National Public Procurement Portal', serving as an end-to-end online marketplace for various entities.

• The Procurement of Goods and Services available on GeM (as per Rule 149 of GFR, 2017) is mandatory for Ministries/ Departments (including attached/ subordinate offices), CPSEs, autonomous bodies and local bodies.
• GeM facilitates the Procurement of common-use goods and services by such entities.
• The portal aims to enhance efficiency, transparency, and speed in public Procurement.
• Through this paperless, contactless, and cashless platform, registered government buyers can seamlessly procure goods and services from registered sellers.

1.10.4Comptroller and Auditor General (CAG) of India

1. The CAG of India, established under Articles 149–151 of the Constitution of India, holds a pivotal role as the Supreme Audit Institution of India (SAII). CAG plays a crucial role in promoting accountability, transparency, and good governance through high-quality auditing and accounting. It provides independent and timely assurance to the legislature, the public, and the executive that public funds are being collected and utilised effectively and efficiently.
2. The CAG's mandate encompasses a wide spectrum of audit and reporting responsibilities:
3. Government Departments and Entities;
4. Government Companies and Corporations;
5. Autonomous Bodies and Authorities that receive government funding (e.g., municipal bodies, IIMs, IITs, state health societies);
6. Special Requests and Initiatives — the CAG can audit the accounts of any other body or authority upon request of the President/ Governor, or on its own initiative.
7. CAG conducts multiple types of audits, namely:
8. Compliance Audits
9. Financial Audits
10. Performance Audits
11. Thematic Audits
12. IT Audits

These audits, especially the performance audits, are noted to cover Procurement, but only with the perspective of identifying if any wastage, malpractice, and fraud have occurred.

1. To carry out its extensive audit mandate effectively, the CAG is endowed with significant powers:
2. Inspection Authority — power to inspect any office or organisation subject to its audit.
3. Transaction Examination — can examine all transactions and question the executive regarding financial matters.
4. Record Access — can call for records, papers, and documents from any audited entity.
5. Audit Extent and Manner — authority to decide the extent and manner of audit to ensure thorough scrutiny.

1.10.5Lokpal/ Lokayukta — Anti-corruption Ombudsman

1. The Lokpal and Lokayukta Act, 2013 and its amendment in 2016 (the Act) provides for a Lokpal in the Central (Union) Government and Lokayukta in the State Governments as the statutory anti-corruption Ombudsman to inquire into allegations of corruption against public servants and for related matters. Once appointed — by the President in the case of Lokpal, or the Governor in the case of Lokayukta — they cannot be transferred or removed except by impeachment proceedings undertaken by Parliament or the State legislatures respectively.
2. The Act outlines the Lokpal's and Lokayuktas' roles, powers, and responsibilities. It has a broad scope regarding the individuals it covers — extending to:
3. Union Ministers (including the serving and former Prime Ministers),
4. Members of Parliament, and
5. various categories of public servants, including those in Group 'A', 'B', 'C', or 'D' positions as defined in the Prevention of Corruption Act, 1988.
6. All entities (NGOs) receiving donations from foreign sources under the Foreign Contribution Regulation Act (FCRA)above Rs 10 lakh per year are also under the jurisdiction of Lokpal.

The Act grants Lokpal powers to sanction prosecution against public servants.

1. There are exceptions in matters related to international relations, external and internal security, public order, atomic energy, and space. To initiate an inquiry into such cases, at least two-thirds of Lokpal members must approve. The Act emphasises confidentiality — if Lokpal concludes a complaint is baseless, the inquiry records remain undisclosed to the public or any party involved.
2. One significant aspect of the Act is the requirement for public servants to declare their assets in a specified manner. This transparency measure aims to deter corruption and promote accountability.
3. Composition: One Chairperson and a maximum of eight other members.
4. The age of Lokpal (Chairperson or member) on the date of assuming office should not be under 45 years.
5. Of the eight members, four are judicial members who are or have been judges of the Supreme Court or a Chief Justice of a High Court.
6. The remaining four are non-judicial members — people of impeccable integrity and outstanding ability, having special knowledge and expertise of not less than twenty-five years in matters relating to anti-corruption policy, public administration, vigilance, finance including insurance and banking, law, and management.
7. Fifty per cent of the Members shall be from Scheduled Castes/ Scheduled Tribes/ Other Backward Classes/ Minorities and women.
8. Selection Committee: The Chairperson and Lokpal members are selected through a selection committee consisting of:
9. the Prime Minister,
10. the Speaker of Lok Sabha,
11. the Leader of Opposition in Lok Sabha,
12. the Chief Justice of India (CJI) or a sitting Supreme Court judge nominated by CJI, and
13. another eminent jurist nominated by the President of India based on the recommendations of the first four members of the selection committee "through consensus".
14. Lokpal may refer complaints for investigation to the CBI. For such cases, CBI would work under Lokpal's supervision. It envisages a 'Directorate of Prosecution' under the overall control of the Director, CBI, with a fixed tenure of two years. The appointment of the Director of Prosecution is to be based on the recommendation of the Central Vigilance Commission. Transfer of CBI officers investigating cases referred by Lokpal shall be with the CVC's approval.
15. The Act lays down clear timelines for preliminary enquiry, investigation and trial and has provisions for attachment and confiscation of property acquired by corrupt means, even while prosecution is pending.

1.10.6Central Vigilance Commission (CVC)

1. Under the Central Vigilance Commission Act, 2003, the CVC is a statutory body headed by the Central Vigilance Commissioner and comprising not more than two Commissioners. It is conceived to be the apex oversight institution, independent from any executive authority. There are two Chief Technical Examiners (CTE) who oversee public procurement.
2. All Central (Union) Government entities appoint a Chief Vigilance Officer (CVO) in consultation with the CVC. CVOs undertake system audits and preventive/ forensic investigations in the Entity and report them to the CVC.
3. CVC only investigates and recommends punitive and follow-up actions to the concerned entity but has no punitive powers by itself. The recommendations are not binding on the entities, but CVC may report any deviations from recommendations to Parliament. It has an advisory role in Discipline and Appeal cases arising from its investigations. It plays a role in sanctioning prosecutions related to corruption and consultations in key appointments. CVC also has a role in the appointment of Independent External Monitors (IEM) under the Integrity Pact (wherever applicable) for Central (Union) Government Entities. CVC submits an annual report to Parliament regarding its investigations.
4. CVC has superintendence over the functioning of the CBI regarding the investigation of offences related to corruption in Central (Union) Government Agencies. CVC has jurisdiction over cases under the Lokpal and Lokayukta Act, Whistle Blowers Act, and Money Laundering Act.
5. It has the powers of a civil court when conducting any inquiry. CVC and CVOs do not have the powers of Police to arrest, seize properties, and enforce compliance from non-government agencies. Therefore, cases requiring such action are entrusted to the CBI.
6. To avoid conflict of interest, CVO and vigilance officers shall not associate with decision-making that may have vigilance sensitivities. Some organisations have a system wherein executive work — like the shortlisting of arbitrators or the debarment of firms — is entrusted fully/ partially to vigilance. The same is not appropriate and is also against the CVC Vigilance Manual.
7. The following levels/ categories of officials are covered under the jurisdiction of the CVC:

1.10.7Central Bureau of Investigation (CBI)

1. Under the Delhi Special Police Establishment Act, 1946, the CBI — a police organisation under the Department of Personnel, Ministry of Personnel, Pension & Public Grievances — is the only oversight agency with police powers. It investigates and prosecutes corruption cases (including those related to public procurement) requiring arrest, seizure of properties and enforcement of compliance from non-government agencies. The prosecutions are carried out under, inter alia, the Prevention of Corruption Act, 1988. It takes up cases based on complaints received from stakeholders or the general public.

Jurisdiction: Though its jurisdiction is restricted to Delhi and UTs, under sections 5 & 6 of the Act, the Central Government can extend its powers and jurisdiction to a State with the consent of the government of that State for investigation of specified offences (generally related to All India Services or Members of Parliament). High Courts and the Supreme Court can also order the CBI to investigate cases outside its normal jurisdiction, for which no consent is required from the State.

1. The Delhi Special Police Establishment (DSPE), which forms a part of the CBI, has two Divisions:

1. While the superintendence of DSPE, as far as it relates to investigation of offences under the Prevention of Corruption Act, 1988, vests in the CVC; for all other matters, the superintendence of DSPE vests in the Central Government.
2. The administration of DSPE vests in the Director of the CBI, who is appointed on the recommendations of a committee headed by the Central Vigilance Commissioner. He holds office for a period of not less than two years. The Director of CBI exercises, in respect of DSPE, powers exercisable by an Inspector General of Police regarding the police force in a State.
3. DSPE cannot conduct any inquiry or investigation into any offence alleged to have been committed under the Prevention of Corruption Act, 1988, except with the prior approval of the Central Government, where such allegation relates to employees at the level of Joint Secretary and above in the Central Government, or corporations established by or under any Central Act, Government companies, societies, and local authorities owned or controlled by it.
4. No such approval, however, is necessary for cases involving the arrest of a person on the spot on the charge of accepting or attempting to accept any gratification other than legal remuneration.

1.11Preferential / Mandatory / Restricted Purchase from Certain Sources

The Central Government may, by notification, provide for mandatory procurement of any goods or services from any category of bidders, or provide for preference to bidders on the grounds of promotion of locally manufactured goods or locally provided services (General Financial Rules, 2017, Rule 153).

WPresently the following policies are in vogue.

1.11.1Reservation of Procurement of Certain Class of Products from Certain AgenciesG

1.11.2Public Procurement Policy for Micro and Small Enterprises (MSEs)

(Rule 153(ii) of GFR 2017)

1.The Policy

From time to time, the Government of India lays down procurement policies to help inclusive national economic growth by providing long-term support to micro, small and medium enterprises, and to disadvantaged sections of society(C adds: "and to address environmental concerns").

The Procurement Policy for Micro and Small Enterprises, 2012 [amended 2018 and 2021] has been notified by the Government in exercise of the powers conferred in Section 11 of the Micro, Small and Medium Enterprises Development (MSMED) Act, 2006, which is mandatory to be followed by Central Government Ministries/ Departments/ Public Sector Undertakings. Details of the policy, along with the amendments issued in 2018 and 2021, are available on the MSME website.

2.Eligibility

1. Micro and Small Enterprises (MSEs) registered under Udyam Registration are eligible to avail the benefits under the policy.
2. This Policy provides preferential procurement of goods produced and services rendered by MSEs. Traders/ distributors/ sole agents/ Works Contracts are EXCLUDED from the purview of the policy.
3. i) (Notified by MSME Ministry vide S.O. 4926(E) dated 18.10.2022) In case of an upward change in terms of investment in plant and machinery or equipment or turnover or both, and consequent re-classification, an enterprise shall continue to avail of all non-tax benefits of the category (micro, small, or medium) it was in before the re-classification, for a period of three years from the date of such upward change.

• ii) MSEs would be treated as owned by SC/ST or Women entrepreneurs where:
• In the case of a proprietary MSE — the proprietor(s) are SC/ST or Woman;
• In the case of a partnership MSE — the SC/ST or Women partners hold at least 51% shares in the unit;
• In the case of Private Limited Companies — SC/ST or Women promoters hold at least 51% share.

3.Applicability and Exemptions

1. The policy is applicable to Central Government Ministries/ Departments/ Public Sector Undertakings.
2. The policy is not applicable to State Government Ministries/ Departments/ State PSEs, but they have similar policies applicable in their state.
3. Exemptions: Given their unique nature, defence armament imports shall not be included in computing the 25% goal for the Ministry of Defence. In addition, defence equipment like weapon systems, missiles, etc., shall remain out of the purview of such a reservation policy. Monitoring of goals set under the policy will be done, as far as they relate to the Defence sector, by the Ministry of Defence itself, in accordance with suitable procedures to be established by them.

4.Facilities for MSE

a) Reduced Transaction Costs: To reduce the transaction cost of doing business, MSEs will be facilitated by:

• providing them tender documents free of cost,
• exempting MSEs from payment of Earnest Money Deposits, and
• adopting e-procurement to bring transparency in the tender process.

However, exemption from paying Performance Bank Guarantee/ Security Deposit is not covered under the policy.

b) Relaxation in Prior Turnover and Experience: The Procuring Entity may relax the condition of prior turnover and prior experience for start-up enterprises recognised by DPIIT, subject to meeting quality & technical specifications. Start-ups may be MSMEs/ MSEs or otherwise. Such relaxation can be provided in the case of procurement of works as well.

It is further clarified that such relaxation is not optional but normally has to be ensured, except in the case of procurement of items related to public safety, health, critical security operations and equipment, etc., where adequate justification exists for the Procuring Entity not to relax such criteria (Notified vide OM No. F.20/2/2014-PPD(Pt.) issued by Department of Expenditure dated 29.09.2016). The decision of the Procuring Entity in this regard shall be final. (Rule 173(i) of GFR 2017.)

c) Timely Payments:Chapter V of the MSMED Act, 2006 has provisions for ensuring timely payments to MSE suppliers:

• The period agreed upon for payment must not exceed forty-five (45) days from the deemed acceptance of the materials supplied by the MSEs.
• In case of any discrepancies in the supplies, the Procuring Entity shall raise an objection to the MSE supplier within 15 days from the date of receipt of materials. If such objection is not raised, then it will be taken as deemed acceptance.
• For delays in payment, the buyer shall be liable to pay compound interest to the supplier on the delayed amount at three times the bank rate notified by the Reserve Bank.
• For arbitration and conciliation regarding the recovery of such payments and interest, the Micro and Small Enterprises Facilitation Council has been set up in various states.

5.Purchase Preference

a) The 25% annual target: Under the amended Public Procurement Policy for MSEs, Order 2012, the Central Government Ministries/ Departments/ PSUs shall procure a minimum of 25 per cent of their annual value of goods or services from MSEs (in accordance with GFR 2017, Rule 153(ii)).

• i) The annual goal of procurement from MSEs also includes sub-contracts to MSEs by large enterprises and consortia of MSEs formed by the National Small Industries Corporation. If a sub-contract is given to MSEs, it will be considered as procurement from MSEs.
• ii) CNC — important clarification: The annual target of 25% procurement from MSEs is only a MINIMUM. The MSE purchase preference is mandatory for all procurements (except for exemptions as per sub-para 3-c above), even after this target is achieved. For example, it is not permissible for organisations to earmark only some goods/ services to be procured exclusively from MSEs to achieve the annual target and not apply MSE procurement preferences to the rest of the goods/ services.

b) The L1+15% price band: In a tender, if the L1 price is from someone other than an MSE, participating MSEs quoting prices within a price band of L1 + 15% shall be allowed to supply up to 25% of the total tendered value by bringing down their price to the L1 price. If there is more than one eligible MSE within such price band who agrees to match the L1 price, the 25% quantity is to be distributed proportionately to them.

• i) Non-divisible items: In case the tender item cannot be split or divided, etc., the MSE quoting a price within the band L1+15% may be awarded for full/ complete supply of the total tendered value, considering the spirit of the Policy for enhancing Government procurement from MSEs.
• ii) Sub-targets: Out of the target of 25% of annual procurement from MSEs (not in the specific tender):
• a sub-target of 4% of annual procurement is earmarked for procurement from MSEs owned by SC/ST entrepreneurs, and
• 3% of annual procurement is earmarked for procurement from MSEs owned by women entrepreneurs.

However, in the event of failure of such MSEs to participate in the tender process or to meet tender requirements and L1 price, the 4% sub-target (SC/ST) and 3% (women) will also be met from other MSEs.

6.Developing MSE Vendors

The Central Ministries/ Departments/ PSUs shall take necessary steps to develop appropriate vendors by organising:

• Vendor Development Programmes (VDP), or
• Buyer-Seller Meets

focused on developing MSEs for procurement through the GeM Portal.

To enhance the participation of MSEs owned by SCs/ STs/ Women in Government procurement, Central Government Ministries/ Departments/ CPSEs should conduct Special Vendor Development Programmes/ Buyer-Seller Meets for SC/ST and Women MSEs.

7.Policy Implementation

1. A Review Committee has been constituted under the Chairmanship of the Secretary, Ministry of MSME, to monitor and review the Public Procurement Policy for MSEs. M/o MSME will review and/or modify the composition of the Committee as and when required. This Committee will, inter alia:
2. review the list of 358 items reserved for exclusive purchase from MSEs on a continuous basis,
3. consider requests from Central Government Departments/ CPSEs for exemption from the 25% target on a case-to-case basis, and
4. monitor achievements under the Policy.
5. To monitor the progress of procurement by Central Government Ministries/ Departments and CPSEs from MSEs, the Ministry of MSME launched the MSME 'Sambandh' Portal on 8th December 2017 for uploading procurement details by all CPSEs on a monthly and annual basis, which the Ministry regularly monitors.

1. To redress the grievances of MSEs related to non-compliance with the policy, a Grievance cell named "CHAMPION Portal" has been set up in the Ministry of MSME.
2. G A National SC/ST Hub (NSSH) scheme was launched in October 2016 to provide handholding support to SC/ST entrepreneurs, and it is being coordinated/ implemented by the NSIC under this Ministry.
3. Clarifications: The Office of the Development Commissioner (Micro, Small & Medium Enterprises) issued an FAQ on the Public Procurement Policy for MSE Order, 2012.

1.11.3Procurement Preference to Make in India (MII Policy)

(Rule 153(iii) of GFR, 2017)

1.Purpose

To encourage 'Make in India' and promote manufacturing and production of goods and services in India with a view to enhancing income and employment, the Department for Promotion of Industry and Internal Trade (DPIIT), Ministry of Commerce and Industry, Government of India, issued the Public Procurement (Preference to Make in India) Order, 2017.

The Order is issued pursuant to Rule 153(iii) of GFR, 2017 and is applicable to the procurement of Goods, Works, and Services.

2.Definitions

For the purpose of this Order:

1. 'L1' means the lowest tender or lowest bid, or the lowest quotation received in a tender, tender/ bidding process or other procurement solicitation, as adjudged in the evaluation process as per the tender or other procurement solicitation.
2. 'Local Content' means the amount of value added in India, which shall — unless otherwise prescribed by the Nodal Ministry — be:

Explanatory notes for calculation of local content:

• i) Imported items sourced locally from resellers/ distributors shall be EXCLUDED from calculation of local content.
• ii) The license fees/ royalties paid/ technical charges paid out of India shall be EXCLUDED from local content calculation.
• iii) Procurement/ supply of repackaged/ refurbished/ rebranded imported products, as commonly understood, shall be treated as reselling of imported products and shall be excluded from calculation of local content. Definitions:
• 'Refurbishing' means repair or reconditioning of an imported product — this does not amount to manufacture because no new goods come into existence.
• 'Repackaging' means repacking of imported goods from bulk pack to smaller packs — this would not ordinarily amount to manufacture of a new item.
• 'Rebranding' means relabelling or renaming or change in symbol or logo/ makes or corporate image of a company/ organisation/ firm for an imported product — this would amount to rebranding.
• iv) To ensure that imported items sourced locally from resellers/ distributors are excluded from calculation of local content, procuring entities are to obtain from bidders the cost of such locally-sourced imported items (inclusive of taxes) along with a break-up on license/ royalties paid/ technical expertise cost etc. sourced from outside India. For items sold by a bidder as reseller, an OEM certificate for country of origin is to be submitted.
• v) For contracts involving supply of multiple items, a weighted average of all items is to be taken while calculating the local content.
• WCNC — Class definitions (these definitions appear in the Chapter 1 text of the Works, Consultancy and Non-Consultancy Manuals; in the Goods Manual they are in the Procurement Glossary):

1. 'Margin of purchase preference' means the maximum extent to which the price quoted by a "Class-I local supplier" may be above the L1 for the purpose of purchase preference. It has been fixed as 20 per cent.
2. 'Nodal Ministry' means the Ministry or Department identified pursuant to this Order with respect to a particular item of goods or services or works.
3. 'Procuring entity' means a Ministry or Department or attached or subordinate office of, or autonomous body controlled by, the Government of India, and includes Government companies as defined in the Companies Act.
4. 'Works' means all works as per Rule 130 of GFR 2017 and will also include 'turnkey works'.

2A. Special Treatment for Items Covered under the PLI Scheme

The manufacturers manufacturing an item under the Production Linked Incentive (PLI) scheme shall be treated as deemed Class-II local supplier for that item, unless they have minimum local content equal to or higher than that notified for Class-I local supplier for that item, provided the manufacturer has received incentive from the concerned PLI Ministry for the item. The above shall be applicable for the specific time period only, as notified by the concerned PLI Ministry.

3.Eligibility of 'Class-I local supplier' / 'Class-II local supplier' / 'Non-local suppliers' for Different Types of Procurement

1. In the procurement of all goods, services or works in respect of which the Nodal Ministry/ Department has communicated that there is sufficient local capacity and local competition, only a 'Class-I local supplier' shall be eligible to bid, irrespective of purchase value.
2. Only 'Class-I local supplier' and 'Class-II local supplier' shall be eligible to bid in procurements undertaken by procuring entities, except when a Global Tender Enquiry has been issued. In global tender enquiries, 'Non-local suppliers' shall also be eligible to bid along with Class-I and Class-II local suppliers.

In procurement of all goods, services or works not covered by sub-para (a) above, and with estimated value of purchases less than Rs. 200 Crore, in accordance with Rule 161(iv) of GFR, 2017 (W cites Rule 161(iv)(b)), a Global Tender Enquiry shall not be issued except with the approval of the competent authority as designated by the Department of Expenditure.

1. For the purpose of this Order, works include Engineering, Procurement and Construction (EPC) contracts, and services include System Integrator (SI) contracts.

3A. Mandatory Sourcing of Items with Sufficient Local Capacity and Competition, from Class-I Local Suppliers in SI/ EPC/ Turnkey Contracts/ Service Tenders

1. The items notified as having sufficient local capacity and competition shall mandatorily be sourced from Class-I local suppliers in si/ EPC/ turnkey Contracts/ Services tenders. This provision will be applicable only for those items which have been notified by the Nodal Ministry as Class-I — i.e., having sufficient local capacity and competition, with specific HSN codes.
2. Notwithstanding the above, if in any project it is considered that it is not practically feasible to source such items from Class-I local suppliers, it may take relaxation from such stipulation with the approval of the Secretary of the administrative Ministry/ Department concerned, or with the approval of the Competent Authority specified by the Administrative Ministry/ Department, on a case-specific basis.

4.Purchase Preference

1. Subject to the provisions of the Order and to any specific instructions issued by the Nodal Ministry, purchase preference shall be given to 'Class-I local supplier' in procurements undertaken by procuring entities in the manner specified hereunder.
2. Divisible procurements: In the procurements of goods or works covered by para 3(b) above which are DIVISIBLE in nature, the 'Class-I local supplier' shall get purchase preference over 'Class-II local supplier' as well as 'Non-local supplier', as per the following procedure:

• i) Among all qualified bids, the lowest bid will be termed L1. If L1 is a 'Class-I local supplier', the contract for the full quantity will be awarded to L1.
• ii) If the L1 bid is not a 'Class-I local supplier':
• 50% of the order quantity shall be awarded to L1.
• Thereafter, the lowest bidder among the 'Class-I local suppliers' will be invited to match the L1 price for the remaining 50% quantity, subject to the Class-I local supplier's quoted price falling within the margin of purchase preference (L1+20%), and the contract for that quantity shall be awarded to such Class-I local supplier subject to matching the L1 price.
• In case the lowest eligible Class-I local supplier fails to match the L1 price or accepts less than the offered quantity, the next higher Class-I local supplier within L1+20% shall be invited to match the L1 price for the remaining quantity, and so on, and the contract shall be awarded accordingly.
• In case some quantity out of the 50% (for the eligible Class-I Local Suppliers) is still left uncovered, then such balance quantity may also be ordered on the L1 bidder.
• Non-divisible procurements and services evaluated on price alone: In the procurements of goods or works covered by para 3(b) above which are not divisible in nature, and in the procurement of services where the bid is evaluated on price alone, the 'Class-I local supplier' shall get purchase preference over 'Class-II local supplier' as well as 'Non-local supplier', as per the following procedure:
• Among all qualified bids, the lowest bid will be termed L1. If L1 is a 'Class-I local supplier', the contract will be awarded to L1.
• If L1 is not a 'Class-I local supplier', the lowest bidder among the 'Class-I local suppliers' will be invited to match the L1 price, subject to the Class-I local supplier's quoted price falling within the margin of purchase preference (L1+20%), and the contract shall be awarded to such Class-I local supplier subject to matching the L1 price.
• In case the lowest eligible Class-I local supplier fails to match the L1 price, the Class-I local supplier with the next higher bid within L1+20% shall be invited to match the L1 price, and so on, and the contract shall be awarded accordingly. In case none of the Class-I local suppliers within the margin of purchase preference matches the L1 price, the contract may be awarded to the L1 bidder.
• "Class-II local supplier" will not get a preference for any procurement undertaken by procuring entities.

4A. Applicability in Tenders where the Contract is to be Awarded to Multiple Bidders

In tenders where the contract is awarded to multiple bidders, subject to matching of L1 rates or otherwise, the 'Class-I local supplier' shall get purchase preference over 'Class-II local supplier' as well as 'Non-local supplier', as per the following procedure:

• i) In case there is sufficient local capacity and competition for the item to be procured, as notified by the Nodal Ministry, only Class-I local suppliers shall be eligible to bid. As such, the multiple suppliers who would be awarded the contract should be all and only 'Class-I Local suppliers'.
• ii) In other cases, 'Class-II local suppliers' and 'Non-local suppliers' may also participate in the tender process along with 'Class-I local suppliers' as per provisions of the Order.
• iii) If 'Class-I Local suppliers' qualify for the award of contract for at least 50% of the tendered quantity in any tender, the contract may be awarded to all the qualified bidders as per the award criteria stipulated in the tender documents.
• iv) However, in case 'Class-I Local suppliers' do not qualify for the award of contract for at least 50% of the tendered quantity, purchase preference should be given to the 'Class-I local supplier' over Class-II local suppliers/ Non-local suppliers, provided their quoted rate falls within the 20% margin of purchase preference of the HIGHEST quoted bidder considered for award of contract — so as to ensure that the Class-I Local suppliers, taken in totality, are considered for award of contract for at least 50% of the tendered quantity.
• v) Only those 'Class-I local suppliers' whose quoted rates fall within the 20% margin of purchase preference would be eligible for purchase preference, subject to meeting the prescribed criteria for award of contract as also the constraint of maximum quantity that can be sourced from any single supplier.
• First, purchase preference must be given to the lowest quoting eligible 'Class-I local supplier'.
• If the lowest quoting Class-I local supplier does not qualify for purchase preference because of the aforesaid constraints, or does not accept the offered quantity, an opportunity may be given to the next higher eligible Class-I local supplier, and so on.
• In case the quantity thus allocated to eligible Class-I local suppliers is short of 50% of the tendered quantity, then this shortfall quantity may be distributed among all other qualified bidders as per the award criteria stipulated in the tender documents.
• vi) To avoid any ambiguity during the bid evaluation process, the procuring entities may stipulate their own tender-specific criteria for the award of contracts amongst different bidders, including the procedure for purchase preference to 'Class-I local supplier', within the broad policy guidelines stipulated in the sub-paras above.

5.Exemption of Small Purchases

Notwithstanding anything contained above, procurements where the estimated value to be procured is less than Rs. 5 lakh shall be EXEMPT from the Order. However, it shall be ensured by procuring entities that procurement is not split for the purpose of avoiding the provisions of this Order.

5A. Exemption in Sourcing of Spares and Consumables of Closed Systems

Procurement of spare parts, consumables for closed systems, and Maintenance/ Service contracts with the Original Equipment Manufacturer/ Original Equipment Supplier/ Original Part Manufacturer shall be exempted from this Order.

6.Minimum Local Content

The Nodal Ministry/ Department may prescribe only a higher percentage of the minimum local content requirement to categorise a supplier as Class-I/ Class-II local supplier. For items for which the Nodal Ministry/ Department has not prescribed a higher minimum local content notification under the Order, it shall be 50% and 20% for Class-I and Class-II local supplier respectively.

7.Requirement for Declaration/ Specification in Advance

The minimum local content, the margin of purchase preference, and the procedure for preference to Make in India shall be declared in the Notice Inviting Tenders or other forms of procurement solicitation, and shall not be varied during a particular procurement transaction.

8.Government e-Marketplace

In respect of procurement through GeM, GeM shall, as far as possible, specifically mark the items that meet the minimum local content while registering the item for display, and shall, wherever feasible, make provision for automated comparison with purchase preference and without purchase preference, and for obtaining consent of the local supplier in those cases where purchase preference is to be exercised.

9.Verification of Local Content

1. The Class-I/ Class-II local supplier shall, at the time of tender, bidding or solicitation, be required to indicate the percentage of local content and provide self-certification that the item offered meets the local content requirement for Class-I/ Class-II local supplier, as the case may be. They shall also give details of the location(s) at which the local value addition is made.
2. In cases of procurement for a value more than Rs. 10 crore, the Class-I/ Class-II local supplier shall be required to provide a certificate from the statutory auditor or cost auditor of the company (in the case of companies), or from a practising cost accountant or practising chartered accountant (in respect of suppliers other than companies), giving the percentage of local content.
3. The bidder shall give self-certification for local content in the quoted item (goods/ works/ services) at the time of tendering. However, at the time of execution of the project, for all contracts above INR 10 Crore, the contractor/ supplier shall be required to give local content certification duly certified by a cost/ chartered accountant in practice.

For cases where it is not possible to provide certification by Cost/ Chartered Accountant at the time of execution of the project, the supplier shall be permitted to provide the certificate after completion of the contract, within the limit acceptable to the procuring entity.

In case the contractor/ supplier does not meet the stipulated local content requirement and the category of the supplier changes from Class-I to Class-II/ Non-local, or from Class-II to Non-local — a penalty up to 10% of the contract value may be imposed. However, the contract once awarded shall not be terminated on this account.

1. Decisions on complaints relating to the implementation of this Order shall be made by the competent authority empowered to investigate procurement-related complaints relating to the procuring entity.
2. Nodal Ministries may constitute committees with internal and external experts for independent verification of self-declarations and auditor's/ accountant's certificates — on a random basis and in the case of complaints.
3. Nodal Ministries and procuring entities may prescribe fees for such complaints.
4. False declarations will be in breach of the Code of Integrity under Rule 175(1)(i)(h) of the GFR, for which a bidder or its successors can be DEBARRED for up to two years as per Rule 151(iii) of the GFR, along with such other actions as may be permissible under law. The Department of Expenditure shall issue suitable instructions for the effective and smooth operation of this process, so that:
5. i) The fact and duration of debarment for violation of the Order by any procuring entity are promptly brought to the notice of the Member-Convenor of the Standing Committee and the Department of Expenditure through the concerned Ministry/ Department or in some other manner;
6. ii) On a periodical basis, such cases are consolidated, and a centralised or decentralised list of such suppliers with the period of debarment is maintained and displayed on the website(s);
7. iii) With respect to procuring entities other than the one that has carried out the debarment, the debarment takes effect PROSPECTIVELY from the date of uploading on the website(s), in such a manner that ongoing procurements are not disrupted;
8. iv) A supplier who has been debarred by any procuring entity for violation of the Order shall not be eligible for preference under the Order for procurement by any other procuring entity for the duration of the debarment. The debarment for such other procuring entities shall take effect prospectively from the date on which it comes to the notice of other procuring entities in the manner prescribed above.

10.Specifications in Tenders and Other Procurement Solicitations

1. Every procuring entity shall ensure that the eligibility/ qualification conditions with respect to previous experience fixed in any tender or solicitation do not require proof of supply in other countries or proof of exports.
2. Procuring entities shall endeavour to see that eligibility/ qualification conditions — including on matters like turnover, production capability, and financial strength — do not result in unreasonable exclusion of Class-I/ Class-II local suppliers who would otherwise be eligible, beyond what is essential for ensuring quality or creditworthiness of the supplier.
3. Procuring entities shall review all existing eligibility norms and conditions with reference to sub-paragraphs (a) and (b) above.
4. Specifying foreign certifications/ unreasonable technical specifications/ brands/ models in the tender document is a restrictive and discriminatory practice against local suppliers. If foreign certification is required to be stipulated because of the non-availability of Indian Standards and/or for any other reason, the same shall be done only after written approval of the Secretary of the Department concerned, or any other Authority designated such power by the Secretary of the Department concerned.
5. GC "All administrative Ministries/ Departments whose procurement exceeds Rs. 1000 Crore per annum shall notify/ update their procurement projections every year, including those of the PSEs/ PSUs, for the next five years on their respective website."

11.Reciprocity Clause

1. When a Nodal Ministry/ Department identifies that Indian suppliers of an item are not allowed to participate and/or compete in procurement by any foreign government due to restrictive tender conditions which have the direct or indirect effect of barring Indian companies — such as registration in the procuring country, execution of projects of specific value in the procuring country, etc. — it shall provide such details to all its procuring entities, including CMDs/ CEOs of PSEs/ PSUs, State Governments and other procurement agencies under their administrative control, and GeM, for appropriate reciprocal action.
2. Entities of countries identified by the Nodal Ministry/ Department as not allowing Indian companies to participate in their Government procurement for any item related to that Nodal Ministry shall not be allowed to participate in Government procurement in India for all items related to that Nodal Ministry/ Department, except for the list of items published by the Ministry/ Department permitting their participation.
3. The stipulation in (b) above shall be part of all tenders invited by the Central Government procuring entities stated in (a) above. All purchases on GeM shall also necessarily have the above provisions for items identified by the Nodal Ministry/ Department.
4. State Governments should be encouraged to incorporate similar provisions in their respective tenders.
5. The term 'entity' of a country shall have the same meaning as under the FDI (Foreign Direct Investment) Policy of DPIIT, as amended from time to time.

12.Action for Non-Compliance with the Provisions of the Order

In case restrictive or discriminatory conditions against domestic suppliers are included in tender documents, an inquiry shall be conducted by the Administrative Department undertaking the procurement (including procurement by any entity under its administrative control) to fix responsibility for the same. Thereafter, appropriate action — administrative or otherwise — shall be taken against erring officials of procuring entities under relevant provisions. Intimation on all such actions shall be sent to the Standing Committee.

13.Assessment of Supply Base by Nodal Ministries

The Nodal Ministry shall keep in view the domestic manufacturing/ supply base and assess the available capacity and the extent of local competition while identifying items and prescribing the higher minimum local content or the manner of its calculation — with a view to avoiding cost increase from the operation of this Order.

14.Increase in Minimum Local Content

The Nodal Ministry may annually review the local content requirements with a view to INCREASING them, subject to the availability of sufficient local competition with adequate quality.

15.Manufacture under Licence/ Technology Collaboration Agreements with Phased Indigenisation

1. While notifying the minimum local content, Nodal Ministries may make special provisions for exempting suppliers from meeting the stipulated local content if the product is being manufactured in India under a licence from a foreign manufacturer who holds intellectual property rights, and where there is a technology collaboration agreement/ transfer of technology agreement for indigenous manufacture of a product developed abroad with clear phasing of increase in local content.
2. In the procurement of all goods, services or works in respect of which there is a substantial quantity of public procurement, and for which the Nodal Ministry has not notified that there is sufficient local capacity and local competition, the concerned Nodal Ministry shall notify an upper threshold value of procurement beyond which foreign companies shall enter into a JOINT VENTURE with an Indian company to participate in the tender. Procuring entities, while procuring such items beyond the notified threshold value, shall prescribe in their respective tenders that foreign companies may enter into a joint venture with an Indian company to participate in the tender. The procuring Ministries/ Departments shall also make special provisions to exempt such joint ventures from meeting the stipulated minimum local content requirement, which shall be increased in a phased manner.

16.Powers to Grant Exemption and to Reduce Minimum Local Content

1. The Administrative Department undertaking the procurement (including procurement by any entity under its administrative control), with the approval of their Minister-in-charge, may — by written order, for reasons to be recorded in writing:
2. i) reduce the minimum local content below the prescribed level; or
3. ii) reduce the margin of purchase preference below 20 per cent; or
4. iii) exempt any item or supplying entities from the operation of this Order or any part of the Order.
5. The Administrative Department, while seeking exemption under this para, shall certify that such item(s) has not been notified by the Nodal Ministry/ Department concerned.
6. A copy of every such order shall be provided to the Standing Committee and the concerned Nodal Ministry/ Department. The Nodal Ministry/ Department will continue to have the power to vary its notification on Minimum Local Content.

17.Directions to Government Companies

With respect to Government companies and other procuring entities not governed by the General Financial Rules, the administrative Ministry or Department shall issue policy directions requiring compliance with this Order.

18.Standing Committee

1. A Standing Committee is constituted with the following membership:

1. The Secretary of the Department concerned with a particular item shall be a member in respect of issues relating to such item. The Chairman of the Committee may co-opt technical experts as relevant to any issue or class of issues under its consideration.

19.Functions of the Standing Committee

The Standing Committee shall meet as often as necessary, but not less than once every six months. The Committee:

1. shall oversee the implementation of this Order and the issues arising from it, and make recommendations to Nodal Ministries and procuring entities;
2. shall annually assess and periodically monitor compliance with this Order;
3. shall identify Nodal Ministries and the allocation of items among them for the issue of notifications on minimum local content;
4. may require the furnishing of details or returns regarding compliance with this Order and related matters;
5. may, during the annual review or otherwise, assess issues where the manner of implementation of the Order results in any restrictive practices, cartelisation, or increase in public expenditure, and suggest remedial measures;
6. may examine cases covered by para 15 above relating to manufacture under licence/ technology transfer agreements, with a view to satisfying itself that adequate mechanisms exist for enforcement of such agreements and for attaining the underlying objective of progressive indigenisation;
7. may consider any other issue relating to this Order that may arise.

20.Removal of Difficulties

Ministries/ Departments and the Boards of Directors of Government companies may issue such clarifications and instructions as may be necessary for the removal of any difficulties arising in the implementation of the Order.

21.Ministries Having Existing Policies

Where any Ministry or Department has its own policy for preference to local content approved by the Cabinet after 1st January 2015, such policies will PREVAIL over the provisions of the Order. All other existing orders on preference to local content shall be reviewed by the Nodal Ministries and revised as needed(W adds: "to conform to this Order, within two months of the issue of this Order").

22.Faqs

Please refer to the FAQs related to the PPP-MII Order issued by DPIIT.

1.11.4Restrictions/ Prior Registration on Entities from a Class of Countries

(Rule 144(xi), GFR 2017 — the "Land Border" Order)

1.Requirement of Registration

Rule 144 of GFR, 2017 has been amended to include a new sub-para (xi) as follows:

2.Detailed Provisions

(Notified by the Department of Expenditure's OM No. F.7/10/2021-PPD(1) dated 23.02.2023)

1. Any bidder from a country that shares a land border with India will be eligible to bid in any procurement — whether of goods, services (including consultancy services and non-consultancy services) or works (including turnkey projects) — only IF the bidder is REGISTERED with the Competent Authority (see sub-para 10 below).
2. Any bidder (including an Indian bidder) who has a Specified Transfer of Technology (ToT) arrangement with an entity from a country that shares a land border with India will be eligible to bid in any procurement — whether of goods, services (including consultancy and non-consultancy services) or works (including turnkey projects) — only if the bidder is registered with the Competent Authority. (See also sub-para 5 below.)
3. Effective dates:

1. In tenders issued after 23.07.2020 or 01.04.2023, as the case may be, the requirements for registration of bidders and other relevant provisions of this Order shall be incorporated in the tender conditions.

3.Applicability

Apart from Ministries/ Departments, attached and subordinate bodies, notwithstanding anything contained in Rule 1 of the GFRs 2017, the Order shall also be applicable:

1. to all Autonomous Bodies;
2. to public sector banks and public sector financial institutions;
3. to all Central Public Sector Enterprises;
4. to all procurement in Public Private Partnership projects receiving financial support from the Government or public sector enterprises/ undertakings;
5. to Union Territories, the National Capital Territory of Delhi, and all agencies/ undertakings thereof.

f) The Order is not applicable:

• i) In projects that receive international funding with the approval of the Department of Economic Affairs (DEA), Ministry of Finance — the procurement guidelines applicable to the project shall normally be followed, notwithstanding anything contained in this Order and without reference to the Competent Authority. Exceptions to this shall be decided in consultation with DEA.
• ii) On procurements made by Indian missions and by offices of government agencies/ undertakings located outside India.
• iii) On bidders (or entities) from those countries — even if sharing a land border with India — to which the Government of India has extended lines of credit, or in which the Government of India is engaged in development projects. Updated lists are given on the Ministry of External Affairs' website.
• iv) On procurement of spare parts and other essential service support like AMC/ CMC, including consumables for closed systems, from Original Equipment Manufacturers (OEMs) or their authorised agents — exempted from the requirement of registration as mandated under Rule 144(xi) of GFR, 2017 (Notified vide OM No. F.12/1/2021-PPD(Pt.) dated 02.03.2021).
• v) A bidder is permitted to procure raw materials, components, sub-assemblies, etc. from vendors from countries that share a land border with India. Such vendors will not be required to be registered with the Competent Authority, as it is not regarded as "sub-contracting". However, if a bidder proposes to supply FINISHED GOODS procured directly/ indirectly from vendors from countries sharing a land border with India, such vendors WILL be required to be registered with the Competent Authority (Notified vide OM No. F.18/37/2020-PPD dated 08.02.2021).

4.Definitions

a) "Bidder" — for the purpose of the Order (including the terms 'bidder', 'consultant', 'vendor' or 'service provider' in certain contexts) means any person, firm or company, including any member of a consortium or joint venture (that is, an association of several persons, or firms or companies), every artificial juridical person not falling in any of the descriptions of bidders stated hereinbefore, including any agency, branch or office controlled by such person, participating in a procurement process.

b) "Tender" — for the purpose of the Order will include other forms of procurement, except where the context requires otherwise.

c) "Transfer of Technology" — means dissemination and transfer of all forms of commercially usable knowledge, such as transfer of know-how, skills, technical expertise, designs, processes and procedures, and trade secrets, which enables the acquirer of such technology to perform activities using the transferred technology independently.

d) "Specified Transfer of Technology" — means a transfer of technology in the sectors and/or technologies specified in sub-para 5 below, occurring on or after 23.07.2020.

e) "Bidder (or entity) from a country which shares a land border with India" — means:

• i) An entity incorporated, established, or registered in such a country; or
• ii) A subsidiary of an entity incorporated, established, or registered in such a country; or
• iii) An entity substantially controlled through entities incorporated, established, or registered in such a country; or
• iv) An entity whose beneficial owner is situated in such a country; or
• v) An Indian (or other) AGENT of such an entity; or
• vi) A natural person who is a citizen of such a country; or
• vii) A consortium or joint venture where any member of the consortium or joint venture falls under any of the above.

f) "Agent" — for the purpose of the Order, is a person employed to do any act for another, or to represent another in dealings with third persons.

g) "Beneficial owner" — for the purposes of point (e)(iv) will be as follows:

• i) In the case of a company or Limited Liability Partnership, the beneficial owner is the natural person(s) who, whether acting alone or together, or through one or more juridical person(s), has a controlling ownership interest, or who exercises CONTROL through other means.

• ii) In the case of a partnership firm, the beneficial owner is the natural person(s) who, whether acting alone or together, or through one or more juridical persons, has ownership of/ entitlement to more than fifteen per cent (15%) of capital or profits of the partnership.
• iii) In the case of an unincorporated association or body of individuals, the beneficial owner is the natural person(s) who, whether acting alone or together, or through one or more juridical persons, has ownership of or entitlement to more than fifteen per cent (15%) of the property or capital or profits of such association or body of individuals.
• iv) Where NO natural person is identified under (i), (ii) or (iii) above, the beneficial owner is the relevant natural person who holds the position of senior managing official.
• v) In the case of a TRUST, the identification of beneficial owner(s) shall include identification of:
• the author of the trust,
• the trustee,
• the beneficiaries with fifteen per cent (15%) or more interest in the trust, and
• any other natural person exercising ultimate effective control over the trust through a chain of control or ownership.
• vi) To determine nationality while assessing the beneficial ownership of the bidder, the nationality mentioned in the beneficial owner's PASSPORT should be considered. In case of the possibility of dual citizenship, nationality on all the passports should be considered through a suitable declaration. If nationality in any of the passports of the person whose beneficial ownership is being assessed is recorded to be from a country sharing a land border with India, the provisions contained under this Order shall apply.

5.Sensitive Sectors/ Technologies

(Relevant only for the provisions on ToT arrangements — refer sub-para 2(b) above)

1. Certain sectors and technologies have been identified as sensitive from the national security point of view:
2. Sectors listed in Schedule I → Category-I sensitive sectors
3. Sectors listed in Schedule II → Category-II sensitive sectors
4. Technologies listed in Schedule III → sensitive technologies

List of Category-I Sensitive Sectors (Schedule-I)

List of Category-II Sensitive Sectors (Schedule-II)

List of Sensitive Technologies (Schedule-III)

1. For Category-I sensitive sectors, bidders with a ToT arrangement in any technology with an entity from a country that shares a land border with India shall require registration.
2. For Category-II sensitive sectors, bidders with a ToT arrangement in the sensitive technologies listed in Schedule III with an entity from a country that shares a land border with India shall require registration.
3. In Category-II sensitive sectors, the Secretary (or an officer not below the rank of Joint Secretary to the Government of India, so authorised by the Secretary) of the Ministry/ Department of the Government of India is empowered, after due consideration, to WAIVE the requirement of registration for a particular item/ application or a class of items/ applications, even if included in Schedule III. The Ministry/ Department concerned shall INFORM DPIIT and the National Security Council Secretariat (NSCS) of their decision to waive the requirement of registration. Ministries/ Departments are not required to consult DPIIT/ nscs before deciding, and are only required to inform DPIIT/ nscs of the decision. If DPIIT/ NSCS raises any point, it should be considered in future procurements, and the ongoing procurement for which the waiver was granted need not be interrupted or altered.
4. Based on security considerations, a Ministry/ Department in a Category-II sensitive sector, or other Ministries/ Departments, may recommend to DPIIT the inclusion of any other technology in the list of sensitive technologies — either generally or for their Ministry/ Department.

6.Sub-contracting in Works Contracts

In works contracts, including turnkey contracts, contractors shall not be allowed to sub-contract works to any contractor from a country that shares a land border with India unless such contractor is REGISTERED with the Competent Authority. The definition of "contractor from a country which shares a land border with India" shall be as in sub-para 4(e) above. This shall not apply to sub-contracts already awarded on or before the date of the Order (i.e., 23rd July 2020).

7.Model Clauses/ Certificate Regarding Compliance

An undertaking/ certificate shall be taken from bidders in the tender documents that the extant guidelines for participation in the tenders (which should include conditions for implementation of this Order) have been complied with. If such a certificate is given by a bidder whose bid is accepted and is found to be FALSE, this would be grounds for DEBARMENT and further legal action in accordance with law.

Model Clauses and Model Certificates, which may be inserted in tenders/ obtained from Bidders, are given in the Annexures. While adhering to the substance of the Order, procuring entities are free to appropriately modify the wording of these clauses based on their past experience, local needs, etc.

8.Validity of Registration

• With respect to tenders, registration should be valid at the time of SUBMISSION of bids AND at the time of ACCEPTANCE of bids.
• With respect to supplies other than by tender, registration should be valid at the time of placement of the order.
• If the bidder was validly registered at the time of acceptance/ placement of the order, registration shall not be a relevant consideration during contract execution.

9.Government e-Marketplace

GeM shall REMOVE non-compliant entities from GeM unless/ until they are registered in accordance with this Order.

10.Competent Authority and Procedure for Registration

1. The Competent Authority for the purpose of registration under this Order shall be the Registration Committee constituted by DPIIT(Notified vide OM No. F.6/18/2019-PPD issued by Department of Expenditure dated 23.07.2020).

1. The Registration Committee shall have the following members:
2. i) An officer not below the rank of Joint Secretary, designated for this purpose by DPIIT, who shall be the Chairperson;
3. ii) Officers (ordinarily not below the rank of Joint Secretary) representing the Ministry of Home Affairs, Ministry of External Affairs, and those Departments whose sectors are covered by applications under consideration;
4. iii) Any other officer whose presence is deemed necessary by the Chairperson of the Committee.
5. DPIIT has laid down the method of application, format, etc. for such bidders as covered by the Order.
6. On receipt of an application seeking registration from a bidder covered by sub-para 2(a) and 2(b) above, the Competent Authority shall first seek POLITICAL and SECURITY CLEARANCES from the Ministry of External Affairs and Ministry of Home Affairs, as per guidelines issued from time to time. Registration shall not be given unless political and security clearance have both been received.
7. The Ministry of External Affairs and Ministry of Home Affairs may issue guidelines for internal use regarding the procedure for scrutiny of such applications.
8. The decision of the Competent Authority to register such bidder may be for all kinds of tenders or for a specified type(s) of goods or services, and may be for a specified or unspecified duration of time, as deemed fit. The decision of the Competent Authority shall be final.
9. Registration granted by the Competent Authority of the Government of India shall be valid not only for procurement by the Central Government and its bodies specified in sub-para 3 above, BUT also for procurement by State Governments and their agencies/ public enterprises, etc. No fresh registration at the State level shall be required.
10. The Competent Authority is empowered to CANCEL the registration already granted if it determines that there is sufficient cause. Such cancellation by itself, however, will not affect the execution of contracts already awarded. Pending cancellation, it may also SUSPEND the registration of a bidder, and the bidder shall not be eligible to bid in any further tenders during the period of suspension.
11. For national security reasons, the Competent Authority shall not be required to give reasons for rejection/ cancellation of registration of a bidder.

11.Clarifications Regarding Applicability of the Restrictions under Rule 144(xi)

1. Proprietary purchases are not excluded from the provisions of Rule 144(xi) of GFR, 2017.
2. The rule is applicable to all purchases irrespective of the order value.
3. Sub-contracting is not permitted by any contractor to a contractor from a country sharing a land border with India unless registered with the competent authority. However, it is to be noted that procurement of raw materials, components, sub-assemblies, etc. does not constitute sub-contracting. In case a bidder has proposed to supply finished goods procured directly/ indirectly from vendors from countries that share a land border with India, such vendor will be required to be registered with the Competent Authority.
4. There is NO bar on the contractor from procuring raw material from a firm that has been ACQUIRED by another firm belonging to a country that shares a land border with India.
5. Contract Manufacturing outside India: If the bidder is getting the subject product manufactured outside India, this is treated as contract manufacturing, and the beneficial ownership of the actual manufacturing entity must be verified. If the actual manufacturer does not meet the beneficial ownership criteria — then the bidder must submit DPIIT registration of such manufacturer to participate in the procurement.
6. The Hiring of Services: Suppose a Bidder (Indian/ Foreign) who is not from a country sharing a land border with India offers services to a procuring entity by arranging equipment from another company. Then the following scenarios may appear:

12.Illustrative Examples of the Applicability of Restrictions under Rule 144(xi)

a) The "sister company / offshore production unit" example:

A vendor, say 'Party A' from India, is procuring an item from their sister company 'Party B', which is registered in a country that does not share a land border with India. Both Party A and Party B are owned by an entity, say 'Party C'. Party C does not belong to a country sharing a land border with India. However, Party B has its production facility in a country sharing a land border with India, and the manufactured item will be procured by Party A from Party B from that production facility. The production unit is wholly owned by Party B.

Party A claims that Rule 144(xi) does not apply to it because neither Party A nor Party B is:

• i) An entity incorporated, established or registered in such a country — as Party A is registered in India and Party B is registered in a country not sharing a land border with India;
• ii) A subsidiary of an entity incorporated, established or registered in such a country — as they are 100% owned subsidiaries of Party C, which is incorporated, registered and established in a country not sharing a land border with India;
• iii) An entity controlled through entities incorporated, established or registered in such a country — as they are 100% owned by Party C;
• iv) An entity whose beneficial owner is situated in such a country — as their beneficial owner is Party C;
• v) An Indian (or other) agent of such an entity;
• vi) A natural person who is a citizen of such a country;
• vii) A consortium or joint venture where any member falls under any of the above — though it has a wholly owned subsidiary in a country that shares a land border with India, it is not a JV or consortium (a subsidiary does not qualify as a JV or consortium);
• viii) In addition, Party A claims that they are not procuring finished goods directly/ indirectly from vendors from countries sharing land borders with India, as the item is being manufactured in their own production units.

b) IT goods and services examples:

1.11.5Support to Start-up Enterprises

1.Definition of Start-up Enterprises

1. As defined by DPIIT, an entity shall be considered a 'Start-up':
2. i) Up to a period of ten YEARS from the date of incorporation/ registration, if it is incorporated as a private limited company (as defined in the Companies Act, 2013) or registered as a partnership firm (registered under section 59 of the Partnership Act, 1932) or a limited liability partnership (under the Limited Liability Partnership Act, 2008) in India; and
3. ii) Turnover of the entity for any of the financial years since incorporation/ registration has not exceeded one hundred crore rupees; and
4. iii) The entity works towards INNOVATION, DEVELOPMENT, or IMPROVEMENT of products, processes, or services, or a scalable business model with a high potential for EMPLOYMENT GENERATION or WEALTH CREATION.
5. Provided that an entity formed by SPLITTING UP or RECONSTRUCTING an existing business shall not be considered a 'Start-up'.
6. Provided further that, in order to obtain benefits, a Start-up so identified under the above definition shall be required to be RECOGNISED as a Start-up by DPIIT.

2.Support to Start-ups

The Government of India has ordered the following support to Start-ups (as defined by DPIIT):

a) Exemption from submission of Bid Security: Such Start-ups shall be EXEMPTED from payment/ submission of Earnest Money Deposit/ Bid Security.

b) Relaxation in Prior Turnover and Experience: The Procuring Entity reserves its right to relax the condition of prior turnover and prior experience for start-up enterprises recognised by DPIIT, subject to meeting quality & technical specifications. Start-ups may be MSMEs/ MSEs or otherwise. Such relaxation can be provided in the case of procurement of works as well.

It is further clarified that such relaxation is not optional but normally has to be ensured, except in the case of procurement of items related to public safety, health, critical security operations and equipment, etc., where adequate justification exists for the Procuring Entity not to relax such criteria. The decision of the Procuring Entity in this regard shall be final. (Rule 173(i) of GFR 2017.)

1.11.6Domestically Manufactured Iron & Steel Products (DMI&SP) PolicyGW

1.12When is Procurement of Services JustifiedCNC

1.13Principles for Public Procurement of ServicesCNC

1.14Legal Aspects Governing Public Procurement

A public procurement contract, besides being a commercial transaction, is also a legal transaction. There are several laws that may affect various commercial aspects of public procurement contracts. A public procurement professional is expected to be generally aware of the implications of the following basic laws affecting procurement; however, he or she is not expected to be a legal expert. In different contexts of the scope of work, an additional set of laws may be relevant.

W — the list of applicable laws, as enumerated in the Works Manual:

1. The Constitution of India
2. Indian Contract Act, 1872
3. Arbitration and Conciliation Act, 1996, as amended by the Arbitration and Conciliation (Amendment) Acts, 2015, 2019 and 2021
4. Competition Act, 2002, as amended by the Competition (Amendment) Acts, 2007 and 2023
5. The Information Technology Act, 2000 (IT Act — regarding e-procurement and e-auction, popularly called the Cyber Law), as amended by the Information Technology (Amendment) Acts 2008 and 2015, and as modified by the Jan Vishwas (Amendment of Provisions) Act, 2023
6. Right to Information (RTI) Act, 2005
7. Central Vigilance Commission Act, 2003
8. Delhi Special Police Establishment Act, 1946 (DSPE — basis of the Central Bureau of Investigation)
9. Prevention of Corruption Act, 1988, as amended by the Prevention of Corruption (Amendment) Act, 2018
10. Bharatiya Nagarik Suraksha Sanhita, 2023 (BNSS) — replaces the Code of Criminal Procedure, 1973; Section dealing with sanction for prosecution — §218
11. Insolvency and Bankruptcy Code, 2016, as amended by the Insolvency and Bankruptcy Code (Amendment) Acts 2018, 2019, 2020 and 2021 — governs insolvency and liquidation of business enterprises — and other allied laws applicable to business entities participating in works contracts
12. Various labour laws applicable at the works' site
13. Various building and safety acts, codes, standards applicable in the context of the scope of work; and
14. Various environmental and mining laws, codes, standards applicable in the context of the scope of work.

1.15The Law of AgencyWCNC

1.16Right to Information and Proactive Information DisclosuresG

1.17The Basic Principles of Undertaking WorksW

1.18Administrative Control and Powers to SanctionW

1.19Public Procurement Cycle

The procurement process for goods, works and/or services typically involves the following cycle of activities, undertaken in the order stated below. Details and procedures of the various stages of the procurement cycle are described in the subsequent Chapters.

Common four-stage spine (all four Manuals):

Need Assessment → Bid Invitation Process → Bid Evaluation and Award of Contract → Contract Management

1.19.1GoodsG

1.19.2WorksW

1.19.3Consultancy ServicesC

1.19.4Non-Consultancy ServicesNC

1.20Nomenclature Conundrum

1. There is NO standardised nomenclature in Public Procurement in India, and a mix of American, European, and British/ Indian nomenclature has become common.

'Tender' is taken to mean:

• (i) the 'Tender Document' or 'Tender Process', as well as
• (ii) the 'Bid' submitted by the 'bidders'.

The Tender Document floated by the Procuring Entity is also called a Bid (or Bidding) Document. Similarly, participants in a 'tender' are alternatively called BIDDERS and TENDERERS. This duality is reflected in "Notice Inviting Tenders" and "Instructions to Bidders", etc.

1. An attempt is made in these Manuals to standardise:
2. the term 'Tender' for the 'Tender Document' (document prepared and published by the Procuring Entity — instead of bid/ bidding document) or the 'Tender Process'; and
3. 'Bid' for the bid submitted by the bidders — and hence 'bidder' is used instead of 'tenderer'.

Similar attempts are made to standardise other nomenclature in these documents without DISTURBING the nomenclature (e.g., 'Pre-qualification Bidding') already embedded in the CPPP or GeM portals.

Appendix to Chapter 1 — Points of Difference Between the Four Manuals

A ready-reckoner of every place in Chapter 1 where the four Manuals genuinely differ, rather than merely rename.

end of Chapter 1

Merging: Goods Ch. 2 (Need Assessment, Formulation of Specifications and Procurement Planning) · Works Ch. 2 (Need Assessment and Procurement Planning) · Consultancy Ch. 2 · Non-Consultancy Ch. 2

The Central Idea of this Chapter

This is the chapter where the four Manuals genuinely diverge the most. Chapter 1 was largely common text; Chapter 2 is not. The reason is simple:

Everything else in this chapter — cost estimation principles, procurement planning, packaging/slicing, cartel mitigation, annual procurement plans, risks and mitigations — is largely common and is stated once below.

Concordance for Chapter 2

2.1Need Assessment and the Initiating Document

2.1.1Goods — the IndentG

2.1.2Works — Perspective Planning for WorksW

2.1.3Consultancy and Non-Consultancy Services — the Procurement ProposalCNC

2.2Matters Decided During Need AssessmentGof general application

2.3Estimation of Cost

2.3.1Why the Estimate MattersGof general application

2.3.2Cost Estimation for Consultancy ServicesC

2.3.3Cost Estimation for Non-Consultancy ServicesNC

2.3.4Cost Estimation for WorksW

2.4Formulation of the Requirement — GOODS: Technical Specifications (TS)G

2.5Formulation of the Requirement — WORKS: PPR, DPR, Designs, Estimates and SanctionsW

2.6Formulation of the Requirement — CONSULTANCY: Terms of Reference (ToR)C

2.7Formulation of the Requirement — NON-CONSULTANCY: Services and Activities ScheduleNC

2.8Obtaining Technical, Administrative and Budgetary Sanctions/ Approvals

2.8.1Goods — Sanctions and Signing of IndentsG

2.8.2Works — the Sanctioning SequenceW

2.8.3Consultancy and Non-Consultancy — Final Administrative and Budgetary ApprovalsCNC

2.9Need Assessment and Formulation of the Requirement — Risks and Mitigations

2.10Procurement Planning

2.10.1The Requirement is Usually Part of a Larger ProjectWCNC

2.10.2Critical Review of the IndentG

2.10.3Reassessment of Quantity and Packaging/ Bundling/ Slicing of Requirement

i) The general rule (Rule 157 of GFR 2017): The procuring authority shall normally neither package nor divide its procurement, or take any other action to LIMIT COMPETITION among bidders, or to avoid the necessity of obtaining the sanction of a higher authority required with reference to the estimated value of the total demand.

ii) the exception: Provided that — in the interest of efficiency, economy, timely completion or supply, wider competition, or access to MSEs (W says: access to SMALLER CONTRACTORS) — a procuring authority May, for reasons to be recorded in writing, divide its procurement into APPROPRIATE PACKAGES, or club requirements of other users for procurement.

iii) Market-facing considerations: Packaging of the contract and procurement planning should be done while keeping in view:

• Market conditions and availability,
• the possibility of eliciting the interest of the qualified firms,
• EFFECTIVE COMPETITION for the type and size of the contract, and
• access to MSEs(W: smaller contractors).

iv) Mixed-category requirements:

• G Some requirements, e.g., IT Systems, may have elements of Goods, Works, and Services. It could be either SLICED into separate Goods, Works and Services elements, or COMBINED into a single package.
• WCNC For example, for a particular contract, material to be procured may constitute more THAN 50 (fifty) per cent of the total cost of works, or there are services which are a mix of consultancy services with a substantial element of goods, such as procurement of an IT system. Such procurement could be done as a single composite contract comprising all components, or divided into separate procurements/ contracts for each category of procurement.

v) The test to apply: In all such situations, the DOMINANT ASPECT of the requirement, and the value for Money aspects of a composite all-inclusive contract versus dividing the contract into respective categories, should be carefully examined at the time of need assessment/ procurement planning. This is a crucial stage of decision-making in procurement planning for a better outcome and for VfM considerations.

2.10.4Eligibility for Participation in Tender

Determine and declare in documents any limitation on the participation of bidders as per the Government's procurement policy regarding preference for certain sections of industry, if any.

The procuring entity shall not establish any requirement aimed at LIMITING the participation of bidders in the procurement process that discriminates against or amongst bidders, or against any category thereof — except to lay down a reasonable and justifiable eligibility or pre-qualification criteria for the bidders.

2.10.5Type of Contract, System of Tendering and Mode of Procurement

a) Type of Contract [W only]: Decide upon the type of contract suitable to the procurement requirement — Lump sum; Item Rate; Percentage Rate; Piece Work; EPC or PPP.

b) Selection of a system of tendering: single/ two stage; single/ two bids; suitability for e-procurement or reverse auction.

c) Select the mode of procurement: open tenders, limited tenders, single tenders, and so on.

2.10.6Time Frame

Decisions on the TIMEFRAME for completing various stages of procurement — from the date of issuing the tender to the date of issuing the contract — which should be DECLARED in the pre-qualification/ bidder registration or tender documents. (Rule 144(ix), GFR 2017)

The procuring entity should endeavour to adhere to the time limit so decided, and RECORD REASONS for any modification of such limits.

2.10.7Availability of Land and Statutory ClearancesW

2.10.8Architectural and Structural DrawingsW

2.10.9Annual Procurement Plans

WCNC — the mandatory 30-day rule:GFR 2017 [Rule 144(x)] mandates that all ministries/ departments shall prepare an annual procurement plan within 30 (thirty) days of budget approval, before the commencement of the year, and the same should also be placed on their website.

[All four] — publication: The procuring entity shall/ may publish information regarding the planned procurement activities for the forthcoming year or years on:

• G the Government e-Marketplace (GeM), GeM-Central Public Procurement portal, and the website/ e-procurement portal used by the procuring entity;
• WNCCPPP and website/ e-procurement portal used by the procuring entity;
• C the central public procurement portal and website/ e-Procurement portal used by the procuring entity

— with a caveat that such publication shall not be construed as an initiation of a procurement process, and shall not cast any obligation on the Procuring Entity to issue the tender document or confer any right on prospective bidders. (Rule 144(x), GFR 2017)

[All four] — the integrated plan: An integrated annual procurement plan should be prepared for goods, works and services for the ensuing financial year, based on:

• The latest cost estimates, and
• a realistic time Schedule for procurement activities and contract implementation

— and thus Schedule and stagger the procurements over the year, with a view to:

• Ensure an even load on the Procuring Entity and the market, and
• Co-ordinate matching procurements of Goods, Works, and Services for a project.

2.10.10Mitigating Cartel Formation

a) Inadequate competition due to an inadequate number of suppliers/ contractors/ consultants/ service providers in the list/ panel of registered vendors — may empower bidders to conspire against the Procuring Entity:

• i) new firms May be encouraged to register themselves for the subject goods/ category/ services.
• ii) Review the description of requirement:
• G A review of TECHNICAL SPECIFICATIONS (especially TAILOR-MADE specifications) may be done to examine why a commercially available alternative cannot be used instead, or at least review its features so that more suppliers become eligible. Consider using SUBSTITUTE ITEMS or new developments in the market.
• W Various items in the BOQ May be reviewed (using packaging/ slicing) so that more contractors become eligible. Insisting on costly machinery to be used May reduce competition and encourage cartel formation.
• CNC Various services and activities in the Services and Activities Schedule may be reviewed so that more consultants/ service providers become eligible. Insisting on costly machinery to be used may reduce competition and encourage cartel formation.

b) Pre-bid conferences: Processes — e.g., PRE-BID CONFERENCES, where a considerable number of competing bidders come together on a platform — May facilitate such cartel formation. This may be AVOIDED as far as feasible, or be held only VIRTUALLY.

HOWEVER, a pre-bid conference May be advantageous in the case of:

G adds:Pre-bid conferences must be done wherever necessary.

c) Varying quantity and conditions: Tendering similar quantities/ works/ services with similar conditions, year on year, provides a stable conspiring environment for the bidders to come to an agreement for quoting prices and quantities. Therefore, the following action can be considered to vary quantity and conditions to make it difficult for cartels:

• i) change the mode of procurement — OTE instead of LTE, or GTE instead of OTE; or bypass the pre-qualification stage and vice versa.
• ii) change the quantity/ packaging:
• G Change the quantity to be procured by PACKAGING/ SLICING the tendered quantity, or by clubbing more than one similar item in a tender (or vice versa).
• W Change the packaging/ slicing by clubbing/ slicing WORKS in a tender.
• CNC Change the packaging/ slicing by clubbing/ slicing SERVICES/ ACTIVITIES in a tender.
• iii) change the pre-qualification criteria, especially in the case of slicing/ packaging, to broaden the target bidders.

2.10.11Strategising Large ProcurementGW

2.11Procurement Planning — Risks and MitigationsGNC

Merging: Goods Ch. 3 (Supplier Relationship Management) · Works Ch. 8 (Registration/ Enlistment of Contractors and Governance Issues) · Consultancy Ch. 3 (Participation of Bidders and Governance Issues) · Non-Consultancy Ch. 3 (Participation of Bidders and Governance Issues)

Structural Warning for Students

This block of subject matter is CHAPTER 3 in the Goods, Consultancy and Non-Consultancy Manuals — but CHAPTER 8 in the Works Manual.

The Works Manual moves the entire vendor-governance block to the END of the Manual (after Contract Execution), whereas the other three place it before Bidding Design. The content is substantially the same; only the location differs. Any exam question citing "para 8.2" of Works corresponds to "para 3.2" of Goods.

Concordance for Chapter 3

3.1Supplier/ Contractor Relationship ManagementGW

3.2Eligibility Criteria for Participation in Tender ProcessCNC

3.3Legal Status of BiddersCNC

3.4Governance Issues in Procurement — Financial Propriety and RTICNC

3.5Code of Integrity for Public Procurement (CIPP)

(Rule 175 of GFR 2017)

3.5.1Introduction

Public Procurement is perceived to be prone to corruption and ethical risks. To mitigate this, the officials of Procuring Entities involved in procurement AND the bidders/ suppliers/ contractors/ consultants/ service providers must abide by the following Code of Integrity for Public Procurement (CIPP).

Declarations by officials: All Procuring officials May be asked to sign declarations to this effect PERIODICALLY and in various procurement decisions.

• [G, C, NC] — including Need Assessment
• W — including Preparation of Estimates

Declarations by bidders: The bidders/ suppliers/ contractors/ consultants/ service providers should be asked to sign a declaration about abiding by the CIPP — W adds: including sub-contractors engaged by them — in registration/ enlistment applications AND in tender/ bid documents, with a WARNING that, in case of any transgression of this code:

• G — it would be liable for punitive actions as detailed below;
• W — its name is not only liable to be removed from the list of enlisted contractors, but it would be liable for other punitive actions such as cancellation of contracts, debarment or action in Competition Commission of India, and so on;
• CNC — its name is not only liable to be removed from the list of registered suppliers/ contractors/ service providers, but it would be liable for other punitive actions as detailed below.

3.5.2The Code — Seven Prohibited Practices

Procuring authorities, as well as bidders, suppliers, contractors, consultants and service providers, should observe the highest standard of ethics and should not INDULGE in the following PROHIBITED PRACTICES — either directly or indirectly — at any stage during the procurement process or the execution of resultant contracts:

3.5.3Obligations for Proactive Disclosures

Whether asked or not, in a tender document:

a) Declaration of Conflict of Interest: Procuring authorities, as well as bidders, suppliers, contractors, consultants and service providers, should suo-moto proactively declare any conflict of interest as per item (v) above — PRE-EXISTING or as soon as these arise at any STAGE in any procurement process or execution of a contract.

b) Declaration of previous transgressions: Bidders must DECLARE any PREVIOUS TRANSGRESSIONS with respect to the prohibited practices above with any entity in any country during the last three years, or of being debarred by any other Procuring Entity.

c) Declaration of commissions/ fees to agents: The bidder/ contractor must disclose any commissions or fees that may have been paid or are to be paid to AGENTS, REPRESENTATIVES, or COMMISSION AGENTS concerning the selection process or execution of the Contract. The information disclosed must INCLUDE:

• the name and address of the agent, representative or commission agent,
• the AMOUNT and CURRENCY, and
• the purpose of the commission or fee

— in a format given in the tender document.

3.5.4Professionalism and Unfair Competitive Advantage [C ONLY]

A) professionalism: The consultant is required to provide professional, objective, and impartial advice — at all times holding the Procuring Entity's interest paramount above his/ its own corporate interests and above any consideration for future work — strictly avoiding any conflicts of interest.

b) Unfair Competitive Advantage: Fairness and transparency in the selection process require that the consultants or their affiliates competing for a specific assignment do not derive an unfair competitive advantage from having provided consultancy services related to the assignment in question.

Such unfair competitive advantage is BEST AVOIDED by full TRANSPARENCY and by providing equal opportunity, so that all firms or individuals interested or involved have full INFORMATION about a service assignment and its NATURE, SCOPE, and background information. To that end, the request for proposals and all information should be made available to all short-listed consultants simultaneously.

c) The three disqualification rules: Therefore, without limitation on the generality of the foregoing, and unless stated otherwise in the RfP document, Consultants (including their experts and sub-consultants) or their allied firm shall not be eligible for any assignment that:

• i) by its NATURE, may be in conflict with another assignment of the consultant or its allied firm — for the same or for another procuring Entity;
• ii) a consultant or any of its affiliates/ allied firms that has been engaged by the client to provide goods, works, or non-consultancy services for a project, shall be disqualified from providing consultancy service resulting from or directly related to those goods, works, or non-consultancy services;
• iii) conversely, a consultant or any of its affiliates/ allied firms hired to provide consultancy services for the preparation or implementation of a project shall be disqualified from subsequently providing goods or works or non-consultancy services resulting from or directly related to the consultancy services for such preparation or implementation.

3.5.5Punitive Provisions

(Rule 175(2) of GFR, 2017)

Without prejudice to — and in addition to — the rights of the procuring entity to other penal provisions as per the tender/ bid documents or contract, IF the procuring entity CONCLUDES that a (prospective) bidder/ supplier/ contractor/ consultant/ service provider, directly or through an agent, has violated this code of integrity in COMPETING FOR the contract or in EXECUTING a contract, the procuring entity May take appropriate measures including one or more of the following:

1.If his bids are UNDER CONSIDERATION in any procurement

1. Forfeiture and/ or encashment of Bid Security;
2. Calling off of any pre-contract negotiations; And
3. REJECTION and EXCLUSION of the bidder from the procurement process.

2.If a contract has ALREADY BEEN AWARDED

1. CANCELLATION of the relevant contract and recovery of compensation for loss incurred by the procuring entity;
2. FORFEITURE and/ or ENCASHMENT of any other security or bond relating to the procurement;
3. Recovery of payments — including advance payments, if any — made by the procuring entity, along with interest thereon at the prevailing rate.

3.Provisions IN ADDITION to the above

1. REMOVAL from the list of registered suppliers/ enlisted contractors and/ or DEBARMENT of the bidder from participation in FUTURE PROCUREMENTS of the procuring entity:
2. [G, W, NC] — for a period not less than six months;
3. C — for a period not exceeding two years.

1. In case of ANTI-COMPETITIVE PRACTICES, information for further processing May be filed with the Competition Commission of India:
2. [G, W, NC] — under the signature of a joint Secretary level officer;
3. C — by the Competent Authority.
4. Initiation of suitable disciplinary or criminal proceedings against any individual or staff found responsible.

3.6Integrity Pact (IP)

1. What it is: The pre-bid Integrity Pact is a tool to help governments, businesses, and civil society fight corruption in public contracting.

It binds both buyers and sellers to ethical conduct and transparency in all activities — from:

This removes the insecurity of bidders that, while they themselves May abjure bribery, their competitors May resort to it and win contracts by unfair means.

2. Who must incorporate it, and at what threshold: Ministries/ Departments and their attached/ subordinate offices (including autonomous bodies) should incorporate the Integrity Pact (OM No. 14(12)/2008-E-II(A) dated 19th July 2011) in the procurements/ contracts:

• of the NATURE and of a THRESHOLD VALUE,
• decided by the ministries/ departments,
• with the approval of the minister in charge.

Format and customisation:

• [G, W] — The procuring entities May make suitable changes in the format, wherever required, based on the specific situation in which the pact is to be used. The pact May also be updated, wherever necessary, to incorporate latest procurement instructions.
• [C, NC] — Ministries/ Departments including their attached/ subordinate offices AND CPSEs may use this format of Integrity Pact, with the suitable changes specific to the situations in which the pact is to be used.

3. Extension to PSBs, PSICs and FIs: CVC issued a revised standard operating procedure (CVC Circular No. 04/06/23 — 015/VGL/091 dated 14.06.2023) and has further stated (CVC Circular No. 06/05/21 — 015/VGL/091 dated 03.06.2021) That, in view of the increasing procurement activities of public sector banks (PSBs), public sector insurance companies (PSICs) and public sector financial institutions (FIs), they shall also adopt and implement the suggested format of Integrity Pact.

3.7Grievances and its Redressal

1. Procuring Entities shall provide a suitable clause in their tender documents for the redressal of grievances of bidders. The following is a suggested mechanism of redressal.

2. Who may apply, and within what time:

Any supplier, contractor, or consultant that claims to have suffered or is likely to suffer loss or injury as a result of a decision/ action/ omission of the Procurement Entity May make an application for its review:

• Within a period of five (5) days from its date,
• to the DESIGNATED OFFICER named in the tender documents in this regard (or the head of the Procuring Entity, if not so specified),
• specifying the ground(s) and the relevant clauses of the tender documents.

De-briefing: Unsuccessful bidders May seek de-briefing regarding the rejection of their bid — in writing or electronically — within five (5) days of the declaration of techno-commercial or financial evaluation results.

3. Only a directly affected bidder can represent:

1. Only a bidder who has participated in the concerned procurement process — i.e., pre-qualification, bidder registration or bidding, as the case may be — can make such representation.
2. In case the PRE-QUALIFICATION bid has been evaluated before the bidding of Technical/ financial bids, an application for review in relation to the technical/ financial bid may be filed only by a bidder who has qualified in the pre-qualification bid.
3. In case the TECHNICAL bid has been evaluated before the opening of the FINANCIAL bid, an application for review in relation to the financial bid may be filed only by a bidder whose technical bid is found to be acceptable.

D) decisions not subject to review: The following decisions of the procuring entity, in accordance with the provisions of internal guidelines, shall not be subject to review:

• i) determination of the need for procurement;
• ii) selection of the mode of procurement or tendering system;
• iii) choice of selection procedure;
• iv) complaints against specifications — except under the premise that they are either VAGUE or too specific to limit competition, which may be permissible;
• v) provisions limiting the participation of bidders in the procurement process in terms of government policies;
• vi) provisions regarding purchase preferences to specific categories of bidders in terms of policies of the Government;
• vii) the decision to enter into negotiations with the L1 bidder;
• viii) cancellation of the procurement process — except where it is intended to SUBSEQUENTLY RE-TENDER the same requirements;
• ix) issues related to ambiguity in contract terms shall not be taken up after a contract has been signed; all such issues should be HIGHLIGHTED before the vendor/ contractor consummates the contract.

4. This grievance redressal is BESIDE the avenue of complaints to the vigilance Department of the procuring organisation.

5. If received DURING the processing of the tender: The designated officer shall FORWARD the application to the tC/ convener of TC for its examination on merits and action as considered necessary.

• An interim reply May be sent that the application will be kept in view in the tender evaluation, and a final response shall be given only after the declaration of the award of the contract.
• The Tender Committee shall place the application on record — including its analysis and action taken thereon — in the TC minutes/ report to the Competent Authority.
• After the award, the TC convener shall respond to the aggrieved party.

6. If received after the declaration of the award of the contract: The designated officer shall FORWARD the application to the COMPETENT AUTHORITY of the tender for his examination on merits and action as considered necessary.

If the Competent Authority finds the complaint to have substance, appropriate and feasible remedial measures should be initiated.

7. If the grievance is resolved, or if the grievance is found to be unwarranted, the aggrieved party shall be informed by the TC convener of the final decision — without disclosing confidential details.

8. Remedial actions available: Based on such representation, if the Competent Authority is satisfied that there has been a contravention of procurement guidelines in the case, he May initiate such action as, in his opinion, is necessary to rectify the contravention — INCLUDING:

1. If the grievance is due to inadequacy of procurement guidelines or a lack of understanding of the staff — remedial action to address such lacunae May be initiated without repercussions to the concerned staff;
2. Annulment or reconsideration of the procurement proceedings;
3. Cancellation of the resultant procurement contract, if legally feasible;
4. In case any individual staff is found responsible — suitable disciplinary proceedings should be initiated against such staff under the conduct Rules;
5. In case the complicity of any bidder is proved:
6. i) REMOVAL of the concerned firm from the list of registered firms;
7. ii) DEBARMENT of the bidders, if warranted;
8. iii) reporting the matter to the Competition Commission of India (CCI) in case of anti-competitive actions by the bidder;
9. Handing over the case to the CVO if there are aspects that require INVESTIGATIONS.

3.8Conduct of Public Servants in Public Procurement — Risks and Mitigations

3.8.1Detailed Mitigation for Conflict of Interest

a) which OFFICERS are 'related' to the tender or execution process: This would depend on the ORGANISATIONAL STRUCTURE and the sensitivity of their role in procurement. It may cover KEY OFFICIALS (and any external consultants/ advisors) involved in:

• making a RECOMMENDATION,
• various APPROVALS, or
• making a MAJOR DECISION

at any STAGE in procurement — i.e., during:

B) illustration — coi (actual, potential, or perceived) can arise if such officers (or his close family) have:

• i) substantial business interests in the firm — e.g., shares more than 0.1% of market cap — or have taken a loan or other FINANCIAL OBLIGATION (say DISCOUNTS) from the firm or its personnel, etc.;
• ii) business relationships with the firm — say, previously worked for the firm, or availed hospitality/ gifts beyond the limits laid down in the Code of Conduct of the organisation, etc.;
• iii) FAMILIAL RELATIONSHIP with the personnel of the firm;
• iv) close personal friendships or REGULAR (say, more than once in a quarter) social interactions — e.g., clubs, games, social associations — with the Firm's personnel, etc.

C) resolution of coi:

It shall be the responsibility of such officials to declare coi — to the extent he is aware of it in normal course — with reference to a procurement process, to the Competent Authority/ next higher officer.

The competent officer may EVALUATE:

• the level of coi, and
• the sensitivity of the function assigned to the official.

He may then EITHER DETERMINE:

• I) that the coi is insignificant enough to influence the type of function performed by the official — and ask the officer to continue his function; Or
• ii) that if the coi or the type of function is significant — nominate any alternative officer to perform the function (partly or fully) of this official in that procurement process.

3.9Development of New Sources and Registration/ Empanelment/ Enlistment/ Pre-qualification

(Rule 150 of GFR 2017)

3.9.1The Three (or Two) Concepts Distinguished

A. The Goods/ CS/ NC formulation — THREE conceptsGCNC

B. The Works formulation — TWO conceptsW

3.9.2Registration — General Provisions

a) Who may register, and why GCNC: For goods and services not available on GeM, and for Works, the head of Ministry/ Department May periodically register suppliers of goods and services that the Department or Office SPECIFICALLY REQUIRES.

Ensuring an up-to-date and current list of registered, capable and competent suppliers/ consultants/ service providers facilitates efficiency, economy, and promotion of competition in public procurement — especially while floating a limited tender/ local purchase/ direct contracting.

For such tenders, it May be possible to skip bidder qualification, to avoid unnecessary repetition/ duplication of efforts — thereby saving time, especially in the case of emergency procurement.

Registration of the supplier/ consultant/ service provider should be done following a fair, transparent, and reasonable procedure and after giving due publicity.

Such registered suppliers should be on-boarded on GeM as and when the item or service gets listed on GeM (Amended vide DoE OM No. F.1/26/2018-PPD dated 02.04.2019).

The list of registered firms for the subject matter of procurement should be exhibited on the websites of the Procuring Entity/ their e-procurement portals.

b) Registration on e-procurement portals W: All the Ministries/ Departments shall register the prospective contractors on their e-procurement portal or in the CPPP (in case they do not have their own e-procurement portal) before submitting their bids.

The contractor May be an individual, sole proprietorship firm, partnership firm, limited liability partnership, private or public limited company.

For registration, the Ministries/ Departments/ CPSUs shall capture at least: a) Name of contractor; b) Address and Contact details; c) Permanent Account Number (PAN); d) Details of Digital Signature Certificate (DSC); and e) GSTIN.

Depending on the requirement of the respective procurement portal, the Ministries/ Departments can capture any other information as may be considered necessary.

c) Enlistment practice in works departments W: Some departments — such as the Central Public Works Department (CPWD) and Military Engineering Services (MES) — are enlisting the contractors after verification of their credentials.

• Public authorities May empanel/ register contractors of those specific types of work which are required by them regularly.
• PERFORMANCE of such empanelled contractors should be reviewed periodically.
• The list of empanelled/ registered contractors shall be updated on a regular basis.
• The category/ Class of contractors May be upgraded/ downgraded, or contractors May be de-listed, based on their performance.
• Empanelment of contractors shall be done in a fair and equitable manner, preferably online, after giving due publicity.
• The practice of inviting bids for works tenders only from empanelled contractors May be confined to tenders up to a certain threshold value (say Rs 20 crore), as decided by the project executing authorities.
• It is expected that ministries/ departments will also develop their own enlistment process — as has been done by CPWD, Ministry of railways (MoR) and Ministry of road transport & highways (MoRTH) — to reduce the time required for verification of credentials of the contractors after opening of the bids.
• The lists of such enlisted contractors can be used by any Ministry/ Department/ cpsu.

d) Sharing of information through CPPP W: The ministries/ departments will also share the information of registered and enlisted contractors with each other through the Central Public Procurement Portal (CPPP).

• They will also ensure that whenever a contractor is debarred, the information regarding the same is made available immediately to all the ministries/ departments through the CPPP.
• The reasons for the debarment and the order of such debarment May also be displayed on the CPPP.
• NIC/ MeitY shall make appropriate changes in the CPPP so that each contractor can be uniquely identified by PAN.
• All the Ministries/ Departments May take cognizance of the information regarding debarment of contractors and use it as an input for the decision-making process as per their own procurement policies.

e) Entities with their own policies: Ministries/ Departments with a significant volume of procurements May follow their own policies and procedures for registration/ enlistment of vendors/ contractors, if they already exist. The policies and procedures described below are for the non-mandatory generic guidance of Ministries/ Departments that DO not have their own policies/ procedures.

The Ministry/ Department shall notify the authorities competent to deal with the applications and grant registrations/ enlistments, along with their jurisdictions.

The appellate authority shall be at least one level above the registering authority, or as designated by the Ministry/ Department.

f) Cross-use of lists and EMD exemption: All Ministries/ Departments May use such lists prepared by other ministries/ departments as and when necessary.

Registered suppliers/ firms are ordinarily exempted from furnishing earnest money deposit/ Bid Security with their tenders for items and monetary limits for which they are registered.

3.9.3Categories for Registration/ Enlistment

G — Categories for Registration of Suppliers of Goods

W — Categories for Enlistment of Contractors

3.9.4Registration of ManufacturersG

3.9.5Grades/ Classes (Monetary/ Tendering Limits)

Registration/ enlistment should be done by grading the firms (grade a, b, and so on) based on their capability to execute contracts/ orders of different monetary limits in the relevant category of requirements.

The monetary limits should be carefully fixed while keeping in view:

• The banker's reports,
• the capacity and capability of the firm, and
• other FINANCIAL INFORMATION indicated in the BALANCE SHEETS, such as profit and loss statements.

G — Example of gradation for Goods (NOT mandatory)

W — Class of Enlistment (Tendering Limits) for Works

3.9.6Procedure for Registration/ Enlistment

a) Fair procedure and publicity: Registration/ enlistment of the suppliers/ contractors should be done following a fair, transparent, and reasonable procedure and after giving due publicity.

Details of the procedure for registration/ enlistment of new firms May be uploaded on the website and published in the form of a booklet for information of the suppliers/ contractors. Timeframes and criteria for registration/ enlistment of new suppliers/ contractors May be clearly indicated.

b) Identifying possible sources: Possible sources for any category/ group of requirements can be identified based on internal and external references. Data on new suppliers/ contractors can be obtained from:

The e-procurement and GeM portals pre-register suppliers online. Such data can be a source of information on prospective suppliers/ contractors.

c) Updating the list and inviting EoI: The list of registered/ enlisted contractors shall be updated on a regular basis (ANNUALLY) G. New supplier(s)/ contractor(s) May be considered for registration/ enlistment at any time, provided they fulfil all the required conditions.

For any larger-scale or critical registration or development of new suppliers/ contractors, the Procuring Entity should call for eoI by publicising its need for the development of sources.

D) CIPP undertaking: While registering the firms, an undertaking May be obtained from them that they will abide by the CIPP enclosed with the application, with a clear warning that, in case of transgression of the Code of Integrity, their names are likely to be deleted from the list of registered suppliers/ enlisted contractors — besides any other penalty or more severe action as deemed fit.

E) GCC undertaking: Along with the new/ renewal application for registration/ enlistment, the suppliers/ contractors should also be asked to declare that, if awarded a contract in any LTE in which they participate, they bind themselves to abide by the Procuring Entity's general conditions of contract (GCC). Such GCC should be part of the application.

F) the participation Rule: Registered vendors/ enlisted contractors must participate in relevant limited tenders. In case they do not respond to at least three (3) tenders in a year on being invited to do so — if there were at least 6 invitations to them — they May be removed from the list of registered vendors/ enlisted contractors.

g) Eligibility for registration/ enlistment:

• i) any firm situated in India or abroad that is in the business of providing goods/ works/ services of specified categories of interest shall be eligible for registration/ enlistment;
• ii) Gwhere registration is granted based on partly outsourced arrangements/ agreements, it shall always be the responsibility of the registered unit to keep such arrangements/ agreements renewed/ alive, and to keep their registration valid for the period for which it has been granted.Any failure in this regard May make the registration null and void/ ineffective retrospectively from any such dates which the registering authority considers appropriate;
• iii) Suppliers/ contractors should possess a valid digital signature certificate (DSC) Class III with the company name at the time of registration/ enlistment/ renewal, to enable them to participate in e-PROCUREMENTS;
• iv) the firm should also have good internal governance — such as a whistleblower policy, commitment to esg (environmental, social, and governance) code of conduct, code of business ethics, etc.;
• V) the firm against whom punitive action has been taken shall not be eligible for re-registration/ re-enlistment during the currency of the punitive action. Registration/ enlistment requests May not be entertained from firms (or their allied firms) who are de-registered/ banned (W Phrasing: "From such firms, stakeholders of whom have any interest in de-enlisted/ banned firms").

H) assessment of capacity and capability: The application form, complete in all respects and accompanied by the requisite processing fee and prescribed documents, shall be submitted by the firms to the registering/ enlisting authority.

The application form, duly filled in, when received from the firms, shall be scrutinised carefully to assess the capacity and capability of the firms — INCLUDING:

• References shall be made to other firms of the standing of whom the applicant firm claims to be a supplier/ contractor.
• Likewise, the applicant firm's bankers May also be requested to advise about the firm's financial standing.

i) If registration cannot be granted: In cases where the firm is not considered capable and registration/ enlistment cannot be granted, the concerned authority shall communicate the deficiencies and shortcomings directly to the firms, under intimation to the appellate authority.

Where a request for re-verification and review is made by the firm — along with any fee as prescribed and within the period prescribed by the Department — a review shall be undertaken.

Requests for re-verification after the expiry of the said period would be treated as a fresh application, and a processing fee, if any is prescribed, charged accordingly.

j) Grant of registration/ enlistment: If considered to be CAPABLE after carefully assessing and verifying credentials, the firm May be granted registration/ enlistment with the approval of the ca.

k) Scope of registration:

• G Registration should be for specific trade groups of goods/ works/ services. For this purpose, all goods/ works/ services should be divided into trade groups, and the information published on the relevant portals/ websites.
• W Enlistment should be for a specific category of works.

l) Validity period and provisional status:

m) Unique number and website display: All registered suppliers/ enlisted contractors should be allocated a unique registration/ enlistment number.

The list of registered suppliers/ enlisted contractors — indicating the names and addresses with details of the requirements and monetary value they will supply/ execute, as well as the VALIDITY PERIOD, and so on, for which they are registered/ enlisted — shall be exhibited on the websites of the Procuring Entity.

n) EMD exemption and its limits G: Within the monetary limits so prescribed, and also for the category of registration, the registered firm May be exempted from depositing the earnest money deposit (EMD).

In other categories and higher monetary limits, the supplier would be treated as any unregistered supplier and not be entitled to the privileges of a registered supplier.

O) monitoring performance and removal: The performance and conduct of every registered supplier/ enlisted contractor are to be monitored/ watched by the relevant Department.

The Procuring Entity should also reserve the right to remove firms who do not perform satisfactorily — even during the validity of registration/ enlistment (after giving due opportunity to the supplier/ contractor to make a representation) — if they:

• Fail to abide by the terms and conditions of the registration/ enlistment, or
• fail to execute contracts on time, or
• supply substandard goods G / do substandard work W, or
• make any false declaration to any Government agency, or
• G For on public interest considerations / W For any ground which, in the opinion of the Government, is not in public interest.

P) right of reassessment: The Procuring Entity shall retain its option to reassess firms already registered/ enlisted at any later date, to satisfy itself with:

• The current financial soundness/ creditworthiness,
• facilities available, and so on.

Thereafter, the Procuring Entity May decide to retain them as registered suppliers for the requirements and monetary limit that were earlier considered, or with necessary changes as deemed fit.

In case of adverse reports from the team of Procuring Entity officers who reassess the firm, the Procuring Entity shall:

• GW — DELETE such firm from the registered suppliers'/ enlisted contractors' list;
• CNC — delete or downgrade such firm from the registered suppliers'/ service providers' list.

3.10Debarment

(Rule 151 of GFR 2017)

3.10.1GFR Provisions

Registration of suppliers/ contractors/ consultants/ service providers AND their eligibility to participate in a Procuring Entity's procurements is subject to:

• Compliance with the Code of Integrity for Public Procurement, and
• satisfactory performance in contracts.

Rule 151 of GFR, 2017 states the following regarding 'debarment from bidding':

3.10.2Current Guidelines on Debarment

1. Origin: PPD, DoE did consultations on the issue of Debarment with major procuring Ministries/ Departments and issued the following 'debarment guidelines' in supersession of all earlier instructions on this subject (Notified vide OM No. F.1/20/2018-PPD issued by Department of Expenditure dated 02.11.2021).

Public Procurement organisations who have existing guidelines for debarment (by any name) should revise their guideline in conformity with these guidelines issued by PPD, DoE.

2. Two types of debarment:

3. Definitions:

4. Alignment obligation: All ministries/ departments must align their existing debarment guidelines with these guidelines. Further, tender/ bidding documents must also be suitably amended, if required.

3.10.3Debarment by a SINGLE Ministry/ Department

Orders for Debarment of a firm(s) shall be passed by a Ministry/ Department, keeping in view the following:

a) Grounds and duration: A bidder (including its successors/ allied firms) May be debarred from participating in any procurement process for a period not exceeding two years (along with such other actions as may be permissible under law) for the following reasons:

• i) If it is determined that the bidder has breached the Code of Integrity as per Rule 175 of GFRs 2017.
• ii) false declaration of local content by Class-I/ Class-II local suppliers under the Public Procurement (Preference to Make in India) Order 2017, dated 16/09/2020 or later — shall also be treated as a breach of the Code of Integrity. A supplier who has been debarred by any procuring entity as per this sub-para:
• The fact and duration of debarment for this reason by any procuring entity must be promptly brought to the notice of the member-convenor of the standing committee (joint Secretary, DPIIT, under the Make in India order) and the Department of Expenditure, through the concerned Ministry/ Department or in some other manner;
• The standing committee shall consolidate such cases, and a centralised list or decentralised list of such suppliers with the period of debarment must be maintained on a periodical basis and displayed on the website(s);
• Such suppliers — though debarred by a single Ministry/ Department — shall not be eligible for preference under the Make in India order for procurement by any other Procuring Entity for the duration of the debarment. This shall be effective from the date of uploading such debarment to the website(s).
• iii) for any other actions or omissions by the firm that, in the opinion of the Ministry/ Department, warrants debarment.

B) jurisdiction of the order: The debarment order shall not be circulated to other ministries/ departments. It will only be applicable to all the attached/ subordinate offices, autonomous bodies, Central public sector undertakings (CPSEs), etc., of the Ministry/ Department issuing the debarment order.

c) Reasonable opportunity: The concerned Ministry/ Department, before ISSUING the debarment order against a firm, must ensure that reasonable opportunity has been given to the concerned firm to represent against such debarment — including a personal hearing if requested by the firm.

d) Competent Authority: The Secretary of the Ministry/ Department May nominate an officer at the rank of Joint Secretary/ Additional Secretary as Competent Authority (ca) to debar the firms.

e) List maintenance: The Ministry/ Department will maintain a list of such debarred firms, which will also be displayed on its website. Such a list on the website shall be automatically binding on the departments, subordinate and attached offices, autonomous bodies, and CPSEs under the Ministry — but in case of doubt, it can be confirmed by the issuing authority.

F) concurrent debarments: More than one Ministry/ Department May concurrently debar the same firm.

G) not a vigilance function: Debarment is an executive function and should not be allocated to the vigilance Department.

H) timeline for the debarment process: The period of debarment starts from the date of issue of the debarment order; Therefore, the process of debarment should be conducted expeditiously.

Considering the QUASI-JUDICIAL NATURE of such proceedings and the need to afford a fair hearing to the firm, the following timeline is SUGGESTED — which May be suitably modified considering the specifics of an organisation:

3.10.4Debarment by CPSEs, Attached Offices/ Autonomous Bodies, and GeM

ministries/ departments, at their option, May also delegate powers to debar bidders to their CPSEs, attached offices/ autonomous bodies, etc.

In such cases, the broad principles for debarment in para 3.10.3(a) to (h) above are to be kept in mind.

Debarments by such bodies shall be applicable only to the procurements made by such bodies.

Similarly, the Government E-marketplace (GeM) can also debar bidders for up to two years on its portal.

3.10.5Debarment ACROSS ALL Ministries/ Departments

In the following situations, the Ministry/ Department May consider debarring the firm from taking part in any tendering procedure floated by ALL The Central Government ministries/ departments:

a) Ground — conviction (Rule 151(i) of GFRs, 2017), for debarment up to three years:

• i) under the prevention of Corruption Act, 1988; or
• ii) the IPC, 1860/ Bharatiya Nyaya Sanhita, 2023, or any other law for the time being in force, for causing any loss of life or property, or causing a threat to public health, as part of the execution of a Public Procurement contract.

B) the reference to DoE: The Ministry/ Department concerned should, after obtaining the approval of the Secretary concerned, forward to DoE a self-contained note setting out all the facts of the case and the justification for the proposed debarment, along with all the relevant papers and documents.

C) prior opportunity is mandatory: The Ministry/ Department, before forwarding the proposal to DoE, must ensure that reasonable opportunity has been given to the concerned firm to represent against such debarment — including a personal hearing if requested by the firm.

D) interim debarment: The firm shall remain debarred during the interim period till the final decision is taken by DoE — only in the Ministry/ Department forwarding such proposal.

For this purpose, the proposing Ministry shall issue an interim order debarring the firm from taking part in tendering procedures floated by their Ministry/ Department, following the procedure laid down in para 3.10.3 above.

Such order inter alia must mention that the Government reserves its right to further debar the firm from taking part in any tendering procedure floated across all the Central Government ministries/ departments, following due procedure.

E) doe's powers and timeline: DoE can also give additional opportunity, at their option, to the firm to represent against proposed debarment. DoE can also take suo-moto Action to debar the firms in certain circumstances.

DoE shall complete the process of debarment within 12 weeks after receiving the proposal from the concerned Ministry/ Department.

F) doe's order: DoE will issue the necessary orders for debarment for a period not exceeding three years for offences mentioned in Rule 151(i) of gfrs, 2017 — after satisfying itself that the proposed debarment across all the ministries/ departments is in accordance with the said Rule. This scrutiny is intended to ensure uniformity of treatment in all cases.

G) the Central list: DoE will maintain a list of such debarred firms, which will be displayed on the gem-Central Public Procurement Portal (CPPP). This list on CPPP shall be applicable to all ministries/ departments, attached and subordinate offices, CPSEs, and autonomous bodies — but in case of doubt, they May confirm it from the issuing authority.

H) absolute bar: No contract of any kind whatsoever shall be placed on the firm debarred by DoE — including its allied firms — during the period of debarment, by any Ministry/ Department/ attached/ subordinate offices of the Government of India, including autonomous bodies, CPSEs, etc., after the issue of a debarment order.

3.10.6Review and Revocation of Orders

A) automatic revocation on expiry: An order for debarment passed shall be deemed to have been automatically revoked on the expiry of the period of debarment specified therein — and it will not be necessary to issue a specific formal order of revocation.

b) Early review/ revocation: The AUTHORISED ENTITY (DoE, Ministry/ Department, or CPSEs, Attached Offices/ Autonomous Bodies, GeM, etc.) that ISSUED the order of debarment can review or revoke the debarment order before the period of debarment is over:

• Suo-moto (based on new facts that come to light), or
• on an appeal by the debarred bidder.

After a review, an order for modification of the period of debarment or revocation of debarment — if there is adequate justification for the same — can be issued.

Approval levels:

• Ordinarily, such modification/ revocation of the Order should be done with the approval of the Secretary concerned of doE or the Ministry/ Department that issued such orders.
• In case of debarments done by CPSEs, attached offices/ autonomous bodies, GeM, etc., such modification/ revocation of the debarment orders should be done only with the approval of at least a board-level officer.

3.10.7Other Provisions (Common to BOTH Types of Debarment)

a) Contents of the order: The debarment order shall MENTION:

• The reason(s) in brief that led to the debarment of the firm,
• The jurisdictional extent to which the order shall be applicable, and
• The validity period of debarment.

B) the bar on contracts, and the two cut-off dates: No contract of any kind whatsoever shall be placed with a debarred firm — including its allied firms — after the issue of a debarment order by the entities in the jurisdiction mentioned in the order.

Bids from only such firms shall be considered for placement of contract which are:

• Neither debarred on the date of opening of tender — opening of the first bid, normally called the technical bid, in case of two-packet/ two-stage tendering —
• nor debarred on the date of contract — i.e., date of issue of the Letter of Acceptance.

Even in the cases of risk purchase, no contract should be placed on such debarred firms.

C) treatment of a debarred firm's bid: If any debarred firm submits the bid, it will be ignored. In case such firm is lowest (L-1), the next lowest firm shall be considered as L-1. Bid Security submitted by such debarred firms shall be returned to them.

d) No retrospective effect on existing contracts: Contracts concluded before the issue of the debarment order shall not be affected by the debarment orders.

E) automatic extension to allied firms and JV partners: The debarment shall be automatically extended to all its allied firms. In case a joint venture/ consortium is debarred, all partners will also stand debarred for the period specified in the debarment order. The names of partners should be clearly specified in the "debarment order".

F) no impact on other legal rights: Debarment in any manner does not impact any other contractual or other legal rights of the procuring entities.

g) Commencement — two different dates:

• For the issuing entity: The period of debarment shall start from the date of issue of the debarment order.
• For other procuring entities: The debarment takes effect prospectively from the date of uploading on the website(s), in such a manner that ongoing procurements are not disrupted.

H) minimum period: Ordinarily, the period of debarment should not be less than six months.

i) GeM Suspension under the Incidence Management Policy [W + C + NC — not in G]:

The GeM portal also has a provision for suspension — debarring vendors'/ service providers' participation in procurements of ALL The buyers — under its incidence management policy.

the reasons and periods for suspension are different than in the provisions mentioned above.

However, if a Procuring Entity feels that the period of suspension by GeM is not adequate, it May also debar the firm as per the procedure mentioned in this section for a more appropriate period — but such debarment shall be applicable ONLY To procurements by that Procuring Entity.

j) Undertakings from bidders on debarment status [G — not in W/C/NC]:

It is noticed that many procuring entities take undertakings from the bidders with respect to their debarment status/ period. Such undertakings, if taken, must be in conformity with the debarment guidelines, as above, to avoid any possible confusion.

k) Alignment obligation WCNC: All ministries/ departments must align their existing debarment guidelines in conformity with these guidelines. Further, bidding documents must also be suitably amended, if required.

3.10.8Safeguarding the Procuring Entity's Interests during Debarment

Suppliers/ contractors/ consultants/ service providers are important assets for the procuring entities, and punishing delinquent suppliers should be the last resort.

• It takes a lot of time and effort to develop, register and mature a new supplier.
• In case of a shortage of suppliers in a particular group of materials/ equipment/ services, such punishment May also hurt the interest of the Procuring Entity.

Therefore:

1. The Procuring Entity May always seek the views of the concerned Department regarding the repercussions of such punitive action on the continuity of procurements.
2. The Procuring Entity May give due weightage to the past performance of the supplier/ consultant/ service provider.
3. In case of a shortage of suppliers and in cases of less serious misdemeanours, the Procuring Entity May:
4. Pragmatically analyse the circumstances,
5. reform the supplier, and
6. get a written commitment from the supplier that his performance will improve.
7. If this fails, efforts should be made to see if:
8. [G, c, nc] — a shorter period of debarment can serve the purpose;
9. W — A temporary Debarment can serve the purpose.

3.11Enlistment of Indian Agents

(Rule 152 of GFR 2017)

ministries/ departments, if they so require, May enlist Indian agents who desire to quote directly on behalf of their foreign principals.

Detailed guidelines on Indian Agents of foreign suppliers are contained in Annex-1 to the Integrity Pact Annexure of each Manual — "Guidelines for Indian Agents of Foreign Suppliers".

Appendix to Chapter 3 — Points of Difference Between the Four Manuals

end of Chapter 3

Part IContracts, Selection Systems and Channels

Agency for Procurement · Admeasurement · Types of Contracts · Systems of Selection · Tendering Systems · Channels of Procurement

Merging: Goods Ch. 4 (Modes of Procurement and Tendering Systems) · Works Ch. 3 (Bidding Design for Works) · Consultancy Ch. 4 (Bidding Design for Consultancy Services) · Non-Consultancy Ch. 4 (Bidding Design for Non-Consultancy Services)

Structural Warning for Students

This block is CHAPTER 4 in Goods, Consultancy and Non-Consultancy — but CHAPTER 3 in Works.

(The reverse of the trap in the previous chapter, where governance was Ch. 3 in three Manuals but Ch. 8 in Works.)

This is also the chapter of greatest substantive divergence between the four Manuals. Three whole apparatus exist in only one Manual each:

And "Types of Contracts" does not exist at all in the Goods Manual — goods procurement has no contract-type taxonomy, because it uses Rate Contracts and supply orders instead.

Because of the volume, this chapter is issued in two parts:

• PART A (this document) — Agency, Admeasurement, Types of Contracts, Systems of Selection, Tendering Systems, Channels of Procurement.
• PART B — Modes of Procurement (OTE, GTE, rc/fa, eRA, PQB, AVL, LTE, SLTE, PAC, STE, direct Procurement, Quotations, Stalled Contracts).

Concordance for Chapter 4 — Part A

4.1Agency for Procurement [W ONLY]

1. The three routes (Rule 133 of GFR, 2017): Rule 133 permits Ministries/ Departments at its discretion to assign execution of their original and repair works as follows: a) directly by the Ministry/ Department; b) public works organisations (PWO); c) public sector undertaking (PSU)/ Organisations set up to execute Works.

2. Directly by the Ministry/ Department: A Ministry or Department at its discretion May directly execute repair works estimated to cost up to rupees sixty (60) LAKH, after following the due procedure 'laid down for Execution of Works' (Rules 139, 159 and 160 of GFR 2017).

4.1.1Public Works Organisations (PWO)

A Ministry or Department May, at its discretion, assign:

• REPAIR WORKS estimated to cost above Rupees SIXTY (60) LAKH, and
• original/ minor works of any value

to any public Works Organisation (PWO) such as:

4.1.2Public Works PSU/ Organisations

As an alternative, a Ministry or Department May assign repair works estimated to cost above rupees sixty (60) lakh and original works of any value to: A) any public sector undertaking (PSU) set up by the Central or State Government to carry out civil or electrical works; Or b) to any other Central/ State Government organisation/ PSU which May be notified by the Ministry of housing and urban affairs (MoHUA) for such purpose, after evaluating their financial strength and technical competence.

4.1.3Procedure for Assigning Work to PWO or PSU/ Organisations

1. Competition among PSUs — and the PMC characterisation: For the assignment of work to PSUs, the Ministry/ Department shall ensure competition among all such eligible PSUs/ ORGANISATIONS.

This competition shall be essentially on the lump sum service charges to be claimed for execution of work.

The award of work to a PSU should be taken as project management consultancy (pmc), and the concerned PSU shall be treated as a consultancy firm. Relevant methods (QCBS, LCS etc.) for procurement of consultancy will be applicable.

2. Nomination basis: In exceptional cases, for assignment of work on nomination basis to a PSU, the conditions for nomination basis would apply. The work under these circumstances shall also be assigned only on a lump sum basis.

3. Sanctions and execution(Rule 140, GFR 2017): For original works and repair works entrusted under paras 4.1.1 and 4.1.2 above, the administrative approval and expenditure sanction shall be accorded and funds allotted by the concerned authority in accordance with the sanctioning sequence of Chapter 2.

The PWO or the PSU or any organisation allotted work shall then execute the work entrusted to it in accordance with the Rules and procedures prescribed in their own organisation.

4. Memorandum of Understanding (MoU): An MoU May be drawn with the PWO or the PSU for proper execution of work.

The MoU should spell out:

• the OBLIGATIONS on the part of the PWO or PSU regarding execution of works as per proper specifications, and
• for maintaining proper quality and speed of execution of works;
• Different stages at which funds shall be released to the PWO should also be clearly spelt out.

Such MoU would normally be for a specific standalone work, but could also be for a project consisting of a collection of related works.

5. Long-term framework MoU: In case of MoU with PWOs, it could also be a long-term framework moU.

6. The Works Committee: For execution of any work under Paras 4.1.1 and 4.1.2 above, the Ministry/ Department shall constitute a "Works Committee" — whether on an ad hoc or standing basis — comprising:

• representatives of the ADMINISTRATIVE WING,
• representatives of the FINANCE WING, and
• an officer possessing technical skills and experience of framing estimates and execution of works.

If need be, members May be co-opted from: the User Department; CPWD/ PWOs/ PSUs; or any technically sound Government agency such as a relevant National Institute of Technology (NIT)/ Indian Institute of Technology (IIT) or a relevant National Research Institute, etc.

The Works Committee shall:

• Ensure observance of due process in the planning and execution of works;
• Check the reasonability of the estimates and other technical details; And
• monitor the execution of the works.

4.2Admeasurement of Services [NC ONLY]

Non-consultancy services are bid and contracted on the total price (UNIT RATE × quantum) of the delivered services (of requisite performance standards) — much like procurement of goods and works.

The QUANTUM of services can be ascertained by EITHER:

• measuring the INPUTS DEPLOYED by the service provider → INPUT ADMEASUREMENT; or
• measuring the output of services delivered → output admeasurement.

4.2.1Input Admeasurement

1. The quantum of services can be ascertained by measurement of the inputs — personnel, equipment, materials, and miscellaneous inputs — deployed during a period (say per month) by the service provider.

2. What the contract specifies:

• the UNIT RATE, and
• the ESTIMATED QUANTUM (per period — say per day/ month) of various inputs required to be deployed to deliver the required quantum of services of requisite performance standards.
• The contract would also specify the SERVICE CHARGES (including profits, overheads, etc.) and taxes over and above such input unit rates.

Financial evaluation is based on the total price of the indicated quantum of various inputs at the contracted unit rate, plus service charges and taxes.

3. The monitoring burden: Input admeasurement requires more vigilant and constant monitoring of inputs deployed. The Procuring Entity must also monitor the performance standards, methodology employed and productivity of inputs to ensure Value for Money.

4. Where used: Input admeasurement is frequently used in time-based and indefinite delivery types of contracts for Services like:

5. Input Admeasured Contracts — Risks and Mitigations:

4.2.2Output-Admeasurement

1. Alternatively, the quantum of services can be ascertained by measurement of the quantum of outputs delivered of the required performance standards — numbers, length, area, volume, weight, value, etc., or a combination thereof — say, the area of office cleaned, or tonne-kilometre of transportation, or value of goods inspected.

2. Financial evaluation: The contract specifies a unit rate of the output of services, and the financial evaluation is done based on the total price of the indicated quantum of service at the contracted unit rate plus taxes.

3. Why it is preferred: Output admeasurement contracts are simpler to administer, since the Procuring Entity will only ascertain performance standards and the quantum. It need not monitor the inputs deployed and the methodology employed. Therefore, wherever feasible, output admeasurement should be the preferred choice.

4. However, in many services, it May be part of the quality assurance plan and SLA to ensure that a specified quantum of inputs is deployed for the services — although payments are still based on output admeasurement.

5. Where used: Depending on the situation, output admeasurement may be suitable mainly for lump-sum and percentage-based types of contracts, and in special circumstances for time-based and indefinite delivery types.

Suitable for Services like:

6. Output Admeasurement Contracts — Risks and Mitigations:

4.3Types of Contracts

4.3.1The Common Opening PropositionWCNC

4.3.2The Three Taxonomies Compared

4.3.3WORKS — the Seven TypesW

4.3.4CONSULTANCY and NON-CONSULTANCY — the Service Contract TypesCNC

4.4Systems of Selection

4.4.1The Common RationaleWCNC

4.4.2Price Based System — Least Cost Selection (LCS)

(Rule 193 of GFR 2017)

1. How it works: In this method of selection, bidders submit both a technical proposal and a financial proposal at the same time.

• Minimum qualifying marks for the quality of the technical proposal are prescribed as a benchmark — normally 75 (seventy-five) out of a maximum of 100 (hundred) — and indicated in the tender document/ RfP, along with a scheme for allotting marks for various technical criteria/ attributes.
• Alternatively — since in LCS selection, technical offers do not require to be ranked (or to have weighted technical score added to financial score, as in QCBS) — it would suffice in appropriately simple cases if the evaluation criteria is only a fail/ pass criteria prescribing only the minimum qualifying benchmark.

• The technical proposals are opened first and evaluated, and the offers that qualify as per these technical evaluation criteria will only be considered as technically responsive; the rest will be considered technically non-responsive and will be dropped from the list.
• Financial proposals are then opened for only eligible and responsive offers (financial bids of other unresponsive bidders remain unopened) and ranked.
• The L-1 offer out of the responsive offers is selected on price criteria alone, without giving any additional weightage to marks/ ranking of the technical proposal.

This system of selection is roughly the same as the price-based selection of an l-1 OFFER (among the technically responsive offers) in the procurement of goods/ works.

2. Where suitable W: LCS is considered suitable for engaging contractors in most works procurement assignments that are of a standard or routine nature — such as construction works or non-complex engineering projects — where well-established practices and standards exist.

3. The default Rule: It is the simplest and the quickest system of selection, and under normal circumstances this method of evaluation shall be used as default, since it allows for minimum satisfactory technical efficiency with economy. Justification must be provided if a selection method other than LCS is to be used.

4. LCS — Risks and Mitigations:

4.4.3Quality and Cost Based Selection (QCBS)

(Rule 192 of GFR 2017)

1. What it is: In the QCBS system of selection, both the quality of the proposal and the cost are considered as deciding factors. This approach is employed when the quality of deliverables is crucial, but the cost of service or work cannot be ignored.

2. The mechanics:

• Quality/ technical scores are assigned to proposals based on specified quality criteria.
• Minimum qualifying marks — normally 70–80 (seventy to eighty) out of a maximum of 100 (hundred) marks — as a benchmark for the quality of the technical proposal is prescribed, and proposals below this benchmark are not considered for financial evaluation.
• The financial proposals are also given a cost-score based on the relative ranking of prices — with 100 (hundred) marks for the lowest and pro-rated lower marks for higher-priced offers.
• The total score shall be obtained by weighting the quality and cost scores and adding them.
• The proposed weightings for quality and cost shall be specified in the RfP/ tender document.
• The firm obtaining the highest total score shall be selected.
• It May be noted that, theoretically, a QCBS system with a weight of 100% (hundred percent) for the 'cost' approximates the price-based LCS system.
• This method of selection shall be used for highly technically complex and critical assignments where it is justifiable to pay an appropriately higher price for a higher quality of proposal.

3. The suggestive weighting table [C only]:

4.4.4The Quality Oriented Procurement (QOP) FrameworkWNC

4.4.5Fixed Budget based Selection (FBS) [C ONLY]

1. Its status: GFR 2017 provides three methods for selection/ evaluation of consultancy proposals — viz. QCBS, LCS and SSS. The Fixed Budget Based Selection (FBS) method is now also allowed for selection of consultants (General Instructions on Procurement and Project Management — DoE's OM No. F.1/1/2021-PPD dated 29 October 2021).

2. How it works: In FBS, the selection process considers both the quality of proposals and the cost. FBS is a competitive method, encouraging consultants to provide high-quality services within the defined budget constraints:

A) fixed budget: In the Request for Proposal (RfP) document, a specific fixed budget is specified. Consultants must adhere to this budget, and their proposed cost cannot exceed it.

b) quality assessment: Consultants submit their proposals, and the evaluation considers the quality of these proposals. The proposal that scores the highest in quality — and is within the specified budget — is selected for award of contract. This assessment ensures that the selected consultant meets the project's requirements effectively, within the stipulated budget.

3. FBS May be used when: A) the type of consulting services required is simple and/ or repetitive and can be precisely defined; And b) the budget can be reasonably estimated, and set based on credible cost estimates and/ or previous selections which have been successfully executed; And c) the budget is sufficient for the consultant to perform the assignment.

4.4.6Direct Selection: Single Source Selection (SSS)

(Rule 194 of GFR 2017)

1. When permissible: Under some special circumstances, it May become necessary to select a particular contractor/ consultant/ service provider where adequate justification is available for such single-source selection, in the context of the overall interest of the Procuring Entity.

The selection by SSS/ nomination is permissible under exceptional circumstances such as:

1. Tasks that represent a natural continuation of previous work carried out by the firm;
2. In case of an emergency situation; Situations arising after natural disasters; Situations where timely completion of the assignment is of utmost importance;
3. Situations where execution of the assignment May involve the use of proprietary techniques, or only one contractor/ consultant has the requisite expertise;
4. At times, other PSUs or Government organisations are used to provide technical expertise. It is possible to use the expertise of such institutions on an SSS basis;
5. Under some special circumstances, it may become necessary to select a particular contractor/ consultant where adequate justification is available in the context of the overall interest of the Ministry or Department. Full justification for Single Source Selection should be recorded in the file, and approval of the Competent Authority obtained before resorting to such single-source selection.

2. Safeguards: The Procuring Entity shall ensure fairness and equity, and shall have a procedure in place to ensure that: A) the prices are reasonable and consistent with market rates for tasks of a similar nature; And b) the required work/ services are not split into smaller-sized procurement.

3. Mandatory reporting of nomination awards: All works/ purchase/ consultancy/ non-consultancy contracts awarded on a nomination basis should be brought to the notice of the following authorities for information: a) THE SECRETARY, in the case of Ministries/ Departments; b) the board of directors or equivalent managing body, in case of Public Sector Undertakings, Public Sector Banks, Insurance companies, etc.; c) the chief executive of the organisation where such a managing body is not in existence.

• I) the report relating to such awards on a nomination basis shall be submitted to the Secretary/ board/ chief executive/ equivalent managing body every quarter.
• ii) the audit committee or similar unit in the organisation May be required to check at least 10% of such cases.

4. SSS — Risks and Mitigations:

4.5Tendering Systems

4.5.1The Common Rationale

Tendering systems are designed to achieve an appropriate balance between the countervailing needs for the 'right quality' and the 'RIGHT PRICE' — while the mode of procurement addresses the 'RIGHT SOURCE', and the TENDER DOCUMENT addresses the 'RIGHT QUANTITY' and 'right time and place' — under different complexities/ criticality of Technical requirements and value of procurements.

please note that the selection of a tendering system has to be based on the two factors mentioned above; Hence, just a value threshold for their use is discouraged. Selection should be based on professional judgement of the two factors mentioned above. (Stated expressly in G, W and NC.)

4.5.2The Systems Listed

4.5.3Single-Stage Tendering System

In single-stage tendering, bids are invited at a single stage of submission. The bids can be stipulated to be either in a single envelope or in multiple envelopes.

A. Single Stage Single Envelope System

1. In a single-stage single-envelope system, eligibility, technical/ commercial details, and financial details are submitted together in the same envelope.

Evaluation is in the sequence of evaluated responsive prices (from L1 onwards), and their technical/ commercial compliance is checked.

The lowest-priced bid that meets the eligibility/ qualification criteria, technical and commercial conditions laid down in the tender documents is declared as successful.

2. Where suitable: This tendering system is SUITABLE where:

• The technical requirement is simple or moderately complex;
• The capability of the source of supply is not too crucial; And
• the value of procurement is not too high.

This is the simplest and the quickest tendering system and should be the default system of tendering.

B. Single Stage Two Envelopes System (Two Bid System)

(Rule 163 of GFR 2017)

1. When used: In technically complex requirements — but where the capability of the source of supply is still not critical, and the value of procurement is not high — a Single-stage two-envelopes system may be followed.

2. Composition of the two envelopes (off-line tenders): Bidders should be asked to bifurcate their quotations into two separately sealed envelopes:

• The first envelope — called the techno-commercial bid — contains the eligibility, technical quality and performance aspects, commercial terms and conditions and documents sought in the tender, except the price and relevant financial details.
• The second envelope — called the financial bid — contains the price quotation along with other financial details.
• Both the envelopes are to be submitted together in a sealed outer envelope.
• In e-procurement, the bidder would be asked to upload two files, mutatis mutandis.

3. First opening: The techno-commercial bids are to be opened in the first instance on the pre-announced bid opening date and time, and scrutinised and evaluated by the TC with reference to parameters prescribed in the tender documents; And responsive, eligible, and technically compliant bidders are decided.

4. Second opening: Thereafter, the financial bids of ONLY The techno-commercially compliant offers are to be opened on a pre-announced date and time for further scrutiny, evaluation, ranking and placement of the contract.

• In e-procurement, financial bids of technically non-compliant offers would remain encrypted and unopened.
• In off-line tenders, the financial bids of technically non-compliant bidders should be returned unopened to the respective bidders by registered acknowledgement due/ reliable courier, or any other mode with proof of delivery.

4.5.4Two-Stage Bidding — Expression of Interest (EoI) Tenders — Market Exploration

(Rule 164 of GFR 2017)

1. The problem it solves: In the case of green-field/ blue-sky projects, where the equipment/ plant to be procured is COMPLEX, the procuring organisation May not possess the full knowledge of either the various technical solutions available or the likely sources for such products in the market.

To meet the desired objectives of a transparent procurement that ensures value for money and simultaneously ensures the upgradation of technology & CAPACITY BUILDING, it would be prudent to invite an Expression of Interest (EoI) bids as a first stage of the two-stage tendering system — to explore the market and finalise specifications based on technical discussions/ presentations with the experienced manufacturers/ suppliers in a transparent manner.

2. The four situations in which EoI bids May be invited: A) it is not feasible for the Procuring Entity to formulate detailed specifications or identify specific characteristics for the subject matter of procurement without receiving inputs regarding its technical aspects from bidders; B) the character of the subject matter of procurement is subject to rapid technological advances, market fluctuations, or both; C) the Procuring Entity seeks to enter into a contract for research, experiment, study, or development — except where the contract includes the production of requirements in quantities sufficient to establish their commercial viability or to recover research and development costs; Or d) the bidder is expected to carry out a detailed survey or investigation and undertake a comprehensive assessment of risks, costs and obligations associated with the particular procurement.

A. The Procedure of Two-Stage Bidding

1. First stage: The Procuring Entity shall invite EoI bids containing the broad objectives, technical and financial qualification criteria, terms and conditions of the proposed procurement, etc. — without a bid price.

On receipt of the Expressions of Interest, manufacturers/ suppliers which are prima facie Considered technically and financially capable of supplying the material or executing the proposed work shall be shortlisted.

2. Technical discussions: Thereafter, technical discussions/ presentations May be held with the short-listed manufacturers/ suppliers — giving equal opportunity to all such bidders to participate in the discussions.

During these technical discussions, the procurement agency May also add other stakeholders who could add value to the decision-making on the various technical aspects and evaluation criteria.

A proper record of discussions/ presentations and the process of decision-making should be kept.

3. Framing specifications: Based on the discussions/ presentations so held, one or more acceptable technical solutions could be decided upon — by laying down detailed technical specifications for each acceptable technical solution, quality benchmarks, warranty requirements, delivery milestones, etc. — in a manner consistent with the objectives of transparent procurement.

At the same time, care should be taken to make the specifications generic in nature, to provide equitable opportunities to the prospective bidders.

4. The limit on revision: In revising the relevant terms and conditions of the procurement, if found necessary because of discussions with the shortlisted bidders, the Procuring Entity shall not modify the fundamental nature Of the procurement itself.

5. Second stage: The Procuring Entity shall invite only those bidders whose bids at the first stage were not rejected, to participate in a two-envelope tendering in response to a revised set of terms and conditions of the procurement.

6. Right of withdrawal without penalty: Any bidder invited to bid but not in a position to supply the subject matter of procurement due to modification in the specifications or terms and conditions May withdraw from the tendering proceedings without forfeiting any Bid Security That he May have been required to provide, or being penalised in any way — by declaring his intention to withdraw from the procurement proceedings with adequate justification.

7. 'Non-committal' EoI: If the Procuring Entity is of the view that after the EoI stage there is a likelihood of further participation by many more bidders — and to avoid getting trapped into a legacy technology — the second-stage tendering May not be restricted only to the shortlisted bidders of the EoI stage, and it May be so declared in the EoI document ab initio.

Thereafter, in the second stage, normal OTE/ GTE tendering May be performed. Such a variant of EoI is called a 'non-committal' EoI.

Instances of 'non-committal EoI' should be rare, since it May de-incentivise the participants from giving a diligent/ sincere EoI. There should not be any bid-security requirement in such non-committal EoI.

B. Invitation of EoI Tenders

In EoI tenders, an advertisement inviting Expression of Interest should be published. The invitation to the EoI document should contain: a) a copy of the advertisement; b) objectives and scope of the requirement — a brief description of objectives and the broad scope of the requirement; it may also include the validity period of empanelment; c) instructions to the bidders — including the nature of supply, fees for empanelment (if EoI is for empanelment), last date of submission, place of submission and any other related instructions; d) formats for submission — the format in which the bidders are expected to submit their EoI; e) QUALIFICATION CRITERIA — the invitation to EoI should clearly lay down the qualification criteria that should be applied for shortlisting. The required supporting documents need to be clearly mentioned.

C. Evaluation of EoI

The bidders should be evaluated for shortlisting — inter alia — based on their past experience of performance in a similar context, financial strength, and technical capabilities, among others.

Each bidder should be assigned scores based on the sum of marks obtained for each parameter multiplied by the weightage assigned to that parameter.

All bidders who secure the minimum required marks (normally 60 (sixty) per cent) should be shortlisted. The minimum qualifying marks should be specified in the EoI document.

ALTERNATIVELY, instead of weighted evaluation, the EoI document May specify a 'FAIL-PASS CRITERIA' with the minimum qualifying requirement for each of the criteria — such as minimum years of experience, minimum number of assignments executed and minimum turnover. Under such circumstances, all bidders who meet the minimum requirement as specified should be shortlisted.

The shortlist should normally comprise at least four firms.

An example of EoI Qualification criteria G:

4.6Channels of Procurement

Public Procurement can be performed/ channelled by way of:

4.6.1Electronic Procurement (e-Procurement)

(Rule 160 of GFR 2017)

1. What it is: Electronic procurement (e-procurement) is the use of information and communication technology (especially the internet) by the buyer (through a third-party e-procurement portal) in conducting procurement processes with the vendors/ contractors for the acquisition of goods (supplies), works and services — aimed at open, non-discriminatory, and efficient procurement through transparent procedures.

2. The mandate — and its two exceptions: It is mandatory for ministries/ departments to receive all bids through e-procurement portals that are gcqe compliant, for all procurements.

This condition will NOT Be applicable for:

• the procurement made without QUOTATION (under RULE 154 of GFR, 2017); or
• through PURCHASE COMMITTEE (under RULE 155 of GFR, 2017).

3. No mixing of Manual and electronic bids: Normally, in e-procurement, no physical/ off-line tender documents are provided, nor are any Manual bids accepted. It is not a good practice to call both electronic and Manual bids in the same tender.

4. Exemption — Global Tender Enquiry: In Global Tender Enquiry (by any mode — open tender, limited tender or single tender), e-procurement May not be mandatorily insisted upon. However, e-publishing would still be mandatory.

5. Exemption — national security and missions abroad: In individual cases where national security and strategic considerations demand confidentiality, ministries/ departments May exempt such cases from e-procurement — after seeking the approval of the concerned Secretary and with the concurrence of financial advisers.

In case of tenders floated by Indian missions and CPSE units abroad, the Competent Authority for deciding the tender May exempt such cases from e-procurement.

6. The portals: Note the different names used by the four Manuals for the NIC portal:

• G"The National Informatics Centre (NIC) has an e-Procurement portal called Government e-procurement of NIC (gepnic)."
• C"National Informatics Centre (NIC) has an eProcurement portal called the Central Public Procurement Portal (CPPP)."

There are other service providers in the public sector (e.g., MSTC) and private sector that can be utilised for e-PROCUREMENT. Details about the process of e-procurement are available from the service providers.

7. Which portal a Ministry should use: Ministries/ departments that do not have a large volume of procurement, or carry out procurements required only for the day-to-day running of offices, and have not initiated e-procurement through any other solution so far — May use the e-procurement solution developed by NIC.

Other ministries/ departments May either use the e-procurement solution developed by NIC, or engage any other service provider — G adds: (Gcqe compliant) — following due process.

8. These instructions will not apply to procurements made by ministries/ departments through Government E-marketplace (GeM).

4.6.2Mandatory Procurement of Goods and Services through GeM

(Rule 149 of GFR 2017)

1. What an online marketplace is: An online marketplace (or e-commerce marketplace) is a type of e-commerce site where several sellers offer products or services, and all the buyers can select the product/ services offered by any one of the sellers based on his own criteria.

In an online marketplace, the purchaser's transactions are processed by the marketplace operator, and then products/ services are delivered and fulfilled directly by the participating retailers. Other capabilities might include auctioning (forward or reverse), catalogues, ordering, posting requirements by purchasers, payment gateways, etc.

In general, because online marketplaces aggregate products from a wide array of providers, selection is usually wider, availability is higher, and prices are more competitive than in vendor-specific online retail stores.

2. The mandate: The Government of India has established the Government E-marketplace (GeM) for common-use goods and services. The procurement process on GeM is end-to-end — from placement of contract orders to payment to suppliers. This is to ensure better transparency and higher efficiency. All the processes will be electronic and online.

The procurement of goods and services through the GeM portal by ministries/ departments (including attached/ subordinate offices), CPSEs, and autonomous bodies is mandatory for goods or services available therein, as per Rule 149 of GFR, 2017.

3. Supplier registration: Products and services are listed on GeM by various suppliers, as on other e-commerce portals. Supplier registration on geM is online and automatic, based on:

4. Demand aggregation: The best prices for a user can be available if the same requirements and demands of various organisations are aggregated. This Acts as an incentive for the supplier to quote their best price. For the same products, the demand of various Government departments can be clubbed together, and Reverse Auction can be done based on aggregate demand, which will provide the best prices to the Government.

5. The GeM monetary thresholds — Rule 149 of GFR, 2017:

D) the invitation for the online e-bidding/ Reverse Auction will be available to all the existing sellers or other sellers registered on the portal who have offered their goods/ services under the particular product/ service category, as per the terms and conditions of GeM.

E) the above-mentioned monetary ceiling is applicable ONLY for purchases made through GeM. For purchases, if any, outside GeM, relevant GFR Rules shall apply.

F) the ministries/ departments shall work out their procurement requirements of goods and services on either "opex" model or "capex" model as per their requirement/ suitability at the time of preparation of budget estimates (be), and shall project their annual procurement plan of goods and services on GeM portal within 30 (thirty) days of budget approval.

g) it is the responsibility of the Procuring Entity to do due diligence to ensure the reasonableness of rates. The government buyers may ascertain the reasonableness of prices before placing an order using the BUSINESS ANALYTICS (ba) tools available on geM — including the last purchase price on geM, the department's own last purchase price, etc.

H) demand for goods shall not be divided into small quantities to make piecemeal purchases, to avoid procurement through L-1 buying/ bidding/ Reverse Auction on GeM, or the necessity of obtaining the sanction of higher authorities required with reference to the estimated value of the total demand."

6. GeM Portal: https://gem.gov.in — Detailed instructions for user organisation registration, supplier registration, listing of products, terms and conditions, online bidding, Reverse Auction, demand aggregation, call centre, etc., are available on this portal.

7. Uploading of non-availability report — gemar&pts: It is mandatory for a buyer to generate a "GeM availability report and past transaction summary" (gemar&pts) with a unique id on the GeM portal using his login credentials, for procurement outside GeM (for example, for procurement through the Central Public Procurement Portal)(Notified vide OM No. F.6.18.2019-PPD dated 11th June 2021).

The past transaction summary will be provided, where available.

"Gemar&pts" shall be a pre-requisite for arriving at a decision by the Competent Authority for procurement of required goods and services by floating a bid outside GeM, and its unique id would be required to be furnished on the publishing portal along with the tender proposed to be published.

8. Interaction with Rules 154 and 155:

• Purchase of goods without quotation Can be resorted to for value up to Rs. 50,000/- only on each occasion — without inviting quotations or bids — based on a certificate to be recorded by the Competent Authority, only when the required goods are not available on GeM.
• In case a certain item is not available on the GeM portal, purchase of goods costing above Rs. 50,000/- and up to Rs. 5,00,000/- on each occasion May be made on the recommendations of a duly constituted local Purchase Committee.

9. Buying outside GeM when the item is on GeM: Where an item is available on GeM, and the Ministry/ Department/ organisation wants to buy outside the GeM in view of any compelling circumstances, the approval of the standing committee of GeM (SCoGeM) And the Secretary concerned Shall be required (OM No. F.6/15/2018-PPD dated 05.02.2020).

10. Receipt of Materials and Payment Procedures: Further details are given in Annexure 36 of the Goods Manual.

11. Push Button Procurement (PBP) on GeM(Notified vide OM No. F.6/7/2022-PPD dated 06.09.2022):

a) The rationale: As per Rule 144(vii) and Rule 149 of GFR, 2017, the procuring entity should satisfy itself that the price of the selected offer is reasonable. SOMETIMES — ESPECIALLY INFREQUENTLY — Government buyers find it difficult to certify the reasonableness of rates. Such users normally do not possess the requisite skills to make procurement decisions. It delays the procurement process.

At the same time, for typically low-value procurements, efforts expended in assessing the reasonability of rates May be disproportionate. Additionally, with developments in technology and e-procurement becoming the norm, the availability of market activities and the capability to analyse them artificially have provided an opportunity to automate decision-making activities, such as the assessment of the reasonability of rates in such cases.

b) The seven conditions of PBP:

• I) PBP will be made only on GeM through bidding — PBP through direct purchase, L-1, custom-bid, etc., are not permitted.
• ii) the total procurement value of the specific case is permitted up to rupees five (5) lakh, inclusive of all taxes.
• iii) this will be an additional Method of procurement, and procuring entities are free to use or not to use this additional method.
• iv) this method can be used only if at least five bids Are received. In case fewer than five bids are received, the procurement is to restart using the usual procurement modes. However, buyers will have a choice to extend the PBP date once by three (3) days At the time of preparation of the tender document, in case of lesser participation.
• V) no splitting of requirements is to be done to bring procurement under this method.
• vi) once a bid is invited on GeM, the contract will be placed directly by GeM without any human intervention [provided condition (iv) above is complied with].
• vii) GeM will permit this method only for such categories where at least ten sources Are listed.

c) GeM has published a Manual on PBP for buyers on its website.

4.6.3Procurement through Centralised Agencies or other Organisations

Departments/ Organisations that have not built up their own capability for procurement May engage procurement agents — for individual procurement or as outsourcing of service — with the approval of the Competent Authority.

Many canalised agencies authorised by the Government, and some CPSEs, provide end-to-end procurement services — i.e., framing procurement documents, bidding process, evaluation, and contract management.

Possibilities of other ministries/ departments or their attached and subsidiary offices undertaking such procurement may also be explored.

Appendix to Chapter 4 — Part a: Points of Difference

end of Chapter 4 — part a

Part IIModes of Procurement

Merging: Goods Ch. 4 paras 4.1–4.13 · Works Ch. 3 paras 3.6–3.14 · Consultancy Ch. 4 para 4.3 · Non-Consultancy Ch. 4 para 4.4

The Most Important Caution in this Chapter

The Threshold Divergence Table — the Single Most Examinable Page in this Chapter

Concordance for Chapter 4 — Part B

4.7Modes of Procurement — the Taxonomy

1. The balance to be struck: Offers from prospective bidders in Public Procurement must be invited according to a procedure that achieves a balance between the need for the widest competition, on the one hand, and the complexity — GNC Add: Time, effort, and cost — of the procedure, on the other hand.

Different modes of procurement (W, C, NC add: and tendering systems) are used to suit various procurement circumstances to achieve this balance. Various modes of procurement vary the extent of competition (width and specificity of catchment area of bidders) to suit different procurement situations.

Mode of procurement addresses the 'right source' of the 5Rs.

2. Delegation:There are laid-down delegations of powers to approve different modes of procurement to various competent authorities as shown in DFPR(G Annexures 2 and 3 · W, C, NC Annexure 1). Each Procuring Entity May also publish its own Schedule of Procurement Powers (SoPP) delegating such powers within the entity(G Annexure 4 · W, C, NC Annexure 2).

4.7.1The Five (or Six) Families of Modes — Compared Across the Four Manuals

W additional footnote: *"Please also refer to RULE 139 of GFR 2017 regarding the thresholds for modes of procurement pertaining to Works."*

W descriptions of AVL and Framework Agreements:

• AVL: "Procurement is restricted to contractors who have been pre-approved and included on a long-term multi-use list based on their demonstrated ability to meet the required standards."
• Framework Agreements: "Also known as RATE CONTRACTS, are agreements with contractors to execute works at pre-agreed rates during a specified validity period."

4.8Open Tender Enquiry (OTE)

(Rule 161 of GFR 2017)

1. What it is: In Open Tender Enquiry (OTE) — also known as national competitive bidding (ncb), or simply advertised tender enquiry, but this Manual would stick to OTE — an attempt is made to attract the widest possible competition by publishing the NIT simultaneously on the designated websites.

This is the default mode of procurement and gives the best Value for Money, but the procedure is relatively complex and prolonged. The systemic cost of this procedure May be high enough to be unviable for smaller-value procurements.

2. When OTE procedures — through e-procurement or through traditional tendering — should be adopted:

a) Procurements exceeding the threshold of:

• [G, C, NC] — Rs. 50 lakh (Rupees Fifty Lakh);
• W — Rs. 10 lakh (Rupees Ten Lakh) in works procurement;

B) all requirements with clear technical specifications;

c)G For requirements that are ordinarily available in the open market, it is necessary to evaluate competitive offers to decide the most suitable and economical option available;

W For requirements that can ordinarily be fulfilled by the players available in the open market, it is necessary to evaluate competitive offers to decide the most suitable and economical option available;

d) G When requirements are not available from known sources, or sources are presently limited and need to be made broad-based. In such situations, even for procurements below Rs. 50 lakh, the OTE mode May be used if warranted.

W When the requirement cannot be fulfilled from known contractors, or contractors are presently limited and the requirement is to be made broad-based. In such situations, even for procurements below Rs. 10 lakh, the OTE mode May be used if warranted.

4.8.1Terms and Conditions

1. No restriction on participation:

• G There should be no restriction on participation by prospective bidders who meet the eligibility criteria. Especially, prior registration with the Procuring Entity should not be insisted upon. However, bidders who are already registered are also free to participate.
• W Participation should not be restricted to only bidders enlisted with the Procuring Entity. Bidders already enlisted are also free to participate. However, a requirement that successful un-enlisted bidders May have to get enlisted with the Procuring Entity before the contract is placed on them May be mentioned in the tender document.

2. Advertisement:

• G Advertisements in such cases should be given on the GOVERNMENT e-MARKETPLACE (GeM) as well as ON GeM-Central Public Procurement Portal (CPPP) at www.eprocure.gov.in.
• W Advertisements in such cases should be given on the GeM-Central Public Procurement Portal (GeM-CPPP) at www.eprocure.gov.in. (no separate GeM mention)

an organisation that has its own website should also publish all its advertised tender enquiries on the website. The Procuring Entity should also post the complete tender document on its website and gem-cppp to enable prospective bidders to make use of the document by downloading it. The advertisements for the tender invitations should give the complete web address from which the tender documents can be downloaded.

While it is no longer mandatory to issue advertisements in newspapers, there is no bar to issuing such advertisements if the procuring entities consider them necessary.

To promote wider participation and ease of bidding, no cost of tender documents May be charged for the tender documents downloaded by the bidders.

3. Free availability: The sale/ availability for downloading of tender documents against NIT should not be restricted and should be available freely. Tender documents should preferably be sold/ made available for download up to the date of tender opening (W: "up to the tender closing date and time").

4. Model Tender Document: The tender documents should be prepared based on the relevant approved Model Tender Document (MTD) for the procurement category.(Further details on preparing tender documents are provided in G Chapter 5 · W Chapter 4.)

5. Records in off-line tenders: The Procuring Entity shall maintain proper records about the number of tender documents sold, the list of parties to whom sold, details of the amount received through sale, and the number of unsold tender documents — which are to be cancelled after the opening of the tenders.

6. Currency: In domestic tenders, bids can be submitted only in INR, and any bid in foreign currency should be summarily rejected. Foreign bidders can also participate if they submit a bid in INR. However, purchase preference for local content as per the PPP-MII shall apply.

7. Consortium bidding in domestic open tenders: In the case of a domestic open tender for projects (including turnkey projects) allowing consortium bidding, a foreign bidder can be a consortium member — subject to the condition that the consortium as a whole Meets the minimum local content criteria, as per the Make in India order, 2017.

The leader of the consortium can be a foreign party, and the bids are to be solicited in Indian rupee only — i.e., no payment can be made in foreign currency to the foreign consortium member.

4.8.2OTE — Risks and Mitigations

4.9Global Tender Enquiry (GTE)

(Rule 161 of GFR 2017)

1. What it is: GTE — also known as international competitive bidding (icb), but this Manual would stick to GTE — is like OTE, but through appropriate advertising and provision for payment in foreign currencies through Letter of Credit, it is aimed at inviting the participation of inter alia Foreign firms.

Bids in foreign currency in any other mode of procurement shall be summarily rejected.

Subject to restriction on GTE (Para 4.9.2 below), GTE can ALSO Be in SLTE, LTE or STE mode if justified with proper approvals as per SoPP.

The point of balance between VfM and the cost/ complexity of the procedure is further aggravated as compared to OTE. The development of local industry also needs to be kept in mind.

2. Hence, GTE may be viable only in the following situations:

4.9.1Terms and ConditionsGreproduced in abridged form in W

4.9.2Restrictions on Global Tenders up to Rs. 200 Crore

1. The bar: No Global Tender Enquiry (GTE) shall be invited up to Rs. 200 crore, or any limit as May be prescribed by the Department of Expenditure from time to time.

2. The relaxation route: In exceptional cases where the Ministry or Department feels that there are special reasons for inviting GTE for tenders below such limit — including those in SLTE/ LTE mode or on a single tender basis — it May record its detailed justification and seek prior approval for relaxation From the Competent Authority specified by the Department of Expenditure.

a) The GTE Portal: The agencies/ subordinate offices under the administrative control of a Ministry/ Department that require to float a GTE for procurement of certain products/ items/ services shall submit their applications and comments online Through the GTE portal under the e-samiksha platform via https://esamiksha.gov.in/GTE_NFEProposalForm.aspx OR https://cabsec.gov.in/more/globaltenderenquiryproposal/ — starting from 5TH May 2022. No physical application will be received.

b) 'GTE portal', a user-friendly IT application under the e-Samiksha platform, was developed by the cabinet secretariat (ID No. 213/2/1/2021-C.A.IV dated 02.05.2022). For more details, refer to GTE Guidelines on the eSamiksha portal.

3. The two mandatory pre-conditions before sending a GTE proposal:

A) a domestic open tender MUST Be floated first to identify the domestic manufacturers/ service providers for the items/ services for which approval is being sought for issuance of Global Tenders.

The proposal must contain the details of domestic open tenders issued after 15.05.2020, covering:

B) the proposal must contain details of deliberations with DPIIT/ relevant industrial bodies regarding the identification of domestic manufacturers/ service providers.

4. The eight exemptions from the Rs. 200 crore restriction:

a) specialised research equipment: For procurement of specialised equipment required for research purposes, and spares and consumables for such equipment, for the use of educational and research institutes — the Secretary of the Ministry/ Department concerned shall be the Competent Authority to approve the issue of GTEs, subject to fulfilment of conditions in sub-para 5 below. The equipment should be of a specialised nature and required for research purposes, not the routine equipment used in offices. (OM No. 4/1/2021-PPD dated 11.06.2021)

b) ICT items: Gtes for procurement of ICT items, software and hardware such as blade servers, SAN storage, LAN switches, mobile testing devices, cloud orchestration & system software, network & web apts, mobile testing tools, integrated backup system (ibs), etc. Can be issued with the approval of the Secretary concerned, instead of Secretary (coordination), until further orders. (OM No. F.4/1/2022-PPD dated 29.08.2022)

c) nomination-basis procurements(as no competitive tenders are invited), inter alia including:

• I) procurement of spare parts of the equipment/ plants & machinery, etc., on a nomination basis from original equipment manufacturers (OEMs) or original equipment suppliers (OES) or original part manufacturers (opms). (For this purpose, 'Spares' shall be taken to include CONSUMABLES for such equipment.)(OM No. 12/17/2019-PPD dated 29.10.2020)
• ii) procurement of services like Annual Maintenance Contract (AMC) and auxiliary/ add-on components for existing equipment/ plant & machinery, etc., which are procured from OEM/ OES/ OPM on a nomination basis. (OM No. F.4/1/2021-PPD dated 01.09.2021)

d) PRE-15.05.2020 contractual commitments: Where procuring entities need to issue GTEs to fulfil contractual commitments/ obligations entered by them before 15.05.2020 — i.e., a bid has been submitted by them to their clients before 15.05.2020. Similarly, where procuring entities need to issue GTEs in view of existing collaboration agreements they entered with foreign suppliers before 15.05.2020. (OM No. 4/1/2021-PPD dated 12.03.2021)

e) medical devices and drugs: Based on the reference received from the Ministry of Health & Family Welfare (MoH&fw), GTE can be floated for 354 medical devices AND 120 DRUGS (placed in Annexure 31 of the Goods Manual). These exemptions for medical devices and drugs are provided UP TO 31.03.2027 Till further orders. It is further clarified that:

• I) the machine system includes spare parts and accessories, which May be procured by procuring entities together or separately.
• ii) the Procuring Entity concerned May frame the detailed technical specifications for the above devices as per their requirement. (OM No. 4/1/2023-PPD(pt.) dated 28.06.2024 for devices; OM No. F.4/1/2023-PPD(pt) dated 07.06.2024 for drugs)

f) mdb/ bfa-funded projects: Projects funded by multilateral development banks (MDBs like The World Bank, Asian Development Bank, etc.)/ bilateral funding agencies (BFAs), where the procurement is governed by the conditions negotiated in the loan agreement, and where the project executing agencies from time to time further award works to various Autonomous Bodies/ CPSEs etc. — the Secretary of the Ministry/ Department responsible for execution of such project shall be the Competent Authority for approval for issuance of GTEs by such autonomous bodies/ CPSEs. (OM No. F.7/12/2021-PPD-I dated 27.07.2021)

g) semiconductor equipment: Procurement of SEMI-CONDUCTOR EQUIPMENT for the purpose of MANUFACTURING ELECTRONICS, and procurements by public-funded semiconductor and display fab facilities (including such facilities in institutes of high learning) — UP TO 31.03.2025. (OM No. F.4/1/2022-PPD-II dated 01.04.2022 and OM No. F.4/1/2023-PPD dated 23.03.2023)

h) procurement abroad for use abroad: GTE restriction up to Rs. 200 crore is not applicable for bona-fide procurements done outside India for use outside India, by CPSEs having international operations or by Indian missions abroad. Such entities should ensure that the bulk of procurement is done in India (and exported for their use abroad), as far as feasible — so as not only to promote Make in India but also to improve export performance.

5. The seven conditions attached to exemption 4(a) — Educational and Research Institutions

Educational, Research institutions, and other units will make full efforts towards reducing imports in the following manner. This will result in substantial effects both within the institutions and through impact on the eco-system:

1. Efforts should be made to promote technology transfer through agreements, or to encourage technological collaboration with foreign manufacturing in India with the start-ups set up in research parks.
2. Sharing and updating information about the availability of research equipment across various Indian institutes on a single portal — the I-STEM portal has been developed for this purpose — so that the needy institutes can utilise those.
3. Without compromising quality, institutes should indicate alternative/ equivalent technical specifications that could suit their requirement, so that there are more chances for local manufacturers to participate in the tender process.
4. Regular interaction between academia and Indian industry organisations at the level of the institution about the requirement of equipment of foreign origin and for encouraging domestic manufacturing.
5. Regular requirements of proprietary/ non-proprietary research consumables May be assessed, and domestic alternatives May be explored for use.
6. The office of psa initiates a national-level programme for indigenous development of scientific equipment.
7. Without compromising quality, institutes should be flexible with specifications so that domestic manufacturers are encouraged to meet requirements.

6. Guidelines for resorting to GTE (research institutions): a) market assessment should be done by the concerned institution, as certified by the head of the institution. Only after no Indian manufacturer is found Should a GTE be issued. B) in case no Indian manufacturer/ suppliers are found, procurement May be done through GTE, subject to compliance with provisions of GFR and the requirement of procurement through GeM. C) dean (r&d) or an appropriate authority within the institute will issue certificates as per sub-para 7 below before inviting GTE. As a reporting matter in the board of governors, such certificates should be tabled and shared with the office of the psa, DPIIT, and the concerned administrative Ministry. d) The information about the procurement of equipment should be shared across various educational and research institutes through the i-stem portal. This will allow the equipment to be used by other institutions for research purposes too. e) analyse the equipment being procured time and again from abroad and help develop them in India by identifying potential manufacturers and providing them with technical assistance and expertise. This programme will be coordinated by the empowered technology group (constituted by Cabinet and chaired by the principal scientific adviser — psa). Half-yearly reports on this action are to be shared by the institutes with the office of the psa, DPIIT, and concerned administrative Ministry. f) preference for local suppliers over foreign suppliers, as per the existing Government of India guidelines, should be observed as applicable.

7. The three certificates to be issued: A) certification that locally available alternatives with equivalent specifications are not suitable for research purposes. B) the non-availability of such equipment for research purposes with nearby research institutes or within the institute. C) certification of the requirement of proprietary items of foreign origin for research purposes (where applicable).

4.9.3GTE — Risks and Mitigations

4.10Rate Contract (RC)/ Framework Agreement (FA)Gtext; W/C/NC list it as a separate family and cross-refer