Rules and regulaton

1. General Financial Rules 2017
(Compilation of GoI`s Financial
Rules/Orders)
Prepared by Vishnu Singh

2. Applicability of GFRs
 General Financial Rules (GFRs) are a compilation of
rules and orders of Government of India to be
followed by all while dealing with matters involving
public finances.
 To be observed by all Departments and Organizations
under the Government and specified Bodies except
otherwise provided for in these Rules.
 GFRs provide a framework within which an
organization manages its business in a financially
prudent manner without compromising its flexibility to
deal with varied situations.
 Modified in 1963, 2005 and 2017
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3. New initiatives requiring modification in GFRs
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 In the last few years, Govt. has made innovative
changes
1. Removal of distinction in non-plan and plan
expenditure,
2. Merger of Railway Budget with General Budget,
3. Focusing on outcomes through an improved
Outcome Budget document,
4. Increased focus on Public Finance Management
System(PFMS),
5. Reliance on the Direct Benefit Transfer (DBT),
6. Introduction of new e-sites like Central Public
Procurement Portal, Government e-Marketing (GeM)

4. General principles of GFRs
 Every officer incurring or authorizing expenditure
should be guided by standards of financial
propriety.
 Every officer is expected to exercise the same
vigilance in respect of expenditure incurred from
public moneys as a person of ordinary prudence
would exercise in respect of expenditure of his own
money.
 Should not be prima facie more than the occasion
demands.
 No sanction or order which will be directly or
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5.  Expenditure from public moneys should not be
incurred for the benefit of a particular person or a
section of the people
 No expenditure from public funds without sanction of
CA
 Authorizing expenditure as per DoFP
 Sanctions to the expenditure to indicate the details of
the provisions in the relevant grant or appropriation
wherefrom such expenditure is to be met.
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6. Responsibility of Controlling Officer
in respect of Budget allocation
 To see that the expenditure does not exceed the
budget allocation
 that the expenditure is incurred for the purpose for
which funds have been provided
 that the expenditure is incurred in public interest
 that adequate control mechanism is functioning in
his Department for prevention, detection of errors
and irregularities in the financial proceedings of his
subordinate offices and to guard against waste and
loss of public money,
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7. Canons (Standards) of financial
propriety
 Every officer incurring or authorising
expenditure from public moneys should be
guided by high standards of financial propriety
 Should also enforce financial order and strict
economy & see that all relevant financial rules
& regulations are observed by his own office
and by subordinate disbursing authority
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8. Reasonability & Accountability: Every authority
procuring any item / service in pubic interest shall
have the responsibility & accountability to bring in
matters relating to public procurement
• Efficiency & Economy
• For fair & equitable treatment of suppliers
• Promotion of competition in public procurement
Transparency: Place on record in precise terms, the
consideration(s) which weighed with the purchase
officer while taking procurement decision
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9. Financial propriety or Standards of
financial propriety
 1. Vigilance: Exercise the same vigilance for
expenditure from public money or organisation’s
money as a person of ordinary prudence would
normally exercise
 2. Economy: Prima-facie, expenditure should not be
more than the occasion demands
 3. Morality: Financial powers not to be used to
sanction expenditure which will directly or indirectly be
for one’s own benefit
 4. Equality: Public money not to be spent for the
benefit of particular person or section of people
unless: 1. the claim could legally be enforced; or 1.
expenditure is in pursuance with a recognised policy
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10. Basic Aims of Procurement – Five
R’s of Procurement
The term ‘Right’ is used here in the sense of
being optimal:
 i) Right quality;
 ii) Right quantity;
 iii) Right price;
 iv) Right time and place; and
 v) Right source
Public Financial Management System
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11. Govt. Accounting Rules
 Cash based Accounting. Government accounts shall be
prepared on cash basis.
 The accounts of Government shall be kept in three parts,
Consolidated Fund (Part-I), Contingency Fund (Part-II) and Public
Account (Part-III).
 Classification of transactions in Government Accounts, shall
have closer reference to functions, programmes and activities of
the Government and the object of revenue or expenditure, rather
than the department in which the revenue or expenditure occurs.
 Every officer responsible for the collection of Government dues
or expenditure of Government money shall see that proper
accounts of the receipts and expenditure, as the case may be, are
maintained in such form as may have been prescribed for the
financial transactions of the Government
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12. Capital and Revenue Expenditure
Capital Expenditure: Significant expenditure incurred with the
object of acquiring tangible assets of a permanent nature (for
use in the organisation and not for sale in the ordinary course of
business) or enhancing the utility of existing assets, shall broadly
be defined as Capital expenditure.
Revenue Expenditure: Subsequent, charges on maintenance,
repair, upkeep and working expenses, which are required to
maintain the assets in a running order as also all other expenses
incurred for the day to day establishment and administrative
expenses, shall be classified as Revenue expenditure
Capital receipts during construction mainly to be utilised in
reduction of capital expenditure :
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13. Execution of works
 Original works means all new constructions
 Minor works mean works which add capital value
to existing assets but do not create new assets.
 Repair works means works undertaken to
maintain building and fixtures.
 Power to accord adm. approval, sanction
expenditure and re-appropriate funds as DoFP
Rules
Public Financial Management System
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14.  No works shall be commenced or liability incurred in connection with it until:
(i) administrative approval has been obtained from the appropriate authority in
each case.
(ii) sanction to incur expenditure has been obtained from the competent authority.
(iii) a properly detailed design has been sanctioned; while designing the projects etc.
(iv) estimates containing the detailed specifications and quantities of various items
have been prepared on the basis of the Schedule of Rates maintained by CPWD
(v) funds to cover the charge during the year have been provided by the competent
authority.
(vi) tenders invited and processed in accordance with rules.
(vii) a Work Order issued
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15. Procurement of Goods & Services
through GeM
 The Procurement of Goods and Services is mandatory for
Goods or Services available on GeM:
(i) Up to Rs.50,000/- through any of the available suppliers
meeting the requisite quality, specification and delivery
period
(ii) Above Rs.50,000/- and up to Rs.30,00,000/- L1 Seller
amongst at least three different manufacturers, on GeM,
meeting the requisite quality, specification and delivery
period.
(iii) Above Rs.30,00,000/- through the supplier having
lowest price meeting the requisite quality, specification and
delivery period after mandatorily obtaining bids, using
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16. Purchase of goods without
quotations
 Purchase of goods upto the value of Rs.
25,000 only on each occasion may be made
without inviting quotations or bids on the basis
of a certificate to be recorded by the
competent authority in the following format.
“I am personally satisfied that these goods purchased
are of the requisite quality and specification and have
been purchased from a reliable supplier at a reasonable
price.”
Public Financial Management System
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17. Purchase of goods by Purchase
Committee
Purchase of goods costing above Rs. 25,000 on
each
occasion may be made on the recommendations of
LPC
certifying:
Certified that we, members of the purchase committee are jointly and
individually satisfied that the goods recommended for purchase are of the
requisite specification and quality, priced at the prevailing market rate and
the supplier recommended is reliable and competent to supply the goods
in question, and it is not debarred by Department of Commerce or
Ministry/ Department concerned.”
 Purchase of goods directly under DGS&D Rate
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18. Purchase of goods by obtaining bids
 It is mandatory for all Ministries/Departments to
publish
their tender enquiries and details of bid awards on
the
Central Public Procurement Portal (CPPP)
 It is mandatory for Ministries/Departments to
receive all bids through e-procurement portals in
respect of all procurements.
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19. The following are the standards methods of
obtaining
bids:
 (i) Advertised Tender Enquiry
 (ii) Limited Tender Enquiry
 (iii) Two-Stage Bidding
 (iv) Single Tender Enquiry
 (v) Electronic Reverse Auctions
Public Financial Management System
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20. Advertised Tender Enquiry
 For procurement of goods of estimated value of
Rs. 25 lakhs and above. Advertisement in such
cases should be given on Central Public
Procurement Portal (CPPP) at
www.eprocure.gov.in and on GeM.
 The organisation should also post the complete
bidding document in its website and on CPPP to
enable prospective bidders
 Minimum time for submission of bids should be
three weeks for Domestic tenders and four weeks
where deptt contemplates obtaining bids from
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21. Limited Tender Enquiry
 For purchase value up to Rs.25Lakh. Copies of the bidding
document should be sent directly by speed post/registered
post/courier/email to firms borne on the list of registered suppliers
 The number of supplier firms in LT Enquiry should be more than
three.
 The unsolicited bids should not be accepted
 Spl LT where value>Rs25Lakh when:
The demand is urgent & certified that additional expenditure involved
by not
procuring through advertised tender enquiry is Justified
Sources of supply are known and possibility of fresh sources is
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22. Single Tender Enquiry
 Procurement from a single source may be resorted
to in the following circumstances :
-When particular firm is the manufacturer of the required
Goods
-In a case of emergency, the required goods are
necessarily to
be purchased from a particular source and the reason for
such
decision is to be recorded and approval of competent
authority
obtained.
-the required item is to be purchased only from a selected
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23.  Two bid system (simultaneous receipt of separate
technical and financial bids)-high value plant &
machinery of complex nature
 Two-Stage Bidding (Obtain bids in two stages with
receipt of financial bids after receipt and evaluation of
technical bids)- applicable when it is not feasible to
formulate detailed specifications or identify specific
characteristics for the subject matter of procurement,
without reeciving inputs regarding its technical aspects
from bidders
 Electronic Reverse Auction-an online real-time
purchasing technique utilised by the procuring entity to
select the successful bid
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24. Award of Contract on nomination
basis
 Management Award of Contract on nomination basis
 A contract can be awarded on nomination basis in the
following circumstances only:
i. During natural calamities and emergency declared by Government
where the procurement possible from a single source only
ii. Where the supplier has exclusive rights in respect of goods &
services and no reasonable alternative exist.
iii. When an auction held several times but no bidders came forward
or bids offered were very low
All works awarded on nomination basis to be brought to the
notice of
governing body or Ministry for information
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25. Steps for preparation of Estimates
for works
 Prepare perspective planning for Works
 Preparation of Preliminary Project Report (PPR) or
Rough Cost Estimate
 Acceptance of necessity and issue of in-Principle
Approval
 Preparation of Detailed Project Report (DPR)
/Preliminary Estimates (PE)
 Administrative Approval and Expenditure Sanction
(A/A and E/S)
 Detailed Designs, Detailed Estimates and Technical
Sanction
 Appropriation of funds
 Procurement Planning
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26. Types of Contracts
 Lump sum (Fixed Price) Contract-fixed price &
scope
 Item rate (Unit Rate) Contract (BoQ)-
commonly used
 Percentage Rate Contract-where major design
process & direction
 Piece Work Contract-in anticipation of
approval
 Engineering, Procurement and Construction
(EPC) Contracts-design and build contract
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27. Bidding Systems
 Single Stage Bidding System
 Single Stage Single Bid/ Envelope System
 Single Stage Two Envelope Systems
 Single Stage Multiple Envelope System
 Two Stage Bidding with Expression of
Interest (EoI)
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28. Preparing Bid Documents,
Publication, Receipt and Opening
of Bids
 Bid document should clearly spelt out
qualification criteria, scope of works, GCC-no
ambiguity
 SBD should be followed, if don’t have one,
CPWD may be followed
 Bid document should have followeing sections:
 NIT
 Instructions to Bidders
 GCC
 SCC
 Tech. specifications
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29. • Forms of Bid
• Bill of Quantity
• Standard form: Bid Security, Performance
Security, Advance payments security, Form of
agreement
• Schedule of supplementary information
• Draweings
• Documents to be furnished by bidders
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30.  Bid Security-2 to 5 %
 Performance Security- 5 to 10%
 Security Deposit/Retention money(1/2 of RM to be released
on issue of ,Taking Over Certificate and remaining ½ 365
days after DLP
EVALUAGTION OF BIDS
AWARD OF WORK
MONITORING OF WORK
-OOOOO-
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34. Public Financial Management System
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35. Public Financial Management System
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