BASIC NORMS AND PRACTICES GOVERNING PUBLIC

PROCUREMENT
Read and THOROUGHLY understand the Department procurement manual,
policies and procedure.
Be clear what you want to purchase, quality, quantity, specification, supplier,
approximate cost involved etc. Get yourself updated with the market trend.
Before purchase, know the budget availability, head of account to which the
expenditure is debitable etc.
Always obtain administrative approval of competent authority in advance. In
exceptional cases, ex post facto sanction may be obtained.
Conduct public buying in a transparent manner to bring competition,
fairness and elimination of arbitrariness in the system
Public procurement procedures must conform to exemplary norms of best
practices to ensure efficiency, economy and accountability in the system
Avoid purchases in piece meal as far as possible.
Also never buy too much bulk quantity more than required just because the
rates are cheap.
Dont split up the sanctions to avoid taking financial approval from higher
authority
Constitute a Local purchase committee and entrust them the purchase work
Do market survey and find out competitive rates.
Never compromise on quality of goods
Physically inspect the goods purchased before entering into stock register
Know what is Consumable, non consumable goods
Conduct physical inspection of stores periodically and record the certificate in
the records and registers
Report loss of stores by theft, defalcation etc immediately to the higher
authorities immediately and conduct investigation to find out the reasons and
how to avoid the same in future.
Always go for purchase from reliable sources, registered suppliers of
DGS&D etc.
Take all precautions while spending public money.
Ensure payment against bills through DIRECT CREDIT to the bank
account of the supplier through RTGS
Avoid middleman and multiple layer of agencies while making purchase.
Make sure that the price of the items is inclusive or exclusive of taxes
In case of contractual purchase, deduct taxes as applicable at prevalent rates.


While calling tenders, please be sure of the following aspects
(i) the specification of the item(s) and end use of the required goods,
(ii) quantity to be purchased,
(iii) the date and time by which the bids should be received,
(iv) the date by which deliveries are expected,
(v) the date on which the bids will be opened (wherever necessary),
(vi) warranty requirements,
(vii) requirement of test certificate, if any,
(viii) requirement of type approval for compliance of statutory
requirements with respect to pollution ,emission, noise, etc.
(ix) training, technical support, after sales service and annual
maintenance contract requirements, if any.
(x) period of validity of quotation,
(xi) special requirements of packing and marking, if any,
(xii) normal payment terms of the institute,
(xiii) tax exemptions applicable and
(ivx) any other special terms and condition which are applicable. An
Approved format available for this shall be used
Bids must be opened in the presence of all purchase committee
members/purchaser as the case may be. All bids must be signed by all
members of the committee / purchaser (along with date). Signatures
arenecessary on the covering envelope, financial part of the bid and the
part which contains the terms and conditions. Negotiations should be
done only with L-1 bidder.
In all purchases with multiple bids, the report of the
purchaser/purchase committee should include the following:-
a) A comparative statement of all dealers/sellers indicating all taxes,
freight, forwarding etc (i.e. the total cost of the purchase).
b) The dealers from whom purchases is recommended.
c) In the event purchase is recommended not on the basis of lowest bid,
the reason thereof shall be explicitly stated.
d) Any other relevant information The report complete in all respects
along with associated documents shall be sent to higher authorities.

Annual Maintenance Contract:
Depending on cost and nature of the goods to be purchased, it may also
be necessary to enter into maintenance contracts for a suitable period
either with the supplier of the goods or with any other competent firm,
not necessarily the supplier of the subject goods. Such maintenance
contracts are specially needed for sophisticated and costly equipment
and machinery. It may however be kept in mind that the equipment or
machinery is maintained free of charge by the supplier during its
warranty period or such other extended periods as the terms of contract
may provide for. The paid maintenance should commence only there
afterwards.


Write off, Condemnation and Disposal
An item may be declared surplus or obsolete or unserviceable, if the
same is of no use to the organisation or when the item is beyond
economical repair. Under such circumstances the property and
equipment be disposed of in the best interest of the organsiation as per
the following guidelines with prior approval of competent authority.
a) Wherever possible, the stores/equipment is traded under buy back
scheme, so as to reduce the cost impact on the new stores/ equipment.
b) If the above option is not available, the property and equipment be
sold out rightly with due procedures.
(c) Obsolete, unusable materials beyond economic repair be disposed off
as per procedure.

The procedure to be followed in making public procurement must conform to
the following yardsticks:-
(i) the specifications in terms of quality, type etc., as also quantity of goods to
be procured, should be clearly spelt out keeping in view the specific needs of
the procuring organizations. The specifications so worked out should meet the
basic needs of the organization without including superfluous and non-
essential features, which may result in unwarranted expenditure. Care should
also be taken to avoid purchasing quantities in excess of requirement to avoid
inventory carrying costs;
(ii) offers should be invited following a fair, transparent and reasonable
procedure;
(iii) the procuring authority should be satisfied that the selected offer
adequately meets the requirement in all respects;
(iv) the procuring authority should satisfy itself that the price of the selected
offer is reasonable and consistent with the quality required;
(v) at each stage of procurement the concerned procuring authority must
place on record, in precise terms, the considerations which weighed with it
while taking the procurement decision.
[vi] A demand should not be split into small quantities for the sole purpose
of avoiding the necessity of taking approval of the higher authority required
for sanctioning the purchase of the original demand.
3.18 Important Guidelines for entering into Contracts
CONTRACT MANAGEMENT contain the norms and principles governing
contracts entered into by Government.
General principles for contract : The following general principles should be
observed while entering into contracts:
(i) The terms of contract must be precise, definite and without any
ambiguities. The terms should not involve an uncertain or indefinite liability,
except in the case of a cost plus contract or where there is a price variation
clause in the contract.
(ii) Standard forms of contracts should be adopted wherever possible, with
such modifications as are considered necessary in respect of individual
contracts. The modifications should be carried out only after obtaining
financial and legal advice.
(iii) In cases where standard forms of contracts are not used, legal and
financial advice should be taken in drafting the clauses in the contract.
(v) No work of any kind should be commenced without proper execution of an
agreement as given in the foregoing provisions.
(vi) Contract document, where necessary, should be executed within 21 days
of the issue of letter of acceptance. Non-fulfilment of this condition of
executing a contract by the Contractor or Supplier would constitute sufficient
ground for annulment of the award and forfeiture of Earnest Money Deposit.
(vii) Cost plus contracts should ordinarily be avoided. Where such contracts
become unavoidable, full justification should be recorded before entering into
the contract. Where supplies or special work covered by such cost plus
contracts have to continue over a long duration, efforts should be made to
convert future contracts on a firm price basis after allowing a reasonable
period to the suppliers/contractors to stabilize their production /execution
methods and processes.
Explanation : A cost plus contract means a contract in which the price
payable for supplies or services under the contract is determined on the basis
of actual cost of production of the supplies or services concerned plus profit
either at a fixed rate per unit or at a fixed percentage on the actual cost of
production.
(viii) (a) Price Variation Clause can be provided only in long-term contracts,
where the delivery period extends beyond 18 months. In short-term contracts
firm and fixed prices should be provided for. Where a price variation clause is
provided, the price agreed upon should specify the base level viz, the month
and year to which the price is linked, to enable variations being calculated
with reference to the price levels prevailing in that month and year.
(ix) Contracts should include provision for payment of all applicable taxes by
the contractor or supplier.
(x) Lumpsum contracts should not be entered into except in cases of
absolute necessity. Where lumpsum contracts become unavoidable, full
justification should be recorded. The contracting authority should ensure that
conditions in the lumpsum contract adequately safeguard and protect the
interests of the Government.
(xi) Departmental issue of materials should be avoided as far as possible.
Where it is decided to supply materials departmentally, a schedule of
quantities with the issue rates of such material as are required to execute the
contract work, should form an essential part of the contract.
(xii) (a) In contracts where government property is entrusted to a contractor
either for use on payment of hire charges or for doing further work on such
property, specific provision for safeguarding government property (including
insurance cover) and for recovery of hire charges regularly, should be
included in the contracts. (b) Provision should be made in the contract for
periodical physical verification of the number and the physical condition of
the items at the contractors premises. Results of such verification should be
recorded and appropriate penal action taken where necessary.
(xiii) Copies of all contracts and agreements for purchases of the value of
Rupees Twenty-five Lakhs and above, and of all rate and running contracts
entered into by civil departments of the Government other than the
departments like the Directorate General of Supplies and Disposals for which
a special audit procedure exists, should be sent to the Audit Officer and /or
the Accounts officer as the case may be.
(xiv) (a) The terms of a contract, including the scope and specification once
entered into, should not be materially varied. (b) Wherever material variation
in any of the terms or conditions in a contract becomes unavoidable, the
financial and other effects involved should be examined and recorded and
specific approval of the authority competent to approve the revised financial
and other commitments obtained, before varying the conditions. (c) All such
changes should be in the form of an amendment to the contract duly signed by
all parties to the contract.
(xv) Normally no extensions of the scheduled delivery or completion dates
should be granted except where events constituting force majeure, as provided
in the contract, have occurred or the terms and conditions include such a
provision for other reasons. Extensions as provided in the contract may be
allowed through formal amendments to the contract duly signed by parties to
the contract.
(xvi) All contracts shall contain a provision for recovery of liquidated
damages for defaults on the part of the contractor.
(xvii) A warranty clause should be incorporated in every contract, requiring
the supplier to, without charge, repair or rectify defective goods or to replace
such goods with similar goods free from defect. Any goods repaired or
replaced by the supplier shall be delivered at the buyers premises without
costs to the buyer.
(xviii) All contracts for supply of goods should reserve the right of
Government to reject goods which do not conform to the specifications.
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Purchase of Goods by obtaining Tenders
Except for the purchase of goods through the methods given in the preceding
paragraphs, Ministries/ Departments shall procure goods within their
delegated powers by following the standard method of obtaining tenders as
follows:
(i) Advertised Tender Enquiry (ATI)
(ii) Limited Tender Enquiry (LTI)
(iii) Single Tender Enquiry (STI)