General Financial Rules 2017

KUMAR SUMEET TIWARY

Assistant Audit Officer
O/o PAG (AUDIT), DELHI
• General Financial Rules (GFRs) are a compilation of rules and orders of
Government of India to be followed while dealing with matters involving
public finances.
• These rules and orders are treated as executive instructions to be
observed by all Departments and Organizations under the Government
and specified Bodies.
• General Financial Rules were issued for the first time in 1947.
• These have subsequently been modified and issued as GFRs 1963 and
GFRs 2005.
• GFR 2017 is issued by Department of Expenditure, Ministry of Finance.
• Rules are applicable to all Central Government Ministries/Departments,
attached and subordinate bodies.
• The provisions contained in GFRs are deemed to be applicable to
Autonomous Bodies.
• Appropriation means the assignment, to meet specified expenditure, of
funds included in a primary unit of appropriation.
• Consolidated Fund of India – Article 266(1).
• Contingency Fund of India established under the Contingency Fund of
India Act, 1950, in terms of Article 267 (1) of the Constitution.
• Public Account means the Public Account of India referred to in Article
266 (2) of the Constitution
• Government Account means the account relating to the Consolidated Fund, the
Contingency Fund and the Public Account
• Head of the Department means an authority or person (not below the rank of a Deputy
Secretary to the Government of India)
• Re-appropriation means the transfer of funds from one primary unit of appropriation to
another such unit
• Recurring expenditure means the expenditure which is incurred at periodical intervals
for the same purpose. Expenditures other than recurring expenditure are non-recurring
expenditure
• “Drawing and Disbursing Officer” means a Head of Office and also any other Gazetted
Officer so designated by a Department of the Central Government, a Head of
Department or an Administrator, to draw bills and make payments on behalf of the
Central Government.
• Where a doubt arises as to the interpretation of any of the provisions of these
Rules, the matter shall be referred to the Ministry of Finance for decision.
• Under Article 284 of the Constitution all moneys received by or deposited with
any officer employed in connection with the affairs of the Union in his capacity
as such, other than revenues or public moneys raised or received by
Government, shall be paid into the Public Account.
• The Head of Account to which such moneys shall be credited and the
withdrawal of moneys therefrom shall be governed by the relevant provisions
of Government Accounting Rules 1990 and the Central Government Account
(Receipts and Payments) Rules, 1983 or such other general or special orders
as may be issued in this behalf.
• It is the duty of the Department of the Central Government concerned to
ensure that the receipts and dues of the Government are correctly and
promptly assessed, collected and duly credited to the Consolidated Fund or
Public Account
• In Departments in which officers are required to receive moneys on behalf of
Government and issue receipts in Form GAR-6.
• Amounts due to Government shall not be left outstanding without sufficient
reasons. Where such amounts appear to be irrecoverable, the orders of the
competent authority shall be obtained for their adjustment.
• Standards of financial propriety. Every officer incurring or authorizing
expenditure from public moneys should be guided by high standards of
financial propriety.
• The financial powers of the Government, which have not been delegated to a
subordinate authority, shall vest in the Finance Ministry.
• All financial sanctions and orders issued by a competent authority shall be
communicated to the Audit Officer and the Accounts Officer.
• A sanction for any fresh charge shall, unless it is specifically renewed, lapse if
no payment in whole or in part has been made during a period of twelve
months from the date of issue of such sanction.
• Report of Losses. Any loss or shortage of public moneys, departmental revenue or
receipts, stamps, opium, stores or other property held by, or on behalf of,
Government irrespective of the cause of loss and manner of detection, shall be
immediately reported by the subordinate authority concerned to the next higher
authority as well as to the Statutory Audit Officer and to the concerned Principal
Accounts Officer, even when such loss has been made good by the party
responsible for it.
• Petty losses of value not exceeding Rupees ten thousand need not be reported.
• Cases involving serious irregularities shall be brought to the notice of Financial
Adviser or Chief Accounting Authority of the Ministry or Department concerned
and the Controller General of Accounts, Ministry of Finance.
• In cases of loss to Government on account of culpability of Government servants,
the loss should be borne by the Central Government Department or State
Government concerned with the transaction.
• All cases involving loss of Government money arising from erroneous or irregular
issue of cheques or irregular accounting of receipts will be reported to the
Controller General of Accounts along with the circumstances leading to the loss, so
that he can take steps to remedy defects in rules or procedures, if any, connected
• All losses above the value of Rupees Fifty thousand due to suspected fire,
theft, fraud, etc., shall be invariably reported to the Police for investigation
as early as possible.
• All loss of immovable property exceeding Rupees fifty thousand , such as
buildings, communications, or other works, caused by fire, flood, cyclone,
earthquake or any other natural cause, shall be reported at once by the
subordinate authority concerned to Government through the usual channel.
• In accordance with the provisions of Article112 (1) of the Constitution, the
Finance Minister shall arrange to lay before both the Houses of Parliament,
an Annual Financial Statement also known as the ‘Budget’ showing the
estimated receipts and expenditure of the Central Government in respect of
a financial year, before the commencement of that year.
• With the merger of Railway Budget with the General Budget, the Demands
for Grants and the Statement of Budget Estimates of Railways shall also be
part of the General Budget with effect from 2017-18.
• The provisions for preparation, formulation and submission of budget to the
Parliament are contained in Articles 112 to 116 of the Constitution of India.
• The Ministry of Finance, Budget Division, shall issue guidelines for
preparation of budget estimates from time to time.
• Tax revenues, non-debt capital receipts including disinvestments and
borrowings are managed by the various Departments of the Ministry of
Finance.
• Non-tax revenues are collected through all Ministries/Departments and
other autonomous bodies.
• ‘User Charges’ is an important component of the non-tax revenues. Each
Ministry/Department may undertake an exercise to identify the ‘user
charges’ levied by it and publish the same on its website.
• The rates of user charges should be linked with appropriate price indices
and reviewed at least every three years.
• Dividends and profits including the transfer of surplus from Reserve Bank of
India is a major component of the non-tax revenues.
• Online collection of various non-tax revenues like fees and user charges are
collected through online non-tax receipt portal.
• Charged Expenditure – Article 112 (3)
• Voted Expenditure – Article 113 (2) (Vote of the Lok Sabha is required)
• The detailed estimates of expenditure shall be prepared by the estimating
authorities up to the final unit of appropriation (Object head) under the
prescribed Major and Minor Heads of Accounts for both Revenue and
Capital expenditure.
• The Revised and Budget Estimates of both Revenue and Capital expenditure
after being scrutinized by the Financial Advisers and approved by the
Secretary of the Administrative Ministry or Department concerned shall be
forwarded to the Budget Division in the Ministry of Finance.
• The estimates for expenditure for which vote of Lok Sabha is required shall
be in the form of Demand for Grants.
• The Demand for Grants shall be presented to Parliament at two levels.
• The main Demand for Grants shall be presented to Parliament by the
Ministry of Finance, Budget Division along with the Annual Financial
Statement while the Detailed Demands for Grants, for consideration by the
“Departmentally Related Standing Committee” (DRSC) of the Parliament,
are laid on the Table of the Lok Sabha by the concerned Ministries/
Departments.
• The form of the Annual Financial Statement and Demands for Grants shall
be laid down by the Finance Ministry.
• The Department of Expenditure in consultation with NITI Aayog and the
concerned Ministries shall prepare an Outcome Budget statement linking
outlays against each scheme/project with the outputs/deliverables and
medium term outcomes.
• Vote on Account – Article 116
• After the Appropriation Bill relating to Budget is passed, the Ministry of
Finance shall communicate the same to the Ministries /Departments which,
in turn, shall distribute the same to their subordinate formations.
• The Departments of the Central Government shall be responsible for the
control of expenditure against the sanctioned grants and appropriations
placed at their disposal.
• No expenditure shall be incurred which may have the effect of exceeding the
total grant or appropriation authorized by Parliament by law for a financial
year, except after obtaining a supplementary grant or appropriation or an
advance from the Contingency Fund.
• Voted and charged portions as also the revenue and capital sections of a
Grant/Appropriation are distinct and re-appropriation inter se is not
permissible.
• The Accounts Officer shall not allow any payment against sanctions in
excess of the Budget provisions unless there is specific approval of the Chief
Accounting Authority.
• Departments of the Central Government shall surrender to the Finance
Ministry, by the dates prescribed by that Ministry before the close of the
financial year, all the anticipated savings noticed in the Grants or
Appropriations controlled by them.
• The savings as well as provisions that cannot be profitably utilized shall be
surrendered to Government immediately they are foreseen without waiting
till the end of the year. No savings shall be held in reserve for possible
future excesses.
• Rush of expenditure, particularly in the closing months of the Financial year,
shall be regarded as a breach of financial propriety and shall be avoided.
• The Financial Advisers of the Ministries/Departments shall ensure
adherence to the stipulated Quarterly Expenditure Plan.
• No expenditure shall be incurred during a financial year on a “New Service”
not contemplated in the Annual Budget for the year except after obtaining a
supplementary grant or appropriation or an advance from the Contingency
Fund during that year
• re-appropriation of funds from one primary unit of appropriation to another
such unit within a grant or appropriation, may be sanctioned by a competent
authority at any time before the close of the financial year to which such
grant or appropriation relates.
• The Primary unit in this regard shall be the final unit of appropriation i.e. the
Object head of account.
• An application for re-appropriation of funds shall be supported by a
statement in Form GFR 1
• If savings are not available within the Grant or if the expenditure is on “New
Service” or “New Instrument of Service” not provided in the budget,
necessary Supplementary Grant as per Article 115(1) of the Constitution shall
be obtained before payment is authorized
• When a need arises to incur unforeseen expenditure in excess of the
sanctioned grant or appropriation or on a new service not provided in
Budget and there is not sufficient time for the voting of the
Supplementary Demand and the passing of the connected appropriation
bill before close of the financial year, an advance from the Contingency
Fund set up under Article 267(1) of the Constitution shall be obtained
before incurring the expenditure
• The procedure for obtaining an advance from the Contingency Fund and
recoupment of the Fund shall be as laid down in the Contingency Fund of
India Rules, 1952.
• The Secretary of a Ministry/Department who is the Chief Accounting
Authority of the Ministry/Department shall be responsible and
accountable for financial management of his Ministry or Department.
• Accounts of the Union Government shall be prepared every year showing the receipts and
disbursements for the year, surplus or deficit generated during the year and changes in
Government liabilities and assets.
• The accounts shall be prepared by Controller General of Accounts, certified by the
Comptroller and Auditor General of India and along with the report of the Comptroller and
Auditor General of India on these accounts, shall be submitted to the President of India,
preferably within six months of close of the Financial Year.
• The Controller General of Accounts in the Ministry of Finance (Department of Expenditure)
is responsible for prescribing the form of accounts of the Union and States.
• Accounts of the Union Government shall be prepared by CGA
• Accounts of the Union Government shall be certified by C&AG
• Accounts of the Union Government shall be submitted to the President of India, preferably
within 6 months of close of the Financial Year
• President hall cause Accounts of the Union Government to be laid before each House of
Parliament
• The Accounts of the Union Government shall be kept in such form as the President may, on
the advice of the Comptroller and Auditor General of India, prescribe as given in Article 150
• CGA is responsible for prescribing the form of accounts of the Union and States, and to
frame, or revise, rules and manuals relating thereto on behalf of the President of India on
the advice of the Comptroller and Auditor General of India
• Government accounts shall be prepared on cash basis.
• Government accounts shall be kept in three parts
• Contingency Fund of Union Territories are set up by the Government of India under Section
48 of Government of Union Territories Act, 1963.
• Transactions relating to debt (other than those included in Part-I), reserve funds, deposits,
advances, suspense, remittances and cash balances shall be recorded in Public Account
• the classification of transaction in Government Accounts shall have closer reference to
Function/Programme/Activity
• Classification of Government Accounts consists of 6 tiers
• The six tiers of Government Accounts are represented by a unique 15 digits’ numeric code.
• The List of Major and Minor Heads of Accounts of Union and States is
maintained by the Ministry of Finance (Department of Expenditure – Controller
General of Accounts)
• CGA is authorised to open a new head of account on the advice of the C&AG
under the Article 150 of the Constitution.
• Ministries/Departments may open Sub-Heads and Detailed Heads as required
by them in consultation with the Budget Division of the Ministry of Finance
• The Object Heads have been prescribed under Government of India’s Orders
below Rule 8 of Delegation of Financial Power Rules
• Object Head represent the primary unit of appropriation showing the
economic nature of expenditure such as salaries and wages, office expenses,
travel expenses
• The power to amend or modify these Object heads and to open new Object
Heads rest with Department of Expenditure of Ministry of Finance on the advice
of the Comptroller and Auditor General of India.
• RBI shall nominate a bank to function as Accredited Bank of a Ministry or
Department, in consultation with the CGA
• Public Financial Management System (PFMS) an integrated Financial Management
System of CGA shall be used for sanction preparation, bill processing, payment,
receipt management, Direct Benefit Transfer, fund flow management and financial
reporting. (ii) All the payment, to the extent possible, shall be released ‘just-in-
time’ by the Ministries through PFMS. (iii) Detailed Demand for Grants (DDG), as
approved, must be uploaded on PFMS by the end of the financial year. (iv) All the
re-appropriation orders, surrender order shall be generated through PFMS
system.
• Transaction charges for the financial intermediaries facilitating DBT payments shall
be paid as stipulated by Ministry of Finance
• Appropriation Accounts of Central Ministries/Departments other than Ministry of
Railways, Defence and Posts shall be prepared by the Principal Accounts Officer
• Appropriation Accounts of Central Ministries/Departments shall be prepared
under the guidance of CGA
• CAA signs the Appropriation Accounts of Central Ministries/Departments
• Union Government Appropriation Accounts (Civil) that required to be
submitted to Parliament, shall be prepared by CGA
• The budget statement linking outlays against each scheme/project with the
outputs/deliverables and medium term outcomes is known as Outcome
Budget
• Union Government Appropriation Accounts (Civil) which is required to be
submitted to Parliament, shall be prepared by CGA
• Appropriation Accounts pertaining to Departments of Posts and Defence
Services shall be prepared and signed by the Secretaries to the Government of
India in the Department of Posts and Ministry of Defence respectively and that
of Ministry of Railways by the Chairman, Railway Board
• Accounts showing under the respective Heads the annual receipts and
disbursements and statement of balances for the purpose of the Union, are
called Finance Accounts
• Finance accounts of the Government of India (including transactions of Department
of Posts and Ministries of Defence and Railways and transactions under Public
Account of India of Union Territory Governments) shall be prepared and signed by
the CGA
• Finance accounts of the Government of India is countersigned by the Secretary
(Expenditure), Ministry of Finance
• The certified Annual Accounts and the Reports relating to the accounts shall be
submitted by the Comptroller and Auditor General of India to the President in
accordance with the provisions of Section 11 of DPC Act, 1971 & Article 151 of
Constitution
• Subsidiary Accounts of Government Departments undertaking commercial
activities. Where the operations of certain Government Departments working on a
commercial or quasi-commercial basis e.g., an industrial factory or a store cannot
be suitably brought within the cash based Government accounting system, the
Head of the units shall be required to maintain such subsidiary proforma accounts
in commercial form as may be agreed between Government and Comptroller and
Auditor General of India.
• The Reserve Bank of India (RBI) shall be the banker to the Government.
• RBI shall maintain cash balance of the Government
• RBI shall, in consultation with the Controller General of Accounts,
nominate a bank to function as Accredited Bank of a Ministry
• Tax revenues of the Government shall be collected by the RBI through its
own offices or through the nominated branches of its agent banks
• Proforma Accounts is suitable for Government Departments working on a
commercial or quasi-commercial basis. This includes the maintenance of
suitable Manufacturing, Trading, Profit & Loss Accounts and Balance Sheet.
• Proforma accounts of regular Government Workshops and Factories shall
be kept in accordance with the detailed rules and procedure prescribed in
the Departmental regulations.
• Personal Deposit Account is a device intended to facilitate the Designated
Officer thereof to credit receipts into and effect withdrawals directly from
the account
• The Personal Deposit Account shall be authorised to be opened by a
special order by the concerned Ministry or Department in consultation
with the Controller General of Accounts
• Every personal deposit account so authorised to be opened, shall form
part of the Government Account and be located in the PUBLIC ACCOUNT
• The provisions relating to “Personal Deposit Account” are contained in
Civil Accounts Manual and R&P 1983
• In relation to Civil and Criminal Courts’ deposits, Personal Deposit Account
to be opened in favour of the Chief Judicial Authority concerned
• Significant expenditure incurred with the object of acquiring tangible assets
of a permanent nature or enhancing the utility of existing assets, shall
broadly be defined as Capital expenditure.
• Charges on maintenance, repair, upkeep and working expenses, which are
required to maintain the assets in a running order as also all other expenses
incurred for the day to day running of the organisation, including
establishment and administrative expenses, shall be classified as Revenue
expenditure
• Expenditure on a temporary asset or on grants-in-aid cannot ordinarily be
considered as a capital expenditure.
• Capital expenditure is generally met from receipts of capital nature, as
distinguished from ordinary revenues derived from taxes, duties, fees, fines
and similar items of current income including extraordinary receipts.
• Charges for re- placement of all wastage or depreciation of property originally
provided out of capital grants shall be classified as Revenue Expenditure
• The cost of genuine improvements, which enhance the useful life of the asset
whether determined by prescribed rules or formulae, or under special orders of
Government, may be debited to Capital Expenditure
• It is open to the Government to meet capital expenditure from ordinary revenues,
provided there are sufficient revenue resources to cover this liability
• The allocation between capital and revenue expenditure on a Capital Scheme for
which separate Capital and Revenue Accounts are to be kept, shall be determined in
accordance with such general or special orders as may be prescribed by the
Government after consultation with the CAG
• Capital receipts during construction mainly to be utilised in reduction of capital
expenditure
• Capital shall bear all charges for the first construction and equipment of a project as
well as charges for intermediate maintenance of the work while not yet opened for
service
• Adjustments with State Government in respect of Pay and Allowances, other
than Leave Salaries, Leave Salaries, Pensionshall be regulated by the rules
contained in Appendix-5 to the Government Accounting Rules, 1990
• As a convention, the period accepted by Central and State Governments for
the re-audit of past transactions involving errors in classification shall be 3
years
• The Central Government (which includes Union Territories) and the State
Governments have agreed under reciprocal arrangements not to prefer petty
and isolated claims for an amount not exceeding 10000/-
• The date up-to which Inter-Governmental adjustments can be carried out as
the books of RBI for the month of March are closed on this very date is 15th
April
• For purposes of inter-Departmental payments, the Departments of
Government shall be divided into Service departments and Commercial
departments
• Service Departments are those departments which are constituted for the
discharge of those functions which either are inseparable from and form
part of the idea of Government e.g. Departments of Administration of
Justice, Jails, Police, Education, Medical, Public Health, Forest, Defence.
• A Service Department shall not charge other Departments for services
rendered or supplies made which falls within the class of duties for which
the former Department is constituted
• A commercial Department shall ordinarily charge and be charged for any
supplies made and services rendered to, or by, other departments of
Government.
• The settlement of inter-departmental adjustments shall be regulated by the
directions contained in Chapter 4 of GAR,1990.
• All claims shall ordinarily be preferred between Departments, both
commercial and non-commercial of the Central Government, within the
same financial year and not beyond 3 years from the date of transaction.
• An authority competent to incur expenditure may sanction the purchase of
goods required for use in public service in accordance with provisions given
in the Delegation of Financial Powers Rules
• The term ‘goods’ used in this chapter includes all articles, material,
commodity, livestock, furniture, fixtures, raw material, spares, instruments,
machinery, equipment, industrial plant, vehicles, aircraft, ships, medicines,
railway rolling stock, assemblies, subassemblies, accessories.
• Goods also include intangible products like software, technology transfer,
licenses, patents or other intellectual properties
• Goods excludes books, publications, periodicals, etc. for a library
• CENTRAL PURCHASE ORGANISATION – GeM as per GFR
• GoI has established the Government e- Marketplace (GeM). The GeM
portal shall be utilized by the Government buyers for direct on-line
purchases.
• GeM stands for Government e-Market Place (Ministry of Commerce)
• All Ministries/Departments shall prepare Annual Procurement Plan before
the commencement of the year and the same should also be placed on
their website
• The Ministries or Departments have been delegated full powers to make
their own arrangements for procurement of goods and services that are
not available on GeM. Common use goods and Services available on GeM
are required to be procured mandatorily through GeM as per Rule 149.
• The Procurement of Goods and Services by Ministries or Departments
will be mandatory for Goods or Services available on GeM.
• The credentials of suppliers on GeM shall be certified by GeM SPV.
• The GeM portal shall be utilized by the Government buyers for direct on-
line purchases as under :-
(i) Up to Rs.25,000/- through any of the available suppliers on the GeM
(ii) Above Rs.25,000/- and up to Rs.5,00,000/- through the GeM Seller
having lowest price amongst the available sellers, of at least three different
manufacturers
(iii) Above Rs.5,00,000/- through the supplier having lowest price meeting
the requisite quality, specification and delivery period after mandatorily
obtaining bids, using online bidding
• The Ministries/Departments shall work out their procurement requirements
of and shall project their Annual Procurement Plan of goods services on
GeM portal within 30 days of Budget approval.
• Registered suppliers are prima facie eligible for consideration for
procurement of goods through Limited Tender Enquiry. They are also
ordinarily exempted from furnishing bid security along with their bids.
• The supplier(s) will be registered for a fixed period (between 1 to 3 years)
depending on the nature of the goods.
• Purchase of goods upto the value of Rs.25,000 (Rupees twenty five
thousand) only on each occasion may be made without inviting quotations
or bids on the basis of a certificate to be recorded by the competent
authority
• In case a certain item is not available on the GeM portal, Purchase of goods
costing above Rs. 25,000 (Rupees twenty five thousand only) and upto
Rs.2,50,000/- (Rupees two lakh and fifty thousand only) on each occasion
may be made on the recommendations of a duly constituted Local Purchase
Committee consisting of three members.
• If a procuring entity determines that the bidder has breached the code of
integrity it may debar a bidder or any of its successors from participating in
any procurement process undertaken by it for a period not exceeding two
years
• It is mandatory for all Ministries/Departments of the Central Government,
their attached and Subordinate Offices and Autonomous /Statutory Bodies to
publish their tender enquiries, corrigenda thereon and details of bid awards
on the Central Public Procurement Portal (CPPP).
• It is mandatory for Ministries/ Departments to receive all bids through e-
procurement portals in respect of all procurements
• Advertised Tender Enquiry should be resorted for procurement of goods of
estimated value of Rupees 25 lakh and above
• CPPP Stands for Central Public Procurement Portal
• date of publication of the tender notice or availability of the bidding document
for sale, whichever is later the minimum time to be allowed for submission of
bids should be 3 weeks
• Where the bids from abroad are also to be obtained, the minimum period
should be kept as 4 weeks for both domestic and foreign bidders
• Limited Tender Enquiry may be adopted when estimated value of the goods to
be procured is up to Rupees 25 lakh
• Copies of the bidding document should be sent directly by speed
post/registered post/courier/ email to firms which are borne on the list of
registered suppliers for the goods in question under Limited Tender Enquiry
• Two bid system (simultaneous receipt of separate technical and financial bids)
• For purchasing high value plant, machinery etc. of a complex and technical
nature, bids may be obtained in two parts- Technical bid and Financial bid.
• Technical bid consisting of all technical details along with commercial terms
and conditions
• Financial bid indicating item-wise price for the items mentioned in the
technical bid.
• Two-Stage Bidding (Obtain bids in two stages with receipt of financial bids
after receipt and evaluation of technical bids)
• Late Bids. In the case of advertised tender enquiry or limited tender enquiry,
late bids (i.e. bids received after the specified date and time for receipt of
bids) should not be considered.
• Single Tender Enquiry. Procurement from a single source
• Proprietary Article Certificate is applicable in Single Tender Enquiry
• Electronic Reverse Auction :An online real-time purchasing technique
utilised by the procuring entity to select the successful bid, which involves
presentation by bidders of successively more favourable bids during a
scheduled period of time and automatic evaluation of bids
 •To safeguard against a bidder’s withdrawing or altering its bid during the
bid validity period in the case of advertised or limited tender enquiry, Bid
Security is obtained
•Bid Security is also called Earnest Money
•Amount of bid security should ordinarily range between 2 to 5% of the
estimated value of the goods to be procured
• Bid Security may be exempted for Micro and Small Enterprises (MSEs),
Suppliers registered with the Central Purchase Organisation and Start-ups
as recognised by Department of Industrial Policy and Promotion (DIPP)
• The bid security is normally to remain valid for a period of 45 days
beyond the final bid validity period
• Bid securities of the unsuccessful bidders should be returned to them at
the earliest after expiry of the final bid validity and latest on or before the
30th day after the award of the contract.
• To ensure due performance of the contract, Performance Security is to be
obtained from the successful bidder awarded the contract
• Performance Security should be for an amount of (of the value of the
contract as specified in the bid documents) 5 to 10%
• Performance Security should remain valid for a period of sixty days beyond
the date of completion of all contractual obligations
• Bid security should be refunded to the successful bidder on receipt of
Performance Security
• Ordinarily, payments for services rendered or supplies made should be
released only after the services have been rendered or supplies made
• dvance payments for procurement of goods and services may be made in
cases advance payment demanded by firms holding maintenance contracts
for servicing of Air- conditioners, computers, other costly equipment
• In case of advance to private firms, advance payment should not exceed 30% of
the contract value
• In case of advance to a State or Central Government agency or a Public Sector
Undertaking, it should not exceed 40% of the contract value
• In case of maintenance contract, the amount of advance should not exceed the
amount payable for 6 month sunder the contract
• Ministries or Departments of the Central Government may relax the ceilings
(including percentage laid down for advance payment for private firms) in
consultation with their Financial Advisers
• PROCUREMENT OF SERVICES:-
• A. CONSULTING SERVICES
• B. OUTSOURCING OF SERVICES
• "Consulting Service" means any subject matter of procurement (which as
distinguished from ‘Non- Consultancy Services’ involves primarily non-physical
project-specific, intellectual and procedural processes where outcomes/
deliverables would vary from one consultant to another
• These Services typically involve providing expert or strategic advice e.g.,
management consultants, policy consultants, communications
consultants, Advisory and project related Consulting Services which
include, feasibility studies, project management, engineering services,
finance, accounting and taxation services, training and development
• Where the estimated cost of the consulting service is up to Rupees
twenty-five lakhs, preparation of a long list of potential consultants may
be done on the basis of formal or informal enquiries from other Ministries
or Departments or Organisations involved in similar activities, Chambers
of Commerce & Industry
• Where the estimated cost of the consulting services is above Rupees
twenty-five lakhs, an enquiry for seeking ‘Expression of Interest’ from
consultants should be published on Central Public Procurement Portal
(CPPP) at [Link] and on GeM
• Request for Proposal (RFP). RFP is the document to be used by the
Ministry/Department for obtaining offers from the consultants for the
required service.
• Engagement of consultants may be resorted to in situations requiring high
quality services for which the concerned Ministry/ Department does not
have requisite expertise. Approval of the competent authority should be
obtained before engaging consultant(s)
• Methods of Selection/ Evaluation of Consultancy Proposals
• Quality and Cost Based Selection (QCBS):QCBS may be used for Procurement of
consultancy services, where quality of consultancy is of prime concern.
• Least Cost System (LCS). LCS is appropriate for assignments of a standard or routine
nature (such as audits and engineering design of non-complex works) where well
established methodologies, practices and standards exist.
• Single Source Selection/Consultancy by nomination. The selection by
direct negotiation/nomination, on the lines of Single Tender mode of
procurement of goods, is considered appropriate only under exceptional
circumstance
• "Non-Consulting Service" means any subject matter of procurement
(which as distinguished from ‘Consultancy Services’), involve physical,
measurable deliverables/ outcomes, where performance standards can be
clearly identified and consistently applied, other than goods or works.
includes maintenance, hiring of vehicle, outsourcing of building facilities
management, security, photocopier service, janitor, office errand services,
drilling, aerial photography
• Identification of likely contractors. The Ministry or Department should
prepare a list of likely and potential contractors on the basis of formal or
informal enquiries from other Ministries or Departments and Organisations
involved in similar activities, scrutiny of ‘Yellow pages’, and trade journals,.
• For estimated value of the non consulting service up to Rupees ten lakhs
or less: The Ministry or Department should scrutinise the preliminary list
of likely contractors, decide the prima facie Eligible and capable
contractors and issue limited tender enquiry to them asking for their
offers by a specified date and time etc. as per standard practice.
• The number of the contractors so identified for issuing limited tender
enquiry should be more than three
• For estimated value of the non consulting service above Rs.10 lakhs: The
Ministry or Department should issue advertisement in such case should
be given on Central Public Procurement Portal (CPPP) at
[Link] and on GeM.
INVENTORY MANAGEMENT
• The officer-in-charge of stores should certify that he has actually
received the material and recorded it in the appropriate stock registers
• Fixed Assets such as plant, machinery, equipment, furniture, fixtures etc.
in the Form GFR-22.
• Consumables such as office s t a t i o n e r y, c h e m i c a l s , maintenance
spare parts etc. in the Form GFR-23
• Library books in the Form GFR 18
• Assets of historical/artistic value held by museum/government
departments in the Form GFR-24
• Calculation of the charges to be recovered from the local bodies,
contractors and others for hiring out the fixed assets should be based on
the Historical cost.
• Fixed assets should be verified at least once in a year
• A physical verification of all the consumable goods and materials should
be undertaken at least once in a year
• A material shall generally be considered surplus if it remains in stock for
over a year unless adequate reasons to treat it otherwise exist
• Complete physical verification of books should be done every year in case
of libraries having not more than 20000 volumes.
• For libraries having more than 20000 volumes and up to 50000 volumes,
such verification should be done at least once in three years.
• Sample physical verification at intervals of not more than three years
should be done in case of libraries having more than fifty thousand
volumes. In case such verification reveals unusual or unreasonable
shortages, complete verification shall be done.
• Loss of five volumes per 1000 volumes of books issued/consulted in a
year may be taken as reasonable provided such losses are not attributable
to dishonesty or negligence. However, loss of a book of a value exceeding
Rs. 1,000/- (Rupees One thousand only) and rare books irrespective of
value shall invariably be investigated and appropriate action taken.
• A report of stores for disposal shall be prepared in For GFR 10
• An item may be declared surplus or obsolete or unserviceable if the same
is of no use to the Ministry or Department. The reasons for declaring the
item surplus or obsolete or unserviceable should be recorded by the
authority competent
• Surplus or obsolete or unserviceable goods of assessed residual value
above Rupees Two Lakh should be disposed of by : (a) obtaining bids
through advertised tender or (b) public auction.
• If a bid is accepted during the process of auctioning the disposal, earnest
money should immediately be taken on the spot from the successful
bidder. The amount of the earnest money should be not less than 25% of
the bid value.
• If a Ministry or Department is unable to sell any surplus or obsolete or
unserviceable item in spite of its attempts through advertised tender or
auction, it may dispose of the same at its scrap value with the approval of
the competent authority in consultation with Finance division.
• A sale account should be prepared for goods disposed of in Form GFR 11
duly signed by the officer who supervised the sale or auction
• Powers to write off of losses are available under the Delegation of
Financial Powers Rules.