Rule 219 of The General Financial Rules 2017 Disposal through Advertised Tender
Original Rule Text
Visual Summary
Ensuring fair, competitive, and transparent disposal of surplus goods.
Clear bidding documents, bid security, and careful evaluation are key.
Full payment required before goods release; defaulters face forfeiture.
Executive Summary
Rule 219 of The General Financial Rules, 2017, details the mandatory procedure for disposing of surplus, obsolete, or unserviceable goods through advertised tenders. The process is designed to ensure transparency, competition, and fairness, starting with the meticulous preparation of bidding documents that clearly outline the goods’ condition and applicable taxes. It mandates the collection of bid security, typically 10% of the assessed price, and specifies how to handle bid evaluation, including negotiations with the highest responsive bidder and offering remaining quantities to subsequent bidders. Crucially, full payment is required before goods are released, and defaulters face forfeiture of their bid security. The rule strictly prohibits the consideration of late bids, reinforcing the need for adherence to specified timelines.
In-Depth Analysis of the Rule
Introduction: Rule 219 provides a structured framework for government departments to dispose of surplus, obsolete, or unserviceable goods via advertised tenders. This rule is fundamental to maintaining financial propriety and public trust by ensuring that such disposals are conducted in an open, competitive, and fair manner, maximizing value for the government while minimizing potential for irregularities.
Breakdown of the Rule:
- Broad Steps for Disposal: The rule outlines a nine-step process:
- Preparation of bidding documents.
- Invitation of tender for the surplus goods to be sold.
- Opening of bids.
- Analysis and evaluation of bids received.
- Selection of the highest responsive bidder.
- Collection of sale value from the selected bidder.
- Issue of sale release order to the selected bidder.
- Release of the sold surplus goods to the selected bidder.
- Return of bid security to the unsuccessful bidders.
- Important Aspects of Advertised Tender: Several critical considerations underpin the process:
- Transparency and Competition: The core principle is to ensure transparency, competition, fairness, and the elimination of discretion. This requires wide publicity of the sale plan and comprehensive, clear terms and conditions in the bidding documents, including applicable taxes.
- Goods Information: Bidding documents must clearly state the location and present condition of the goods, allowing bidders to inspect them before submitting bids.
- Bid Security: Bidders are required to furnish bid security, typically 10% of the assessed or reserved price, with the exact amount specified in the bidding document.
- Bid Acceptance and Negotiation: The highest acceptable responsive bid is normally accepted. If the price is unacceptable, negotiations may be held only with that bidder. If negotiations fail, the reasonable price may be counter-offered to the next highest responsive bidder(s).
- Partial Quantity Disposal: If the highest bidder cannot take the full quantity, the remainder may be offered to the next higher bidder(s) at the price offered by the highest acceptable bidder.
- Full Payment Requirement: Full payment, adjusted for bid security, must be obtained from the successful bidder before the goods are released.
- Default Consequences: If a selected bidder fails to lift the goods, their bid security is forfeited, and other actions, including re-sale at the defaulter’s risk and cost, may be initiated after legal advice.
- Treatment of Late Bids: Bids received after the specified date and time are strictly not to be considered.
Practical Example: Imagine the Ministry of Defence needs to dispose of a batch of obsolete vehicles. Following Rule 219, they would first prepare detailed bidding documents, including vehicle specifications, current condition, and the 10% bid security requirement. They would then advertise the tender widely on government portals. After opening bids, if the highest responsive bid for 100 vehicles is from ‘XYZ Motors’ but they can only take 70, the remaining 30 vehicles might be offered to ‘ABC Logistics’ (the next highest responsive bidder) at the same price per vehicle as offered by ‘XYZ Motors’. Upon full payment, the vehicles are released. If ‘XYZ Motors’ fails to make full payment or collect the vehicles, their bid security would be forfeited, and the Ministry would proceed with re-selling the vehicles, potentially to ‘ABC Logistics’ or through a new tender, at ‘XYZ Motors’ risk and cost.
Related Provisions
Rule 219 is part of a broader framework for inventory management and disposal. Understanding its context with the following rules is beneficial:
- Rule 217 of The General Financial Rules 2017 Disposal of Goods: This rule provides the overarching principles for declaring goods as surplus, obsolete, or unserviceable and the initial steps for their disposal.
- Rule 218 of The General Financial Rules 2017 Modes of Disposal: This rule outlines various methods for disposing of goods, including advertised tender and public auction, and sets monetary thresholds for each.
- Rule 220 of The General Financial Rules 2017 Disposal through Auction: This rule details the alternative method of disposal through auction, providing a comparative context to the advertised tender process.
Learning Aids
Mnemonics
- P.I.O.A.S. C.I.R.R.: To remember the broad steps of disposal through advertised tender: Preparation, Invitation, Opening, Analysis, Selection, Collection, Issue, Release, Return.
Process Flowchart
Multiple Choice Questions (MCQs)
1. What is the primary principle for disposing of goods through advertised tender under Rule 219 of The General Financial Rules, 2017?
- A) Maximizing profit
- B) Ensuring transparency, competition, fairness, and elimination of discretion
- C) Prioritizing speed of disposal
- D) Limiting participation to registered suppliers
Show Answer
Correct Answer: B) Ensuring transparency, competition, fairness, and elimination of discretion
2. According to Rule 219 of The General Financial Rules, 2017, what percentage of the assessed or reserved price should ordinarily be furnished as bid security?
- A) Five per cent
- B) Ten per cent
- C) Fifteen per cent
- D) Twenty per cent
Show Answer
Correct Answer: B) Ten per cent
3. Under Rule 219 of The General Financial Rules, 2017, when can negotiations be held if the highest acceptable bid price is not satisfactory?
- A) With all responsive bidders
- B) Only with the highest responsive bidder
- C) With the top three responsive bidders
- D) Negotiations are not permitted
Show Answer
Correct Answer: B) Only with the highest responsive bidder
4. What happens to the bid security if a selected bidder does not show interest in lifting the goods, as per Rule 219 of The General Financial Rules, 2017?
- A) It is refunded after a penalty
- B) It is used to cover administrative costs
- C) It is forfeited
- D) It is held until the goods are re-sold
Show Answer
Correct Answer: C) It is forfeited
5. Rule 219 (iii) of The General Financial Rules, 2017, states that late bids should:
- A) Be considered with a penalty
- B) Be considered if the delay is minor
- C) Not be considered
- D) Be forwarded to the next tender round
Show Answer
Correct Answer: C) Not be considered
Frequently Asked Questions
What is the primary objective of Rule 219 of The General Financial Rules, 2017, for disposing of goods?
The primary objective is to ensure transparency, competition, fairness, and the elimination of discretion in the sale of surplus, obsolete, or unserviceable government goods through advertised tenders.
What key information must be included in the bidding documents for advertised tenders under Rule 219?
Bidding documents must comprehensively include all required terms and conditions of sale, clearly state the applicability of taxes, and indicate the location and present condition of the goods to allow for inspection by bidders.
What are the consequences if a successful bidder fails to collect the goods after selection, according to Rule 219 of The General Financial Rules, 2017?
If a selected bidder does not show interest in lifting the goods, their bid security will be forfeited. Additionally, other actions, including the re-sale of the goods at the defaulter’s risk and cost, may be initiated after obtaining legal advice.
Key Takeaways
- Rule 219 mandates a transparent and competitive process for disposing of government surplus goods via advertised tenders.
- Comprehensive bidding documents detailing goods’ condition, terms, and applicable taxes are essential.
- A 10% bid security is ordinarily required, and full payment must be collected before goods are released.
- Strict adherence to timelines is enforced, with late bids being rejected and defaulters facing forfeiture of bid security.
Conclusion
Rule 219 of The General Financial Rules, 2017, serves as a vital guide for government entities in managing the disposal of surplus assets. By enforcing stringent procedures for advertised tenders, it upholds principles of good governance, ensuring that public resources are managed efficiently and ethically. Adherence to these guidelines is crucial for maintaining accountability and preventing financial irregularities in the disposal process.