OVERVIEW ON PURCHASE POLICY.ppt

OVERVIEW ON PURCHASE
POLICY
Sib Sankar Banik, W.B.A&A.S,
INTERNAL AUDIT OFFICER,
FINANCE (INTERNAL AUDIT) DEPARTMENT

GENERAL GUIDELINES
 Government purchases are guided by some very stringent
financial rules framed by the Government in this respect. The
general principles to be observed while entering into contracts
or agreements for the purpose of making purchases are
contained in Rule 47 of the West Bengal Financial Rules
Volume I as amended from time to time. The last extensive
and important amendment was effected through G.O. No.
10500-F dated 19/11/2004. Subsequently amended by
G.O.No. 5400-F(Y) Date, Kolkata, the 25th June, 2012

ESSENTIAL CONDITION GOVERNING
EXPENDITURE FROM PUBLIC FUND
 No authority may incur expenditure or enter into
any liability involving expenditure from public fund
until it has been sanctioned by the general or
special order of the Governor or any authority on
his behalf.
 The expenditure should also be provided for in
authorised grants and appropriation for the year
(Rule – 34)

STANDARD OF FINANCIAL PROPRIETY SET BY
F.R (RULE – 35)
 Every public officer is expected to exercise same
vigilance at the time of incurring public money as a
person of ordinary prudence would exercise while
spending his own money.
 The expenditure should not be prima facie more
than the occasion demands.
 No authority should exercise powers of sanctioning
expenditure for his own advantage
 Public money should not be spent for the benefit of
particular section of people unless provided for.
 The amount of allowance granted should be so
regulated that it does not become of source of
profit to the recipient.

CONTROL OF EXPENDITURE (RULE – 37)
Duties of controlling officer are:-
 Total expenditure is kept within the limit of
authorised appropriation.
 Funds allotted to the spending units are expended
in the public interest and upon objects for which it
was sanctioned.
 He must be aware of the total expenditure so far
made, commitment and liabilities and amounts to
be incurred about these.
 He is responsible for any instance of excess or
financial irregularities brought to notice by audit
scrutiny or otherwise.

RULE 38.
 In the discharge of his ultimate responsibilities for the
administration of an appropriation or part of an appropriation
placed at his disposal, every officer incurring or authorising
expenditure from public fund must satisfy himself not only that
adequate provisions exist within the departmental organisation
for systematic internal checks calculated to prevent and detect
errors and irregularities in the financial proceedings of his
subordinate officers and to guard against waste and loss of
public money and stores, but also that the prescribed checks
are effectively applied.

TO MEET EMERGENCY NATURE OF EXPENDITURE
To meet emergency nature of expenditure each head of
office is allowed to draw a permanent advance for the
office considering extent of work and nature of job
attached . The Head of Office shall scrutinize before
making such payments and claims for reimbursement
in T.R. 34 . Head of Office is also responsible for
informing A.G,W.B regarding total amount of
permanent advance held by him to A.G. W.B within
15th April each year.

DELEGATION OF FINANCIAL POWER RULE,
1977
 It mainly deals with the financial power of various
administrative authority to incur expenses under the
head office expenses, other charges etc. It also
deals with delegation of DDO’s role by Head of
Office.

CONTRACTS AND TENDERS RULES
(WEST BENGAL FINANCIAL RULES PROVISIONS)
Rule 47. The following principles are laid down for the guidance of
all officer who have to enter into contracts or agreements :-
(1) No contract shall be made by a subordinate authority which
has not been directed or authorised to do so by or under the
orders of the Governor in terms of Clause (1) of Article 299 of
the Constitution. The Governor shall be made a party to every
contract of the Government and the words "for and on behalf of
the Governor of West Bengal" should follow the designation of
the officer authorised in this behalf under Article 299 of the
Constitution and executing the contract appended below his
signature.

RULE 47. CONTD..
 Note-1. - The various classes of contracts and assurances of
property, authorised by the Governor in exercise of the powers
conferred by Clause (1) of Article 299 of the Constitution which
may be executed by different subordinate authorities of the
Government are specified in the notification issued by the
Judicial Department from time to time.
 Note-2. - The limitations upon the powers of subordinate
authorities, the condition under which such power should be
exercised and the general procedure prescribed with regard to
various classes of contracts and assurances of property, such
as calling for and acceptance of tenders, etc. are laid down in
Delegation of Financial Power Rules, 1977, and the appropriate
Departmental regulations and orders.

RULE 47. CONTD
 (2) The following general principles shall be observed by all
offices empowered to enter into contracts or agreements for
obtaining supply and execution of works and services on
behalf of the Government and involving expenditure from
public fund.
 The terms of contract must be precise and definite and there
must be no room for ambiguity or misconstruction therein.
 (c)No contract involving an uncertain or indefinite liability or
any condition of an unusual character should be entered into
without the previous consent of the Finance Department.
 Where escalation in respect of labour overheads, customs
duties, freight charges etc. is provided for in a contract the
basis for the calculation of the same should be clearly
indicated.

PUBLIC PROCUREMENT
 Government procurement, also called public
tendering or public procurement, is the procurement
of works, goods and services on behalf of a public
authority, such as a government agency. A well
functioning procurement system can be said to be
in place if it achieves the objectives of
transparency, competition, economy, efficiency,
fairness and accountability.

PRINCIPLES OF PROCUREMENT
Transparency: Transparency is letting everyone
know ,not only the facts and figures of procurement
but also the mechanisms and procedures followed
Equal Opportunity and Fairness: Being
objective and ensuring impartial, unbiased and
equitable treatment of tenderers by conforming with
rules and standards free from discrimination and
dishonesty

PRINCIPLES OF PROCUREMENT
Economy: Achieving economy is getting the right
thing at the right price -Value for Money (vfm)
Efficiency: With economy in price and choice of
item, ensuring its arrival in the right place at the right
time for its intended use is Efficiency -Money for
Value(mfv)

METHODS OF PROCUREMENT
1. Direct Purchase i.e. without quotation/tender
2. Procurement by inviting quotation
3. Procurement by inviting tender /bid

PROCUREMENT WITHOUT TENDER/
QUOTATION
Purchases upto Rs. 10,000.00 may be made without
any tender or quotation. The purchasing authority
shall certify that the purchase has been made at
reasonable market price in cases of purchase from the
open market without tender / quotation.
[Consult:10500-F & 5400-F(Y) Dated:19.11.2004&25.06.2012]

PROCUREMENT BY INVITING
QUOTATION
 Purchase above Rs.10,000.00 and upto
Rs.1,00,000.00 shall be made after inviting
quotations from at least four reliable firms
which shall be opened in presence of willing
agents. In such cases of purchase by invitation
of quotation, procurement shall be finalized on
recommendation of Local Purchase Committee
to be constituted in each office.

PROCUREMENT BY INVITING QUOTATION
In respect of offices outside Kolkata, the notice for
quotation shall be issued through the notice board of
the concerned office, the offices of the District
Magistrate and the Sub-Divisional Officer and the
Panchayat, Municipality of that locality. In Kolkata, such
notice shall be circulated by displaying in the notice
board of Local Bodies and by sending the same to
suppliers, etc.
[Consult:10500-F &5400-F(Y) Dated:19.11.2004&25.06.2012]

PROCUREMENT BY INVITING OPEN
TENDER/BID
For the purpose of these guidelines, the words “bid” and
“tender” shall have the same meaning. Subject to the
special rules or order or procedure that may be
prescribed by the Govt. in respect of a particular
department, open tender shall invariably be invited for
the supply of articles or stores or for execution of works
and services worth Rs.1,00,000.00 or more.
[Consult:10500-F &5400-F(Y) Dated:19.11.2004&25.06.2012]

PRE-TENDERING STAGE
The period before “calling for Tenders for price
comparison” shall be treated as ‘Pre-tendering stage’.
This stage involves:
i. Preparation of Estimates
ii. Vetting of Detailed Cost Estimates
iii. Administrative Approval
iv. Technical Sanction &
v. Expenditure Sanction

PROCUREMENT BY INVITING OPEN
TENDER/BID
 Tender notice shall always be given due
publication through the leading dailies in English,
Hindi and Bengali. The use of intermediate
general suppliers should be discouraged. Open
tender for supply of articles or stores or for
execution of works worth Rs.1,00,000.00 or more
shall be invited in the following manner:

PUBLICATION OF NIQ/NIB
 For supply of articles or stores or for execution of
works and services with estimated value exceeding
Rs.10,000.00 and upto Rs.1,00,000.00 (One Lakh).
 By means of- Publication of the work on the notice
board and on the official website of the
administrative department if maintained.

Rs.1,00,000.00 (one Lakh) and upto
Rs.5,00,000.00( Five Lakh) .
administrative department if maintained and also
brief referral advertisement in one daily Bengali
newspaper [in case of hill areas of Darjeeling
District in Nepali newspaper].

 For supply of articles or stores or for execution
of works and services with estimated value
exceeding Rs.5,00,000.00 ( Five Lakh) and
upto Rs.10,00,000.00( Ten Lakh).
 By means of- Publication of the work on the
notice board and on the official website of the
administrative department if maintained and
also brief referral advertisement in two daily
newspapers, one in Bengali [in case of hill areas
of Darjeeling District in Nepali newspaper] and
the other in English.

Rs.10,00,000.00
administrative department if maintained and also
brief referral advertisement in three daily
newspapers, one each in Bengali [in case of hill
areas of Darjeeling District in Nepali
newspaper],in English and in Hindi

 For Tender Value of Rs. 50 lakhs and above, e-
tendering through the centralized e-tender portal,
wbtenders.gov.in is mandatory in addition to
publication in print media.

TWO BID SYSTEM
 For high value purchase exceeding
Rs.10,00,000.00 or for purchasing plant,
machinery, etc. of complex and technical nature,
bids may be invited in two parts under Two-Bid
System.

TWO BID SYSTEM
 Selection of agency should be made on the basis of at
least three tenders which shall be opened in presence
of the willing agents. If the number of tenders
received is less than three, tender should be invited
afresh.

TWO BID SYSTEM
For high value purchase exceeding Rs.10 lakhs or
for purchasing plant, machinery, equipment, etc. of
complex and technical nature, bids shall be invited
in two parts as under:
a) Technical Bid consisting of all technical details
along with commercial terms and conditions &
b) Financial Bid including item wise price for the
items mentioned in the Technical Bid

TWO BID SYSTEM
The technical bid and the financial bid should be sealed
by the bidder in separate cover duly super scribed and
both the sealed covers are to be put in a bigger cover
which should also be sealed and duly super scribed.

TWO BID SYSTEM
 The technical bids shall be opened by the purchasing
department/office at the first instance and evaluated
by a competent committee or authority. Financial bid
should not be opened until the technical bid is
opened and assessed for selection of the qualified
bidder.

TWO BID SYSTEM
At the second stage, financial bids of only the
technically acceptable offers shall be opened for
furnishing value and ranking before finalization and
awarding of the contract. After evaluation, the lowest
rate financial bid from amongst the technically
qualified bidders shall be accepted.

TENDER/BIDDING PROCEDURE
One Bid per Bidder:
A Bidder who submits more than one Bid for one particular
work will cause all such particular bids rejected and the
Bidder shall be disqualified and his earnest money shall be
forfeited.

Bid Validity
Bidders/tenderers shall be required to submit
bids/tenders valid for a period specified in the Bidding
Documents that shall be sufficient to enable the
competent authorities to complete the comparison and
evaluation of bids in order to award the contract within
that period to the successful bidder..

Earnest Money
A contractor intending to participate in the tender
process shall deposit earnest money as provided for
in the notice inviting tender. Earnest money shall be
released to the unsuccessful tenderers/bidders,
once the contract has been signed with the
successful bidder.

Security Deposit
The successful tenderer shall be required to execute a
formal agreement in duplicate within the time stipulated in
the Bidding Document, failing which his tender shall liable
to be rejected and his earnest money forfeited.

WHAT IS A CONTRACT
 Contract is a legal document between the two
parties for carrying out the described work or
supplies.
 It specifies clearly the obligations to be
performed by both the parties.
 It also species the compensation to be paid by
the defaulting party to the other affected party.

SECURITY DEPOSIT
On execution of such agreement he shall be required to
deposit in one or more installments as may be specified
in the agreement, security money of such amount
which together with the earnest money already
deposited, shall amount to ten per cent of the total
value of the work as quoted by him.

SECURITY DEPOSIT
 Security Deposit may also be deducted from the
payments due from time to time on account of work
done and supplies made under a contract in such
manner that final security deposit comes to ten
percent of the value of work done or supplied with.

RELEASE OF SECURITY DEPOSIT
 The Security Deposit of a contractor shall not
be refunded till the final bill for the relative work
for supplies has been prepared and passed for
payment, or the period specified in the
agreement in this behalf expires, whichever is
later.

NOTIFICATION NO.10500-F DATED 19TH
NOVEMBER 2004
Purchase up to Rs 20,000/- for a financial year is to be
processed through inviting quotation . Any purchase above
Rs 20,000/- attracts invitation of tender. The tender notice
shall be circulated at important dailies through Director of
Information and Culture who has been authorized by the
Govt. to select the daily newspapers where from the tender
notice will be circulated. ( This rule has been amended )
There are four categories of officers named in the financial
rules Such as a) Sub-Divisional Officer status , b) District
Officer status , c) Director and Head of the Departmental
status , d) Departmental Secretary status

PURCHASE PROCEDURE
 Cash transaction upto to Rs 10000/- may be made
without quotation or tender.
 Transaction above Rs 10000/- up to Rs 100000/-
shall be made after inviting quotation from at least 4
reliable firms.
 Open Tender shall be invited for supply of articles
or stores or execution of works and services above
Rs 100000/-

CONTRACTS AND TENDERS (RULE – 47 DULY
MODIFIED)
Salient features:-
 No contract shall be made by a subordinate
authority which has not been directed under the
order of Governors.
 Terms of Contracts should be precise and definite.
There should not be any room for ambiguity.
 Terms of a contract, once settled, should not be
materially varied without previous consent of the
authority and if permitted reasons should be
recorded in writing.

CONTRACTS AND TENDERS (RULE – 47 DULY
MODIFIED) CONTD….
Salient features:-
 All contract should have a clause for liquidated
damages for default on part of contractor.
 Cost plus contract should be avoided.
 Quantity of work to be done should be expressed
clearly.
 There should be a provision for security deposit.
 High value contract should be invited in
consultation with the Law Officers.

FOLLOWING POINTS TO BE NOTED WHILE
MAKING PURCHASES
 Registered SSI units of WB are to be given 15%
price preference in comparison to large, medium
industrial unit.
 All industrial units owned or managed by Govt. of
WB should be given 10% price preference.
 State based medium scale units shall be given 10%
price preference vis-à-vis large industrial unit and
SSI of other states.
 If Govt. stationary office fails to supply stationary
articles same can be purchased from Co-operative
Societies without tender or quotation like Confed,
Samabayika etc.

ITEMS TO BE PURCHASED FROM WBSIDC, KHADI
INDUSTRIES, WB HANDLOOM AND POWERLOON
DEVELOPMENT CORPN., CADC ETC
 A- I
 A – II
 A – III
 A – IV, V, VI, VII AND VII OF 1500-F dated
19.11.2004

 It is absolutely necessary that all purchases should
be made within delegated financial powers of Head
of the Office.

EARNEST MONEY - EXEMPTION
 Suppliers registered with DGS&D, Govt. of India.
 SSI registered with Dte. Of SSI, Govt. of West
Bengal
 RIC
 Lighthouse for the blind
 Trading Corporation of India Ltd
 Labour Co-operative Societies
 M/s Mackintosh Burn Ltd.

SELECTION OF TENDER
Following points should be kept in kind in selecting
the lowest bidder:-
 No. of tenderers should be at least three. Otherwise
re-tendering should be done.
 The bid should be opened in the presence of
members of Selection Committee
 Comparative analysis of rate and value.
 Lowest tenderer should be awarded order. If not,
reason should be specified.
 Credentials and turnover of the firm.

TDS (TAX DEDUCTION AT SOURCE)
It is the duty of the DDO to see that taxes are
deducted as per provisions of the following sections
of I.T Act:-
 Sec – 192 (TDS from Salaries).
 Sec – 194C (TDS from Contractor).
 Sec – 194J (TDS from Profession Service)

OVERVIEW ON PURCHASE POLICY.ppt

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