GFR 2017 Key Points

 General Financial Rules (2017)

Key points

1) “Consolidated Fund” means the Consolidated Fund of India referred to in Article 266 (1) of the Constitution

2) “Contingency Fund” means the Contingency Fund of India established under the Contingency Fund of India Act, 1950, in terms of Article 267 (1) of the Constitution

3) “Financial Year” means the year beginning on the 1st of April and ending on the 31st of March

4) CAPEX model: In the CAPEX Model, Capital expenditures is used by the buyer to straightway purchase goods followed by procurement of consumables, arranging comprehensive maintenance contract after warranty period and finally disposing the product after useful life;

5) OPEX model: In the OPEX model, the Seller provides the goods, maintains it and also provides the consumables as required and finally takes back the goods after useful / contracted life. The expenditure is made by the Buyer in a staggered manner as per the terms and conditions of the contract.

Defalcation And Losses

6) 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.

7) The following losses need not be reported:

 (i) Cases involving losses of revenue due to

(a) mistakes in assessments which are discovered too late to permit a supplementary claim being made,

(b) under assessments which are due to interpretation of the law by the local authority being overruled by higher authority after the expiry of the time limit prescribed under the law, and

(c) refunds allowed on the ground that the claims were time barred

(ii) Petty losses of value not exceeding Rupees ten thousand.

8) Loss of Government Property due to fire, theft, fraud.. 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.

9) Loss of immovable property by fire, flood etc. 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.

Procurement Of Goods

10) 'Goods' 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, a group of machineries comprising of an integrated production process or such other category of goods or intangible products like software, technology transfer, licenses, patents or other intellectual properties purchased or otherwise acquired for the use of Government but excludes books, publications, periodicals, etc. for a library.

The term 'goods' also includes works and services which are incidental or consequential to the supply of such goods, such as, transportation, insurance, installation, commissioning, training and maintenance. 

11) Rule 149: Government e-Market place (GeM). Government of India has established the Government e-Marketplace (GeM) for common use Goods and Services.

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, meeting the requisite quality, specification and delivery period.

(ii) Above Rs.25,000/- and up to Rs.5,00,000/- through the GeM Seller having lowest price amongst the available sellers (excluding Automobiles where current limit of 30 lakh will continue), of at least three different manufacturers, on GeM, meeting the requisite quality, specification and delivery period.

(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 or reverse auction tool provided on GeM (excluding Automobiles where current limit of 30 lakh will continue)

12) Debarment from bidding.

A bidder shall be debarred if he has been convicted of an offence –

(a) under the Prevention of Corruption Act, 1988; or

(b) the Indian Penal Code 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 execution of a public procurement contract. 

A bidder debarred or any successor of the bidder shall not be eligible to participate in a procurement process of any procuring entity for a period not exceeding three years commencing from the date of debarment. 

A procuring entity may debar a bidder or any of its successors, from participating in any procurement process undertaken by it, for a period not exceeding two years, if it determines that the bidder has breached the code of integrity.

13)  Reserved Items and other Purchase/ Price Preference Policy.

(i) The Central Government, through administrative instructions, has reserved all items of hand spun and hand-woven textiles (khadi goods) for exclusive purchase from Khadi Village Industries commission (KVIC).

(ii) Of all items of textiles required by Central Government departments, it shall be mandatory to make procurement of at least 20% from amongst items of handloom origin, for exclusive purchase from KVIC and/ or Handloom Clusters such as Co-Operative Societies, Self Help Group (SHG) Federations, Joint Liability Group (JLG), Producer Companies (PC), Corporations etc. including Weavers having Pehchan Cards.

14)  Rule 154: Purchase of goods without quotation

 Purchase of goods up to the value of Rs. 25,000 only on each occasion may be made without inviting quotations or bids

15) Rule 155 :Purchase of goods by Purchase Committee. In case a certain item is not available on the GeM portal, Purchase of goods costing above Rs.25,000 and upto Rs.2,50,000/- on each occasion may be made on the recommendations of a duly constituted Local Purchase Committee consisting of three members of an appropriate level as decided by the Head of the Department. The committee will survey the market to ascertain the reasonableness of rate, quality and specifications and identify the appropriate supplier. 

16) Rule 159 E-Publishing & Rule 160 E -Procurement: 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) 

17) Rule161 Advertised Tender Enquiry: Should be used for procurement of goods of estimated value of Rs. 25 lakhs and above

18) Global Tender Enquiry may be used where the Ministry or Department feels that the goods of the required quality, specifications etc., may not be available in the country and it is necessary to also look for suitable competitive offers from abroad, the Ministry or Department may send copies of the tender notice to the Indian Embassies abroad as well as to the Foreign Embassies in India. The selection of embassies will depend on the possibility of availability of the required goods in such countries.

19) No Global Tender Enquiry shall be invited for tenders up to Rs 200 crore or such limit as may be prescribed by the Department of Expenditure from time to time. Provided that for tenders below such limit, in exceptional cases, where the Ministry or Department feels that there are special reasons for GTE. 

20) Rule 162 Limited Tender Enquiry: This method may be adopted when estimated value of the goods to be procured is up to Rupees Twenty five Lakhs.

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. Limited Tender Enquiry should be more than three. May be adopted even where the estimated value of the procurement is more than Rupees Twenty-five Lakhs, if

-The competent authority in the Ministry or Department certifies that the demand is urgent and any additional expenditure involved by not procuring through advertised tender enquiry is justified in view of urgency.

-There are sufficient reasons, to be recorded in writing by the competent authority, indicating that it will not be in public interest to procure the goods through advertised tender enquiry

i) Technical bid consisting of all technical details along with commercial terms and conditions; and

ii) Financial bid indicating item-wise price for the items mentioned in the technical bid.

The technical bids are to be opened by the purchasing Ministry or Department at the first instance and evaluated by a competent committee or authority. At the second stage financial bids of only these technically acceptable offers should be opened after intimating them the date and time of opening the financial bid for further evaluation and ranking before awarding the contract.

21) Rule 164 Two-Stage Bidding: Obtain bids in two stages with receipt of financial bids after receipt and evaluation of technical bids. May be used if

i) it is not feasible to formulate detailed specifications or identify specific characteristics for the subject matter of procurement

ii) the character of the subject matter of procurement is subject to rapid technological advances or market fluctuations or both;

The procedure for two stage bidding shall include the following, namely:

 (a) in the first stage of the bidding process, the Ministry/Department shall invite bids through advertised tender containing the technical aspects and contractual terms and conditions of the proposed procurement without a bid price;

 (b) all first stage bids, which are otherwise eligible, shall be evaluated through an appropriate committee constituted by the Ministry/ Department;

-The sources of supply are definitely known and possibility of fresh source(s) beyond those being tapped is remote.

22) Rule 163 Two bid system: For purchasing high value plant, machinery etc. of a complex and technical nature, bids may be obtained in two parts as under:

(a) the committee may hold discussions with the bidders and if any such discussion is held, equal opportunity shall be given to all bidders to participate in the discussions;

(b) in revising the relevant terms and conditions of the procurement, the procuring entity shall not modify the fundamental nature of the procurement itself, but may add, amend or omit any specification of the subject matter of procurement or criterion for evaluation;

(c) in the second stage of the bidding process, the procuring entity shall invite bids from all those bidders whose bids at the first stage were not rejected, to present final bid with bid prices in response to a revised set of terms and conditions of the procurement;

(d) any bidder, invited to bid but not in a position to supply the subject matter of procurement due to modification in the specifications or terms and conditions, may withdraw from the bidding proceedings without forfeiting any bid security 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. 

22) Rule 166 Single Tender Enquiry. Procurement from a single source may be resorted to in the following circumstances:

(i) It is in the knowledge of the user department that only a particular firm is the manufacturer of the required goods to be obtained from the bidders except Micro and Small Enterprises (MSEs) as defined in MSE Procurement Policy. Also known as Earnest Money Deposit.

Amount of bid security should ordinarily range between two percent to five percent of the estimated value of the goods to be procured.

Should be valid for a period of forty-five 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.

In case of two packet or two stage bidding, Bid securities of unsuccessful bidders during first stage i.e. technical evaluation etc should be returned within 30 days of declaration of results of first stage i.e. technical evaluation.

25) Performance Security

(i) 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 five to ten per cent. of the value of the contract as specified in the bid documents.

Performance Security may be furnished in the form of Insurance Surety Bonds, Account Payee Demand Draft, Fixed Deposit Receipt from a Commercial bank,

Bank Guarantee from a Commercial bank or online payment in an acceptable form safeguarding the purchaser's interest in all respects.

Performance Security should remain valid for a period of sixty days beyond the date of completion of all contractual obligations of the supplier including warranty obligations.

26) Advance payment to supplier

(i) Advance payment demanded by firms holding maintenance contracts for servicing of Air conditioners, computers, other costly equipment, etc.

(ii) Advance payment demanded by firms against fabrication contracts, turn-key contracts etc. Such advance payments should not exceed the following limits:

(a) 30%. of the contract value to private firms;

(b) 40%. of the contract value to a State or Central Government agency or a Public Sector Undertaking

(c) in case of maintenance contract, the amount should not exceed the amount payable for six months under the contract.

 Procurement Of Consulting Services

27) "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), other than goods or works, except those incidental or consequential to the service, and includes professional, intellectual, training and advisory services or any other service classified or declared as such by a procuring entity but does not include direct engagement of a retired Government servant

i) Where the estimated cost of the consulting service is up to Rupees 25 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, Association of consultancy firms etc.

ii) Where the estimated cost of the consulting services is above Rupees 25 lakhs, in addition to (i) above, an enquiry for seeking 'Expression of Interest' from consultants should be published on Central Public Procurement Portal (CPPP) at and on GeM. Enquiry for seeking Expression of Interest should include in brief, the broad scope of work or service, inputs to be provided by the Ministry or Department, eligibility and the prequalification criteria to be met by the consultant(s) and consultant's past experience in similar work or service.

28) Terms of Reference (TOR).

The TOR should include

i) Precise statement of objectives.

ii) Outline of the tasks to be carried out.

iii) Schedule for completion of tasks.

iv) The support or inputs to be provided by the Ministry or Department to facilitate the consultancy.

v) The final outputs that will be required of the Consultant

29) 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. The RFP should be issued to the shortlisted consultants to seek their technical and financial proposals. The RFP should contain:

(i) A letter of Invitation

(ii) Information to Consultants regarding the procedure for submission of proposal.

(iii) Terms of Reference (TOR).

(iv) Eligibility and pre-qualification criteria in case the same has not been ascertained through Enquiry for Expression of Interest.

(v) List of key position whose CV and experience would be evaluated.

(vi) Bid evaluation criteria and selection procedure.

(vii) Standard formats for technical and financial proposal.

(viii) Proposed contract terms.

(ix) Procedure proposed to be followed for midterm review of the progress of the work and review of the final draft report.

30) Rule 189 Evaluation of Technical Bids: Technical bids should be analysed and evaluated by a Consultancy Evaluation Committee (CEC) constituted by the Ministry or Department.

31) Quality and Cost Based Selection (QCBS): QCBS may be used for Procurement of consultancy services, where quality of consultancy is of prime concern.

i) In QCBS initially the quality of technical proposals is scored as per criteria announced in the RFP. Only those responsive proposals that have achieved at least minimum specified qualifying score in quality of technical proposal are considered further.

(ii) After opening and scoring, the Financial proposals of responsive technically qualified bidders, a final combined score is arrived at by giving predefined relative weight ages for the score of quality of the technical proposal and the score of financial proposal.

iii) The RFP shall specify the minimum qualifying score for the quality of technical proposal and also the relative weightages to be given to the quality and cost. The proposal with the highest weighted combined score (quality and cost) shall be selected.

iv) The weightage of the technical parameters i.e. non- financial parameters in no case should exceed 80 percent.

32) 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. Unlike QCBS, there is no weightage for Technical score in the final evaluation and the responsive technically qualified proposal with the lowest evaluated cost shall be selected.

Procurement Of Non Consulting Services

33) "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, except those incidental or consequential to the service, and includes maintenance, hiring of vehicle, outsourcing of building facilities management, security, photocopier service, janitor, office errand services, drilling, aerial photography, satellite imagery, mapping etc

34) i) For estimated value of the non-consulting service up to Rupees ten lakhsor less: The Ministry or Department should scrutinise the preliminary list of likely contractors as identified as per Rule 199 above, 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.

(ii) 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) and on GeM. An organisation having its own website should also publish all its advertised tender enquiries on the website.

Procurement Of Works

35) Original works means all new constructions, site preparation, additions and alterations to existing works, special repairs to newly purchased or previously abandoned buildings or structures, including re-modelling or replacement. Minor works mean works which add capital value to existing assets but do not create new assets. Repair works means works undertaken to maintain building and fixtures. Works will also include services or goods incidental or consequential to the original or repair works. 

 A Ministry or Department at its discretion may directly execute repair works estimated to cost up toRupees Thirty Lakhs .

A Ministry or Department may, at its discretion, assign repair works estimated to cost above Rupees Thirty Lakhs and original/minor works of any value to any Public Works Organisation (PWO) such as Central Public Works Department (CPWD), State Public Works Department, others Central Government organisations

The broad procedure to be followed by a Ministry or Department for execution of works under its own arrangements shall be as under: -

(i) the detailed procedure relating to expenditure on such works shall be prescribed by departmental regulations framed in consultation with the Accounts Officer, generally based on the procedures and the principles underlying the financial and accounting rules prescribed for similar works carried out by the Central Public Works Department (CPWD);

(ii) preparation of detailed design and estimates shall precede any sanction for works;

(iii) no work shall be undertaken before Issue of Administrative Approval and Expenditure Sanction by the competent Authority on the basis of estimates framed;

(iv) Open tenders will be called for works costing Rs. Five lakh to Rs. Thirty lakh;

(v) Limited tenders will be called for works costing less than Rupees five lakhs;

(vi) execution of Contract Agreement or Award of work should be done before commencement of the work;

(vii) final payment for work shall be made only on the Personal Certificate of the Officer-in-charge of execution of the work

36) Review of Projects. After a project costing Rs. 100 crore or above is approved, the Administrative Ministry or Department will set up a Review Committee consisting of a representative each from the Administrative Ministry, Finance (Internal Finance Wing) and the Executing Agency to review the progress of the work. The Review Committee shall have the powers to accept variation within 10% of the approved estimates. For works costing less than Rs. 100 crore, it will be at the discretion of the Administrative Ministry/Department to set up a suitable mechanism for review and acceptance of variation within 10% of the approved estimates.