Rule 194 of The General Financial Rules 2017 Single Source Selection Consultancy by Nomination
Original Rule Text
Visual Summary
Justifies direct negotiation/nomination for consultancy.
Continuation of work, emergencies, proprietary expertise, special justification.
Requires recorded justification, competent authority approval, reasonable pricing, and no splitting of services.
Executive Summary
Rule 194 of The General Financial Rules, 2017 outlines the conditions under which a Ministry or Department can select a consultant through single-source selection or nomination, bypassing competitive bidding. This method is reserved for exceptional circumstances, including tasks that are a natural continuation of previous work, emergency situations, assignments requiring proprietary techniques or unique expertise, or other special circumstances with adequate justification. Crucially, such selections must ensure fairness, equity, reasonable pricing, and avoid splitting services to circumvent procurement rules.
In-Depth Analysis of the Rule
Rule 194 of The General Financial Rules, 2017 provides a framework for single-source selection of consultants, a departure from the standard competitive bidding process. This rule is designed to be applied only in specific, justified scenarios where competitive procurement may not be feasible or in the best interest of the government. It emphasizes the need for careful consideration and robust documentation when opting for this method.
Breakdown of the Rule:
- Exceptional Circumstances (i): Single-source selection is appropriate for tasks that represent a natural continuation of previous work carried out by the same firm. This ensures continuity and leverages existing knowledge.
- Emergency Situations (ii): This method can be used in emergencies, such as situations arising after natural disasters, where the timely completion of the assignment is of utmost importance and competitive bidding would cause undue delay.
- Proprietary Techniques/Unique Expertise (iii): If the execution of the assignment involves the use of proprietary techniques or if only one consultant possesses the requisite specialized expertise, single-source selection is justified.
- Special Justification (iv): Other special circumstances may warrant single-source selection, provided there is adequate justification recorded in the file and approval from the competent authority is obtained before proceeding.
- Fairness and Equity (v): Regardless of the justification, the process must ensure fairness and equity. This includes verifying that prices are reasonable and consistent with market rates for similar tasks, and that the required consultancy services are not split into smaller procurements to bypass competitive procedures.
Practical Example:
A government department has been working with a specialized IT firm for two years to develop a complex, custom-built software system using proprietary algorithms. The project is nearing completion, but an urgent, critical extension is required to integrate a new regulatory compliance module. Due to the firm’s unique knowledge of the existing proprietary code and the urgency of the compliance requirement, the department decides to engage the same firm through single-source selection under Rule 194 (i) and (ii). The department records a full justification, detailing the firm’s unique expertise and the critical timeline, and obtains approval from the competent authority. They also ensure the proposed pricing for the extension is reasonable compared to market rates for similar specialized services, as required by Rule 194 (v).
Related Provisions
Understanding Rule 194 is enhanced by considering other related provisions in the General Financial Rules, 2017:
- Rule 144 of The General Financial Rules 2017 Fundamental Principles of Public Buying: This rule lays down the overarching principles for all public procurement, making Rule 194 an exception to these general guidelines.
- Rule 166 of The General Financial Rules 2017 Single Tender Enquiry: This rule provides similar provisions for single-source procurement of goods, offering a parallel for understanding the exceptional nature of Rule 194.
- Rule 192 of The General Financial Rules 2017 Quality and Cost Based Selection (QCBS): This rule outlines the standard, competitive method for selecting consultancy services, highlighting the deviation represented by Rule 194.
Learning Aids
Mnemonics:
- To remember the conditions for Single Source Selection under Rule 194, think of CEPSF:
- Continuation of previous work
- Emergency situations
- Proprietary techniques/expertise
- Special circumstances (justified)
- Fairness and equity
Process Flowchart:
Multiple Choice Questions (MCQs)
1. Under Rule 194 of the General Financial Rules, 2017, which of the following is NOT a valid exceptional circumstance for single-source selection of a consultant?
- A) Tasks that are a natural continuation of previous work.
- B) Situations arising after natural disasters where timely completion is crucial.
- C) When multiple consultants offer similar expertise at competitive rates.
- D) When the assignment involves proprietary techniques.
Show Answer
Correct Answer: C) When multiple consultants offer similar expertise at competitive rates.
2. According to Rule 194 of the General Financial Rules, 2017, what is a mandatory requirement when selecting a consultant through single-source selection under special circumstances?
- A) Obtaining approval from the Ministry of Finance.
- B) Recording full justification in the file and obtaining competent authority approval.
- C) Publicly advertising the intent for single-source selection.
- D) Ensuring the consultant is a Public Sector Undertaking.
Show Answer
Correct Answer: B) Recording full justification in the file and obtaining competent authority approval.
3. Rule 194 (v) of the General Financial Rules, 2017 emphasizes which of the following principles for single-source selection?
- A) Maximizing profit for the consultant.
- B) Ensuring fairness, equity, and reasonable pricing.
- C) Prioritizing speed over quality.
- D) Allowing services to be split into smaller procurements.
Show Answer
Correct Answer: B) Ensuring fairness, equity, and reasonable pricing.
4. If a Ministry needs to engage a consultant for an emergency situation where timely completion is of utmost importance, which rule of the General Financial Rules, 2017 would primarily apply for single-source selection?
- A) Rule 144
- B) Rule 192
- C) Rule 194 (ii)
- D) Rule 166
Show Answer
Correct Answer: C) Rule 194 (ii)
5. Rule 194 of the General Financial Rules, 2017 states that single-source selection is considered appropriate under exceptional circumstances. Which of the following is a key aspect to ensure when using this method?
- A) The consultant must be the lowest bidder.
- B) The assignment must be entirely new and unrelated to previous work.
- C) The required consultancy services are not split into smaller sized procurement.
- D) The selection process must involve at least three competitive bids.
Show Answer
Correct Answer: C) The required consultancy services are not split into smaller sized procurement.
Frequently Asked Questions
When is single-source selection for consultancy permissible under Rule 194 of the General Financial Rules, 2017?
It is permissible only under exceptional circumstances, such as natural continuation of previous work, emergency situations, use of proprietary techniques, or when only one consultant has the requisite expertise, provided there is adequate justification and competent authority approval.
What safeguards are required when a Ministry uses single-source selection under Rule 194 of the General Financial Rules, 2017?
The Ministry must ensure fairness and equity, that prices are reasonable and consistent with market rates for similar tasks, and that the required consultancy services are not split into smaller procurements to avoid competitive bidding. Full justification must be recorded, and approval from the competent authority obtained.
Key Takeaways
- Rule 194 permits single-source selection for consultancy in exceptional circumstances only.
- Justifiable reasons include work continuation, emergencies, proprietary expertise, or other specially approved cases.
- Strict adherence to fairness, equity, and reasonable pricing is mandatory.
- Full justification and competent authority approval are crucial for such selections.
Conclusion
Rule 194 of The General Financial Rules, 2017 serves as a vital provision, allowing for flexibility in consultant selection under truly exceptional circumstances. While promoting efficiency and continuity in specific scenarios, it simultaneously mandates rigorous justification and adherence to principles of fairness and financial propriety, ensuring that public funds are utilized judiciously even when competitive bidding is bypassed.