Rule 157 of The General Financial Rules 2017 Avoiding Piecemeal Purchases

Rule 157 of The General Financial Rules 2017 Avoiding Piecemeal Purchases

Visual Summary

Executive Summary

Rule 157 of The General Financial Rules, 2017, explicitly prohibits the practice of dividing a demand for goods into smaller quantities. This is to prevent circumventing the requirement for obtaining sanction from a higher authority, which would otherwise be necessary based on the total estimated value of the demand. The rule emphasizes transparency and adherence to financial propriety in procurement processes, ensuring that all purchases are subjected to the appropriate level of scrutiny and approval.

In-Depth Analysis of Rule 157

Rule 157 is a foundational principle in public procurement, designed to uphold financial discipline and prevent potential misuse of authority. It directly addresses the issue of “piecemeal purchases,” a common tactic used to bypass established financial controls.

Breakdown of the Rule:

• Prohibition of Division: The core of the rule is the strict prohibition against breaking down a single, larger demand for goods into multiple smaller demands.
• Purpose of Prohibition: This division is specifically forbidden when its intent is to avoid the necessity of obtaining sanction from a higher authority.
• Reference to Estimated Value: The requirement for higher authority sanction is directly tied to the total estimated value of the demand, implying that the aggregate value, not fragmented values, should dictate the approval level.
• Financial Propriety: The rule underpins the broader principle of financial propriety, ensuring that all public expenditures are transparent and subject to appropriate oversight.

Practical Example:

Consider a government department that needs to purchase office furniture worth Rs. 600,000. If the sanctioning limit for a Head of Office is Rs. 200,000, and for a higher authority it is above Rs. 200,000, Rule 157 dictates that the entire Rs. 600,000 purchase must be treated as a single demand. Splitting this into three separate purchases of Rs. 200,000 each to allow the Head of Office to sanction them individually would be a direct violation of Rule 157. The intent is to ensure that the total financial commitment is always reviewed and approved by the authority competent for that aggregate value.

Related Provisions

Understanding Rule 157 is enhanced by examining related provisions that govern procurement and financial sanctions:

• Rule 144 of The General Financial Rules, 2017: Fundamental Principles of Public Buying – This rule outlines the core principles of efficiency, economy, and transparency in public procurement, which Rule 157 directly supports by preventing circumvention of financial controls.
• Rule 158 of The General Financial Rules, 2017: Purchase of Goods by Obtaining Bids – This rule details the standard methods for procuring goods by obtaining bids, reinforcing the need for proper procedures that Rule 157 aims to protect from manipulation.
• Rule 225 of The General Financial Rules, 2017: General Principles for Contract – This rule sets out general principles for entering into contracts, including precision and definiteness of terms, which are undermined by piecemeal purchases designed to avoid scrutiny.

Learning Aids

Mnemonics:

• Piecemeal Purchases Prohibited: Proper Procurement Prevails.
• Split Sanctions Stop: Single Sum Scrutiny.

Process Flowchart:

1. What does Rule 157 of The General Financial Rules, 2017, primarily prohibit?

• A) Purchasing goods without a budget allocation.
• B) Dividing a demand for goods into small quantities.
• C) Procuring services from a single source.
• D) Incurring expenditure on a New Service.

2. The main objective of Rule 157 of The General Financial Rules, 2017, is to avoid:

• A) Delays in procurement processes.
• B) The necessity of obtaining sanction from a higher authority.
• C) Over-expenditure on capital projects.
• D) The use of e-procurement portals.

3. According to Rule 157 of The General Financial Rules, 2017, what determines the level of sanction required for a demand for goods?

• A) The urgency of the demand.
• B) The number of suppliers available.
• C) The estimated value of the total demand.
• D) The type of goods being procured.

4. Which of the following practices would violate Rule 157 of The General Financial Rules, 2017?

• A) Consolidating multiple small demands into one large purchase.
• B) Seeking approval from the highest authority for all purchases.
• C) Breaking down a Rs. 500,000 purchase into five Rs. 100,000 purchases to stay within a lower authority’s limit.
• D) Using e-tenders for high-value procurements.

5. Rule 157 of The General Financial Rules, 2017, is primarily concerned with ensuring:

• A) Timely delivery of goods.
• B) Quality of procured items.
• C) Adherence to financial sanction limits based on total demand.
• D) Fair competition among suppliers.