MANAGEMENT & FINANCIAL ADMINISTRATIONGFR 2017 — Procurement

Core Principle/Rule: Procurement of common-use goods and services available on GeM is mandatory for all Ministries and Departments.

Key Facts:

• Up to ₹25,000: Purchase may be made through any available GeM supplier meeting the required quality, specification, and delivery period.
• ₹25,000 to ₹5,00,000: Purchase must be from the GeM seller offering the lowest price (L1) among at least three different manufacturers or brands.
• Above ₹5,00,000: Purchase must be made from the L1 supplier after mandatory bids using online bidding or reverse auction tools on GeM.

Core Principle/Rule: For goods unavailable on GeM, GFR defines strict monetary thresholds for direct purchase and committee-based evaluation.

Key Facts:

• Direct Purchase (Rule 154): Goods up to ₹25,000 on each occasion may be bought without quotations or bids, provided the competent authority signs a specific certificate of financial propriety.
• Local Purchase Committee (Rule 155): Goods costing above ₹25,000 and up to ₹2,50,000 on each occasion must be purchased on recommendations of a duly constituted three-member committee of appropriate level.

Core Principle/Rule: LTE sends bid invitations directly to a limited number of selected, empanelled suppliers instead of public advertising, saving time and administrative cost.

Key Facts:

• Financial Limit: LTE is generally adopted where the estimated procurement value is up to ₹25 lakh.
• Minimum Bidders: Copies should be sent directly by speed post, registered post, or email to at least three empanelled suppliers.
• Exception above ₹25 Lakh: LTE may exceed ₹25 lakh only for strictly justified reasons—for example, urgent need where advertised-tender delay would harm public interest, or where supply sources are definitely known to be limited.

Core Principle/Rule: Securities protect procurement: EMD discourages bidders from backing out after winning, while Performance Security ensures satisfactory contract completion.

Key Facts:

• Earnest Money Deposit / Bid Security: Usually 2% to 5% of the estimated value of goods.
• EMD Exemptions: Micro and Small Enterprises and registered Startups are strictly exempt from paying EMD.
• Performance Security: Usually 5% to 10% of total contract value and must remain valid for 60 days beyond completion of all contractual obligations.
• No Performance-Security Exemption: Unlike EMD, MSEs and Startups must provide Performance Security if they win the contract.

Core Principle/Rule: Government contracts should normally be fixed-price. A Price Variation Clause allowing contract-price adjustment for market fluctuations is a strict exception.

Key Facts:

• PVC may be included only in long-term contracts where delivery extends beyond 18 months.
• For contracts shorter than 18 months, PVC is strictly prohibited unless an abnormal situation exists—such as highly volatile raw-material prices—and specific approval is obtained.