Rule 174 of The General Financial Rules 2017 Efficiency Economy and Accountability in Public Procurement System

Original Rule Text

Rule 174 Efficiency, Economy and Accountability in Public Procurement System. Public procurement procedure should ensure efficiency, economy and accountability in the system. To achieve the same, the following key areas should be addressed: (i) To reduce delay, appropriate time frame for each stage of procurement should be prescribed by the Ministry or Department. (ii) To minimise the time needed for decision making and placement of contract, every Ministry/Department, with the approval of the competent authority, may delegate, wherever necessary, appropriate purchasing powers to the lower functionaries. (iii) The Ministries or Departments should ensure placement of contract within the original validity of the bids. Extension of bid validity must be discouraged and resorted to only in exceptional circumstances. (iv) Deleted.

Visual Summary

Efficiency

Streamline procurement stages.

Economy

Delegate powers for faster decisions.

Accountability

Ensure contract placement within bid validity.

Executive Summary

Rule 174 of the General Financial Rules, 2017, emphasizes the critical need for efficiency, economy, and accountability in the public procurement system. It outlines key areas for Ministries and Departments to address, including establishing appropriate timeframes for procurement stages, delegating purchasing powers to lower functionaries for faster decision-making, and ensuring contracts are placed within the original bid validity period to minimize delays and maintain financial discipline. The rule aims to optimize the procurement process, ensuring public funds are utilized effectively and transparently.

In-Depth Analysis of Rule 174

Rule 174 serves as a foundational principle for all public procurement activities under the General Financial Rules, 2017. It mandates that every procurement procedure must be designed and executed to uphold the highest standards of efficiency, economy, and accountability. This rule is crucial for preventing waste, ensuring optimal utilization of public resources, and fostering public trust in government spending.

Breakdown of the Rule

Efficiency through Timelines: Sub-rule (i) directs Ministries and Departments to establish clear and appropriate timeframes for each stage of the procurement process. This is vital for streamlining operations, avoiding unnecessary delays, and ensuring projects are completed on schedule.
Economy via Delegation: Sub-rule (ii) promotes economy by allowing Ministries and Departments, with competent authority approval, to delegate purchasing powers to lower functionaries. This decentralization aims to minimize decision-making time, reduce bureaucratic bottlenecks, and potentially lower administrative costs associated with prolonged approval processes.
Accountability in Contract Placement: Sub-rule (iii) emphasizes accountability by requiring Ministries and Departments to place contracts within the original validity period of bids. It explicitly discourages extensions of bid validity, reserving them only for exceptional circumstances. This ensures contractual integrity, prevents price renegotiations due to delays, and maintains fairness in the bidding process.
Dynamic Adaptation: Sub-rule (iv) indicates that certain provisions may be deleted, suggesting that the rules are subject to review and adaptation to remain relevant and effective in a changing environment.

Practical Example

Consider a Ministry procuring IT equipment. To comply with Rule 174, the Ministry would first set a strict timeline for floating tenders, evaluating bids, and awarding the contract. Second, it would empower a dedicated procurement team (lower functionaries) with specific financial limits to make quick decisions on standard equipment purchases, avoiding delays from higher-level approvals. Third, the Ministry would ensure that the contract is awarded and signed before the bids expire, preventing the need for extensions that could lead to revised offers or a loss of competitive advantage. This integrated approach ensures the Ministry acquires necessary equipment efficiently, economically, and with full accountability.

Related Provisions

Rule 174 is closely related to several other provisions within the General Financial Rules, 2017, that collectively govern public procurement and financial management:

Rule 144 of The General Financial Rules, 2017: Fundamental Principles of Public Buying – This rule lays down the overarching principles for all public procurement, emphasizing efficiency, economy, and transparency, which Rule 174 elaborates upon.
Rule 173 of The General Financial Rules, 2017: Transparency, Competition, Fairness and Elimination of Arbitrariness in the Procurement Process – Directly preceding Rule 174, this rule provides specific measures to ensure a fair and competitive procurement environment, complementing the efficiency and accountability goals.
Rule 21 of The General Financial Rules, 2017: Standards of Financial Propriety – This general principle requires every officer to exercise vigilance in public expenditure, forming the ethical bedrock for the specific procurement guidelines in Rule 174.

Learning Aids

Mnemonics

“TEE Time” – Timelines, Economy (delegation), Ensure validity.

Process Flowchart: Ensuring Rule 174 Compliance

Multiple Choice Questions

1. What is the primary objective of Rule 174 of the General Financial Rules, 2017?

A) Maximizing revenue collection
B) Ensuring efficiency, economy, and accountability in public procurement
C) Regulating inter-departmental adjustments
D) Establishing guidelines for grants-in-aid

Show Answer

Correct Answer: B) Ensuring efficiency, economy, and accountability in public procurement

2. According to Rule 174 (i) of the General Financial Rules, 2017, what should Ministries and Departments prescribe to reduce delay?

A) New financial year dates
B) Appropriate time frames for each procurement stage
C) Limits on expenditure
D) Methods for dispute resolution

Show Answer

Correct Answer: B) Appropriate time frames for each procurement stage

3. Rule 174 (ii) of the General Financial Rules, 2017, suggests delegating purchasing powers to lower functionaries to achieve which goal?

A) Increase administrative burden
B) Minimize time for decision making
C) Centralize procurement
D) Promote external audits

Show Answer

Correct Answer: B) Minimize time for decision making

4. What does Rule 174 (iii) of the General Financial Rules, 2017, emphasize regarding contract placement?

A) Extending bid validity indefinitely
B) Placing contracts within the original bid validity
C) Renegotiating prices after bid expiry
D) Prioritizing single-source procurement

Show Answer

Correct Answer: B) Placing contracts within the original bid validity

5. Which of the following is explicitly discouraged by Rule 174 (iii) of the General Financial Rules, 2017?

A) Setting clear procurement timelines
B) Delegating purchasing powers
C) Extension of bid validity
D) Ensuring contract placement

Show Answer

Correct Answer: C) Extension of bid validity

Frequently Asked Questions

Why is efficiency important in public procurement according to Rule 174 of the General Financial Rules, 2017?

Efficiency is crucial to ensure that public projects are completed on time and within budget, preventing delays that can lead to cost overruns and hinder service delivery. Rule 174 (i) specifically mandates setting appropriate timeframes for each procurement stage to achieve this.

How does Rule 174 of the General Financial Rules, 2017, promote economy?

Rule 174 (ii) promotes economy by allowing Ministries and Departments to delegate appropriate purchasing powers to lower functionaries. This minimizes the time needed for decision-making and contract placement, thereby reducing administrative costs and optimizing resource utilization.

What is the significance of placing contracts within the original bid validity period as per Rule 174 of the General Financial Rules, 2017?

Placing contracts within the original bid validity period, as per Rule 174 (iii), is significant for maintaining accountability and fairness. It discourages extensions that could lead to renegotiations, loss of competitive pricing, or opportunities for irregularities, ensuring the integrity of the procurement process.

Key Takeaways

Rule 174 mandates efficiency, economy, and accountability in all public procurement procedures.
It requires Ministries to set clear timeframes for each procurement stage to reduce delays.
Delegation of purchasing powers to lower functionaries is encouraged to expedite decision-making and achieve economy.
Contracts must be placed within the original bid validity period, with extensions strongly discouraged, to ensure accountability.

Conclusion

Rule 174 of the General Financial Rules, 2017, is a cornerstone for sound financial governance in public procurement. By focusing on efficiency, economy, and accountability, it provides a framework that not only optimizes the use of public funds but also reinforces transparency and trust in government operations. Adherence to these principles is essential for effective and ethical public administration.

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