Orientation Programme on Purchase Procedure for Faculty

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Orientation programme on
PURCHASE PROCEDURE
For AUTONOMOUS EDUCATIONAL ORGANISATIONS

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What is Purchase?
Purchasing also known as procurement.
Means buying of all the materials, services,
works needed by the organization.

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PUBLIC PROCUREMENT
What is Public Procurement / public buying?
Public buying is different from private
buying in many ways.
Public buying needs to be transparent and
follow applicable rules, regulations and
existing policies.

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GUIDELINES FOR PUBLIC BUYING

43. VARIOUS WATCH-DOGS

48. Rule 137 OF GFR – 2005
Fundamental principles of public buying
Every authority delegated with the financial
powers of procuring goods in public interest shall have the
responsibility and accountability to bring efficiency,
economy, transparency in matters relating to public
procurement and for fair and equitable treatment of
suppliers and promotion of competition in public
procurement.

49. 299. Contracts
(Article 299, Constitution of India)
(1) All contracts made in the exercise of the executive
power of the Union or of a State shall be expressed to be
made by the President, or by the Governor of the State,
as the case may be, and all such contracts and all
assurances of property made in the exercise of that
power shall be executed on behalf of the President or the
Governor by such persons and in such manner as he may
direct or authorise.

50. FIVE GOLDEN RULES Of PURCHASES

51. 1. Contact several vendors to find the best price.
2. A purchase discount / a trade discount can affect
prices.
3. Purchaser should be able to take advantage of a
quantity discount or a cash discount.
Quantity discount: a discount that a vendor gives to a buyer who places large orders.
Cash discount : an amount deducted from the selling price for payment within a
specified time period
GETTING RIGHT PRICE

52. Factors affecting the Right Price
Early Advance
Payment
without Bank
Guarantee
Advance
Payment against
Bank Guarantee
Payment within
30 days after
receipt of
Materials
Payment
Against
Delivery
Payment after
30 days from
date of receipt
of Materials

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REASONABLE PRICE
Important:

Last purchase price of same (or in its
absence, similar) item.

Current Market Price of the same or
similar item.

Price of raw materials which goes into the
item.

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L1’s PRICE ABOVE“REASONABLE”
LIMIT
• At first, we need to recheck the correctness of the
estimated value.
• If estimated price is the same then :-
• Price negotiation with the lowest technically accepted
tenderer.
• Re-tender with wide publicity with same terms and
conditions or with suitable modifications if necessary.
• IF L1’s PRICE IS BELOW REASONABLE LIMIT,
WHAT TO DO?

55. CHOOSING RIGHT VENDOR
Considerations in Vendor Selection
RELIABILITY
DISTANCESERVICES

56. TYPES OF TENDERS
Expression of Interest
Public Tender
Limited Tender
Global Tender
Request for Proposal (RFP)
Request for Quotations(RFQ)
E-tender
Percentage Rate Tender

57. CONTENTS OF TENDER DOCUMENT
As per GFR-168

58. CONTENTS OF TENDER DOCUMENT
As per GFR-168

59. CONTENTS OF TENDER DOCUMENT
As per GFR-168

61. As per GFR-170:
It is security for not withdrawing /altering bid
once submitted.
It is charged 2% - 5% of bid value.
EMD is also known as Bid Security / Bid Bond.
EARNEST MONEY DEPOSIT

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PERFORMANCE SECURITY
As per GFR-171:
To ensure due performance of the contract,
performance security is taken from bidders.
It is charged 5% to 10% of Purchase Value.
Taken in the from of DD or Performance Bank
Guarantee.
Validity of PBG can very for 1 to 2 years.

64. PROCUREMENT PROCESS
https://www.youtube.com/watch?v=aPO3fwYnaXA

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TECHNICAL SPECIFICATIONS &
STANDARDS OF ITEMS
• Technical Specification and Standards of items
can be done by:

Reference sample.

Drawings.

Written technical specifications.
In many tenders, we may have to use combination
of two or more methods to make it more specific
to the bidders.

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TECHNICALLY ACCEPTABLE SUPPLIER
A supplier who fulfils following two
criteria are technically accepted
suppliers:
• Eligibility Criteria
• Qualification criteria.

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ELIGIBILITY CRITERIA
• Supplier should be registered with
Government as Company, etc, having valid
PAN, Service Tax number, Gumasta
Licence, authorised Indian Agent, etc. as
per the Government norms.
• Suitable stipulations are to be incorporated
to ensure above norms in tender
documents.
• Many organisations do Vendor Registration
to confirm above facts before hand.

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QUALIFICATION CRITERIA
• The tenderer should be technically
capable with acceptable past record and
also financially sound to deliver the
goods as required.
• To ensure above, suitable stipulations to
be incorporated accordingly in the tender
enquiry document.

69. Tender Opening Procedure
Quotation / Tenders must be opened in the presence of
three members.
Suppliers may be allowed to attend tender opening
meeting.
All tenders / quotations including cover must be signed by
all members of the committee / Indentor or their
representative.
All corrections, overwriting should be attested by the
bidder and duly initialed by tender opining committee.

70. TENDER EVALUATION METHODS
1. Quality and Cost Based Selection (QCBS)
2. Quality Based Selection (QBS)
3. Fixed Budget Selection (FBS)
4. Least Cost selection (LCS)

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TENDER
EVALUATION
(Two Envelop Model)
Technical Evaluation
Sanction of Estimate
Procedure of Inviting Tender
Technical Credentials
Project Delivery
Validity of Tender
Eligibility of Tenderer
Experience and capability
Quality & Functionality

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Commercial Evaluation
Financial Profile
Price
Reasonableness of Rate
TENDER
EVALUATION
(Two Envelop Model)

73. PAYMENT TERMS
Variety of payment terms & conditions are:
1) 100% payment after delivery & acceptance.
2) 100% payment against delivery.
3) Part payment in instalments.
4) Advance payment to party.
5) Payment through Letter of Credit.
6) Wire Transfer.
8) RTGS / NEFT payment (e-payment).

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INTERNATIONAL COMMERCIAL TERMS
(INCOTERMS)
• Published by the Internal Chamber of
Commerce, Paris.
The purpose of INCOTERMS is to provide a
set of International Rules dealing with the
relations between buyers and sellers in
foreign trade.

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RE-EXPORT
PROCEDURE
1.Letter from the Indentor to re-export the defective
equipments.
2. Consent letter from the foreign supplier that the company is
ready to repair or replace the same.
3. Copy o f the original purchase order.
4. Instructions from the Indentor giving the details of fund to
which the re-export charges to be debited.
5. DRMM will send a letter to SBI for obtaining No Objection
Certificate to re-export.

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ADVANCE PAYMENT TO SUPPLIERS
Rule 159 of GFR:
1. It may become necessary to make advance payments in the following types of
cases:
1. Advance upto 30% to 50% of the value of goods and services against Bank
Guarantee may be considered as normal advance payment.
2. Advance payment above 50% with or without Bank Guarantee to considered
as unsecured advance payment and to be avoided. May be approved in rare cases
as a special case with approval of competent authority.

79. E-PROCUREMENT
E-procurement means purchase using network through
software. In includes :
1. Indent management
2. E-Tendering
3. E-Auctioning
4. Vendor management
5. Catalogue management
6. Purchase Order Integration
7. Order Status
8. Ship Notice
9. E-Invoicing,
10. E-Payment
11. contract management

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TYPES OF PURCHASES
(As per General Financial Rules-2017)
1. Direct Market Purchase without quotation. (upto Rs.
25,000).
2. Direct Market Purchase(LPC) (upto Rs. 2 Lakh).
3. Limited Tenders Enquiry
4. Advertised Tenders Enquiry (Above Rs. 50 Lakh)
5. Single Tender Enquiry ( Proprietary Item).
6. Purchase through other Rate Contract.
7. Repeat Orders
8. Purchase through Buy-back offer.

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1. PURCHASE WITHOUT QUOTATION
• As per GFR -154
• Purchase upto Rs. 25,000 on each occasion may be
made without inviting quotations by competent
authority.

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• As per GFR -155
• Purchase of goods upto Rs. 2.00 Lakh on each occasion
may be made by an authorised committee through Market
Survey with due certifications.
• In case of web survey, printouts of survey of three
companies may be attached to proposal.
• In each case, copy of three indicative bids to be attached.
2. DIRECT MARKET PURCHASE-LPC

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3. LIMITED TENDER INQUIRY (LTI)
AS per GFR – 162
LTI to be issued for all purchases from Rs. 1 to Rs. 50
Lakh.
Enquiry should be sent to more than THREE parties.
Atleast three quotations should be received.
Otherwise, approval of competent authority required to
open 1 or 2 tenders.

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4. ADVERTISED / GLOBAL TENDER INQUIRY
As per GFR - 161
All tenders above Rs. 50 Lakhs to be advertised in leading
newspapers.
Tender to be published on CPPP also.
In case of Global Tender more lead time can be given with
wider publicity.

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5. SINGLE TENDER INQUIRY (STI)
As per GFR – 154
Single Tender Enquiry means purchasing without
competition.
STI should be used as exceptional cases.
Single Tender Inquiry to be issued when:
Parts of Existing Equipments.
AMC of Equipment by the sellers after Warranty
Proprietary Items-single source of supply.

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6. Purchase through other Rate Contract
• As per GFR – 148
• Purchase of item(s) can be made using DGS&D rate
contract without inviting quotations.
• Get valid DGS&D Rate Contract copy from bidders or
from DGS&D site.
• Process file under ' OTHER RATE CONTRACT' head in
OPS.
• Follow the same procedure for Institute Rate Contract.

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7. Repeat Order
• The repeat order is made without any change in the
rates, specifications as well as terms and conditions of
supply.
• The repeat order shall be placed within 180 days from
the date of original purchase order.
• No repeat order will be placed if buy-back is involved in
the purchase.
• Any amended order shall not be considered for repeat
order.

88. Thank you for your patience!