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Public Procurement under GFR 2017 (Chapter 6, Rules 142–206): GeM, CPPP, Tendering Limits & Bid Security

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UPSC DRDO SAO • UPSC Store Officer • UPSC Admin Officer • SO/SSA LDCE
⚡ Quick Answer & AI Exam Snapshot (TL;DR)

Chapter 6 of the General Financial Rules (GFR), 2017 (Rules 142 to 206) governs the Procurement of Goods and Services by Central Government Ministries and Departments. Every UPSC DRDO SAO and Store Officer aspirant must memorize the exact updated monetary thresholds (as amended by Department of Expenditure in May 2024): Direct Purchase without quotation up to ₹50,000 (₹1 Lakh for S&T Ministries/DRDO), Local Purchase Committee (LPC) up to ₹5,00,000, Limited Tender Enquiry (LTE) up to ₹50,00,000, and Advertised Tender Enquiry (ATI) for ₹50,00,000 and above, alongside mandatory GeM procurement slabs under Rule 149.

1. Master Monetary Threshold Table for Procurement of Goods (GFR 2017 — Latest Amended Limits)

Memorize both the original 2017 limits and the latest Department of Expenditure OM (10 May 2024) revised limits—UPSC exams test these exact Rule numbers and Rupee cutoffs:

GFR Rule Mode of Procurement Latest Amended Monetary Limit (May 2024) Original 2017 Limit & Key Procedural Conditions
Rule 149(i) GeM Direct Online Purchase
(Any available GeM seller meeting specs)		 Up to ₹50,000
(Up to ₹1,00,000 for Automobiles)		 (Was ₹25,000).Mandatory if goods/services are available on GeM (Government e-Marketplace).
Rule 149(ii) GeM L-1 Purchase
(Comparison among at least 3 different OEMs on GeM)		 Above ₹50,000 up to ₹10,00,000 (₹10 Lakh) (Was ₹25,000 to ₹5,00,000). Automated system selection of lowest price (L-1) among 3 different manufacturers.
Rule 149(iii) GeM Online Bidding / Reverse Auction (RA) Above ₹10,00,000 (₹10 Lakh) (Was above ₹5,00,000). Mandatory online bidding or Reverse Auction tool on GeM.
Rule 154 Purchase of Goods WITHOUT Quotation
(Non-GeM items)		 Up to ₹50,000 on each occasion
(Up to ₹1,00,000 for Scientific Ministries / DRDO!)		 (Was ₹25,000). Competent authority certifies that “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.”
Rule 155 Purchase of Goods by Local Purchase Committee (LPC) Above ₹50,000 up to ₹5,00,000 (₹5 Lakh) (Was ₹25,000 to ₹2,50,000). Three-member Local Purchase Committee appointed by Head of Department surveys the market to verify reasonableness of rate, quality, and specifications.
Rule 162 Limited Tender Enquiry (LTE) Estimated value up to ₹50,00,000 (₹50 Lakh) (Was ₹25 Lakh). Copies of bidding document sent directly to registered suppliers; minimum number of suppliers to whom LTE is sent shall be MORE THAN THREE (i.e., ≥ 4).
Rule 161 Advertised Tender Enquiry (ATI / Open Tender) Estimated value of ₹50,00,000 (₹50 Lakh) and above (Was ₹25 Lakh and above). Published on Central Public Procurement Portal (CPPP — eprocure.gov.in) and GeM. Minimum time for bid submission: 3 weeks (21 days) for domestic bids and 4 weeks (28 days) for Global Tender Enquiry (GTE).
Rule 161(iv) Global Tender Enquiry (GTE) Disallowed up to ₹200 Crore without prior approval of Cabinet Secretariat / DoE To promote Atmanirbhar Bharat & Make in India (PPP-MII Order), no Global Tender Enquiry can be floated for tenders up to ₹200 Crore without special exemption.
Rule 166 Single Tender Enquiry (STE / Proprietary Article) When only 1 OEM manufactures the item OR in case of emergency Requires a Proprietary Article Certificate (PAC) approved by the Ministry/Department.

2. Fundamental Principles of Public Buying (Rule 144) & Two-Bid System (Rule 163)

  • Rule 144 (Fundamental Principles of Public Buying — The ‘Five Rs’): Every authority delegated with financial powers to procure goods in public interest has the responsibility and accountability to bring efficiency, economy, and transparency, and fair and equitable treatment of suppliers. In Materials Management, this translates to the Five Rs of Procurement: Right Quality, Right Quantity, Right Price, Right Time & Place, and Right Source.
  • Rule 163 (Two-Bid System — Technical Bid + Financial Bid): For purchasing high-value plant, machinery, or complex technical equipment, bids are invited in two separate sealed/encrypted covers:
    1. Technical Bid: Technical specifications, eligibility, past experience, and commercial terms (without price).
    2. Financial Bid: Item-wise price quotation and taxes.

    Crucial Rule: Technical Bids are opened first and evaluated; Financial Bids of ONLY those bidders whose Technical Bids are declared technically responsive/acceptable are opened!

3. Bid Security / EMD (Rule 170), Performance Security (Rule 171) & Advance Payments (Rule 172)

GFR Rule & Provision Exact Statutory Percentage / Limit Exemptions & Validity Period
1. Bid Security / Earnest Money Deposit (EMD)
(Rule 170)		 2% to 5% of the estimated value of goods to be procured. Who is Exempt from EMD? (i) Micro and Small Enterprises (MSEs), (ii) Start-ups recognized by DPIIT, and (iii) Central/State PSUs or vendors registered with the Central Purchase Organisation.
Validity: Must remain valid for 45 days beyond the final bid validity period.
2. Performance Security / PBG
(Rule 171)		 3% to 5% (or 3% to 10%) of the value of the contract. No exemption even for MSEs! Required for all contracts above ₹5 Lakh.
Validity: Must remain valid for 60 days beyond the date of completion of all contractual obligations (including warranty obligations!).
3. Advance Payment to Suppliers
(Rule 172)		 Ordinarily payments are made only after delivery. Where advance is unavoidable:
• Private Firms: Max 30% of contract value
• State/Central Govt Agencies or PSUs: Max 40% of contract value
• Maintenance Contract (AMC): Max 6 months’ amount		 Must be backed by a Bank Guarantee of 110% of the advance amount in case of private firms.

Procurement of Consulting Services vs Non-Consulting Services (Rules 177–206):

  • Selection Methods for Consultants (Rules 192–194):
    1. QCBS (Quality and Cost Based Selection — Rule 192): Technical quality score and financial cost are combined; maximum weightage given to Technical Parameters shall NOT exceed 80% (i.e., Cost weightage must be at least 20%).
    2. LCS (Least Cost Selection — Rule 193): Used for routine, standard assignments (like audits or simple engineering designs) where the lowest-priced bidder among those clearing the minimum technical qualifying mark is selected.
    3. SSS (Single Source Selection — Rule 194): Used only in exceptional cases (continuation of previous work, emergency, or sole specialized firm).

🎯 High-Yield Exam One-Liners (Last-Minute Revision Box)

  1. Chapter 6 of GFR 2017 (Rules 142 to 206) deals with ‘Procurement of Goods and Services’.
  2. Rule 149 of GFR 2017 makes procurement of common-use goods and services mandatory through the Government e-Marketplace (GeM).
  3. Under the May 2024 amendment to Rule 149, Direct Online Purchase on GeM is allowed up to ₹50,000; L-1 comparison (among 3 OEMs) from ₹50,000 to ₹10 Lakh; and Bidding/Reverse Auction above ₹10 Lakh.
  4. Under Rule 154 (as amended in May 2024), purchase of non-GeM goods WITHOUT quotation is allowed up to ₹50,000 (and up to ₹1,00,000 for Scientific Ministries/Departments like DRDO).
  5. Under Rule 155 (as amended in May 2024), purchase through a 3-member Local Purchase Committee (LPC) applies for values above ₹50,000 up to ₹5,00,000 (₹5 Lakh).
  6. Under Rule 162, Limited Tender Enquiry (LTE) is used for estimated values up to ₹50,00,000 (₹50 Lakh; originally ₹25 Lakh) and must be sent to MORE THAN THREE (i.e., at least 4) registered suppliers.
  7. Under Rule 161, Advertised Tender Enquiry (ATI) is mandatory for procurements of ₹50,00,000 (₹50 Lakh; originally ₹25 Lakh) and above.
  8. Minimum time allowed for submission of bids in an Advertised Tender Enquiry (Rule 161) is 3 weeks (21 days) from publication, and 4 weeks (28 days) for Global Tender Enquiry (GTE).
  9. No Global Tender Enquiry (GTE) shall be invited for tenders up to ₹200 Crore without prior approval from the Cabinet Secretariat / Department of Expenditure.
  10. Under Rule 170 of GFR 2017, Bid Security (Earnest Money Deposit – EMD) ranges between 2% and 5% of the estimated value of goods.
  11. Micro and Small Enterprises (MSEs) and DPIIT-recognized Start-ups are completely EXEMPT from furnishing Bid Security (EMD) under Rule 170.
  12. Bid Security (EMD) must remain valid for 45 days beyond the final bid validity period.
  13. Performance Security (Rule 171) is 3% to 5% (up to 10%) of contract value and must remain valid for 60 days beyond completion of all contractual and warranty obligations.
  14. Even MSEs are NOT exempt from furnishing Performance Security (PBG) once awarded a contract under Rule 171.
  15. Under Rule 172, advance payments to suppliers shall not exceed 30% of contract value for private firms and 40% of contract value for Central/State PSUs.
  16. Under Rule 192 (QCBS for Consulting Services), the weightage assigned to Technical Parameters cannot exceed 80% in any case.
  17. Rule 173 of GFR 2017 lays down the Code of Integrity (prohibiting corrupt, fraudulent, collusive, or coercive practices) and Debarment of bidders (up to 2–3 years).
  18. Divide and Rule Prohibited (Rule 157): A demand for goods shall NOT be divided into small quantities to make piecemeal purchases for the sole purpose of avoiding the necessity of obtaining the sanction of a higher authority.
  19. Buy-Back Offer is governed by Rule 176 of GFR 2017 when replacing old equipment with new equipment.
  20. Rate Contract on GeM is governed by Rule 149; the erstwhile DGS&D was wound up in 2017 when GeM replaced it.

📝 UPSC & Regulatory Level Practice MCQs (With Detailed Solutions)

Q1. Under Rule 170 and Rule 171 of the General Financial Rules (GFR), 2017, for how many days beyond the final bid validity period and beyond the completion of all contractual/warranty obligations must ‘Bid Security (EMD)’ and ‘Performance Security (PBG)’ remain valid respectively?
  • A. Bid Security: 30 days; Performance Security: 45 days
  • B. Bid Security: 45 days; Performance Security: 60 days
  • C. Bid Security: 60 days; Performance Security: 90 days
  • D. Bid Security: 15 days; Performance Security: 30 days
Correct Answer: (B) — Under Rule 170(ii), Bid Security (EMD, 2%–5%) must remain valid for 45 days beyond the final bid validity period. Under Rule 171(ii), Performance Security (PBG) must remain valid for 60 days beyond the date of completion of all contractual obligations including warranty.

Q2. Under Rule 172 of GFR 2017, when advance payment to a supplier is unavoidable in a fabrication or turnkey contract, what is the maximum permissible advance payment as a percentage of the contract value for a ‘Private Firm’ vs a ‘State/Central Government Agency or PSU’?
  • A. 10% for Private Firms; 20% for PSUs
  • B. 20% for Private Firms; 30% for PSUs
  • C. 30% for Private Firms; 40% for PSUs
  • D. 50% for both Private Firms and PSUs
Correct Answer: (C) — Rule 172(i) of GFR 2017 limits advance payments to 30% of the contract value for private firms and 40% of the contract value for a State or Central Government agency or a Public Sector Undertaking (PSU).

Q3. Under Rule 192 of GFR 2017 governing ‘Quality and Cost Based Selection’ (QCBS) for procuring Consulting Services, what is the maximum weightage that can be assigned to Technical Parameters?
  • A. 50%
  • B. 70%
  • C. 80%
  • D. 90%
Correct Answer: (C) — Rule 192(iv) of GFR 2017 stipulates that under QCBS, the weightage of the technical parameters (i.e., non-financial parameters) in no case should exceed 80 percent (meaning financial cost weightage must be at least 20 percent).

Q4. Under the amended provisions of GFR 2017 (Rule 149), up to what monetary ceiling can a Government buyer make a ‘Direct Online Purchase’ on the Government e-Marketplace (GeM) from any available supplier meeting the requisite quality and specification?
  • A. Up to ₹10,000
  • B. Up to ₹25,000 (revised to ₹50,000 in May 2024)
  • C. Up to ₹5,00,000
  • D. Up to ₹10,00,000
Correct Answer: (B) — Under Rule 149(i), Direct Online Purchase on GeM was originally up to ₹25,000 and was enhanced by the Department of Expenditure (OM dated 10 May 2024) to ₹50,000 (and ₹50,000 to ₹10 Lakh via L-1 comparison among 3 OEMs).

Q5. To promote ‘Atmanirbhar Bharat’ and domestic manufacturing under Rule 161(iv) of GFR 2017, no Global Tender Enquiry (GTE) shall be invited without prior approval of the Competent Authority (Cabinet Secretariat / DoE) for tenders up to:
  • A. ₹50 Crore
  • B. ₹100 Crore
  • C. ₹200 Crore
  • D. ₹500 Crore
Correct Answer: (C) — Under Rule 161(iv) of GFR 2017, no Global Tender Enquiry (GTE) shall be invited for tenders up to ₹200 Crore without prior approval.

❓ Frequently Asked Questions (Exam FAQs)

Q: Are Micro and Small Enterprises (MSEs) exempt from both Bid Security (EMD) and Performance Security under GFR 2017?

No. Under Rule 170, MSEs and DPIIT-recognized Start-ups are exempt from furnishing Bid Security (EMD) while bidding. However, if an MSE wins the tender, it is NOT exempt from furnishing Performance Security (PBG) under Rule 171.

Q: What are the updated May 2024 monetary thresholds for Rule 154, Rule 155, and Rule 161/162 of GFR 2017?

In May 2024, the Department of Expenditure doubled the key GFR 2017 limits: Purchase without quotation (Rule 154) rose from ₹25,000 to ₹50,000 (₹1 Lakh for S&T Ministries); Local Purchase Committee (Rule 155) rose from ₹2.5 Lakh to ₹5 Lakh; and the Limited/Advertised Tender threshold (Rules 161–162) rose from ₹25 Lakh to ₹50 Lakh.

Q: What is the minimum number of registered vendors to whom a Limited Tender Enquiry (LTE) must be sent under Rule 162?

Under Rule 162(i) of GFR 2017, copies of the bidding document in a Limited Tender Enquiry must be sent directly by speed post/registered post/e-procurement to ‘more than three’ (i.e., at least 4) registered suppliers.

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