Rule 169 of The General Financial Rules 2017 Maintenance Contract
Original Rule Text
Visual Summary
Ensures upkeep of purchased goods.
Sophisticated and costly equipment.
Only after warranty period ends.
Executive Summary
Rule 169 of The General Financial Rules, 2017, outlines the necessity and conditions for entering into maintenance contracts for goods purchased by government entities. These contracts are particularly crucial for sophisticated and expensive equipment and machinery. A key stipulation is that paid maintenance contracts should only commence after the expiration of the supplier’s warranty period or any other extended free maintenance period specified in the original contract terms.
In-Depth Analysis of Rule 169
Rule 169 provides specific guidance on the procurement of maintenance services, emphasizing strategic planning for the longevity and operational efficiency of government assets. It acknowledges that while initial purchases are covered by warranties, long-term asset management requires dedicated maintenance agreements.
Breakdown of the Rule:
- Necessity of Maintenance Contracts: The rule states that maintenance contracts may be necessary depending on the cost and nature of the goods purchased. This implies a risk-based assessment where high-value or critical equipment warrants such contracts.
- Contracting Parties: Contracts can be made with the original supplier or any other competent firm, offering flexibility in choosing service providers. This promotes competition and potentially better service terms.
- Focus on Sophisticated Equipment: Special emphasis is placed on “sophisticated and costly equipment and machinery,” indicating that these assets require a higher level of attention regarding post-warranty support.
- Timing of Commencement: A critical provision is that paid maintenance should only begin after the warranty period or any other free maintenance period provided by the supplier has expired. This prevents redundant expenditure and ensures optimal utilization of warranty benefits.
Practical Example:
A government department procures a high-end medical imaging machine with a 2-year warranty. According to Rule 169 of The General Financial Rules, 2017, the department should plan for a maintenance contract. However, the paid maintenance contract should only become active after the initial 2-year warranty period provided by the manufacturer has concluded. This ensures the government benefits fully from the free warranty service before incurring additional costs for maintenance.
Related Provisions
Rule 169 on Maintenance Contracts is complemented by other rules governing procurement and contract management:
- Rule 144: Fundamental Principles of Public Buying – These principles underpin all procurement activities, including those leading to maintenance contracts, ensuring efficiency, economy, and transparency.
- Rule 171: Performance Security – This rule ensures that the successful bidder for any contract, including maintenance, provides security for due performance.
- Rule 225: General Principles for Contract – This rule lays down the overarching principles for entering into all types of contracts, ensuring clarity, legal soundness, and protection of government interests.
Learning Aids
Mnemonics:
- Maintenance Contracts Start After Warranty: Helps remember the key timing aspect of Rule 169.
Process Flowchart:
Multiple Choice Questions
1. What is the primary condition for the commencement of a paid maintenance contract under Rule 169 of the General Financial Rules, 2017?
- A) Immediately after purchase.
- B) After the supplier’s warranty period expires.
- C) When the equipment shows signs of wear.
- D) Upon approval from the Ministry of Finance.
Show Answer
Correct Answer: B) After the supplier’s warranty period expires.
2. Rule 169 of the General Financial Rules, 2017, emphasizes maintenance contracts for which type of goods?
- A) All goods, regardless of cost.
- B) Only low-cost, high-volume items.
- C) Sophisticated and costly equipment and machinery.
- D) Goods nearing their end-of-life.
Show Answer
Correct Answer: C) Sophisticated and costly equipment and machinery.
3. According to Rule 169 of the General Financial Rules, 2017, with whom can a maintenance contract be entered?
- A) Only with the original supplier.
- B) Only with a government-approved firm.
- C) With the supplier or any other competent firm.
- D) With any firm, provided it offers the lowest price.
Show Answer
Correct Answer: C) With the supplier or any other competent firm.
4. If a purchased item has an extended free maintenance period beyond the standard warranty, when should a paid maintenance contract commence as per Rule 169 of the General Financial Rules, 2017?
- A) Immediately after the standard warranty.
- B) After the extended free maintenance period.
- C) At the discretion of the procuring entity.
- D) Never, as free maintenance is sufficient.
Show Answer
Correct Answer: B) After the extended free maintenance period.
5. The purpose of Rule 169 of the General Financial Rules, 2017, is to ensure:
- A) Suppliers offer lifetime warranties.
- B) Government avoids all maintenance costs.
- C) Proper upkeep and longevity of government assets.
- D) Only new equipment is purchased regularly.
Show Answer
Correct Answer: C) Proper upkeep and longevity of government assets.
Frequently Asked Questions
Q: When should a government department consider a maintenance contract under Rule 169 of The General Financial Rules, 2017?
A: A government department should consider a maintenance contract depending on the cost and nature of the goods, especially for sophisticated and costly equipment and machinery, to ensure their continued functionality and longevity.
Q: Can a maintenance contract under Rule 169 of The General Financial Rules, 2017, start during the warranty period?
A: No, Rule 169 explicitly states that paid maintenance contracts should only commence after the supplier’s warranty period or any other extended free maintenance period has expired.
Q: Is it mandatory to contract with the original supplier for maintenance as per Rule 169 of The General Financial Rules, 2017?
A: No, the rule allows for maintenance contracts to be entered into with either the supplier of the goods or any other competent firm, providing flexibility in choice.
Key Takeaways
- Rule 169 mandates consideration of maintenance contracts for purchased goods, particularly for high-value and complex equipment.
- A crucial aspect is that paid maintenance contracts must only begin after the expiration of any free warranty or extended service periods.
- Flexibility exists to engage either the original supplier or another competent firm for maintenance services.
- The rule aims to ensure the long-term operational efficiency and protection of government investments in critical assets.
Conclusion
Rule 169 of The General Financial Rules, 2017, provides essential guidelines for the strategic management of government assets through maintenance contracts. By stipulating that paid maintenance should only commence post-warranty, it ensures fiscal prudence and optimal utilization of resources, safeguarding public investment in critical infrastructure and equipment.