Rule 175 of The General Financial Rules 2017 Code of Integrity

Original Rule Text

Rule 175 (1) Code of Integrity No official of a procuring entity or a bidder shall act in contravention of the codes which includes (i) Prohibition of (a) Making offer, solicitation or acceptance of bribe, reward or gift or any material benefit, either directly or indirectly, in exchange for an unfair advantage in the procurement process or to otherwise influence the procurement process. (b) Any omission, or misrepresentation that may mislead or attempt to mislead so that financial or other benefit may be obtained or an obligation avoided. (c) Any collusion, bid rigging or anticompetitive behavior that may impair the transparency, fairness and the progress of the procurement process. (d) Improper use of information provided by the procuring entity to the bidder with an intent to gain unfair advantage in the procurement process or for personal gain. (e) Any financial or business transactions between the bidder and any official of the procuring entity related to tender or execution process of contract; which can affect the decision of the procuring entity directly or indirectly. (f) Any coercion or any threat to impair or harm, directly or indirectly, any party or its property to influence the procurement process. (g) Obstruction of any investigation or auditing of a procurement process. (h) Making false declaration or providing false information for participation in a tender process or to secure a contract; (ii) Disclosure of conflict of interest. (iii) Disclosure by the bidder of any previous transgressions made in respect of the provisions of sub-clause (i) with any entity in any country during the last three years or of being debarred by any other procuring entity. Rule 175 (2) The procuring entity, after giving a reasonable opportunity of being heard, comes to the conclusion that a bidder or prospective bidder, as the case may be, has contravened the code of integrity, may take appropriate measures.

Visual Summary

Ethical Conduct

Officials and bidders must avoid bribery, collusion, and misuse of information.

Transparency & Disclosure

Bidders must disclose conflicts of interest and past debarments.

Enforcement

Procuring entities will take appropriate measures against violations.

Executive Summary

Rule 175 of The General Financial Rules, 2017 establishes a comprehensive Code of Integrity for all officials of procuring entities and bidders involved in government procurement processes. It strictly prohibits various unethical practices such as bribery, collusion, misrepresentation, misuse of information, and financial transactions that create conflicts of interest. The rule also mandates disclosure of conflicts of interest and any past transgressions by bidders. Importantly, it empowers procuring entities to take appropriate measures against any party found to have contravened this code, ensuring fairness, transparency, and accountability in public procurement.

In-Depth Analysis of the Rule

Rule 175 is a cornerstone of ethical conduct in government procurement, aiming to foster an environment of trust and fairness. It outlines specific prohibitions and disclosure requirements to prevent corruption and ensure that public funds are utilized judiciously. This rule is critical for maintaining the integrity of the procurement system and safeguarding public interest.

Breakdown of the Rule

Rule 175 (1) Code of Integrity: This sub-rule lays down the fundamental principle that no official or bidder shall act in contravention of the established code. It details specific prohibited actions:
- Prohibition of Unethical Practices: This includes making or accepting bribes, misrepresentation to gain unfair advantage, engaging in collusion or bid rigging, improper use of confidential information, engaging in financial transactions with officials that create conflicts of interest, coercion, and obstructing investigations.
- False Declarations: Bidders are prohibited from making false declarations or providing false information to participate in a tender or secure a contract.
- Disclosure of Conflict of Interest: Both officials and bidders are required to disclose any potential conflicts of interest.
- Disclosure of Past Transgressions: Bidders must disclose any previous violations of the code or debarment by other procuring entities within the last three years.
Rule 175 (2) Consequences of Contravention: This sub-rule empowers the procuring entity to take appropriate measures against any bidder or prospective bidder found to have violated the code of integrity, after providing a reasonable opportunity of being heard.

Practical Example

Consider a scenario where a government department is procuring IT services. A bidder attempts to offer a significant “gift” to a procuring entity official to influence the tender outcome. This act directly violates Rule 175(1)(i)(a) regarding the prohibition of bribes. If discovered, the procuring entity, after giving the bidder a fair hearing as per Rule 175(2), can take appropriate measures, which could include debarment from future tenders, cancellation of the current bid, or other legal actions. Similarly, if a bidder fails to disclose a past debarment from another government agency, this would be a violation of Rule 175(1)(iii), leading to similar consequences.

Related Provisions

Rule 175 is complemented by several other rules in The General Financial Rules, 2017 that collectively ensure robust financial management and ethical procurement:

Rule 144 of The General Financial Rules 2017 Fundamental Principles of Public Buying: This rule outlines the core principles of public procurement, emphasizing efficiency, economy, transparency, and fair treatment of suppliers, which directly support the integrity code.
Rule 151 of The General Financial Rules 2017 Debarment From Bidding: This rule details the conditions under which a bidder can be debarred, including conviction for corruption or breach of the code of integrity, providing a direct enforcement mechanism for Rule 175.
Rule 21 of The General Financial Rules 2017 Standards of Financial Propriety: This rule sets high standards for officers incurring or authorizing expenditure, requiring vigilance and adherence to financial rules, which is foundational to the integrity expected in procurement.

Learning Aids

Mnemonics

I.N.T.E.G.R.I.T.Y. Code:
Improper use of info is out.
No bribes, no benefits.
Transactions must be transparent.
Ethical conduct is key.
Genuine declarations always.
Report conflicts of interest.
Investigations must not be obstructed.
Transgressions disclosed.
Yes to fair procurement.

Process Flowchart

Multiple Choice Questions (MCQs)

1. What is explicitly prohibited under Rule 175 (1)(i)(a) of the General Financial Rules, 2017?

A) Offering competitive prices
B) Making or accepting bribes
C) Disclosing conflicts of interest
D) Participating in pre-bid conferences

Show Answer

Correct Answer: B) Making or accepting bribes

2. According to Rule 175 (1)(i)(c) of the General Financial Rules, 2017, which behavior is prohibited?

A) Engaging in fair competition
B) Collusion or bid rigging
C) Seeking clarification on tender documents
D) Submitting multiple bids from different entities

Show Answer

Correct Answer: B) Collusion or bid rigging

3. Rule 175 (1)(iii) of the General Financial Rules, 2017 requires bidders to disclose:

A) Their financial turnover for the last five years
B) Any previous transgressions or debarments
C) The names of all their employees
D) Their proposed profit margins

Show Answer

Correct Answer: B) Any previous transgressions or debarments

4. What action can a procuring entity take if a bidder contravenes the code of integrity under Rule 175 (2) of the General Financial Rules, 2017?

A) Immediately award the contract to the next lowest bidder
B) Take appropriate measures after giving a reasonable opportunity of being heard
C) Impose a monetary fine without further inquiry
D) Publicly shame the bidder without any formal process

Show Answer

Correct Answer: B) Take appropriate measures after giving a reasonable opportunity of being heard

5. Which of the following is NOT a prohibited act under Rule 175 (1)(i) of the General Financial Rules, 2017?

A) Improper use of information to gain unfair advantage
B) Financial transactions between bidder and official related to tender
C) Obstruction of any investigation or auditing
D) Providing accurate and complete information

Show Answer

Correct Answer: D) Providing accurate and complete information

Frequently Asked Questions

What is the primary purpose of Rule 175 of The General Financial Rules, 2017?

Rule 175 establishes a Code of Integrity to ensure ethical conduct, transparency, and fairness in government procurement processes, prohibiting various corrupt and unethical practices by both officials and bidders.

What are some examples of “prohibited acts” under Rule 175 (1)(i) of The General Financial Rules, 2017?

Prohibited acts include offering or accepting bribes, misrepresentation, collusion, bid rigging, improper use of confidential information, financial transactions creating conflicts of interest, coercion, obstructing investigations, and making false declarations.

What happens if a bidder violates the Code of Integrity as per Rule 175 (2) of The General Financial Rules, 2017?

If a bidder contravenes the Code of Integrity, the procuring entity can take appropriate measures, but only after providing the bidder with a reasonable opportunity to be heard.

Key Takeaways

Rule 175 mandates a strict Code of Integrity for all participants in government procurement.
It explicitly prohibits a wide range of unethical practices, including bribery, collusion, and misuse of information.
Bidders are required to disclose conflicts of interest and any past debarments.
Procuring entities have the authority to take appropriate action against violations, ensuring accountability.

Conclusion

Rule 175 of The General Financial Rules, 2017 is indispensable for fostering a transparent and ethical procurement ecosystem. By clearly defining prohibited behaviors and mandating disclosures, it serves as a robust framework to prevent corruption and ensure that public resources are managed with the highest standards of integrity. Adherence to this rule is paramount for all stakeholders to uphold public trust and achieve efficient, economical, and fair public procurement outcomes.

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