Rule 144 of The General Financial Rules 2017 Fundamental Principles of Public Buying

Original Rule Text

Rule 144 Fundamental principles of public buying (for all procurements including procurement of works). Every authority delegated with the financial powers of procuring goods in public interest shall have the responsibility and accountability to bring efficiency, economy, and transparency in matters relating to public procurement and for fair and equitable treatment of suppliers and promotion of competition in public procurement. The procedure to be followed in making public procurement must conform to the following yardsticks: – (i) The description of the subject matter of procurement to the extent practicable should – a. Be objective, functional, generic and measurable and specify technical, qualitative and performance characteristics. b. Not indicate a requirement for a particular trade mark, trade name or brand. (ii) 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 organisations. The specifications so worked out should meet the basic needs of the organisation without including superfluous and non- essential features, which may result in unwarranted expenditure. (iii) Where applicable, the technical specifications shall, to the extent practicable, be based on the national technical regulations or recognized national standards or building codes, wherever such standards exist, and in their absence, be based on the relevant international standards. In case of Government of India funded projects abroad, the technical specifications may be framed based on requirements and standards of the host beneficiary Government, where such standards exist. Provided that a procuring entity may, for reasons to be recorded in writing, adopt any other technical specification. (iv) Care should also be taken to avoid purchasing quantities in excess of requirement to avoid inventory carrying costs. (v) Offers should be invited following a fair, transparent and reasonable procedure. (vi) The procuring authority should be satisfied that the selected offer adequately meets the requirement in all respects. (vii) The procuring authority should satisfy itself that the price of the selected offer is reasonable and consistent with the quality required. (viii) 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. (ix) A complete schedule of procurement cycle from date of issuing the tender to date of issuing the contract should be published when the tender is issued. (x) All Ministries/Departments shall prepare Annual Procurement Plan before the commencement of the year and the same should also be placed on their website. (xi) [Notwithstanding anything contained in these Rules, Department of Expenditure may, by order in writing, impose restrictions, including prior registration and/ or screening, on procurement from bidders from, or bidders having commercial arrangements with an entity from, a country or countries, or a class of countries, on grounds of defence of India, or matters directly or indirectly related thereto including national security; no procurement shall be made in violation of such restrictions.]

Visual Summary

Core Responsibility

Efficiency, Economy, Transparency.

Procurement Procedure

Fair, Transparent, Competitive.

Key Aspects

Clear Specs, Reasonable Price, Annual Plan.

Executive Summary

Rule 144 of The General Financial Rules, 2017, establishes the fundamental principles for all public procurement, emphasizing efficiency, economy, and transparency. It mandates that procuring authorities ensure fair and equitable treatment of suppliers and promote competition. Key yardsticks include objective and functional specifications, avoiding brand bias, setting clear quality standards, preventing excess purchases, inviting offers through fair procedures, ensuring reasonable pricing, documenting all procurement decisions, publishing a complete procurement cycle schedule, and preparing an Annual Procurement Plan. The rule also allows for national security-based restrictions on procurement from certain entities or countries.

In-Depth Analysis of the Rule

Introduction: Rule 144 serves as the bedrock for all public procurement activities under The General Financial Rules, 2017. It outlines the essential principles that government authorities must adhere to, ensuring that public funds are utilized judiciously and ethically.

Breakdown of the Rule:

Core Responsibility: Every authority with financial powers for procurement is accountable for efficiency, economy, and transparency, alongside fair treatment of suppliers and promotion of competition.
(i) Description of Procurement: The subject matter must be described objectively, functionally, generically, and measurably, specifying technical, qualitative, and performance characteristics. It must not indicate a particular trademark, trade name, or brand.
(ii) Specifications: Quality, type, and quantity of goods must be clearly defined, meeting the organization’s basic needs without including unnecessary features that could lead to unwarranted expenditure.
(iii) Technical Specifications: These should, where practicable, align with national technical regulations or recognized national/international standards. Any deviations must be recorded in writing with justification.
(iv) Avoiding Excess Purchases: Procuring quantities beyond actual requirement should be avoided to minimize inventory carrying costs.
(v) Invitation of Offers: Offers must be invited through a fair, transparent, and reasonable procedure.
(vi) Adequacy of Selected Offer: The procuring authority must confirm that the chosen offer fully meets all requirements.
(vii) Reasonableness of Price: The price of the selected offer must be deemed reasonable and consistent with the required quality.
(viii) Documenting Decisions: At every procurement stage, the authority must precisely record the considerations influencing its decisions.
(ix) Procurement Cycle Schedule: A complete schedule, from tender issuance to contract award, must be published with the tender.
(x) Annual Procurement Plan: All Ministries/Departments are required to prepare and publish an Annual Procurement Plan on their website before the year commences.
(xi) Restrictions on Procurement: The Department of Expenditure can impose restrictions, including prior registration or screening, on bidders from certain countries or entities based on national security or defense of India.

Practical Example: Imagine a government hospital needing new medical equipment. Under Rule 144, the procurement officer must define the equipment’s functional requirements (e.g.,