STORES PURCHASE MANUAL-

a quick reference

▣ The term “stores” means all articles and materials (other than cash and documents) which come into the possession of a Government Servant for use in the public service. (Art 120 KFC Vol 1)

• This will also include Annual Maintenance services/Contract for maintenance of M & E, Computers etc.
• However items like dietary articles of animals in

zoos, fuel, dietary products etc. doesn’t come.

• Expenditure on stores is included under contingent expenditure (except wherever it is treated as otherwise) and is therefore, subject generally to the rules contained in chapter VI of the KFC Volume 1 (Article 120 to 162) which govern the expenditure.

• The KFC mainly contains rules relating to all financial transactions of Government which fall into two broad classes viz receipts and disbursement. These rules should be followed by every Government servant in the matter of receipt, custody, and disbursement of Government Money. (Art 1)

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• However Articles 124,126,127,128,131,132,133,140,147,148, were modified and Article 134, 135, & 139 exempted from KFC Volume 1 [G.O. (P) No. 35/2018/ Fin dtd 09/03/18]

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• Stores Purchase Manual is intended to provide with all required rules, regulations, instructions, directives and guidance.

• Government as per G.O. (P) No.3/SPD/2013 dt.21.06.2013 had issued orders revising the Stores Purchase Manual.

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• vide order no. G.O. (P) No.7/2014/SPD dt.28.08.2014 certain amendments were also made in the manual

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• The revised manual is having 18 Chapters and 33 Annexures.(It is appended with circulars of Central Vigilance Commission etc.)

▣ Government incorporated a new chapter –

Chapter 19 in SP manual for e-market procurement by Government departments/ PSUs/Autonomous bodies / LSGIs/ Universities [G.O.(P) No.2/2018 SPD dt 28/04/2018]

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▣ This manual contains the general rules applicable to all departments regarding the purchase of stores required for use in public service. In regard to particular classes of articles like books and periodicals, stationery and printing stores, clothing and liveries etc. will be supplemented by the instructions by Finance Departments.

▣ In the case of public works, irrigation, forest, stationery, police, LSGD Institutions and other special departments these rules should be supplemented by the special rules contained in the codes and manuals of the departments concerned.

▣ Eg: PWD code, Forest code, Stationery manual, Police manual etc.

▣ The rules and instructions in this manual shall be followed by Heads of Aided schools while utilizing public funds for the purchase of articles for their schools. This will apply to purchase from special fees fund also.

▣ The Kerala Sahitya Academy, The Kerala Sangeetha Nataka Academy, The Kerala Lalithakala Academy and The Kerala Kalamandalam shall observe the Rules and instructions in this manual while making purchase of stores.

▣ These rules and instructions will also apply to purchase of all items of stores, materials, machinery, equipments, vehicles etc. by autonomous bodies, Aided institutions and all institutions under Government and public sector undertakings.

i. Article 299 of the Constitution of India governs the legal framework for public procurement, which stipulates that contract legally binding on the Government to be executed in writing by Officers specifically authorized to do so.

ii. Indian Contract Act 1872, sale of goods act 1930 are the main legislations governing contracts of sale/ purchase of stores in general.

iii.

There is no law exclusively governing public procurement of stores. However the guidelines issued by CVC increases the transparency and objectivity in public procurement shall be applicable.

• An Officer has to purchase stores for public service should estimate his requirements for the year as far as they can be foreseen. (Art 123)

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• At the end of each financial year he should prepare a list of articles required during next financial year. (Art 123)

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• The lists should be based on probable budget estimate. (Art 123)

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• The list may be prepared based on previous consumption of last 3 to 5 years. (Art 123)

▣ Before orders placed or forecasting requirements the following instructions should be observed in regard to the utilization of the surplus stores in the Department of the Government.

▣ Stores remaining in stock for over a year should be considered as surplus unless there is sufficient reason to treat them otherwise (Art 157). The previous sanction of the competent authority should be obtained for the sale of stores regarded as surplus.

i.

▣ No sale of these stores should be made until it is assured that no Government Department requires them.

Each Head of Department should circulate from time to time lists of all usable stores found surplus to the requirements of his department to other heads of departments as soon as the surpluses are noticed.

ii. Every Head of Department should see from the list received by him under instructions above whether he can utilize the stores available with the other departments before he places orders for the purchase of such stores.

• For any purchase, the purchasing officer should bear in mind three principles :
• Economy
• Efficiency
• Accountability

To achieve these objective the following should be taken care of :

1. To reduce delays, each Department should prescribe appropriate time frame for procurement. For the purchasing process delegate responsibility with the approval of Competent Authority.
2. Each Department should ensure conclusion of contract within the original validity of the tenders. Extension of tender validity must be discouraged except under unavoidable circumstances.

G.O. (Rt) No. 5/2014 SPD dtd 21/01/2014

The Heads of Departments are classified into 3 groups on the basis of the

approximate value of the purchases they are making each year.

(List of HODs categorized may be seen at Annexure 33 of SPM)

• This is the sanction required for effecting any purchase. This can be issued by purchasing officers according to their delegation of powers. If the estimate is more than their financial powers obtain A.S. from higher authorities.

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• Heads of Departments and other Officers empowered on this behalf are competent to accord Administrative sanction for all purchases up to their limit of financial powers vested on them.

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• It is the duty of each purchasing officer to satisfy himself that funds are available for meeting the expenditure in respect of purchase of stores and that there is a valid administrative sanction for effecting the purchase.

▣ Demand for stores should not be divided into smaller quantities for making piecemeal purchases for the sole purpose of avoiding the necessity of obtaining the sanction of higher authority required with reference to the estimated value of the total demand.

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▣ As per G.O.(P) No. 102/17/Fin. Dated 7^th August 2017 the revised delegation of powers of Administrative Departments of the Secretariat Heads of Departments are as follows:

Heads of Departments

2. A) Scrap and Unserviceable article disposals

• [Circular Number B1/85/2020 SPD dt 06/07/2021]
• E-waste, Unserviceable vehicles and other scrap to be disposed off based on the guidelines issued as per G.O.(Rt) No. 2300/2019 LSGD dtd 09/10/2019 through CLEAN KERALA Ltd.
• Those disposal items estimated an amount of Rs.15000 can be released directly without quotation.
• When the estimated amount exceeds Rs.15000 and upto Rs.1lakh by way of quotation, whereas the estimated amount exceeds Rs.1lakh and upto Rs.5lakh to be disposed by tender.
• And when the estimated amount exceeds Rs.5lakh, the scrap and unserviceable items to be disposed of through www.etenders.kerala.gov.in through E-Tender.
• Whenever Finance Department renew the validity period of M/s MSTC Ltd, the offices/ institutions can dispose items obtained by way of confiscated/seized vehicles/scraps through M/s MSTC Ltd or CLEAN KERALA Ltd by e-Auction.

B) As per the computerization of Government departments in the state, a number of unusable, irreparable or redundant IT and electronic equipment are there for condemnation/scrapping. Departments make it ensure that these items are to be condemned based on the G.O.(Ms) No.27/2018/ITD dtd 28/10/2018* along with the latest recommendations of Departmental Technical Committee met on 13/09/2021.

• Amendment for the disposal of IT/ Electronic equipment [G.O.(Ms) No. 30/2021 ITD dtd 01/10/2021.]
• Without the recommendations of the Technical Committee, the Head of Office/ HOD can approve the scrapping proposal based on the following conditions:

i.

iii.

When the Minimum period of duration/ usage of the equipment is expired as per the orders issued dated 28/10/2018.

ii. When lesser/ minimum period of working of the equipment is not over if it is unable to repair/ unnecessary expenditure to be met then it can approve the scrapping proposal with the opinion of a technical expert.

All the remaining conditions in the G.O. dtd 28/10/2018 to be strictly

followed.

*The period of scrapping/ condemnation of IT/ electronic equipments (G.O.(Ms) No.27/2018/ITD dtd 28/10/2018)

• The period mentioned above are the average usage of equipments. Except items mentioned in part I others can be utilized maximum of the period and above until its usage.
• Reasons for the condemnation/ dismantle:

iii.

1. Before the expiration of the minimum period of usage, if any difficulty is experiencing of its operation/ increase in maintenance cost/ occasionally inoperative.
2. When the equipment became obsolete due to the latest technology or when the modernization of these equipments are difficult, even if spending for the same equipment not becoming feasible or if there is a threat to security or when the usage of data is exorbitantly high.

Not profitable even if these equipments are repaired.

• Government have considered the need for separate guidelines for the procurement of Goods and services in LSGDs and accordingly the guidelines for the procurement of goods and services began as per the above GO.

1. Medicine – From Government owned companies/ Corporations and other agencies
2. Dietary items – From Maveli Stores, civil supplies corporations, Neeti stores and Kudumbasree units.
3. Agricultural items – From Agricultural farms and nurseries owned by Government/ LSGIs/ Universities and other agencies approved by Government.
4. Bitumen – BPCL/ Industrial Development Corporation/ SIDCO

• If the procurement of computer and peripherals takes a time lag of more than one month through CPRCs Portal, sanction has been accorded to LSGD institutions to recollect deposit amount from CPRCs and utilize the same amount to procure items from GeM as per the specifications explained in Circular No. DA 1/153/2020/LSGD dtd 07/09/2020 to procure middle level laptop to students. Also its rate to be stick to the rate fixed by the director of IT mission.
• [ G.O.(Rt) No. 2076/ 2021 LSGD dated 23/10/2021]

Before issuing A.S. ensure that there should be provision in the budget. Tender/Quotation are to be obtained in all purchases except the following :

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1. Purchase of books and periodical in all departments involving up to15,000/- at a time. (discount may also be considered.)
2. Petty purchases up to15,000/- at a time.

3) Purchase from Government sources subject to the provision in para 9.22 to 9.25.

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9.22: Products manufactured by state government institutions/ depts and state public sector industries and institutions will be purchased from them exclusively without tenders for the first 5 years after they have gone into production.

If the rate quoted is over 25% above the normal market price, the price to be reviewed by the minister in charge of the department. If even after the review the prices are over 25% above the normal market price, the purchase should be finalised only after consideration by the council of ministers. The Public sector Undertaking (Supplier) and the purchasing authority should make available a certificate that “the rate of purchase does not exceed the market place”

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9.23: In the case of products of state government department units and state public sector industries and institutions which have been in production for more than 5 years, tenders should be invited as laid down in the manual with a price preference of 10% against the firm outside the state and 5% against within the state.

(see list of Govt owned manufacturing institutions in

Annexure 16)

• (Government have extended the period of validity of relaxation of para 9.23 of SPM for a further period of one more year w.e.f 14/11/2021 so as to enable SIDCO to supply wooden, steel and hospital furniture directly to all Government Departments/ PSUs/ LSGD Institutions/ Autonomous Bodies etc without following Tender formalities subject to the condition that the price of items doesnot exceed the selling price fixed as per G.O. (Rt) No. 26/2015 SPD dtd 28/05/2015. The purchasing officer must ensure that the period of validity of relaxation to para 9.23 of SPM is in force at the time of purchase from SIDCO. G.O.(Rt)33/2021/ SPD dtd 22/11/2021)
• Government have also extended the validity period for the supply of steel furniture certain other items of wooden furniture and hospital furniture directly to all Government departments/ PSUs/ LSGDc/ Autonomous bodies etc without observing tender formalities for a period of 1 year w.e.f 02/02/2022 as per G.O.(Rt) No. 07/2022 SPD dt TVPM 02/02/2022.

• : In the case of micro, small and medium enterprises such unit should produce a certificate to that effect from the MD, KSSIDC Trivandrum.

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• : As regards direct purchase without tender or purchase on price preference from public sector units of the GOI the orders issued by the government from time to time in respect of individual units will be followed.

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5. Special purchases in which any other procedure is approved by Government.

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• Controlled items of stores from controlled stocks.

6) During the instant of natural calamity or any other emergency as declared by Government.

7. Purchase of proprietary items like AUTOCAD, software, tonner, etc., on the recommendations of technical experts.

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• Invite simple quotation from leading publishers and book sellers and place orders on the basis of competitive quotation so that maximum discount may be obtained, in case of purchase of books and periodicals above 15,000/-

• In cases of such purchases, where advance payment is insisted on, the purchasing officer shall obtain before hand a written undertaking from the selected firm/ contractor to the effect that they shall supply the books and periodicals ordered in time and in satisfactory condition, with a view to securing the interest of Government against any loss.

Purchase of stores up to a value of 15,000/- on each occasion may be made without inviting quotation/bids by the competent authority on the basis of a certificate to be recorded by him in the following format:

I......................................................................am

personally satisfied that the stores purchased are of the requisite quality and specification and has been purchased from a reliable supplier at a reasonable price.

Purchase of stores costing above 15,000/- and up to 1,00,000/- shall be made after inviting quotations.

▣ Copies of the quotation notice given in Ann.10 should be supplied to all firms. It is not obligatory to publish quotation notice in the Kerala Gazette. Short quotation notice as in Ann.11 may be published in the Notice Board of the concerned purchasing office, the nearby prominent public place and in the Government Website. Atleast 5 working days shall be given for submitting of quotation

• Atleast 3 quotations should be invited for the purchase effected when the estimated value of the source is above Rs.15,000 and up to Rs.1,00,000. In such cases the firms can submit their quotations in their own commercial letter papers.

• The Government had decided to implement the centrally financed e-Government procurement (e- GP) Mission Mode Project in the state and constituted various committees for monitoring it.
• www.etenders.kerala.gov.in is the state e- procurement approved URL.
• The manual signature is replaced by the Digital Signature Certificate and such usage is valid and the respective DSC user shall be responsible and accountable for any approvals given using his/her DSC.

• e-Tender limit

▣ e-Government procurement shall be followed in all Government departments/ Boards/ PSUs for all tenders above 5 lakhs.

(G.O. (Ms)No.13/2015/ITD dt. 12/05/2015)

• Kerala State IT Mission (KSITM) shall be the implementing agency for e- Government procurement project across the state. Kerala State IT mission shall extend all possible assistance towards:
• Training of nodal officer and users nominated by the department by a dedicated Helpdesk cum Training Centre.
• Obtaining digital signature certificates for users.
• Preparation and publishing of the online tender.
• Kerala State IT Mission shall have a dedicated Programme Management Unit (PMU) looking after this project.

• Under e-procurement the tender forms can be downloaded from the library of eGP Portal and Dept. website. The tender forms can be downloaded by all registered vendors on free of cost.

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• In order to ensure complete confidentiality and anonymity in tendering activities payment towards EMD shall be collected online using the payment gateway of SBI.

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• An e-tender Cell in Finance Department shall closely monitor all e-tender activities of Government Departments/ PSUs implemented through www.etenders.kerala.gov.in

• Government have decided that the Departments may procure laptops for the implementation of e- office, so that the work can be carried out from anywhere. The advantages of procuring laptops instead of Desktop are its portability, low maintenance, low power consumption, less space occupancy and no cost required for UPS etc. Hence all departments, grant-in aid institutions/ boards/ corporations/Universities/ LSG institutions/ PSUs should procure laptops instead of Desktops for the roll out of e-Governance and other activities in their organization.

• Tenders should be invited if the estimated value of stores to be purchased is above 1,00,000/-
• Limited Tender.
• Open Tender
• Single Tender (Private purchase)

• The Limited Tender system may be adopted whenever the estimated value of the order to be given is between above 1,00,000/- to 10,00,000/-.

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• Copies of the Tender documents should be sent free of cost directly by Speed post/Regd. Post/ Courier/e- mail, simultaneously to all the firms on the list if registered suppliers for the stores in question. The number of supplier firms should be more than three. Website publicity should also be given for Limited Tenders, however the Department can limit the access of the tender documents to only the selected prospective suppliers by issuing them password to have access to the documents.

• The open tender system should be used as a general rule and must be adopted whenever the estimated value of the contract is above 10,00,000/-.

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• In the case of purchase of manufactured goods or stores (e.g. purchase of printing paper) invitation of tenders can be restricted from manufactures, provided the purchasing officer considers it necessary in the interest of the public and Department Purchase Committee approves.

• In all cases of open tender, it is essential that wide publicity is given to the tender notification. Short tender notices as in Annexure XII should be published in the stores purchase sheet of the Kerala Gazette and in the Government website.
• Short Tender Notices may also published in one or more leading regional language newspapers and also in one or two issues of a leading english newspaper published in India having wide circulation.
• In the case of purchase of heavy machinery, imported stores and other stores which cannot be obtained without wide publicity, the same may be published in the Indian Trade Journal published weekly from Calcutta by the Director General of intelligence and statistics.

• Obtaining quotation by issuing Single Tender enquiry to a selected source amounts to purchase without generating competition. Therefore, this mode of purchase should be resorted to only in unavoidable situation.
• When the articles required are of a proprietary character and competition is not expected to be advantageous.
• The word proprietary is defined as an item which is manufactured by one and only one manufacturer and/or which is a patent or speciality to which a tender system cannot be applied.
• Purchasing officers may purchase direct such articles from the firms or agencies concerned on the advice of an expert committee (when necessary) and the purchase committee after considering the reasonableness of the cost fixed.
• In the case of emergency, the required stores are necessarily to be purchased from a particular source subject to the reason for such decision being recorded and the approval of the competent authority obtained prior to the purchase.

• For standardisation of machinery or components or spare parts compatible to the existing sets of machinery/equipment (on the advice of a competent authority) the required stores are to be purchased only from a selected firm.

• Where a department feels that the stores of the required quality, specifications etc. may not be available in the country and/ it is also necessary to look for suitable competitive offers from abroad, the department may send copies of the tender notice to the Indian Embassies abroad as well as to the Foreign Embassies in India requesting them to give wide publicity of the requirement in those countries. They may also be requested to put the tender notice in their websites. The selection of Embassies will depend on the possibility of availability of the required stores in such countries. Publicizing the requirement globally is also known as Global Tender Enquiry. [7.19]

• Sometimes the purchase department may not receive sufficient number of tenders and situations may also arise, where after analysing the tenders purchase department ends up with one eligible tender.
• In such situation the purchase department is first to check whether all necessary requirements like standard tender enquiry conditions, industry friendly specification, wide publicity sufficient time for formulation of tenders etc. were fulfilled.
• If not, the tender is to be reissued after rectifying the defects. After that if it ends up with one eligible tender only, then contract may be placed on that tenderer provided the quoted price is reasonable.

• When the bill for a purchase made under ‘single tender’ is sent for audit the drawing officer should record a statement explaining briefly the necessity for deviating from the open tender system.
• Essential Technical particulars required in the tender documents
• Scope of supply including quantity required and,

also, end use of the required stores.

2. Specifications, Technical parameters and product requirements expressing the requirements in terms of functional characteristics.
3. Drawings
4. Requirement of BIS marks wherever applicable.

v. Requirement of advance sample, if any, at post

contract stage before bulk production.

viii.

ix.

6. Special Requirements of packing and marking if any
7. Inspection procedure for stores ordered and criteria of conformity.

Requirements of special tests if any.

Training, technical support, after sale service and AMC requirements if any.

10. Warranty requirements
11. Qualification criteria of the tenderers.

• For all purchases above 1,00,000/- tender forms should ordinarily be prescribed and issued at prices according to the scale approved by Government.

• The cost of tender forms may be accepted in cash, DD or by M.O. only.

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• Tender forms may not be desirable in the case of fuel oils, motor vehicles, even though amount involved is more than 1,00,000/-

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• A tenderer may download the tender form from the official website of Government of Kerala. In that case tenderer should remit the cost by DD of Nationalized Banks and should submit such tenders along with the cost.

The Controller of Stationery and the Supdt. of Government presses are authorised to purchase stores up to Rs.10lakhs at a time without reference to the Government or the DPC.

(Government order no. (MS) 303/15/Fin dt 20/7/2015 enhanced the delegation of powers of controller of stationery from the existing 20 lakhs to 50 lakhs subject to budget provision.)

Whenever tenders are invited, the procedure in the following

rules should be followed:

• Estimate the requirements and a phased programme may be drawn up for inviting the tenders.
• Rush purchases towards the end of the financial year should

be avoided.

• The articles should properly be classified under different trade groups and tender should then be invited separately for each group.

• The tenders should not be made unwieldy by including too many items of different kinds of materials in the same tender.
• Requirement should be correctly estimated.
• Tender specification should be carefully and correctly drawn up. So that there is no ambiguity about the correct type, size, packing etc. of materials required. There should be no room for change in specification after inviting tender.

• Comprehensive specification of plant, machinery and specialized equipments should be given with the term or ‘similar’ added wherever possible.

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• Tenderer should be allowed to quote for all the items or part of thereof. They should also be allowed to make suitable alternatives.

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• The place of delivery should be specified in the invitation of tender.

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• Care should be taken to see that sufficient time is allowed to the tenders to submit their tender.

The following minimum are suggested:

• For ordinary stores which can be procured from Indian Market – 15 Days.
• For machinery and plant which have necessary to be imported two months.
• For heavy equipments involving foreign manufacture of plant and machinery, their import and erection – Three months.

The invitation should also specify a period of firmness of the rate.(For all ordinary general purchases firm period should be 2 months whereas for the production of heavy plants, machinery, steel equipments and its supply and erection 3 months. For the scarcely purchase and the products of rate changing regularly firm period should be maximum 1 month)

Tender documents should preferably be sold up to one day prior to date of opening of tenders. The sale of tender documents against open tender should not be restricted.

The tender notice for an open tender should be carefully drafted. It should contain all the salient features of requirement in brief. Super flows or irrelevant details should not be incorporated. The tender notice should contains:

• Description and specification of the stores and quantity.
• Period and terms of delivery.
• Cost of tender/bidding documents
• Place(s) and timing of sale of tender documents
• Place and deadline for receipt of tenders.
• Place time and date of opening of tenders.
• Amount and form of bid security/EMD.
• Any other important information.

Sometimes situation may arise necessitating modification of the tender documents already issued. After receiving the documents, a tender may point out some genuine mistakes in the tender documents. In such situations, it is necessary to amend/modify suitably prior to the date of submission of bids. Copies of such amendments should be sent to all concerned.

• Amendments/modifications by the tenders

▣ The tenderer after submitting the tender is permitted to submit alterations/modification to its tender so long such alteration/modification are received duly sealed and marked like original tender, up to the date and time of receipt of tender.

• Receipt and custody of tenders

Receipt and custody of tenders shall be done in a transparent manner. (See Para:7.41 & 7.42)

Tenders are to be received through Tender Box and, in its absence, by hand delivery to the nominating purchasing officer. The Tender Box should be kept in a place which is easily accessible to the parties for dropping their tenders. This box shall have two locks of one will be with the head of office and the other with the officer nominated by him.

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• Late Tender

In the case of open or limited tender, late tenders should not be considered. (Tenders received after the specified date and time)

1. On no account tenders received after the time fixed for the opening of the tenders shall be considered.
2. Tenders received by the post after the date and time fixed, but before the time of opening shall also be considered, provided the officer is satisfied that the delay occurred in postal transit.

• Opening of tenders

▣ All the tenders received on time shall be opened in the presence of authorized representatives of tenders. At least two duly authorised officials of the department should jointly open the tenders.

After opening every tender shall be numbered serially, initialled and dated on the first page by all the officials authorised to open the tenders.

▣ Responsibility of the tender opening officials (See Para:7.47 & 7.48). The Tender opening officials will prepare a list of the representatives attending the tender opening and obtain their signatures on the same.

▣ In order to maintain the sanctity of tendering system the CVC has advised that the purchases should preferably be made directly from the manufacturers.

▣ A tenderer firm, may withdraw its offer at any time before its acceptance. It is equally open to the tenderer to revise or modify his offer before its acceptance. Such withdrawal, revision or modification must reach the accepting authority before the date and time of opening of tender.

• Evaluation of tenders

No tender should be rejected by the tender opening officials at the opening stage.

Tenders which are in the prescribed form and are accompanied by the requisite EMD shall be included for consideration provided they have been received before the time. Tenders shall be excluded in the following cases:

1. Tenders are not in the prescribed form (where forms are prescribed).
2. Not accompanied by EMD.
3. When the tender is not signed by the tenderer.
4. The tenderer is ineligible.
5. When the tender is from a blacklisted firm
6. When the tender is received late.

• The name of the successful tenderer awarded the contract should be mentioned in the notice board/ bulletin/ website of the concerned department.
• In the state, the Departments/ Organizations may publish in their website details of all purchases of value of above Rs.25 lakhs

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Tenderers right to question purchaser

iii.

1. A tenderer shall have the right to be heard in case it feels that proper procurement process is not being followed or its tender has been rejected wrongly.
2. He can tell the representation in writing to be examined by the purchasing department.

Such representation should be forwarded within one month from the date of placement of the contract and to be replied within one month from the date of receipt of the representation.

▣ After the tenders/quotations are opened, quick action needs to be taken to tabulate the rates, make the selection and finalise the acceptance. As the markets are unsteady, quick actions are vital.

However acceptance should be made within the period of firmness agreed to by the tenderers.

▣ Tabulation statement should be correct, complete and informative and should be authenticated by the competent purchasing or recommending officer. Errors and omissions should not happened and it should be neat, easy and self explanatory.

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• When the tender has been once accepted finally such acceptance shall be communicated to the successful tenderer in the most expeditious manner and in any case before the period of firmness expires.
• The successful tenderer is to be instructed to furnish the required Performance Security within a specified period (generally 21 days).
• A formal supply order should also be placed with the successful tenderer simultaneously. (Annexure 22)

i. Extend the delivery with imposing of liquidated damages

and other denial clauses.

Liquidated damages

• There should be a suitable provision in the terms & conditions of the contract for claiming liquidated damages of appropriate amount from the supplier to take care of delays in supplies and performance, for which the supplier is responsible.
• Generally, the percentage is 0.5% per week or part thereof. There should also be an appropriate maximum limit of such deduction. This percentage is generally 10%.

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2. Forfeit the performance security.
3. Cancel the contract and
4. Impose other available sanctions or penalties.

• This means an event beyond the control of the supplier and not involving the suppliers fault or negligence and which is not foreseeable.
• Eg: war, revolution, acts of public enemy, sabotage, earthquake, fire, flood, epidemics, quarantine restricts, etc.
• If such situation arises the supplier shall promptly notify in writing the cause their of within 21 days of occurrence of such event.

• An agreement should be entered into with the successful tenderer for the purchase costing one- lakh and above.
• If any firm despatch the goods before the execution of the agreement they should be held liable for the demurrage charges if any.
• The agreement relating to plant and machinery will be destroyed after a period of 30 years after the date of the agreement.
• Other agreements will be destroyed after a period of 10 years after the rights and duties under the agreements have been settled.

In order to safe guard against a bidder’s withdrawing/altering its bid during the bid validity period in the case of open/Limited tender Earnest money deposit is to be obtained. The amount of EMD shall be one percent of the total cost of the articles tendered for subject to a minimum of Rs.1500/- (See Para:8.18, 8.19)

Validity of EMD

• The EMD should remain valid for a period of 45 days beyond the final tender validity period.

Forfeiture of EMD

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• EMD of a tender will be forfeited, if the successful tenderer fails to furnish the required performance security within the specified period.

• Firms who are registered with SPD
• Micro and small enterprises and industrial co- operatives within the state which are certified as such by the Director of Industries and Commerce or by the General Manager, District Industrial Centre.
• Government Institution/State PSU.
• SIDCO

• EMD furnished by all unsuccessful tenderers should be returned to them without any interest whatsoever, at the earliest after expiry of the final tender validity period but not later than 30 days after conclusion of the contract.

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Performance Security

• To ensure due performance of the contract, Performance Security is to be obtained from the successful bidder who is awarded the contract.

8.19. The Performance Security should be equivalent to 5% of the total value of the contract rounded to the nearest rupee. The security may be taken in any of the following forms:

1. By Cash
2. Demand Draft from Nationalised Banks
3. Bank Guarantee from Scheduled Banks in India
4. Government Promissory Notes
5. Stock Certificates of the Central or State Governments.
6. National Savings Certificates, Government of India 12 years National Plan Savings Certificates and 10 year Treasury Savings Certificate.

vii.

Treasury Savings Bank Deposits

8. Post Office Savings Bank Deposits
9. Post Office Cash Certificates
10. Deposit receipts of recognized bank and co-operative societies approved by Government for the purpose.

8.30. Performance security is to be forfeited and credited to the Government in the event of a breach of contract by the supplier, in terms of the relevant contract. (Security deposit to be deposited under the head 8443-106-civil deposits)

• After a contract has been fulfilled the purchase department shall ensure that all the payments due to the firm including the release of EMD/ Performance security are made on priority basis without avoidable delay.
• The performance security should be released or refunded within a period of three months of the expiration of the contract.

• A Running Contract is a contract for the supply of an approximate quantity of articles at a specified rate during a certain period. Dietary articles, fire wood, charcoal, raw materials for Ayurvedic medicines etc. come under the group. (Para:13.2 & 13.3) It is settled by heads of departments and DPC.
• Government as per G.O.(P) No. 10/2019/SPD dt TVPM 22/8/19 incorporated centralised procurement and rate contract system (CPRCS) as a mode of procurement in the revised SPM as para 7.52 as below.

▣ “In order to revamp the operational processes centralised procurement and rate contract system (CPRCS) an online rate contract portal is adopted as a mode of procurement which implemented by electronics and IT department with KSITM to facilitate online procurement of commonly used hardware items required by various Government departments / organisations/PSUs etc.

▣ The purchasing officers should follow the guidelines issued by E & IT departments from time to time.

• If the procurement of computer and peripherals takes a time lag over one month through CPRCs Portal sanction has been accorded to LSGD institutions to recollect deposit amount from CPRCs and utilize the same amount to procure items from GeM as per the specifications explained in Circular No. DA 1/153/2020/LSGD dtd 07/09/2020 to procure middle level laptop to students. Also its rate to be stick to the rate fixed by the director of IT mission.
• [ G.O.(Rt) No. 2076/ 2021 LSGD dated 23/10/2021]

▣ A rate contract is a contract for the supply of stores at specified rate during the period covered by the contract. It is settled by the stores purchase Department only. The Directorate General of supplies and Disposals (DGS & D) New Delhi is concluding every year rate and/or running contract. This is known as RC concluded by DGS & D.

▣ Steel furniture, Steel cupboards and safes, motor truck batteries and tubular batteries of UPS, tyres of motor vehicles etc., are some of the items coming under rate contract.

▣ Running contracts may be settled by Heads of Departments and DPCs, whereas rate contracts will be settled by SPD only.

• In case of items for which rate/running contract settled by the SPD exist or a running contract by the Head of Department exists, it is obligatory to avail of those contracts.
• Performances security shall, however, not be demanded in the supply orders issued against rate contracts. (Para:13.18)
• After a contract has been fulfilled and payment made, the deposit should be released or refunded to the contractor/firm without delay. As a rule it should be released within 3 months of the expiration of the contract. (Whenever a bid is rejected after unreasonable period and the deposit was refunded penal interest to be paid for the deposit amount.)

• Govt. as per order number G.O (P)No. 409/2014/Fin Dated 23/09/2014 has revised certain fees, fine, service charge, cost of various forms, sale proceeds etc., re-iterating that the revision will be applicable only to those items whose rates have not been enhanced after 01/04/2012.

• Sophisticated Electronic Equipment, Computer Hardware Software etc. need proper maintenance for trouble free service. For this purpose, may enter into a maintenance contract. However beware that the AMC is to start only after the expiry of warranty period.

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• Sometimes before the expiry of period we may force to terminate the contract for some or other reasons. Hence a clause to be inserted before entering into the contract.

• Clause is as “ The purchase reserves the right to terminate the AMC at any time without assigning any reason and not entitled to claim any compensation.

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• The Administrative Department may sanction AMC up to a limit of Rs.15lakh subject to rules in force.

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• AMC for computer, printer, photocopies, machinery, lab equipment, AC and all other electronic and electrical equipment, Heads of Department is delegated financial powers up to Rs.3 lakhs.

When there is a decision with the approval of the competent authority to replace certain existing old stores with the newer and better versions/ substitutes, the department may trade the existing old stores while purchasing the new ones. For this purpose suitable clauses are to be incorporated in the tender enquiry document. Provision should also be kept to permit the interested tenderers to inspect the old stores to be traded through their transaction.

• This should be severely discouraged. However the lowest eligible tenderer’s rate is reasonable and acceptable, negotiation can be made him only.

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• When the price of the lowest offerer’s (L1) is not reasonable price negotiation may be conducted with him in the first instance.

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• If (L1) doesn’t agree to reduce its price, then the price which has been reduced as reasonable may be counter offered to all the eligible tenderers including L1 for further action.

▣ Normally Payments are effected only after effecting the supplies satisfactorily. However it may become necessary to make advance payments in the following types of cases:

1. Advance demanded by firms for servicing of Air- conditioners, Computers, other costly equipments etc.
2. Advance payment demanded by firms against fabrication contract, turnkey contracts etc. Such advance payments should not exceed:
1. 30% of the contract value to private firms.
2. 40% of the contract value to a State or a Public Sector

Undertaking.

• In the case of maintenance contract the amount should not exceed the amount payable for 6 months under the contract.

• The Purchasing Officers should bring to the notice of the SPD, cases of default, supply of defective materials, irregular supply and all cases of breach of the terms of contract.
• A detailed report explaining the nature and extend of default of breach should be sent in each such case.
• A show cause notice shall be served to the firm before final orders are issued. The list of firms blacklisted/ banned shall be displayed in the website of SPD.

▣ GeM implemented to facilitate online procurement of commonly

used goods and services instead of DGS&D rate contract.

▣ The purchase through GeM by Central Government users have been authorised and made mandatory by the ministry of Finance Government of India by adding a new rule No.149 in the General Financial Rule 2017.

▣ Government of Kerala vide G.O.(Ms) No.2/2018/SPD dated 27/3/2018 and procurement of vehicles (G.O. (Rt) No. 67/2017/ SPD dt 25/11/2017 made GeM as a procurement mode. Whenever purchases effected through GeM, the Administrative Sanction should clearly mention about the procurement mode through GeM.

▣ It aims to enhance : transparency, efficiency,

and speed in public procurement.

• As per G.O (MS)No. 2/2018/ SPD dt 27/3/18 our state has made and adopted purchase of commonly used goods and services through GeM.

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• Goods: This mean an article/ product/ an intangible product like software, technology transfer, licences, patents, or other intellectual properties being offered for sale on the GeM portal by seller(s) on GeM. The term Goods shall also include works and services which are incidental or consequential to the supply of such goods such as transportation, insurance, installation, commissioning, training and guarantee/ warranty obligations as defined in the scope of supply given in the contract.

• Services: Shall mean the services offered or provided by the seller such as IT Professional Services, Manpower Services, Security Services, Transport Services etc. listed as services on GeM.

• Procurement of Goods and Services above Rs. 25000/- through GeM shall be mandatory for all Government departments (G.O.(P)No. 7/2019/SPD dt 26/04/2019)
• If HOD finds that purchase through GeM would not be appropriate as the item is not available on GeM or requirement/ specification is too specific or otherwise then the HoD could procure those items through other modes as laid down in the SPM, after recording the reasons for the same.
• The GeM portal shall be utilized by the Government buyers for direct online purchases as under:

i. Up to 50000/- through any of the available suppliers on the GeM.

ii. Above Rs.50000/- and up to Rs.30,00,000/- through the GeM seller having the lowest price amongst the available sellers of atleast 3 different manufacturers on GeM meeting the requisite quality, specification and delivery period.

iii.

Above Rs. 30,00,000/- through the supplier having the lowest price meeting the requisite quality, specification and delivery period after mandatorily obtaining bids, using online bidding or reverse auction tool provided on GeM.

4. The above monetary ceiling is applicable only for the purchases made through GeM. For purchases, if any, outside GeM, relevant SPM rules shall apply.
5. Never a demand for goods shall not be divided into small quantities to make piecemeal purchases to avoid procurement through L-1 buying on GeM.

1. Dietary articles
2. Purchase of Laboratory/ Medical Equipments by Director of Health Services (DHS), Director of Medical Education (DME), Kerala Medical Services Corporation Ltd (KMSCL), Director of Ayurveda Medical Education (DAME), Director of Ayurveda, Director of Homoeopathy, Director of Homoeopathy Medical Education, Employees State Insurance Corporation.
3. Stationery Department, Kerala Books and Publication

Society(KBPS), Fire & Rescue Services Department.

4. Government of Kerala controlled organizations, PSUs, etc. should come up with their own policy as to what items shall be bought through GeM and otherwise

• The new system of payment can be made available for Kerala only after the completion of the integration process.
• Till then the payment is to be done as detailed below by observing the following conditions as well:

iii.

1. The procuring department should ensure that necessary Administrative sanction is issued for the procurement specifying the source of funds, like head of account or treasury or bank account.
2. They shall also ensure the availability of sufficient fund before placing the order with GeM so that timely payment can be issued.

There after, supply order in GeM portal, observing the stores purchase rules is to be placed.

iv. On receipt of goods same to be verified with respect to the supply order and agreement conditions, if any before proceeding to sanction payment.

5. Payment for the supply shall be made within 10 days.
6. The procuring authority can make the payment by generating a bill through Bins or by STSB, bank check by the concerned DDO respectively and transfer the credit amount directly to the account of the seller through electronic fund transfer mode within the time frame as stipulated in GeM rules.

The procuring authority should ensure that the payment advice from GeM includes the contractual deductions if any such as penalties for violation of Service Level Agreement and liquidated damages for delayed supplies.

vii.

• If the procurement of computer and peripherals takes a time lag over one month through CPRCs

Portal sanction has been accorded to institutions to recollect deposit amount

LSGD

from

CPRCs and utilize the same amount to procure items from GeM as per the specifications explained in Circular No. DA 1/153/2020/LSGD dtd 07/09/2020 to procure middle level laptop to students. Also its rate to be stick to the rate fixed by the director of IT mission.

• [ G.O.(Rt) No. 2076/ 2021 LSGD dated 23/10/2021]

▣ 18.8. Purchase management is a specialized subject and, therefore, the officials entrusted with purchase work should be adequately trained at the entry level itself to avoid mistakes in tender evaluation, placement of contract, contract management etc.

▣ In addition to entry level training, the purchase officials should also be sent for in-service training periodically to keep them abreast with the changing scenario and latest techniques of Purchase Management taking place within as well as outside the country.

“The important and significant areas of public procurement have been explained in Stores Purchase Manual. A situation may however crop up in a purchase case for which no solution may readily be available in this manual. In such a situation the department may seek advice and guidance from the Stores Purchase Department (18.9)”

▣ Article 147

1. The officer authorised to receive stores should himself verify the articles received with samples if any and take them to stock soon after they received. If any discrepancies noticed stores should not be accepted.
2. If any demurrage to be paid sanction of Government is necessary subject to delegation of powers.
3. If any loss, shortage, damage of any defect is noticed while checking stores should be promptly be brought to notice.
4. Heads of departments can accept late supplies after recording the reasons therefore up to 2 months after the prescribed date of delivery.

▣ Article 150

Separate stock account should be maintained for :

1. Raw materials and extendible stores used in manufacturing departments.
2. Office furniture including all office stores except

books, forms and stationery.

3. Books, forms and stationery.

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▣ Article 153

No Government servant should hold stores in stock in excess of the quantity likely to be required for a reasonable period. To ensure this rule is observed, a responsible officer of the department should inspect all perishable stores once in each half year and all other stores once in an year unless there is sufficient reason (which should be recorded) to the contrary.

▣ Article 157

Stores remaining in stock for over a year should be considered surplus unless there is sufficient reasons to treat them otherwise.

List of surplus stock should be ascertained and forward to HOD.

• No sale of these items should be made until it is assured that no Government department requires them.

▣ Article 158

All stores should be verified periodically in the manner prescribed for each department and atleast once in an year. However in the stationery department a complete physical verification of the stock need to be made every 2 years only.

The verification should never be entrusted:

1. To a low paid subordinate or
2. To the custodian of the ledger-keeper.
3. To any person who is not conversant with the classification and nomenclature.

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▣ Article 162

Any deficiency detected during a verification of stores should report to the controlling authority along with the verification report.

▣ Concerned Officers should maintain all the records of issue, receipt, opening, evaluation of Tenders, Award of Contracts that is all pre- order and post-order records in chronological order and store the files in an identified place such that it be retrievable for scrutiny whenever needed at any notice.

▣ Procurement documents like purchase order file, open and close order file and purchase reports shall be maintained up to the period defined in Kerala Financial Rules.

• On completion of all activities against a contract, the purchase file should be preserved in the record room and destroyed after the expiry of the applicable mandatory retention period with the approval of the competent authority.

The End