What are General Financial Rules (GFR) 2017?
General Financial Rules (GFRs) are a compilation of rules and orders of Government of India which are to be followed by all Departments and Organisations under the Government and specified Bodies, while dealing with matters involving public finances. These rules and orders are mandated to be treated as executive instructions by them. These rules were first issued in the year 1947 and were later revised in 1967 & year 2005 till they were finally updated in year 2017 to the current form.
These rules cover all aspects of financial dealing by the government. It starts with giving out the General Principles Relating to Expenditure and Payment of Money & thereafter covers the Budget Formulation & Implementation. Interestingly the definition of a Financial Year is covered under Rule 42 of the GFR, while the Presentation of Budget in Parliament is covered under Rule 43 of the GFR. The complete modalities of how the budget of the country is to be prepared & implemented / monitored are regulated by this document. The GFR then moves on to define various accounts of the government, including the Capital & Revenue Fund Accounts and their utilization.
However for business entities the direct utilization of this document is perhaps from Chapter 5 to Chapter 6 only. While chapter 5 defines various types of Works, chapter 6 defines the modalities & methodology for procurement of Goods & Services. The complete procurement procedures, including Rate Contracts by DGS&D, functioning of the GeM portal, Local Procurement & Advertised Tender Enquiry gets defined in these chapters.
In order to provide greater amplification to the implementation of GFR 2017, the government has issued additional manuals, as under:-
Manual for Procurement of Goods 2017
The term 'Goods' encompasses a very vast range of procurement items. It includes all articles, material, commodity, livestock, furniture, fixtures, raw material, spares, instruments, machinery, equipment, industrial plant, vehicles, aircraft, ships, medicines, railway rolling stock, assemblies, subassemblies, accessories, a group of machineries comprising of an integrated production process or such other category of goods or intangible products like software, technology transfer, licenses, patents or other intellectual properties purchased or otherwise acquired for the use of Government but excludes books, publications, periodicals, etc. for a library. The term ‘goods’ also includes works and services which are incidental or consequential to the supply of such goods, such as, transportation, insurance, installation, commissioning, training and maintenance.
Manual for Procurement of Consultancy & Other Services Rule 178 & 180 of GFR 2017, permits Ministries/ Departments to hire external professionals, consultancy firms or consultants for a specific job, which is well defined in terms of content and time frame for its completion. Engagement of consultants may be resorted to in situations requiring high quality services for which the Procuring Entity does not have requisite expertise.
In addition some Ministries & Departments have issued their own guidelines for procurement issues, for example the Ministry of Defence has issued two main guidelines i.e. Defence Acquisition Procedure 2020 for Capital Procurement & Defence Procurement Manual 2009 for Revenue Procurement. So what is Capital & Revenue Procurement? Well it is primarily related to the nature of expenditure classified by the Government in GFR.
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. Accordingly the procurement procedure adopted to incur Capital Expenditure is laid down in the Defence Acquisition Procedure 2020.
Revenue Expenditure. . The subsequent charges on maintenance, repair, upkeep and working expenses, which are required to maintain the assets procured through Capital Expenditure / procedure, in a running order as also all other expenses incurred for the day to day running of the organisation, including establishment and administrative expenses shall be classified as Revenue expenditure. The procedure adopted to incur Revenue Expenditure / procurement is laid down in the Defence Procurement Manual 2009.
Defence Procurement Manual 2009
Defence Acquisition Procedure 2020
Conclusion The GFR 2017 is the mother document which regulates all procurement by the government bodies. All other documents which have been issued by Ministries & Departments are derived from the GFR 2017 itself and cannot be in conflict to the provisions defined in it. None the less for suppliers who wish to participate in the government tender it is imperative to understand the procurement procedure adopted by the specific buyer. http://mamagemytender.com/ is a website that can be utilised by businesses for ensuring compliance to the tendering procedures of various government bodies. The site even offers FREE Consultation packages to guide business entrepreneurs.
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