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.
PUBLICATION OF NIQ/NIB
 For supply of articles or stores or for execution of works
and services with estimated value exceeding
Rs.1,00,000.00 (one Lakh) and upto
Rs.5,00,000.00( Five 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 one daily Bengali newspaper [in case
of hill areas of Darjeeling District in Nepali
newspaper].
PUBLICATION OF NIQ/NIB
 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.
PUBLICATION OF NIQ/NIB
 For supply of articles or stores or for execution of works
and services with estimated value exceeding
Rs.10,00,000.00
 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 three daily newspapers, one each in
Bengali [in case of hill areas of Darjeeling District in
Nepali newspaper],in English and in Hindi
PUBLICATION OF NIQ/NIB
 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.
TENDER/BIDDING PROCEDURE
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..
TENDER/BIDDING PROCEDURE
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.
TENDER/BIDDING PROCEDURE
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)