Rule 163 of The General Financial Rules 2017 Two Bid System
Original Rule Text
(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 bid and the financial bid should be sealed by the bidder in separate covers duly super-scribed and both these sealed covers are to be put in a bigger cover which should also be sealed and duly super-scribed. 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.
Visual Summary
Applies to complex, high-value plant & machinery.
Technical and financial bids submitted separately.
Technical bids opened first, then financial for qualified offers.
Executive Summary
Rule 163 of the General Financial Rules, 2017, mandates a ‘Two Bid System’ for the procurement of high-value, complex plant and machinery. This system requires bidders to submit separate technical and financial proposals in sealed covers. Initially, only the technical bids are opened and evaluated. Subsequently, only the financial bids of those bidders deemed technically acceptable are opened for further evaluation and contract award. This structured approach ensures that technical suitability is prioritized before financial considerations for specialized procurements.
In-Depth Analysis of the Rule
The ‘Two Bid System’ outlined in Rule 163 is a critical mechanism for ensuring quality and technical compliance in government procurement, especially for items that are complex and carry significant value. It prevents situations where a low financial bid might compromise the technical requirements, which is crucial for specialized equipment and infrastructure.
Breakdown of the Rule:
- Applicability: This system is specifically designed for the procurement of “high value plant, machinery etc. of a complex and technical nature.” This ensures that specialized purchases receive a thorough technical vetting.
- Bid Structure: Bids must be submitted in two distinct parts:
- Technical Bid: Contains all technical specifications, details, and commercial terms and conditions, excluding price.
- Financial Bid: Contains the item-wise price for the goods mentioned in the technical bid.
Both bids must be sealed in separate covers, which are then placed inside a larger sealed cover, ensuring confidentiality until the appropriate stage.
- Evaluation Process: The evaluation is sequential:
- First, the purchasing Ministry or Department opens and evaluates only the technical bids. This is done by a competent committee or authority to assess compliance with technical requirements.
- Second, only those bidders whose technical offers are found acceptable proceed to the next stage. Their financial bids are then opened, and further evaluation and ranking are performed before the contract is awarded.
Practical Example:
Consider a government hospital needing to procure a new MRI machine. This is a high-value, complex piece of equipment. Under Rule 163, vendors would submit two separate bids: a technical bid detailing the machine’s specifications, service agreements, and installation plans, and a financial bid with the pricing. The hospital’s procurement committee would first review all technical bids to ensure they meet the required medical standards and operational needs. Only those vendors whose MRI machines are technically suitable would then have their financial bids opened, allowing the hospital to select the most cost-effective option among the technically qualified suppliers.
Related Provisions
Understanding Rule 163 is enhanced by examining related provisions within the General Financial Rules, 2017:
- Rule 162 of The General Financial Rules 2017 Limited Tender Enquiry: This rule outlines the procedure for limited tender enquiries, typically used for procurements of lower estimated value, providing a contrast to the more rigorous two-bid system.
- Rule 164 of The General Financial Rules 2017 Two-Stage Bidding: While similar in principle, Rule 164 describes a two-stage bidding process where technical bids are invited first, and then revised terms and financial bids are sought from qualified bidders, often for even more complex or evolving procurements.
Learning Aids
Mnemonics
- T.T.S.E.: Technical first, Two-part bids, Sealed separately, Evaluate in stages.
Process Flowchart
Multiple Choice Questions (MCQs)
1. For what type of procurement is the ‘Two Bid System’ under Rule 163 of the General Financial Rules, 2017, primarily intended?
- A) Low-value, routine office supplies
- B) High-value, complex plant and machinery
- C) Standardized goods available on GeM
- D) Services with simple deliverables
Show Answer
Correct Answer: B) High-value, complex plant and machinery
2. According to Rule 163 of the General Financial Rules, 2017, what are the two main parts of a bid in the ‘Two Bid System’?
- A) Commercial and Legal bids
- B) Technical and Financial bids
- C) Experience and Qualification bids
- D) Preliminary and Final bids
Show Answer
Correct Answer: B) Technical and Financial bids
3. In the ‘Two Bid System’ under Rule 163 of the General Financial Rules, 2017, which bid is opened and evaluated first?
- A) The Financial bid
- B) Both bids simultaneously
- C) The Technical bid
- D) A preliminary concept bid
Show Answer
Correct Answer: C) The Technical bid
4. What is the requirement for sealing bids in the ‘Two Bid System’ as per Rule 163 of the General Financial Rules, 2017?
- A) Both bids can be in a single unsealed cover.
- B) Technical and financial bids must be sealed in separate covers, then put into a bigger sealed cover.
- C) Only the financial bid needs to be sealed.
- D) Sealing is optional, depending on the Ministry’s discretion.
Show Answer
Correct Answer: B) Technical and financial bids must be sealed in separate covers, then put into a bigger sealed cover.
5. Under Rule 163 of the General Financial Rules, 2017, when are the financial bids of technically acceptable offers opened?
- A) Immediately after submission of all bids.
- B) After the technical bids have been opened and evaluated, and only for technically qualified bidders.
- C) Only if the technical evaluation is inconclusive.
- D) At the discretion of the bidder.
Show Answer
Correct Answer: B) After the technical bids have been opened and evaluated, and only for technically qualified bidders.
Frequently Asked Questions
Q1: What kind of items does Rule 163 of the General Financial Rules, 2017, apply to?
Rule 163 applies to the procurement of high-value plant, machinery, and other items that are complex and technical in nature, where both technical specifications and cost are significant factors.
Q2: Why are technical and financial bids separated under Rule 163 of the General Financial Rules, 2017?
The separation ensures that the technical merits and compliance of a bid are evaluated independently and objectively, without being influenced by the quoted price. This helps in selecting technically sound solutions before considering financial competitiveness.
Q3: What happens if a bidder’s technical proposal is not acceptable under Rule 163 of the General Financial Rules, 2017?
If a bidder’s technical proposal is not found acceptable by the evaluation committee, their financial bid will not be opened, and they will not be considered for the contract award.
Key Takeaways
- Rule 163 governs the ‘Two Bid System’ for high-value, complex, and technical procurements.
- Bidders must submit separate technical and financial proposals, each sealed independently and then combined in a larger sealed cover.
- Technical bids are evaluated first; only technically acceptable offers proceed to financial bid opening.
- This system ensures that technical suitability is prioritized before financial considerations, leading to robust procurement outcomes.
Conclusion
Rule 163 of the General Financial Rules, 2017, is a cornerstone for transparent and quality-focused procurement of specialized goods. By mandating a two-bid system and sequential evaluation, it ensures that government entities acquire technically sound solutions for complex needs, thereby safeguarding public funds and promoting efficiency in critical acquisitions.