See Full Document Text
Manual for Procurement
of
Consultancy services
(Second Edition, 2025)
Government of India
Ministry of Finance
Department of Expenditure
iPreface
1. Compliance: This Manual adheres to the relevant laws, GFR, and clarifications/ OMs
issued by the Procurement Policy Division, Department of Expenditure, Ministry of Finance
(‘the Ministry’) up to April 2025. In case of inconsistencies between this Manual and prevailing
law or GFR, the extant law and GFR shall prevail. However, the provisions of this Manual shall
prevail in case of discrepancies with the clarifications/ OMs issued till April 2025 by the
Ministry. Procuring entities are advised to stay informed about any further changes in the
relevant law, GFR, and clarifications/ OMs from the Ministry.
2. Interpretation:
a) Any mention of writing or written includes matter in digital communications (including
email), manuscript, typewritten, lithographed, cyclostyled, photographed, or printed -
under or over signature or seal or digitally acceptable authentication, as the case may
be.
b) Words in the singular include the plural and vice-versa. Words importing the
masculine gender shall be taken to include other genders. Words importing persons
include any company or any association/ body of individuals/ companies and vice-
versa.
c) Any reference to any legal Act, Government Policies or orders shall be deemed to
include all amendments to such instruments, from time to time, till date.
d) Sentences containing ‘may’ are to be considered desirable or good practices which
procuring entities are encouraged to implement.
e) Sentences containing ‘should’/ ‘shall’ are required to be followed.
f) Sentences containing “allowed” indicate an optional course of action to be decided
upon on merits.
3. Manual for Procurement of Goods as a Comprehensive Reference: The ‘Manual
for Procurement of Goods, 2024’ is written to be a comprehensive reference. Other Manuals
(Works, Consultancy and Non-consultancy Services) are self-sufficient from the point of
carrying out a procurement, however common topics relevant for deeper understanding of the
fundamentals of procurement are included only in brief in these manuals, giving reference to
relevant details in the ‘Manual for Procurement of Goods, 2024’.
4. Manuals and Model Tender Documents: Model Tender Documents (MTD) for
Procurement of Goods, and Non-consultancy Services were issued in 2021 and that of
Consultancy Services was issued in 2023. These complement the respective procurement
manuals since the MTDs contain additional details on many topics that the Manuals can
accommodate. Therefore, Procuring Officials are urged to read both Manuals and MTDs in
tandem for better understanding.
5. Annexures: Voluminous details from various orders/ websites are relegated to
annexures to maintain an uninterrupted flow of text on a topic. Since these orders/ websites
undergo frequent revision, it would be easier to update the annexures than the body of the
Manual.
6. An attempt has been made in this edition of Manuals to illustrate some topics with
relevant examples.
vManual for Procurement of Consultancy Services, Second Edition, 2025
Table of Contents
FOREWORD ........................................................................................................................ iii
Preface ................................................................................................................................. v
Table of Contents ................................................................................................................. vii
Acronyms ..............................................................................................................................x i
Procurement Glossary ........................................................................................................ xiii
Chapter 1: Introduction to Procurement of Consultancy Services .......................................... 1
1.1 Procurement Rules and Regulations; and this Manual ............................................ 1
1.2 Clarification, Amendments and Revision of this Manual .......................................... 2
1.3 Applicability of this Manual ...................................................................................... 2
1.4 Categorisation of procurements .............................................................................. 4
1.5 Authorities Competent to incur Expenditure on a Procurement ............................... 6
1.6 Basic Aims of Procurement – Five R’s of Procurement ........................................... 7
1.7 Refined Concepts of Cost and Value – Value for Money ......................................... 7
1.8 Fundamental Principles of Public Procurement ....................................................... 7
1.9 Public Procurement Infrastructure at the Centre ..................................................... 8
1.10 Preferential Purchase from certain sources ......................................................... 8
1.11 When is Procurement of Consultancy Services justified .................................... 30
1.12 Principles for Public Procurement of Consultancy Services ............................... 30
1.13 Legal Aspects Governing Public Procurement of Consultancy Services ............ 31
1.14 The Law of Agency – applicable to Procurement of Consultancy services......... 31
1.15 Public Procurement Cycle in Procurement of Consultancy Services .................. 31
1.16 Nomenclature Conundrum ................................................................................ 32
Chapter 2: Need assessment and Procurement Planning ................................................... 33
2.1 Need Assessment ................................................................................................. 33
2.2 Procurement Proposal (Concept Paper) for Consultancy services ........................ 33
2.3 Preparation of Terms of Reference (ToR) ............................................................. 34
2.4 Estimating Costs, Setting the Budget, and Seeking Approval ............................... 36
2.5 Final Administrative and Budgetary Approvals ...................................................... 38
2.6 Need assessment, Formulation of Terms of Reference, and Procurement Planning -
Risks and Mitigations ....................................................................................................... 38
2.7 Developing a Procurement Plan ............................................................................ 39
Chapter 3: Participation of Bidders and Governance Issues ................................................ 43
3.1 Eligibility Criteria for Participation in Tender Process ............................................ 43
3.2 Legal Status of Bidders ......................................................................................... 43
3.3 Governance Issues in Procurement of Services .................................................... 45
viiTable of Contents
3.4 Integrity Pact (IP) .................................................................................................. 49
3.5 Grievances and its Redressal: .............................................................................. 50
3.6 Conduct of Public Servants in Public Procurement - Risks and Mitigations ........... 52
3.7 Development of New Sources and Registration/ Empanelment/ Pre-qualification of
Firms 54
3.8 Debarment of Suppliers ........................................................................................ 56
3.9 Enlistment of Indian Agents .................................................................................. 61
Chapter 4: Bidding Design for Consultancy Services .......................................................... 63
4.1 Types of Contracts ................................................................................................ 63
4.2 Systems of Selection of Consultants ..................................................................... 68
4.3 Modes of Procurement .......................................................................................... 73
4.4 Tendering Systems ............................................................................................... 75
4.5 Channels of Procurement ..................................................................................... 75
Chapter 5: Bid Invitation Process ........................................................................................ 79
5.1 Preparation and Uploading/ Floating of Tender Documents .................................. 79
5.2 Preparation of the Request for Expression of Interest (REoI) Document ............... 80
5.3 Preparation of the Request for Proposals (RfP) Document ................................... 83
5.4 Uploading of Tender Documents: Mandatory e-Publishing (Rule 159 of GFR 2017)
89
5.5 Obtaining Tender Documents and Submitting Bids ............................................... 91
5.6 Opening of Bids .................................................................................................... 96
5.7 Transparency and Protecting Third-Party Rights of Bidders .................................. 97
5.8 Bidding Invitation Process- Risks and Mitigations ................................................. 98
Chapter 6: Forms of Securities, Prices, Payment Terms and Price Variations .................... 99
6.1 Forms of Security .................................................................................................. 99
6.2 Payment Clause ................................................................................................. 103
6.3 Terms of Payment............................................................................................... 103
6.4 Advance Payment ............................................................................................... 104
6.5 Firm Price, and Variable Price ............................................................................ 105
6.6 Statutory Taxes/ Duties/ Levies........................................................................... 107
6.7 Recovery of Public Money from Consultant's Bill ................................................ 109
6.8 Payment against Time Barred Claims ................................................................. 109
Chapter 7: Shortlisting of Consultants, Expression of Interest (EoI) .................................. 111
7.1 Basic Considerations .......................................................................................... 111
7.2 Modes of EoI ....................................................................................................... 111
7.3 Evaluation of REoI .............................................................................................. 112
7.4 Shortlisting – Risks and Mitigation ...................................................................... 116
viiiManual for Procurement of Consultancy Services, Second Edition, 2025
Chapter 8: RfP Evaluation and Award of Contract ............................................................. 117
8.1 Bid Evaluation Process ....................................................................................... 117
8.2 Composition and Role of Consultancy Evaluation Committee (CEC) .................. 118
8.3 Preliminary and Techno-commercial Evaluation ................................................. 123
8.4 Evaluation of the Quality – Technical Proposals ................................................. 126
8.5 Evaluation of Cost and Selection of Winning Bidder............................................ 131
8.6 Negotiations to Freeze Description of Service ..................................................... 136
8.7 Award of Contract ............................................................................................... 137
8.8 RfP, Evaluation and Award Stage – Risks and Mitigation.................................... 141
Chapter 9: Special Types of Engagements ....................................................................... 145
9.1 Single Source Selection (SSS)............................................................................ 145
9.2 Selection of Individual Consultants ..................................................................... 145
9.3 Selection of Specialized Agencies/ Institutions .................................................... 146
9.4 Selection of Non-governmental Organizations (NGO) ......................................... 147
9.5 Procurement Consultants.................................................................................... 147
9.6 Financial Advisors ............................................................................................... 148
9.7 Auditors .............................................................................................................. 148
9.8 Public competition for Design of symbols/logos .................................................. 149
9.9 Procurement of Integrated IT Projects................................................................. 150
9.10 Hiring Consultants for Digital India Projects ..................................................... 152
Chapter 10: Monitoring Consultancy Services Contract .................................................... 155
10.1 Contract Management ..................................................................................... 155
10.2 Contract Administration ................................................................................... 156
10.3 Controlling Scope of Supply and Quantity ....................................................... 163
10.4 Time Control .................................................................................................... 164
10.5 Cost Control: Billing and Payments ................................................................. 168
10.6 Concluding the Assignment and Post Contract review..................................... 173
10.7 Disputes and Conflicts ..................................................................................... 174
10.8 Terminating Services Prior to End of Contract ................................................. 189
109. Monitoring of Consultancy Contracts – Risks and Mitigation............................ 191
Annexure 1: Financial Powers to Sanction Expenditure for Purchases and Execution of
Contracts .......................................................................................................................... 197
Annexure 2: Suggested Structure of Schedule of Procurement Powers (SoPP)................ 199
Annexure 3: Format of Procurement Proposal .................................................................. 202
Annexure 4: Terms of Reference (ToR) Format ................................................................ 204
Annexure 5: Bid Opening Attendance Sheet cum Report .................................................. 205
Annexure 6: CEC Committee Minutes Format for Consultancy Services ........................... 206
ixTable of Contents
Annexure 7: Format for Evaluation of Responsiveness ..................................................... 209
Annexure 8: Format for Simplified Evaluation of Quality (LCS/ EoI) .................................. 210
Annexure 9: Format for Detailed Technical Evaluation - Summary Sheet ......................... 211
Annexure 10: Evaluation of Consultancy Firm’s Experience .............................................. 212
Annexure 11: Evaluation of Methodology & Work Schedule .............................................. 213
Annexure 12: Evaluation of the Key Professionals ............................................................ 214
Annexure 13: Certificate for Procurement of Consultancy Services without Quotation ...... 215
Annexure 14: Purchase Committee Certificate for Procurement of Consultancy Services . 216
Annexure 15: Limited Tender Form ................................................................................... 217
Annexure 16: Example of Formula for Price Variation Clause ........................................... 220
Annexure 17: Model Clauses to be inserted in Tenders etc. w.r.t Order (Public Procurement
No.4) ................................................................................................................................. 222
Annexure 18: Integrity Pact Format ................................................................................... 225
Annex-1 to Integrity Pact - Guidelines for Indian Agents of Foreign Suppliers ................... 229
Annex-2 to Integrity Pact – Appointment and Role of IEMs ............................................... 230
Annexure 19: FAQs in Respect of Public Procurement Policy for MSEs Order, 2012 ....... 233
Annexure 20: Letter (Notification) of Award (LoA) of Contract ........................................... 240
Annexure 21: Proposal for Extension of Delivery Period ................................................... 241
Annexure 22: Format for Extension of Delivery Period/ Performance Notice ..................... 243
Annexure 23: Model Format for Correspondence with Consultant after Expiry of Delivery Date
......................................................................................................................................... 245
Annexure 24: No Claim Certificate .................................................................................... 246
Annexure 25: Guidelines for Evaluation of Concurrent Application of the MSE and MII
Preferences ...................................................................................................................... 247
Annex to Annexure 25: Examples of Evaluation of Concurrent Application of the MSE and MII
Preferences ...................................................................................................................... 250
Annexure 26: FAQs About PPP-MII Order, 2017 .............................................................. 258
Annexure 27: Format for Show-cause Notice for Debarment ............................................ 261
Annexure 28: Format for Debarment Order ....................................................................... 263
Annexure 29: Format of Declaration by the Appointed Arbitrator ....................................... 265
xManual for Procurement of Consultancy Services, Second Edition, 2025
Acronyms
The following acronyms are used throughout this Manual1:
AMRCD Administrative Mechanism EoI Expression of Interest (Tender) –
for Resolution of CPSEs see also REoI
AITB Additional Instructions to Bidders EPF Employee Provident Fund
BDS Bid Data Sheet ESI Employee State Insurance
BG Bank Guarantee FA Framework Agreement (Forward
BNS Bhartiya Nyaya Sanhita (BNS), Auction, Financial Adviser)
2023 (see IPC also) FA (&CAO) Financial Adviser (and Chief
BOC Bid Opening Committee Accounts Officer)
BOQ “Bill of Quantities” (refers to the FM Force Majeure
Price Schedule in Excel sheet) FTP Full Technical Proposal
BSD Bid Securing Declaration (in lieu of GCC General Conditions of Contract
Bid Security, if permitted) GeM Government e-Marketplace
C(F)A Competent (Financial) GFR General Financial Rules, 2017
Authority
GST (CGST/ IGST/ SGST) (Central/
CBI Central Bureau of Investigation Integrated/ State) Goods and Services Tax
CCI Competition Commission of India GSTIN GST Identification Number
CEC Consultancy Evaluation Committee GTE Global Tender Enquiry
CEO Chief Executive Officer H-1 Highest Scoring Bidder
CIPP Code of Integrity for Public HSN Harmonized System of
Procurement Nomenclature
CMC Contract Monitoring Committee ICB International Competitive Bidding
CoI Conflict of Interest IEM Independent External Monitor
CPPP Central Public Procurement Portal IoT Internet of Things
CPSE Central Public Sector Enterprise IPC Indian Penal Code, 1860 (This law
CV Curriculum Vitae has been replaced by Bhartiya Nyaya
CVC Central Vigilance Commission Sanhita (BNS), 2023 from 1st July 2024)
CVO Chief Vigilance Officer IPR Intellectual Property Rights
DFPR Delegation of Financial Power ISO International Organization for
Standardization
DoE Department of Expenditure
(Ministry of finance) ITC Instructions to consultants
DPIIT Department for Promotion of JV Joint Venture (Consortium)
Industry and Internal Trade L1 lowest acceptable bidder who is
DSC Digital Signature Certificate techno-commercially responsive.
E-BG Electronic Bank Guarantee LCC Life Cycle Cost
EMD Earnest Money Deposit LCS Least Cost System
LD Liquidated Damages
_______________________
1
The main acronym is listed first, and alternatives are listed in bracket thereafter. Alternative meanings in certain
contexts, if any, are listed in the brackets, after main meaning. Acronyms within brackets is not considered
for sort-order.
xiAcronyms
LEC Lowest Evaluated Cost REoI Request for Expression of Interest –
LoA Letter (Notification) of Award (also see also EoI
called Letter of Intent (LoI, in some (S)RfP (Standard) Request for Proposals
contexts) (Document)
LTE Limited Tender Enquiry RTGS Real Time Gross Settlement
MHA Ministry of Home Affairs RTI Right to Information (Act)
MII Make in India (Order) SCC Special Conditions of Contract
MoF Ministry of Finance SD Security Deposit, also see PBG
MSA Mediated Settlement Agreement SFMS Structured Financial Messaging
MSE Micro and Small Enterprise System
MSME(D) Micro, Small and Medium SLA Service Level Agreement
Enterprises (Development Act, 2006) SLTE Special Limited Tender Enquiry
MSP Mediation Service Provider SoPP Schedule of Procurement Powers
MTD (SBD) Model Tender Document SoR Schedule of Rates
(Standard Bid Document) SSS/ STE Single Source Selection/
NCB National Competitive Bidding Single Tender Enquiry
NGO Non-Government Organisation STP Simplified Technical proposal
NIC National Informatics Centre TC (TPC/ TEC) Tender Committee,
NIT Notice Inviting Tender also called Tender Purchase Committee or
Tender Evaluation Committee
NSCS National Security Council
Secretariat TCO Total Cost of Ownership – also see
WOL
OTE Open Tender Enquiry
TCS Tax Collected at Source
PA Procurement Agent(s)
TDS Tax Deducted at Source
PAN Personal Account Number
TIA Tender Inviting Authority
PBG Performance Bank Guarantee, also
see SD. ToR Terms of Reference
PPD Procurement Policy Division - under UAM2 Udyam Aadhaar Memorandum
the Department of Expenditure, Ministry of UIN Unique Identity Number
Finance
URC Udyan Registration Certificate
PPP-MII Public Procurement URDG Uniform Rules for Demand
(Preference to Make in India), Order
Guarantees
PQB Prequalification Bidding VfM (Best) Value for Money
PQC Pre-qualification Criterion WOL Whole of Lice (Cost) – also see
PSICs Public Sector Insurance TCO
Companies
PSU Public Sector Undertaking
PVC Price Variation Clause
QCBS Quality and Cost Based Selection
RBI Reserve Bank of India
RCM Reverse Charge Mechanism
_______________________
2
replaced by Udyam Registration Certificate (URC
w.e.f. 01.07.2020)
xiiManual for Procurement of Consultancy Services, Second Edition, 2025
Procurement Glossary
Unless the context dictates otherwise, the following definitions shall apply throughout this
Manual 3:
1. “Agent” is a person employed to do any act for another or represent another in dealings
with a third person. In the context of public procurement, an Agent is a representative
participating in the Tender Process or Execution of a Contract for and on behalf of its
principals;
2. “Allied firms” (including the term ‘affiliates’/ ‘affiliated firm’, ‘sister concern’, ‘associated
firm’, ‘related party’ in different contexts) of a bidder/ contractor (Principal firm, includes Joint
Venture Company) is a firm/ concern that comes within the sphere of effective influence of the
principal firm, based on – i) Principal Firm being a proprietary firm owns it, ii) Principal firm
being a partnership firm, has common (all or majority of) partners, or any one of partners
having profit share of 20% or more iii) Common Management (say majority of director) with
the Principal firm; iv) Partners or directors of the principal firm have a majority interest in the
management; v) Principal firm has a controlling voice by owning substantial or majority (20%
or more) shares; vi) Principal firm directly or indirectly controls or is controlled by or is under
common control, by way of any agreement/ MoU or otherwise, v) is a successor/ subsidiary to
the principal firm or vice-a-versa; vii) have common offices/ manufacturing facilities with the
Allied Firm;
3. "Bid" (including ‘tender’, ‘offer’, ‘quotation’ or ‘proposal’ in certain contexts) means an
offer to supply goods, services or execution of works made in accordance with the terms and
conditions set out in a document inviting such Bids;
4. "Bidder" (including ‘consultant’, ‘tenderer’, ‘contractor’, supplier or ‘service provider’ in
certain contexts) means any eligible person or firm or company, including a consortium (that
is an association of several persons, or firms or companies), participating in a procurement
process with a Procuring Entity;
5. "Bidder registration document" means a document issued by a Procuring Entity,
including any amendment thereto, that sets out the terms, conditions of registration
proceedings, and includes the invitation to register;
6. "Bid security" ( ‘Earnest Money Deposit’(EMD), or ‘Bid Security Declaration’ in certain
contexts) means security from a bidder securing obligations arising from its Bid, i.e., to avoid:
the withdrawal or modification of its Bid within the validity, after the deadline for submission of
such Bids ; failure to sign the resulting contract or failure to provide the required security for
the performance of the resulting contract after its Bid has been accepted; or failure to comply
with any other condition precedent to signing the contract specified in the solicitation
documents.;
7. “Bill of Quantities” (including ‘Price Schedule’ or ‘BOQ’ in certain contexts) means the
priced and completed Bill of Quantities forming part of the bid;
8. “Central Public sector enterprise” (CPSEs or CPSUs) means a body incorporated
under the Companies Act or established under any other act in which the Central Government
or other CPSEs have a majority ownership of 51% or more;
_______________________
3 The main preferred term is within the inverted commas. Alternative equivalent terms used in certain contexts, if
any, are listed in the brackets. Text within brackets is not considered for sort-order of terms.
xiiiProcurement Glossary
9. “Class-I local supplier” means a supplier or service provider, whose goods, services or
works offered for procurement, meets the minimum local content as prescribed for ‘Class-I
local supplier’ under the Public Procurement (Preference to Make in India), Order 2017(as
revised in 2024)4;
10. “Class-II local supplier” means a supplier or service provider, whose goods, services
or works offered for procurement, meets the minimum local content as prescribed for ‘Class-
II local supplier’ but less than that prescribed for ‘Class-I local supplier’ under the Public
Procurement (Preference to Make in India), Order 2017(as revised in 2024)5;
11. “Competent authority” (or Competent Financial Authority) means an authority to which
powers of approval in various stages of procurement process or execution of a resultant
contract is delegated by or under General and Financial Rules (GFR), Delegation of Financial
Power Rules (DFPR), Schedule of Procurement Powers (SoPP) or any other general or
special orders issued by the Government of India;
12. “Consultancy services” means a one-off (that is, not repetitive and not routine) services
involving project-specific intellectual and procedural processes using established technologies
and methodologies, but the outcomes – which are primarily of a non-physical nature – may
not be standardised and would vary from one consultant to another. It may include small works
or supply of goods that are incidental or consequential to such services; (Rule 177 of GFR
2017)
13. “Contract” (including ‘Procurement Contract', ‘Purchase Order’, ‘Supply Order’,
‘Withdrawal Order,’ ‘Work Order’, ‘Consultancy Contract’, ‘Contract for Services’, ‘Rate
Contract’, ‘Framework Agreement’, ‘Letter of Award, ‘Agreement’, ‘Repeat Order’, or a ‘Formal
Agreement’ in certain contexts), means a formal legal agreement in writing relating to the
subject matter of Procurement, entered into between the Procuring Entity and the supplier,
service provider or contractor on mutually acceptable terms and conditions and which are in
compliance with all the relevant provisions of the laws of the Country;
14. “Contractor” (including the terms ‘Supplier’ or ‘Service Provider’ or ‘Consultant’ or ‘Firm’
or ‘Vendor’ or ‘Manufacturer’ or ‘Successful Bidder’ in certain contexts) means the person,
firm, company, or a Joint Venture with whom the contract is entered into and shall be deemed
to include the contractor's successors (approved by the Procuring Entity), agents,
subcontractor, representatives, heirs, executors, and administrators as the case may be
unless excluded by the terms of the contract;
15. “Contract Value” (or Contract Price) means the full and final monetary amount that the
procuring entity is obligated to pay to the contractor under the terms of the contract, ensuring
that no additional costs are incurred beyond the agreed sum. It is an all-inclusive figure that
covers the base price of the goods, services, or works being procured, along with all applicable
taxes/ surcharges (such as Goods and Services Tax – GST etc), customs duties, freight,
transportation, installation, commissioning, warranties, maintenance, and any other incidental
charges;
16. “e-Procurement” means the use of information and communication technology
(specially the internet) by the Procuring Entity in conducting its procurement processes with
_______________________
4 Notified vide Order No. P-45021/2/2017-PP (BE-ll)-Part(4)Vol.ll issued by Department of Promotion of Industry
and Internal Trade dated 19.07.2024
5 Notified vide Order No. P-45021/2/2017-PP (BE-ll)-Part(4)Vol.ll issued by Department of Promotion of Industry
and Internal Trade dated 19.07.2024
xivManual for Procurement of Consultancy Services, Second Edition, 2025
bidders for the acquisition of goods (supplies), works and services with the aim of open, non-
discriminatory, and efficient procurement through transparent procedures;
17. "Goods" (including the terms ‘Stores’, ‘Material(s)’ in specific contexts) includes all
articles, material, commodity, livestock, medicines, furniture, fixtures, raw material,
consumables, spare parts, instruments, hardware, machinery, equipment, industrial plant,
vehicles, aircrafts, ships, railway rolling stock assemblies, sub-assemblies, accessories, a
group of machines comprising an integrated production process or such other categories of
goods or intangibles, products like technology transfer, licenses, patents, software or other
intellectual properties (but excludes books, publications, periodicals, etc., for a library),
procured or otherwise acquired by a procuring entity. Procurement of goods may include
certain small work or some services, which are incidental or consequential to the supply of
such goods, such as transportation, insurance, installation, commissioning, training, and
maintenance etc. (Rule 143 of GFR 2017);
18. “Intellectual Property Rights” (IPR) refers to the owner’s rights against unauthorised
possession/ exploitation by others of its tangible or intangible intellectual property. It includes
rights to Patents, Copyrights, Trademarks, Industrial Designs, and Geographical indications
(GI);
19. "Invitation to (pre-)qualify" means a document including any amendment thereto
published by the Procuring Entity inviting offers for pre-qualification from prospective bidders;
20. "Invitation to register" means a document including any amendment thereto published
by the Procuring Entity inviting offers for bidder registration from prospective bidders;
21. “Letter of Award” (including ‘Letter of Intent’ or ‘Notification of Award’ in certain
contexts) means the letter or memorandum communicating to the contractor the acceptance
of his bid for award of the contract;
22. “Local Content” means the amount of value added in India which shall, unless
otherwise prescribed by the Nodal Ministry, be the total value of the item procured (excluding
net domestic indirect taxes) minus the value of imported content in the item (including all
customs duties) as a proportion of the total value, in percent;
23. "Model Tender (Bidding) Document(s)" (including ‘tender (enquiry) documents’ or
‘Request for Proposal Documents’ – RfP documents, or ‘Standard Bidding Documents’ - SBD
in certain contexts) means a document issued by the procuring entity, including any
amendment thereto, that sets out the terms, conditions of the given procurement, and includes
the invitation to bid. A Model (Standard) Tender (Bidding) Document is the model template to
be used for preparing Tender Document after making suitable changes for specific
procurement;
24. “Non-consultancy services” (or ‘Outsourcing of Services’) are defined by exclusion as
those services that cannot be classified as Consultancy Services. These involve routine,
repetitive physical, procedural, and non-intellectual outcomes for which quantum and
performance standards can be clearly identified and consistently applied and are bid and
contracted on such basis. It may include small works or a supply of goods or Consultancy,
which are incidental or consequential to such services; (Rule 197 of GFR 2017)
25. “Non-Local supplier” means a supplier or service provider, whose goods, services or
works offered for procurement, has local content less than that prescribed for ‘Class-II local
xvProcurement Glossary
supplier’ under the Public Procurement (Preference to Make in India), Order 2017 (as revised
in 2024)6;
26. "Notice inviting tenders" (including ‘Invitation to bid’ or ‘request for proposals’ in certain
contexts) means a document and any amendment thereto published or notified by the
Procuring Entity, which informs the potential bidders that it intends to procure goods, services
and/or works or a combination thereof;
27. “Outsourcing of Services” means deployment of outside agencies on a sustained long-
term (for one year or more) for performance of Non-consultancy services which were
traditionally being done in-house by the employees of Ministries/ departments (e.g., Security
Services, Horticultural Services, Janitor/ Cooking/ Catering/ Management Services for Hostels
and Guest Houses, Cleaning/ Housekeeping Services, Errand/ Messenger Services, and so
forth). Besides outsourcing, Non-consultancy services also include procurement of short-term
stand-alone services;
28. “Parties”: means the parties to the contract are the "Contractor" and the Procuring
Entity, as defined in this clause;
29. “Performance Security” (includes the terms ‘Security Deposit’ or ‘Performance Bond’
or ‘Performance Bank Guarantee’ or other specified financial instruments in certain contexts)
means a monetary guarantee to be furnished by the successful Bidder or Contractor in the
form prescribed for the due performance of the contract;
30. “Place of Supply” means the specific location where Goods are delivered to the Buyer,
taken on board a conveyance, or otherwise supplied; and where Services or Works are
performed or executed during the term of the Contract. This location is crucial not only for
determining the time of completion of such delivery, performance, or execution but also for
ensuring compliance with relevant tax laws and other regulations applicable to its jurisdiction.
31. "Pre-qualification (bidding) procedure" means the procedure set out to identify, prior to
inviting bids, the bidders that are qualified to participate in the procurement;
32. "Pre-qualification document" means the document including any amendment thereto
issued by a Procuring Entity, which sets out the terms, conditions of the pre- qualification
bidding, and includes the invitation to pre-qualify;
33. "(Public) Procurement" (including ‘Government Procurement’ or ‘Public-Private
Partnership’ in certain contexts) means acquisition by way of purchase, lease, license or
otherwise, either using public funds or any other source of funds (e.g. grant, loans, gifts,
private investment etc.) of goods, works or services or any combination thereof, by a procuring
entity, whether directly or through an agency, but does not include any acquisition of goods,
works or services without consideration, and the term "procure" or "procured" or “purchase”/
“purchased” shall be construed accordingly;
34. “(Public) Procurement Guidelines” means guidelines applicable to Public Procurement,
comprising a hierarchy of Statutory framework, Rules and Regulations, Manuals of
Procurement and Procurement Documents as detailed in Annexure 1 of the Manual for
Procurement of Goods, 2024;
35. “Procurement Officer” means the officer signing the Letter of Award (LoA) and/or the
contract on behalf of the Procuring Entity;
_______________________
6 Notified vide Order No. P-45021/2/2017-PP (BE-ll)-Part(4)Vol.ll issued by Department of Promotion of Industry
and Internal Trade dated 19.07.2024
xviManual for Procurement of Consultancy Services, Second Edition, 2025
36. "Procurement Process" means the process of Procurement extending from the
assessment of need, Bid Invitation Process, Bid Evaluation and Award of Contract to the
Contract Management. It also covers issue of invitation to pre-qualify or to register or to bid,
as the case may be;
37. “Procuring authority” means the officer who finally approves, as well as those officials
and committee members (including Associated/ Integrated Finance, technical departments,
besides any other) who submit the notes/ reports to approve any decision;
38. "Procuring Entity" means the entity in any Ministry or Department of the Central
Government or a unit thereof or it's attached or subordinate office or CPSE to which powers
of Procurement have been delegated and handles the entire procurement process, ensuring
efficiency, transparency, fair treatment of suppliers, and the promotion of competition;
39. “Procuring Organisation” means the Organisation for which the procurement is done
to fulfil its stated objectives, assigned duties/ obligations/ responsibilities/ functions, and
activities in alignment with desired policy outcomes;
40. "Prospective bidder" means anyone likely or desirous to be a bidder;
41. "Public Private Partnership" means an arrangement between a public entity, on one
side, and a private sector entity, on the other, for the provision of public assets or public
services or both, or a combination thereof, through investments being made or management
being undertaken by the private sector entity, for a specified period, where there is predefined
allocation of risk between the private sector and the public entity and the private entity receives
performance-linked payments that conform (or are benchmarked) to specified and
predetermined performance standards, deliverables or Service Level agreements measurable
by the public entity or its representative;
42. "Rate contract " ( or the term ‘framework agreement’ in certain contexts) means an
agreement between a Central Purchase Organisation or Procuring Entity with one or more
bidders, valid for a specified period of time, which sets out terms and conditions under which
specific procurements can be made during the term of the agreement and may include an
agreement on prices which may be either predetermined or be determined at the stage of
actual procurement through competition or a predefined process allowing their revision without
further competition;
43. “Registering authority” means an authority which registers bidders for different
categories of procurement;
44. "Registered Supplier (Consultant or Service Provider)" means any supplier who is on
a list of registered suppliers of the Procuring Entity or a Central Purchase Organisation;
45. "Reverse auction" (or the term ‘Electronic reverse auction’ in certain contexts) means
an online real-time purchasing technique utilised by the Procuring Entity to select the
successful bid, which involves presentation by bidders of successively more favourable bids
during a scheduled period of time and automatic evaluation of bids;
46. “Scheduled Bank” means a bank as defined in section 2(e) of the Reserve Bank of
India Act, 1934 and listed in schedule 2 thereof;
47. "Service" is defined by exception as any subject matter of procurement other than
goods or works, except those incidental or consequential to the service, and includes physical,
maintenance, professional, intellectual, training, consultancy and advisory services or any
other service classified or declared as such by a Procuring Entity but does not include
appointment of an individual made under any law, rules, regulations or order issued in this
behalf. It includes ‘Consultancy Services’ and ‘Other (Non-consultancy) Services’;
xviiProcurement Glossary
48. “Special Conditions of Contract” (SCC) means Special Conditions that override the
General Conditions if and to the extent of the conflict between the two;
49. "Subject matter of procurement" means any item of procurement whether in the form
of goods, services or works or a combination thereof;
50. ‘Tender Document’ means the document (including all its sections, appendices, forms,
formats, etc. and various terms prevalent for such documents) published by the Procuring
Entity to invite bids in a Tender Process. The Tender Document and Tender Process may be
generically called “Tender" or "Tender Enquiry", which would be evident from context without
ambiguity;
51. “Tender Process” is the entire process from the publishing of the Tender Document to
the resultant award of the contract;
52. ‘Total Cost of Owning’ - TCO (Life Cycle Costing - LCC, Whole of Life Costing - WOL)
encompasses all costs associated with acquiring (including the price paid to the supplier),
operating, maintaining, and disposing of a product or service. Essentially, the three terms refer
to the cost incurred on a product during its lifetime. However, LCC has evolved beyond that to
consider the cost of the impact of the product on the environment and, therefore, is mostly
used as a tool in Sustainable Public Procurement. WOL is used mostly in capital-intensive
assets, infrastructure projects, and long-term investments, and TCO is used mostly in
procurement of Goods;
53. "Works" refer to any activity, sufficient in itself to fulfil an economic or technical function,
involving construction, fabrication, repair, overhaul, renovation, decoration, installation,
erection, excavation, dredging, and so on, which make use of a combination of one or more
of engineering design, architectural design, material and technology, labour, machinery, and
equipment. Supply of some materials or certain services may be incidental or consequential
to and part of such works. The term “Works” includes (i) civil works for the purposes of roads,
railway, airports, shipping-ports, bridges, buildings, irrigation systems, water supply, sewerage
facilities, dams, tunnels and earthworks; and so on, and (ii) mechanical and electrical works
involving fabrication, installation, erection, repair and maintenance of a mechanical or
electrical nature relating to machinery and plants; (Rule 130 of GFR 2017)
xviiiManual for Procurement of Consultancy Services, Second Edition, 2025
Chapter 1: Introduction to Procurement of
Consultancy Services
1.1 Procurement Rules and Regulations; and this Manual
1. Various Ministries, Departments, attached and subordinate offices, local urban bodies,
public sector enterprises, and other Government (including autonomous) bodies (hereinafter
referred to as ‘Procuring Entities’) spend a sizeable amount of their budget on the Procurement
of goods, works and services to discharge the duties and responsibilities assigned to them.
2. The Ministries/ Departments have been delegated full powers to make their own
arrangements for the procurement of goods and services that are not available on the
government e-marketplace (GeM). These powers must be exercised as per the Delegation of
Financial Power Rules and in conformity with the ‘Procurement Guidelines’ described below.
Common use Goods and Services available on GeM are required to be procured mandatorily
through GeM as per Rule 149 of GFR, 2017.
3. To ensure that these procurements are made by following a uniform, systematic,
efficient, and cost-effective procedure and also to ensure fair and equitable treatment of
consultants/ service providers, there is a hierarchy of statutory provisions, rules, financial,
vigilance, security, safety, counter- trade and other regulations; orders and guidelines of the
Government about public procurement (hereinafter referred as ‘Procurement Guidelines’,
please see Annexure 1 of Manual for Procurement of Goods, 2024 (hereinafter referred as
‘Procurement Guidelines’).
4. At the apex of the Statutory framework governing public procurement is Article 299 of
the Constitution of India, which stipulates that contracts legally binding on the Government
must be executed in writing by officers specifically authorized to do so. The Constitution also
enshrines Fundamental Rights (In particular Articles 14 – Right to Equality before Law and 19
(1) (g) – Right to practice any profession, or to carry on any occupation, trade, or business)
which have implications for Public Procurement. Further, the Indian Contract Act, 1872 and
the Sale of Goods Act, 1930 are major legislations governing contracts of sale/ purchase of
goods in general. There are other mercantile laws (Arbitration and Conciliation Act, 1996;
Competition Act, 2002; Information Technology Act, 2000, Indian Stamp Act, 1899, etc . as
amended from time to time), which may be attracted in Public Procurement Transactions.
5. In Central Government, there is no law exclusively governing public procurement.
However, comprehensive Rules and Regulations in this regard are available in the General
Financial Rules (GFR), 2017 (especially chapter 6 to 9); Delegation of Financial Powers Rules
(DFPR), 2024; Government orders regarding purchase preference/ restrictions like Public
Procurement (Preference to Make in India), Order 2017, facilities to Micro and Small
Enterprises and Startups, Restrictions on Entities from a Class of Countries (Rule 144 (xi),
GFR 2017) etc.
6. Without purporting to be a comprehensive compendium of all such ‘Procurement
Guidelines’, this Manual is intended to serve as a portal to enter this vast area and draw
attention to basic norms and practices governing public procurement.
1Chapter 1: Introduction to Procurement of Consultancy Services
1.2 Clarification, Amendments and Revision of this Manual
For revision, interpretation, clarification, and issues relating to this manual, the Procurement
Policy Division, Department of Expenditure, Ministry of Finance would be the nodal authority.
1.3 Applicability of this Manual
1. This manual is applicable to procurement of "Consultancy Services" as defined in the
‘Procurement Glossary section’. For any circumstances not covered in this manual for
procurement of consulting services, the Procuring Entity may refer to the Manual for
Procurement of Goods, 2024. For the sake of brevity, this Manual refer to some of the sections
of the Goods Manual without reproducing them.
2. Procuring Entities: This Manual shall apply to all Procuring Entities covered by Rule
1 of GFR, i.e., all Central Government Ministries/Departments, attached and subordinate
bodies. These provisions shall also apply, as per the same rule, to autonomous bodies except
to the extent that the bye-laws of an autonomous body provide separate procurement
guidelines7 that the Government has approved.
3. Statutory Bodies and CPSEs: These guidelines shall also be applicable to bodies
substantially owned or controlled by or receiving substantial financial assistance from the
Central Government (inter-alia, Central Public Sector Enterprises (CPSEs or undertakings,
including their subsidiary companies/ Ventures); Public Sector Banks (PSBs); Public Sector
Insurance Companies (PSICs); Public Sector Financial Institutions (FIs); Constitutional or
Statutory Bodies, Public Academic Institutions (National/ Central institutes), and Commissions
that have been created under the Constitution of India or specific legislations), except to the
extent deviations7 that have been approved by their competent authority (e.g., Board of
Directors)
4. Indian Missions and CPSE Units Abroad: While the applicability of the Manual in
the case of Indian Missions abroad and CPSE Units abroad shall be as per sub-para 2) and
3) above, respectively – the following is clarified:
a) Adopting Financial Limits/ Thresholds in Local Currency: For procurements
done and for use outside India, in the host country’s local currency, Indian Missions
and CPSE units abroad may adopt General Financial Rules (GFR) financial limits/
thresholds of procurements (as mentioned in this Manual at various instances, e.g.,
selection of mode of Procurement etc.) by using latest INR-PPP conversion rates for
the local currency as published by the IMF (International Monetary Fund). For
convenience, such converted limits/ thresholds may be reviewed annually. Even if the
Procurement is to be done in a currency other than the local currency, the applicable
financial limits/ thresholds of procurements shall be in terms of the INR-PPP
conversion rate for the local currency only. If the IMF does not publish the PPP
conversion rate for local currency, then the conversion may be done to the currency
most relevant to that mission/ unit in consultation with the Financial Advisor.
The following illustration may be used as guidance:
_______________________
7
Such approved guidelines must retain fundamental provisions relating to the Constitution and Government
instructions relating to Preferential Procurement Policies, GTE and Land Border restriction, General Instructions
on Procurement and Project Management (NO.F.1/1/2021-PPD dtd 20.10.2021)
2Manual for Procurement of Consultancy Services, Second Edition, 2025
Financial limits in GFR are to be calculated for the Indian Mission in Bangladesh,
where the relevant local currency is Bangladesh Taka (BT). Let the PPP
conversion rate (as per international dollar) published by the IMF for INR and
BT in a particular year be as follows:
Rs. 22.947 = 1 USD = 31.98 BT
The PPP-based conversion rate for BT/ INR may be calculated as 31.98/ 22.947
= 1.394. Thus, a threshold of INR. 25,00,000 (say the threshold for OTE) would
be then 34,85,000 BT.
b) Exemptions: For exemptions from restrictions relating to Global Tenders, bidders
from Land-border countries, and eProcurement for bona-fide procurements and use
outside India by Indian Missions and CPSE Units abroad, please refer to paragraphs
4.3.2-4-g, 1.11.4-3-f(ii), and 4.17.1-4, respectively, in the Manual for Procurement of
Goods, 2024.
5. Portals: GeM portal, CPPP (Central Public Procurement Portal), and various such
platforms of different Organisations carry out a substantial proportion of Public Procurement.
Hence, the procedures for such platforms should generally conform to these ‘Procurement
Guidelines.’
6. Outsourced Procurement: These procurement guidelines shall continue to apply if
these procuring entities outsource the procurement process, bundle the procurement process
with other contractual arrangements, or utilise the services of a procurement support agency
or procurement agents to carry out the Procurement on their behalf.
7. Customisation: This Manual is to be taken as generic guidelines, which are
necessarily broad in nature. Subject to the observance of these generic guidelines, Procuring
Entities are advised to customise these manuals, with the approval of competent authority and
financial concurrence, to suit their local/specialised needs by issuing their own detailed
Manuals (including customised formats); Model Tender Documents; Schedule of Procurement
Powers and Checklists to serve as practical instructions for their officers and to ensure
completeness of examination of cases. For procuring organisations that have their own
detailed manuals or procedure orders, the initiation, authorisation, Procurement, and
execution of contracts undertaken by them shall be regulated by detailed rules and orders
contained in their respective regulations and by other special orders applicable to them.
8. Exemptions: These procurement guidelines would not apply to procurements by
procuring entities mentioned above for their own use from their subsidiary companies,
including Joint Ventures, where they have a controlling share. Moreover, by a general or
special notification, the Government may permit certain ‘Procuring Entities’ mentioned in the
sub-para above, considering unique conditions under which they operate, for all or certain
categories of procurement, to adopt detailed approved guidelines for procurement, which may
deviate in some respects but conform with all other essential aspects of these ‘Procurement
Guidelines.’
9. Procurements financed by Loans/ Grants extended by International Funding
Agencies:
a) For projects funded by the World Bank, Asian Development Bank, and other
International Funding Agencies (IFA), the Articles of Agreement, with the approval of
the Ministry of Finance, stipulate either the Indian (or State) Government’s own
procurement procedures or IFA’s specific procurement procedures to be followed by
the borrowers.
3Chapter 1: Introduction to Procurement of Consultancy Services
b) These guidelines would not be applicable to projects funded by the World Bank using
the Investment Project Financing (IPF) instrument and similar instruments of other
International Funding Agencies (IFA), as stipulated under Articles of Agreement, as
mentioned under sub-para-a) above. IFA’s specific procurement procedures shall be
applicable as permitted under Rules 264 of GFR 2017.
c) However, for the projects financed using instruments such as Program-for-Results
(PforR) of the World Bank, and Results-based lending (RBL) of the Asian
Development Bank, and similar instruments of other International Funding Agencies,
the application of these guidelines as expressly agreed in the legal agreements shall
be followed.
1.4 Categorisation of procurements
1. Categorisation of Procurements helps in preparing guidelines for Procurements and
Model Tender Documents, which cater to peculiar contractual conditions of the categories of
procurements. Following are the categories of procurements (please refer to the definition in
procurement Glossary):
a) Goods.
b) Services
i) Consultancy Services and
ii) Non-consultancy services (NC services)
c) Works
2. Distinctive Features: Normally such categorisation is clear as per their definition and
procurement should be done accordingly, following the relevant guidelines and Model Tender
Documents. The boundaries between such categorisation may not be clear cut and may
overlap. It may neither be possible nor necessary to precisely distinguish between the
categories in overlapping areas. Though simplistic, main distinguishing factors between these
are:
a) While both Goods and Works lead to tangible outputs (with some exceptions like IPR
materials), yet the main Difference between Goods and Works is that manufacture of
goods is done in supplier’s own premises (other than installation/ commissioning),
while ‘Works’ is done on the premises of the procuring entity (other than pre-
fabricated components). Works may include incidental ‘Goods’ and vice-a-versa.
b) Main Difference Between ‘Goods’ and ‘Works’ on one hand and ‘Services’ on the
other is intangibility of outputs of Services.
c) Main difference between Consultancy and Non-consultancy services is the level of
intellectual inputs – predominant in Consultancy and not central to Non-consultancy.
Another difference is that Non-consultancy services are repetitive, routine, with
measurable and standardised outputs, while Consultancy services are one-off and
non-routine with outputs that are neither exactly measurable nor standardised.
3. In case of Doubt: Procurement in cases of doubts about categorisation may be done
as follows:
a) In case of blurred border-lines and grey areas, a simpler procedure of procurement
should be followed. In case of doubt between:
i) Goods and works/ NC services/ consultancy, it should be processed as
procurement of goods.
4Manual for Procurement of Consultancy Services, Second Edition, 2025
ii) Works and NC service/ consultancy, it should be processed as procurement of
works.
iii) Non-consultancy and Consultancy services, it should be processed as
procurement of non-consultancy services.
b) Procurement of IT Projects should normally be carried out as Procurement of
Consultancy services, as the outcomes/deliverables vary from one service provider
to another. The IT Projects may include:
i) bespoke software development;
ii) cloud based services and
iii) composite IT system integration services involving design, development,
deployment, commissioning of IT system including supply of hardware,
development of software, bandwidth, and operation/maintenance of the system
for a define period after go-live etc.
c) 8Composite Contracts: Composite contracts may involve mixed elements of Goods,
Works, and Services. For example, in the Procurement of large machinery, some
works and services like Installation, Commissioning, Training, Annual Maintenance
Contract (AMC) or a Comprehensive Maintenance Contract (CMC), and so on may
be incidental to the supply of goods. The relationship of primacy between the goods
element and the works/ services element may be examined, irrespective of the
relative values. A possible alternative approach could be to have separate but linked
contracts for such elements of Goods, Works, and Services, but implementation may
become challenging. If the primary objective is the Procurement of goods with
services/ works being incidental to it, it may be processed as procurement of Goods.
However, if the primary objective is Procurement of Works/ services with
Procurement of goods being incidental, then it should generally be processed as
Procurement of works/ services (as the case may be), irrespective of the relative
values.
i) Procurement of “new product” viz. Mechanical, Electrical or ICT assets etc of the
nature of Machinery and Plant with incidental works/ services like fabrication,
installation, erection, commissioning, AMC/CMC should be handled as
procurement of goods, except for procurement of IT Projects as specified above.
ii) AMC/ CMC of existing Mechanical, Electrical or ICT assets of the nature of
Machinery and Plant should be treated as procurement of Non-Consultancy
Services.
Notes:
1) If the NC services primarily involve construction, fabrication, repair,
maintenance, overhaul, renovation, decoration, installation, erection,
excavation, dredging, and so on, of Civil assets, then it should be handled as
procurement of Works.
2) Procurement of new mechanical and electrical works (not in the nature of
Machinery and Plant) involving fabrication, installation, erection of a
mechanical or electrical nature should be treated as procurement of Works,
if elements of procurement of Goods is incidental.
_______________________
8
PPD’s OM No. F6/2/2023-PPD dated 13.01.2023
5Chapter 1: Introduction to Procurement of Consultancy Services
3) Repair, renovation, maintenance, overhauling, decoration, AMC/ CMC, or
similar work for existing Mechanical, Electrical or ICT assets NOT of the
nature of Machinery and Plant etc should normally be handled as
procurement of services.
d) It is possible that, depending on the nature and complexity of the assignment, a task
could be dealt with either as a consultancy or non-consultancy service. In essence, if
the intellectual and advisory part of services is the primary objective (irrespective of
relative value of these component), the selection needs to be dealt with in
Consultancy mode. For example, if the task is looking at the condition of a dam (for
dam safety) by physically inspecting a dam through underwater observation, this task
is collection of data using technologies and photography, but the actual analysis is an
intellectual and advisory task and is the primary objective of the assignment.
Therefore, the entire task needs to be dealt with as selection of a consultant.
1.5 Authorities Competent to incur Expenditure on a Procurement
1. The first step in procurement to procure goods, services or works involves a formal
decision to procure something along with the exact or approximate expenditure to be incurred.
A Competent authority which is competent to incur expenditure may accord administrative
sanction/ approval to incur expenditure on a specific procurement in accordance with the
Delegation of Financial Rules (DFPR – extracted in Annexure 1) by following the ‘Procurement
Guidelines’ described in this Manual (Rule 145 of GFR 2017). Each ‘Procuring Entity’ may
issue a Schedule of Procurement Powers (SoPP) adding further details to the broad
delegations in the DFPR, based on the assessment of risks involved in different decisions/
approvals at various stages of Procurement Cycle. A suggested structure of such SoPP is
enclosed as Annexure 2.
2. Being a decision with a financial bearing and hence invariably requires consultation of
the Financial Adviser (unless validly re-delegated within permissible limits or otherwise
permitted by DoE through specific orders). The extent of involvement of the Financial Adviser
and the Integrated Finance (IFD) in in subsequent stages of procurement matters may be
based on one of the following procedures (Para 19, Charter for FA, 2023):
a) Normal Procedure: Under this procedure, the concurrence of the Financial Adviser/
IFD shall be required on all procurement matters, except for matters where re-
delegation has been done within the limits permissible under the rules/ general
orders/ general instructions of DoE. Unless a special procedure is approved by the
Secretary of the Department with concurrence of DoE, this procedure shall be
followed.
b) Special Procedure: The Secretary of the Department may, with the prior
concurrence of Secretary Expenditure, decide on a different level of involvement of
the Financial Adviser /IFD specific to the Department. The procedure will lay out the
types/ classes of cases where the Financial Adviser/ Integrated Finance Division’s
(IFD) consultation would be required which may be in terms of threshold financial
limits, stages in procurement or types of procurement and contracts viz. consultancy,
goods and works contracts etc. or any permutation thereof.
3. In all procedures, payments under approved contracts shall not require IFD
consultation except in cases where the payments are in relaxation/variation to approved
contract conditions.
6Manual for Procurement of Consultancy Services, Second Edition, 2025
1.6 Basic Aims of Procurement – Five R’s of Procurement
In every procurement, public or private, the basic aim is to achieve just the right balance
between costs and requirements concerning five parameters called the five ‘R’s of
procurement. The entire process of procurement (from the time that need for an item, facility
or services is identified till the need is satisfied) is designed to achieve such a right balance.
Although couched in jargon of procurement of Goods, it’s equally applicable to procurement
of Consultancy services. The term ‘Right’ is used here in the sense of being ‘optimal balance’:
1. Right quality;
2. Right quantity;
3. Right price;
4. Right time and place; and
5. Right source.
(For more details on basic aims of procurement, please refer to Chapter 1 and ‘Appendix 1:
Advanced Concepts of Value for Money’ of the Manual for Procurement of Goods, 2024).
1.7 Refined Concepts of Cost and Value – Value for Money
The concept of price or cost has been further refined into Total Cost Of Ownership (TCO), Life
Cycle Cost (LCC) or Whole-of-Life (WOL) to consider not only the initial acquisition cost but
also the cost of operation, maintenance, and disposal during the lifetime of the external
resource procured. Similarly, the concept of quality is linked to the need and is refined into the
concept of utility/ value. These two, taken together, are used to develop the concept of Value
for Money (VfM, also called Best Value for Money in certain contexts). VfM means the
effective, efficient, and economical use of resources, which may involve the evaluation of
relevant costs and benefits, along with an assessment of risks, non-price attributes (e.g., in
goods and/or services that contain recyclable content, are recyclable, minimise waste and
greenhouse gas emissions, conserve energy and water and minimise habitat destruction and
environmental degradation, are non-toxic etc.) and/or life cycle costs, as appropriate. Price
alone may not necessarily represent VfM. In public Procurement, VfM is achieved by attracting
the widest competition by way of optimal description of need; development of value-
engineered specifications/ Terms of Reference (ToR); appropriate packaging/ slicing of
requirement; selection of an appropriate mode of Procurement and tendering system. These
advanced concepts are explained in Chapter 1 and ‘Appendix 1: Advanced Concepts of Value
for Money’ of the Manual for Procurement of Goods, 2024.
1.8 Fundamental Principles of Public Procurement
General Financial Rules, 2017 (Rule 144) lay down the Fundamental Principles of Public
Procurement. These principles and other additional obligations of procuring authorities in
public procurement can be organised into five fundamental principles of public procurement,
which all procuring authorities must abide by and be accountable for:
1. Transparency principle;
2. Professionalism principle;
3. Broader obligations principle;
4. Extrinsic legal principle; and
7Chapter 1: Introduction to Procurement of Consultancy Services
5. Public accountability principle.
(For more details on fundamental principles of public procurement, please refer to Chapter 1
and ‘Appendix 1: Advanced Concepts of Value for Money’ of the Manual for Procurement of
Goods, 2024).
1.9 Public Procurement Infrastructure at the Centre
Public Procurement is a complex function, and the infrastructure needed to execute it is
equally complex. In India, the following administrative, oversight, and Digital infrastructure
exist for Public Procurement.
a) Procurement Policy Division
b) Central Public Procurement Portal
c) Government e-Marketplace (GeM)
d) Comptroller and Auditor General (CAG) of India
e) Lokpal/ Lokayukta – Anti-corruption Ombudsman
f) Central Vigilance Commission (CVC)
g) Central Bureau of Investigation (CBI)
(For details about these, please refer to Chapter 1 of the Manual for Procurement of Goods,
2024.)
1.10 Preferential Purchase from certain sources
The Central Government may, by notification, provide for mandatory procurement of any
goods or services from any category of bidders, or provide for preference to bidders on the
grounds of promotion of locally manufactured goods or locally provided services. (General and
Financial Rules, 2017, Rule 153 (iii)).
Note: Before considering any Purchase Preference mentioned below, the Procuring
Entity should check the latest directives in this regard for necessary action. Purchase
Preference provision shall invariably be part of the Notice Inviting Tender (NIT) and
Instructions to Bidders/ Consultants (ITB/ ITC).
1.10.1 Public Procurement Policy for Micro and Small Enterprises (MSEs)
(Rule 153 (ii) of GFR 2017)
1. The Policy: From time to time, the Government of India (Procuring Entity) lays down
procurement policies to help inclusive national economic growth by providing long-term
support to micro and small enterprises and disadvantaged sections of society and to address
environmental concerns. The Procurement Policy for Micro and Small Enterprises, 2012
[amended 2018 and 2021] has been notified by the Government in exercise of the powers
conferred in Section 11 of the Micro, Small and Medium Enterprises Development (MSMED)
Act, 2006. Details of the policy along with the amendments issued in 20189 and 202110 are
available on the MSME website11.
2. Eligibility:
a) Micro and Small Enterprises (MSEs) registered under Udyam Registration are eligible
to avail the benefits under the policy.
_______________________
9http://www.dcmsme.gov.in/Gazette%20Notification.pdf
10http://www.dcmsme.gov.in/PPP-MSEs%20Order,2012%20Amendment,2022.pdf
11 http://dcmsme.gov.in/pppm.htm.aspx
8Manual for Procurement of Consultancy Services, Second Edition, 2025
b) This Policy provides preferential procurement of goods produced and services
rendered by MSEs. Traders/ distributors/ sole agents/ Works Contract are excluded
from the purview of the policy.
i) 12In case of an upward change in terms of investment in plant and machinery or
equipment or turnover or both, and consequent re-classification, an enterprise
shall continue to avail of all nontax benefits of the category (micro, small, or
medium) it was in before the re-classification, for a period of three years from the
date of such upward change. Non-tax benefits include benefits of various
schemes of the Government, including Public Procurement Policy, Delayed
Payments, etc.
ii) MSEs would be treated as owned by SC/ ST or Women entrepreneurs:
1). In the case of proprietary MSE, proprietor(s) are SC /ST or Woman;
2). In the case of partnership MSE, the SC/ ST or Women partners hold at least
51% (fifty-one per cent) shares in the unit;
3). In the case of Private Limited Companies, SC/ ST or Women promoters hold
at least 51% (fifty-one per cent) share.
3. Applicability and Exemptions:
a) The policy is applicable to Central Government Ministries/ Departments/ Public
Sector Undertakings
b) The policy is not applicable to State Government Ministries/ Departments/ State
PSEs, but they have similar policies applicable in their state.
c) Exemptions: Given their unique nature, defence armament imports shall not be
included in computing the 25 (twenty-five) per cent goal for the Ministry of Defence.
In addition, defence equipment like weapon systems, missiles, etc., shall remain out
of the purview of such a reservation policy. Monitoring of goals set under the policy
will be done, as far as they relate to the Defence sector, by the Ministry of Defence
itself in accordance with suitable procedures to be established by them.
4. Facilities for MSE:
a) Reduced Transaction Costs: To reduce transaction cost of doing business, MSEs
will be facilitated by providing them tender documents free of cost, exempting MSEs
from payment of earnest money deposit, adopting e-procurement to bring
transparency in tender process. However, exemption from paying Performance Bank
Guarantee/ Security Deposit is not covered under the policy.
b) Relaxation in Prior Turnover and Experience: The Procuring Entity may relax the
condition of prior turnover and prior experience for start-up enterprises recognised by
the Department for Industry & Internal Trade (DPIIT), subject to meeting quality &
technical specifications. Startups may be MSEs or otherwise. Such relaxation can be
provided in the case of procurement of works as well. It is further clarified that such
relaxation is not optional but normally has to be ensured, except in case of
procurement of items related to public safety, health, critical security operations and
equipment, etc.) where adequate justification exists for the Procuring Entity not to relax
such criteria13. The decision of the Procuring Entity in this regard shall be final. Please
_______________________
12
Notified by MSME Ministry vide S.O. 4926(E) dt 18/10/2022
13
Notified vide OM No.F.20/2/2014-PPD(Pt.) issued by Department of Expenditure dated 29.09.2016.
9Chapter 1: Introduction to Procurement of Consultancy Services
also refer to para 1.10.4-2-b), 5.2.2-6-b) and 7.3.3-6) (table). (Rule 173 (i) of GFR
2017).
c) Timely Payments: Chapter V of the MSMED Act, 2006 also has provision for ensuring
timely payments to the MSE suppliers. The period agreed upon for payment must not
exceed forty-five days from the deemed acceptance of the materials supplied by the
MSEs; in case of any discrepancies in the supplies, then the Procuring Entity shall
raise objection to the MSE supplier within 15 days from date of receipt of materials, if
such objection is not raised, then it will be taken as deemed acceptance. For delays in
payment the buyer shall be liable to pay compound interest to the supplier on the
delayed amount at three times of the bank rate notified by the Reserve Bank. For
arbitration and conciliation regarding recovery of such payments and interests, Micro
and Small Enterprises Facilitation Council has been setup in states.
5. Purchase Preference
a) Under the amended Public Procurement Policy for MSEs, Order 2012, the Central
Government Ministries/ Departments/ Public Sector Undertakings shall procure a
minimum of 25 per cent of their annual value of goods or services from MSEs. (In
accordance with General Financial Rules, 2017, Rule 153-(ii)).
i) The annual goal of procurement from MSEs also includes subcontracts to Micro
and Small Enterprises by large enterprises and consortia of Micro and Small
Enterprises formed by the National Small Industries Corporation. If a subcontract
is given to MSEs, it will be considered as procurement from MSEs.
ii) The annual target of 25% procurement from MSEs is only a minimum. The MSE
purchase preference is mandatory for all procurements (except for exemptions
as per sub-para 3-c above), even after this target is achieved. For example, it is
not permissible for organisations to earmark only some goods/ services to be
procured exclusively from MSEs to achieve the annual target and not apply MSE
procurement preferences to the rest of the goods/services.
b) In tender, if the L1 price is from someone other than an MSE, participating Micro and
Small Enterprises (MSE) quoting prices within a price band of L1+15 (fifteen) per cent
shall be allowed to supply up to 25 (twenty-five) per cent of the total tendered value
by bringing down their price to L1 price. If there is more than one eligible MSE within
such price band who agree to match the L1 price, the 25 (twenty-five) per cent
quantity is to be distributed proportionately to them
Note: If the procuring entity negotiates with the non-MSE L1 bidder, the
price band (L1+15%) should be calculated based on the original L1 price,
not the lower negotiated price, and such eligible MSE bidders shall be
called to match the new negotiated L1 price as per procedure mentioned
above for placement of 25% quantity.
i) In case the tender item cannot be split or divided, etc., the MSE quoting a price
within the band L1+15% may be awarded for full/ complete supply of the total
tendered value to MSE, considering the spirit of the Policy for enhancing
Government procurement from MSEs.
ii) Out of the target of 25% of annual procurement from MSEs (Not in the specific
tender), the sub-target of 4% of annual procurement from MSEs is earmarked for
procurement from MSEs owned by Scheduled Caste (SC)/ Scheduled Tribe (ST)
entrepreneurs, and 3% of annual procurement from MSEs is earmarked for
procurement from MSEs owned by women entrepreneur. However, in the event
10Manual for Procurement of Consultancy Services, Second Edition, 2025
of failure of such MSEs to participate in the tender process or meet tender
requirements and L1 price, the 4% sub-target for procurement earmarked for
MSEs owned by SC/ST entrepreneurs and 3% earmarked to women
entrepreneurs will also be met from other MSEs.
6. Developing MSE Vendors: The Central Ministries or Departments or Public Sector
Undertakings shall take necessary steps to develop appropriate vendors by organising Vendor
Development Programmes (VDP) or Buyer-Seller Meets focused on developing Micro and
Small Enterprises (MSEs) for procurement through GeM Portal. To enhance the participation
of MSEs owned by SCs /STs/ Women in Government procurement, Central Government
Ministries/ Departments/ CPSEs should conduct Special Vendor Development Programmes/
Buyer-Seller Meets for SC/STs and Women MSEs.
7. Policy Implementation:
a) A Review Committee has been constituted under the Chairmanship of Secretary,
Ministry of MSME for monitoring and reviewing of Public Procurement Policy for
MSEs. M/O MSME will review and/or modify the composition of the Committee as
and when required. This Committee will, inter alia, review the list of 358 items
reserved for exclusive purchase from MSEs on a continuous basis, consider requests
from Central Government Departments, CPSUs for exemption from 25 (twenty-five)
percent target on a case-to-case basis and monitor achievements under the Policy.
b) To monitor the progress of procurement by Central Government Ministries/
Departments and CPSEs from MSEs, Ministry of MSME has launched the MSME
‘Sambandh’14 Portal on 8th December 2017 for uploading procurement details by all
CPSEs on a monthly and an annual basis which is regularly monitored by the Ministry.
c) To redress the grievances of MSEs related to non-compliance of the Policy a
Grievance cell named “CHAMPION Portal” has been set up in the Ministry of MSME.
d) Clarifications: Office of Development Commissioner (Micro, Small & Medium
Enterprises) issued FAQs15 on Public Procurement Policy for MSE Order, 2012,
placed at Annexure-19.
1.10.2 Procurement Preference to Make in India
(Rule 153 (iii) of GFR, 2017)
1. Purpose: To encourage ‘Make in India’ and promote manufacturing and production of
goods and services in India with a view to enhancing income and employment, Department
for Promotion of Industry, and Internal Trade (DPIIT), Ministry of Commerce and Industry,
Government of India, issued Public Procurement (Preference to Make in India), Order 201716.
The order is issued pursuant to Rule 153 (iii) of GFR, 2017. The Order is applicable on the
procurement of Goods, Works, and Services.
2. Definitions: For the purpose of this Order: -
a) ‘L1’ means the lowest tender or lowest bid, or the lowest quotation received in a
tender, bidding process or other procurement solicitation as adjudged in the
evaluation process as per the tender or other procurement solicitation.
_______________________
14
https://sambandh.msme.gov.in/PPP_Index.aspx. Any payment grievances filed by the MSEs against Procuring
Entity may be monitored and progress updated therein. Total value of month end payments due to the MSEs
may updated.
15
Issued Vide OM F.No 1(3)/2018-MA, Part III dated 25.03.2022.
16
Latest revision to the Order notified vide OM No. P-45021/2/2017-PP (BE-II) issued by DPIIT, dated 16.09.2020
11Chapter 1: Introduction to Procurement of Consultancy Services
b) ‘Local Content’ means the amount of value added in India which shall, unless
otherwise prescribed by the Nodal Ministry, be the total value of the item procured
(excluding net domestic indirect taxes) minus the value of imported content in the
item (including all customs duties) as a proportion of the total value, in percent.
Explanatory notes for calculation of local content given above
i) Imported items sourced locally from resellers/ distributors shall be excluded from
calculation of local content.
ii) The license fees/ royalties paid/ technical charges paid out of India shall be
excluded from local content calculation
iii) Procurement/ Supply of repackaged/ refurbished/ rebranded imported products
as understood commonly shall be treated as reselling of imported products and
shall be excluded from calculation of local content. The definition of repackaged/
refurbished/ rebranded imported products is as follows:
1)‘Refurbishing’ means repair or reconditioning of an imported product does not
amount to manufacture because no new goods come into existence.
2)‘Repackaging’ means repacking of imported goods from bulk pack to smaller
packs would not ordinarily amount to manufacture of a new item.
3)‘Rebranding’ means relabelling or renaming or change in symbol or logo/
makes or corporate image of a company/ organization/ firm for an imported
product would amount to rebranding.
iv) To ensure that imported items sourced locally from resellers/ distributors are
excluded from calculation of local content, procuring entities to obtain from
bidders, the cost of such locally-sourced imported items (inclusive of taxes) along
with break-up on license/ royalties paid/ technical expertise cost etc. sourced
from outside India/ for items sold by bidder as reseller, OEM certificate for country
of origin to be submitted.
v) For contracts involving supply of multiple items, weighted average of all items to
be taken while calculating the local content
c) 'Class-I local supplier' means a supplier or service provider, whose goods, services
or works offered for procurement, meets the minimum local content as prescribed for
'Class-I local supplier' under this Order.
d) 'Class-II local supplier' means a supplier or service provider, whose goods, services
or works offered for procurement, meets the minimum local content as prescribed for
'Class-II local supplier' but less than that prescribed for 'Class-I local supplier' under
this Order.
e) 'Non - Local supplier' means a supplier or service provider, whose goods, services or
works offered for procurement, has local content less than that prescribed for 'Class-
II local supplier' under this Order.
f) ‘Margin of purchase preference’ means the maximum extent to which the price
quoted by a “Class-I local supplier” may be above the L1 for the purpose of purchase
preference. It has been fixed as 20 (twenty) percent.
g) ‘Nodal Ministry’ means the Ministry or Department identified pursuant to this order in
respect of a particular item of goods or services or works.
h) ‘Procuring entity’ means a Ministry or department or attached or subordinate office
of, or autonomous body controlled by, the Government of India and includes
Government companies as defined in the Companies Act.
12Manual for Procurement of Consultancy Services, Second Edition, 2025
i) ‘Works’ means all works as per Rule 130 of GFR- 2017 and will also include ‘turnkey
works’.
2A. Special treatment for items covered under PLI Scheme: The manufacturers
manufacturing an item under PLI scheme shall be treated as deemed Class II local supplier
for that item unless they have minimum local content equal to or higher than that notified for
Class-I local supplier for that item, provided the manufacturer has received incentive from the
concerned PLI Ministry for the item. The above shall be applicable for the specific time period
only, as notified by concerned PLI Ministry.
3. Eligibility of ‘Class-I local supplier’/ ‘Class-II local supplier’/ ‘Non-local suppliers’ for
different types of procurement
e) In procurement of all goods, services or works in respect of which the Nodal Ministry/
Department has communicated that there is sufficient local capacity and local
competition, only ‘Class-I local supplier’, shall be eligible to bid irrespective of
purchase value.
f) Only ‘Class-I local supplier’ and ‘Class-II local supplier’, shall be eligible to bid in
procurements undertaken by procuring entities, except when Global tender enquiry
has been issued. In global tender enquiries, ‘Non-local suppliers’ shall also be eligible
to bid along with ‘Class-I local suppliers’ and ‘Class-II local suppliers’. In procurement
of all goods, services or works, not covered by sub-para 3-a) above, and with
estimated value of purchases less than Rs. 200 Crore, in accordance with Rule
161(iv)-(b) of GFR, 2017, Global tender enquiry shall not be issued except with the
approval of competent authority as designated by Department of Expenditure.
g) For the purpose of this Order, works includes Engineering, Procurement and
Construction (EPC) contracts and services include System Integrator (SI) contracts.
3A. Mandatory sourcing of items, with sufficient local capacity and competition,
from Class-I local suppliers in SI/ EPC/ Turnkey Contracts/ Service Tenders
a) The items, notified as having sufficient local capacity and competition, shall
mandatory be sourced from Class-I local suppliers in SI/ EPC/ Turnkey Contracts/
Services tenders. This provision will be applicable only for those items which have
been notified by the Nodal Ministry as Class-I i.e., having sufficient local capacity and
competition, with specific HSN codes.
b) Notwithstanding above, if in any project, it is considered that it is not practically
feasible to source such items from Class I local suppliers, it may take relaxation from
such stipulation with the approval of Secretary of the administrative Ministry/
Department concerned or with the approval of the Competent Authority specified by
the Administrative Ministry/ Department, on case-specific basis.
4. Purchase Preference:
a) Subject to the provisions of the Order and to any specific instructions issued by the
Nodal Ministry or in pursuance of the Order, purchase preference shall be given to
‘Class-I local supplier’ in procurements undertaken by procuring entities in the
manner specified here under.
b) In the procurements of goods or works, which are covered by para 3-b) above and
which are divisible in nature, the ‘Class-I local supplier’ shall get purchase preference
over ‘Class-II local supplier’ as well as ‘Non-local supplier’, as per following
procedure:
Note:
13Chapter 1: Introduction to Procurement of Consultancy Services
1. If the procuring entity negotiates with the L1 bidder, who is not a Class-
I Local Supplier, the margin of purchase preference (L1+20%) should be
calculated based on the original L1 price, not the lower negotiated price,
and such eligible Class-I Local Suppliers shall be called to match the new
negotiated L1 price as per procedure mentioned above for placement of
50% quantity.
2. Since as per sub-para c) below, MII order is applicable ‘where the bid
is evaluated on price alone’ – MII purchase preference would not be
applicable where evaluation is based inter-alia on non-price criteria, e.g.,
QCBS or FBS in Services and Works.
i) Among all qualified bids, the lowest bid will be termed as L1. If L1 is ‘Class-I local
supplier’, the contract for full quantity will be awarded to L1.
ii) If L1 bid is not a ‘Class-I local supplier’, 50 (fifty) percent of the order quantity
shall be awarded to L1. Thereafter, the lowest bidder among the ‘Class-I local
supplier’ will be invited to match the L1 price for the remaining 50 (fifty) percent
quantity subject to the Class-I local supplier’s quoted price falling within the
margin of purchase preference, and contract for that quantity shall be awarded
to such ‘Class-I local supplier’ subject to matching the L1 price. In case such
lowest eligible ‘Class-I local supplier’ fails to match the L1 price or accepts less
than the offered quantity, the next higher ‘Class-I local supplier’ within the margin
of purchase preference shall be invited to match the L1 price for remaining
quantity and so on, and contract shall be awarded accordingly. In case some
quantity is still left uncovered on Class-I local suppliers, then such balance
quantity may also be ordered on the L1 bidder.
c) In the procurements of goods or works, which are covered by para 3-b) above and
which are not divisible in nature, and in the procurement of services where the bid is
evaluated on price alone, the ‘Class-I local supplier’ shall get purchase preference
over ‘Class-II local supplier’ as well as ‘Non-local supplier’, as per following
procedure:
i) Among all qualified bids, the lowest bid will be termed L1. If L1 is a ‘Class-I local
supplier’, the contract will be awarded to L1.
ii) If L1 is not a ‘Class-I local supplier’, the lowest bidder among the ‘Class-I local
suppliers’ will be invited to match the L1 price subject to the Class-I local supplier’s
quoted price falling within the margin of purchase preference(L1+20%), and the
contract shall be awarded to such ‘Class-I local supplier’ subject to matching the
L1 price.
iii) In case the lowest eligible ‘Class-I local supplier’ fails to match the L1 price, the
‘Class-I local supplier’ with the next higher bid within the margin of purchase
preference (L1+20%) shall be invited to match the L1 price and so on, and the
contract shall be awarded accordingly. In case none of the ‘Class-I local suppliers’
within the margin of purchase preference matches the L1 price, the contract may
be awarded to the L1 bidder.
d) “Class-II local supplier” will not get a preference for any procurement undertaken by
procuring entities.
4A Applicability in tenders where the contract is to be awarded to multiple bidders:
In tenders where the contract is awarded to multiple bidders subject to matching of L1 rates
14Manual for Procurement of Consultancy Services, Second Edition, 2025
or otherwise, the ‘Class-I local supplier’ shall get purchase preference over ‘Class-II local
supplier’ as well as ‘Non-local supplier’, as per following procedure:
a) In case there is sufficient local capacity and competition for the item to be procured,
as notified by the nodal Ministry, only Class I local suppliers shall be eligible to bid.
As such, the multiple suppliers who would be awarded the contract should be all and
only ‘Class I Local suppliers.’
b) In other cases, ‘Class II local suppliers’ and ‘Non-local suppliers’ may also participate
in the tender process along with ‘Class I Local suppliers’ as per provisions of the
Order.
c) If ‘Class I Local suppliers’ qualify for the award of contract for at least 50 (fifty) per
cent of the tendered quantity in any tender, the contract may be awarded to all the
qualified bidders as per award criteria stipulated in the tender documents. However,
in case ‘Class I Local suppliers’ do not qualify for the award of contract for at least 50
(fifty) per cent of the tendered quantity, purchase preference should be given to the
‘Class I local supplier’ over ‘Class II local suppliers’/ ‘Non-local suppliers’ provided
that their quoted rate falls within 20 (twenty) per cent margin of purchase preference
of the highest quoted bidder considered for award of contract so as to ensure that the
‘Class I Local suppliers’ taken in totality are considered for award of contract for at
least 50 (fifty) per cent of the tendered quantity.
d) The margin of purchase preference shall be 20%. Only those ‘Class-I local suppliers’
would be eligible for purchase preference whose quoted rates fall within the margin
of purchase preference, subject to its meeting the prescribed criteria for award of
contract as also the constraint of maximum quantity that can be sourced from any
single supplier. First, purchase preference must be given to the lowest quoting eligible
‘Class-I local supplier.’ If the lowest quoting ‘Class-I local supplier’ does not qualify
for purchase preference because of aforesaid constraints or does not accept the
offered quantity, an opportunity may be given to the next higher eligible ‘Class-I local
supplier,’ and so on. In case the quantity thus allocated to eligible ‘Class-I local
suppliers’ is short of 50% of the tendered quantity, then this shortfall quantity may be
distributed among all other qualified bidders as per award criteria stipulated in the
tender documents.
e) To avoid any ambiguity during the bid evaluation process, the procuring entities may
stipulate their own tender-specific criteria for the award of contracts amongst different
bidders, including the procedure for purchase preference to ‘Class-I local supplier’
within the broad policy guidelines stipulated in the sub-paras above.
5. Exemption of small purchases: Notwithstanding anything contained in paragraph 1
above, procurements where the estimated value to be procured is less than Rs. 5 lakhs shall
be exempt from the Order. However, it shall be ensured by procuring entities that procurement
is not split for the purpose of avoiding the provisions of this Order.
5A Exemption in the sourcing of spares and consumables of closed systems:
Procurement of spare parts, consumables for closed systems and Maintenance/ Service
contracts with Original Equipment Manufacturer/ Original Equipment Supplier/ Original Part
Manufacturer shall be exempted from this Order.
6. Minimum local content: The ‘local content’ requirement to categorise a supplier as a
‘Class-I local supplier’ is a minimum of 50 (fifty) per cent. For ‘Class-II local suppliers,’ the
‘local content’ requirement is a minimum of 20 (twenty) per cent. Nodal Ministry/ Department
may prescribe only a higher percentage of the minimum local content requirement to
15Chapter 1: Introduction to Procurement of Consultancy Services
categorise a supplier as a ‘Class-I local supplier’/ ‘Class-II local supplier.’ For the items for
which the Nodal Ministry/ Department has not prescribed higher minimum local content
notification under the Order, it shall be 50 (fifty) per cent and 20 (twenty) per cent for ‘Class-I
local supplier’/ ‘Class-II local supplier’ respectively. It may be noted that local content is not
related to the nationality of the firm – a foreign-owned firm may also become a Class-I or
Class-II local supplier by adding local value addition.
7. Requirement for specification in advance: The minimum local content, the margin
of purchase preference and the procedure for preference to Make in India shall be specified
in the notice inviting tenders or other form of procurement solicitation and shall not be varied
during a particular procurement transaction.
8. Government E-marketplace: In respect of procurement through the Government E-
marketplace (GeM), shall, as far as possible, specifically mark the items that meet the
minimum local content while registering the item for display and shall, wherever feasible, make
provision for automated comparison with purchase preference and without purchase
preference and for obtaining consent of the local supplier in those cases where purchase
preference is to be exercised.
9. Verification of local content:
a) The ‘Class-I local supplier’/ ‘Class-II local supplier’ at the time of tender, bidding or
solicitation shall be required to indicate percentage of local content and provide self-
certification that the item offered meets the local content requirement for ‘Class-I local
supplier’/ ‘Class-II local supplier’, as the case may be. They shall also give details of
the location(s) at which the local value addition is made.
b) In cases of procurement for a value in excess of Rs. 10 crores, the ‘Class-I local
supplier’/ ‘Class-II local supplier’ shall be required to provide a certificate from the
statutory auditor or cost auditor of the company (in the case of companies) or from a
practicing cost accountant or practicing chartered accountant (in respect of suppliers
other than companies) giving the percentage of local content.
c) The bidder shall give self-certification for local content in the quoted item (goods/
works/ services) at the time of tendering. However, at the time of execution of the
project, for all contracts above INR 10 Crore, the contractor/ supplier shall be required
to give local content certification duly certified by cost/ chartered accountant in
practice. For cases where it is not possible to provide certification by Cost/ Chartered
Accountant at the time of execution of project, the supplier shall be permitted to
provide the certificate for local content from Cost/ Chartered Accountant after
completion of the contract, within the limit acceptable to the procuring entity. In case
the contractor/ supplier does not meet the stipulated local content requirement and
the category of the supplier changes from Class-I to Class-II/ Non-local or from Class-
II to Non-local, a penalty upto 10% of the contract value may be imposed. However,
contract once awarded shall not be terminated on this account.
d) Decisions on complaints relating to implementation of this Order shall be taken by the
competent authority which is empowered to look into procurement-related complaints
relating to the procuring entity.
e) Nodal Ministries may constitute committees with internal and external experts for
independent verification of self-declarations and auditor’s/ accountant’s certificates on
random basis and in the case of complaints.
f) Nodal Ministries and procuring entities may prescribe fees for such complaints.
16Manual for Procurement of Consultancy Services, Second Edition, 2025
g) False declarations will be in breach of the Code of Integrity under Rule 175(1)(i)(h) of
the General Financial Rules for which a bidder or its successors can be debarred for
up to two years as per Rule 151 (iii) of the General Financial Rules along with such
other actions as may be permissible under law.
h) A supplier who has been debarred by any procuring entity for violation of the Order
shall not be eligible for preference under the Order for procurement by any other
procuring entity for the duration of the debarment. The debarment for such other
procuring entities shall take effect prospectively from the date on which it comes to
the notice of other procurement entities in the manner prescribed above.
i) The Department of Expenditure shall issue suitable instructions (please refer to para
3.8 of this manual) for the effective and smooth operation of this process, so that:
i) The fact and duration of debarment for violation of the Order by any procuring
entity are promptly brought to the notice of the Member-Convenor of the Standing
Committee and the Department of Expenditure through the concerned Ministry
/Department or in some other manner;
ii) on a periodical basis such cases are consolidated and a centralized list or
decentralised list of such suppliers with the period of debarment is maintained
and displayed on the website(s);
iii) in respect of procuring entities other than the one that has carried out the
debarment, the debarment takes effect prospectively from the date of uploading
on the website(s) in such a manner that ongoing procurements are not disrupted.
10. Specifications in Tenders and other procurement solicitations:
a) Every procuring entity shall ensure that the eligibility conditions in respect of previous
experience fixed in any tender or solicitation do not require proof of supply in other
countries or proof of exports.
b) Procuring entities shall endeavour to see that eligibility conditions, including on
matters like turnover, production capability, and financial strength, do not result in
unreasonable exclusion of ‘Class-I local supplier’/ ‘Class-II local supplier’ who would
otherwise be eligible beyond what is essential for ensuring quality or creditworthiness
of the supplier.
c) Procuring entities shall review all existing eligibility norms and conditions with
reference to sub-paragraphs (a) and (b) above.
d) Reciprocity Clause:
i) When a Nodal Ministry/Department identifies that Indian suppliers of an item are
not allowed to participate and/ or compete in procurement by any foreign
government due to restrictive tender conditions which have direct or indirect
effect of barring Indian companies such as registration in the procuring country,
execution of projects of specific value in the procuring country etc., it shall provide
such details to all its procuring entities including CMDs/CEOs of PSEs/PSUs,
State Governments and other procurement agencies under their administrative
control and GeM for appropriate reciprocal action.
ii) Entities of countries that have been identified by the nodal Ministry/Department
as not allowing Indian companies to participate in their Government procurement
for any item related to that nodal Ministry shall not be allowed to participate in
Government procurement in India for all items related to that nodal Ministry/
Department, except for the list of items published by the Ministry/ Department
permitting their participation.
17Chapter 1: Introduction to Procurement of Consultancy Services
iii) The stipulation in (b) above shall be part of all tenders invited by the Central
Government procuring entities stated in (1) above. All purchases on GeM shall
also necessarily have the above provisions for items identified by the nodal
Ministry/ Department.
iv) State Governments should be encouraged to incorporate similar provisions in
their respective tenders.
v) The term ‘entity’ of a country shall have the same meaning as under the FDI
Policy of DPIIT as amended from time to time.
e) Specifying foreign certifications/ unreasonable technical specifications/ brands/
models in the bid document is a restrictive and discriminatory practice against local
suppliers. If foreign certification is required to be stipulated because of non-availability
of Indian Standards and/or for any other reason, the same shall be done only after
written approval of the Secretary of the Department concerned or any other Authority
having been designated such power by the Secretary of the Department concerned.
f) "All administrative Ministries/Departments whose procurement exceeds Rs. 1000
Crore per annum shall notify/update their procurement projections every year,
including those of the PS Es/PS Us, for the next 5 years on their respective website."
10A Action for non-compliance of the Provisions of the Order: In case restrictive or
discriminatory conditions against domestic suppliers are included in bid documents, an inquiry
shall be conducted by the Administrative Department undertaking the procurement (including
procurement by any entity under its administrative control) to fix responsibility for the same.
Thereafter, appropriate action, administrative or otherwise, shall be taken against erring
officials of procurement entities under relevant provisions. Intimation on all such actions shall
be sent to the Standing Committee.
11. Assessment of supply base by Nodal Ministries: The Nodal Ministry shall keep in
view the domestic manufacturing / supply base and assess the available capacity and the
extent of local competition while identifying items and prescribing the higher minimum local
content or the manner of its calculation, with a view to avoiding cost increase from the
operation of this Order.
12. Increase in minimum local content: The Nodal Ministry may annually review the local
content requirements with a view to increasing them, subject to availability of sufficient
local competition with adequate quality.
13. Manufacture under license/ technology collaboration agreements with phased
indigenization: While notifying the minimum local content, Nodal Ministries may make special
provisions for exempting suppliers from meeting the stipulated local content if the product is
being manufactured in India under a license from a foreign manufacturer who holds intellectual
property rights and where there is a technology collaboration agreement / transfer of
technology agreement for indigenous manufacture of a product developed abroad with clear
phasing of increase in local content.
13A. In the procurement of all goods, services or works in respect of which there is a
substantial quantity of public procurement and for which the nodal ministry has not notified
that there is sufficient local capacity and local competition, the concerned nodal ministry shall
notify an upper threshold value of procurement beyond which foreign companies shall enter
into a joint venture with an Indian company to participate in the tender. Procuring entities, while
procuring such items beyond the notified threshold value, shall prescribe in their respective
tenders that foreign companies may enter into a joint venture with an Indian company to
participate in the tender. The procuring Ministries/Departments shall also make special
18Manual for Procurement of Consultancy Services, Second Edition, 2025
provisions for exempting such joint ventures from meeting the stipulated minimum local
content requirement, which shall be increased in a phased manner.
14. Powers to grant exemption and to reduce minimum local content:
a) The administrative Department undertaking the procurement (including procurement
by any entity under its administrative control), with the approval of their Minister-in-
charge, may by written order, for reasons to be recorded in writing,
i) reduce the minimum local content below the prescribed level; or
ii) reduce the margin of purchase preference below 20 (twenty) percent; or
iii) exempt any particular item or supplying entities from the operation of this Order
or any part of the Order.
b) The Administrative Department, while seeking exemption under this para, shall certify
that such an item(s) has not been notified by Nodal Ministry/ Department concerned
under sub-para 3A-a) above.
c) A copy of every such order shall be provided to the Standing Committee and concerned
Nodal Ministry / Department. The Nodal Ministry / Department concerned will continue
to have the power to vary its notification on Minimum Local Content.
15. Directions to Government companies: In respect of Government companies and
other procuring entities not governed by the General Financial Rules, the administrative
Ministry or Department shall issue policy directions requiring compliance with this Order.
16. Standing Committee:
a) A standing committee is hereby constituted with the following membership
i) Secretary, Department for Promotion of Industry, and Internal Trade-Chairman
ii) Secretary, Commerce-Member
iii) Secretary, Ministry of Electronics, and Information Technology-Member
iv) Joint Secretary (Public Procurement), Department of Expenditure-Member
v) Joint Secretary (DPIIT)-Member-Convenor
b) The Secretary of the Department concerned with a particular item shall be a member
in respect of issues relating to such item. The Chairman of the Committee may co-
opt technical experts as relevant to any issue or class of issues under its
consideration.
17. Functions of the Standing Committee: The Standing Committee shall meet as often
as necessary but not less than once in six months. The Committee
a) shall oversee the implementation of this order and issues arising therefrom and make
recommendations to Nodal Ministries and procuring entities.
b) shall annually assess and periodically monitor compliance with this Order.
c) shall identify Nodal Ministries and the allocation of items among them for issue of
notifications on minimum local content.
d) may require the furnishing of details or returns regarding compliance with this Order
and related matters.
e) may, during the annual review or otherwise, assess issues, if any, where it is felt that
the manner of implementation of the order results in any restrictive practices,
cartelisation or increase in public expenditure and suggest remedial measures.
f) may examine cases covered by paragraph (xiii) above relating to manufacture under
license/ technology transfer agreements with a view to satisfying itself that adequate
mechanisms exist for enforcement of such agreements and for attaining the
underlying objective of progressive indigenisation.
19Chapter 1: Introduction to Procurement of Consultancy Services
g) may consider any other issue relating to this Order which may arise.
18. Removal of difficulties: Ministries /Departments and the Boards of Directors of
Government companies may issue such clarifications and instructions as may be necessary
for the removal of any difficulties arising in the implementation of the Order.
19. Ministries having existing policies: Where any Ministry or Department has its own
policy for preference to local content approved by the Cabinet after 1st January 2015, such
policies will prevail over the provisions of the Order. All other existing orders on preference to
local content shall be reviewed by the Nodal Ministries and revised as needed to conform to
this Order, within two months of the issue of this Order.
20. Please refer to the FAQs related to the PPP-MII order issued by DPIIT, placed in
Annexure 26.
1.10.3 Restrictions/ Prior Registration on Entities from a Class of Countries
(Rule 144 (xi), GFR 2017)
1. Requirement of registration: Rule 144 of GFR, 2017, has been amended to include
a new sub-para (xi) as follows:
“Notwithstanding anything contained in these Rules, Department of Expenditure
may, by order in writing, impose restrictions, including prior registration and/ or
screening, on procurement from bidders from, or bidders having commercial
arrangements with an entity from, a country or countries, or a class of countries,
on grounds of defence of India, or matters directly or indirectly related thereto
including national security; no procurement shall be made in violation of such
restrictions.”
2. Detailed provisions in this regard have been notified by the Department of
Expenditure's OM No. F.7/10/2021-PPD (1) dated 23.02.2023(Public Procurement Order No.
4 – hereinafter referred to in this section as the ‘Order’), are as follows.
a) Any bidder from a country which shares a land border with India will be eligible to bid
in any procurement, whether of goods, services (including consultancy services and
non-consultancy services) or works (including turnkey projects) only if the bidder is
registered with the Competent Authority. The information on Competent Authority is
given in sub-para 10 below.
b) Any bidder (including an Indian bidder) who has a Specified Transfer of Technology
(ToT) arrangement with an entity from a country which shares a land border with India
will be eligible to bid in any procurement, whether of goods, services (including
consultancy services and non-consultancy services) or works (including turnkey
projects) only if the bidder is registered with the Competent Authority, specified in
para 10 below.
c) The requirement of registration for cases covered by sub-para a) above has been
applicable since 23.07.2020. The requirement of registration for bidders covered by
sub-para b) above will be applicable for all procurements where tenders are issued/
published after 01.04.2023.
d) In tenders issued after 23.07.2020 or 01.04.2023, as the case may be, the provisions
of requirement of registration of bidders and of other relevant provisions of this Order
shall be incorporated in the tender conditions.
20Manual for Procurement of Consultancy Services, Second Edition, 2025
3. Applicability
a) Apart from Ministries/Departments, attached and subordinate bodies,
notwithstanding anything contained in Rule 1 of the GFR 2017, the Order shall also
be applicable to:
i) all Autonomous Bodies;
ii) all public sector banks and public sector financial institutions;
iii) all Central Public Sector Enterprises;
iv) all procurement in Public Private Partnership projects receiving financial support
from the Government or public sector enterprises/ undertakings; and
v) all Union Territories, National Capital Territory of Delhi, and all agencies/
undertakings thereof.
b) The Order will not be applicable to:
i) projects which receive international funding with the approval of the Department
of Economic Affairs (DEA), Ministry of Finance, the procurement guidelines
applicable to the project shall normally be followed, notwithstanding anything
contained in this order and without reference to the Competent Authority.
Exceptions to this shall be decided in consultation with DEA.
ii) procurement made by Indian missions and by offices of government agencies/
undertakings located outside India.
iii) bidders (or entities) from those countries (even if sharing a land border with India)
to which the Government of India has extended lines of credit or in which the
Government of India is engaged in development projects. Updated lists of
countries to which lines of credit have been extended or in which development
projects are undertaken are given on the website of the Ministry of External
Affairs17.
iv) procurement of spare parts and other essential service support like Annual
Maintenance Contract (AMC)/ Comprehensive Maintenance Contract (CMC),
including consumables for closed systems, from Original Equipment
Manufacturers (OEMs) or their authorized agents.
4. Definitions
a) “Bidder" for the purpose of the Order (including the term ‘bidder’, ‘consultant’ ‘vendor’
or ‘service provider’ in certain contexts) means any person or firm or company,
including any member of a consortium or joint venture (that is an association of
several persons, or firms or companies), every artificial juridical person not falling in
any of the descriptions of bidders stated hereinbefore, including any agency, branch
or office controlled by such person, participating in a procurement process.
b) “Tender” for the purpose of the Order will include other forms of procurement, except
where the context requires otherwise.
c) “Transfer of Technology” means dissemination and transfer of all forms of
commercially usable knowledge such as transfer of know-how, skills, technical
expertise, designs, processes and procedures, trade secrets, which enables the
acquirer of such technology to perform activities using the transferred technology
independently. (Matters of interpretation of this term shall be referred to the
Registration Committee constituted by the Department for Promotion of Industry and
Internal Trade, and the interpretation of the Committee shall be final.)
_______________________
17https://mea.gov.in/Lines-of-Credit-for-Development-Projects.htm
21Chapter 1: Introduction to Procurement of Consultancy Services
d) “Specified Transfer of Technology” means a transfer of technology in the sectors and/
or technologies, specified in sub-para 5 below, occurring on or after 23.07.2020.
e) “Bidder (or entity) from a country which shares a land border with India” for the
purpose of the Order means:
i) An entity incorporated, established, or registered in such a country; or
ii) A subsidiary of an entity incorporated, established, or registered in such a
country; or
iii) An entity substantially controlled through entities incorporated, established, or
registered in such a country; or
iv) An entity whose beneficial owner is situated in such a country; or
v) An Indian (or other) agent of such an entity; or
vi) A natural person who is a citizen of such a country; or
vii) A consortium or joint venture where any member of the consortium or joint
venture falls under any of the above
f) “Agent” for the purpose of the Order is a person employed to do any act for another,
or to represent another in dealings with third persons.
Note
1. A person who procures and supplies finished goods from an entity from a
country which shares a land border with India will, regardless of the nature of
his legal or commercial relationship with the producer of the goods, be deemed
to be an Agent for the purpose of this Order.
2. However, a bidder who only procures raw material, components etc. from an
entity from a country which shares a land border with India and then
manufactures or converts them into other goods will not be treated as an Agent.
g) Beneficial owner for the purposes of point e(iv) will be as under:
i) In case of a company or Limited Liability Partnership, the beneficial owner is the
natural person(s), who, whether acting alone or together, or through one or more
juridical person(s), has a controlling ownership interest or who exercises control
through other means.
Explanation: -
1) “Controlling ownership interest” means ownership of, or entitlement to,
more than twenty-five per cent of shares or capital or profits of the company;
2) “Control” shall include the right to appoint the majority of the directors or to
control the management or policy decisions, including by virtue of their
shareholding or management rights or shareholders agreements or voting
agreements;
ii) In case of a partnership firm, the beneficial owner is the natural person(s) who,
whether acting alone or together, or through one or more juridical person, has
ownership of entitlement to more than fifteen percent of capital or profits of the
partnership;
iii) In case of an unincorporated association or body of individuals, the beneficial
owner is the natural person(s), who, whether acting alone or together, or through
one or more juridical person, has ownership of or entitlement to more than fifteen
percent of the property or capital or profits of such association or body of
individuals;
22Manual for Procurement of Consultancy Services, Second Edition, 2025
iv) Where no natural person is identified under sub-para g(i) or g(ii) or g(iii) above,
the beneficial owner is the relevant natural person who holds the position of
senior managing official;
v) In case of a trust, the identification of beneficial owner(s) shall include
identification of the author of the trust, the trustee, the beneficiaries with fifteen
percent or more interest in the trust and any other natural person exercising
ultimate effective control over the trust through a chain of control or ownership.
vi) For determining nationality while assessing the beneficial ownership of the
bidder, the nationality as mentioned in the Passport of the beneficiary owner
should be considered. In case of the possibility of dual citizenship, nationality on
all the passports should be considered, through a suitable declaration. If,
nationality in any of the passports of the person, whose beneficial ownership is
being assessed, is recorded to be from a country sharing land border with India,
the provisions contained under this Order shall apply. Hong Kong and Macau are
to be considered as part of China for the purpose of this Order.
5. Sensitive Sectors/ Technologies (relevant only for the provisions on ToT arrangements;
please refer to sub-para 2-b) above):
a) Certain sectors and technologies have been identified as sensitive from the national
security point of view. The sectors listed in Schedule I to the Order are considered
Category-I sensitive sectors. The sectors listed in Schedule II to the Order are
considered Category-ll sensitive sectors. The technologies listed in Schedule III are
considered sensitive technologies.
List of Category-I Sensitive sectors (Schedule-I)
S. No Sectors
1 Atomic Energy
2 Broadcasting/ Print and Digital Media
3 Defence
4 Space
5 Telecommunications
List of Category-II Sensitive sectors (Schedule-II)
S. No Sectors
1 Power and Energy (including exploration/ generation/ transmission/
distribution/ pipeline)
2 Banking and Finance including Insurance
3 Civil Aviation
4 Construction of ports and dams & river valley projects
5 Electronics and Microelectronics
6 Meteorology and Ocean Observation
7 Mining and extraction (including deep sea projects)
23Chapter 1: Introduction to Procurement of Consultancy Services
S. No Sectors
8 Railways
9 Pharmaceuticals & Medical Devices
10 Agriculture
11 Health
12 Urban Transportation
List of Sensitive Technologies (Schedule-III)
S. No Sectors
1 Additive Manufacturing (e.g., 3D Printing)
2 Any equipment having electronic programmable components or
autonomous systems (e.g., SCADA systems)
3 Any technology used for uploading and streaming of data including
broadcasting, satellite communication etc.
4 Chemical Technologies
5 Biotechnologies including Genetic Engineering and Biological
Technologies
6 Information and Communication Technologies
7 Software
b) For Category-I sensitive sectors, bidders with ToT arrangement in any technology
with an entity from a country which shares a land border with India shall require
registration.
c) For Category-ll sensitive sectors, bidders with ToT arrangement in the sensitive
technologies listed in Schedule III, with an entity from a country which shares a land
border with India shall require registration.
d) In Category-ll sensitive sectors, the Secretary (or an officer not below the rank of Joint
Secretary to Government of India, so authorized by the Secretary) of the Ministry/
Department of the Government of India is empowered, after due consideration, to
waive the requirement of registration for a particular item/ application or a class of
items/ applications from the requirement of registration, even if included in Schedule
III. The Ministry/ Department concerned shall intimate the Department for Promotion
of Industry and Internal Trade (DPIIT) and National Security Council Secretariat
(NSCS) of their decision to waive the requirement of registration. Ministries/
Departments of the Government of India are not required to consult the DPIIT/ NSCS
before deciding and are only required to intimate the decision to DPIIT/ NSCS. If any
point is raised by DPIIT/ NSCS, it should be considered in future procurements;
ongoing procurement for which the waiver was granted need not be interrupted or
altered.
e) Based on security considerations, a Ministry/ Department in a Category II sensitive
sector or other Ministries/ Departments may recommend to DPIIT inclusion of any
other technology in the list of sensitive technologies, either generally or for their
Ministry/ Department.
24Manual for Procurement of Consultancy Services, Second Edition, 2025
6. Sub-contracting in works contracts: In works contracts, including turnkey contracts,
contractors shall not be allowed to sub-contract works to any contractor from a country which
shares a land border with India unless such contractor is registered with the Competent
Authority. The definition of “contractor from a country which shares a land border with India”
shall be as in sub-para 4-e) above. This shall not apply to sub-contracts already awarded on
or before the date of the Order (i.e., 23rd July 2020).
[Note: Procurement of raw material, components, etc. does not constitute sub-contracting]
7. Model Clauses/ Certificate regarding compliance: A certificate shall be taken from
bidders that the extant guidelines for participation in the tenders (which should include
conditions for implementation of this Order) have been complied with. if such certificate given
by a bidder whose bid accepted is found to be false, this would be a ground for debarment
and further legal action in accordance with law. Model Clauses and Model Certificates which
may be inserted in tenders / obtained from Bidders are given at Annexure 17. While adhering
to the substance of the Order, procuring entities are free to appropriately modify the wording
of these clauses based on their past experience, local needs etc.
8. Validity of registration: In respect of tenders, registration should be valid at the time
of submission of bids and at the time of acceptance of bids. In respect of supply otherwise
than by tender, registration should be valid at the time of placement of order. If the bidder was
validly registered at the time of acceptance / placement of order, registration shall not be a
relevant consideration during contract execution.
9. Government e-Marketplace: GeM shall remove non-compliant entities from GeM
unless/ until they are registered in accordance with this Order.
10. Competent Authority and Procedure for Registration
a) The Competent Authority for the purpose of registration under this Order shall be the
Registration Committee constituted by the Department for Promotion of Industry and
Internal Trade (DPIIT) 18 [Notified vide OM No. F.6/18/2019-PPD issued by
Department of Expenditure dated 23.07.2020]
Note:
(i) In respect of application of the Order to procurement by/ under State
Governments, all functions assigned to DPIIT shall be carried out by the State
Government concerned through a specific department or authority designated
by it. The composition of the Registration Committee shall be as decided by the
State Government. However, the requirement of political and security clearance
as per para 10 (d) shall remain and no registration shall be granted without such
clearance.
(ii) Registration granted by State Governments shall be valid only for
procurement by the State Government and its agencies/ public enterprises etc.
_______________________
18 (i) In respect of application of the Order to procurement by/ under State Governments, all functions assigned to
DPIIT shall be carried out by the State Government concerned through a specific department or authority
designated by it. The composition of the Registration Committee shall be as decided by the State Government.
However, the requirement of political and security clearance as per para 10 (d) above shall remain and no
registration shall be granted without such clearance.
(ii) Registration granted by State Governments shall be valid only for procurement by the State Government and
its agencies/ public enterprises etc. and shall not be valid for procurement in other states or by the Government of
India and their agencies/ public enterprises etc.
25Chapter 1: Introduction to Procurement of Consultancy Services
and shall not be valid for procurement in other states or by the Government of
India and their agencies/ public enterprises etc.
b) The Registration Committee shall have the following members:
i) An officer, not below the rank of Joint Secretary, designated for this purpose by
DPIIT, who shall be the Chairperson;
ii) Officers (ordinarily not below the rank of Joint Secretary) representing the
Ministry of Home Affairs, Ministry of External Affairs, and of those Departments
whose sectors are covered by applications under consideration;
iii) Any other officer whose presence is deemed necessary by the Chairperson of
the Committee.
iv) With effect from 01.04.2023, an officer (ordinarily not below the rank of Joint
Secretary) representing the National Security Council Secretariat.
c) DPIIT has laid down the method of application, format etc. for such bidders as
covered by the Order.
d) On receipt of an application seeking registration from a bidder covered by sub-para
2-a) and 2-b) above, the Competent Authority shall first seek political and security
clearances from the Ministry of External Affairs and Ministry of Home Affairs, as per
guidelines issued from time to time. registration shall not be given unless political and
security clearance have both been received.
e) The Ministry of External Affairs and Ministry of Home Affairs may issue guidelines for
internal use regarding the procedure for scrutiny of such application by them.
f) The decision of the Competent Authority, to register such bidder may be for all kinds
of tenders or for a specified type(s) of goods or services and may be for a specified
or unspecified duration of time, as deemed fit. The decision of the Competent
Authority shall be final.
g) Registration granted by the Competent Authority of the Government of India shall be
valid not only for procurement by the Central Government and its bodies specified in
sub-para 3 above, but also for procurement by State Governments and their
agencies/ public enterprises etc. No fresh registration at the State level shall be
required.
h) The Competent Authority is empowered to cancel the registration already granted if
it determines that there is sufficient cause. Such cancellation by itself, however, will
not affect the execution of contracts already awarded. Pending cancellation, it may
also suspend the registration of a bidder, and the bidder shall not be eligible to bid in
any further tenders during the period of suspension.
i) For national security reasons, the Competent Authority shall not be required to give
reasons for rejection/cancellation of registration of a bidder.
11. Clarifications regarding the applicability of the restrictions under Rule 144 (xi)
of the GFR.
a) The proprietary purchases are not excluded from the provisions of the Rule 144 (xi)
of GFR, 2017.
b) The rule is applicable on all the purchases irrespective of the order value.
c) The provisions of Rule 144 (xi) are not applicable in the case of selling of raw materials
by a Government agency (like a CPSE/ Autonomous Bodies, etc.).
d) The provisions of Rule 144 (xi) are not applicable on the export to the countries sharing
land border with India.
26Manual for Procurement of Consultancy Services, Second Edition, 2025
e) Sub-contracting is not permitted to any contractor from a country sharing land border
with India, unless registered with the competent authority. However, it is to be noted
that procurement of raw material, components, etc. does not constitute sub-
contracting. In case, a bidder has proposed to supply finished goods, procured
directly/ indirectly from the vendors from the countries which shares land border with
India, such vendor will be required to be registered with the Competent Authority as
per the provisions of Rule 144 (xi) of GFR, 2017.
f) There is no bar on the contractor from procuring raw material from a firm that has
been acquired by another firm belonging to a country that shares a land border with
India.
g) Contract Manufacturing outside India: If the bidder is getting the subject product
manufactured outside India, this is treated as contract manufacturing, and beneficial
ownership of the actual manufacturing entity must be verified. If the actual
manufacturer meets the beneficial ownership criteria (para 4-g above) – then the
bidder must submit DPIIT registration of such manufacturer to participate in the
procurement.
h) Hiring of Services: Suppose, a Bidder (Indian/Foreign), who is not from a country
sharing land border with India, offers services to a procuring entity by arranging
equipment from another company then the following scenarios may appear:
SN Scenario Applicability of Rule 144 (xi)
a) The equipment/ goods have been The bidder has procured certain
purchased or will be purchased from goods to offer the requisite services to
company (manufacturer) from country a procuring entity. In such case, the
which shares a land border with India bidder does not fall within the
definition of the terms “bidder” as
defined under sub-para 4-e) above.
Hence, the provisions of the Rule 144
(xi) of GFR, 2017 do not apply to this
case.
b) By entering into a MOU/ lease Here, the bidding vendor proposes to
agreement with the company (who hire the services from a company that
owns the equipment/ goods) from belongs to a country sharing land
country which shares a land border border with India. This, prima facie,
with India becomes the case of indirect supply of
services by a company that owns the
equipment/ goods by introducing an
intermediary. The intermediary merely
acts as an agent to the company
providing services of the equipment. In
such a case registration of company
owning the equipment and indirectly
supplying the services shall require to
be registered with the competent
authority, thereby requiring the need to
fulfil the provisions of Rule 144 (xi).
27Chapter 1: Introduction to Procurement of Consultancy Services
SN Scenario Applicability of Rule 144 (xi)
c) By entering into a MOU/ lease In this case, the actual supplier of
agreement with the company (say ‘X’ services, prima facie, shall be ‘X.’
who is the present owner of the Status of ‘X’ in this case does not
equipment) from country which does attract the provisions of Rule 144 (xi).
not share a land border with India. The
equipment has been purchased from
the manufacturer of the company (say
‘Y’) which is from country that shares a
land border with India.
12. Illustrative examples on the applicability of the Restrictions under Rule 144 (xi)
of GFR 2017
a) A vendor, say, ‘Party A’ from India, is procuring an item from their sister company, say,
‘Party B,’ which is registered in a country not sharing a land border with India. Both
the parties, Party A and B, are owned by an entity that does not belong to a country
sharing a land border with India. Party B has its production facility in a country sharing
land border with India. The manufactured item will be procured by Party A from its
sister concern, i.e., Party B from the above-mentioned production facility. The
production unit is wholly owned by Party B. The Party A now claims that the provisions
of Rule 144 (xi) of GFR 2017 do not apply on it because: both the Party A and B are
not:
i) Both Party A and B are not an entity incorporated, established, or registered in
such a country, since Party A is registered in India and Party B is registered in a
country not sharing land border with India;
ii) Both Party A and B are 100% owned subsidiary of an entity, which is
incorporated, registered, and established in a country not sharing land border
with India;
iii) The beneficial owner of Party A and B is not situated in a country sharing land
border with India since they are owned by an entity belonging to country not
sharing land border with India;
iv) Both Party A and B are not an Indian (or other) agent of such an entity;
v) Both A and B are not a natural person who is a citizen of such a country;
vi) Both A and B are not a consortium or joint venture where any member of the
consortium or joint venture falls under any of the above. Though, Party B has a
wholly owned subsidiary in a country that shares a land border with India but is
not a JV or consortium (a subsidiary does not qualify as a JV or consortium)
vii) In addition to the above, Party A claims that they are not procuring finished goods
directly/ indirectly from the vendors from the countries sharing a land border with
India as the item is being manufactured in their own production units.
viii) In light of the above facts and the claims put forth by Party A, it is important to
clarify to the procurers that Party A acts as an agent for Party B, which
manufactures goods in a country sharing a land border with India. Party B
supplies goods manufactured at premises established in a country that shares a
land border with India. In such a case, registration is required for Party B (and
not necessarily for Party A, who is only an agent and not from a country sharing
a land border with India).
28Manual for Procurement of Consultancy Services, Second Edition, 2025
b) Taking an example of IT goods and services:
i) if the contractor is only supplying the servers as it is from an OEM, that belongs
to a country sharing land border with India, and there is no value addition done
by the contractor, then the contractor acts as an agent for the OEM and
registration of the OEM and the agent (contractor) both are required as per the
provisions of Rule 144 (xi) of GFR 2017.
ii) In case the contractor supplies value added services on a hardware, the
contractor outsources, in that case the registration of OEM is not required.
iii) Where there is deployment of IT services that includes both hardware and
software customization, and the contractor has sourced hardware, which is made
in the country sharing land border with India, the requirement of registration as
per the provisions of Rule 144 (xi) are not applicable.
1.10.4 Support to Start-up Enterprises
1. Definition of Start-up Enterprises
a) As defined by DPIIT, an entity shall be considered as a 'Start-up':
i) Upto a period of ten years from the date of incorporation/ registration, if it is
incorporated as a private limited company (as defined in the Companies Act,
2013) or registered as a partnership firm (registered under section 59 of the
Partnership Act, 1932) or a limited liability partnership (under the Limited Liability
Partnership Act, 2008) in India, and
ii) Turnover of the entity for any of the financial years since incorporation/
registration has not exceeded one hundred crore rupees, and
iii) The entity works towards innovation, development or improvement of products
or processes or services or a scalable business model with a high potential for
employment generation or wealth creation.
b) Provided that an entity formed by splitting up or reconstructing an existing business
shall not be considered a ‘Start-up’.
c) Provided further that in order to obtain benefits a Startup so identified under the above
definition shall be required to be recognized as Startup by DPIIT.
2. Support to Start-ups
The Government of India has ordered the following support to Start-ups (as defined by the
Department for Promotion of Industrial and Internal Trade - DPIIT).
a) Exemption from submission of Bid Security: Such Start-ups shall be exempted
from payment of Earnest Money.
b) 19 Relaxation in Prior Turnover and Experience: The Procuring Entity reserves its
right to relax the condition of prior turnover and prior experience for start-up
enterprises recognized by the Department for Industry & Internal Trade (DPIIT),
subject to meeting quality & technical specifications. Startups may be MSEs or
otherwise. Such relaxation can be provided in the case of procurement of works as
well. It is further clarified that such relaxation is not optional but normally has to be
ensured, except in case of procurement of items related to public safety, health, critical
security operations and equipment, etc) where adequate justification exists for the
_______________________
19
Such relaxation can be partial – e.g., 25% relaxation over specified turn-over and experience.
29Chapter 1: Introduction to Procurement of Consultancy Services
Procuring Entity not to relax such criteria20. The decision of the Procuring Entity in this
regard shall be final. The benefits under Startup policy will be applicable only for the
particular industry/ sector for which they are registered with DPIIT (necessary
certificate to be obtained from the bidder in this regard). Please also refer to para
1.10.1-4-b), 5.2.2-6-b) and 7.3.3-6) – Table 2. (Rule 173 (i) of GFR 2017).
1.11 When is Procurement of Consultancy Services justified
Rule 178 & 180 of GFR 2017, permits Ministries/ Departments to hire external professionals,
consultancy firms or consultants (referred to as consultant hereinafter) 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. Approval of the competent authority should
be obtained before engaging consultant(s). We may justify need for Procurement of
Consultancy Services on consideration of:-
a) The assignment should be well defined in terms of content and time frame for its
completion
b) The inadequacy of Capability or Capacity of required expertise in-house;
d) The need to have qualified consultants for providing a specialized high-quality
service;
e) Need for impartial advice from a consultant (acting independently from any affiliation)
to avoid conflicts of interest;
f) The need in some cases for Transfer of Knowledge/ Training/ Capacity and capability
building as a by-product of such engagement;
g) Need to acquire information about/ identifying and implementing new methods and
systems;
h) Need for planning and implementing organizational change
i) There may be internal capacity/ capability to do the job but there are considerations
of economy, speed, and efficiency in relation to additional requirement/ commitment/
usage of;
i) Staff/ Management/ Organization;
ii) Technological and Material Resources;
iii) Money, and
iv) Time/ Speed of execution.
1.12 Principles for Public Procurement of Consultancy Services
1. Other principles of Public Procurement as mentioned in para 1.8 above are also
equally applicable to Procurement of consultancy services. To ensure value for money during
procurement of consultancy services, the following additional principles shall be considered:
a) Services to be procured should be justifiable in accordance with Para 1.11 above;
b) Terms of Reference (a document covering well-defined scope of work/ description of
services and the time frame for which services are to be availed of) should be
consistent with the overall objectives of Procuring Entity;
c) Equal opportunity to all qualified Consultants to compete should be ensured;
_______________________
20
Notified vide OM No.F.20/2/2014-PPD(Pt.) issued by Department of Expenditure dated 29.09.2016.
30Manual for Procurement of Consultancy Services, Second Edition, 2025
d) Engagements should be economical and efficient.
e) Transparency and integrity in the Consultancy process (that is, proposed, awarded,
administered, and executed according to highest ethical standards) and;
f) Additionally, in procurement of consultancy services, consultants should be of high
quality, in line with justification as per para 1.11 above.
(Rule 180 of GFR 2017)
2. In Procurement of Consultancy, these considerations can be best addressed through
unrestricted competition among qualified shortlisted firms or individuals in which selection is
based on the quality of the proposal and, where appropriate, on the cost of services to be
provided. Hence Procurement of Consultancy needs to be done in a two-stage process.
1.13 Legal Aspects Governing Public Procurement of Consultancy
Services
A public procurement contract, besides being a commercial transaction, is also a legal
transaction. There are a number of laws that may affect various commercial aspects of public
procurement contracts. A public procurement professional is expected to be generally aware
of the implications of following basic laws affecting procurement of works; however, he or she
is not expected to be a legal expert. In different contexts of the scope of work, an additional
set of laws may be relevant. (For salient features of laws applicable to public procurement,
please refer to Appendix 2 provided in Manual for Procurement of Goods, Second Edition,
2024)
1.14 The Law of Agency – applicable to Procurement of Consultancy
services
Legally speaking consultant would be an Agent of the Procuring Entity acting as a ‘Principal’
–, to carry out the service on its behalf. Such a relationship is covered by The Law of Agency
(Section 182 to section 238, of the Indian Contract Act, 1872) and hence there exists a
Principal and Agent relationship between Procuring Entity and the consultant. As per this law,
the Procuring Entity is vicariously legally and financially liable for actions of its Agents. For
example, a violation of certain labour laws in deputing staff for Procuring Entity’s contract by
the consultant may render the Procuring Entity legally and financially answerable for such
violations, under certain circumstances. There is a need to be aware of such eventualities.
Model tender Documents take care of this aspect.
1.15 Public Procurement Cycle in Procurement of Consultancy
Services
The entire process of procurement and implementation of Consultancy services shall include
the following steps:
1. Need Assessment:
a) Preparation of Procurement Proposal (Concept Paper) and obtaining in principle
approvals;
31Chapter 1: Introduction to Procurement of Consultancy Services
b) Preparation of the Terms of Reference (ToR), cost estimate and seeking
administrative and budgetary approval;
c) Developing a Procurement Plan
2. Shortlisting of Qualified Consultants – EOI process
3. RfP Invitation Process: Preparing ‘Request for Proposal (RfP) Document’,
publication, receipt and opening of bids;
4. Bid Evaluation and Award of Contract:
a) Preliminary Examination and Evaluation of technical proposals: consideration of
quality;
b) Evaluation of financial proposals;
c) Selection of winning proposal; Negotiations and award of the contract to the selected
firm; and
5. Contract Management: Execution and Monitoring of Consultancy Assignments.
Details and procedures of various stages of the procurement cycle would be described in
following Chapters of the manuals.
1.16 Nomenclature Conundrum
1. There is no standardised nomenclature in Public Procurement in India, and a mix of
American, European, and British/ Indian nomenclature has become common. ‘Tender’ is
taken to mean (i) ‘Tender Document’ or ‘Tender Process’ as well as (ii) the ‘Bid’ submitted
by the ‘bidders.’ The Tender Document floated by Procuring Entity is also called a Bid (or
Bidding) Document. Similarly, participants in a ‘tender’ are alternatively called bidders and
tenderers. This duality is reflected in “Notice Inviting Tenders’ and ‘Instructions to Bidders’
etc.
2. An attempt is made to standardise the term ‘Tender’ for ‘Tender Document’ (document
prepared and published by the Procuring Entity, instead of bid/ bidding document) or
‘Tender Process’ and Bid for the ‘bid’ submitted by the ‘bidders’ and hence ‘bidder’ is used
instead of tenderer. Similar attempts are made to standardise other nomenclature in this
document without disturbing the nomenclature (e.g., Pre-qualification Bidding) embedded
in the CPPP or GeM portals.
32Manual for Procurement of Consultancy Services, Second Edition, 2025
Chapter 2: Need assessment and Procurement
Planning
2.1 Need Assessment
1. Procurement Proposal: A critical part of the procurement of Consultancy Services
process is preparing an appropriately staffed and budgeted Procurement Proposal/
Concept Paper (which serve the function that an Indent serves in procurement of Goods).
The authority in the user Department initiating the procurement proposal shall first
determine the need (including anticipated quantum) for the subject matter of the
procurement. Purpose/ Objective Statement of Services, Service Outcome Statement, and
justification for the procurement of Consultancy Services are important parts of the
procurement proposal.
2. Terms of Reference containing Scope of Work, Time-frame, Key Staff, Deliverables/
Milestones is of fundamental importance in ensuring value for money, transparency,
competition, and level playing field in procurement of Consultancy Services. The user
Department shall maintain all documents relating to the determination and
technical/financial/budgetary approvals of the need for procurement.
2.2 Procurement Proposal (Concept Paper) for Consultancy
services
2.2.1 Preparing Procurement Proposal/ Concept Paper
As a first step towards procurement of services, a formal written brief Proposal and
Justification for the Services should be prepared (Please see a suggested format in Annexure
3: Format of Procurement Proposal). It is akin to the Indent for Materials/ Material Requisition
in case of Procurement of Goods. The User should prepare in simple and concise language
the requirement, purpose/ objectives and the scope/ outcomes of the assignment and justify
the procurement based on analysis of in-house available capacity/ capability. The eligibility
and pre-qualification criteria to be met by the consultants should also be clearly identified at
this stage. Justifications for procurement of Consultancy Services as given in para 1.11 may
be kept in view. It is the basic document for initiating procurement of services. It is also the
document from which the subsequent detailing of Terms of Reference (ToR) for consultancy
services is drawn up. A procurement proposal should contain:
1. Purpose/ Objective Statement of Services: The user should prepare “Purpose/
Objective Statement of Services”. One of the important contents of this statement is
description of service to describe the subject matter of procurement which would be used in
all subsequent documents. Bringing out the background and context, this should justify how
the proposed procurement of services would fit in with short-term and strategic goals of
Procuring Entity. Making such a statement is important to put the need for services in clear
perspective. It may seem elementary or academic but is a necessary and critical first step in
properly designing a procurement proposal.
2. Service Outcome Statement: Once the "Purpose/ Objective of Services" has been
clearly defined, the next step is to formulate a 'Service Outcome Statement'. This should list
out qualitatively and quantitatively the outcomes expected from the Procurement of Services,
33Chapter 2: Need assessment and Procurement Planning
as well as the expected Time-frame and a rough estimate of cost of Procurement of services
(including related costs to be incurred by the organization). At this stage, it is not necessary
go into details of all the activities required to achieve the service outcomes, but it should list at
least the broad activities, would help in putting a rough estimate to the cost of the assignment.
A 'Service Outcome Statement' should provide a concrete basis for subsequently defining the
type and amount of work that needs to be done by the Consultant and the time-frame within
which the output needs to be received by the user. The estimated cost is needed to ascertain
the level of approval necessary as per SoPP.
3. Justification for the procurement of Services: The Concept Paper/ Procurement
proposal should analyse the capabilities/ capacities required to carry out the assignment. It
should also analyse the available in-house capabilities/ capacities and compare these with the
ones required for the assignment. Based on this assessment the Procurement should be
justified in the light of para 1.11.
2.2.2 In-principle Approval for initiating procurement of Services
Based on the justification contained in the Procurement Proposal, in-principle administrative
approval and budgetary sanction for initiating procurement of such services should be
accorded by the Competent Authority (CA) as laid down in SoPP. Further stages may be
proceeded with, only after such approvals. (Rule 180 of GFR 2017)
2.3 Preparation of Terms of Reference (ToR)
1. ToR is akin to Description, Quantity and Technical Specification in Procurement of
Goods. This is the first step in the selection of the consultants once a need has been identified.
It explains the purpose/ objectives of the assignment, scope of work, activities, tasks to be
performed, respective responsibilities of the Procuring Entity and consultant, expected results,
and deliverables of the assignment. It is important for an understanding of the assignment and
its correct execution to ensure that the objectives of assignment are achieved. It reduces the
risk for the Procuring Entity of unnecessary extra work, delays, and additional expenses. In
addition, it helps reduce for the bidders the risk of ambiguities during the preparation of
bidder’s proposals, contract negotiation, and execution of Consultancy.
2. Hence ToR should be comprehensive and unambiguous. However, it should not be
too detailed and inflexible, so that competing consultants may be in a position to propose their
own methodology and staffing. Bidders shall be encouraged to comment on the ToR in their
proposals. The ToR shall include:
a) Procuring Entity’s organisation background and Project background;
b) Purpose and Service Outcomes Statement of the assignment; (refer to chapter 1)
c) Detailed scope of work Statement including schedule for completing the assignment;
d) Expected requirement of key professionals and kind of expertise;
e) Capacity-building programme and transfer of knowledge, if any;
f) Deliverables - List of reports (or documents, data, maps, surveys, designs, drawings),
schedule of deliveries, and period of performance;
g) Background material, Data, reports, records of previous surveys, and so on, available
and to be provided to the consultant;
h) Facilities such as local conveyance, office space, office machines, secretarial
assistance, utilities, local services, etc., which would be provided to the consultant by
the Procuring Entity;
i) Institutional and organisational arrangement; and
34Manual for Procurement of Consultancy Services, Second Edition, 2025
j) Procedure for review of the work of consultant after award of contract
3. A template for developing a ToR is given at Annexure 4. It should cover following
aspects:
a) Detailed Scope of Work: As part of the ToR, at its simplest, the 'Detailed Scope of
Work ' will contain the type and volume of activity to be undertaken and the time-
frame of activity involved to achieve the Purpose and Service Outcomes as envisage
in the 'Brief proposal and Justification of the Services' (refer chapter 1). Starting from
end-outcomes backwards, the process to achieve the outcomes is broken down into
a discrete number of interrelated tasks, which the consultant will have to undertake.
In consultancy Services, the 'Detailed Scope of Work’ should describe only the
activities, not the approach or methodology by which the results are to be achieved,
since these are the task of the consultants. However, suggestions may be provided
on the approach or the methodology that the consultants could or should use to
execute the assignment. After the tasks are identified, a logical sequencing of the
tasks must be determined. Usually a simple bar chart (or Gantt-chart) is the best way
to illustrate required outputs over time and their relationship to each other. The
'Detailed Scope of Work ' contains such a sequence of tasks over a timeline and also
tangible outputs and activities such as reports, workshops, or seminars.
b) Expected requirement of key professionals and kind of expertise” Except in very
complex Consultancies, it is desirable to not to distinguish the tasks of individual
experts but instead to prepare a longer and more detailed description of what the
Consultancy team, as a whole, will provide without splitting up tasks. These are
generally known as “activity based” ToR as opposed to “position-based” ToR. The
ToR would list a range of tasks without regard to who will have the responsibility to
undertake them. In most of the cases, where the number of experts is small, the work
to be done is not clearly defined, and a degree of flexibility is required— this is
acceptable. In Consultancy services, Key professionals are usually named, and their
credentials carry weightage in technical evaluation.
c) Deliverables and Reports Requirements: The assignments deliverables and
reporting should be clearly specified. In particular, for inception and progress reports,
there should be a balance between keeping the Procuring Entity well informed and
not forcing consultants to spend an excessive amount of time preparing minor
reports. The ToR should indicate the format, frequency, and content of reports as well
as the number of copies, the language, and the names of the prospective recipients
of the reports. For all major reports, an executive summary is recommended as a
separate section. Depending on the assignment, the following reports are usually
required;
i) Inception Report: This report should be submitted about six weeks after the
commencement date. Any major inconsistency in the ToR, staffing problems, or
deficiency in Procuring Entity’s assistance that have become apparent during
this period should be included. The inception report is designed to give the
Procuring Entity confidence that the assignment can be carried out as planned
and as agreed upon in the contract and should bring to its attention major
problems that might affect the direction and progress of the work.
ii) Progress Reports: These reports keep the Procuring Entity regularly informed
about the progress of the assignment. They may also provide warnings of
anticipated problems or serve as a reminder for payment of invoices due.
35Chapter 2: Need assessment and Procurement Planning
Depending on the assignment, progress reports may be delivered monthly or
bimonthly. For feasibility studies and design assignments, delivery of progress
reports at two-month intervals is satisfactory. For technical assistance and
implementation supervision, for instance, construction, progress reports are best
submitted monthly. Progress reports may include a bar chart showing details of
progress and any changes in the assignment schedule. Photographs with time-
stamping are a quick and easy way of conveying the status of a project, and their
use in progress reports should be encouraged. For technical assistance services,
progress reports also serve as a means of setting out the work program for the
following months. Each team member usually contributes to the preparation of
the monthly report.
iii) Interim Reports: If the assignment is phased, interim reports are required to
inform the Procuring Entity of preliminary results, alterative solutions, and major
decisions that need to be made. Since the recommendations of an interim report
may affect later phases of the assignment and even influence the results of the
project, the Procuring Entity should discuss the draft interim reports with
consultants in the field. The Procuring Entity should not take more than 15
(fifteen) days to review and approve draft interim reports.
iv) Final Report: The final report is due at the completion of the assignment. The
Procuring Entity and consultants should discuss the report while it is still in draft
form. The consultants alone are responsible for their findings; although changes
may be suggested in the course of the discussions, consultants should not be
forced to make such changes. If the consultants do not accept comments or
recommendations from the Procuring Entity, these should be noted in the report.
The consultants should include in the report the reasons for not accepting such
changes.
d) Background material, records of previous surveys etc. available and to be provided
to the consultant. This would vary from project to project, but transparency demands
that such information should be transparently and equitably shared with all
prospective bidders.
e) Facilities such as local conveyance, office space, secretarial assistance etc., which
can be provided to the consultant. This aspect has a great bearing on the cost that
will be quoted by the bidders. This can have implications in vitiating the selection
process either way – a facility to be provided may not get declared or a declared
facility may not be provided ultimately. So, great care and reality check is necessary,
while preparing this statement.
f) Procedure for review of the consultancy after award of contract: In consultancy
services, the Contract Monitoring Committee (CMC), and procedure for review and
approval of work of the consultant after the award of contract should also be declared
and adhered to.
(Rule 185 of GFR 2017)
2.4 Estimating Costs, Setting the Budget, and Seeking Approval
1. Preparation of a well-thought-through cost estimate is essential if realistic budgetary
resources are to be earmarked.
36Manual for Procurement of Consultancy Services, Second Edition, 2025
a) Categories: Costs shall be divided into two broad categories: (a) fee or remuneration
(according to the type of contract used); and (b) reimbursable costs. Depending on
the nature of the assignment, cost estimates may be prepared either in local currency
or with a combination of local plus foreign currencies. Cost estimate should provide
for forecast of inflation during the period of assignment.
g) Estimated Resources: The cost estimate shall be based on the Procuring Entity's
assessment of the resources needed to carry out the assignment:
i) Staff time
ii) logistical support (City, National and International Travels/ Trips and durations),
and
iii) physical inputs (for example, vehicles, laboratory equipment)
iv) Miscellaneous (Support services, contingencies, and Profit element, taxes, and
duties)
h) Rates: Costs are normally estimated using unit rates (staff remuneration rates,
reimbursable expenses) and quantities (exceptionally some items may be estimated
on the lump-sum basis or percentage basis – Contingencies and support services).
Rates of payment should be identified (including applicable taxes if any) in local and
foreign currency for Staff Time, Logistics Costs and Costs of various physical inputs/
support services.
i) Staff Costs: The estimate of staff cost is based on an estimate of the personnel time
(staff-months or staff-hours) required for carrying out the assignment taking into
account the time required by each expert, his or her billing rate, and the related direct
cost component. In general, staff remuneration rates include basic salary, social
charges, overheads, fees or profit and allowances. It is useful to prepare a bar chart
indicating the duration of each main activity (work schedule) and time to be spent by
different members of the consultancy team (staffing schedule) distinguishing tasks to
be carried out by foreign and local consultants. Due consideration should be given to
the expected breakdown of a consultant’s time in the home office and client’s
countries and away from home office allowance.
j) Logistic Costs: Number of trips required should be estimated as required to carry
out various activities. Travel costs may be included for city travel, National and
International travel and stay.
k) Physical Inputs Costs: Assessment of such costs would depend on the technical
requirements of equipment.
l) Miscellaneous costs: Support services may be taken as a percentage of staff costs.
Contingencies and Profit elements are usually taken as a percentage of the total cost
of the Consultancy. To this would be added the taxes and duties likely to be incurred
by the consultants.
2. Although assignments vary in size, length, and nature, it is possible to make a cost
estimate by breaking down the assignment’s activities into the following cost categories:
a) Professional and support staff;
b) Travel, Hotel, and transport;
c) Mobilisation and demobilisation;
d) Office rent, Furniture/ Equipment, supplies, Utilities, IT equipment and
communication;
e) Assignment related surveys, training programmes;
f) Translation, report printing;
37Chapter 2: Need assessment and Procurement Planning
g) Contingencies: miscellaneous, insurance, shipping; and
h) Indirect local taxes and duties in connection with carrying out the services.
3. A mismatch between the cost estimate and the ToR is likely to mislead consultants on
the desired scope, depth, and details of service required, and this could lead to serious
problems during contract negotiations or during implementation of the assignment.
2.5 Final Administrative and Budgetary Approvals
1. The scope of the work described in the ToR shall be compatible with the available
budget. The most important step is to determine whether all tasks required to achieve the
desired output have been included in the ToR. The next step is to determine whether adequate
budget has been allocated to implement the ToR as designed. Since the budget may be fixed
or limited, a series of iterations may be required before a final, acceptable ToR is formulated.
CA's (Competent Authority) approval may be taken for the ToR before proceeding ahead.
After administrative approval provision may be made in the Budget or if that is not feasible,
additional confirmation at the time of seeking Administrative approval may be taken from the
CA for inclusion in the Revised Estimate stage of Budget. Procurement may be initiated only
after such budgetary provisions/ confirmations.
2. Procuring Entities may lay down a schedule of powers for administrative and budgetary
approval of procurement proposals for services. Before granting such approvals, it should be
certified that funds in the budget are available and liability for this procurement proposal is
noted against the total available budget.
2.6 Need assessment, Formulation of Terms of Reference, and
Procurement Planning - Risks and Mitigations
Risk Mitigation
1. Need is either artificially created or Keep records and involve stakeholders:
exaggerated, with the intention to channel Records of decision making, and data used
benefits to an individual or an organisation. should be kept. Involve procurement and
For example, demand is created for a good finance functions at this stage also. End user
that is not needed simply to benefit the and stakeholder consultations should be part
company’s owner. of the process.
2. Delays in Assessment of Need and Need assessment should be done sufficiently
generation of Purchase Proposal for in advance of the time when services are
Procurement may lead to shortcut required. In case or urgent requirements, the
procurement procedures that dilutes urgency certificate should be approved by
transparency and prevent achievement of authority empowered to grant administrative
value for money. It may also lead to delays in approval for the indent, recording justification
delivery of services. – why the need could not be formulated
earlier.
38Manual for Procurement of Consultancy Services, Second Edition, 2025
Risk Mitigation
3. The estimate of the costs may be Estimates of procurement should be prepared
inadequate. This may lead to inadequate with due diligence, keeping in view inflation,
response from the bidders and may delay technology changes, profit margins etc.
finalisation of procurement. It may also
adversely affect the quality of supplies.
4. Need Description/ Specifications/ Use a formal market discovery tool: Pre-
Activity Schedule are disproportionate to the bid conference and/ or well publicised EoI
need identified or made to tilt in favour one or may be used for discovery of the market.
a group of vendor(s) or contractor(s) to Otherwise, encourage and invite comments
artificially restrict competition. on the technical and commercial conditions in
the tender document or hold pre-bid
5. Asymmetric dissemination of vital conference.
need information: Dialogue for determining
solutions available in the market is held only
with selected prospective bidders, giving
them undue advantage in preparing for the
bidding. Selected prospective bidders get
access to inside information not disclosed or
disclosed late to others.
2.7 Developing a Procurement Plan
2.7.1 Planning the Procurement
1. The Consultancy Services may be part of a larger project/ works in which there be
other components of work, Goods or Non-consultancy services. Once a project or a program
is identified, the Procuring Entity needs to develop synchronised procurement plan for all the
various components of the project/programme. This will also require planning of the sequence
and contents of the different components including this Consultancy Service, adoption of the
most appropriate method of selection and type of contract and ensuring that selection of
consultant is initiated and completed to in timely manner to meet the overall requirements of
project implementation. For example, if a consultant is required for a large road project
construction supervision, the entire sequence of preparation of the feasibility report, detailed
design and bidding document, time required for inviting bids for construction work, and award
of contract has to be considered so that the construction supervision consultant is mobilised
before the award of the construction contract. Procurement planning is a crucial stage of
decision-making in procurement planning for a better outcome and for VfM considerations.
2. Packaging, Bundling and Slicing: The procuring authority shall normally neither
package nor divide its procurement or take any other action to limit competition among bidders
or to avoid the necessity of obtaining the sanction of higher authority required with reference
to the estimated value of the total demand. Provided that in the interest of efficiency, economy,
timely completion or supply, wider competition, or access to MSEs, a procuring authority may,
for reasons to be recorded in writing, divide its procurement into appropriate packages, or club
requirements of other users for procurement. Packaging of the contract and procurement
planning should be done keeping in view the availability and possibility of eliciting the interest
39Chapter 2: Need assessment and Procurement Planning
of the qualified firms; effective competition for the type and size of the contract; and access to
MSEs. For example, for a particular contract, material to be procured may constitute more
than 50 (fifty) per cent of the total cost of works or there are services which are a mix of
consultancy services with substantial element of goods, such as procurement of an IT system.
Such procurement could be done as a single composite contract comprising all components
or divided into separate procurements for each category of procurement. In all such situations,
the dominant aspect of the requirement and value for money aspects of a composite all-
inclusive contract versus dividing the contract into respective categories should be carefully
examined at the time of Need assessment/ Procurement Planning.
3. Eligibility for Participation in Tender: Determine and declare in documents, any
limitation on participation of bidders as per the Government’s procurement policy regarding
preference to certain sections of industry, if any. The procuring entity shall not establish any
requirement aimed at limiting participation of bidders in the procurement process that
discriminates against or amongst bidders or against any category thereof except to lay down
a reasonable and justifiable eligibility or pre-qualification criteria for the bidders;
4. System of Tendering and Mode of procurement:
a) Selection of a system of tendering (single/two stage; single/two bids; suitability for e-
procurement or reverse auction);
b) Select the mode of procurement (open tenders, limited tenders, single tenders, and
so on);
5. Time Frame: Decisions on the timeframe for completing various stages of
procurement, which should be declared in the pre-qualification/bidder registration or tender
documents. The procuring entity should endeavour to adhere to the time limit so decided and
record reasons for any modification of such limits; (Rule 144(ix), GFR 2017)
6. Annual Procurement plans: GFR 2017 [Rule 144 (x)] mandates that All
Ministries/Departments shall prepare Annual Procurement Plan within 30 (thirty) days of
Budget approval, before the commencement of the year and the same should also be placed
on their website. Integrated annual procurement plan should be prepared for goods, works
and services for the ensuing financial year based on the latest cost estimates, and realistic
time schedule for procurement activities and contract implementation and thus schedule and
stagger the procurements over the year with a view to ensure an even load on the procuring
entity and the market and to co-ordinate matching procurements of Goods, Works, and
Services for a project. The procuring entity may publish information regarding the planned
procurement activities for the forthcoming year or years on the central public procurement
portal and website/ e-Procurement portal used by the procuring entity with a caveat that such
publication shall not be construed as initiation of a procurement process and cast any
obligation on the procuring entity to issue the tender document or confer any right on
prospective bidders.
7. Mitigating Cartel Formation: Need Assessment and Procurement Planning is the
main stage where this menace can be addressed effectively:
a) Inadequate competition, due to an inadequate number of service providers in the list/
panel of registered service providers, may empower bidders to conspire against the
Procuring Entity:
i) New firms may be encouraged to register themselves for the subject services.
ii) Various services and activities in the Services and Activities Schedule may be
reviewed so that more consultants/ service providers become eligible. Insisting
40Manual for Procurement of Consultancy Services, Second Edition, 2025
on costly machinery to be used may reduce competition and encourage cartel
formation.
b) Processes, e.g., pre-bid conferences (where a considerable number of competing
bidders come together on a platform), may facilitate such cartel formation. This may
be avoided as far as feasible or be held only virtually. However, a pre-bid conference
may be advantageous in the case of turnkey contract (s) and sophisticated and costly
equipment, large works, and complex service assignments, as detailed in para 5.5.3
below.
c) Tendering similar Services and Activity Schedule with similar conditions, year on year,
provides a stable conspiring environment for the bidders to come to an agreement for
quoting prices and quantities. Therefore, the following action can be considered to
vary quantity and conditions to make it difficult for cartels:
i) Change the mode of procurement - OTE instead of LTE, or GTE instead of OTE;
or bypass the pre-qualification stage and vice versa.
ii) Change the packaging/slicing by clubbing/ slicing services/ activities in a tender.
iii) Change the pre-qualification criteria, especially in the case of slicing/ packaging,
to broaden the target bidders.
41Manual for Procurement of Consultancy Services, Second Edition, 2025
Chapter 3: Participation of Bidders and Governance
Issues
3.1 Eligibility Criteria for Participation in Tender Process
1. Normally participation in Tender Process should be open to all bidders. However,
procuring entity should lay down ‘Eligibility’ criteria, based on requirement of the procurement
and Government Policies. ‘Eligibility’ and ‘Qualification’ criteria (Experience; Performance and
Financial Capabilities), are entirely different criteria and should not be mixed up. ‘Eligibility’
criteria regulate the participation of bidders in the Tender process, while ‘Qualification’ criteria
are for evaluation of bidders for award of the contract. Bidder should meet the eligibility criteria
as of the date of his bid submission (and should continue to meet these till the award of the
contract) otherwise his bid would be rejected as non-responsive and would not be evaluated
for award of contract. Bidder shall be required to declare fulfilment of Eligibility Criteria in his
bid document. Some of the eligibility criteria is related to following issues (for details refer to
relevant Model Tender Documents):
a) Legal status of the bidder: a natural person or a private entity or a public entity
(State-owned enterprise or institution), a Joint Venture/ Consortium (an association
of several persons, firms, or companies - hereinafter referred to as JV/C).
b) Requirement of various registrations/ licences from various statutory authorities,
required for the subject matter of procurement: GSTIN, PAN, EPF, ESI, Labour,
Private Security Agencies (PASARA), etc.
c) Submission of requisite Bid Security (or Bid Security Declaration, if allowed) or proof
of exemption therefrom
d) free from Financial insolvency, Debarment or Convictions;
e) A consistent history of litigation or arbitration by the bidder may result in
disqualification;
f) free from ‘Conflict of Interest’ with other bidders, which may affect fair competition.
g) Restriction on participation as per Government Policies:
i) For Class-II Local Suppliers and Non-Local bidders as per the Make-in-India
policy.
ii) Any bidder from a country sharing a land border with India (but not in
development partnership with India), or any bidder (including Indian) with a
Specified Transfer of Technology (ToT) arrangement with such a country, shall
be eligible subject to certain conditions.
3.2 Legal Status of Bidders
3.2.1 Individual Persons
1. Individual consultants: Individual consultants are recruited for similar activities as
Consultancy firms when a full team is not considered necessary. They may be independent
experts not permanently associated with any particular firm, or they may be employees of a
firm recruited on an individual basis. They may also be employees of an agency, institution,
or university. They are normally recruited for project implementation supervision, training,
provision of specific expert advice on a highly technical subject, policy guidance, special
studies, compliance supervision, or implementation monitoring. Individual consultants are not
43Chapter 3: Participation of Bidders and Governance Issues
normally recruited for project preparation unless the proposed project is simple and, generally,
a repeat of an already established and successful project. If more than three experts are
required, then the assignment should normally be undertaken by a team from a firm. As with
firms, individual consultants are classed as either international or national, depending on their
level of expertise and their international experience and exposure.
2. Retired Government Servants: Rule 177 of GFR, 2017, says that the consulting
services do not include direct engagement of retired Government servants. They should not
be engaged as consultants against regular vacant posts under this rule. Such engagements
should be handled as a personnel matter. As Consultants, retired Government servants can
be hired/ engaged only for a specific task and for a specific duration. They should be assigned
clear output related goals. For such engagements on a full-time basis (when they are not
allowed to concurrently do any other assignment) on a monthly basis, their remuneration
should be fixed as last pay drawn minus pension, as per extant DOPT guidelines. However,
for part-time non-exclusive engagements, the Procuring Ministry/ department may fix
remuneration on a per day/ month or lump-sum basis. Also refer to para 9.2-3)
3.2.2 Private and Public Entities:
1. Consultancy Firms: The main source of consultants is Consultancy firms of diverse
specializations that provide consultancy. Such firms are normally classified as either
international – firms that have international experience and are capable of undertaking work
at international level at international rates; or national – firms that may not have international
exposure and normally undertake assignments only within that country, usually at significantly
lower rates.
2. Non-governmental Organizations (NGO)
There may be distinct advantage in use of Non-governmental organizations (NGOs) in
Projects which emphasize experience in community participation and in-depth local
knowledge – for example, Projects related to Corporate Social Responsibility (CSR) or
Government Social Initiatives like ‘Swatch Bharat Abhiyan’ etc.
3. Specialized Agencies and Institutions
Specialized agencies or institutions (including Government/ Semi-Government agencies,
universities, research, and professional institutions) may also from time to time be recruited to
provide Consultancy services. These services may be provided by individuals (as discussed
above) or by teams. Nonetheless, there are at times distinct advantages to using such
agencies. Experts and teams from such agencies and institutions may undertake a variety of
roles across the whole field of possible Consultancy services. These may range from project
preparation through project supervision and policy advice to project benefit monitoring and
evaluation.
3.2.3 Association of several Bidders
1. Sub-contracting: A bidder who is capable of being selected for award of contract on
his own credentials, may propose to sub-contract a part of the contract for specialised items
of services, as a financial or technical strategy. The names and details of the sub-contracts
are to be clearly stated in the bid submitted by Bidder, provided further that such sub-
contractor should not circumvent the eligibility criteria. Qualifications of these sub-contractors
shall not be considered in evaluation of qualification criteria for the bid. Despite any approval
granted by the Procuring Entity for such arrangements, the Bidder/ Contractor shall be solely
and directly responsible for executing sub-contracted portions of the contract. The total value
of the sub-contracting portion of services must not exceed the per cent of the contract price
44Manual for Procurement of Consultancy Services, Second Edition, 2025
as specified in the Tender Document/ Contract (if not so specified 25 (twenty-five) percent).
Sub-contracting by the contractor without the approval of the Procuring Entity shall be a breach
of contract.
2. Consortium of Consultants:
a) In large and complex assignments consultants may associate with each other to form
a consortium to complement their respective areas of expertise, to increase the
technical responsiveness of their proposal, and make larger pools of experts
available or for other reasons. Such an association may be for the long term
(independent of any particular assignment) or for a specific assignment.
b) Such associations are called Consortium or Joint Ventures (JVs) for the purpose of
this Manual. In case of consortium or JVs, all members shall sign the contract and
shall be jointly and severally liable for the entire assignment. However, the Procuring
Entity only deals with the lead member of consortiums/ JVs for all the purposes. After
the short list is finalised, and the Request for Proposal (RfP) is issued, any association
in the form of a consortium/ JV or sub consultancy among the short-listed firms shall
be permissible in accordance with provisions stated in the RfP. Under such
circumstance, one of the shortlisted consultants must become the lead member of
the consortium/ JV.
c) Bid documents should clearly specify whether consortiums/ JVs are allowed to bid (in
case of complex and large assignments, say above certain values (say - Rs. 5
(Rupees five) crore). Maximum number of partners in consortium/ JV shall be limited
(say – three). In case consortiums/ JVs are permitted to bid, it should be clarified what
qualifications are to be collectively (clubbed together) met by the consortium/ JV
partners (say experience of similar consultancy etc) and what each partner has to
meet individually and separately (say financial capacity). In case of each member
meeting credentials individually, it should also be specified that each partner should
meet at least 25% (and the lead partner at least 50%) out of the qualifying limit (say
financial capacity/ turnover).
d) If consortiums/ JVs are allowed, measures should be taken to ensure that all the
consortium/ JV partners are present and deliver services all through the contract
period. An Implementation Board with participation of all consortium/ JV partners may
be provided for wherein the Project Manager from the procuring entity shall also be
allowed audience when required. Meeting of consortium/ JV partners with the project
executing authority for quarterly progress review may be made as a criterion linked
to achievement of key dates or even payment.
3.3 Governance Issues in Procurement of Services
3.3.1 Standards (Canons) of Financial Propriety
Public Procurement like any other expenditure in Government must conform to the Standards
(also called Canons) of Financial Propriety. It may be useful to refer to the relevant provisions
in the General Financial Rules, 2017
Rule 21. Standards of financial propriety: Every officer incurring or authorizing
expenditure from public moneys should be guided by high standards of financial
propriety. Every officer should also enforce financial order and strict economy and see
that all relevant financial rules and regulations are observed, by his own office and by
45Chapter 3: Participation of Bidders and Governance Issues
subordinate disbursing officers. Among the principles on which emphasis is generally
laid are the following: -
i) Every officer is expected to exercise the same vigilance in respect of expenditure
incurred from public moneys as a person of ordinary prudence would exercise in
respect of expenditure of his own money.
ii) The expenditure should not be prima facie more than the occasion demands.
iii) No authority should exercise its powers of sanctioning expenditure to pass an order
which will be directly or indirectly to its own advantage.
iv) Expenditure from public moneys should not be incurred for the benefit of a
particular person or a section of the people, unless —
a) a claim for the amount could be enforced in a Court of Law, or
b) the expenditure is in pursuance of a recognized policy or custom.
3.3.2 Right to Information and Proactive Information Disclosures
Section 4(1) (b) of the RTI Act lays down the information to be disclosed by public authorities
on a suo-motu or proactive basis and Section 4(2) and Section 4(3) prescribe the method of
its dissemination to enhance transparency and also to reduce the need for filing individual RTI
applications. The Department of Personnel & Training, Ministry of Personnel, Public
Grievances & Pensions, Government of India, has issued “Guidelines on suo motu disclosure
under Section 4 of the RTI Act” vide their OM No.1/6/2011-IR dated April 15, 2013.21. The
relevant guidelines relating to information disclosure relating to procurement are reproduced
below:
“Information relating to procurement made by public authorities including
publication of notice/tender enquiries, corrigenda thereon, and details of bid
awards detailing the name of the Vendor/ Contractor of goods/services being
procured or the works contracts entered or any such combination of these and
the rate and total amount at which such procurement or works contract is to be
done should be disclosed. All information disclosable as per Ministry of Finance,
Department of Expenditure’s O.M. No 10/1/2011-PPC dated 30th November,
201122 (and 05th March 201223) on Mandatory Publication of Tender Enquiries
on the Central Public Procurement Portal and O.M. No. 10/3/2012- PPC dated
09th January 2014 on implementation of comprehensive end-to-end e-
procurement should be disclosed under Section 4 of the Right to Information
Act.
3.3.3 Code of Integrity for Public Procurement (CIPP)
1. Public procurement is perceived to be prone to corruption and ethical risks. To mitigate
this, the officials of Procuring Entities and the bidders/ suppliers/ contractors/ consultants/
service providers involved in procurement process must abide by the following Code of
Integrity for Public Procurement (CIPP). All Procuring officials may be asked to sign
declarations to this effect periodically and in various Procurement decisions (including Need
Assessment). The bidders/ suppliers/ contractors/ consultants/ service providers should be
asked to sign a declaration for abiding by a Code of Integrity for Public Procurement in
registration applications and in bid documents, with a warning that, in case of any
_______________________
21 http://cic.gov.in/GuidelinesOnProActive.pdf
22 http://finmin.nic.in/the_ministry/dept_expenditure/gfrs/pub_tender_enq_cppportal.pdf
23http://eprocure.gov.in/cppp/sites/default/files/instruction_contents/INST_DOC_NO_7/OM_DoE_5thMarch2012.p
df
46Manual for Procurement of Consultancy Services, Second Edition, 2025
transgression of this code, its name is not only liable to be removed from the list of registered
suppliers/ contractors/ consultants/ service providers, but it would be liable for other punitive
actions such as cancellation of contracts, banning and blacklisting or action in Competition
Commission of India, and so on. (Rule 175 (2) of GFR 2017).
2. Code of Integrity for Public Procurement: Procuring authorities as well as bidders,
suppliers, contractors, consultants, and service providers should observe the highest
standard of ethics and should:
a) not indulge in the following prohibited practices, either directly or indirectly, at any
stage during the procurement process or during execution of resultant contracts:
i) “Corrupt practice”: making offers, solicitation or acceptance of bribe, rewards
or gifts or any material benefit, in exchange for an unfair advantage in the
procurement process or to otherwise influence the procurement process or
contract execution;
ii) “Fraudulent practice”: any omission or misrepresentation that may mislead or
attempt to mislead so that financial or other benefits may be obtained, or an
obligation avoided. This includes making false declaration or providing false
information for participation in a tender process or to secure a contract or in
execution of the contract;
iii) “Anti-competitive practice”: any collusion, bid rigging or anti-competitive
arrangement, or any other practice coming under the purview of The Competition
Act, 2002, between two or more bidders, with or without the knowledge of the
Procuring Entity, that may impair the transparency, fairness, and the progress of
the procurement process or to establish bid prices at artificial, non-competitive
levels;
iv) “Coercive practice”: harming or threatening to harm, persons, or their property
to influence their participation in the procurement process or affect the execution
of a contract;
v) “Conflict of interest”: any personal, financial, or business relationship between
the bidder and any personnel of the procuring entity who are directly or indirectly
related to the procurement or execution process of the contract, which can affect
the decision of the procuring entity directly or indirectly;
vi) “Undue Advantage”: improper use of information obtained by the bidder from
the procuring entity with an intent to gain an unfair advantage in the procurement
process or for personal gain. This also includes if the bidder (or his allied firm24)
provided services for the need assessment/ procurement planning25 of the
tender process in which he is participating;
vii) “Obstructive practice”: materially impede the Procuring Entity’s investigation
into allegations of one or more of the above mentioned prohibited practices either
by deliberately destroying, falsifying, altering; or by concealing of evidence
material to the investigation; or by making false statements to investigators
and/or by threatening, harassing or intimidating any party to prevent it from
disclosing its knowledge of matters relevant to the investigation or from pursuing
_______________________
24
Please see definition in ‘Procurement Glossary” section
25
inter-alia need assessment, preparation of - feasibility/ cost estimates/ Detailed Project Report (DPR), design/
technical specifications, terms of reference (ToR)/ Activity Schedule/ schedule of requirements or the Tender
Document etc.
47Chapter 3: Participation of Bidders and Governance Issues
the investigation; or by impeding the Procuring Entity’s rights of audit or access
to information;
b) proactively disclose26 , whether asked or not, in a tender document:
i) Procuring authorities 27 as well as bidders, suppliers, contractors, and
consultants/ service providers, are obliged under Code of Integrity for Public
Procurement to suo-moto proactively declare any conflicts of interest (coming
under the definition mentioned above – pre-existing or as and as soon as these
arise at any stage) in any procurement process or execution of contract. Failure
to do so would amount to violation of this code of integrity; and
ii) All bidder must declare any previous transgressions of such a code of integrity
with any entity in any country during the last three years or of being debarred by
any other Procuring Entity. Failure to do so would amount to violation of this code
of integrity;
iii) The Contractor/Consultant must disclose any commissions or fees that may have
been paid or are to be paid to agents, representatives, or commission agents
concerning the selection process or execution and performance of the Contract.
The information disclosed must include the name and address of the agent,
representative, or commission agent, the amount and currency, and the purpose
of the commission or fee in a format given in the Tender Document.
3. Professionalism and Unfair Competitive Advantage:
a) Professionalism: The consultant is required to provide professional, objective, and
impartial advice, at all times holding the Procuring Entity’s interest paramount above
his/ its own corporate interests and above any consideration for future work, strictly
avoiding any conflicts of interest.
Unfair Competitive Advantage: Fairness and transparency in the selection process
require that the consultants or their affiliates competing for a specific assignment do
b)
not derive an unfair competitive advantage from having provided consultancy
services related to the assignment in question. Such unfair competitive advantage is
best avoided by full transparency and by providing equal opportunity so that all firms
or individuals interested or involved have full information about a service assignment
and its nature, scope, and background information. To that end, the request for
proposals and all information should be made available to all short-listed consultants
simultaneously.
c) Therefore, without limitation on the generality of the foregoing, and unless stated
otherwise in the RfP document, Consultants (including its experts and sub—
consultants) or its allied firm28 shall not be eligible for any assignment that,
i) by its nature, may be in conflict with another assignment of the consultant or its
allied firm for the same or for another Procuring Entity.
_______________________
26
To encourage voluntary disclosures, such declarations would not mean automatic disqualification for the bidder
making such declarations. The declared conflict of interest may be evaluated, and mitigation steps, if possible, may
be taken by the procuring entity. Similarly, voluntary reporting of previous transgressions of the Code of Integrity
elsewhere may be evaluated, and barring cases of debarment, an alert watch may be kept on the bidder’s actions
in the tender and subsequent contract.
27 Please refer to example in para 3.10-5 for clarification of CoI relating to personnel of procuring Entity.
28
For definition of allied firm please refer to ‘Procurement Glossary’ section.
48Manual for Procurement of Consultancy Services, Second Edition, 2025
ii) A Consultant or any of its affiliates/ allied firms that has been engaged by the
client to provide goods, works, or non-consultancy services for a project, shall be
disqualified from providing Consultancy service resulting from or directly related
to those goods, works, or non-Consultancy services.
iii) Conversely, a Consultant or any of its affiliates/ allied firms hired to provide
consultancy services for the preparation or implementation of a project, shall be
disqualified from subsequently providing goods or works or non-consultancy
services resulting from or directly related to the consultancy services for such
preparation or implementation;
4. Punitive Provisions:
Without prejudice to and in addition to the rights of the Procuring Entity to other penal
provisions as per the bid documents or contract, if the Procuring Entity concludes that a
(prospective) bidder/contractor/ Supplier/ consultant/ service provider, directly or through an
agent, has violated this code of integrity in competing for the contract or in executing a
contract, the Procuring Entity may take appropriate measures including one or more of the
following:
a) if his bids are under consideration in any procurement
i) Forfeiture or encashment of bid security;
ii) calling off of any pre-contract negotiations, and;
iii) rejection and exclusion of the bidder from the procurement process
b) if a contract has already been awarded
i) Cancellation of the relevant contract and recovery of compensation for loss
incurred by the Procuring Entity;
ii) Forfeiture or encashment of any other security or bond relating to the
procurement;
iii) Recovery of payments made by the Procuring Entity along with interest thereon
at the prevailing rate
c) Provisions in addition to above:
i) Removal from the list of registered consultants and debarment of the bidder from
participation in future procurements of the Procuring Entity for a period for a
period not exceeding two years;
ii) In case of anti-competitive practices, information for further processing may be
filed by the Competent Authority, with the Competition Commission of India;
iii) Initiation of suitable disciplinary or criminal proceedings against any individual or
staff found responsible.
3.4 Integrity Pact (IP)
1. The Pre-bid Integrity Pact is a tool to help governments, businesses, and civil society
to fight corruption in public contracting. It binds both buyers and sellers to ethical conduct and
transparency in all activities from pre-selection of bidders, bidding and contracting,
implementation, completion and operation related to the contract. This removes insecurity of
Bidders, that while they themselves may abjure Bribery, but their competitors may resort to it
and win contract by unfair means.
49Chapter 3: Participation of Bidders and Governance Issues
2. Ministries/ Departments and their attached/ subordinate offices (including autonomous
bodies) should incorporate Integrity Pact29 in the procurements/ contracts of the nature and of
a threshold value, decided by the Ministries/ Departments with the approval of the Minister in
charge. As guidance, the threshold should cover bulk (80-90% - eighty to ninety percent by
value) of its annual procurement expenditure. The format of the Integrity Pact is included in
Annexure 18. Ministries/ Departments including their attached/ sub-ordinate offices and
CPSEs may use this format of Integrity Pact, with the suitable changes specific to the
situations in which pact is to be used.
3. CVC issued a revised Standard Operating procedure30 and has further stated31 that in
view of the increasing procurement activities of Public Sector Banks (PSBs), Public Sector
Insurance Companies (PSICs) and Public Sector Financial Institutions (FIs) shall also adopt
and implement the suggested format of Integrity Pact. In the case of sub-contractors, the IP
shall be a tri-partite arrangement to be signed by the organization, the contractor, and the sub-
contractor. Please refer to Annex-2 of Annexure 18 for details.
3.5 Grievances and its Redressal:
1. Procuring Entities shall provide a suitable clause in their Tender Documents for the
redressal of grievances of bidders. The following is a suggested mechanism of redressal:
2. Any supplier, contractor, or consultant that claims to have suffered or is likely to suffer
loss or injury as a result of a decision/ action/ omission of the Procurement Entity may make
an application for its review within a period of Five (5) days from its date, or any other time
period, as may be specified in the tender documents, to the designated officer named in the
tender documents in this regard (or the Head of the Procuring Entity, if not so specified),
specifying the ground(s) and the relevant clauses of the tender documents. Unsuccessful
Bidders may seek de-briefing regarding the rejection of their bid, in writing or electronically,
within Five (5) days, or any other time period, as may be specified in the tender documents,
of the declaration of techno-commercial or financial evaluation results.
3. Only a directly affected bidder can represent in this regard:
a) Only a bidder who has participated in the concerned procurement process, i.e., pre-
qualification, bidder registration or bidding, as the case may be, can make such
representation.
b) In case the pre-qualification bid has been evaluated before the bidding of Technical/
financial bids, an application for review in relation to the technical/ financial bid may
be filed only by a bidder who has qualified in the pre-qualification bid;
c) In case the technical bid has been evaluated before the opening of the financial bid,
an application for review in relation to the financial bid may be filed only by a bidder
whose technical bid is found to be acceptable.
d) The following decisions of the procuring entity in accordance with the provision of
internal guidelines shall not be subject to review:
i) Determination of the need for procurement;
ii) Selection of the mode of procurement or tendering system;
iii) Choice of selection procedure;
_______________________
29OM No.14(12)/ 2008- E-ll(A) dated 19th July 2011
30
vide CVC Circular No.04/06/23 (015/VGL/091 dtd 14/06/2023)
31
vide CVC Circular No.06/05/21 (015/VGL/091 dtd 03/06/2021)
50Manual for Procurement of Consultancy Services, Second Edition, 2025
iv) Complaints against specifications except under the premise that they are either
vague or too specific to limit competition may be permissible.
v) Provisions limiting the participation of bidders in the procurement process in terms
of government policies.
vi) Provisions regarding purchase preferences to specific categories of bidders in
terms of policies of the Government
vii) The decision to enter into negotiations with the L1 bidder;
viii) Cancellation of the procurement process except where it is intended to
subsequently re-tender the same requirements;
ix) Issues related to ambiguity in contract terms shall not be taken up after a contract
has been signed; all such issues should be highlighted before the
vendor/contractor consummates the contract.
4. This grievance redressal is beside the avenue of complaints to the vigilance
department of the procuring organisation or judicial remedies.
5. If received during the processing of the tender, the officer receiving the application
shall forward it to the TC/Convener of TC for its examination on merits and action as
considered necessary. An interim reply may be sent that the application will be kept in view in
the tender evaluation, and a final response shall be given only after the declaration of the
award of the contract. The Tender Committee shall place the application on record, including
its analysis and action taken thereon, in the TC minutes/ report to the Competent Authority.
After the award, the competent authority shall respond to the aggrieved party as per sub-para
6) below.
6. If such grievance is received after the declaration of the award of the contract, the
officer receiving the application shall forward the application to the Competent Authority of the
tender for his examination on merits and action as considered necessary. Such post award
grievance must be redressed and closed within 30 days of receipt of the grievance. If the
Competent Authority finds the complaint to have substance, appropriate and feasible remedial
measures should be initiated as per sub-para 7) or 8) below.
7. If the grievance is resolved or if the grievance is found to be unwarranted, the
aggrieved party shall be informed by the officer receiving the application of the final decision
without disclosing confidential details.
8. Based on such representation, if the Competent Authority is satisfied that there has
been a contravention of procurement guidelines in this case, he may initiate such action as,
in his opinion, is necessary to rectify the contravention, including:
a) If the grievance is due to inadequacy of procurement guidelines or a lack of
understanding of the staff, remedial action to address such lacunae may be initiated
without repercussions to the concerned staff.
b) Annulment or reconsideration of the procurement proceedings;
c) cancellation of the resultant procurement contract, if legally feasible;
d) In case any individual staff is found responsible, suitable disciplinary proceedings
should be initiated against such staff under the conduct rules.
e) In case the complicity of any bidder is proved,
i) removal of the concerned firm from the list of registered firms
ii) debarment of the bidders, if warranted
iii) reporting the matter to the Competition Commission of India (CCI) in case of anti-
competitive actions by the bidder.
f) Handing over the case to CVO if there are aspects that require investigations.
51Chapter 3: Participation of Bidders and Governance Issues
3.6 Conduct of Public Servants in Public Procurement - Risks and
Mitigations
Risk Mitigation
1. Hospitality: Hospitality (including Hospitality must never be solicited, directly or
facilitation of travel, lodging, boarding and indirectly. The frequency, scale and number of
entertainment during official or unofficial officials availing hospitality should not be
programs) from suppliers/ contractors/ allowed to identify the recipient in a public way
consultants/ service providers may tend with any particular supplier/ contractor/
to cross the limits of ethical/ occasional/ consultant or raise doubts about its neutrality. It
routine/ modest/ normal business should not involve significant travel, overnight
practice. Officials sent to firm’s premises accommodation, or trips abroad. Particular
for inspections/ meetings may mistakenly care should be taken in relation to offers of
presume entitlement to hospitality from hospitality from firms (say participating in
the firm, even if other arrangements are current or imminent tenders or its execution)
available at the location. who stand to derive a personal or commercial
benefit from their relationship with the recipient.
2. Gifts: Gifts from suppliers/ Gifts must never be solicited, directly or
contractors/ consultants/ service indirectly. An official should not accept and
providers may tend to cross the limits of retain gifts more valuable than the limit as laid
ethical/ occasional/ routine/ modest/ down in the conduct rules. Particular care
normal business practice, especially on should be taken in relation to gifts from firms
festive season. Since the value of the gift (say participating in current or imminent
may not be known to the recipient, it may tenders or its execution) who stand to derive a
cause inadvertent violation of Conduct personal or commercial benefit from their
rules. relationship with the recipient. Cash, gift
cheques or any vouchers that may be
exchanged for cash may not be accepted
regardless of the amount. Any gift received
inadvertently in violation of above, must
immediately either be returned or else reported
and deposited in Toshakhana/ Treasury.
3. Private Purchases from Official Public purchasers must not seek or accept
Suppliers/ contractors/ consultants/ special facilities or discounts on private
service providers: Procuring Officials may purchases (particularly same items which are
mistakenly consider it innocuous to seek being ordered officially) from contractors,
discounts in private procurements from suppliers/ contractors/ consultants/ service
suppliers/ contractors/ consultants/ providers (including Rate Contract holders)
service providers having official dealings with whom they have official dealings.
or its associates (especially against Rate
Contracts).
4. Sponsorship of Events: Public purchasers must never get involved in
Procuring Officials may mistakenly any non-official pecuniary transaction with the
consider it innocuous to seek financial contractors, suppliers/ contractors/
favours (donations, advertisements for consultants/ service providers including
52Manual for Procurement of Consultancy Services, Second Edition, 2025
Risk Mitigation
souvenirs, and contributions in cash or soliciting of sponsorship for unofficial and
kind) in relation to sponsoring of cultural, private cultural, social, sporting, religious,
social, charitable, religious, or sporting charitable, or similar organisations or events
events, in the false belief that since he/ from.
she is personally not benefitted, it would
not be a violation of CIPP.
5. Conflict of Interest (COI): Para Interpretation of Conflict of Interest would
3.3.3-2-a-v) above, Code of Integrity for depend on the organisational structure and its
Public Procurement has a provision on unique circumstances and cannot be laid down
Conflict of Interest – which inter-alia universally. However, some illustrative
states:” examples are given below to provide context.
“… if the bidding firm or their personnel a) Officers that can be considered to be
have relationships or financial or business related to the tender or execution process
transactions with any official of procuring would depend on the organisational
entity who are directly or indirectly related structure and sensitivity of their role in
to tender or execution process of procurement. It may cover key officials
contract;…” (and any external consultants/ advisors)
There may be dilemma regarding the involved in making a recommendation,
officers related to the tender or execution various approvals, or making a major
process and if even minor routine decision at any stage in procurement – i.e.,
transactions. during need determination/ indenting,
Tender Document preparation/
preparation of comparative tabulation;
Technical and Financial evaluation of Bids;
negotiation/ signing of Contract; execution
of the contract; payments to the contractor.
b) As an illustration – COI (actual, potential,
or perceived) can arise if such officers (or
his close family32) have:
i. Substantial business interests in the
firm33 (e.g., shares more than 0.1% of
market cap), taken a loan or other
financial obligation (say discounts)
from the firm or its personnel33), etc.
ii. Business relationships with the firm –
say previously worked for the firm or
availed hospitality/ gifts beyond the
limits laid down in the Code of
Conduct of the organisation, etc.
_______________________
32
Close family for this purpose shall be officer’s spouse, parents, children, and their families. As far as extended
family - Siblings/ Uncles/ Aunts/ Cousins and their families are concerned, the situation would depend on closeness
of relationships and whether the officer would in normal course be aware of their activities.
33
For purpose of COI, Firm includes its allied firms also. Firm’s personnel for this purpose, shall mean – senior
executives (or team handling the bidding) at the bidding firm.
53Chapter 3: Participation of Bidders and Governance Issues
Risk Mitigation
iii. Familial relationship32Error!
Bookmark not defined. with the
personnel of the firm.
iv. close personal friendships or regular
(say, more than once in a quarter)
social interactions (e.g., clubs,
games, social associations) with the
Firm’s personnel, etc.
c) Resolution of COI: It shall be the
responsibility of such officials to declare
COI (to the extent he is aware of, in normal
course) with reference to a procurement
process to the Competent Authority/ next
higher officer. The competent officer may
evaluate the level of COI, and the
sensitivity of the function assigned to the
official. He may either determine
i. COI is insignificant enough to
influence the type of function
performed by the official and ask the
officer to continue his function.
ii. If COI or the type of function is
significant, nominate any alternative
officer to perform the function (partly
or fully) of this official in that
procurement process.
3.7 Development of New Sources and Registration/ Empanelment/
Pre-qualification of Firms
1. Normally, in open tendering, there should be no restriction of prior registration. Entities
may provide for registration after selection in unrestricted open tendering. Difference may be
noted between registration, empanelment (maintaining a classified list of firms based on their
experience usually required in case of limited tenders), and prequalification.
a) Registration is to establish genuine identification of the firm (e.g., for e-procurement
portals, preferential procurement, and so on).
b) Empanelment is to establish prima-facie capability for restricted tendering (not open
tendering, e.g., limited tendering panels, also useful in special limited tenders).
c) Pre-qualification and Multi-use Lists:
i) Pre-qualification: Wherever the nature of the requirement dictates competition
only among prequalified bidders (without vitiation of prices offered by unqualified
bidders), prequalification may be done with open tendering in the prequalification
bidding stage.
ii) Approved List/ Multi-use List: If there are frequent requirements of such
nature, prequalification may be done through an open process with an extended
54Manual for Procurement of Consultancy Services, Second Edition, 2025
validity of the Shortlist of Qualified Bidders (called List of approved Sources, in
some organisations, e.g., Ministry of Railways), for example, one year or longer.
The use of a List of Qualified Bidders is also known as a Multi-use list in many
countries, as distinct from empanelment (e.g., Limited Tender Panel - which does
not undergo a formal open tender pre-qualification/ EoI process). In such long-
term Multi-use lists or Approved Lists, if any competent bidder applies for
inclusion at any time, it should be examined as per the criteria of the original
multi-use list.
2. However, since in common parlance, registration is a word interchangeably for the above
three concepts, used by most of departments, this usage is being retained, though the
distinction would be clear from the context of usage.
3. For goods and services not available on GeM, and for Works, the Head of Ministry/
Department may periodically register suppliers of goods and services that Department or
Office specifically requires. Ensuring an up-to-date and current list of registered, capable,
and competent suppliers/ consultants/ service providers facilitates efficiency, economy,
and promotion of competition in public procurement, especially while floating a limited
tender/ local purchase/ direct contracting. For such tenders, it may be possible to skip
bidder qualification to avoid unnecessary repetition/ duplication of efforts, thereby saving
time, especially in the case of emergency procurement. Registration of the supplier/
consultant/ service provider should be done following a fair, transparent, and reasonable
procedure and after giving due publicity. Such registered suppliers should be on-boarded
on GeM as and when the item or service gets listed on GeM.34 The list of registered Firms
for the subject matter of procurement should be exhibited on websites of the Procuring
Entity/ their eProcurement portals.
4. All Ministries/ Department may use such lists prepared by other Ministries / Departments
as and when necessary. Registered Firms are ordinarily exempted from furnishing earnest
money deposit/ bid security with their tenders for items, and Monetary Limits for which they
are registered.
5. In cases where the firm is not considered capable and registration cannot be granted,
the authority concerned shall communicate the deficiencies and shortcomings direct to the
firms under intimation to the appellate authority. Where a request for re- verification and review
is made by the firm (such a request can be made only after six months), along with any fee as
prescribed by the Department, review shall be undertaken. Requests for re-verification after
expiry of the said period would be treated as a fresh application and processing fee, if any
prescribed, charged accordingly.
6. Procuring Entity shall retain its option to reassess firms already registered, at any later
date, to satisfy itself about the current financial soundness/ credit worthiness, facilities
available, and so on. Thereafter, Procuring Entity may decide to retain them as registered
suppliers for the requirements and monetary limit earlier considered or with necessary
changes as deemed fit. In case of adverse reports from the team of Procuring Entity’s officers
who reassess the firm, Procuring Entity shall delete/ downgrade such firm from the registered
suppliers list
7. Further details about procedure for registration is given in para 3.6 of the Manual for
Procurement of Goods, 2024.
_______________________
34
Amended vide DoE OM No. F.1/26/2018-PPD dated 02.04.2019.
55Chapter 3: Participation of Bidders and Governance Issues
(Rule 150 of GFR 2017)
3.8 Debarment of Suppliers
3.8.1 GFR Provisions
1. Registration of suppliers/ consultants/ service providers and their eligibility to
participate in Procurement Entity’s procurements is subject to compliance with Code of
Integrity for Public Procurement and satisfactory performance in contracts. Rule 151 of
General Financial Rules (GFR), 2017 states the following regarding the ‘Debarment from
Bidding’: -
a) A bidder shall be debarred if he has been convicted of an offence-
i) under the Prevention of Corruption Act, 1988; or
ii) the Bhartiya Nyaya Sanhita (BNS), 2023 or any other law for the time being in
force, for causing any loss of life or property or causing a threat to public health
as part of execution of a public procurement contract.
b) A bidder debarred under sub-section (a), or any successor of the bidder shall not be
eligible to participate in a procurement process of any procuring entity for a period
not exceeding three years35 commencing from the date of debarment. The
c) A procuring entity may debar a bidder or any of its successors, from participating in
any procurement process undertaken by it, for a period not exceeding two years, if it
determines that the bidder has breached the code of integrity.
d) The bidder shall not be debarred unless such bidder has been given a reasonable
opportunity to represent against such debarment.
3.8.2 Current Guidelines on Debarment:
1. PPD, DoE did consultations on the issue of Debarment with major procuring Ministries/
Departments and issued the following ‘Debarment Guidelines’ in suppression to all earlier
instructions on this subject36. Public Procurement organisations who have existing
guidelines for Debarment (by any name) should revise their guideline in conformity with
these guidelines issued by PPD, DoE.
2. Guidelines on Debarment of Firms from Bidding:
a) The guidelines are classified under the following two types: -
i) In cases where debarment is proposed to be limited to a single Ministry, the
Ministry itself can issue the appropriate Orders, thereby banning all its business
dealing with the debarred firm.
ii) Where it is proposed to extend the debarment beyond the jurisdiction of the
Ministry, i.e., covering all central Ministries/ Departments, the requisite Orders
shall be issued by the Department of Expenditure (DoE), Ministry of Finance
(MoF).
b) Definitions:
i) Firm: The term 'firm' or 'bidder" has the same meaning for the purpose of these
Guidelines, which includes an individual or person, a company, a cooperative
society, a Hindu undivided family and an association or body of persons, whether
incorporated or not, engaged in trade or business.
_______________________
35
Now two years is applicable as mentioned below in para 8.7.2-3-a) below.
36Notified vide OM No. F.1/20/2018-PPD issued by Department of Expenditure dated 02.11.2021.
56Manual for Procurement of Consultancy Services, Second Edition, 2025
ii) Allied firm: All concerns which come within the sphere of effective influence of the
debarred firms shall be treated as allied firms. In determining this, the factors
listed in its definition in the ‘Procurement Glossary’ section may be kept in view.
iii) The terms “banning of a firm,” ‘suspension,’ ‘Black-Listing’ etc. convey the same
meaning as “Debarment".
c) All ministries/departments must align their existing debarment guidelines with these
guidelines. Further, tender documents must also be suitably amended if required.
3. Debarment by a Single Ministry/ Department: Orders for Debarment of a firm(s) shall
be passed by a Ministry/ Department, keeping in view the following:
a) A bidder (including its successors/ allied firms) may be debarred from participating in
any procurement process for a period not exceeding two years (along with such other
actions as may be permissible under law) for the following reasons:
i) If it is determined that the bidder has breached the code of integrity as per Rule
175 (2) of GFR 2017. (Refer to para 3.3.3 of this Manual for Code of Integrity).
ii) False declaration of local content by Class I/ Class II local suppliers under Public
Procurement (Preference to Make in India, Order 2017, Dtd 16/09/2020 or later,
i.e., the Make in India Order) shall also be treated as a breach of the code of
integrity. A supplier who has been debarred by any procuring entity as per this
sub-para:
1) The fact and duration of debarment for this reason by any procuring entity
must be promptly brought to the notice of the Member-Convenor of the
Standing Committee (Joint Secretary DPIIT, under the Make in India order)
and the Department of Expenditure through the concerned Ministry
/Department or in some other manner.
2) The Standing Committee shall consolidate such cases, and a centralized list
or decentralized list of such suppliers with the period of debarment must be
maintained on a periodical basis and displayed on the website(s).
3) Such suppliers, though debarred by a single Ministry/ Department, shall not
be eligible for preference under the Make in India Order for procurement by
any other procuring entity for the duration of the debarment. This shall be
effective from the date of uploading such debarment to the website(s).
iii) For any other actions or omissions37 by the firm that, in the opinion of the Ministry/
Department, warrants debarment.
b) The debarment order shall not be circulated to other Ministries/ Departments. It will
only be applicable to all the attached/ subordinate offices, Autonomous bodies,
Central Public Sector Undertakings (CPSEs), etc. of the Ministry/ Department issuing
the debarment Order. Please refer to Annexure 28 for a format for debarment order.
c) The concerned Ministry/ Department, before issuing the debarment order against a
firm, must ensure that reasonable opportunity has been given to the concerned firm
to represent against such debarment (including a personal hearing if requested by
_______________________
37 [Supply of substandard material; non-supply of material; abandonment of works; substandard quality of works;
failure to abide by “Bid Securing Declaration”; conviction under the Prevention of Corruption Act, 1988; conviction
under any law for causing any loss of life or property or causing a threat to public health as part of executing a
public procurement contract; employs a government servant who has been dismissed or removed on account of
corruption; employs a non-official convicted for an offence involving corruption or abetment of such an offence in a
position where he could corrupt government servants, or employs a government officer within one year of his
retirement who has had business dealings with him in an official capacity before retirement.]
57Chapter 3: Participation of Bidders and Governance Issues
the firm). Please refer to Annexure 27 for the format of the Show-cause notice for
debarment.
d) The Secretary of Ministry/Department may nominate an officer at the rank of Joint
Secretary/Additional Secretary as competent authority (CA) to debar the firms.
e) The Ministry/Department will maintain a list of such debarred firms, which will also be
displayed on its website. Such a list on the website shall be automatically binding on
the departments, subordinate and attached offices, autonomous bodies, and CPSEs
under the Ministry, but in case of doubt, it can be confirmed by the issuing authority.
f) More than one Ministry/ Department may concurrently debar the same firm.
g) Debarment is an executive function and should not be allocated to the Vigilance
Department.
h) The period of debarment starts from the date of issue of the debarment order;
therefore, the process of debarment should be conducted expeditiously. Considering
the quasi-judicial nature of such proceedings and the need to afford a fair hearing to
the firm, the following timeline is suggested, which may be suitably modified
considering the specifics of an organisation:
i) Noticing of delinquency of the firm by the Procuring Entity – zero-day
ii) Evaluation of evidence and proposal to CA for debarment of the firm - 2 Weeks
iii) Issue of Show Cause Notice to the firm calling for written and oral submission. –
1 week.
iv) Time for submission, including reminders, etc – 3 weeks.
v) Evaluation of firm’s submission and giving oral hearing to the firm – 3 weeks
vi) Final Order, indicating an opportunity to the firm, 2 weeks to appeal to the
Secretary of Ministry/ Department as an appellate authority – 2 weeks.
vii) Total 12 weeks from zero-day, after which the debarment period starts.
viii) Receipt of Appeal and disposal of the same by the appellate authority – 4 weeks.
4. Debarment by CPSEs, Attached Offices/ Autonomous Bodies, GeM: Ministries/
Departments, at their option, may also delegate powers to debar bidders to their CPSEs,
Attached Offices/ Autonomous Bodies, etc. In such cases, broad principles for debarment
in sub-paras 3-a) to h) above are to be kept in mind. Debarments by such bodies shall be
applicable only to the procurements made by such bodies. Similarly, the Government e-
Marketplace (GeM) can also debar bidders for up to two years on its portal.
5. Debarment across All Ministries/ Departments: In the following situations, the Ministry/
Department may consider debarring the firm from taking part in any tendering procedure
floated by all the Central Government Ministries/ Departments:
a) If the bidder has been convicted of an offence (Rule 151 (i) of GFR, 2017), for
debarment upto three years:
i) under the Prevention of Corruption Act, 1988, or
ii) the Bhartiya Nyaya Sanhita (BNS), 2023 or any other law for the time being in
force, for causing any loss of life or property or causing a threat to public health
as part of the execution of a public procurement contract.
b) The Ministry/ Department concerned should, after obtaining the approval of the
Secretary concerned, forward to DoE a self-contained note setting out all the facts of
the case and the justification for the proposed debarment, along with all the relevant
papers and documents.
c) Ministry/ Department, before forwarding the proposal to DoE, must ensure that
reasonable opportunity has been given to the concerned firm to represent against
58Manual for Procurement of Consultancy Services, Second Edition, 2025
such debarment (including a personal hearing if requested by the firm). If DoE
realizes that sufficient opportunity has not been given to the firm to represent against
the debarment, such debarment requests received from Ministries/ Departments shall
be rejected.
d) The firm shall remain debarred during the interim period till the final decision is taken
by DoE, only in the Ministry/ Department forwarding such proposal. For this purpose,
the proposing Ministry shall issue an interim order debarring the firm from taking part
in tendering procedures floated by their Ministry/ Department following the procedure
laid down in sub-para 3) above. Such order inter-alia must mention that the
Government reserves its right to further debar the firm from taking part in any
tendering procedure floated across all the Central Government Ministries/
Departments, following due procedure.
e) DoE can also give additional opportunity, at their option, to the firm to represent
against proposed debarment. DoE can also take suo-moto action to debar the firms
in certain circumstances. DoE shall complete the process of Debarment within 12
weeks after receiving the proposal from the concerned Ministry/ Department.
f) DoE will issue the necessary orders for debarment for a period not exceeding three
years for offences mentioned in Rule 151 (i) of GFR, 2017, after satisfying itself that
the proposed debarment across all the Ministries/ Departments is in accordance with
the said rule. This scrutiny is intended to ensure uniformity of treatment in all cases.
g) DoE will maintain a list of such debarred firms, which will be displayed on the Central
Public Procurement Portal (CPPP). This list on CPPP shall be applicable to all
Ministries/ Departments, Attached and Subordinate Offices, CPSEs, and
Autonomous bodies, but in case of doubt, they may confirm it from issuing authority.
h) No contract of any kind whatsoever shall be placed on the firm debarred by DoE,
including its allied firms, during the period of debarment by any Ministry/ Department/
Attached/Subordinate offices of the Government of India, including autonomous
bodies, CPSEs, etc., after the issue of a debarment order.
6. Review and Revocation of Orders:
a) An order for debarment passed shall be deemed to have been automatically revoked
on the expiry of the period of debarment specified therein, and it will not be necessary
to issue a specific formal order of revocation.
b) The authorised entity (DoE, Ministry/ Department or CPSEs, Attached Offices/
Autonomous Bodies, GeM, etc.) that issued the order of debarment can review or
revoke the debarment order before the period of debarment is over, suo-moto (based
on new facts that come to light) or on an appeal by the debarred bidder. After a review,
an Order for modification of the period of debarment or revocation of debarment, if
there is adequate justification for the same, can be issued. Ordinarily, such
modification/ revocation of the Order should be done with the approval of the
Secretary concerned of DoE or the Ministry/Department that issued such orders. In
case of debarments done by CPSEs, such modification/ revocation of the debarment
orders should be done ordinarily with the approval of competent authority not below
a board-level officer.
7. Other Provisions (common to both types of debarments):
a) The debarment order shall mention the reason(s) in brief that led to the debarment of
the firm and the jurisdictional extent to which the order shall be applicable, besides
the validity period of debarment.
59Chapter 3: Participation of Bidders and Governance Issues
b) No contract of any kind whatsoever shall be placed with a debarred firm, including its
allied firms, after the issue of a debarment order by the entities in the jurisdiction
mentioned in the order. Bids from only such firms shall be considered for placement
of contract, which are neither debarred on the date of opening of tender (opening of
first bid, normally called as technical bid, in case of two packet/two stage tendering)
nor debarred on the date of contract (i.e., date of issue of Letter of Acceptance). Even
in the cases of risk purchase, no contract should be placed on such debarred firms.
c) If any debarred firm submits the bid, it will be ignored. In case such firm is lowest (L-
1), the next lowest firm shall be considered as L-1. Bid security submitted by such
debarred firms shall be returned to them.
d) Contracts concluded before the issue of the debarment order shall not be affected by
the debarment Orders.
e) The Debarment shall be automatically extended to all its allied firms. In case a joint
venture/ consortium is debarred, all partners will also stand debarred for the period
specified in the Debarment Order. The names of partners should be clearly specified
in the “Debarment Order.”
f) Debarment in any manner does not impact any other contractual or other legal rights
of the procuring entities.
g) The period of debarment shall start from the date of issue of the debarment order for
the issuing entity. In respect of procuring entities other than the one that has carried
out the debarment, the debarment takes effect prospectively from the date of
uploading on the website(s) in such a manner that ongoing procurements are not
disrupted.
h) Ordinarily, the period of debarment should not be less than six months.
i) GeM portal also has a provision for Suspension (debarring vendors/ service providers
participation in procurements of all the buyers) under its Incidence Management
Policy38. The reasons and period for suspension are different than in the provisions
mentioned above. However, if a procuring entity feels that the period of suspension
by GeM is not adequate, it may also debar the firm as per procedure mentioned in
this section for a more appropriate period, but such debarment shall be applicable
ONLY to procurements by that procuring entity.
j) All Ministries/ Departments must align their existing Debarment Guidelines in
conformity with these Guidelines. Further, bidding documents must also be suitably
amended, if required.
8. Safeguarding Procuring Entity’s Interests during Debarment of Suppliers/
Consultants/ Service Providers: Suppliers/ Consultants/ Service Providers are important
assets for the procuring entities, and punishing delinquent suppliers/ consultants/ service
providers should be the last resort. It takes a lot of time and effort to develop, register and
mature a new supplier/ consultant/ service provider. In case of a shortage of suppliers/
consultants/ service providers in a particular group of materials/ equipment/ services, such
punishment may also hurt the interest of the Procuring Entity. Therefore, the Procuring Entity
may always seek the views of the concerned department regarding the repercussions of such
punitive action on the continuity of procurements. Procuring Entity may give due weightage to
the past performance of the supplier/ consultant/ service provider. In case of a shortage of
suppliers/ consultants/ service providers and in cases of less serious misdemeanour, the
_______________________
38
https://assets-bg.gem.gov.in/resources/pdf/incident_management_policy_v12.1.pdf
60Manual for Procurement of Consultancy Services, Second Edition, 2025
Procuring Entity may pragmatically analyse the circumstances, reform the supplier/
consultant/ service provider, and get a written commitment from the supplier/ consultant/
service provider that his performance will improve. If this fails, efforts should be made to see
if a shorter period of debarment can serve the purpose. (Rule 151 of GFR 2017)
3.9 Enlistment of Indian Agents
Ministries/ Departments if they so require, may enlist Indian agents, who desire to quote
directly on behalf of their foreign principals39. (Rule 152 of GFR 2017)
_______________________
39
Rule 52 of GFR, 2017 amended vide OM No. F.26/2/2016-PPD issued by Department of Expenditure dated
25.07.2017.
61Manual for Procurement of Consultancy Services, Second Edition, 2025
Chapter 4: Bidding Design for Consultancy Services
4.1 Types of Contracts
1. There are various alternative basis for linking payments to the performance of a
quantum of services (called types of contracts) – each having different risks and mitigation
measures. Bids are called and financial evaluation is based on the type of contract. The choice
of the type of contract should be based on Value-for-Money (VfM) with due regard to the nature
of requirement. BOQ of the financial bid is designed specifically for each type of contract.
Adoption of an inappropriate type of contract could lead to a situation of lack of competition,
contractual disputes, and non-performance/ failure of the contract.
2. Each type of contract is described briefly in subsequent paras, and criteria are
suggested for their adoption along with risks and mitigation measures. Mostly used types of
contracts are:
a) Lump sum (Firm Fixed Price) contract;
b) Time based (Retainer-ship) contracts;
c) Percentage (Success Fee) contract;
d) Retainer-ship cum Success fee-based contract;
e) Indefinite delivery contract.
4.1.1 Lump Sum (Firm Fixed Price) Contract:
1. The lump sum (firm fixed price) contract is the simplest form of contract and wherever
feasible; the Procuring Entity shall use this form of contract. In this type of contract consultants
are required to quote a lump sum fixed price figure for completing the Consultancy services in
accordance with the given terms of reference. Consultant’s proposal is deemed to include all
prices - no arithmetical correction or price adjustments are allowed during evaluation. This
Terms of Reference shall indicate the scope and quantum of Services required.
2. Lump sum consultancy contracts are easy to administer because there is fixed price
for a fixed scope and payments are linked to clearly specified outputs/ milestones/ deliverables
such as reports, documents, drawings, bills of quantities, software programs and so on.
Bidders quote lump sum price for the required quantum of services. They may also be asked
to quote unit rate for the consultancy output, to be used in case of variation etc.
3. Schedule of Requirement shall indicate the quantum of the Consultancy outputs, its
performance standards, and the timeline/ milestones of its delivery. Contract may specify parts
of payments to be released at specified timelines/ milestones.
4. In view of Risks mentioned below this type of contracts are widely used for simple
planning and feasibility studies, environmental studies, detailed design of standard or common
structures, preparation of data processing systems, and so forth.
5. Lump Sum Contracts - Risks and Mitigations
Risk Mitigation
1. The quality and Scope of the Lump sum service contracts should be used
Output/ deliverables is not linked to the mainly for assignments in which the quality,
payment. There may be tendency for the scope, and the timing of the required output of
consultant/ consultant to cut corners on the consultants are clearly defined. The
quality and scope of the output/ contract should include provision for
deliverables by saving on resources evaluation of quality and scope of deliverables
63Chapter 4: Bidding Design for Consultancy Services
Risk Mitigation
employed. Disputes may arise due to and certificate for its acceptability may be
different possible interpretations of quality recorded. Payment should be made only
and scope of assignment. against certificate of acceptance of
deliverables.
2. Time over-run: As time is not linked While the payments are not linked to time, the
to the payment. There may be tendency for assignment should be monitored per month to
the consultant to save on deployment of ensure that the output per month is in line with
resources which may result in time-over- planned and estimated time-line.
run.
4.1.2 Time-Based (Retainer-ship) Contract
1. In Time-based (Retainer-ship) contracts payments are based on agreed hourly, daily,
weekly, or monthly rates for staff (who in consultancy contracts are normally named) and on
reimbursable items using actual expenses and/or agreed unit prices. These are also called as
retainer ship contracts since the consultant are retained for a pre-decided contract period. The
rates for staff include salary, social costs, overhead, fee (or profit), and, where appropriate,
special allowances.
2. Schedule of Requirement shall indicate the quantum of inputs required (Man-hours of
different key and non-key personnel), qualifications of key-personnel, reimbursable items, and
the timeline/ milestones of its deliverables. Contract may specify parts of payments to be
released at specified timelines/ milestones.
3. Both time-based contracts and indefinite delivery contracts are used when Lump sum
contract is not feasible due to difficulties in specifying the scope/ length of consultancy services
or the quantum of individual activities either because the inputs required for attaining the
objectives of the requirement is difficult to assess or because the services are tied up to
contracts/ activities by others for which the completion period may vary. As differentiated from
the Indefinite Delivery type of contracts (discussed below), Time-based contracts are suitable
for consultancy services that are continuously needed, while Indefinite Delivery type of
contracts is suitable for services which are infrequently needed but the consultant is needed
to be always on beck and call.
4. Because of risks and mitigations mentioned below, this type of contract is widely used
for complex studies, supervision of construction, advisory services, and most training
assignments etc.
5. Time-Based Contracts - Risks and Mitigations
Risk Mitigation
1. The quality and Scope of the The contract should include provision for
Output/ deliverables as in Lump-sum evaluation of quality and scope of deliverables
Contracts, is not linked to the payment. and certificate for its acceptability may be
There may be tendency for the consultant recorded. Payments should be released only
to cut corners on quality, scope, and timing against such certificates.
of the output/ deliverables by saving on
resources employed. Disputes may arise
due to different possible interpretations of
quality and scope of assignment.
64Manual for Procurement of Consultancy Services, Second Edition, 2025
Risk Mitigation
2. Performance in each time period Contracts need to be closely monitored and
is not linked to the payment. There may be administered by the 'Procuring Entity' to
tendency for the consultant to use paid staff ensure that the progress of assignment is
in a dilatory and un-productive manner. commensurate with the time spent and that
the resources for which payment is claimed
have actually efficiently and productively been
deployed on the assignment during the
period. A system of monthly reporting of
payouts and quantum of work achieved by the
consultant to CA should be instituted to
enable supervision.
3. Time and Cost over-run is a major This type of contract should include an upper
risk in Time-based contracts, as the limit of total payments to be made to the
payment is based on time and delay may consultants for the assignment to safeguard
result in unanticipated benefit to the against excessive prolonging of time and
consultant and the assignment may get payments. After this limit is reached, or the
delayed. period of completion is exceeded, CA should
review justification for extension of the
contract.
4.1.3 Percentage (Success/ contingency Fee) Contract
1. Percentage (Success/ Contingency Fee) contracts directly relate the fees paid to the
consultant to the estimated or actual project cost, or actual value of assets/ transactions to be
handled – e.g., project cost or the cost of the goods procured or inspected. Since the payment
is made after the successful realisation of objectives, it is also called success (or contingency)
fee contract. The payment is made based on the value of assets/ transactions handled during
the period.
2. Schedule of Requirement shall indicate the estimated value of assets/ transactions to
be handled as well as the contract Period (one year, unless otherwise stipulated) over which
such volume shall be availed. However, there shall be no firm commitment to avail the entire
value of transactions within the contract period. The final selection is made among the
technically qualified consultants who have quoted the lowest percentage while the notional
value of assets is fixed.
3. Due to Risks and mitigations discussed below, these contracts are commonly used for
appropriate architectural services; procurement and inspection agents.
4. Percentage Contracts - Risks and Mitigations
Risk Mitigation
4. The quality and Scope of the The contract should include provision for
Output/ deliverables as in Lump-sum evaluation of quality, scope and the timing of
Contracts, is not linked to the payment. deliverables and certificate for its acceptability
There may be tendency for the consultant may be recorded. Payment should be made
to cut corners on quality and scope of the only against certificate of acceptance of
output/ deliverables by saving on resources deliverables.
employed.
65Chapter 4: Bidding Design for Consultancy Services
Risk Mitigation
5. Time over-run: As time is not linked While the payments are not linked to time, the
to the payment. There may be tendency for assignment should be monitored per month to
the consultant to save on deployment of ensure that the output per month is in line with
resources which may result in time-over- planned and estimated time-line.
run.
6. Bias against Economic Therefore, the use of such a contract for
solutions: Since the percentage payment architectural services is recommended only if
is linked to the total cost of the project, in it is based on a fixed target cost and covers
the case of architectural or engineering precisely defined services.
services, percentage contracts implicitly
lack incentive for economic design and are
hence discouraged.
4.1.4 Retainer and Success (Contingency) Fee Contract
1. In Retainer and Success (Contingency) fee contracts the remuneration of the
consultant includes a retainer (time based, monthly payment) and a success fee (Percentage
based), the latter being normally expressed as a percentage of the estimated or actual Project
cost. Thus, this type of contract is a combination of Time Based and Percentage Contracts.
2. Due to risks and mitigations discussed below, Retainer and contingency fee contracts
are widely used when consultants (banks or financial firms) are preparing companies for sales
or mergers of firms, notably in privatization operations. It can also be used for assignments
related to organisational restructuring/ change.
3. Retainer-ship and Contingency Fee Contracts - Risks and Mitigations
Risk Mitigation
All Risks as applicable to both Percentage Same mitigation strategies as in both
Contracts and Time-Based contracts are Percentage and Time-Based contracts may
encountered in this case be adopted in this case.
4.1.5 Indefinite Delivery Contract (Price Agreement)
1. These contracts are used when Procuring Entity need to have “on call” specialized
services, the extent and timing of which cannot be defined in advance. This is akin to the
system of 'Rate Contracts' or framework contracts in the procurement of Goods. There is no
commitment from Procuring Entity for the quantum of work that may be assigned to the
consultant. The Procuring Entity and the firm agree on the unit rates to be paid, and payments
are made periodically on the basis of the time/ quantum of service actually used during the
period.
2. Schedule of Requirement shall indicate only a tentative estimate of the volume of
required service as well as the contract Period (one year, unless otherwise stipulated) over
which such volume is likely to be availed. The Services shall be availed on-call as and when
needed by the procuring entity without any commitment regarding the volume of services. The
consultant shall be selected based on the total price (unit rate multiplied by indicative volume)
of such Services/ Inputs (including service charges and taxes) over the period of contract.
3. Please read the para 4.1.2-3) for differences between Time-based and Indefinite
Delivery contracts.
66Manual for Procurement of Consultancy Services, Second Edition, 2025
4. Due to risks and mitigations discussed below, Indefinite Delivery contracts are
commonly used to retain “advisers” or avail services 'on-call' - for example; expert adjudicators
for dispute resolution panels, institutional reforms, procurement advice, technical
troubleshooting, Document Management, Taxi Services, Temporary Manpower Deployment
and so forth – normally over a period of a year or more.
5. Indefinite Delivery Contracts - Risks and Mitigations
Risk Mitigation
1. The quality and Scope of the The contract should include provision for
Output/ deliverables as in Lump-sum evaluation of quality and scope of deliverables
Contracts, is not linked to the payment. and certificate for its acceptability may be
There may be tendency for the consultant recorded. Payments should be released only
to cut corners on quality, scope, and against such certificates.
timing of the output/ deliverables by
saving on resources employed.
2. Performance in each time Contracts need to be closely monitored and
period is not linked to the payment. There administered by the 'Procuring Entity' to ensure
may be tendency for the consultant to use that the progress of assignment is
resources in a dilatory and un-productive commensurate with the time spent and that the
manner. resources for which payment is claimed have
actually efficiently and productively been
deployed on the assignment during the period.
A system of monthly reporting of payouts and
quantum of work achieved by the consultant to
CA should be instituted to enable supervision.
3. Time and Cost over-run is a This type of contract should include an upper
major risk in such contracts, as the output limit of total payments to be made to the
may not be achieved in the estimated consultants to safeguard against excessive
time. prolonging of time and payments. After this limit
is reached, or the period of completion is
exceeded, CA should review justification for
extension of the contract.
4. Risk of over-utilization: The need assessment of utilized services
Indefinite Delivery Contracts are at risk of should be subject to some scrutiny, to ensure
being over-utilized in excess of actual that there is no abnormal unexplainable trend
need since the scrutiny of service need in utilization.
may not be as intense as in case of other Such contracts need to be closely monitored
types of contracts. and administered by the 'Procuring Entity' to
ensure that the there is no indiscriminate or
unwarranted usage, and a maximum contract
value may be laid down to keep control over
usage and approval of CA may be obtained to
extend it beyond such limit.
A system of monthly reporting of payouts and
quantum of work achieved by the consultant to
CA should be instituted to enable supervision.
67Chapter 4: Bidding Design for Consultancy Services
Risk Mitigation
In the report a monthly payout benchmark may
be kept, above which the report may be
required to be sent to a level above CA.
4.2 Systems of Selection of Consultants
1. Since the quality and scope of a consultancy assignment are not tangibly identifiable
and consistently measurable, the technical and financial capability of consultants becomes an
important though indirect determinant for quality and scope of performance. In such a situation
value for money is achieved by encouraging wide and open competition among equally
competent consultant. Thus, selection of consultants is normally done in a two-stage process.
In the first stage, likely capable sources are shortlisted, on the basis of qualification and
experience requirements for the given assignment for further consideration, if need be through
an 'Expression of Interest' (EoI) through advertisement. The shortlist should include a sufficient
number, not fewer than three (3) and not more than eight (8) eligible firms. In rare cases where
less than three Consultants become eligible as per short-listing criteria, and the criteria cannot
be relaxed, procurement may be continued with the approval of the Competent Authority. In
the second stage, the shortlisted consultants are invited to submit their technical and financial
(RfP) proposals generally in separate sealed envelopes. Evaluation of the technical proposal
is carried out by evaluators without access to the financial part of the proposal. Financial
proposals are opened after evaluation of quality.
2. The relative importance of Quality and Price aspects may vary from assignment to
assignment depending on complexities/ criticality of quality requirements, internal capability of
Procuring Entity to engage and supervise the assignment, as well as the value of
procurements. Hence different systems of selection of consultants are designed to achieve
appropriate relative importance (weightage) of Quality and Price aspects. Decision on system
of selection is normally preceded by an assessment of the capacity of the user to engage and
supervise the implementation of proposed assignment. The selection method chosen depends
to some extent on this assessment. Selection of system of selection also should consider the
likely field of Bidders.
3. The nomenclature of various selection methods below is in line with generally prevalent
nomenclature:
a) Price based System - Least Cost Selection (LCS);
b) Quality and Cost Based Selection (QCBS);
c) Fixed Budget based Selection (FBS)
d) Direct Selection: Single Source Selection (SSS)
4.2.1 Price based System - Least Cost Selection (LCS)
1. In this method of selection, consultants submit both a technical proposal and a financial
proposal at the same time. Minimum qualifying marks for quality of the technical proposal are
prescribed as benchmark (normally 75 (seventy-five) out of maximum 100 (hundred)) and
indicated in the RfP along with a scheme for allotting marks for various technical criteria/
attributes. Alternatively, since in LCS selection, technical offers do not require be ranked (or
to be added of weighted technical score to financial score – as in QCBS selection), it would
suffice in appropriately simple cases (similar to EoI criteria, please refer to para 7.3.3-8), if the
68Manual for Procurement of Consultancy Services, Second Edition, 2025
evaluation criteria is only a fail/ pass criteria prescribing only the minimum qualifying
benchmark. Thus, in LCS, a simplified evaluation criteria may also be used where instead of
a marking scheme a minimum fail/pass benchmark of technical evaluation may be prescribed
(i.e., must have completed at least two similar assignments; must have a turnover of at least
Rs 10 (Rupees Ten) Crore etc). Any bidder that passes these benchmarks is declared as
technically qualified for opening of their financial bids. The technical proposals are opened first
and evaluated and the offers who are qualifying as per these technical evaluation criteria will
only be considered as technically responsive, and the rest would be considered technically
nonresponsive and would be dropped from the list. Financial proposals are then opened for
only eligible and responsive offers (Financial bids of other unresponsive bidders are returned
unopened) and ranked. L-1 offer out of the responsive offers is selected on price criteria alone
without giving any additional weightage to marks/ ranking of Technical proposal. This system
of selection is roughly the same as the price-based selection of L-1 offer (among the
technically responsive offers) in procurement of Goods/ Works. (Rule 193 of GFR 2017, also
see para 8.5.2)
2. LCS is considered suitable for recruiting consultants from firms in most assignments
that are of a standard or routine nature (such as engineering design of non-complex
Consultancy/ services/ works) where well-established practices and standards exist.
3. It is the simplest and the quickest system of selection and under normal circumstances,
this method of evaluation shall be used as default since it allows for minimum satisfactory
technical efficiency with economy. Justification must be provided if a selection method other
than LCS is to be used.
4. Least Cost Selection - Risks and Mitigations
Risk Mitigation
1. Technical criteria may not be Technical criteria selected should be relevant
relevant to realization of quality of and proportional to the requirement of quality
assignment. of assignment and the selection process
should be rigorous enough to ensure that on
one hand no technically unsatisfactory bids
should be able to get past a loose criterion
and on the other hand no technically
satisfactory offer should get ruled out by tight
criteria.
2. Marking Subjectivity: The scheme It is important to lay down as objective a
of marking or its application may be scheme of marking as possible. Cases where
subjective. subjectivity is unavoidable (as in evaluation of
methodology etc), a system of grading
responses and their marking may be laid
down in the bidding documents. Procuring
Entity should also have a system of
conciliation and moderation of widely
disparate markings by different members of
evaluation committee.
69Chapter 4: Bidding Design for Consultancy Services
4.2.2 Quality and Cost Based Selection (QCBS)
1. In QCBS system of selection, both the quality of the proposal and the cost of the
services are considered as deciding factors. This approach is employed when the quality of
deliverables is crucial, but the cost of service or work cannot be ignored.
2. Quality/ Technical scores are assigned to proposals based on specified quality criteria.
Minimum qualifying marks (normally 70-80 (seventy – eighty) out of maximum 100 (hundred)
marks) as benchmark for quality of the technical proposal is prescribed and proposals below
this benchmark are not considered for Financial evaluation. The Financial Proposals are also
given cost-score based on relative ranking of prices, with 100 (hundred) marks for the lowest
and pro-rated lower marks for higher priced offers. The total score shall be obtained by
weighting the quality and cost scores and adding them. For example, the weightage given to
cost score may be 30% (thirty percent) and technical score may be given weightage of 70%
(seventy percent but should never be more than 80%). The ratio of weightages for cost and
Technical score could also be 40:60 (forty: sixty) or 50:50 (fifty: fifty) etc. However, the weight
for the “cost” shall be chosen, considering the complexity of the assignment and the relative
importance of quality. The proposed weightings for quality and cost shall be specified in the
RfP. The firm obtaining the highest total score shall be selected. It may be noted that
theoretically QCBS system with weight of 100% (hundred percent) for the ‘cost’ approximates
the price based LCS system. This method of selection shall be used for highly technically
complex and critical assignments where it is justifiable to pay appropriately higher price for
higher quality of proposal.
3. Caution against consortium/ JV in QCBS Procurements:
a) Since quality is given weightage in the evaluation itself, in QCBS procurement,
therefore, Joint Ventures may be avoided, as far as possible. Joint Ventures could,
however, become necessary in high technology or innovative projects where a single
entity may not be able to execute the work alone.
c) If consortiums/ JVs are allowed, measures should be taken to ensure that all the
consortium/ JV partners are present and deliver services all through the contract
period. An Implementation Board with the participation of all consortium/ JV partners
may be provided for wherein the Project Manager from the procuring entity shall also
be allowed an audience when required. Meeting of consortium/ JV partners with the
project executing authority for quarterly progress review may be made as a criterion
linked to the achievement of key dates or even payment.
4. Table 1 below provides a suggestive weighting for QCBS. (Rule 192 of GFR 2017,
also see para 8.5.3)
Table 1. A suggestive weighting of scores for QCBS
Description Remarks Quality/Cost Score
Weighting (%)
High complex/ downstream Use QCBS with higher 80/20
consequences/ specialised technical weightage
assignments
Moderate complexity Majority of cases will 75-65/ 25-35
follow this range
Assignments of a standard or routine Use of LCS is appropriate 60-50/40-50
nature such as auditors/procurement
agents handling the procurement
70Manual for Procurement of Consultancy Services, Second Edition, 2025
5. QCBS - Risks and Mitigations
Risk Mitigation
1. Inappropriate Selection of QCBS: Selection of QCBS should be justified and
There is a possibility that QCBS system is applied only under circumstances
selected where LCS or other systems would mentioned above.
have been more appropriate considering the
quality requirements or the capability of
Procuring Entity to monitor the assignment.
2. Weightage of Technical: Cost may Weightage different from 70:30 (seventy:
not be proportional to quality requirements thirty) should be adequately examined and
justified.
3. Technical criteria may not be Technical criteria selected should be
relevant to realization of quality of relevant and proportional to the requirement
assignment. of quality of assignment and the selection
process should be rigorous enough to
ensure that on one hand no technically
unsatisfactory bids should be able to get
past a loose criterion and on the other hand
no technically satisfactory offer should get
ruled out by tight criteria.
4. Marking Subjectivity: The scheme It is important to lay down as objective a
of marking or its application may be scheme of marking as possible. Cases
subjective. where subjectivity is unavoidable (as in
evaluation of methodology etc), a system of
grading responses and their marking may be
laid down in the bidding documents.
Procuring Entity should also have a system
of conciliation and moderation of widely
disparate markings by different members of
evaluation committee.
4.2.3 Fixed Budget based Selection (FBS) for consultancy services:
1. GFR 2017 provide three methods for selection/evaluation of consultancy proposals
viz. Quality and Cost Based Selection (QCBS), Least Cost System (LCS) and Single Source
Selection (SSS). The Fixed Budget based Selection (FBS) method is now also allowed40 for
selection of consultants.
2. In FBS, the selection process considers both the quality of proposals and the cost.
FBS is a competitive method, encouraging consultants to provide high-quality services within
the defined budget constraints.:
a) Fixed Budget: In the request for proposal (RFP) document, a specific fixed budget
is specified. Consultants must adhere to this budget, and their proposed cost cannot
exceed it.
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40
General Instructions on Procurement and Project Management - DoE’s OM NO.F.1/1/2021-PPD dtd 29th
October 2021
71Chapter 4: Bidding Design for Consultancy Services
b) Quality Assessment: Consultants submit their proposals, and the evaluation
considers the quality of these proposals. The proposal that scores the highest in
quality (and is within the specified budget) is selected for award of contract. This
assessment ensures that the selected consultant meets the project’s requirements
effectively, within the stipulated budget.
3. FBS may be used when:
a) the type of consulting services required is simple and/or repetitive and can be
precisely defined; and
b) the budget can be reasonable estimated, and set based on credible cost estimates
and/ or previous selections which have been successfully executed; and
c) the budget is sufficient for the consultant to perform the assignment.
4.2.4 Direct Selection: Single Source Selection (SSS)
1. Under some special circumstances, it may become necessary to select a particular
consultant where adequate justification is available for such single-source selection in the
context of the overall interest of Procuring Entity. (Rule 194 of GFR 2017, also see para 8.5.4).
Direct selection is also called the Nomination mode of procurement (Please refer to para 4.3-
4-d) below). The selection by SSS/ nomination is permissible under exceptional circumstance
such as:
a) tasks that represent a natural continuation of previous work carried out by the firm;
b) in case of an emergency situation, situations arising after natural disasters, situations
where timely completion of the assignment is of utmost importance;
c) situations where execution of the assignment may involve use of proprietary
techniques or only one consultant has requisite expertise;
d) At times, other PSUs or Government Organizations are used to provide technical
expertise. It is possible to use the expertise of such institutions on a SSS basis;
e) Under some special circumstances, it may become necessary to select a particular
consultant where adequate justification is available for such single-source selection
in the context of the overall interest of the Ministry or Department. Full justification for
single source selection should be recorded in the file and approval of the competent
authority obtained before resorting to such single-source selection.
2. Procuring Entity shall ensure fairness and equity, and shall have a procedure in place
to ensure that:
a) the prices are reasonable and consistent with market rates for tasks of a similar
nature; and
b) the required consultancy services are not split into smaller sized procurement.
3. All works/purchase/ consultancy contracts awarded on nomination basis should be
brought to the notice of following authorities for information-
a) The Secretary, in case of ministries/departments.
b) The Board of directors or equivalent managing body, in case of Public Sector
Undertakings, Public Sector Banks, Insurance companies, etc;
c) The Chief Executive of the organisation where such a managing body is not in
existence.
i) The report relating to such awards on nomination basis shall be submitted to the
Secretary/Board/Chief Executive /equivalent managing body, every quarter.
ii) The audit committee or similar unit in the organisation may be required to check
at least 10% of such cases.
72Manual for Procurement of Consultancy Services, Second Edition, 2025
4. SSS - Risks and Mitigations
Risk Mitigation
1. Inappropriate Selection of SSS: Full justification for single source selection
There is a possibility that SSS system is should be recorded in the file and approval of
selected where LCS or other systems the competent authority (schedule of
would have been more appropriate Procurement Powers – SoPP should severely
considering the quality requirements or the restrict powers for SSS selection) obtained
capability of Procuring Entity to monitor the before resorting to such single-source
assignment. The assignment may be split selection. In direct selection, the Procuring
into parcels to avoid competitive selection Entity should ensure fairness and equity, and
systems or to avoid obtaining higher level the required consultancy/ Non-consultancy
approvals for SSS. services are not split into smaller sized
procurement to avoid competitive processes.
2. Cost may be unreasonably High: Procuring Entity must have a procedure in
The single consultant is likely to charge place to ensure that the prices are reasonable
unreasonably high price. and consistent with market rates for tasks of a
similar nature. If necessary, negotiations may
be held with the consultants to examine
reasonableness of quoted price.
4.3 Modes of Procurement
1. Offers from prospective bidders in public procurement must be invited according to a
procedure that achieves a balance between the need for the widest competition, on one hand,
and complexity of the procedure, on the other hand. Different modes of procurement and
tendering systems are used to suit various procurement circumstances to achieve this
balance. Various modes of procurement vary the extent of competition (width and specificity
of catchment area of bidders) to suit different procurement situations. Mode of Procurement
addresses the ‘Right Source’ of the 5Rs.
2. There are laid down procedures for delegation of powers of procurement to various
competent authorities under different modes as shown in DFPR (Annexure 1). Each procuring
entity may also publish its own Schedule of Procurement Powers (SoPP) delegating such
powers within the entity. A suggested format for SoPP is given at Annexure 2.
3. The various modes of procurement that can be used in public procurement are (GFR
201741):
a) Advertised Modes: The advertised modes of procurement are designed to foster a
spirit of healthy competition. These modes, ensure the broadest possible competition
by widely publicising procurement opportunities. (Rule 161 GFR 2017):
i) Open Tender Enquiry (OTE): Also known as National Competitive Bidding (NCB),
this mode involves inviting bids through public advertisements to maximise
participation, for procurement above Rs 50 Lakhs.
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41
Various thresholds for these Modes of procurements have been revised upwards vide PPD’s OM No. F.1/3/2014-
PPD dt. 10.07.2024
73Chapter 4: Bidding Design for Consultancy Services
ii) Global Tender Enquiry (GTE): Also referred to as International Competitive
Bidding (ICB), this mode invites bids from international vendors to ensure global
competition. There is a restriction on use of this mode below Rs 200 crores.
b) Pre-qualification Modes: These modes of procurement are restricted to shortlisted
pre-qualified bidders. The shortlisting is done transparently, based on qualification
criteria to identify bidders who have the capability to perform the contract. Shortlisting
itself is done through wide publicity akin to advertised tenders.
i) Pre-Qualification Bidding Mode (PQB): In this mode, only those bidders who
meet specific qualifications are invited to submit bids.
ii) Approved Vendor Lists (AVL): Procurement is restricted to vendors who have
been pre-approved and included on a long-term multi-use list based on their
demonstrated ability to meet the required standards. (Please refer to Para 4.7 of
the Manual for Procurement of Goods, Second Edition, 2024 for details on the
AVL).
c) Restricted Modes: In restricted modes, the bidding is limited to known and selected
bidders, without the public advertisements seen in advertised modes. Unlike the Pre-
qualification mode, the shortlisting or registration of bidders is based on less rigorous
checks of capability and past experience, without relying on wide publicity or stringent
qualification criteria. (Rule 162, GFR 2017):
i) Limited Tender Enquiry (LTE): This mode invites bids from a select group of
suppliers and is used for procurements up to Rs. 50 lakhs. (Please refer to
Annexure 15)
ii) Special Limited Tender Enquiry (SLTE): LTE type of process applicable for
procurements above Rs. Fifty lakhs in exceptional circumstances, where limited
competition is justified.
d) Nomination Modes: These modes involve procurement from a single source,
typically under special circumstances where competition is not feasible or necessary.
(Rule 166 GFR 2017):
i) Proprietary Article Certificate (PAC): This is used when procurement is required
from a specific vendor due to the proprietary nature of the goods or services (say
from OEMs).
ii) Single Tender Enquiry (STE) without PAC: This allows procurement from a single
source without a PAC under specific conditions. In case of Single Tender
procurements:
1). a report relating to such awards on nomination basis shall be submitted every
quarter to:
• The Secretary, in case of Ministries/Departments.
• The Board of Directors or equivalent managing body, in case of Public
Sector Undertakings, Public Sector Banks, Insurance companies, etc;
• The Chief Executive of the organisation where such a managing body
is not in existence.
2). The audit committee or similar unit in the organisation may be required to
check at least 10% of such cases.
e) Shopping Modes: These are used for small-value procurements where formal
tendering is not practical. (Rule 154, 155 GFR 2017):
74Manual for Procurement of Consultancy Services, Second Edition, 2025
i) Direct Procurement without Quotation: Small purchases (upto Rs 50,000) made
directly without soliciting formal bids. (Please refer to Annexure 13)
ii) Direct Procurement by Purchase Committee: A committee-based approach for
direct purchases, typically used for low-value (upto Rs 5 Lakhs) items. (Please
refer to Annexure 14)
f) Rate Contracts: Also known as Framework Agreements, are agreements with
suppliers/ consultants/ service providers to provide goods or services at pre-agreed
rates for a specified period.
4. Applicability, Terms and Conditions, Risks, and mitigations of these modes of
procurements (including restrictions regarding GTE mode for procurements below Rs 200
Crore) are detailed in Chapter 4 of the Manual for Procurement of Goods, 2024 which may be
referred. For sake of brevity, these are not repeated here.
4.4 Tendering Systems
1. Tendering systems are designed to achieve an appropriate balance between the
countervailing needs for Right Quality, Right Source, and the Right Price under different
complexities/ criticality of Technical requirements and value of procurements. In certain critical
and complex requirements, the technical and financial capability of Source of supply becomes
an important determinant for value for money. Depending on the complexity and criticality of
Technical requirement, Criticality of capability of Source and value of procurement, following
types of tendering systems may be used. The various Bidding Systems that are used in public
procurement are:
a) Single Stage Tendering System:
i) Single Stage Single Envelop System
ii) Single Stage Two Envelops System (Two Bid System) (Rule 163 of GFR 2017)
iii) Single Stage Two envelops System with pre-qualification.
b) Two Stage Bidding - Expression of Interest Tenders – Market Exploration/ Short-
listing (Rule 164 of GFR 2017)
2. Details of these Bidding Systems are explained in Chapter 4 of the Manual for
Procurement of Goods, 2024, which may be referred. For sake of brevity, these are not
repeated here. For guidance on the preparation of Request for Expression of Interest (REoI)
document for the procurement of consultancy services, please refer to para 5.2 below.
4.5 Channels of Procurement
Public Procurement can be channelled by way of Manual Bids, eProcurement Platforms, GeM
Portal or through third-party agencies.
4.5.1 Electronic Procurement (eProcurement - Rule 160 of GFR 2017)
1. Electronic procurement (eProcurement) is the use of information and communication
technology (specially the internet) by the buyer (through a third-party e-Procurement portal) in
conducting procurement processes with the vendors/ contractors for the acquisition of goods
(supplies), works and services aimed at open, non-discriminatory, and efficient procurement
through transparent procedures. A generic description of how eProcurement is conducted is
detailed in ‘Appendix 3: Electronic Procurement (eProcurement) and e-Auction’ of the Manual
for Procurement of Goods, 2024.
75Chapter 4: Bidding Design for Consultancy Services
2. It is mandatory for ministries/departments to receive all bids through e-procurement
portals that are GCQE42 compliant for all procurements. This condition will not be applicable
for the procurement made without quotation (under Rule 154 of GFR, 2017) or through
purchase committee (under Rule 155 of GFR, 2017).
3. Normally in eProcurement no manual Tender Documents are provided, nor any
manual bids are accepted. It is not a good practice to call both electronic as well as manual
bids in the same tender. Sub-paras 4 and 5) below allow exemptions in specific situations
mentioned therein, from e-Procurement, in cases where it is not convenient or feasible.
4. In Global Tender Enquiry (by any mode – Open Tender, Limited Tender or Single
Tender) e-procurement may not be mandatorily insisted upon, however e-Publishing would
still be mandatory. (refer Para 5.4.1).
5. In individual cases where national security and strategic considerations demand
confidentiality, Ministries/ Departments may exempt such cases from e-procurement after
seeking the approval of the concerned Secretary and with the concurrence of Financial
Advisers. In case of tenders floated by Indian Missions and CPSE units abroad, the Competent
Authority for deciding the tender may exempt such cases from e-procurement.
6. National Informatics Centre (NIC) has an eProcurement portal called the Central Public
Procurement Portal (CPPP). There are other service providers in Public Sector (e.g., MSTC)
and Private sector which can be utilized for eProcurement. Details about the process of e-
procurement are available from the service providers. Appendix 3 of the ‘Manual for
Procurement of Goods, 2024,’ also gives such generic details of the eProcurement process.
7. Ministries/ Departments which do not have a large volume of procurement or carry out
procurements required only for day-to-day running of offices and have not initiated e-
procurement through any other solution provided so far, may use e-procurement solution
developed by NIC. Other Ministries/ Departments may either use e-procurement solution
developed by NIC or engage any other service provider following due process.
8. These instructions will not apply to procurements made by Ministries/ Departments
through Government e-Marketplace (GeM).
(Rule 160 of GFR 2017)
4.5.2 Mandatory Procurement of Goods and Services through Government e-
Marketplace (GeM)
(Rule 149 of GFR 2017)
1. Government Electronic Marketplace is a type of e-commerce site where common use
products or services are offered by several sellers, and all the buyers can select the product/
services offered by any one of the sellers based on his own criteria. In an online marketplace,
Purchaser’s transactions are processed by the marketplace operator, and then products/
services are delivered and fulfilled directly by the participating retailers. Other capabilities
included are auctioning (forward or reverse), catalogues, ordering, posting requirements by
purchasers, payment gateways, etc. The procurement process on GeM is end to end, from
the placement of supply orders to payment to suppliers. This is to ensure better transparency
and higher efficiency.
_______________________
42
Guidelines for Compliance to Quality Requirements of eProcurement (GCQE), July 2021 issued by Systems
Standardisation Testing and Quality Certification (STQC) Directorate (an attached office of the Ministry of
Electronics and Information Technology (MeitY), Government of India).
76Manual for Procurement of Consultancy Services, Second Edition, 2025
2. The Procurement of Goods and Services by Ministries or Departments is mandatory
for Goods or Services available on GeM as per Rule 149 of GFR, 2017. The GeM portal shall
be utilized by the Government buyers for direct online purchases (of Goods and Services) as
follows:-
a) Up to Rs.50,000/- through any of the available suppliers on the GeM, meeting the
requisite quality, specification, and delivery period.
Note 1: In the case of automobiles, direct procurement under this sub-para is
permitted without any ceiling limit.
Note 2: In case the item is available on GeM, it is not permitted to purchase the same
under Rule 154 of the GFR, 2017 (Purchase without quotation).
b) Above Rs.50,000/- and up to Rs.10,00,000/- through the GeM Seller having the
lowest price amongst the available sellers, of at least three different manufacturers
of goods or service providers (in case of services), on GeM, meeting the requisite
quality, specification, and delivery period. The tools for online bidding and online
reverse auction available on GeM can be used by the Buyer even for procurements
less than Rs. 10,00,000/-.
Note 1: In case the item/ service is available on GeM, it is not permitted to purchase
the same under Rule 155 of the GFR, 2017 (Purchase by Purchase Committee).
c) Above Rs. 10,00,000/- 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.
d) The invitation for the online e-bidding/reverse auction will be available to all the
existing Sellers or other Sellers registered on the portal and who have offered their
goods/services under the particular product/service category, as per the terms and
conditions of GeM.
e) The above-mentioned monetary ceiling is applicable only for purchases made
through GeM. For purchases, if any, outside GeM, relevant GFR Rules shall apply.
f) The Ministries/Departments shall work out their procurement requirements of Goods
and Services on either “OPEX” model or “CAPEX” model as per their
requirement/suitability at the time of preparation of Budget Estimates (BE) and shall
project their Annual Procurement Plan of goods and services on GeM portal within
30 (thirty) days of Budget approval.
g) It may be noted that it is the responsibility of the Procuring Entity to do due diligence
to ensure the reasonableness of rates. The government buyers may ascertain the
reasonableness of prices before placing an order using the Business Analytics (BA)
tools available on GeM, including the last purchase price on GeM, the department’s
own last purchase price, etc.
h) Demand shall not be divided into small quantities to make piecemeal purchases to
avoid procurement through L-1 Buying / bidding / reverse auction on GeM or the
necessity of obtaining the sanction of higher authorities required with reference to the
estimated value of the total demand.”
3. Further details for procurement on GeM are detailed in Chapter 4 of the Manual for
Procurement of Goods, 2024, which may be referred to. For the sake of brevity, these are not
repeated here.
77Chapter 4: Bidding Design for Consultancy Services
4.5.3 Procurement through Centralized Agencies or other Organizations
Departments/ Organisations, who have not built-up their own infrastructure for purchase, may
engage procurement agents (for individual procurement or as outsourcing of service) with the
approval of its Secretary. Many canalized agencies authorised by the Government and some
CPSEs43 do provide such end-to-end procurement services, i.e., framing procurement
documents, bidding process, evaluation, and contract management. Procurements by such
agencies would have to conform to these Procurement Guidelines. In such cases a Contract
can be placed on them for procurement services, at mutually agreed terms. Guidelines for
procurement through such agencies are detailed in Chapter 4 of the Manual for procurement
of Goods, 2024, which may be referred. For sake of brevity, these are not repeated here.
_______________________
43
Examples (not an exhaustive or recommendatory list) of such agencies are – Rail India Technical and Economic
Services (RITES), Delhi Metro Rail Corporation (DMRC), Engineers India Limited (EIL), Indian Railway Institute
of Logistics and Materials management (IRILMM), Institute of Public Auditors of India (IPAI) etc.
78Manual for Procurement of Consultancy Services, Second Edition, 2025
Chapter 5: Bid Invitation Process
5.1 Preparation and Uploading/ Floating of Tender Documents
5.1.1 Model Tender Documents
Department of Expenditure (DoE), Ministry of Finance, Government of India has issued Model
Tender Documents for Procurement of Goods44 (October 2021), Procurement of Non-
Consultancy Services45 (October 2021) and Procurement of Consultancy Services46 (April
2023). Procuring Entities are urged to customise relevant MTD for preparing tender
documents for their procurements. Guidance notes annexed to the MTDs, detail the process
of customisation of MTD for an Organisation and for each procurement.
5.1.2 Tender Documents47
1. The tender document is the fundamental document in the public procurement process as
after award of the contract it becomes part of the contract agreement. A carefully prepared
tender document avoids delays and complaints. This will also attract more bidders to
formulate and submit their competitive bids with confidence. Hence, it is worth spending
time and effort on this even in cases of urgency.
2. Provisions/ clauses in the tender document should be clear, self-contained, and
comprehensive, without any ambiguity. to avoid differences in interpretation and possible
disputes, time overrun, cost overrun and quality compromises. While tender document
should be complete in themselves and may be slightly different for various categories of
procurements, these must necessarily address the essential aspects mentioned below
(Rule 186 of GFR 2017). Model Tender Documents, issued by the DoE, which comply with
all these requirements, may be used, with due customisation, as per the guidance notes
annexed to the MTDs:
a) A letter of Invitation
b) Information to Consultants regarding the procedure for submission of proposal.
c) Terms of Reference (TOR).
d) Eligibility and pre-qualification criteria in case the same has not been ascertained
through Enquiry for Expression of Interest.
e) List of key position whose CV and experience would be evaluated.
f) Bid evaluation criteria and selection procedure.
g) Standard formats for technical and financial proposal.
h) Proposed contract terms.
i) Procedure proposed to be followed for midterm review of the progress of the work
and review of the final draft report
_______________________
44Accessible from
https://doe.gov.in/sites/default/files/Model%20Tender%20Document%20for%20Procurement%20of%20Goods
%20%28pdf%29.pdf
45 Accessible from
https://eprocure.gov.in/cppp/sites/default/files/standard_biddingdocs/Procurement_Consultancy_Services.pdf
46Accessible from https://www.doe.gov.in/sites/default/files/Model-Tender-Document-for-Procurement-of-Non-
Consultancy-Services.pdf
47 Notified under para 12 vide OM No.F.1/1/2021-PPD issued by Department of Expenditure dated 29.10.2021
79Chapter 5: Bid Invitation Process
3. Procuring entities may issue instructions regarding appropriate delegation of authority for
approval of the Tender Documents before these are floated/ uploaded.
4. Eligibility criteria specify the very basic criteria that a bidder should meet to be
considered a responsive bid to be evaluated further beyond the preliminary evaluation/
screening of bids.
5. Qualification Criteria: Technical and Financial qualification Criteria for the bidders are
important in the public procurement process. They shall be clear and fair, having regard
to the specific circumstances of the procurement. Appropriate parameters should be
prescribed in the qualification criteria for bidders, to enable selection of the right type of
bidders in public interest, balancing considerations of quality, time, and cost.
6. Evaluation Criteria: Procuring Entity may include in the evaluation criteria in the Tender
Document based on one or more of quality, price, technical merit, aesthetic and functional
characteristics, environmental characteristics, running costs, cost- effectiveness, after-
sales service and technical assistance, delivery date and delivery period or period of
completion etc. No criteria shall be used for evaluation of tenders that cannot be verified
or has not been specified in the Tender Document.
7. Open online tendering should be the default method to ensure efficiency of procurement.
Public authorities should also keep the experience criteria broad based so that bidders
with experience in similar nature of services/ goods can participate.
8. The Procuring Entity should allow enough time to the bidders to prepare their proposals.
The time allowed shall depend on the assignment, but normally shall not be less than three
weeks. In cases where participation of international consultants is contemplated, a period
of not less than four weeks should normally be allowed.
9. Tender documents should invariably reserve Procuring Entity’s right without assigning any
reason to:
a) reject any or all of the Bids, or
b) cancel the tender process; or
c) abandon the procurement of the Services; or
d) issue another tender for identical or similar Services.
5.2 Preparation of the Request for Expression of Interest (REoI)
Document
5.2.1 Basic Considerations
1. Department of Expenditure (DoE), Ministry of Finance, Government of India has inter-
alia issued Model Tender Documents for Procurement of Consultancy Services48, which
includes a Model REoI, which may please be referred.
2. As mentioned in para 1.11 above it is important to hire consultants who have a
reputation for relevant quality and competence, hence Procurement of Consultancy, is done
in a two-stage process. The first stage (Expression of Interest stage) to shortlist such qualified
consultants in a transparent and open manner. In next stage (RfP stage) there is competition
_______________________
48
Accessible from
https://eprocure.gov.in/cppp/sites/default/files/standard_biddingdocs/Procurement_Consultancy_Services.pdf
80Manual for Procurement of Consultancy Services, Second Edition, 2025
only among qualified shortlisted firms or individuals in which selection is based on the quality
of the proposal and, where appropriate, on the cost of services to be provided.
3. Therefore, the process of shortlisting is one of the most difficult and time-consuming
tasks in the selection process of a consultant. This could be eased by writing a clear
Description of Service (objectives and Scope) and shortlisting criteria.
5.2.2 Contents of REoI
The EoI document shall contain following sections:
1. Part I: REOI process
a) Section I: Request for Expression of Interest (REOI)
b) Section II: Appendix
c) Section III: Qualification Criteria
2. Part II: Schedule of Requirements
a) Section IV: Terms of Reference
3. Part III: EOI Submission Formats
a) Form 1: EOI Form (Covering Letter)
i) Form 1.1: Consultant Information
ii) Form 1.2: Eligibility Declarations
b) Form 2: Qualification Criteria – Compliance
i) Form 2.1: Performance Capability Statement
ii) Form 2.2: Financial Capability Statements
iii) Form 2.2.1: Financial Statement
iv) Form 2.2.2: Average Annual Turnover
c) Form 3: Checklist for Consultants
d) Other Annexures:
i) Annexure 1: Authorisation to Attend Pre-EOI Conference
ii) Annexure 2: Code of Integrity
4. Section I: Request for Expression for Interest (REoI): Is a formal invitation for
Expression of Bidders from interested bidders.
5. Section II - Appendix to the REoI, is where variable parameters and information
related to this specific REoI process are summarised.
6. Section III: Qualification Criteria:
a) This section lays down the qualification criteria which shall be applied by the
Procuring Entity for short listing the consultants. The REoI should ask for sufficient
information so that the Procuring Entity may evaluate the consultant’s capabilities and
eligibility to undertake the assignment. The Consultants must be asked
i) requisite experience during specified period (say 5 years) with volume of
assignments similar in nature in general and specific sectors relevant to the
subject assignment;
ii) Financial capability: Turnover (Overall and from Consultancy Services)
b) Relaxation for Start-ups: The condition of prior turnover and prior experience may
be relaxed49 for startups (only to startups recognised by the Department of Industry
& Internal Trade (DPIIT)) subject to meeting quality & technical specifications and
_______________________
49
OM No.F.20/2/2014-PPD (Pt.) dated 20.09.2016.
81Chapter 5: Bid Invitation Process
making suitable provisions in the tender document (Rule 173 (i) of GFR 2017).
Startups may be MSEs or otherwise. It is further clarified that such relaxation is not
optional but has to be ensured, except in case of procurement of items related to
public safety, health, critical security operations and equipment, etc) where adequate
justification exists for the Procuring Entity to not relax such criteria. Please also refer
to para 1.10.1-4-b), 1.10.4-2-b) and 7.3.3-6 Table).
c) Qualification Criteria shall be based entirely upon the capability and resources
required to perform the particular contract satisfactorily, considering bidders’
experience and past performance, capabilities with respect to personnel, equipment
and manufacturing facilities, financial standing and relevant compliance with
environmental protection regulations/ Environment Management System. There
should be no qualification criteria that would be advantageous to foreign consultants
at the cost of domestically delivered services.
d) Qualification of demerged entities50 (by virtue of a corporate restructuring
exercise etc.): EoI document must clearly mention if (and under what conditions) the
demerged entity will be permitted to use credentials of original/parent entity (for initial
five years from the incorporation of the demerged entities) to satisfy the qualification
criteria or not.
e) In addition, the consultants should indicate information relating to their eligibility and
any conflict of interest that they know may impact objective performance and impartial
advice for their services. Consultants should not be asked about their approach to
the services or to submit any curricula vitae of key personnel, because these
documents will be dealt with in the RfP. No legal documents such as certificates of
incorporation of the firm, powers of attorney, financial statements, or translations of
standard brochures should be requested. Given the often-large number of
submissions, the advertisement should stress the importance of brevity of the
information to be sent. It may indicate the extent of dispensation, if any, allowed for
startups. Unless otherwise stated in Section II: Appendix, Consultants may associate
with other firms to enhance their qualifications but should indicate clearly whether the
association is in the form of a joint venture/consortium (JV/C) and/or a sub-
consultancy.
7. Section IV: Terms of Reference (TOR): This section describes the background,
purpose/ objectives, description/ scope of work, deliverables/ outcomes, inputs to be provided
by the Procuring Entity; and timelines of Consultancy Services (hereinafter called the ‘Service’)
required. The ‘Service’ may include incidental Goods, Works, and other Services if so
indicated therein. Any generic reference the ‘Service’ shall be deemed to include such
incidental Goods, Works, and other Services. This may also include the place of execution of
the assignment.
5.2.3 Important Provisions of REoI
1. REoI contains all relevant information as well as guidance to the prospective bidders
regarding - obtaining tender documents, preparing, and submitting a responsive bid, process
of establishing the eligibility/ qualification credentials of the bidders as well as evaluation and
comparison of tenders, Code of Integrity in Public Procurement (CIPP), process of grievance
_______________________
50
As per DoE’s OM No. No. F .8/78/2023-PPD dated 12.10.2023, in suitable cases procuring entity may consider
the credentials based on the merit and circumstances of the cases like type of procurement, nature of
demerger, number of eligible bidders available etc.
82Manual for Procurement of Consultancy Services, Second Edition, 2025
redressal, and declaration of results. It also contains introduction/ overview of its contents.
Other important provisions in a REoI are:
2. Eligibility Criteria: Provisions relating to Eligibility Criteria, Conflict of Interest and
applicable preferential policies regulate the participation of bidders of various categories and
their agents. It also contains introduction/ overview of its contents. It mentions the type of
entities which may participate, specifically if JV/C are permitted to participate. It shall also
mention that the consulting company should be registered under applicable act with registered
offices in India. It also excludes insolvent, bankrupt, debarred, convicted, firms with conflict of
interest from participation. Restriction of participation of bidders from certain countries having
land borders with India are also applicable. In case JV/Cs are permitted, it should be made
clear if the experience of the bidders as a member of JV/C would be considered or not. If yes,
then the manner of aggregating qualifications of members of JV/C (say, only prorata
experience proportionate to his percentage share declared in JV/C MoU) may be mentioned.
3. Preferential Procurement Policies: Preferential Procurement policies applicable to
the EoI are mentioned (MSEs, Start-ups, Make in India etc.)
4. EoI Validity: EOIs shall remain valid for a period not less than 60 (sixty) days from the
deadline for the EOI submission.
5. Qualification Criteria: As mentioned earlier qualification criteria for shortlisting the
bidders and its scoring/ marking scheme is detailed. It also specifies, if JV/C are permitted,
how credentials of members of JV/C would be considered in evaluation.
6. Terms of Reference (ToR): As mentioned earlier ToR describes the background,
purpose/ objectives, description/ scope of work, deliverables/ outcomes, inputs to be provided
by the Procuring Entity; and timelines of the required ‘Service’. At EoI stage ToR is relevant
for bidders to decide, whether they are interested in bidding for this assignment. It is also
relevant to decide specific sector of experience required in the qualification criteria. Normally
ToR should be ready before REoI is floated, however, if detailed ToR is not ready, at least
description/ scope of work, deliverables/ outcomes, inputs to be provided by the Procuring
Entity; and timelines of the required ‘Service’ should be included in REoI. REoI should contain
a clause retaining right to make minor adjustments to ToR at the RfP stage.
5.3 Preparation of the Request for Proposals (RfP) Document
5.3.1 Basic Considerations
1. Department of Expenditure (DoE), Ministry of Finance, Government of India has issued
Model Tender Documents for Procurement of Consultancy Services and Procurement of
Consultancy Services51, which may please be referred.
5.3.2 The Request for Proposal (RFP) (Rule 186 of GFR 2017)
1. The Request for Proposals (RfP) is the bidding document in which the technical and
financial proposals from the consultants are obtained. For procurement of Consultancy
Services, the RfP is sent only to the short-listed consultants. It contains the following sections:
a) Section I: Request for Proposal Letter (RFPL) and its Appendix: Tender Information
Summary (TIS)
b) Section II: Instructions to Consultants (ITC)
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51
Accessible from
https://eprocure.gov.in/cppp/sites/default/files/standard_biddingdocs/Procurement_Consultancy_Services.pdf
83Chapter 5: Bid Invitation Process
c) Section III: Appendix to Instructions to Consultants (AITC)
d) Section IV: General Conditions of Contract (GCC)
e) Section V: Special Conditions of Contract (SCC)
f) Section VI: Terms of Reference (TOR)
i) Section VI-A: List of Key Experts and Required Qualifications
g) Section VII: Evaluation/ Scoring Criteria
2. Section I: Request for Proposal Letter (RFPL) and its Appendix: Tender
Information Summary (TIS)
Section I – Request for Proposal Letter (RFPL and its Appendix – Tender Information
Summary - TIS) provides a synopsis of information relevant for a Consultant to decide on
participating in the RFP. RFPL states the intention of the Procuring Entity to enter into a
contract for the provision of consultancy services, details of the Procuring Entity, and date,
time, and address for submission of proposals. It plays the role played by NIT in procurement
of Goods and Services.
3. Section II: Instructions to Consultants (ITC) and Section III: Appendix to
Instructions to Consultants (AITC)
Section II: “Instructions to Consultants” (ITC), along with Section III: “Appendix to Instructions
to Consultants (AITC)”, contains all necessary information that would help the consultants
prepare responsive proposals. It shall bring in as much transparency as possible to the
selection procedure by providing information on the evaluation process and by indicating the
evaluation criteria and factors and their respective weights and minimum passing quality
score. Standard information includes clauses relating to the procedure of bid submission, pre-
bid meeting, for seeking clarifications, and so on, but should not contain information on
processes after the announcement of the award which should be covered in GCC, for
example, the arbitration clause, resolution of disputes, and so on. The assignment/ job specific
information in AITC include the date and time of bid submission, contact address, qualification
criteria, method of selection, evaluation process, factors of evaluation and their respective
weights, and so on. The ITC shall specify the proposal validity period [normally 90 (ninety)
days].
4. Section IV: General Conditions of Contract (GCC) and Section V: Special
Conditions of Contract (SCC)
Section IV – General Conditions of Contract (GCC) and Section V – Special Conditions of
Contract (SCC) describe the conditions governing the resulting contract. GCC covers all
information on aspects after the announcement of the tender award till the closure of the
contract and dispute resolution. It should not cover any aspect up to the announcement of the
award. Instead of modifying the GCC every time, any changes warranted by exceptional
circumstances may be indicated in a separate section - Special Conditions of Contract (SCC)-
with the prior approval of the CA and GCC and may be included unchanged in every tender
document. It is also to be indicated therein that the provisions in the SCC will supersede the
corresponding provisions in the GCC.
5. Section VI: Terms of Reference (TOR) and Section VI-A: List of Key Experts and
Required Qualifications
a) Section VI: Terms of Reference (TOR) describes the background, purpose/
objectives, description/ scope, deliverables/ outcomes, timelines, Procuring Entity’s
inputs and counterpart personnel, statutory requirements of Services required etc.
84Manual for Procurement of Consultancy Services, Second Edition, 2025
b) Since cost is part of the selection criterion the ITC shall not indicate the budget
(except in case of Fixed Budget System of selection) but shall indicate the expected
input of key professionals (staff time). Section VI-A: ‘List of Key Experts and Required
Qualifications’ describes the team composition, expertise, experience, and
professional qualifications required for each Key Experts. Consultants, however, shall
be free to prepare their own estimates of staff time necessary to carry out the
assignment.
c) Consultants may be encouraged to provide comments and suggestions on Terms of
Reference, Counterpart Staff, Key Experts and Facilities to be provided by the
Procuring Entity’ regarding these Sections.
d) Simplified Technical Proposal: In LCS system of evaluation, since the technical
scores are not ranked or weighted and added to Financial Scores, it would suffice if
instead of a detailed marking scheme for the criteria/ sub criteria, minimum fail-pass
qualifying benchmarks are laid down for each criteria/ sub criteria. For such
assignment technical evaluation can be carried out by following a simplified
procedure for evaluation of technical quality and only a Simplified Technical Proposal
(STP, instead of a Full Technical Proposal - FTP) may be called for and indicated in
the data sheet of the RfP document. STP should be used. when the assignment is:
i) unlikely to have significant downstream impact;
ii) of a routine nature where ToR already defines details of tasks to be performed
and required output and approach, methodology, organisation, and staffing could
be evaluated without use of sub criteria; and
iii) that characteristics of work do not require further detailed evaluation of the
consultant’s experience (e.g., engagement of accountants, auditors, consultant
engineers etc).
e) STP reduces the time and cost required to prepare the proposal and could be
evaluated faster by the Evaluation Committee. For example, following parameters
can be used:
i) Minimum experience including number of assignments handled by the firm
similar to the area of assignment;
ii) Turnover and other financial parameters of the firm, if required;
iii) Minimum educational qualifications of each of the key professionals;
iv) Minimum requirement of experience of the key professionals in an area similar
to the proposed assignment.
v) All the firms which meet the minimum qualifying standards/ criteria so prescribed
will stand technically qualified for consideration of their financial bids.
6. Quality Considerations - Section VII: Evaluation/ Scoring Criteria
Section VII – Evaluation/ Scoring Criteria stipulates the scoring scheme for evaluating various
Technical criteria. These may cover scoring of criteria relating to the Consultant’s experience,
Technical Approach and Methodology, understanding of requirements, qualification, and
experience of Key Experts (Key experts need not be a permanent employee of the consultant),
transfer of knowledge etc. It may also lay down a minimum technical score to qualify for the
next stage of Financial Evaluation. In a specific evaluation scheme, instead of a scheme of
scoring, a scheme may be laid down to evaluate criteria on a pass/ fail basis.
85Chapter 5: Bid Invitation Process
5.3.3 Standard Formats for Technical and Financial Proposals
1. Technical Proposal
a) Form T-1: Proposal Form – (To serve as a covering letter to both the Techno-
commercial and Financial Proposals)
i) Form T-1A: Consultant’s Commercial Information
b) Form T-2: Consultant’s Organisation and Experience
c) Form T-3: Comments and Suggestions on Terms of Reference, Counterpart Staff,
and Inputs to be Provided by the Procuring Entity
d) Form T-4: Description of Approach, Methodology and Work Plan in Responding to
the Terms of Reference
e) Form T-5: Work Schedule and Planning for Deliverables
f) Form T-6: Team Composition, Assignment, and Key Experts’ Inputs
i) Annex to Form T-6: Key Experts’ Curriculum Vitae (CV)
g) Form T-7: Terms and Conditions - Compliance
h) Form T-8: Checklist for Consultants.
i) Form T-9: Bank Guarantee Format for Earnest Money Deposit
j) Form T-10: Integrity Pact
2. Financial Proposal (BOQ Excel Sheet):
a) Procuring Entity should select an appropriate format of BOQ from the eProcurement
Portal and upload it after filling up the entries for the complete schedule of
requirements and various price components to enable the system to automatically
calculate all-inclusive price of a bid to generate a comparative tabulation of all bids.
Any procurement portal that does not have a facility for Financial bid to be uploaded
in Excel format (providing detailed break-up in line with type of contract and system
of selection) should endeavour to build such functionality, which are crucial for Non-
consultancy and Consultancy Services.
b) The Bidder should fill in rates and prices for all items of the Consultancy described in
the in the Excel Sheet. Items for which no rate or price is entered by the Consultant
will not be paid for by the Procuring Entity when executed and shall be deemed
covered by the other rates and prices in the Financial Proposal. The price Schedule
contains sections on Remuneration for Staff deployed, Reimbursable Expenses and
Miscellaneous Expenses. All duties, taxes, and other levies payable by the
Consultant under the Contract, or for any other cause, as in the month prior to the
month of the deadline for submission of bids, should be included in the total Bid price
submitted by the Bidder. Even in tenders for Lump-sum contracts, for the purpose of
determining the remuneration due for additional elements of work, the Bidder shall
provide a breakdown of the lump-sum price. Bidding Documents should include a
clause that “if a firm quotes NIL service charges/ consideration, the bid shall be
treated as unresponsive and will not be considered”.
c) Bidders are to upload only the downloaded BOQ (in excel format) after entering the
relevant fields without any alteration/ deletion/ modification of other portions of the
excel sheet. The quoted price shall be considered to include all relevant financial
implications, including inter-alia the scope of the services to be performed, location
of the bidder, location of the consignee(s), terms of delivery, extant rules and
regulations relating to taxes, duties, customs, transportation, environment, labour of
the bidder's country and in India.
86Manual for Procurement of Consultancy Services, Second Edition, 2025
3. Other Formats
a) Contract Form and its Appendices
i) Appendix A: Terms of Reference
ii) Appendix B: Key Experts
iii) Appendix C: Remuneration Cost Estimates
iv) Annex to Appendix C: Breakdown of Agreed Fixed Rates in Consultant’s Contract
v) Appendix D: Reimbursable Expenses Cost Estimates
vi) Appendix E-1: Bank Guarantee Format for Performance Security
vii) Appendix E-2: Bank Guarantee Format for Advance Payment
b) Authorisation to Attend Pre-Proposal Conference. (To be filled up, if required, by
Consultant)
5.3.4 Important Provisions of ITC
1. ITC contains all relevant information as well as guidance to the prospective bidders
regarding - obtaining tender documents, preparing, and submitting a responsive bid, process
of establishing the eligibility/ qualification credentials of the bidders as well as evaluation and
comparison of tenders, Code of Integrity in Public Procurement (CIPP), process of grievance
redressal, and declaration of results. It also contains introduction/ overview of its contents.
Other important provisions in an ITC are:
2. Eligibility to Participate: As the RFP following the earlier EOI shortlisting process,
this invitation is open only to consultants who have been shortlisted therein or are specifically
invited to participate. It is not permissible for the shortlisted consultants to transfer this RFP to
any other firm without the permission of the Procuring Entity. Proposals from consultants who
have not been shortlisted shall not be entertained. The shortlisted Consultant must continue
to meet the eligibility criteria prescribed in the EOI document (based inter-alia on which they
were shortlisted), including restrictions on Consultants from specified countries as of the date
of his Proposal submission and should continue to meet these till the award of the contract.
Consultants must provide evidence of their continued eligibility to the Procuring Entity if
requested.
3. Association among Shortlisted Consultants: Unless otherwise stipulated in TIS/
AITC, if a shortlisted Consultant considers that it may enhance its expertise for the assignment
by associating with other consultants in the form of a Joint Venture or as Sub-consultants, it
may do so with either (a) non-shortlisted Consultant(s) or (b) shortlisted Consultants, without
vitiating the shortlisting criteria of the REOI. The shortlisted Consultant shall be a lead member
when associating with non-shortlisted firms as a joint venture. If shortlisted Consultants
associate with each other, any of them can be a lead member. A shortlisted Consultant must
obtain the Procuring Entity's written approval not later than 14 days before the RfP submission
deadline, in all such cases. Such approval shall be denied if (i) a shortlisted Consultant
proposes to associate with an ineligible Consultant or, in case of an ineligible joint venture,
any of its members (ii) because of the change, the consultant no longer substantially meets
the qualification criteria outlined in REOI document, or (iii) if, in the opinion of the Procuring
Entity, a substantial reduction in competition may result.
4. Preferential Procurement Policies: Preferential Procurement policies applicable to
the RfP are mentioned (MSEs, Start-ups, Make in India etc.)
5. RfP Validity: RfP shall remain valid for a period not less than 90 (ninety) days from
the deadline for the RfP submission.
87Chapter 5: Bid Invitation Process
6. Evaluation/ Scoring Criteria: Evaluation shall, inter-alia, consider the Consultant’s (i)
“Specific experience of the Consultant (as a firm) relevant to the Assignment”; ii) “Adequacy
and quality of the proposed methodology, and work plan”; iii) “Key Experts’ qualifications and
competence for the Assignment”. It also specifies, if JV/C are permitted, how credentials of
members of JV/C would be considered in evaluation. Procuring Entity may, ask all shortlisted
Consultants to deliver presentation on their technical proposals. This presentation shall only
cover contents of the technical proposals submitted by the Consultant. Unless otherwise
provided, no marks shall be assigned to the presentation. Opportunities for such presentations
shall be provided in a manner to provide a level playing field to all shortlisted consultants,
including time limits for such presentations.
7. Terms of Reference (ToR): As mentioned earlier ToR describes the background,
purpose/ objectives, description/ scope of work, inputs of Key Experts, deliverables/
outcomes, inputs to be provided by the Procuring Entity; and timelines of the required
‘Service’.
5.3.5 Proposed form of contract
1. The contract includes accepted ToR methodology, general and specific conditions of
contract, etc. wherever possible, the Procuring Entity shall use the Standard Form of Contract.
The general conditions of contract shall include all such conditions which are common in
nature and not project specific. Such conditions include clauses pertaining to sub-contracting,
methods of payment, termination and extension of contracts, arbitration, variation in quantities,
indemnity and insurance, force majeure, conflict of interest, compliance to local laws and taxes
and duties etc. The project specific conditions include clauses relating to the assignment in
hand. These clauses should be carefully developed to protect the interest of the Procuring
Entity.
2. Description of Services: Including a well-defined Description of Services ensures
both parties have a clear understanding of the expectations, deliverables, and quality
standards. It also provides a framework for monitoring performance and handing any potential
issues that may arise during the consultancy contract’s execution. It should include the ToR
and the consultant’s proposal as finalised during the negotiations. It should include the
following:
a) Description of the specific tasks, activities, or deliverables that the consultant will
provide. This should include all the major components of the consultancy work.
b) Phases of Work: If the consultancy service involves multiple phases (e.g., inception,
implementation, evaluation), these should be defined, with milestones where
applicable.
c) Outputs/Deliverables: Specify the tangible or intangible outputs the consultant is
expected to deliver, such as reports, designs, strategies, etc.
d) Objectives and Goals as mentioned in the ToR
e) Methodology as proposed by the consulted and as modified during negotiation
f) Timelines and Deadlines, as agreed.
g) Roles and Responsibilities, as per ToR and Proposal of the consultant.
h) Quality Standards and Acceptance Criteria as per RfP.
i) Resources and Support as per the RfP.
3. Conflict of Interest: The consultant shall not receive any other remuneration from any
source in connection with the same assignment except as provided under the contract.
Consultants assisting a client in privatisation of public assets shall neither purchase nor advise
88Manual for Procurement of Consultancy Services, Second Edition, 2025
purchasers of such assets. Similarly, consultants hired to prepare ToR for an assignment shall
not be hired for the assignment in question and shall not be in a conflict-of-interest situation
as described in the RfP/contract.
4. Professional Liability: The consultant is expected to carry out its/his assignment with
due diligence and in accordance with the prevailing standards of the profession. As the
consultant's liability to the Procuring Entity will be governed by the applicable law, the contract
need not deal with this matter unless the parties wish to limit this liability. If they do so, they
should ensure that: (a) there must be no such limitation in case of the consultant's gross
negligence or wilful misconduct; (b) the consultant's liability to the Procuring Entity may, in no
case, be more than a multiplier (say 3 times) of the total value of the contract to be indicated
in the RfP and special conditions of contract (the multiplier will depend on each specific case);
and (c) any such limitation may deal only with the consultant's liability toward the Procuring
Entity and not with the consultant's liability toward third parties.
5. Staff Substitution of Key Professional: During an assignment where key
professionals are named in the contract, if substitution is necessary (for example, because of
ill health or because a staff member proves to be unsuitable, or the member is no longer
working with the consultant), the consultant shall propose other staff of at equivalent or higher
credentials for approval by the Procuring Entity. The RfP/contract must specifically make
provision for terms and conditions under which the staff can be replaced, about the
remuneration to be paid, and so on. Please refer to para 10.2.5-2 below, to understand the
system of remuneration deduction for substitutions.
6. Applicable Law and Settlement of Disputes: The contract shall include provisions
dealing with the applicable law, which should be the law applicable in India and the forum for
the settlement of disputes – applicable Arbitration Clause and procedures.
7. Training or Transfer of Knowledge: If the assignment includes an important
component of training or transfer of knowledge to the Ministries/ department staff, the ToR
shall indicate the objectives, nature, scope, and goals of the training programme, including
details on trainers and trainees, skills to be transferred, timeframe, and monitoring and
evaluation arrangements. The cost of the training programme shall be explicitly stated in the
consultant's contract and in the budget for the assignment.
5.4 Uploading of Tender Documents: Mandatory e-Publishing
(Rule 159 of GFR 2017)
5.4.1 ePublishing of Tender Documents
1. It is mandatory for all Ministries/Departments of the Central Government, their attached
and subordinate offices, and autonomous/ statutory bodies to publish their tender
enquiries, corrigenda thereof and details of bid awards online on the Central Public
Procurement Portal (CPPP) and also on their website. These instructions apply to all
Tender Enquiries, Requests for Proposals, Requests for Expressions of Interest, Notice
for pre-Qualification/ Registration or any other notice inviting bids or proposals in any form
whether they are advertised, issued to limited number of parties or to a single party. These
instructions would not apply to Purchase of goods/ services without quotations or
Purchase of goods/ services by purchase committee.
2. Individual cases where confidentiality is required, for reasons of national security, would
be exempted from the mandatory e-publishing requirement. The decisions to exempt any
89Chapter 5: Bid Invitation Process
case on the said grounds should be approved by the Secretary of the Ministry/ Department
with the concurrence of the concerned Financial Advisor. In the case of autonomous
bodies and Statutory bodies’ approval of the head of the body with the concurrence of the
head of the finance should be obtained in each such case. Statistical information on the
number of cases in which exemption was granted and the value of the concerned contract
should be intimated on a Quarterly basis to the Ministry of Finance, Department of
Expenditure.
5.4.2 Amendment of Tender Documents (Rule 173 (iii) of GFR 2017)
At any time prior to the date of submission of bids, the procuring entity may, Suo-moto or in
response to a clarification sought by a prospective bidder (directly or in pre-bid conference),
amend tender documents by issuing a corrigendum. Copies of such amendment / modification
should be uploaded on the ePublishing portal and Procuring Entity’s own website. In case of
off-line tenders, the copies of such amendment/ modification are to be simultaneously
despatched, free of cost, by registered/speed post/courier/e-mail, to all the parties who have
already purchased the tender documents and copies of such amendments are also to be
prominently attached in the unsold sets of the tender documents (which are available for sale).
When the amendment/modification changes the requirement significantly and /or when there
is not much time left for the bidders to respond to such amendments, and prepare a revised
tender, the time and date of submission of tenders are also to be suitably extended (not less
than 3 days) as per para 5.4.3 below.
5.4.3 Extension of Deadline of Bid Submission
1. To give sufficient time to bidders to prepare and submit their bids, the Procuring entity
may suo-moto or based on justifiable request of bidder(s) or due to significant modification of
tender documents (as per para 5.4.2 above) extend the time and date of submission of tenders
suitably (not less than three (3) days), along with suitable changes in the corresponding time-
frames for receipt of tender, bid validity period etc and validity period of the corresponding
EMD/bid security. Depending on the situation, such an amendment may also need fresh
publication adopting the same procedure as for publication of the original tender enquiry.
2. Auto-Extension of Bids – in case of lack of Response: The eProcurement portal/
GeM should not provide anybody, including the Procuring Entity, with the bid count before the
tender opening time, even at their request. The eProcurement portal/ GeM may permit
Procuring Entity to input minimum number of bids considered sufficient and pre-specified
number of days for automatic extension of bid opening (ordinarily not less than 7 days) at the
time of tender upload. The system shall declare in the tender details that in case of low
competition (without specifying the number), the tender closing time shall be automatically
extended by specified number of days. If bids received till the bid opening time are less than
the specified minimum bids, the system should automatically extend the tender opening by
specified number of days without seeking any input from or sharing any information with
anyone, including the Procuring Entity. Purchaser and bidders shall only be informed that due
to less competition, the tender closing time has been extended up to (date and time). However,
this automatic extension of bid opening shall be done only once, not repeatedly. If a Procuring
Entity wants to go ahead even with low competition (e.g., due to urgency), they may mention
‘one’ as minimum bid. So that if no bid is received, the tender is automatically extended,
otherwise not. Procuring entity is free to cancel and retender the procurement after auto-
extension. GeM and eProcurement portals shall update their systems accordingly.
90Manual for Procurement of Consultancy Services, Second Edition, 2025
5.5 Obtaining Tender Documents and Submitting Bids
5.5.1 Availability and Cost of Tender Documents (Rule 161 (v) of GFR 2017)
1. Tender documents should preferably be sold or available for download after the date
and time of the start of availability till the deadline for availability as mentioned in tender
document (say up to last date of bid submission) and this should be clearly indicated in the
documents. The organisation should also post the complete tender document on the website
and CPPP and permit prospective bidders to make use of the document downloaded from the
website/ CPPP.
2. Normally no tenders document fee should be charged. In exceptional cases procuring
entity may fix a bare minimum cost of tender documents to defray the expenses/ effort of
preparing documents, drawings etc. The cost of the tender document is to be submitted to the
authority nominated therein by the prospective bidder in the form of a demand draft /banker’s
cheque/ pay order/ online payment gateway. Firms that are eligible for exemption from the
tender document cost such as MSEs, Procuring Entity’s registered units (for relevant items
and monetary limit) have to submit/ upload scanned copy of documents in support of this
exemption.
5.5.2 Participation of Bidders
1. Eligibility Criteria
Tender document may lay down, eligibility criteria for participating in the tender process e.g.,
restrictions on participation by bidders relating to - type of commercial entity, insolvency,
ineligibility/ debarment/ convictions/ conflict of interest, Class of bidders (as per Make in India
Order), bidders from countries having land borders with India etc. Except for the eligibility
criteria participation shall be open to all bidders in an Open/ Global Tender Enquiries. In the
case of the Second Stage (of two Stage Bidding or PQB) or Limited Tenders, participation
shall be open only to such bidders who have been previously shortlisted or specifically invited.
2. Purchase Preference Policies
The Procuring Entity shall stipulate in tender document the available preferences to eligible
Bidders under various Government Policies/ directives (policies relating to Make in India;
MSEs; Start-ups etc.).
3. Conflict of Interest among Bidders/ Agents: Bidders having a conflict of interest
shall not be eligible to participate in the tender process unless the conflict stemming from such
relationship has been resolved in a manner acceptable to the Procuring Entity throughout the
Tender process and execution of the Contract. Please also refer to para 3.3.3 above. The
bidder shall be considered to have a conflict of interest in this tender process and execution
of the resultant contract in the following situations:
a) If its personnel have a close personal, financial, or business relationship52 with any
personnel of the procuring entity who are directly or indirectly related to the
procurement or execution process of the contract, which can affect the decision of
the procuring entity directly or indirectly;
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52
Please refer to para 3.5-5 for clarification
91Chapter 5: Bid Invitation Process
b) The bidder (or his allied firm53 ) provided services for the need assessment/
procurement planning54 of the Tender process in which it is participating;
c) Participation in any capacity by a Bidder (including the participation of a Bidder as a
partner/ JV/ consortium member or sub-contractor in another bid or vice-versa) in more
than one bid shall result in the disqualification of bid in which he is a main/ principal/
lead bidder. However, this does not limit the participation of an entity as a sub-
contractor in more than one bid if he is not bidding independently in his own name or
as a member of a consortium/ JV;
5.5.3 Pre-proposal Meeting (Pre-bid Conference) and Pre-NIT Conference
(Rule 173 (x) of GFR 2017)
1. Pre-Notice Inviting Tender (NIT) Conference: In complex and innovative
procurement cases or where the procuring entity may not have complete knowledge to
formulate tender provisions (e.g., two-Stage Tendering (with EoI) - refer to para 4.4-1-b)
above), a pre-NIT conference (Market Consultation) is a key step allowing procuring entities
to refine specifications and terms by engaging with potential consultants and industry experts.
Such conferences should be publicised so that different potential consultants can attend55.
This process helps align tender requirements with current market capabilities and
technological advancements. By gathering insights on feasibility and trends, the procuring
entity can craft realistic specifications that encourage competitive and cutting-edge solutions.
The findings from these consultations inform the final tender documents, ensuring a
transparent and effective procurement process.
2. Pre-proposal Meeting/ Pre-bid Conference: In all cases of large value or complex
assignments, one or more pre-proposal meetings/ Pre-bid conference may be prescribed in
the EoI/ RfP. During this meeting, the technical/ commercial details, scope of assignment,
responsibilities of either parties or other details should be clearly explained to the prospective
bidders so that there is no ambiguity later at the time of submission of technical/ financial bids.
a) Participation is not mandatory. However, if a bidder chooses not to (or fails to)
participate in the Pre-bid conference or does not submit a written query, it shall be
assumed that they have no issues regarding the techno/ commercial conditions.
b) The date and time for such a meeting should normally be after 7 to 21 (seven to
twenty-one) days of issue of the Tender Document and should be specified therein.
The date and time by which the written queries for the Pre-bid must reach the
authority and the last date for registration for participation in the Pre-bid conference
are also mentioned in the tender Document (3 days before the date of the conference,
if not specified). The pre-bid conference may also be held online at the discretion of
the Procuring Entity.
c) Timelines for response to the pre-bid conference, e.g., Replies to Questions, issue of
minutes of the pre-bid conference, Corrigenda, etc, should be mandatorily mentioned
in the tender document and complied with.
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53
Please see definition in ‘Procurement Glossary” section
54
inter-alia need assessment, preparation of - feasibility/ cost estimates/ Detailed Project Report (DPR), design/
technical specifications, terms of reference (ToR)/ Activity Schedule/ schedule of requirements or the Tender
Document etc.
55
Notified under para 9.2 vide OM No.F.1/1/2021-PPD issued by Department of Expenditure dated 20.10.2021
92Manual for Procurement of Consultancy Services, Second Edition, 2025
d) Delegates participating in the Pre-bid conference must provide a photo identity and
an authorization letter as per the specified format from their Company/ principals;
else, they shall not be allowed to participate.
e) After the Pre-bid conference, Minutes of the Pre-bid conference shall be published
on the Procuring Entity’s portal within seven days from the conference. Where some
significant changes are made in the terms/scope of the EoI/ RfP as a result of the
pre-bid meeting or otherwise considered necessary by the Procuring Entity, a formal
corrigendum may be issued, to all bidders, which shall form part of the Tender
Document. To give reasonable time to the prospective bidders to take such
clarifications into account in preparing their bids, the Procuring Entity may suitably
extend, as necessary, the deadline for the bid submission.
5.5.4 Site Visit
The Consultant, at its own cost, responsibility, and risk, may visit and examine the Site of
required Services and its surroundings and obtain all information that may be necessary for
preparing the Bid and entering into a contract for the Services.
5.5.5 Clarification of Tender Documents
A prospective bidder requiring clarification on the tender documents may ask questions in
writing/ electronically from Office/ Contact Person as mentioned in tender document, provided
the questions are raised before the clarification end date mentioned therein (or if not
mentioned, before 7 days of the deadline for the bid submission). This deadline shall not be
extended in case of any intervening holidays. A response will be sent in writing to the
clarifications sought prior to the date of opening of the tenders. Only material queries and their
responses shall be uploaded on the website without revealing the identity of the bidder making
the query. When the response to clarification changes the requirement significantly and /or
when there is not much time left for the bidders to respond to such responses, the time and
date of submission of tenders may also be suitably extended (not less than 3 days) as per
para 5.4.3 above.
5.5.6 Withdraw/ Amendments / Modifications to Bids by Bidders
The bidder, after submitting its bid is permitted to substitute/ alter/modify it, superseding earlier
bid, so long such revised bid is uploaded/ received duly sealed and marked like original bid,
up to the bid submission deadline. Resubmission of a bid shall require uploading of all
documents, including financial bid afresh. The system shall consider only the last bid
submitted as the valid bid. The bidder may withdraw his bid before the bid submission
deadline, and it shall be marked as withdrawn and shall not get opened during the Bid opening.
Any such action after that deadline is not permitted. Withdrawal/ amendment/ modification/
alteration/ impairment/ derogation of a bid, in any respect, by its bidders between the deadline
for submission of bids and expiration of the period of bid validity, his bid security/ EMD shall
be forfeited besides imposition of any other punitive remedy available to the procuring entity.
In such cases, tender evaluation shall be proceeded with in terms of para 8.2.6-3) below.
5.5.7 Sealing/ Marking of Bids in off-line Tenders
The tender document should indicate the manner of submission/ uploading of bids. In case of
off-line tenders, total number of bid copies (for example, in duplicate or in triplicate, and so on)
required to be submitted. The bidder is to seal the original and each copy of the bid in separate
envelopes, duly marking the same as "original", "duplicate," and so on, and printing the
address of the purchase office and the tender reference number on the envelopes. Further,
the sentence ''NOT TO BE OPENED" before (due date and time of tender opening) is also to
93Chapter 5: Bid Invitation Process
be printed on these envelopes. The inner envelopes are then to be put inside a bigger outer
envelope, which will also be duly sealed marked, and so on, as above. If the outer envelope
is not sealed and marked properly as above, the procuring entity does not assume any
responsibility for its misplacement, premature opening, late opening, and so on.
5.5.8 Uploading/ Submission of Bids
1. Uploading Bids in eProcurement: Different eProcurement portals56 may have
different provisions, but the following is the generic description:
a) The Procuring Entity is neither a party nor a principal in the relationship between
Bidder and the organisation hosting the e-procurement portal (hereinafter called the
Portal). Bidders must acquaint and train themselves with the rules, regulations,
procedures, and implied conditions/ agreements of the Portal. Bidders intending to
participate in the bid, shall be required to register in the Portal.
b) Any query/ clarification/ complaint regarding downloading Tender Documents and
uploading Bids on the e-Procurement portal may be addressed to the Help Desk of
the portal.
c) In case of conflict between provisions of the Portal with the Tender Document,
provisions of the Portal shall prevail. Bidders may study the resources provided by
the Portal for Bidders.
d) Bids must be uploaded till the deadline for submission mentioned in the Tender
Document. If the office happens to be closed on the deadline to submit the bids as
specified above, this deadline shall not be extended. Bidder must comply with the
conditions of the eProcurement portal, including registration, compatible Digital
Signature Certificate (DSC) etc. In the case of downloaded documents, Bidder must
not make any changes to the contents of the documents while uploading, except for
filling in the required information.
e) Only one copy of the bid can be uploaded, and Bidder shall digitally sign all
statements, documents, certificates uploaded by him, owning sole and complete
responsibility for their correctness/ authenticity as per the provisions of the IT Act
2000 as amended from time to time.
f) Regarding the protected Price Schedule (excel format, Cover-2), Bidder shall write
his name in the space provided in the specified location only. Bidder shall type rates
in the figure only in the rate column of respective item(s) without any blank cell or
Zero values in the rate column, without any alteration/ deletion/ modification of other
portions of the excel sheet. If space is inadequate, Bidder may upload additional
documents under "Additional Documents" in the "bid Cover Content."
g) The date and time of the e-Procurement server clock, which is also displayed on the
dashboard of the bidders, shall be taken as the reference time for deciding the closing
time of bid submission. Bidders are advised to ensure they submit their bid within the
deadline and time of bid submission, taking the server clock as a reference, failing
which the portal shall not accept the Bids. No request on the account that the server
clock was not showing the correct time and that a particular bidder could not submit
their bid because of this shall be entertained. Failure or defects on the internet or
heavy traffic at the server shall not be accepted as a reason for a complaint. The
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56
These portals must be compliant with ‘Guidelines for Compliance to Quality Requirements of eProcurement’
(GCQE), July 2021 issued by Systems Standardisation Testing and Quality Certification (STQC) Directorate (an
attached office of the Ministry of Electronics and Information Technology (MeitY), Government of India).
94Manual for Procurement of Consultancy Services, Second Edition, 2025
Procuring Entity shall not be responsible for any failure, malfunction or breakdown of
the electronic system used during the e-procurement Process.
h) All Bids uploaded by Bidder to the portal shall get automatically encrypted. The
encrypted bid can only be decrypted/ opened by the authorised persons on or after
the due date and time. The bidder should ensure the correctness of the bid before
uploading and take a printout of the system generated submission summary to
confirm successful bid upload.
i) Bidder must upload scanned copies of originals (or self-attested copies of originals –
as specified). Bidder should ensure the clarity/ legibility of the scanned documents
uploaded by him. The Procuring Entity reserves its right to call for verification of
originals of all such self-certified documents from the Bidders at any stage of
evaluation, especially from the successful Bidder(s) before the issue of Letter of
Award (LoA).
j) If so specified, originals (or self-attested copies of originals – e.g., exemption/ proof
of EMD (in the form of Bank Guarantee, DD etc.) or, as specified therein) of specified
scanned uploaded documents must be physically submitted sealed in double cover
and acknowledgement be obtained before the bid submission deadline at mentioned
venue. Failure to do so is likely to result in the bid being rejected. If the office is closed
on the deadline for physical submission of originals, it shall stand extended to the
next working day at the same time and venue.
k) No manual Bids shall be made available or accepted for submission in e-Procurement
(except for originals of scanned copies as per sub-para above).
2. Submission of Bids in offline Tender Process: In offline tenders, receipt and
custody of bids shall be done in a transparent manner to maintain the credibility of the process.
The following guidelines should be adhered to for receipt and custody of bids:
a) The technical and financial proposals shall be submitted at the same time. To
safeguard the integrity of the process, the technical and financial proposals shall be
submitted in separate sealed envelopes, kept in an outer sealed envelope.
b) The procuring entity shall maintain tender boxes for receiving the bids at suitable
locations which would facilitate security and easy access to bidders. If required,
Tender boxes should be separate for each day of the week of tender opening and
should be sealed by the Bid Opening Committee (BOC) of the day. The tender box
shall have two locks. Key of one lock will be with the head of the office and the other
key with the official nominated by him;
c) Bids received by courier shall be deposited in the tender box by the Dispatch Section
till the date and time of bid opening. Bids sent by telex, cable or facsimile are to be
ignored and rejected.; and
d) For bulky/oversized bids which cannot be dropped into tender boxes, the officials
authorised to receive such bids shall maintain proper records and provide a signed
receipt with date and time to the bearer of the bid. He will also sign on the cover, duly
indicating the date and time of receipt of the tender(s). Names and designations of at
least two such authorised officers should be mentioned in the tender documents.
3. Bid security: Bid Security or if permitted Bid Securing Declaration (BSD) must
accompany the bid as per instructions in the Tender Document. A self-attested scan of the
original Bid Security/ BSD should be uploaded along with bids. Bids not complying with these
provisions shall be rejected. Please refer para 6.1.1 below.
95Chapter 5: Bid Invitation Process
5.5.9 Bid Validity
A bid shall remain valid for the period mentioned in the Tender Document (90 days if not so
specified). A bid valid for a shorter period shall be rejected as nonresponsive. In case the day
up to which the bids are to remain valid falls on or is subsequently declared a holiday/ closed
day for the Procuring Entity, the bid validity shall automatically be deemed to be extended upto
the next working day. The validity period should not be unreasonably long as keeping the
tender unconditionally valid for acceptance for a longer period entails the risk of getting higher
prices from the bidders. (Please see para 8.2.6 below for extension of Bid Validity Period)
5.6 Opening of Bids
1. Immediately after the deadline for bid submission, procuring entity shall proceed to the
bid opening. If the specified date of Bid Opening falls on is subsequently declared a holiday
or closed day for the Procuring Entity, the Bids shall be opened at the appointed time on the
next working day. In offline tenders, the BOC shall comprise one officer each from the
procuring entity and Associated/ integrated Finance.
2. In e-procurement, all tenders uploaded by bidders are received, safeguarded, and
opened online on the portal as detailed in Appendix 3: Electronic Procurement (eProcurement)
and e-Auction’ of ‘Manual for Procurement of Goods, 2024’.
3. In offline tenders, receipt and custody of bids shall be done in a transparent manner to
maintain the credibility of the process. The following guidelines should be adhered to for
receipt and custody of bids:
a) The authorised representatives of bidders, who intend to attend the tender opening
in OTE/ GTE/ SLTE are to bring with them letters of authority from the corresponding
bidder. The prescribed format for the letter of authority for attending the bid opening
should be given in the tender document. All bid-opening activities should be carried
out demonstrably before such a gathering. The prescribed format for the bid opening
attendance sheet and report are given at Annexure 5;
b) At a prescheduled date and time, the BOC of the day should get the tender box
opened, after ensuring and demonstrating that the seal on the box has not been
tampered with. All bids should be collected from the tender box. Bids for tenders not
opening on that day should be put back into the box and the box resealed.
Sometimes, there would be tenders dropped wrongly into this tender box. Such
wrongly dropped tenders with appropriate endorsement should be put into the
appropriate box or sent to the Tender Committee (TC) concerned if the date of
opening is over. The bids for different tenders opening on the day (including oversized
bids, which were submitted to designated officers) should be sorted, and a count for
each tender should be announced and recorded, particularly noting any
modifying/altering/withdrawal of bids. BOC should ensure and demonstrate that bid
envelopes are duly sealed and untampered. Late bids should be separately counted
but kept aside and not opened. In the case of an advertised tender enquiry or limited
tender enquiry, late bids (that is, bids received after the specified date and time for
receipt of bids) should not be considered (Rule 188 of GFR 2017);
c) The technical bids will be opened on the pre-announced date and the financial
proposals shall remain sealed and shall be opened publicly only for those firms that
have qualified technically.
96Manual for Procurement of Consultancy Services, Second Edition, 2025
d) After opening, every tender shall be numbered serially (say 3/14 – if it is the third bid
out of 14 total), initialled, and dated on the first page by the BOC. Each page of the
price schedule or letter attached to it shall also be similarly initialled, particularly the
prices, delivery period, and so on, which shall also be circled and initialled along with
the date. Any other page containing significant information should also be dealt with
similarly. Blank tenders, if any, should be marked accordingly by the BOC. The
original (and duplicate, if any) copies in a tender set are to be marked accordingly by
the BOC;
e) Erasure/cutting/overwriting/use of whitener/columns left unfilled in tenders, if any,
shall be initialled along with date and time and numbered by the officials opening the
tenders and total number of such noticed alterations (or the absence of any alteration)
should be explicitly marked on the first page of the bid. Wherever quantity/amount is
written only in figures, the BOC should write them in words. All rebates/discounts
should be similarly circled, numbered, and signed. In the absence of any
alteration/overwriting/whitener/ blanks, the remark “no corrections noted” should be
written. Similarly, the absence of discounts should be marked with “no discounts
noted;”
f) The BOC is to announce the salient features of the tenders such as description and
specification, quoted price, terms of delivery, delivery period, discount, if any, whether
EMD furnished or not, and any other distinctive feature of the tender for the
information of the representatives attending the tender opening. No clarifications by
bidders should be entertained or allowed to be recorded during the bid opening. BOC
has no authority to reject any tender at the tender opening stage;
g) Financial instruments should be noted in the bid opening report/register and handed
over to the Finance Section for safe custody and monitoring; and
h) A bid opening report containing the names of the bidders (serial number wise), salient
features of the tenders, as read out during the public opening of tenders, will be
prepared by the tender opening officers, and duly signed by them along with the date
and time. The tenders that have been opened, list of the representatives attending the
tender opening, and bid opening report are to be handed over to the nominated
purchase officer and an acknowledgement obtained for him. The name of the bidder
proposed prices shall be read aloud and recorded when the financial proposals are
opened. No modification to financial proposals is permitted. The Procuring Entity shall
prepare the minutes of the public opening. Format at Annexure 5 may be used for this
purpose. When electronic submission of proposals is used, this information shall be
posted online.
i) Similar procedure shall later be followed during Financial Bid Opening in case of
multiple-envelop bidding.
5.7 Transparency and Protecting Third-Party Rights of Bidders
1. Objectives of transparency in eProcurement are amply served if all data relating to the
Tender and Award of Contract are accessible to public.
2. As far as the bidders who have participated in a tender (participating bidders), for
purpose of transparency, comparative summary of Technical (compliance details) and of
Financials bids (including QCBS calculations, wherever applicable) should also be accessible
to them, but not necessarily to public at large, unless sought and is permissible under the RTI
act.
97Chapter 5: Bid Invitation Process
3. Bidders may have genuine concern about Techno-commercial and operational trade
secrets, if their full technical and financial bids are accessible to their competitors or public at
large. This concern may get aggravated in complicated EPC/ PPP/ Consultancy
procurements. Technical/ financial bids should not be made accessible to public at large, and
a call needs to be taken based on sensitivity of details in the bids to restrict access of even
participating bidders to full technical/ financial bids of their competitors. Decision of procuring
Entity to share or not share the full technical bids with other participating bidders, should be
clearly brought out in the Tender Documents.
4. However, a clause may be added to the tender documents reserving right of the
Procurement Entity and the eProcurement portal to provide access to bidders’ technical/
financial bids to other participating bidders, in addition to comparative summary of Technical
and financial bids of all participating bidders.
5.8 Bidding Invitation Process- Risks and Mitigations
Risk Mitigation
1. Exceptions to an open tender Rigorously follow the conditions under
process are abused, leading to single source which open tendering can be dispensed with.
processes.
2. When short lists are used, the Registration of bidders/contractors: All
process of preparation of short lists may be major procuring Departments must keep a list
non-transparent and all eligible firms may not of registered bidders for use in restricted
be included, and some ineligible firms may tendering. Publicise even restricted bids on
get included. your website. Bidders for LTE/ SLTE may be
transparently selected with the approval of
CA.
3. Pre-qualification criteria: PQB has Lay down criteria when two stage tendering
the potential of getting misused or being is warranted. Also lay down model PQC
applied without considering the restrictive criteria for diverse types of procurements.
nature of competition. PQC should be
relevant to the quality requirements, and
neither be very stringent nor very lax to
restrict/facilitate the entry of bidders. These
criteria should be clear, unambiguous,
exhaustive, and yet specific. Also, there
should be fair competition.
4. Invitation to tender (an open bid) is Publicity and adequate time for bid
not well publicised or gives insufficient time, submission must be ensured. Require a
thereby restricting the number of bidders that higher-level approval for short bid submission
participate. period.
5. Evaluation criteria are not set from Objective, relevant and clearly stated
the beginning or are not objective or not evaluation criteria must be specified in the
clearly stated in the tender documents, tender document.
thereby making them prone to being abused.
98Manual for Procurement of Consultancy Services, Second Edition, 2025
Chapter 6: Forms of Securities, Prices, Payment
Terms and Price Variations
6.1 Forms of Security
6.1.1 Bid Security (Rule 170 of GFR 2017)
1. To safeguard against a bidder withdrawing or altering its/ his bid during the bid validity
period in the case of advertised (OTE and GTE tenders) or special limited tender enquiry Bid
Security (also known as Earnest Money Deposit (EMD)) is to be obtained from the bidders
along with their bids.
2. Normally in procurement of consultancy services, it is not a practice to ask for Bid
Security. However, Procuring Entity has the option of requiring a bid security in time-critical
procurements.
3. The bidders should be asked to furnish bid security along with their bids57.Amount of
bid security should ordinarily range between two (2) to five (5) per cent of the estimated value
of the services to be procured. The amount of bid security, rounded off to the nearest
thousands of Rupees, as determined by the Procuring Entity, is to be indicated in the tender
documents. The procuring Entity may, if considered justified, stipulate an upper ceiling on the
bid security amount, in larger tenders, so as not to restrict competition.
4. Form of Security: The bid security may be obtained in the form of Insurance Surety
Bonds58,account payee demand draft, or banker's cheque or Bank Guarantee (including e-
Bank Guarantee)59 issued/ confirmed60 by any of the Scheduled Banks (as defined in section
2(e) of the RBI Act 1934) or payment online in an acceptable form, safeguarding the
purchaser’s interest in all respects. In case the bid security is more than a threshold (Rupees
five lakh) and in case of foreign bidders in GTE tenders it may be in the form of a bank
guarantee (in equivalent Foreign Exchange amount and must conform to the Uniform Rules
for Demand Guarantees (URDG 758) – an international convention regulating international
securities61) issued/ confirmed by any of the scheduled bank in India in an acceptable form.
The bid security is normally to remain valid for a period of 45(forty-five) days beyond the final
bid validity period.
5. In place of a Bid security, Procuring Entities after seeking approval of the competent
authority may consider asking Bidders to sign a Bid securing declaration (BSD), accepting that
if they withdraw or modify their Bids during the period of validity, or if they are awarded the
contract and they fail to submit a performance security, or to sign the contract, before the
deadline defined in the tender documents, they shall be suspended for the period of time
specified in the BSD from being eligible to submit Bids/Proposals for contracts with the
procuring entity.
_______________________
57Notified vide OM No F.20/2/2014-PPD(Pt.) issued by Department of Expenditure dated 25.07.2017.
58Notified vide OM No. F.1/1/2022-PPD issued by Department of Expenditure dated 02.02.2022.
59 Notified vide OM No. F.1/4/2022-PPD issued by Department of Expenditure dated 05.08.2022.
60 A bank guarantee merely advised by a scheduled bank is not acceptable, in lieu of being confirmed.
61 A set of rules developed by the International Chamber of Commerce first adopted in 1992. The latest version
URDG 758 provides a framework for harmonising international trading practices and establishes agreed-upon rules
for independent guarantees and counter-guarantees among trading partners for securing payment and
performance in worldwide commercial contracts.
99Chapter 6: Forms of Securities, Prices, Payment Terms and Price Variations
6. In appropriate cases, Submission of the bid security may be exempted with the
Competent Authority’s (CA’s) approval, especially in the case of indigenisation/development
tenders, limited tenders, and procurements directly from the manufacturer or authorised
agents, bidders that are currently registered (firms should normally be registered for the
particular trade group (group of services) and monetary values, as decided by the procuring
entity), and will also continue to remain registered during the bid validity period with the
concerned Ministry/ Department/ Procuring Entity. Micro and Small Enterprises (MSEs) as
defined in MSE Procurement Policy issued by Department of Micro, Small and Medium
Enterprises (MSME) and registered Startups as recognized by Department for Promotion of
Industry and Internal Trade (DPIIT) (please refer to para 1.10.4) are exempt from payment of
EMD. In case the bidder falls in these categories, the bidder should furnish a certified copy of
its valid registration details.
7. A bidder’s bid security shall be forfeited if the bidder withdraws or amends its/his tender
or impairs or derogates from the tender in any respect within the period of validity of the tender
or if the successful bidder fails to furnish the required performance security, or to sign the
contract within the specified period.
8. Bid securities of the unsuccessful bidders should be returned to them at the earliest
after expiry of the final bid validity period and latest by the 30th day after the award of the
contract. Bid security should be refunded to the successful bidder on receipt of a performance
security. However, in case of two packet or two stage tendering, Bid securities of unsuccessful
bidders during first stage i.e., technical evaluation etc. should be returned within 30 days of
declaration of result of first stage i.e., technical evaluation etc.62
6.1.2 Performance Security (Rule 171 of GFR 2017)
1. To ensure due performance of the contract, performance security (or Performance
Bank Guarantee (PBG) or Security Deposit (SD)) is to be obtained from the successful bidder
awarded the contract. Performance security should be for an amount of three (3) to five (5)
per cent (3 to 10% for Works) of the contract value, as specified in the tender documents63.
The procuring Entity may stipulate an upper ceiling for the Performance Security amount, in
larger tenders, so as not to restrict competition. For an illustrative example, the ceiling can be
Rs 75 Lakhs for tenders upto Rs 50 Crores and Rs 3 Crore for tenders above Rs 50 Cr but
below Rs 300 Cr. For tenders of higher value than this, the Procuring Entity may decide the
amount of Performance Security (but not less than Rs 3 Cr mentioned above). However,
Procuring Entities are free to decide their own quantum for performance security, or dispense
with it, with the approval of Competent authority and finance concurrence, based on their
perception of performance risks vis-a vis need for competition.
2. Form of Security: Performance security may be furnished in the form of an Insurance
Surety Bond64, account payee demand draft from a commercial bank, bank guarantee
(including e-bank guarantee65) issued/ confirmed66 from any of the scheduled banks in India,
or online payment in an acceptable form, safeguarding the purchaser's interest.
3. In case of a JV, the BG towards performance security shall be provided by all partners
in proportion to their participation in the project. In the case of GTE tenders, the performance
_______________________
62Notified vide OM No. F.1/2/2022-PPD issued by Department of Expenditure dated 01.04.2022.
63
Notified vide OM No. F.1/2/2023-PPD issued by Department of Expenditure dated 01.01.2024.
64
Notified vide OM No. F.1/1/2022-PPD issued by Department of Expenditure dated 02.02.2022.
65
Notified vide OM No. F.1/4/2022-PPD issued by Department of Expenditure dated 05.08.2022.
66
A bank guarantee merely advised by a scheduled bank is not acceptable in lieu of being confirmed.
100Manual for Procurement of Consultancy Services, Second Edition, 2025
security should be in the same currency as the contract and must conform to the Uniform
Rules for Demand Guarantees (URDG 758) – an international convention regulating
international securities67.
4. Securities in the existing contracts in form of bank guarantee may be permitted by
Procuring Entity to be replaced by the contractors to Insurance Surety Bonds or e-Bank
Guarantee. Adequate safeguards such as such requiring prior submission of new forms of
security before releasing the original forms of security shall be ensured. (For further details on
Insurance Surety Bond and e-bank guarantee, please refer to para 6.1.3 and 6.1.4 of Manual
for Procurement of Goods, 2024)
5. Submission of Performance Security may not be insisted upon in lower valued
contracts (say upto Rupees 50 (Fifty) lakh).
6. Procuring Entity may exempt Govt. Ministries, Departments, Attached and Subordinate
Offices, Autonomous bodies (on their specific requests or otherwise) from submission of
Performance Security68.
7. Performance Security is to be furnished by a specified date (generally 14 (fourteen) to
28 (twenty-eight) days after notification of the award, depending on the amount) and it should
remain valid for a period of 60 (sixty, or any other period mentioned in the tender Documents)
days beyond the date of completion of all contractual obligations of the contractor, including
warranty obligations.
8. The performance security will be forfeited and credited to the procuring entity’s account
in the event of a breach of contract by the contractor. It should be refunded to the contractor
without interest, after he duly performs and completes the contract in all respects but not later
than 60 (sixty) days of completion of all such obligations including the warranty under the
contract. Return of Bid/ Performance Securities should be monitored by the senior officers and
delays should be avoided. If feasible, the details of these securities may be listed in the e-
Procurement Portal/ website of the Procuring entity, to make the process transparent and
visible.
9. In the case of service contracts spanning over multiple number of the years, care
needs to be taken to decide on the amount of performance security being sought along with
the duration. It has been observed that procuring entities retain the performance security over
the complete service contract period which may be of 5-7 years or may be more. This practice
puts the service provider in a difficult situation as they have to block a substantial amount of
their working capital as security for the entire duration of the contract. In such cases the
following is suggested:
a) The right quantum of performance security has to strike a balance between protecting
the procuring entity's interest in case of default in performance vs. avoiding increase
in tendered price and /or reduced competition. If the security is low, the procuring
entity may be adversely affected if and when default occurs. If it is high, the extra
financial cost of furnishing such security will be factored in by bidders when quoting
prices & hence the cost may increase.
_______________________
67 A set of rules developed by the International Chamber of Commerce first adopted in 1992. The latest version
URDG 758 provides a framework for harmonising international trading practices and establishes agreed-upon rules
for independent guarantees and counter-guarantees among trading partners for securing payment and
performance in worldwide commercial contracts.
68 There is no bar from taking Performance Security from CPSEs
101Chapter 6: Forms of Securities, Prices, Payment Terms and Price Variations
b) Sufficient flexibility is already available in the GFR to design the performance security
for procurement of services, both value and duration, duly considering the market
conditions and commercial practice for the particular kind of service.
c) Procuring entities may consider to proportionately keep reducing performance
security in proportion to the balance service period, wherever feasible. Wherever, it
is decided to take lower or proportionally reducing PS, tender conditions may be
suitably modified for the future cases.
6.1.3 Verification of Bank Guarantees
1. Bank guarantees submitted by the bidders/ suppliers/ consultants/ service providers
as EMD/ performance securities need to be immediately verified from the issuing bank before
acceptance. There may not be any need to get the Bank Guarantee vetted from legal/ finance
authority if it is in the specified format. Guidelines for verification of BGs submitted by the
bidders/ contractors against EMD/ performance security/advance payments and for various
other purposes are as follows:
a) BG shall be as per the prescribed formats.
b) The BG contains the name, designation and code number of the Bank officer(s)
signing the guarantee(s);
c) The address and other details (including telephone no.) of the controlling officer of
the bank are obtained from the branch of the bank issuing the BG (this should be
included in all BGs);
d) The confirmation from the issuing branch of the bank is obtained in writing through
registered post/speed post/courier/ official email-id of the Bank/ SFMS on the official
portal of the procuring entity. The bank should be advised to confirm the issuance of
the BGs specifically quoting the letter of Procurement Entity on the printed official
letterhead of the bank indicating address and other details (including telephone nos.)
of the bank and the name, designation and code number of the officer(s) confirming
the issuance of the BG;
e) Pending receipt of confirmation as above, confirmation can also be obtained with the
help of responsible officer at the field office, which is close to the issuing branch of
the bank, who should personally obtain the confirmation from issuing branch of the
bank and forward the confirmation report to the concerned procurement entity.
2. Bank guarantees, either received in physical form or electronic form, should be verified
for its genuineness following prescribed method for the same and the Organisations should
do due diligence on genuineness of the Bank Guarantees before acceptance of the same.
3. Corporate Guarantee or Indemnity Bond shall not be accepted for Bid Security (EMD)
or performance Security, or in lieu of any other Bank Guarantee (e.g., for advance payment/
warranty obligations).
4. Please note the ease with which an e-bank guarantee can be verified. (For further
details on e-bank guarantee, please refer to para 6.1.4 of Manual for Procurement of Goods,
2024).
6.1.4 Safe Custody and Monitoring of EMDs, Performance Securities and Other
Instruments
1. A suitable mechanism for safe custody and monitoring of EMDs and performance
securities and other instruments should be evolved and implemented by each Procuring Entity.
The Ministries/ Departments shall also make institutional arrangements for taking all
102Manual for Procurement of Consultancy Services, Second Edition, 2025
necessary actions on time for extension or forfeiture/ encashment or refund of EMDs and
performance securities, as the case may be.
2. Monitoring should also include a monthly review of all bank guarantees and other
instruments expiring in next three months, along with a review of the progress of the
corresponding contracts.
3. Extension of bank guarantees and other instruments, where warranted, should be
sought immediately and implemented within their validity period. Bank Guarantee should
never be handed over to the consultant/ service provider for propose of extension of validity.
Such a system of monitoring of securities and other instruments may be computerised with
automatic alerts about lapse of validity etc.
6.2 Payment Clause
1. The elements of price included in the quotation of a bidder depend on the nature of the
consultancy services to be performed, location of the consultant, location of the user, terms of
delivery, extant rules and regulations about taxes, duties, and so on, of the Consultant's
country and the buyer's country.
2. It is, therefore, necessary that, to enable the bidders to frame their quotations properly
in a meaningful manner, the tender documents should clearly specify the desired terms of
delivery and also the duties and responsibilities to be performed by the consultant in addition
to supply of services.
3. Elements of Price: Where the price has several components, bidders should be asked
to furnish a cost break-up indicating the applicable prices and taxes for each of such
components along with the overall price. The payment schedule and terms will be linked to
this cost break-up; and
4. Currency: The tender documents are to specify the currency (currencies) in which the
tenders are to be priced. As a general rule, domestic bidders are to quote and accept their
payment in Indian currency; Indian agents of foreign consultants/ service providers are to
receive their agency commission in Indian currency; costs of imported services , which are
directly imported against the contract, may be quoted in foreign currency (currencies) and paid
accordingly in that currency; and the portion of the services , which are to be undertaken in
India, are to be quoted and paid in Indian currency.
6.3 Terms of Payment
1. The usual payment term is 100 (hundred) per cent on receipt and acceptance of
deliverables by the procuring entity and on production of all required documents by the
Consultant.
2. Payment provisions, including amounts to be paid, schedule of payments, and
payment procedures, shall be indicated in RfP and also in the contract. Payments may be
made at regular intervals (as under time-based contracts) or for agreed outputs (as under
lump sum contracts).
3. Modes of Payment:
a) Procuring Entities should make payments through the Electronic Clearance System
(ECS), e.g., Real-Time Gross Settlement systems (RTGS), National Electronic Funds
Transfer (NEFT) or Electronic Payment Gateways. As per RBI guidelines, the ECS
103Chapter 6: Forms of Securities, Prices, Payment Terms and Price Variations
mandate in RBI’s format may be obtained at the time of consultant registration and in
the tender document. The Format is available with all Banks.
b) However, if ECS payments are not feasible, payments may be made in exceptional
circumstances by cheque/demand draft drawn on a Government treasury or branch
of RBI or any Scheduled Bank authorised by RBI for transacting Government
business.
c) Trade Receivables Discounting System (TReDS) is an electronic platform for
facilitating the financing / discounting of trade receivables of Micro, Small and Medium
Enterprises (MSMEs) through multiple financiers. These receivables can be due from
corporates and other buyers, including Government Departments and Public Sector
Undertakings (PSUs). Payments can also be made through this platform to MSE
suppliers/ consultants.
6.4 Advance Payment
6.4.1 Conditions for Advance Payments
1. Conditions: As per Rule 172 (1) of General Financial Rules (GFR) 2017, ordinarily,
payments for services rendered should be released only after the services have been
rendered. However, in exceptional situations where substantial funds are to be sunk by the
contractor before payment becomes due, considering the lower cost of funds for the
Government entity as compared to the higher cost of funds for the bidder, advance payment
with safeguards (BG) may be considered.
2. Quantum: The quantum of such advance payments should not exceed the quantum
of funds to be sunk by the contractor before payment becomes due in the contract. The
quantum of advance payments should not generally exceed the following limits:
a) Thirty per cent of the contract value to private firms;
b) Forty per cent of the contract value to a state or central Government agency or PSE;
c) In the case of the maintenance contract, the amount should not exceed the amount
payable for six months under the contract.
d) In exceptional cases, the competent authority may relax the ceilings mentioned above
with prior concurrence of the Associated/Integrated Finance.
3. Interest-free: Since the provision of advance payment leverages the difference in
interest rate as argued in sub-para 1) above and considering the additional cost of Bank
Guarantee for advances for the bidder, interest-free advance payments may be considered
with the approval of competent authority and finance concurrence. Where an interest-free
advance is permitted, a clause in the tender enquiry and the contract may be stipulated that if
the contract is terminated due to default of the contractor, the advance payment would be
deemed as an interest-bearing advance at the interest rate (e.g., the interest rate of the
General Provident Fund – GPF) prevailing on the date of release of advance payment, plus
2% to be compounded quarterly. In appropriate cases, the competent authority may stipulate
advance payments with suitable interest rates (e.g., the interest rate of the General Provident
Fund – GPF) to be recovered along with the instalments of recovery of advance payment.
4. Instalments: The advance payment should not be made in less than two instalments,
as per the expected infusion of funds required in the contract, except in exceptional
circumstances for the reasons to be recorded. This will keep a check on contractor
misutilisation of full advance when the contract is delayed considerably.
104Manual for Procurement of Consultancy Services, Second Edition, 2025
5. Recovery: Advance payments, especially interest-free advances, should be recovered
(from either running bills or from the Performance/ Advance payment Bank Guarantees) in
instalments linked to milestones or specified periods, whichever is earlier. This would ensure
that even if the contractor is not executing the assignment or executing it at a slow pace,
recovery of advance could commence, and the scope for misuse of such advance could be
reduced.
6. Bank Guarantee: While making any advance payment as above, adequate
safeguards in the form of a bank guarantee (or e-Bank Guarantee of at least 110% of advance)
should be obtained from the firm. In case the advances are to be paid/ recovered in
instalments, an equal number of part BGs (with proportionate amount and validity) may be
taken instead of lumpsum BG, with each BG released after a related recovery is made. An
Indemnity Bond is not to be considered in place of a Bank Guarantee. However, no Bank
Guarantee should be insisted in case advance is being given to Central Ministry/ Department,
there attached/ subordinate offices or the Autonomous Bodies attached with them. The BG
may also not be taken, wherever a contract has been placed on a CPSE on nomination basis.
7. Milestone/ stage payments or part payments against the deliverables should not be
considered as advance payments for the purpose of this para, as these payments are made
after the sinking of funds by the contractor for achieving these milestones/ stage. These should
be provisioned in the tender document/ contract, including Bank Guarantee to be taken, if any,
in case of milestone/ stage payments. (Rule 172(2) GFR 2017)
8. Provision of advance payment should be anticipated at the procurement planning
stage. The quantum of Advance payment and related conditions should be declared in the
Tender Documents, with the approval of competent authority and concurrence of associated/
integrated finance. If not so declared, the condition of advance payment for a particular bid
should not be agreed to.
6.4.2 Documents for Advance Payments
Documents, needed from the consultant for release of payment, are to be clearly specified in
the contract. The paying authority should also verify the documents received from the
consultant with corresponding stipulations made in the contract before releasing the payment.
6.5 Firm Price, and Variable Price
1. Fixed price: Short-term contracts where the delivery period does not extend beyond
12 (twelve) months should normally be concluded with a firm and price fixed by inviting tenders
accordingly.
2. Variable Price:
a) In tenders with deliveries longer than 12 (twelve) months, a Price Variation Clause
(PVC) may be provided to protect the purchaser’s interests, particularly for high-value
(more than Rupees three crore) procurements. However, even for shorter deliveries
or lower value, the PVC may be stipulated for items with inputs (raw material, labour,
etc.) prone to short-term price volatility - especially for critical or high-value items/
services – otherwise, there is a possibility of the contract failing or the purchaser
having to pay a higher price if market prices fall.
b) Where it is decided to conclude the contract with a variable price, an appropriate
clause incorporating, inter-alia, a suitable price variation formula (to take care of the
changes in the input cost of labour, material, and fuel/ power components) should be
provided in the tender documents, to calculate the price variation between the base
105Chapter 6: Forms of Securities, Prices, Payment Terms and Price Variations
level and delivery date. It is best to proactively provide our own PVC formula and
base dates of indices, in the tender document to discourage different bidders quoting
different formulae and different base dates, which may lead to problems on bringing
their prices on a common comparable footing.
c) The variations are to be calculated periodically (usually quarterly) by using indices
published by Governments/ chambers of commerce/London Metal Exchange / any
other neutral and fair source of indices. Suitable weights are to be assigned to the
applicable elements, that is, fixed overheads and various applicable inputs e.g.,
material/ fuel/ labour (for which reliable indices are available), in the price variation
formula. If the delivery of services needs more than one raw material, the input cost
of material may be further sub-divided for various categories of material, for which
cost indices are published.
d) Essential elements of PVC:
i) Base Date & Time Lag: The price agreed upon should specify the base date,
that is, the month and year to which the contract/ bid price is linked, to enable
variations to be calculated with reference to the price indices prevailing in that
month and year. This base date should be a few weeks/ months (the period is
called time-lag) prior to the last date of submission of bids when the last
published price indices would be available. Time lag applies both for the base
date and delivery date and must be specified in the Tender Documents;
ii) Ignorable Variation: The price variation formula must also stipulate a minimum
percentage of variation of the contract price, only above which the price variation
will be admissible (for example, where the resultant increase is lower than, say,
two per cent of the contract price, no price adjustment will be made in favour of
the contractor);
iii) Inordinate Variation: In rare cases, prices may go up to such an extent that it
may render the contract unviable for either party, thus frustrating the contract.
Therefore, the price variation clause should provide for a ceiling (a percentage
per annum or an overall ceiling or both, say 20%/ 25% of the original price) on
price variations, beyond which the price variation would be capped at this level.
As soon as it comes to light that price variations are likely to go beyond this
ceiling, and if the Contractor is not agreeable to the price variation being capped
at that level, he may notify the Purchaser under ‘Frustration of Contract’
provisions in the Tender Document/ Clause, for short-closing the contract. (Refer
para 10.8.5). However, if the short closing is not in the interest of the procuring
entity, the competent authority, with the concurrence of associated/ integrated
finance, may allow the continuation of the contract by relaxing/ removing the cap
on the price variation.
iv) Where advance or stage payments are made, there should be a further
stipulation that no price variations will be admissible on such portions of the price
after the dates of such payment;
v) Where deliveries are accepted beyond the scheduled delivery date subject to
levy of liquidated damages as provided in the contract. The LD (if a percentage
of the price) will be recoverable on the price as varied by the operation of the
PVC;
vi) No upward price variation will be admissible beyond the originally scheduled
delivery date for defaults on the part of the contractor (e.g., when an extension
106Manual for Procurement of Consultancy Services, Second Edition, 2025
of the delivery date is with denial clause). However, the purchaser would avail a
downward price variation as per the denial clause in the letter of extension of the
delivery period;
vii) Price variation may be allowed beyond the originally scheduled delivery date in
case of refixation of delivery date (which is treated like original delivery period –
refer para 10.4.2-2 and 10.4.4) through an amendment to the contract in cases
of delays attributable to force majeure or defaults by the procuring entity;
viii) The clause should also contain the mode and terms of payment of the price
variation admissible.
ix) The buyer should ensure a provision in the contract for the benefit of any
reduction in the price in terms of the PVC being passe
x) An illustrative PVC clause is available in Annexure 16.
6.6 Statutory Taxes/ Duties/ Levies
6.6.1 Goods and Services Tax (GST)
1. GST Registration Status and GSTIN (15-digit registration number):
a) All the bidders/ Bidders should ensure that they are GST compliant and that their
quoted tax structure/ rates are as per the GST Act/ Rules.
b) Bidder should be registered under GST and furnish their GSTIN number and GST
Registration Certificate in their offer unless they are specifically exempted from
registration under a specific notification/ circular/ section/ rule issued by statutory
authorities.
c) If the bidder has multiple business verticals in a state and has separate registrations
for each vertical, the GSTIN of each vertical concerned with the supply and service
involved, as per the scope of the Schedule of Requirements and Price Schedule shall
be quoted.
d) If the supply/ service is from multiple states, the bidder should mention GST
registration numbers for each state separately.
e) Composition scheme: If the Bidder has opted for a composition levy under Section
10 of CGST, he should declare the fact while bidding along with GSTIN and GST
registration certificate.
f) Exemption from Registration: If a bidder is not liable to take GST registration, i.e.,
having turnover below threshold, he shall submit undertaking/ indemnification against
tax liability. The bidder claiming exemption in this respect shall submit a valid
certificate from a practising Chartered Accountant (CA)/ Cost Accountant with the
Unique Document Identification Number (UDIN) to the effect that the bidder fulfils all
conditions prescribed in notification exempting him from registration. Such bidder/
dealer shall not charge any GST and/ or GST Cess in the bill/ invoice. In such case,
applicable GST shall be deposited under Reverse Charge Mechanism (RCM) or
otherwise as per GST Act by the Procuring Entity directly to concerned authorities.
Bidder should note that his offer would be loaded with the payable GST under the
RCM. Further, the bidder should notify and submit to the Procuring Entity within 15
days of becoming liable for registration under GST.
g) Bidders must also consider the benefits of input tax credit under the GST legislations,
as amended from time to time, on Input goods/Capital goods / Input Services while
quoting the prices.
107Chapter 6: Forms of Securities, Prices, Payment Terms and Price Variations
h) In their bids, the bidders shall indicate the details of their GST Jurisdictional
Assessing Officers (Designation, address, email ID). In case of a contract award, the
Purchaser shall immediately forward a copy of the LOA/Purchase Order to the
Jurisdictional Assessing Officer mentioned in the bidder’s bid.
i) The Procuring Entity's state-wise GSTINs shall be indicated in Tender Documents.
2. HSN Code and GST Rate:
a) If provided in the Tender Document, the HSN (Harmonized System of Nomenclature)
code for the goods/ services is only indicative. The bidder shall be responsible for
ensuring that they quote the correct HSN Code and corresponding GST rate for the
goods/ services they offer.
b) As per the GST Act, the bid and contract must show the GST Tax Rates (and GST
Cess if applicable) and GST Amount explicitly and separately from the bid/ contract
price (exclusive of GST). So, if a Bidder asks for GST (and GST Cess if applicable)
to be paid extra, the rate and nature of such applicable taxes should be shown
separately. Bidders should quote 'GST' if payable extra on the total basic rate of each
cost element and quote GST in ‘%' inclusive of cess.
c) If the price is stated to include GST, the bidder must declare the current GST rate
(and GST Cess, as applicable) included in the price.
d) If GST, other taxes, or duties are not specified, or the column is left blank in the price
schedule, it shall be presumed that no such tax/ levy is applicable or payable by the
Procuring Entity. No Statutory Variation in GST shall be paid in such a case.
3. Refund from Consultant: Sometimes, the consultant, after claiming and receiving
reimbursements for GST, from the purchaser, applies to the concerned authorities for refunds,
on genuine grounds, of certain portions of such duties and taxes paid by it and receives the
allowable refunds. Such refunds contain the purchaser's share also (out of the payments
already made by the purchaser to that consultant). The tender enquiry document and the
contract are to contain suitable provisions for obtaining such refunds from the consultant.
a) Alternatively, a certificate may be taken from the consultant that the consultant has
submitted the bill considering future refunds/ credits/ adjustments.
4. Statutory Duties/ Taxes/ Levies that are to be borne by the bidder:
Following Statutory Duties/ Taxes/ Levies are to be entirely borne by the bidder, including any
statutory variations thereon and the Procuring Entity would not be responsible for these:
a) Personal and Corporate Tax: Bidder shall bear all Personal/ Corporate taxes
imposed on owners/ company/ Joint Venture/Subcontractors or their employees.
b) Taxes on Sub-Contractors, Vendors: Bidder shall bear all taxes, including GST, as
may be imposed on Contractor or supply-chain (sub-Contractors, Vendors, etc.).
c) Duties/ Taxes on Raw Materials: The Procuring Entity is not liable for any claim
from the contractor on account of fresh imposition and/ or increase (including
statutory increase) of GST, customs duty, or other duties on raw materials and/ or
components used directly in the delivery of the contracted services taking place
during the pendency of the contract unless such liability is expressly agreed to in
terms of the contract.
6.6.2 Deduction of Income Tax, etc., from Payments
If applicable under relevant tax laws and rules, the Procuring Entity shall deduct from all
payments and deposit required taxes to respective authorities as per para 10.5.3-2) below.
108Manual for Procurement of Consultancy Services, Second Edition, 2025
6.6.3 Statutory Variation Clause:
Unless otherwise stated in the contract, statutory variation in applicable GST rate, only during
the period from the date of submission of the tender to the date of acceptance of the tender
(that is, placement of the contract) and during the original/ re-fixed delivery period of the
contract shall be borne by the Procuring Entity. The benefit of any reduction in the GST rate
must be passed on to the Procuring Entity during the original and extended delivery period.
However, GST rate amendments shall be considered for the quoted HSN code only, against
documentary evidence, provided such an increase in GST rates is after the tender submission
date. However, the Statutory Variation shall not be applicable for any misquotation of the HSN
number or incorrect GST rate by the bidder.
(Note: Re-fixed delivery period means the fresh delivery period, which is arrived
at by recasting the original contractual delivery period after taking care of the
lost period, for which the consultant was not responsible. Refer to para 10.4.2-
2)
6.7 Recovery of Public Money from Consultant's Bill
Sometimes, requests are received from a different Ministry/ Department for withholding some
payment of a consultant out of the payment or Securities due to it against a contract. Such
requests are to be examined by the Procuring Entity (which has received the request) on the
merits of the case for further action. It will, however, be the responsibility of the
Ministry/Department asking for withholding of payment to defend the Government against any
legal procedure arising out of such withholding as also for payment of any interest thereof.
6.8 Payment against Time Barred Claims
Ordinarily, all claims against the Government are time barred after a period of three years
calculated from the date when the payment falls due unless the payment claim has been under
correspondence. However, the limitation is saved if there is an admission of liability to pay,
and fresh period of limitation starts from the time such admission is made. The drill to be
followed while dealing with time barred claims will be decided by the Procuring Entity
concerned in consultation with the paying authority. The paying authority is to ensure that no
payment against such time barred claim is made till a decision has been taken in this regard
by the CA.
109Manual for Procurement of Consultancy Services, Second Edition, 2025
Chapter 7: Shortlisting of Consultants, Expression of
Interest (EoI)
7.1 Basic Considerations
1. Due to inherent complexities of evaluation of physically non-measurable scope and
quality standards of consultancy proposals, it is too time consuming and expensive for the
Procuring Entity to invite (as well for the Consultancy firms to prepare) and evaluate proposals
from all consultants who want to compete. Therefore. in Procurement of Consultancy, is done
in a two-stage process.
2. In the first stage of procurement, the qualified firms with requisite experience, technical
and financial capabilities, who can be trusted to deliver the required services at the desired
level of quality, are shortlisted transparently. This shortlisting is done through Expression of
Interest (EoI) process. Care should be taken to avoid stipulation of shortlisting qualification
criteria disproportionate to the requirement of the services that may lead to restricted shortlist
and lack of competition in the second stage. Adequate time should be allowed for getting
responses from interested consultants. The Procuring Entity shall make available copies of
the EoI document to the interested consultants in on its website and e-Procurement portal
(GeM/ CPPP).
3. In the second stage Request for Proposals (RfP), proposals containing Technical and
Financial Bids is invited from such shortlisted bidders. Selection of winning bidder is based on
the quality of the proposal and, where appropriate, on the cost of services to be provided.
7.2 Modes of EoI
1. Open Tender Enquiry (OTE): (Rule 183 (ii) of GFR 2017, please refer to para 4.2 of
the ‘Manual for Procurement of Goods, 2024’ for details) For procurement above Rs 50
(Rupees Fifty) Lakhs shortlisting is done in an openly advertised competitive (OTE mode)
shortlisting process called Expression of Interest (EoI), giving equal opportunity to all
interested bidders to be considered for shortlisting. Under EoI the "Request for Expression of
Interest" (REoI) is advertised on Central Public Procurement Portal (CPPP) at
www.eprocure.gov.in and on Government e-Marketplace (GeM). An organisation having its
own website should also publish all its advertised tender enquiries on the website. The
advertisements for invitation of tenders should give the complete web address from where the
bidding documents can be downloaded. A complete ToR should be ready before requesting
EoI. Attention of known reputed consultants may also be separately drawn wherever possible.
The advertisement must include, among other things, the last date of submission of EoI, how
to get/ download copy of the EoI document including ToR, contact information of the Procuring
Entity with the name of contact person, and so on.
2. Global Tender Enquiry (GTE): In case it is felt that likely consultants may not be
available in India, the EoI process may be done on Global Tender Enquiry (GTE) process, by
sending REoI notice to foreign embassies in India and Indian embassies in relevant countries.
Please see further details of GTE and also restriction on GTE for tenders below Rs. 200 Crore,
in para 4.3 of ‘Manual for Procurement of Goods, 2024’.
3. Limited Tender Enquiry (LTE): (Rule 183 (i) of GFR 2017, please refer to para 4.4 of
the Manual for Procurement of Goods, 2024 for details) In procurements of consultancy
111Chapter 7: Shortlisting of Consultants, Expression of Interest (EoI)
services below Rs 50 (Rupees Fifty) Lakhs, shortlisting is done without a formal published
Expression of Interest (EoI), akin to a Limited Tender Enquiry (LTE) process. To start with, the
preparation of a long list of potential consultants may be done on the basis of formal or informal
enquiries from other Ministries or Departments or Organisations involved in similar activities,
Chambers of Commerce & Industry, Association of consultancy firms etc. The Procuring Entity
should scrutinise the preliminary long list of likely contractors as identified above and shortlist
the prima facie eligible and capable contractors from the long list. The number of consultants
in this moderated long-list should not be less than three. In case sufficient consultants cannot
be located, then the responses may be called from lesser number of consultants, but not less
than three in any case, after taking CA's approval. To smoothen this shortlisting of consultants
for projects below Rs 50 (Rupees Fifty) Lakhs, Procuring entities who do frequent procurement
of consultancy services, may consider preparation of a Panel of qualified consultants (please
refer to para 3.7 above), after evaluation of their credentials, on the lines of registration of
vendors in procurement of goods. If the complexity of the project so justifies, a formal EoI may
be advertised as in above, even for procurements below Rs 50 (Rupees Fifty) Lakhs, with the
approval of CA.
4. Special Limited Tender (SLTE): LTE mode for EoI, even for values higher than Rs.
50 lakh (Rupees Fifty Lakh) (Rule 162 of GFR 2017, please refer to para 4.5 of the Manual for
Procurement of Goods, 2024 for details), where normally OTE should have been done, is
permissible in certain exceptional circumstances as follows. Powers to sanction procurement
on LTE basis in such exceptional cases may be laid down in SoPP based on a certificate of
urgency signed by the indentor. This mode has the merit of being quicker, but VfM obtained
may be less than in case of OTE; hence it should be restricted to following situations.:
d) The competent authority in the Ministry / Department certifies that there is an existing
or prospective urgency for operational or technical requirements and any additional
expenditure involved by not procuring through advertised tender enquiry is justified
in view of urgency. The Ministry/Department should also put on record the nature of
the urgency and reasons why the procurement could not be anticipated earlier.
e) The sources of supply are definitely known and possibility of fresh source(s) beyond
those being tapped is remote.
f) There are sufficient reasons, to be recorded in writing by the competent authority,
indicating that it will not be in public interest to procure the services through advertised
tender enquiry.
g) Government policy designates procurement from specific agencies.
7.3 Evaluation of REoI
7.3.1 General Norms of Evaluation
For role of the evaluation committee, general norms of evaluation, preliminary examination of
bids, evaluation of qualifications, please refer to the paras 8.1, 8.2, 8.3 and 8.4 of chapter 8,
which shall apply mutatis mutandis. For sake of brevity these are not repeated here.
7.3.2 Evaluation of Responsiveness and Eligibility
1. Only substantively responsive EOIs shall be evaluated for shortlisting. A substantively
responsive EOI is complete and conforms to the REOI document’s essential terms and
conditions.
2. The procuring entity shall determine, to its satisfaction, whether the Consultants are
eligible as per laid down eligibility criteria to participate in the REOI process. The eligibility
112Manual for Procurement of Consultancy Services, Second Edition, 2025
evaluation shall be on a “pass” or “fail” basis. A Consultant must achieve a “pass” on all the
criteria to proceed to the next step. Any Consultant not achieving a ‘pass' in any of the eligibility
criteria shall be rejected as nonresponsive.
7.3.3 Evaluation of Qualification
1. Procuring entity shall determine whether the Consultants are qualified and capable in
all respects to be shortlisted to provide the ‘Services’. The Procuring Entity shall evaluate the
consultants for shortlisting, inter-alia, based on their past experience of handling general and
similar consultancy assignments, and financial capability of the firm.
2. The determination shall not consider the qualifications of other firms, such as the
consultant's subsidiaries, parent entities, affiliates, or any other entity different from the
consultant. Assignments completed by the Consultant’s individual experts working privately or
through other consulting firms cannot be claimed as the relevant experience of the Consultant
or that of the Consultant’s partners or sub-consultants.
3. The Procuring Entity reserves the right to waive minor deviations in the qualification
criteria if they do not materially affect the capability of a Consultant to perform the contract.
4. The qualification and Experience of Key Experts are not included in the shortlisting
criteria but shall be evaluated at the RFP stage. Since the bidders who meet the REoI
qualification, can well manage to attract right Key experts during RfP.
5. In case a particular certification/ licence is required to perform the assignment, that
may also be included in eligibility or qualification criteria.
6. Each criterion may be sub-divided into sub-criteria, if called for. Table 2 below gives
an indicative criterion. The criteria and their weightage may be changed as per the need of
Procuring Entity.
Table 2. Suggested Qualification criteria and their weightages
Criteria/ Sub-criteria Suggested Sub-criteria Criteria
Values
Criteria 1 General and Similar Experience: Bidders providing Consultancy 70%
services for at least the specified period and have completed the specified
volume of general and similar consultancy assignments during the specified
period.
Similar assignments Define based on value, general and specific
sector of work, region, Key activities/
methodologies/ technologies etc.
Consultants must have at least α years' α = 7 20%
experience in Consultancy Services
During the last α years, Consultancy α = 7 50%
Assignments completed or substantially γ = 80%
completed (at least γ payments received)
β = 7
should be at least β
Out of the Consultancy Assignments δ = 2 30%
mentioned above, δ should be similar
assignments
113Chapter 7: Shortlisting of Consultants, Expression of Interest (EoI)
Criteria/ Sub-criteria Suggested Sub-criteria Criteria
Values
Criteria 2 - Financial Capability: Overall financial strength of the consultant in 30%
terms of turnover, profitability, and cash flow (liquid assets) situation
Turnover: Minimum average annual θ = 200% of the 70%
turnover of at least Rs. θ Crores, at least κ value of
of which should be from Consultancy assignment
Service Contracts, (total payments κ = 50%
received for contracts in progress or
α = 7
completed) within the last α years
Financial Viability - Net Worth: The Net ξ = 30% 30%
Worth of Bidder firm should not be negative
on ‘The Relevant Date’ and should not have
eroded by more than ξ in the last 3 years.
Relaxation for Start-ups: Qualification λ = [20% (twenty
criteria can be relaxed upto λ % for startups percent)]
subject to meeting the quality and technical
specifications during the RFP. (Please refer
to paras 1.10.1-4-b), 5.2.2-6-d) and 1.10.4-
2-b))
Note: During RFP Process Consultant shall be asked to furnish documentary evidence to
demonstrate his compliance to Criteria 1 and Criteria 2.
Relevant Date when the specified period ends for different criteria shall be:
1) For all annual reports, periods mentioned are ending with the financial year of the
company [say 2023-24].
2) For other statements, latest statement available on the last date of bid submission.
7. Qualification Criteria shall be based entirely upon the capability and resources required
to perform the particular contract satisfactorily, considering bidders’ experience and past
performance, capabilities with respect to personnel, equipment and manufacturing facilities,
financial standing and relevant compliance with environmental protection regulations/
Environment Management System. There should be no qualification criteria that would be
advantageous to foreign consultants at the cost of domestically provided consultancy.
8. Qualification of demerged entities69 (by virtue of a corporate restructuring
exercise etc.): Tender documents must clearly mention if (and under what conditions) the
demerged entity will be permitted to use credentials of original/parent entity (for initial five
years from the incorporation of the demerged entities) to satisfy the qualification criteria or not
(Refer para 5.2.2-6-d).
9. It is also noted that while shortlisting/ selecting consultants, some procuring entities
are keeping the minimum qualifying financial turnover at the level of 5-10 times of the
estimated cost of the consultancy work. This, prima facie, appears high. Higher qualification
criteria increase the likelihood of adequate experience/ capacity but reduce the competition; if
_______________________
69
As per DoE’s OM No. No. F .8/78/2023-PPD dated 12.10.2023, in suitable cases procuring entity may consider
the credentials based on the merit and circumstances of the cases like type of procurement, nature of demerger,
number of eligible bidders available etc.
114Manual for Procurement of Consultancy Services, Second Edition, 2025
set unduly high they may increase the cost without any improvement in quality. It is suggested
that the criteria should be fixed on a reasonable basis while drafting tender documents and
such higher minimum qualifying turnover should be kept only, if adequately justified70. In
higher value procurements, the minimum annual turnover should not be blindly a multiplier of
the assignment value, but there may be an upper cap on demanded turnover, so as not to
restrict competition only to the big four or five Consultancy Firms.
10. In EoI, simplified evaluation criteria should be used, instead of marking schemes. A
fail-pass, minimum benchmark in each criteria/ sub-criteria can be specified e.g., must have
past experience of at least two similar projects; firm must have a turnover of at least Rs 10
(Rupees Ten) Crores and so on. Any firm which passes these benchmarks is declared as
qualified.
11. However, in complex situation, marks/ scores may be assigned to the response of
each consultant based on weightages assigned to each of the criteria in the EoI. For example,
in case of number of assignments in last 7 years, out of maximum 35 marks for the sub-criteria,
scoring can be
a) 3 marks per assignment upto 7 assignments (benchmark); and
b) 3.5 marks for additional assignments, subject to maximum of 35.
12. This exercise of scoring is not merely for disqualification of firms below a threshold,
but to establish the relative strengths and weaknesses of the applicants, in order to arrive at
a robust short list of qualified consultants who have the required experience and qualifications
to deliver the required services at the desired level of quality. Please refer to para 8.4.3 also.
13. The Procuring Entity shall short list all the consultants who secure the minimum
required marks [normally 75% (seventy five percent)]. The minimum qualifying requirement
shall be specified in the EoI document.
7.3.4 The EoI Evaluation Report
1. The short list of firms is required for the selection of consultancy services in a
competitive process with a minimum of three (Rule 184 of GFR 2017) and generally not more
than eight (to avoid inordinate delays in evaluation of subsequent RfP). If there are a larger
number of consultants meeting the evaluation criteria, the shortlist shall be restricted to a
specified number of Consultants (if not specified, eight (8) consultants) based on higher
Average Turnover (or any other criteria, if so, stipulated therein).
2. The short list may comprise only national consultants (firms registered or incorporated
in the country and having registered office in India), for small assignments and indicated in the
EoI. This situation is applicable where qualified national firms are available at a competitive
cost or if the nature of the assignment is such that a foreign consultant’s inclusion is not
justified (for example, a training or outreach to be carried out in local language) or if foreign
consultants have not expressed any interest.
3. If the same firm is considered for concurrent assignments (for example, a construction
supervision consultant for different stretches/ packages of rehabilitation/ reconstruction of a
road contract), the Procuring Entity shall assess the firm’s overall capacity to perform multiple
contracts before including it in more than one short list. However, this needs to be pre-declared
in the EoI documents.
_______________________
70
Notified vide OM No.F.18/13/2020-PPD issued by Department of Expenditure dated 13.07.2020
115Chapter 7: Shortlisting of Consultants, Expression of Interest (EoI)
4. The evaluation committee may submit its EoI Evaluation report to CA for approval.
Tender Committee format at Annexure 6 can be mutatis-mutandis used for this purpose.
7.3.5 Declaration of Shortlist and issue of RfP:
1. EOIs of Consultants that succeed in the above evaluation shall be shortlisted.
Provisionally shortlisted consultants will be informed of the condition(s) that must be met
before submitting their Proposal in the RFP process.
2. Only shortlisted (including provisionally shortlisted) Consultants shall be invited to
participate in the following RFP process. Such shortlisting shall remain valid for a period
specified in the REoI (six months from the date of declaration, if not so specified). It’s important
that the RfP is issued as early as possible after shortlisting, since the qualification data on
which shortlisting based, may tend to become outdated. In case such delay is more than 6
months, it would be better to reinvite EoI.
3. After the EoI Evaluation report is accepted by the competent authority, the name and
address of the shortlisted consultant (s) shall be published in the portal and notice board/
bulletin/website of the Procuring Entity. All Consultants shall be advised about shortlisting of
their EOIs or otherwise without disclosing the comparative position of their EOIs with that of
others. Shortlisted Consultants must not advertise or publish the same in any form without the
prior written consent of the Procuring Entity.
4. Shortlisting a consultant is an administrative process and does not confer any legal or
contractual rights on the shortlisted bidder. Since original documents/ certificates are not being
called for and examined at this stage, all shortlisted shall be conditional upon final verification
of such documents/ certificates during the RFP Process.
7.4 Shortlisting – Risks and Mitigation
Risks Mitigation
1. Conflict of interest situations: It is These situations need to be dealt with
possible that conflict of interest situations are not by signing declarations in specified
reported or declared by the participating formats both at the EoI bid stage as
consultants (or sometimes by members of the also in the technical proposal (and by
evaluation committee). CEC members before undertaking
the evaluation of proposals).
2. Qualifications leasing: Local Bidders with This issue needs to be dealt with from
insufficient qualifications may show association the EoI stage by very clearly
with well qualified (foreign or local) consultants, just identifying the qualified applicant and
to use their qualification documents to get the putting on record/ contract the
contract. These well-qualified consultants lease guaranteed contribution from the
their qualification – but do not or only minimally partner with qualification.
contribute experience or key personnel at the
execution stage.
116Manual for Procurement of Consultancy Services, Second Edition, 2025
Chapter 8: RfP Evaluation and Award of Contract
8.1 Bid Evaluation Process
8.1.1 Importance of Evaluation of Bids
The evaluation of tenders is one of the most significant areas of purchase management and
the process must be transparent. All tenders are to be evaluated strictly based on the terms
and conditions incorporated in the tender document and those stipulated by the bidders in
their tenders. The Contracting Authority may include in the evaluation criteria in the Tender
Document, quality, price, technical merit, aesthetic and functional characteristics,
environmental characteristics, running costs, cost- effectiveness, after-sales service and
technical assistance, delivery date and delivery period or period of completion etc. No criteria
shall be used for evaluation of tenders that cannot be verified. No hearsay information or
hitherto undeclared condition should be brought in while evaluating the tenders. Care should
be taken that no tender enquiry condition (especially the significant/essential ones) should be
overlooked/ relaxed while evaluating the tenders. The aim should be to ensure that no bidder
gets undue advantage at the cost of other bidders and/or at the cost of Procuring Entity. The
process of tender evaluation process is described in the subsequent paras in this chapter.
8.1.2 Evaluation in Different Tendering Systems
1. In case of single stage single envelop tendering, the evaluation of qualification of
bidders, technical, commercial, and financial aspect is done simultaneously. The techno-
commercially successful bid that meets the financial evaluation criteria laid down in the tender
documents is declared as successful.
2. In single stage two envelops, initially only the techno-commercial bids would be
opened and evaluated for bids which successfully meet the qualification criteria and techno-
commercial aspects. Financial bids of such successful bidders only would be opened for
selecting the L1 bidder among these and in case of manual tenders, financial bids of
unsuccessful bidders would be returned unopened to them. In two stage bids, the PQB/ EoI
stage would have already been evaluated as detailed in Chapter 4 and this second stage is
for evaluation of responses to the Second Stage two envelops from the shortlisted qualified
bidders. Evaluation of techno-commercial and financial aspects are, however, discussed
separately below. It is of utmost importance that the authenticity, integrity, and sanctity of
unopened Financial Bids must be ensured before their opening. All the financial bids may
preferably be put in a large envelop, which may be dated, sealed, and signed (including by
some of the bidders present), to show that none of the bids were accessed during the custody.
3. In procurement of Consultancy Services, bids would have already been evaluated as
detailed in Chapter 7 and this RfP stage is for evaluation of responses of two envelops from
the shortlisted qualified bidders, following procedure described in sub-para 2) above.
8.1.3 Preparation and Vetting of Comparative Statement
Except in cases upto Rs 50 Lakh (Rupees Fifty Lakh) the Procuring Entity should prepare a
comparative statement of quotations (Technical and Financial) received in the order in which
tenders were opened. In case of Techno-Commercial bid comparative statement will have
information about deciding responsiveness and eligibility of bids and evaluation of Technical
suitability of offers. In case of Financial bid, it would have information about rates quoted
(including taxes or otherwise), discount, if any, and any other information having implications
on ranking of bids etc. The comparative statement so prepared should be signed by the
117Chapter 8: RfP Evaluation and Award of Contract
concerned officers. It may also be vetted by the associated/ integrated Finance for veracity of
information, however in case the comparative statement is prepared by the eProcurement
portal, vetting by associated/ integrated Finance is not required.
8.1.4 The Stages of Evaluation
The evaluation of the proposals shall be carried out in two stages: at the first stage evaluation
of responsiveness and technical proposals is taken up. Evaluators of technical proposals shall
not have access to the financial proposals until the technical evaluation is concluded as the
envelope containing the financial proposal is not opened till the technical evaluation is
complete. The financial proposal of only such bidders will be opened which obtain minimum
qualifying marks/standards prescribed for the technical proposal. The evaluation shall be
carried out in full conformity with the provisions of the RfP.
8.1.5 Contacting Procuring Entity during the evaluation:
From the time of bid submission to awarding the contract, no Bidder shall contact the Procuring
Entity on any matter relating to the submitted bid. If a Bidder needs to contact the Procuring
Entity for any reason relating to this tender and/ or its bid, it should do so only in writing or
electronically. Any effort by a Bidder to influence the Procuring Entity during the processing of
bids, evaluation, bid comparison or award decisions shall be construed as a violation of the
Code of Integrity, and bid shall be liable to be rejected as nonresponsive in addition to other
punitive actions for violation of Code of Integrity as per the Tender Document.
8.2 Composition and Role of Consultancy Evaluation Committee
(CEC)
8.2.1 Composition of CEC:
1. For all cases having financial implications of less than Rs. 50 (Rupees Fifty) lakhs the
evaluation of the Bids may be entrusted solely and directly by individual competent authority,
without involvement of a Consultancy evaluation committee or any evaluation report. He would
himself carry out all the steps in evaluation described in this chapter, instead of the CEC and
directly records reasons and decision on the file itself. He may ask for a Technical Suitability
report from user departments, if so needed.
2. For all cases having financial implications of more than Rs. 50 (Rupees Fifty) lakhs
(including SLTE or Nomination Basis), a Consultancy Evaluation Committee (CEC),
comprising of normally three members including Financial Adviser or his representative and a
representative of the user, shall be constituted as per SoPP, in order to carry out the consultant
selection procedure. The CEC should not be very large as it may slow down the evaluation
process. However, suitable domain/technical experts may be included in the committee to
render assistance in evaluation of the bids.
3. As per Rule 173 (xxii) of GFR 2017 no member of the tender committee (or the
accepting authority) should be reporting directly to any other member of such committee in
case estimated value of the procurement exceeds Rs. 50 lakhs. Though the GFR stipulates
this provision only when the estimated value of procurement exceeds Rs 50 lakh, it is desirable
that the same provision should be followed in the constitution of all purchase committees
irrespective of the value of procurement.
4. The representative of the Procuring Entity shall work as a convenor of the CEC. He
shall distribute the RfP to the CEC members and request them to familiarize themselves with
the characteristics and requirements of the assignment, the selection procedures, and the
118Manual for Procurement of Consultancy Services, Second Edition, 2025
evaluation criteria and sub-criteria. The convener of the CEC should also call meeting of the
CEC members to review any questions they may have on the evaluation principles,
procedures, and objectives etc.
5. CMC may be constituted with the approval of one level higher than the competent
authority. It is advantageous for organisations doing procurements regularly to have pre-
nominated (by designation) CMC and lay down their powers, jurisdiction, composition, and
corresponding Competent Authority for various categories of procurement and different
threshold values of procurements. Procuring Entity should lay down a Schedule of
Procurement Powers (SoPP) detailing such thresholds. It can also lay down the powers,
jurisdiction, and composition of various levels of Tender Committee and corresponding
Competent Authority for various categories of procurement and different threshold values of
procurements. A suggested format for SoPP is in Annexure 2; however, the exact values of
thresholds may have to be decided by the Procuring Entity in conformity with DFPR (Annexure
1).
8.2.2 Role of Consultancy Evaluation Committee
1. Member secretary of the CEC (or competent authority, in direct acceptance cases)
shall receive the bids opened along with other documents from the tender opening officials
and are responsible for safe-custody of the documents and for processing involved at all steps
in finalising the Procurement.
2. The CEC shall be responsible for all aspects and stages of the consultant selection,
that is, evaluation of EoI, shortlisting of consultants, deciding TORs, issuance of RfP,
evaluation of technical and financial proposals, negotiations, and final selection of the
consultant. There is no need to constitute any other committee for technical evaluation,
preliminary evaluation, etc.
3. CEC duties are to be discharged personally by the nominated officers. They may take
help of their subordinate officers by way of reports/ evaluations, but they would still be
answerable for such decisions. CEC members cannot co-opt or nominate others to attend
deliberations on their behalf. CEC deliberations are best held across the table and not through
circulation of notes.
4. After the proposals have been opened, the evaluation process can begin. Before
starting the evaluation, the CEC members should ensure that they
a) have no conflict of interest;
b) understand the rating and scoring system;
c) have been provided with evaluation worksheets; and
d) Agree on how to evaluate the proposals.
5. Competent Authority (authority competent to approve the procurement of that value as
per the SoPP)’s written approval must be taken at various stages of procurement, before
proceeding ahead e.g.:
a) Administrative/ financial sanctions/ Issue of tender
b) Approval of Techno commercial evaluation and Opening of price bids in case of two
packet system
c) Price Negotiations if permitted under specified circumstances.
d) Approval of Financial Evaluation and Award of contract to the selected bidder(s)
e) Cancellation of Procurement and Re-tendering
119Chapter 8: RfP Evaluation and Award of Contract
f) In some special cases during Contract execution e.g. - exercise of the option clause
or any variation beyond the laid down %age; forfeiture/ release of performance
securities; premature termination/ foreclosure of Contract etc.
6. Wherever such competent authority is a Minister of the Central Government (or Board
of Director in a CPSE), obtaining approvals at so many stages, may delay the process and
un-necessarily overburden the onerous tasks of such authorities. Therefore, in such cases
their approval may only be taken at the stage of “Approval of Financial Evaluation and Award
of contract”. At other stages approval may be taken from the officer to whom such powers are
delegated by the Minister (or Board of Director, in case of CPSE).
8.2.3 Handling Dissent among Tender Committee
1. All members of the CEC should resolve their differences through personal discussions
instead of making to and fro references in writing. In cases where it is not possible to come to
a consensus and differences persist amongst CEC members, the reasons for dissent of a
member should be recorded in a balanced manner along with the majority’s views on the
dissent note. The final recommendations should be that of the majority view. However, such
situations should be rare. The Competent Authority (CA) can overrule such dissent notes after
recording reasons for doing so clearly. His decision would be final.
2. In cases where the CA does not agree with the majority or unanimous
recommendations of the CEC, he should record his views and, if possible, firstly send it back
to CEC to reconsider along the lines of the tender accepting authority’s views. However, if the
CEC, after considering the views of the CA, sticks to its own earlier recommendations, the CA
can finally decide as deemed fit, duly recording detailed reasons. He will be responsible for
such decisions. However, such situations should be rare.
8.2.4 Independence, Impartiality, Confidentiality and ‘No Conflict of Interest’ at
all Stages of Evaluation of Bids
1. Members of the CEC should not have any conflict of interest and should not directly
engage in any communication with short-listed firms from the date of their appointment to the
date on which the contract is awarded.
2. Information relating to evaluation of tenders and the Tender Committee’s (TC’s)
deliberations should be confidential and not be shared with persons not officially connected
with the process, until the award of contract is notified to the successful firm, except that after
technical evaluation, the overall technical score shall be informed to all consultants for each
criterion or sub-criterion, if any, as required in the Tender document. Under no circumstances,
Tender file or confidential information contained therein shall be provided for scrutiny or for
decision to any person/ office who are not involved in decision making.
3. All technical, commercial and finance officials who have contributed to the techno-
commercial or financial evaluation of bids, even though they may not be part of the CEC should
deal with the procurement in an independent, impartial manner and should have no conflict of
interest with any of the bidder involved in the procurement. They should also maintain
confidentiality of the information processed during the evaluation process and not allow it to
reach any unauthorised person. They should sign a declaration at the end of their
reports/notings stating that, “I declare that I have no conflict of interest with any of the bidder
in this tender.” CEC members may also make such a declaration at the end of their reports.
4. During the processing of the tender, all references/grievances/ complaints/ directives/
request for information from any sources including higher level officials/ authorities within the
Ministry or from outside may be forwarded to the CEC/Convener of CEC for its examination
120Manual for Procurement of Consultancy Services, Second Edition, 2025
on merits and action as considered necessary, maintaining independence, impartiality,
confidentiality and ‘No Conflict of Interest.’ An interim reply may be provided that the Tender
is still under consideration and that final response would be given after the declaration of the
award of contract.
8.2.5 Timely Processing of Tenders:
1. Delays in finalising procurement deprive the public of the intended benefits and results
in lost revenues and cost over-run. To enable timely decision making, complete Time schedule
of finalising the Tender process from the date of issuing the tender to date of issuing the
contract, should be published in the Tender Documents. Every official in the chain of the
procurement operation is accountable for acting in a specified time so that the tender is
finalised on time. Any deviation from the schedule may be monitored and explained, by way
of system of Management Reporting (Appendix 4 and 5 of ‘Manual for Procurement of Goods,
2024’). As a check, the proposed schedule of tender process may be printed on the inside
cover of the Procurement File, where actual date of completion of various stages may be
recorded. The suggestive time schedule in Table 3 is a guideline for finalising contracts against
various modes of procurements.
Table 3. Indicative time schedule
Mode of Procurement Indigenous Imported
1 Open tender/ (e-tendering) 45 days 60 days
Procurement through registered vendors/
2 30 days 45 days
(Special) limited tenders
3 Proprietary basis/nomination basis 21days 30 days
2. This time schedule is only indicative, and the schedule shall be subject to change
based on the nature of requirements, sourcing, sample evaluation, site visit/pre-bid meeting
with prospective bidders and Government, guidelines, and so on.
8.2.6 Extension of Bid Validity Period
1. The entire process of scrutiny and evaluation of tenders, preparation of ranking
statement and notification of award must be done expeditiously and within the original bid
validity period (Rule 174 (iii) of GFR 2017).
2. If, however, due to some exceptional and unforeseen reasons, the purchase
organisation is unable to decide on the placement of the contract within the original validity
period, it may request, preferably before expiry of the original validity period, all the responsive
bidders to extend validity of their bids up to a suitable period. They may also be requested to
extend the validity of the Bid Security for the corresponding additional period. But the bidders,
who agree to extend the validity, are to do so without changing any terms, conditions, and so
on, of their original tenders. Reasons for seeking extension of bid validity should be recorded
by the procuring officers at the time of taking such decisions. A bidder may not agree to such
a request, and this will not entail forfeiture of its Bid Security.
3. In case such a refusal by bidder(s) to extend validity (hereinafter called not-extended
bids) or withdrawal of offer within validity as per para 5.5.6 (hereinafter referred as withdrawn
bids), happens:
121Chapter 8: RfP Evaluation and Award of Contract
a) before completion of the Techno-commercial evaluation, then the Techno-commercial
evaluation (including the not-extended and withdrawn bids) shall be completed. If a
not-extended or withdrawn bid qualifies in techno-commercial evaluation, financial
bid(s) of such bidders shall also be opened, and action shall be taken as per sub-para
below.
b) after the techno-commercial evaluation but before the completion of the financial bid
evaluation, then the financial bid evaluation (including not-extended and withdrawn
bids) shall be completed.
i) If a not-extended or withdrawn bid happens to be the L1 bidder (lowest
acceptable bidder, who is techno-commercially qualified, and would have been
awarded a contract, but for his refusal to extend validity or withdrawal of bid
within validity), the tender must be re-tendered.
ii) Since this may take some time, Procuring Entity may cover their immediate
short-term needs through an appropriate mode of procurement.
iii) However, such L1 price of the not-extended or withdrawn bids shall not be
taken as precedence for determining price estimates or reasonableness.
iv) In certain cases, there may be multiple L1 bidders, for example, in Project
Management Consultancy hiring on the basis of fixed service charge. In such
cases, where a withdrawn bid also happens to be L1, re-tendering may not be
necessary. The procuring entity may continue with tender finalization,
proceeding with the remaining L1 bids.
c) In case of QCBS system of evaluation, the proposal obtaining the highest total
combined score in evaluation of quality and cost is identified which is ranked as H-1
(please refer to para 8.5.3 for the QCBS evaluation methodology). If a not-extended
or withdrawn bid happens to be the H-1 bidder, the tender must be re-tendered.
8.2.7 Consideration of Lack of Competition in OTE/ GTE and LTE [Rule 173 (xx),
and (xxi) of GFR 2017]
1. The number of bids received, which can indicate adequate competition, depends on
the parameters of procurement (value, specification, mode of procurement, tendering system,
etc.) and the market situation. This has to be judged by the CEC. However, less than three
independent bids (without suspicion of the cartel) may indicate a lack of competition. CEC
must record a paragraph in its report about the adequacy or otherwise of competition in the
tender.
2. Sometimes, against advertised/ limited tender cases, the procuring entity may not
receive enough bids and/ or after analysing the bids, ends up with only one responsive bid –
a situation referred to as ‘Single Offer.’ As per Rule 173(xxi) of GFR, 2017, such situation of
‘Single Offer’ is to be treated as Single Tender. It has become a practice among some
procuring entities to routinely assume that open tenders which result in single bids are not
acceptable, and to go for re-tender as a ‘safe’ course of action. This is not correct. Re-
tendering has costs: firstly, the actual costs of retendering; secondly, the delay in execution of
the work with consequent delay in the attainment of the purpose for which the procurement is
being done; and thirdly, the possibility that the re-bid may result in a higher bid71. Even when
_______________________
71
As stated under para 11.8 of OM No.F.1/1/2021-PPD issued by Department of Expenditure dated 20.10.2021.
122Manual for Procurement of Consultancy Services, Second Edition, 2025
only one Bid is submitted, the contract can be placed provided following conditions are
satisfied:
a) The procurement was satisfactorily advertised, and sufficient time was given for
submission of bids.
b) The qualification criteria were not unduly restrictive; and
c) Prices are reasonable in comparison to market values.
3. However, as far as delegation/schedule of procurement powers (SoPP, refer Annexure
2) is concerned, competent authority would be as in Single tender mode. In case of price not
being reasonable, negotiations (being L1) or retender may be considered as justifiable.
a) Unsolicited offers against LTEs should be ignored; however, Ministries/Departments
should evolve a system by which interested firms can register and bid in next round
of tendering.
8.2.8 Recommendations/ Report
1. The CEC must make formal recommendations (Annexure 6) for the award of the
contract to the bidder whose bid has been determined to be substantially responsive and the
lowest evaluated bid, provided further that the bidder is determined to be qualified to perform
the contract satisfactorily and his credentials have been verified. It is a good practice that CEC
should spell out salient terms and conditions of the offer(s) recommended for acceptance. It
should also be ensured by the CEC that any deviation/variation quoted by the consultant in
his bid are not left undiscussed and ruled upon in the CEC; otherwise, there may be delay in
acceptance of the contract by the consultant. These recommendations are submitted for
approval to the tender accepting authority. Since a nominee of Financial Adviser of the
Department is usually a member of the Tender Committee, there is no need for the CA to
consult the FA of the Department before accepting the CEC recommendations. In any
purchase decision, the responsibility of the CA is not discharged merely by selecting the
cheapest offer or accepting CEC recommendations, but ensuring whether:
a) Offers have been invited in accordance with this manual and after following fair and
reasonable procedures in prevailing circumstances;
b) He is satisfied that the selected offer will adequately meet the requirement for which
it is being procured;
c) The price of the offer is reasonable and consistent with the quality required; and
d) The accepted offer is the most appropriate taking all relevant factors into account in
keeping with the standards of financial propriety.
2. After the acceptance of these recommendations by the tender accepting authority, the
Letter (Notification) of Award (LoA) can be issued.
8.3 Preliminary and Techno-commercial Evaluation
(Rule 189 of GFR 2017)
8.3.1 Preliminary Examination of Bids - Evaluation of Responsiveness of Bids
1. A substantively responsive bid is complete and conforms to the Tender Document's
essential terms, conditions, and requirements, without substantive deviation, reservation, or
omission. Only substantively responsive bids shall be considered for further evaluation. Other
bids shall be treated as unresponsive and ignored. All bids received shall first be scrutinised
to identify unresponsive bids, if any. Some important points based on which a bid may be
declared as unresponsive and be ignored during the initial scrutiny are:
123Chapter 8: RfP Evaluation and Award of Contract
a) The bid is not in the prescribed format or is incomplete (i.e., when the required bid
formats have not been submitted) or is unsigned (or not signed as per the stipulations
in the tender document);
b) The required EMD has not been provided or exemption from EMD is claimed without
acceptable proof of exemption;
c) The bidder is not eligible to participate in the bid as per laid down eligibility criteria
(example: the tender enquiry condition says that the bidder must be a registered MSE
unit, but the bidder is a, say, a large-scale unit);
d) The bid departs from the essential requirements specified in the tender document (for
example, the bidder has not agreed to give the required performance security); or
e) Against a schedule in the list of requirements in the tender enquiry, the bidder has
not quoted for the entire requirement as specified in that schedule (example: in a
schedule, it has been stipulated that the bidder will supply the equipment, install, and
commission it and also train the purchaser's operators for operating the equipment.
The bidder has, however, quoted only for supply of the equipment).
f) Bidder has quoted conditional bids or more than one bid or alternative bids unless
permitted explicitly in the Tender Document.
g) The bid validity is shorter than the required period. However, in case of STE
procurement, shorter bid validity may be accepted.
h) Non-submission or submission of illegible scanned copies of stipulated documents/
declarations.
i) The bid has unresolved substantive deviations (please refer to para 8.3.4 below).
8.3.2 Non-conformities between Figures and Words
Sometimes, non-conformities/errors are also observed in responsive tenders between the
quoted prices in figures and in words. This situation normally does not arise in case of e-
Procurement. This should be taken care of in the manner indicated below:
a) If, in the price structure quoted for the required services, there is discrepancy between
the unit price and total price (which is obtained by multiplying the unit price by the
quantity), the unit price shall prevail and the total price corrected accordingly;
b) If there is an error in a total corresponding to the addition or subtraction of sub-totals,
the sub-totals shall prevail, and the total shall be corrected; and
c) If there is a discrepancy between words and figures, the amount in words shall
prevail.
d) Such a discrepancy in an offer should be conveyed to the bidder asking him to
respond by a target date and if the bidder does not agree to Procuring Entity’s
observation, the tender is liable to be rejected.
8.3.3 Discrepancies between Original and Additional/ Scanned Copies of a
Tender:
Normally, as far as feasible, no submission of original documents in physical format (other
than Cost of Tender Documents, if any, (refer Para 5.5.1 Availability and Cost of Tender
Documents), Bid Security and statutory certificates if any) should be asked for in e-
Procurement. In e-Procurement there could be discrepancies between the uploaded scanned
copies and the Originals submitted by the bidder. In offline tenders, discrepancies may be
observed in responsive tenders between the original copy and other copies of the same tender
set. If discrepancies exist between the uploaded scanned or other copies and the originals
submitted by the bidder, the original copy's text, etc., shall prevail. Here also, this issue is to
be taken up with the bidder in the same manner as above and subsequent actions taken
124Manual for Procurement of Consultancy Services, Second Edition, 2025
accordingly. Any substantive discrepancy shall be construed as a violation of the Code of
Integrity, and the bid shall be liable to be rejected as nonresponsive in addition to other punitive
actions under the Tender Document for violation of the Code of Conduct.
8.3.4 Deviations/ Reservations / Omissions - Substantive or Minor
1. During the evaluation of Bids, the following definitions apply:
a) “Deviation” is a departure from the requirements specified in the Tender Document;
b) “Reservation” is the setting of limiting conditions or withholding from complete
acceptance of the requirements specified in the Tender Document; and
c) “Omission” is the failure to submit part, or all the information or documentation
required in the Tender Document.
2. Substantive Deviations: A deviation/ reservation/ omission from the requirements of
the Tender Document shall be considered as a substantive deviation as per the following
norm, and the rest shall be considered as Minor deviation:
a) which affects in any substantive way the scope, quality, or performance of the
product;
b) which limits in any substantive way, inconsistent with the Tender Document, the
Procuring Entity's rights, or the Bidder's obligations under the contract; or
c) Whose rectification would unfairly affect the competitive position of other Bidders
presenting substantively responsive Bids.
3. The decision of the Procuring Entity shall be final in this regard. Bids with substantive
deviations shall be rejected as nonresponsive.
4. Variations and deviations and other offered benefits (techno-commercial or financial)
above the scope/ quantum of the services specified in the Tender Document shall not
influence evaluation Bids. If the bid is otherwise successful, such benefits shall be availed by
the Procuring Entity, and these would become part of the contract.
5. During the preliminary examination, some minor infirmity and/or irregularity and/or non-
conformity may also be found in some bids. Such minor issues could be a missing pages/
attachment or illegibility in a submitted document; non-submission of requisite number of
copies of a document.
6. Considering Minor Deviations: There have been also cases where the bidder
submitted the amendment Bank Guarantee but omitted to submit the main portion of the
document. The court ruled that this is a minor irregularity. The Procuring Entity reserves the
right to accept bids with such minor issues provided they do not constitute any substantive
deviation and do not have fiscal impact and, also, do not prejudice or affect the ranking order
of the bidders. Wherever necessary, the Procuring Entity shall convey its observation, on such
‘minor’ issues to Bidder as per para 8.3.5 below. If Bidder does not reply by the specified date
or gives an evasive reply without clarifying the point at issue in clear terms, that bid shall be
liable to be rejected as nonresponsive.
8.3.5 Clarification of Bids/Shortfall Documents
1. During evaluation and comparison of bids, the purchaser may, at his discretion, ask
the bidder for clarifications on the bid, in a consolidated manner, ordinarily not more than once.
The request for clarification shall be given in writing by registered/ speed post/ courier/ email/
eProcurement portal (CPPP/ GeM), asking the bidder to respond by a specified date,
mentioning therein that, if the bidder does not comply or respond by the date, his tender will
be liable to be rejected. Depending on the outcome, such tenders are to be ignored or
125Chapter 8: RfP Evaluation and Award of Contract
considered further. No change in prices or substance of the bid, which may grant any undue
advantage to such bidder, shall be sought, offered, or permitted. No post-bid clarification at
the initiative of the bidder shall be entertained.
2. The Procuring Entity reserves its right to, but without any obligation to do so, to seek
any shortfall information/ documents only in case of historical documents which pre-existed at
the time of the Bid Opening, and which have not undergone change since then. Provision may
be made by eProcurement portals to allow shortfall documents to be asked for (specifying a
target date for submission, as in sub-para above) and taken from any bidders after the
technical bid opening. (Example: if the Permanent Account Number, registration with GST has
been asked to be submitted and the bidder has not provided them, these documents may be
asked for with a target date as above). As far as the submission of documents is concerned
regarding qualification criteria, after submission of the tender, only related shortfall documents
should be asked for and considered. For example, if the bidder has submitted a supply order
without its completion/performance certificate, the certificate can be asked for and considered.
However, no new supply order should be asked for to qualify the bidder.
3. Ministries/ Departments/ CPSEs with a significant volume of procurement may develop
a data-base of QR data of different bidders to minimize the time taken to ascertain QR
compliance. Bidders may also be given viewing rights for its own data. In such case, over and
above the documents submitted by the bidder in its bid, the above data-base may also be
considered irrespective of the fact whether or not such data/details have been declared by the
bidder in its bid.
8.3.6 Evaluation of Eligibility:
Procuring Entity shall determine, to its satisfaction, whether the Bidders are eligible as per the
eligibility criteria in the Tender Document to participate in the Tender Process. Tenders that
do not meet the required eligibility criteria prescribed shall be rejected as unresponsive.
8.4 Evaluation of the Quality – Technical Proposals
1. Only substantively responsive bids shall be evaluated for further evaluation.
2. Please refer to the paras 8.4.3, 8.4.4 and 8.4.5 below for Rating/ Grading Schemes,
Individual/ Joint Review, and mitigation of subjectivity in evaluation of quality by the CEC.
8.4.1 Responsiveness to ToR
CEC shall evaluate each proposal on the basis of its responsiveness to the ToR. Proposals
not responding to the ToR fully and properly will be summarily rejected as being non-
responsive, before taking up the appraisal of the technical proposal for evaluation of quality.
A technical proposal pre-disclosing any material pricing information shall also be rejected.
8.4.2 Criteria and Sub-criteria
1. CEC shall evaluate quality of the technical proposal by awarding marks so as to make
the total maximum technical score of 100 (one hundred) for the criteria and sub-criteria for
Quality/ Technical Proposals - (a) the consultant's relevant experience for the assignment; (b)
the quality of the methodology proposed; (c) the qualifications of the key staff proposed; and
(d) capability for transfer of knowledge (if relevant). Each proposal should be judged on its
own merits and assigned an absolute - not comparative -grade against predefined criteria and
sub-criteria. A comparative evaluation would single out the best proposal on a relative scale,
but still could leave the Procuring Entity with a poor proposal.
126Manual for Procurement of Consultancy Services, Second Edition, 2025
2. The criteria and weightage to each criterion or sub-criterion would depend on the
requirements of each case and may be fixed objectively. A model scheme of
maximum/minimum marks in terms of percentage is, however, proposed in Table 4.
Table 4. A model scheme of maximum/minimum marks in terms of percentage
Rated Criteria Range of Percentage for Score
1.Consultantcy firm’s Experience relevant to 5-10%
assignment
2. Proposed approach Methodology, work plan, and 20-50%
understanding of requirements
3. Qualification and adequacy of experience of Key 30-60%
Staff
4.Transfer of Knowledge, if relevant* 0-10%
Overall 100 %
Note: * If this criterion is not required, the marks can be adjusted against some other criteria.
The weight given to the firm’s experience can be relatively modest since this criterion has
already been considered when short listing the consultant. More weight shall be given to the
methodology in the case of more complex assignments (for example, multidisciplinary
feasibility or management studies). Evaluation of only the key personnel is recommended.
Since key personnel ultimately determine the quality of performance, more weight shall be
assigned to this criterion if the proposed assignment is complex. The CEC shall review the
qualifications and experience of proposed key personnel in their curricula vitae, which must
be accurate, complete, and signed by an authorized official of the consultant and the individual
proposed. The experience criteria mentioned in point 1 in the table above holds true for
Consultancy Firm and not for an individual consultant.
3. The CEC shall normally divide the above criteria mentioned in Table 4 into sub-criteria.
However, the number of sub criteria should be kept to the minimum that is considered
essential. For example, methodology Criteria can be sub-divided into sub-criteria as:
a) understanding of ToR (30% weightage);
b) acceptability and detailing of methodology and work plan (50% weight);
c) innovation, if it is important (20% weightage);
4. The criteria for suitability of the key professionals for the assignment can also be
divided into:
a) Educational qualifications (20% weightage),
b) Professional experience in the required area of assignment (80% weight).
Similar to in LCS (para 4.2.1) and EoI (para 7.3.3-10), a simplified evaluation criteria laying
down minimum qualifying fail-pass benchmarks for each criteria/ sub criteria (instead of
marking schemes) may also be used in appropriate cases. All offers that pass the qualifying
benchmarks are declared as technically qualified and their financial bids are opened.
8.4.3 Rating/ Grading Schemes to Mitigate Subjectivity
1. Technical proposals for consultancy services are an intellectual product. Their
evaluation must be based on individual professional judgement of competent evaluators and
should not be reduced to a purely arithmetical exercise. The difficulty is to ensure that this
judgement is not exercised in an unreasonable or arbitrary manner. It is important that
127Chapter 8: RfP Evaluation and Award of Contract
subjectivity, implicit to any individual professional judgement, be complemented by
transparency, consistency, and fairness. The individual evaluator entrusted with the
evaluation, when required, should be able to explain to the satisfaction of a qualified reviewer
from the higher authority or to enforcement agencies the reason for his/her scoring and
recommendation. One way to achieve this objective is by adopting a rating/ grading scheme
for evaluation of the criteria and sub-criteria (if so specified in the RfP) in the technical
proposals.
2. Precise and exact markings of criteria and sub-criteria specified in technical evaluation
(especially of unquantifiable criteria e.g., evaluation of Methodology) may neither be feasible
nor warranted, especially when there is bound to be variation among marks by different
members of CEC. Instead of assigning marks over the full range of attributes, it is more
appropriate to divide the range into 4-5 slabs of ratings. A possible example of rating could
be:
Rating Assessment Detailed Evaluation, in case of unquantifiable Marks
Criteria
A Very Good The consultants have outstanding, advanced Full Marks
expertise in specific problem areas of the
assignment that can promise an excellent
execution of the assignment. The consultants’
staff includes top experts in the field of the
assignment. The consultants are considered
world-class specialists in the approaches and
methodologies dealing with specific issues in the
assignment. The consultants operate according to
well-established Quality Management (ISO 9002
etc.) Procedures.
B Good The consultants have extensive experience in the 80% of full
field of the assignment and have worked in Marks
Regions and Sectors with similar physical and
institutional conditions, including similar critical
issues. Permanent staff are adequate and highly
qualified to cover the requirements of the
assignment. The consultants have experience
with advanced approaches and methodologies for
dealing with the specific requirements of the
assignment.
C Satisfactory The consultants have experience in the field of 60% of full
assignments similar to the one being considered Marks
but have not dealt with critical issues specific to it
(such as, for instance, delicate social or
environmental issues). The consultants are
experienced in the use of standard approaches
and methodologies required for the assignment.
The consultants’ permanent staff are adequate.
D Unsatisfactory The consultant has experience which is not 30% of full
considered adequate for the quality needed by the Marks
Project.
128Manual for Procurement of Consultancy Services, Second Edition, 2025
Rating Assessment Detailed Evaluation, in case of unquantifiable Marks
Criteria
E Not Relevant The consultant’ experience has no or little 10% of full
relevance to the Project under consideration. Marks
3. Each member of the CEC should first read all proposals, without scoring them. This
first review helps determine whether the proposals are free of significant omissions or
deviations from the ToR; it also allows CEC members to assess the overall clarity of the
proposals and identify elements that will require special attention in the evaluation.
4. After the review, the CEC meets to define the grades of the rating system to be adopted
for scoring the technical proposals (if not detailed in the RfP), according to the criteria and sub
criteria set out in the RfP. To discourage subjectivity and avoid the use of points and fractions
of points, the rating system provides a few grades (from three to four) for each criterion and
sub-criterion. Minimum qualifying marks or relative qualifying method for quality of the
technical proposal will be prescribed and indicated in the RfP. The grading system must be
defined before the technical proposals are opened to prevent bias (or perceived bias)
occurring because of the CEC’s knowledge of the opened proposal contents. It is
recommended that the evaluation and scoring of technical proposals be carried out only after
defining the grading system. Otherwise, CEC members would have to assign a level of
responsiveness of the proposals to each of the different criteria and sub criteria without
guidance and support from predefined grades. This could easily distort the evaluation for the
following main reasons:
a) Evaluators may differ, even widely, in their definition, understanding, or interpretation
of the same criterion and also because of their subjective experience and
understanding of the ToR;
b) Disparities in evaluators’ relative generosity or severity in judgment and ratings can
easily be magnified by the lack of common definitions of the requirements to be
considered for each criterion and sub-criterion;
c) Large differences in scores caused by inadequate understanding of the ToR or
improper use of the evaluation criteria and sub-criteria are difficult to reconcile and
explain.
5. After the rating/ grading scheme has been defined and proposals have been opened,
the evaluation process can begin.
8.4.4 Individual Scoring of Proposals
CEC members should carry out the evaluation independently and score the proposal based
on the rating criteria. The CEC evaluation should be based on the proposal as submitted.
Under no circumstances can the CEC request information or clarifications that may change
the proposals. Issues to be clarified with the selected consultant will have to be discussed
during negotiations. Individual evaluators’ results are recorded on pre-established worksheets.
After each member has independently rated all criteria and sub-criteria, it is good practice to
read each proposal again to ensure that scores reliably reflect the quality of the proposal.
8.4.5 Joint Review and Mitigation
1. The CEC should conduct a joint review and discuss the merits of individual evaluations
and scores. Some evaluators tend to be generous while others will be rigid in their judgment
and ratings. Such disparity does not matter, provided each evaluator is consistent and
differences in scores are not too large. Large differences should be reviewed and explained;
because they often are caused by improper or inaccurate use of the rating system. Reconciling
129Chapter 8: RfP Evaluation and Award of Contract
differences that are considered too large by the CEC may result in members revising some of
their ratings and scores. As such, any changes should be recorded. If a discussion is needed
to reach a final decision, an independent party should prepare minutes. Finally, the scores
given by different members may be averaged out. During the meeting, the CEC should also
comment on the strengths and weaknesses of all proposals that have met the minimum
technical score indicated in the RfP. This will help identify any elements in the winning
proposal that should be clarified during negotiations.
2. Eventually, for each of the technical proposals, the CEC should calculate the average
of the scores allocated to each criterion by all members, establish the technical ranking of the
proposals, identify the best, and propose it for award. The evaluation also establishes whether
a proposal passes the minimum qualifying mark (or technical score, normally 75 (seventy-
five)) provided for in the RfP. If one or more proposals fail to meet the minimum qualifying
mark, both individual and joint assessments must be carefully reviewed and justified. Short-
listed consultants are usually discouraged when their proposals are rejected, particularly when
they are only a few points below the minimum mark; therefore, the Procuring Entity should be
prepared to debrief consultants to explain the evaluation of their proposals.
8.4.6 Evaluation of Conformity to Commercial and Other Clauses:
Bidder must comply with all the Commercial and other clauses of the RfP Document. The
Procuring Entity shall also evaluate the commercial conditions quoted by Bidder to confirm
that all terms and conditions stipulated in the RfP Document have been accepted without
substantive omissions/ reservations/ exception/ deviation by the Bidder. Deviations from or
objections or reservations to critical provisions identified in the Tender Documents will be
deemed to be a material deviation. If critical provisions are not explicitly stated in the Tender
document, then these shall be taken to be Governing laws and Jurisdiction, Contractor’s
Obligations and Restrictions of its Rights, Performance Bond/ Security, Force Majeure, Taxes
& Duties, and Code of Integrity). Only minor deviations may be accepted/allowed, provided
these do not constitute substantive deviations as per para 8.3.4 above.
8.4.7 Technical Evaluation Report
At the end of the technical evaluation process, the CEC shall prepare a technical evaluation
report of the "quality" of the proposals recording the scores given to each criterion and sub-
criterion, as well as explain the decisions and take the competent authority's (CA) approval.
For each proposal, the report also should substantiate the results of the evaluation and
indicate technical weaknesses or deviations from the terms set out in the RfP and comment
on their acceptability. This committee shall record in detail the reasons for acceptance or
rejection of the bids analysed and evaluated by it. The CA may ask the CEC to explain the
report but should not request that scores be changed. It should review the CEC’s evaluation
of each proposal (on technical, contractual, and other aspects). The CA should decide how
any acceptable deviation in each proposal should be handled during negotiations, in case that
proposal is ranked first. The technical evaluation report is a confidential document, and its
contents shall not be disclosed. All records relating to the evaluation, such as individual mark
sheets, shall be retained until completion of the project and its audit. A sample format for
preparation of technical evaluation report and financial evaluation report including award
recommendation to the competent authority is given at Annexure 6.
8.4.8 Declaration of Results
After evaluation of quality has been completed, the Procuring Entity shall notify those
consultants whose proposals did not meet the minimum qualifying standard or were
130Manual for Procurement of Consultancy Services, Second Edition, 2025
considered non-responsive to the RfP and/or ToR, indicating that their financial proposals will
be returned unopened after completing the selection process. The Procuring Entity shall
simultaneously notify the consultants that have successfully satisfied the qualifying standard
or where marks have been awarded, the minimum qualifying marks. The date/ time and place
(or on the portal in case of e-procurement) are announced for the opening of Financial Bids in
the presence of technically suitable bidders who are willing to attend the bid opening. Such a
date should be two to five (5) days after the announcement.
8.5 Evaluation of Cost and Selection of Winning Bidder
8.5.1 Basic Considerations
1. The financial proposals shall be opened publicly in the presence of representatives of
the technically qualified consultants who choose to attend. The Evaluation Committee
demonstrably verifies that the financial proposals have remained sealed and then opens them.
The name of the consultant, quality scores, and proposed prices shall be read aloud and
recorded when the financial proposals are opened. No modification to financial proposals is
permitted. The Procuring Entity shall prepare the minutes of the public opening. Format at
Annexure 5 may be used for this purpose. When electronic submission of proposals is used,
this information shall be posted online.
2. For a time-based contract, any arithmetical errors shall be corrected, and prices shall
be adjusted if they fail to reflect all inputs that are included in the respective technical
proposals. For a lump-sum contract, the consultant is deemed to have included all prices in
its/his financial proposal so neither arithmetical correction nor any other price adjustment shall
be made.
3. For the purpose of evaluation, the total cost shall include all taxes and duties for which
the Procuring Entity makes payments to the consultant and other reimbursable expenses,
such as travel, translation, report printing, or secretarial expenses as indicated in the RfP
document
4. If any bidder offers conditional discounts/ rebates in his bid or suo-motu discounts and
rebates after the Bid Opening (techno-commercial or financial), such rebates/ discounts shall
not be considered for ranking the offer. But if such a bidder does become L1 or H-1 without
discounts/ rebates, such discounts/ rebates shall be availed and incorporated in the contracts;
5. Unless announced beforehand, the quoted price shall not be loaded based on
deviations in the commercial conditions. If it is so declared, such loading of a financial bid shall
be done as per the relevant provisions;
6. As per policies of the Government, from time to time, the Procuring Entity reserves its
option to give purchase preferences to eligible categories of Bidders as indicated in the Tender
Document.
7. Financial evaluation of Bids shall include and consider the following taxes/ duties as
per para 6.2:
a) in the case of Services performed in India or incidental goods of foreign origin already
located in India, GST & other similar duties, which shall be contractually payable, on
the Services and incidental Goods, if a contract is awarded on the bidder;
b) The offers shall be evaluated based on the GST rate quoted by each bidder, and the
same shall be used for determining the inter-se ranking. The Procuring Entity shall
not be responsible for any misclassification of HSN Number or incorrect GST rate if
131Chapter 8: RfP Evaluation and Award of Contract
quoted by the bidder. Any increase in GST rate due to misclassification of HSN
number shall have to be absorbed by the consultant; and
c) If GST is quoted extra, but with the provision that it shall be charged as applicable at
the time of delivery, the offer shall be evaluated for comparison purposes by loading
the maximum existing rate of GST for the product/ HSN code.
8. Price Variation: If the bids have been invited on a variable price basis, they will be
evaluated, compared, and ranked based on the position prevailing on the bid submission
deadline and not based on any future date. If a Bidder submits a firm price quotation against
the requirement of a variable price quotation, that bid shall be prima facie acceptable and
considered further, taking the price variation asked for by the Bidder as nil.
(Rule 190 of GFR 2017)
8.5.2 Least Cost Selection (LCS)
Under the LCS procedures, the financial proposals will be ranked in terms of their total
evaluated cost. The least cost proposal will be ranked as L-1 and the next higher and so on
will be ranked as L-2, L-3 etc. The least cost proposal (L-1) will be considered for award of
contract. The CEC will put up a report on financial evaluation of the technically qualified
consultants to the competent finance authority along with the recommendation that the least
cost proposal (L-1) can be approved/ invited for negotiation and for final award of contract.
8.5.3 Quality and Cost Based Selection (QCBS Rule 192 of GFR 2017)
1. Weightages: Under QCBS selection, the technical proposals will be allotted
weightage of 70% (Seventy per cent) while the financial proposals will be allotted weightages
of 30% (Thirty per cent) or any other respective weightages as declared in the RfP (Example,
60:40, 50:50, but not greater than 80%). The proposed weightages for quality and cost shall
be specified in the RfP.
2. Evaluation of Technical Score: Similarly, proposal with the highest technical marks
(as allotted by the evaluation committee) shall be given a score of 100 (Hundred) and other
proposals be given technical score that are proportional to their marks w.r.t. the highest
technical marks. Minimum qualifying marks (normally 70-80 (seventy – eighty) out of maximum
100 (hundred) marks) as qualifying benchmark for quality of the technical proposal shall be
prescribed and indicated in the Tender Document along with a scheme for allotting marks for
various technical criteria/ attributes. Bids scoring less than the minimum threshold shall not be
considered for further evaluation. Since the weightage of the cost element adopted in
Consultancy services is as high as 70 (seventy) percent, financial considerations would
dominate the selection, though to a lower extent as compared to LCS (Least Cost Selection –
L1 basis). In such cases, it is essential to ensure that the minimum qualifying marks in the
evaluation is set sufficiently high, to weed out low quality bids with low prices.
3. Evaluation of Financial Score: Proposal with the lowest cost may be given a financial
score of 100 (Hundred) and other proposals given financial scores that are inversely
proportional to their prices w.r.t. the lowest offer.
4. Weighted QCBS Score: The total score, both technical and financial, shall be
obtained by weighing the quality and cost scores and adding them up. On the basis of the
combined weighted score for quality and cost, the consultant shall be ranked in terms of the
total score obtained. The proposal obtaining the highest total combined score in evaluation of
quality and cost will be ranked as H-1 followed by the proposals securing lesser marks as H-
2, H-3 etc. The proposal securing the highest combined marks and ranked H-1 will be invited
for negotiations, if required and shall be recommended for award of contract. In the event two
132Manual for Procurement of Consultancy Services, Second Edition, 2025
or more bids have the same score in final ranking, the bid with highest technical score will be
H-1
5. QCBS Formula: In such a case, an Evaluated Bid Score (B) will be calculated for each
responsive Bid using the following formula, which permits a comprehensive assessment of
the Bid price and the technical merits of each Bid:
C T
B = low X + ( 1− X)
C T
high
where
C = Evaluated Bid Price
C = the lowest of all Evaluated Bid Prices among responsive Bids
low
T = the total Technical Score awarded to the Bid
T = the Technical Score achieved by the Bid that was scored best among all
high
responsive Bids
X = weightage for the Price as specified in the BDS
6. The Bid with the best evaluated Bid Score (B) among responsive Bids shall be the
Most Advantageous Bid
7. Example: Following example illustrates the evaluation of QCBS:
d) In a particular case of selection of consultant, it was decided to have minimum
qualifying marks for technical qualifications as 75 (Seventy-five) and the weightage
of the technical bids and financial bids was kept as 70:30 (Seventy:Thirty). In
response to the RfP, three proposals, A, B & C were received. The technical
evaluation committee awarded the following marks as under:
A: 75 Marks
B: 80 Marks
C: 90 Marks
e) The minimum qualifying marks were 75 (Seventy-five) thus, all the three proposals
were found technically suitable. Using the formula T/T , the evaluation committee
high
awards the following technical points:
A: 75/90 = 83 points
B: 80/90 = 89 points
C: 90/90 = 100 points
f) The financial proposals of each qualified consultant were opened after notifying the
date and time of bid opening to the successful participants. The price evaluation
committee examined the financial proposals and evaluated the quoted prices as
under:
A: Rs.100.
B: Rs.104.
C: Rs.106.
g) Using the formula C /C, the committee gave them the following points for financial
low
proposals:
A: 100/100 = 100 points
B: 100/104 = 96 points
C: 100/106 = 94 points
133Chapter 8: RfP Evaluation and Award of Contract
h) In the combined evaluation, thereafter, the evaluation committee calculated the
combined technical and financial score as under:
Proposal A: 83x0.70 + 100x0.30 = 88.10 points.
Proposal B: 89x0.70 + 96x0.30 = 91.10 points
Proposal C: 100x0.70 + 94x0.30 = 98.20 points.
i) The three proposals in the combined technical and financial evaluation were ranked
as under:
Proposal A: 88.10 points: H-3
Proposal B: 91.10 points: H-2
Proposal C: 98.20 points: H-1
j) Proposal C at the evaluated cost of Rs.106 (Rupees One hundred and six) was,
therefore, declared as winner and recommended for negotiations/approval, to the
competent authority.
8.5.4 Single Source Selection (SSS)
The Single Source in case of SSS selection shall be called for further negotiation, if need be,
after opening and evaluation of its financial proposals.
8.5.5 Fixed Budget Selection (FBS)
Under FBS, the selection of the consultant shall be made by one of the following two methods:
a) By a competitive selection process, based only on quality, using specific marking
criteria for quality in the manner indicated in Rule 192(i) of the GFR. The proposal
with the highest technical score that meets the fixed budget requirement shall be
considered for placement of contract.
b) In cases of repetitive or multiple assignments, by empanelling Consultants for a
period, using suitable eligibility/ qualification criteria. Thereafter, selection of a specific
consultant for a specific assignment from such panel shall be based on overall
considerations of public interest including timeliness, practicability, number of other
assignments already given to that consultant in the past, etc. In such cases the
budget for each assignment shall also be fixed by the procuring entity.
8.5.6 Global Tender Enquiry (GTE, International Competitive Bidding)
If stipulated in the TIS/ AITB that this is a Global Tender Enquiry (International Competitive
Bidding), the following additional aspects of the evaluation of the financial offer shall also
apply:
1. Currency of Bid: In GTE (Global Tender Enquiry), foreign bidders have the flexibility
to quote prices and receive payments in either Indian Rupees or freely convertible currencies
such as US Dollars, Euros, Pound Sterling, Yen, other relevant currencies72, or a combination
thereof. However, prices for incidental goods/works (including Agency Commission)
performed or sourced in India must be quoted and paid for in Indian Rupees. Indian bidders
are required to quote in INR only. All offers are to be converted to Indian Rupees based on
the “Bill currency selling” exchange rate on the bid submission deadline, quoted by a source
_______________________
72
The Central Board of Indirect Taxes and Customs in India (CBIC) issues Exchange Rate Notification under
Customs Act, 1962, which lists currencies and exchange rates for imported goods in Schedule I – which may
indicate relevant currencies for indicate. The current notification is Exchange Rate Notification No. 30/2024 -
Customs (N.T.).
134Manual for Procurement of Consultancy Services, Second Edition, 2025
as specified (if not specified, authorised exchange bankers approved by RBI) in the tender
document.
2. Evaluation of Offers: Import of Goods or services or both attract integrated tax
(IGST). The IGST rate and GST cess shall be applicable on the ‘Customs Assessable Value’
plus the ‘Basic Customs duty applicable thereon.’ The offers would be compared based on
the principle of the total outgo from the Procuring Entity’s pockets, including all applicable
taxes and duties (Customs duty, IGST, and GST Cess).
3. Agency Commission to the Consultant: Provisions contained in para 4.3.1-9 of the
Manual for Procurement of Goods, 2024 maybe followed.
8.5.7 Negotiations for Reduction of Prices, Abnormally Low Bids and Cartel/
pool Rates
Negotiation with bidders after bid opening must be severely discouraged, especially in
procurement of consultancy services. Since both quality and price are to be considered in
procurement of consultancy services, negotiations for reduction in price is not advisable.
Likewise, abnormally low bids and cartel/ pool rates are not of much relevance. However, if
required provisions mentioned under para 7.6.7 (Consideration of Abnormally Low Bids) and
para 7.6.8 (Cartel Formation/ Bid Rigging) of the Manual for Procurement of Goods, 2024 may
be referred.
8.5.8 Evaluation of Concurrent Application: MSE and Make in India Policies
The concurrent application of the two procurement orders i.e., MSE Procurement Order of
2012 and PPP-MII Order may create confusion to the procuring entities on how to evaluate
the bidders falling within the purview of both policies. To bring predictability both to the
procuring entities as well as bidders, DoE issued guidelines73. These guidelines are explained
in Annexure 25, along with examples.
8.5.9 Cancellation of Procurement Process/ Rejection of All Bids/Re-tender
[Rule 173 (xix) of GFR 2017]
1. The Procuring Entity has the right to cancel the process of procurement or reject all
bids at any time before intimating acceptance of successful bid under circumstances
mentioned below. However, such rejections should be well considered and normally be in
cases where all the bids are either substantially in deviation to the ToR or considered
unreasonably high in cost and, if in the latter case, the lowest qualified bidder during
negotiations fails to reduce the costs to a reasonable level. If it is decided to re- invite the bids,
the ToR should be critically reviewed/modified so as to address the reasons of not receiving
any acceptable bid in the earlier Invitation for bids. The Procuring Entity may cancel the
process of procurement or rejecting all bids under circumstances mentioned below:
a) If the quantity and quality of requirements have changed substantially or there is an
un-rectifiable infirmity in the tender process;
b) when none of the tenders is substantially responsive to the requirements of the
Procurement Documents;
c) none of the technical Proposals meets the minimum technical qualifying score;
_______________________
73 Notified vide OM No.F.1/4/2021-PPD issued by Department of Expenditure dated 18.05.2023.
135Chapter 8: RfP Evaluation and Award of Contract
d) If effective competition is lacking. However, lack of competition shall not be
determined solely based on the number of Bidders. (Please refer to para above also
regarding receipt of a single offer).
e) the Bids’/Proposals’ prices are substantially higher than the updated cost estimate or
available budget;
f) If the bidder, whose bid has been found to be the lowest evaluated bid (L1) or highest
scorer (H-1) withdraws (Para 8.2.6-3) or whose bid has been accepted, fails to sign
the procurement contract as may be required, or fails to provide the security as may
be required for the performance of the contract (Para 8.7.3) or otherwise withdraws
from the procurement process (para 5.5.6), the Procuring Entity shall re-tender the
case74.
2. In case where responsive bids are available, the aim should be to finalise the tender
by taking mitigating measures even in the conditions described below. If it is decided to rebid
the tender, the justification should balance the perceived risks in finalisation of tender
(marginally higher rates) against the certainty of resultant delays, cost escalations, loss of
transparency in re-invited tender. It may be noted that once a Tender is retendered, the bids
in the old tender cannot be revived and reconsidered, as per the Indian Contract Act, even if
prices received in the new tender turn out to be higher.
3. Approval for re-tendering should be accorded by the CA based on the reasons/proper
justification in writing. The decision of the procuring entity to cancel the procurement shall be
immediately communicated to all bidders that participated in the procurement process and
bids if not opened would not be opened and in case of manual tenders be returned unopened.
Bid securities, if any, should also be returned without delay.
4. Before retendering, the procuring entity should first check whether, while
floating/issuing the enquiry, all necessary requirements, and formalities such as standard
conditions, industry friendly qualification criteria, and technical and commercial terms, wide
publicity, sufficient time for tendering, and so on, were fulfilled. If not, a fresh enquiry should
be issued only after rectifying the deficiencies.
8.6 Negotiations to Freeze Description of Service
1. In the Consultancy Services contract, the accepted ToR and methodology etc are laid
down in form of ‘Description of Service’. Therefore, before the contract is finally awarded,
discussions may be necessary with the selected bidder to freeze these aspects, especially
when, it is discouraged during evaluation of technical proposals to seek clarifications on these
matters. However, such technical discussions do not amount to negotiations in the sense, the
word is used in Procurement of Goods and Works. However, in Procurement of Consultancy,
this discussion is termed as Negotiations since these discussions may have some financial
ramifications at least for the bidder. Negotiations are not an essential part of the selection
process. In many cases, however, it is felt necessary to conduct negotiations with the selected
consultant for discussions of the ToR, methodology, staffing, Procuring Entity's inputs, and
special conditions of the contract. These discussions shall not substantially alter (or dilute) the
original ToR or terms of the offer, lest the quality of the final product, its cost, and the initial
evaluation be vitiated. The final ToR and the agreed methodology shall be incorporated in
"Description of Services," which shall form part of the contract.
_______________________
74
Notified vide OM No. F.1/1/2021-PPD issued by Department of Expenditure dated 21.04.2022.
136Manual for Procurement of Consultancy Services, Second Edition, 2025
2. Financial negotiations shall only be carried out if, due to negotiations, there is any
change in the scope of work which has a financial bearing on the final prices or if the costs/cost
elements quoted are not found to be reasonable. In such negotiations, the selected firm may
also be asked to justify and demonstrate that the prices proposed in the contract are not out
of line with the rates being charged by the consultant for other similar assignments. However,
in no case such financial negotiation should result in an increase in the financial cost as
originally quoted by the consultant and on which basis the consultant has been called for the
negotiations. If the negotiations with the selected consultant fail, the Procuring Entity shall
cancel the bidding procedure and re-invite the bids.
8.7 Award of Contract
8.7.1 LoA to Successful Bidder
1. Before a final award is announced, the technical and financial credentials of the
selected bidders/ consultant should be crosschecked to the extent feasible. This is especially
important at RfP stage, since normally such a verification is not done at the EOI stage. The
Procuring Entity may, at its discretion, ask Bidder to submit for verification the originals of all
such documents whose scanned copies were submitted during EOI and RfP stages. If so
decided, the photocopies of such self-certified documents shall be verified and signed by the
competent officer and kept in the records as part of the contract agreement. If the Bidder fails
to provide such originals or in case of substantive discrepancies in such documents, it shall
be construed as a violation of the Code of Integrity. Such bid shall be liable to be rejected as
nonresponsive in addition to other punitive actions in the Tender Document. The evaluation of
Bids shall proceed with the subsequent ranked offers.
2. Prior to the expiry of the period of bid validity, the successful bidder will be notified
(briefly indicating therein relevant details such as quantity, description of the services ordered,
prices, and so on) in writing by a registered letter or any other acknowledgeable and fool proof
method that his bid has been accepted. Legally communication of acceptance of offer is
considered complete as soon as it is submitted to Postal authorities (please refer to Para 2.9-
1) of Appendix 2 in Manual for Procurement of Goods, 2024). A template for the Letter of
Acceptance (or Notice of Award, or Acceptance of Tender) is given in Annexure 20. In the
same communication, the successful bidder is to be instructed to furnish the required
performance security within a specified period (generally 14 (fourteen) to 28 (twenty-eight),
depending on the amount).
3. Letter of Award - LoA shall state the sum (hereinafter and in the contract called the
"Contract Price") that the Procuring Entity shall pay the contractor in consideration of the
supply of the services. The Letter of Award (LoA) shall constitute the legal formation of the
contract, subject only to the furnishing of performance security as per the provisions of the
sub-clause below. The Procuring Entity, at its discretion, may directly issue the contract
subject only to the furnishing of performance security, skipping the issue of LoA.
4. The value of Contract should include Taxes/ duties/ levies, if any.
5. In respect of contracts for purchases valued Rupees Five (5) lakhs and above, where
tender documents include the GCC, SCC and schedule of requirements, the letter of
acceptance will result in a binding contract. All delivery liabilities would be counted from the
date of LoA.
137Chapter 8: RfP Evaluation and Award of Contract
6. It shall be mandatory for the successful bidder to get registered on GeM and obtain a
unique GeM Seller ID. before the placement of LoA or the contract. This ID shall be
incorporated in the contract.
8.7.2 Publication of Award of Contract and Return of EMD of Unsuccessful
Bidders [Rule 173 (xviii) of GFR 2017]
1. Mandatory Publication of Award of Contract: The details of award of contract and
name of the successful bidder should be mentioned mandatorily on the CPPP/ GeM (as
relevant) and in the notice board/ bulletin/ website of the concerned Ministry or Department/
eProcurement Portal.
2. Exceptions to Publishing of Award of Contract: In case publication of such
information is sensitive from commercial or security aspects, dispensation may be sought from
publishing of such results by obtaining sanction from the Secretary of the Department with the
concurrence of associated Finance. Open, transparent declaration, of price, sources, and
delivery schedule of Central Public Sector Enterprises (CPSEs) contractors as per extant
instructions adversely impacts ability of CPSEs to compete in highly competitive market.
CPSEs are denied a level playing field. At the time of tender formulation, commercial
organisations like CPSEs will disclose whether the subject of procurement is for commercial
re-sale. Contract Award details of such cases may be shared on electronic Procurement
Portals such as GeM, CPPP etc. after six (06) months of finalization of procurement. Such a
system shall protect financial data of the CPSEs for a reasonable time while also complying
with requirement of transparency.
3. Bid Securities: Upon the successful bidder furnishing the signed agreement and
performance security, each unsuccessful bidder will be promptly notified, and their bid security
be returned without interest within 30 (thirty) days of notice of award of contract in terms of
para 6.1.1 above. The successful consultant’s bid security shall be adjusted against the SD or
returned as per the terms of the tender documents.
8.7.3 Performance Security
The consultant receiving the LoA is required to furnish the required performance security, if it
is part of tender conditions, in the prescribed form within period prescribed in the tender
document (generally 14 (fourteen) to 28 (twenty-eight), depending on the amount), as per para
6.1.2 above. In case performance security is not submitted within the stipulated time, procuring
entity may pursue the contractor upto a reasonable grace period further for submission. In
case the firm fails to submit the requisite Performance Security even thereafter or fails to sign
the contact it may be treated as withdrawal of offer by L1 or H-1 bidder (as the case may be),
and the tender may be reinvited, besides taking necessary punitive actions including forfeiture
of EMD against such bidders.
8.7.4 Acknowledgement of Contract by Successful Bidder and Execution
1. After the successful bidder is notified that his bid has been accepted, he will be sent
an agreement in duplicate for signature and return, incorporating all agreements between the
parties.
2. The consultant should acknowledge and unconditionally accept, sign, date and return
the agreement within 14 (fourteen) days from the date of issue of the contract in case of OTE
and 28 (twenty-eight) days in case of GTE. Such acknowledgements may not be required in
low value contracts, below Rupees Five (5) Lakh or when the bidders offer has been accepted
in entirety, without any modifications. While acknowledging the contract, the consultant may
raise issues and/ or ask for modifications against some entries in the contract; such aspects
138Manual for Procurement of Consultancy Services, Second Edition, 2025
shall be immediately be investigated for necessary action and, thereafter, the consultant’s
unconditional acceptance of the contract obtained. If both parties (Procuring Entity and the
consultant) simultaneously sign the contract across the table, further acknowledgement from
the consultant is not required. It should also be made known to the successful bidder that in
case he does not furnish the required performance security or does not accept the contract
within the stipulated target dates, such non-compliance will constitute sufficient ground for
forfeiture of its EMD and processing the case for further action against it (the successful
bidder). Procuring Entity may also consider getting the contract digitally signed.
3. All contracts shall be signed and entered into after receipt and verification of the
requisite performance security, by an authority empowered to do so by or under the orders of
the President of India in terms of Article 299 (1) of the Constitution of India. The words “for
and on behalf of the President of India” in case of Ministry/ Department should follow the
designation appended below the signature of the officer authorised on this behalf. The various
classes of contracts and assurances of property, which may be executed by different
authorities, are specified in the DFPR (Annexure 1). In case of CPSE and other organisations
the contract shall be signed for and on behalf of the head of the organisation. No contract
should be entered into by any authority which has not been empowered to do so.
8.7.5 Framing of Contract
The following general principles should be observed while entering into contracts:
1. Any agreement shall be issued strictly as per approved CEC recommendations, be
vetted by the Associated/ integrated Finance, and approved by CA. The terms of contract must
be precise, definite and without any ambiguities. The terms should not involve an uncertain or
indefinite liability, except in the case of a cost-plus contract or where there is PVC in the
contract. In other words, 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
Associated/ integrated Finance.
2. All contracts shall contain a provision for
a) Recovery of liquidated damages (LD) for delay in performance of the contract on the
part of the contractor;
b) Payment of all applicable taxes by the contractor; and
c) for an unconditional power of revocation or cancellation by the Procuring Entity at any
time on the expiry of six months’ notice to that effect, when a contract is likely to
endure for a period of more than two years, it should, wherever feasible, include a
provision.
3. Standard forms of contracts should be invariably adopted, except in following cases:
a) Authorities competent to make purchases may, at their discretion, make purchases
of value up to Rupees Five (5) lakh by issuing purchase orders containing basic terms
and conditions;
b) With respect to contracts for purchases valued from Rupees One Lakh to upto
Rupees Ten lakhs, where tender documents include the GCC, SCC, and schedule of
requirements, the letter of acceptance will result in a binding contract, provided no
performance security is called for or due to be submitted. All delivery liabilities would
be counted from the date of LoA. (Rule 225 iv)b) GFR 2017).
c) In cases where standard forms of contracts are not used or where modifications in
standard forms are considered necessary in respect of individual contracts, legal and
139Chapter 8: RfP Evaluation and Award of Contract
financial advice should be taken in drafting the clauses in the contract and approval
of CAs is to be obtained; and
d) Copies of all contracts and agreements for purchases of the value of Rs. 50 (Rupees
Fifty) lakh and above, and of all rates and running contracts entered into by civil
Departments of the Government should be sent to the Accountant General.
e) Copies of the LOA/Purchase Order should also be sent to the Jurisdictional
Assessing Officer for GST, mentioned in the bidder’s bid.
8.7.6 Audit Trails - Procurement Records
1. The procuring entity must maintain and retain audit trails, records and documents
generated or received during its procurement proceedings, in chronological order, the files will
be stored in an identified place and retrievable for scrutiny whenever needed without wastage
of time.
2. However, many organisations now process procurements on their own eProcurement
Portals. In such cases, taking printouts and making a physical file just for records may be
counter-productive, provided the portals have provisions for audit trails. The documents and
records to be maintained electronically or physically will include the following:
a) documents pertaining to determination of need for procurement;
b) description of the subject matter of the procurement;
c) Statement of the justification for choice of a procurement method other than open
competitive tendering;
d) Documents relating to pre-qualification and registration of bidders, if applicable;
e) Particulars of issue, receipt, opening of the bids and the participating bidders at each
stage;
f) Requests for clarifications and any reply thereof including the clarifications given
during pre-bid conferences;
g) Bids evaluated, and documents relating to their evaluation; and
h) Contracts and Contract Amendments
i) Complaint handling, correspondences with clients, consultants, banks.
3. In organisations where physical files are still maintained, the Procurement file should
start with the Indent and related documents. All subsequent documents relating to
procurement planning; Copy of Tender Document and documents relating to its and
formulation, publishing and issue/ uploading; Bid Opening; Bids received; Correspondence
and documents (including Technical Evaluation and CEC report) relating to pre-qualification,
evaluation, Award of Contract; and finally, the Contract copy, should be kept on the file. In
case of bulky Bids received, all bids received may be kept in a separate volume, with a copy
of accepted bids later being put on the main volume. To maintain integrity of the records
relating to Procurement, these files should be kept secure and for contract management a
new volume of file may be opened to obviate frequent exposure of sensitive procurement file.
In contract management volume, copies of successful bid, Tender Committee Report,
Contract may also be kept for ready reference, besides correspondence and documents
relating to Contract Management and its closure.
140Manual for Procurement of Consultancy Services, Second Edition, 2025
8.8 RfP, Evaluation and Award Stage – Risks and Mitigation
Risks Mitigation
1. No key expert proposed from the main RfP should specify that the team
qualified partner in consortium/ JV: It is seen leader proposed should have worked
that though the shortlisting and contract is won by for a sufficient number of years (say,
a consortium/ JV on the basis of qualifications of two to three years) with the main
the main qualified partner firm, but no key experts qualifying firm. If this is not complied
(nor team leader) are proposed from that firm. As with it could be a ground for the
consultancy assignment is an intellectual product, proposal being termed as non-
the effective contribution of the qualified partner responsive.
firm can only come from experts (in particular the
team leader) who have worked for sufficient time
with the main qualified consultant.
2. Request for substitution of key experts Any request for substitution should be
at the time of contract negotiation: After the firm examined very closely and agreed
is invited for negotiation, it asks for substitution of only if permitted by the RfP
key staff in the contract. This is an unacceptable
practice unless the selection process is
unreasonably delayed.
3. Presence of one or more unsigned CVs If few CVs are not signed by the key
in technical proposal: If a proposal contains one expert, the evaluation should be
or more unsigned CVs, it should be scrutinised carried without considering these
carefully. It can be that the CV is used without unsigned CVs and, if this firm is still a
permission or commitment from the concerned key winner, clarification may be sought at
expert. the negotiation stage for resolution. In
no case substitution of such key
experts be agreed to at the contract
negotiation stage. If most of the CVs
are not signed by the respective
proposed key experts, the proposal
should be termed as non-responsive
and rejected at the technical
evaluation stage.
4. Evaluation of bids is subjective or leaves CEC should give an undertaking at
room for manipulation and biased assessments. the appropriate time (as per para
Some CEC members may not be independent or 8.2.4-3) that none of the members
neutral or may have conflict of interest (CoI). has any CoI with the
companies/agencies participating in
the tender process. Any member
having an CoI with any company
should refrain from participating in the
CEC. Some members of a CEC may
be subordinate to or related others in
a strictly hierarchical organisation, so
that they are not free to express
independent views – such a situation
141Chapter 8: RfP Evaluation and Award of Contract
Risks Mitigation
must be avoided when constituting
the CEC.
5. Discriminating against a Best Value Bid: Mitigation for each type of risk is
In case a bidder’s bid (not in the good books of the mentioned below.
procuring entity) becomes the best value bid as per
the evaluation criteria, some of the following
actions may have risks of misuse. There is also a
reverse risk in these actions if a favourite becomes
best value bid:
6. Unwarranted retendering: Rejecting all In case a procurement is rebid
bids and calling for retendering on the pretext of more than once, approval of one
prices being high, change of specifications, budget level above the CA may be taken.
not being available, and so on. Please also see the complaint
mechanism.
7. Sudden quantity reduction/increase or Bid conditions must specify a limit
splitting of quantity work at the time of award: beyond which originally announced
Many organisations have provisions for change/ quantity/scope cannot be
splitting in the bid quantity at the time of award. reduced/increased. If parallel
Some organisations vary quantity even without contracts are envisaged, clear criteria
such provisions for the splitting may be specified in
the tender documents beforehand.
8. Unwarranted negotiations: negotiations Normally, there should be no post-
are called without justification. Sometimes a tender negotiations. In certain
counter-offer is made to discourage lowest exceptional situations, for example,
acceptable bidder. procurement of proprietary items,
items with limited sources of supply,
and items where there is suspicion of
a cartel formation, negotiations may
be held with L-1. In case of L-1
backing out, there should be re-
tendering.
9. Unwarranted delays in finalizing or A target timeline of finalisation of
varying the terms of preannounce contract procurement should be laid down.
agreement: even after the CEC recommendations Delays and reasons thereof should
are accepted, signing of the contract is delayed on be brought out before the CA on the
one pretext or the other. Although there is a file at the time of CEC’s acceptance
standard contract form in the tender documents, or contract signing. The contract
the contract may be drafted in a fashion to favour should be strictly as per the bid
or discourage the successful bidder. conditions and accepted offer.
10. Anti-competitive practices: Bidders, These strategies, in turn, may result
which would otherwise be expected to compete, in patterns that procurement officials
secretly conspire to frustrate the buyer’s attempts can detect, and steps can be taken to
to get VfM in a tender process. Anti-competitive thwart such attempts. Such anti-
conspiracies can take many forms. Sometimes the competitive activities come under the
purview of the competition law, where
142Manual for Procurement of Consultancy Services, Second Edition, 2025
Risks Mitigation
officers involved in procurement may be part of there is provision of stringent
such collusion. penalties. Regular training should be
a) Bid coordination: The bidders collude to the held for officers involved in
quote same or similar rates that are much higher procurement to detect and mitigate
than the reasonable price to force the buyer to such practices and also use of the
settle the procurement at exorbitant prices. competition law against such bidders.
b) Cover bidding: Cover bidding is designed to
give the appearance of genuine competition by way
of supporting bids for the leading bid-rigger.
c) Bid suppression: Bid suppression means that
a company does not submit a bid for final
consideration in support of the leading bid-rigger.
d) Bid rotation: In bid-rotation schemes,
conspiring firms continue to bid but they agree to
take turns being the winning (i.e., lowest qualifying)
bidder in a group of tenders of a similar nature.
e) Market allocation: Competitors carve up the
market and agree not to give competitive bids for
certain customers or in certain geographic areas.
143Manual for Procurement of Consultancy Services, Second Edition, 2025
Chapter 9: Special Types of Engagements
9.1 Single Source Selection (SSS)
1. Selection of consultants through direct negotiations does not provide the benefits of
competition in regard to quality and cost, lacks transparency in selection, and could encourage
unacceptable practices. The reasons for SSS and selection of a particular consultant must be
recorded and approved by the CA as per the delegation of powers laid down at in DPFR/
SoPP, prior to single tendering. Powers of procurement of SSS must be severely restricted.
Therefore, single-source selection shall be used only in exceptional circumstance, where it is
inescapable over competitive selections as discussed in sub-paras below.
2. When in a Project, continuity for downstream work is essential, the initial RfP shall
outline this prospect, and, if practical, the factors used for the selection of the consultant should
take the likelihood of continuation into account. Continuity in the technical approach,
experience acquired, and continued professional liability of the same consultant may make
continuation with the initial consultant preferable to a new competition subject to satisfactory
performance in the initial assignment. For such downstream assignments, the Procuring Entity
shall ask the initially selected consultant to prepare technical and financial proposals on the
basis of ToR furnished by the Procuring Entity, which shall then be negotiated.
3. If the initial assignment was not awarded on a competitive basis or if the downstream
assignment is substantially larger in value, a competitive process shall normally be followed
in which the consultant carrying out the initial work is not excluded from consideration if it
expresses interest.
4. For selecting a consultant under this method, the Procuring Entity should prepare a full
justification and take the approval of the competent authority as per the Annexure 2: Schedule
of Procurement Powers (SoPP).
5. While selecting the consultant under this method, the Procuring Entity shall ensure that
the consultant has the requisite qualification and experience to undertake the assignment.
Normally the Procuring Entity shall adopt the same short-listing criteria as applied to similar
assignments while evaluating the EoI.
6. Its CFA's (Competent Financial Authority) responsibility to ensure that a statement of
all selections by nominations, every month are to be reported to Secretary/ Head of Ministry/
Department.
9.2 Selection of Individual Consultants
1. Individual consultants are normally employed on assignments for which
a) Teams of personnel is not required;
b) No additional outside professional support is required, and
c) The experience and qualifications of the individual are the paramount requirement.
2. The procedures for selecting individual consultants are similar to, but much simpler
than, those for selecting teams of consultants from a firm. Process of selection of Individual
consultants entails:
a) Preparing a Consultancy Services package including the ToR, time frame, number of
person-months, budget, EoI Short-listing criteria and getting it approved by the CA;
145Chapter 9: Special Types of Engagements
b) Advertising: Advertisement in such case should be given on Central Public
Procurement Portal (CPPP) at www.eprocure.gov.in and on Government e-
Marketplace (GeM). An organisation having its own website should also publish all
its advertised tender enquiries on the website. The advertisements for invitation of
tenders should give the complete web address from where the bidding documents
can be downloaded.
c) Method of Selection: They shall be selected through comparison of qualifications of
at least three candidates among those who have expressed interest in the
assignment or have been approached directly by the Procuring Entity. Capability is
judged on the basis of academic background, experience, and, as appropriate,
knowledge of the local conditions, such as local language, culture, administrative
system, and government organisation. Selection will be carried out by the CEC which
will award marks for educational qualifications and experience and select the most
suitable candidate for the assignment. The CEC may also interview candidates and
award marks for their performance in the interview and recommend the remuneration
to be paid.
d) Direct Negotiation: Individual consultants may be selected on a direct negotiation
basis with due justification in exceptional cases such as: (a) tasks that are a
continuation of previous work that the consultant has carried out and for which the
consultant was selected competitively; (b) emergency situations resulting from
natural disasters; and (c) when the individual is the only consultant qualified for the
assignment. Individual consultants may be (among others) independent consultants;
consultants recruited from firms; or consultants recruited from academic,
government, or international agencies.
e) Staff or Associates of Consultancy Firms: If the candidate is permanent staff or
associates of a Consultancy firm the conflict-of-interest provisions described in these
guidelines shall apply to the parent firm.
3. Retired Government Servants:
a) Rule 177 of GFR, 2017, says that the consulting services do not include direct
engagement of retired Government servants. They should not be engaged as
consultants against regular vacant posts under this rule. Such engagements should
be handled as a personnel matter.
b) Engagement/ hiring of retired Government servants should be regulated as per DoE’s
OM F.No. 3-25/2020-E.IIIA dtd 9th December 2020.
9.3 Selection of Specialized Agencies/ Institutions
1. From time to time, Ministries/ Departments may need to recruit a specialized agency
or institution to undertake a specific Consultancy/ Non-Consultancy Service, for which it is
particularly well suited. Such agencies may be Government/ Semi-Government Agencies,
Universities or Professional Institutions.
2. In some cases, the agency or institution has access to special expertise or special
backup and support facilities that make it worthwhile considering recruitment on an SSS basis.
In such cases, there must be full justification that the use of SSS is in the best interests of
Procuring Entity.
3. In cases, of Government and semi-Government Agency SSS would be an appropriate
method of recruitment.
146Manual for Procurement of Consultancy Services, Second Edition, 2025
4. Individual consultants recruited from agencies and institutions may be selected in the
same way as any other individual consultants.
9.4 Selection of Non-governmental Organizations (NGO)
1. Non-governmental organizations (NGOs, not-for-profit organisations) may be hired for
Consultancy/ NC Services, if they express interest and/ or if the Procuring Entity finds their
qualifications satisfactory. Assignments which emphasize experience in and bonding with
grassroot historically disadvantaged communities, e.g., experience in community participation
and in-depth local knowledge are typically attributed to NGOs and short lists may comprise
NGOs entirely. In this case, QCBS should be followed, and the evaluation criteria of proposals
should reflect the NGO-unique qualifications, such as the following:
a) History of work with grassroots communities and evidence of satisfactory
performance;
b) Familiarity with participatory development approaches and low-cost technologies;
c) Experienced staff conversant with the cultural and socioeconomic dimensions of
beneficiaries;
d) Committed leadership and adequate management;
e) Capacity to co-opt beneficiary participation.
2. Procuring Entities may select NGOs using SSS, provided the approvals and
procedures laid down for the same are followed. For example, SSS may be adopted to hire a
local NGO for a very small assignment in a remote area where only one NGO is available, and
competition is impractical.
9.5 Procurement Consultants
1. Consultancy or Non-consultancy:
a) Hiring of Procurement agents (PAs) can either be done as a Consultancy Service or
Non-consultancy service, depending on the objectives and scope of assignment.
b) Consultants: If the role of Procurement Agents primarily involves intellectual analysis,
strategic planning, spend analysis, cost control, and advisory functions, it would be
appropriate to hire them as Consultancy Services i.e. when they are asked to design/
implement new system or improve value for money or develop strategic procurement
or carry out market building/ sourcing etc, where quality weightage of more than 30%
is called for.
c) Non-consultancy: On the other hand, if their responsibilities are only outsourcing of
routine procedures without intellectual decision making, classifying them as
outsourcing of Non-Consultancy Services would be suitable, i.e. when they only
operate the existing procedures and crucial decisions are made by the client himself,
where quality weightage can be 30% or less. In such a case please also refer to para
4.5.3 above.
2. Specific Items: When Procurement consultants are specifically used for handling the
procurement of specific items and generally working from their own offices, they are paid a
percentage (either fixed or inversely proportional) of the value of the procurements handled
(or of savings realised) or a combination of a percentage and a fixed fee. In such cases, they
are selected under QCBS, with cost being given a weight of less than 50 (fifty) percent. If the
weight of the cost element adopted were as high as 50 (fifty) percent, financial considerations
147Chapter 9: Special Types of Engagements
would dominate the selection, creating the risk of an unacceptably lower service quality. In
such cases, it is essential to ensure that the quality threshold in the evaluation is set sufficiently
high. They shall be selected following the appropriate procedures for other Consultancy
assignments using QCBS and time-based contracts, as specified for other Consultancy
assignments.
3. Outsourcing of Procurement Function: When Procurement Agents provide services
for procurement for a whole project in a specific unit of Procuring Entity, it is usually a non-
consultancy service, unless criteria in sub-para 1-b) above is met.
9.6 Financial Advisors
1. Procuring Entities may hire financial institutions to implement two main types of
assignment:
a) in the preparation of studies and financial Consultancy; or
b) As advisers on financial restructuring, Mergers and Acquisitions (M&A), or demerger
etc.
2. In the first case, the advisers can be selected under any of the methods described in
Chapter 4 (that is, whichever is considered most suitable, depending on the scope of work of
the assignment). In the second case, QCBS shall be adopted, whereby the RfP specifies
technical evaluation criteria similar to those relevant to standard Consultancy assignments.
The financial proposal would include two distinct forms of remuneration:
a) a lump-sum retainer fee to reimburse the consultant for services made available; and
b) A success fee, which is either fixed or preferably expressed as a percentage of the
value of the privatization transaction.
3. Depending on the type of activity mentioned above and the circumstances of the
Procuring Entity, the RfP specifies the relative weights assigned in the financial evaluation to
the retainer and to the success fee, respectively. In some cases, the Procuring Entity offers a
fixed retainer fee, and the consultant must compete only on the success fee as a percentage
of the value of the privatization transaction. For QCBS (notably for large contracts), cost may
be given a weight higher than recommended for standard assignments (such as 30 (thirty)
percent), or the selection may be based on LCS selection. The RfP shall specify clearly how
proposals will be presented and how they will be compared. Success fees are most
appropriate when it is relatively easy to measure results in meeting the Procuring Entity’s
objective (successful sale of assets) and when the success is at least partly related to the
efforts of the consultant involved. Therefore, success fees are more likely to be adopted at the
transaction stage, because by that time the Procuring Entity’s objective is to maximize
revenue.
9.7 Auditors
1. Quality audits of federal or state expenditures, are an important accountability
mechanism for ensuring financial integrity. Therefore, public organisations have a vital
fiduciary responsibility to ensure that their audit is of the highest quality.
2. Auditors typically carry out auditing tasks under well-defined ToR and professional
standards. The ToR should consider applicable statutory, Government, organisational
requirements and applicable auditing and accounting standards. Scope of Audit should cover
the jurisdiction, Type of audit, contract period and any additional services. The Technical
148Manual for Procurement of Consultancy Services, Second Edition, 2025
qualifications should be based on licensing requirement, general and similar experience,
quality certifications, quality and adequacy of staffing, financial capability, auditing approach
and scheduling of the auditor. Auditors’ independence and lack of conflict of interest is also
an important requirement. A presentation or interview also may be part of the RfP process. A
pre-proposal conference may also be considered.
3. Since in recent time quality of audit has been a matter of concern, selection of auditors
may preferably be done as a consultancy service on QCBS basis with emphasis on weightage
of quality.
9.8 Public competition for Design of symbols/logos
(Rule 196 of GFR 2017)
1. Certain Ministries/Departments are required to conduct competitions for the design of
logos/symbols for their use, which should be conducted in a transparent, fair, and objective
manner. Following guidelines shall be followed by all Ministries/ Departments as well as their
attached/ subordinate offices and the autonomous bodies/ organizations controlled by them,
while conducting public competitions for design of symbols/ logos for their use:
a) Design competitions should be conducted in a transparent, fair, and objective
manner;
b) Wide publicity should be given to the competition so as to ensure that the information
is accessible to all possible participants in the competition. This should include
publication on the web site of the Ministry/ Department/ PSU/organization concerned,
as also the Central Public Procurement Portal. The existing e-publishing module can
be utilized;
c) Provisions of any applicable laws, including the Official Languages Act and the
Emblems and Names (Prevention of Improper Use) Act, should be kept in view while
conducting the competition;
d) A detailed Competition Notice should be drawn up and made public. The notice
should, inter alia, details on the following:
i) The objectives of the design competition and the key features expected in the
proposed design;
ii) Qualification criteria, if any, for participation in the competition;
iii) The process of evaluation and evaluation criteria - whether it would be single or
multi-stage (for symbols/ logos intended to represent a drive/project/ entity of
National Importance, it may be decided to have the selection through public
voting. If so, the modalities should be clearly specified).
iv) The manner of submission of entries and the format/ details etc. expected with
the design;
v) Whether one participant can submit multiple designs;
vi) The last date and time for submission;
vii) Details of entry fees, if any and the manner of submission of the same;
viii) Expected date for announcement of results and the manner in which the results
will be intimated;
ix) The number of prizes to be awarded and the amount payable for the successful
design(s).
149Chapter 9: Special Types of Engagements
x) It may be clearly stipulated that the intellectual property rights of the successful
design(s) would rest with the sponsoring agency. The status of the unsuccessful
designs and whether it is intended to return them should be indicated clearly.
xi) If the selection is to be done by a jury of experts nominated for the purpose, the
composition of the jury may also be notified.
2. Once the completion is over and the winning entry selected, this again should be
notified in the public domain. If the selection has been by a jury of experts nominated for the
purpose, the composition of the jury may be notified.
3. It is evident that every competition would have distinct features and therefore, the
aforesaid guidelines should be used as a general principle while preparing the detailed
procedure/rules for each such competition.
9.9 Procurement of Integrated IT Projects
1. Procurement of integrated IT Projects (refer to para 1.4-3-b) should normally be carried
out as Procurement of Consultancy services, as the outcomes/ deliverables vary from one
service provider to another. The IT Projects may include:
a) bespoke software development;
b) cloud based services and
c) composite IT system integration services involving design, development,
deployment, commissioning of IT system including supply of hardware, development
of software, bandwidth, and operation/maintenance of the system for a define period
after go-live etc.
2. IT services procurement involves aligning business goals, assessing vendor
capabilities, and adopting agile practices. Whether it's bespoke software, cloud services, or
system integration, a well-defined procurement process ensures optimal outcomes for
organizations.
3. QCBS Selection: Since quality is of prime importance in procurement of IT services,
QCBS selection with due emphasis on quality weightage (even up to 80%, depending on
quality requirements) may be used. In cloud services in particular, alternative pricing models
may be allowed to be quoted.
4. Caution against Restrictive and discriminatory Qualification Conditions: Ministry
of Electronics & Information Technology (MeitY) has cautioned75 that qualification conditions
for cloud service provider should not be restrictive/ discriminatory like insistence on ‘Gartner’s
‘Magic Quadrant etc., and very high financial turnover, which impede the domestic service
providers and does not add value to the users. They have also cited Department for Promotion
of Industry and Trade & Internal Trade (DPIIT), Ministry of Commerce and Industry has similar
advisory76 that such discrimination against domestic players is a violation of Make India Order
which provide purchase preference to local content requirement. Therein, common examples
of restrictive and discriminatory conditions against the local suppliers, in procurement of IT
Services have been cited as:
a) Restrictive and Discriminatory Eligibility Criteria in Tender Conditions
i) Mandatory Presence in Gartner Magic Quadrant - IT and Telecom Products;
ii) Mandatory USFDA/ European CE - Medical Devices;
_______________________
75 D.O. No. 10(13)/2022-EG-II dated 25.08.2022
76 OM No. P-45021/121/2018- (B.E.-II) dated 20.06.2019
150Manual for Procurement of Consultancy Services, Second Edition, 2025
iii) ExcessiveTurnover.requirementRs.1000 Cr for-procurement of Rs.70 Cr;
iv) Excessive past Experience - 10 years;
v) Export experience to G8 countries;
vi) Additional requirement of Bank Guarantee for Local Supplier;
vii) Delayed Payment Terms to Local suppliers
b) Restrictive and Discriminatory specifications -Foreign Brands specified
i) CISCO, NEC, Alcatel, Siemens - Telecom Products
ii) HP, Dell, Lenovo - IT products
iii) OTIS, Mitsubishi, Schindler, Kone, Johnson - Lifts
c) Restrictive and Discriminatory specifications/ Preapproved foreign brands in works/
turnkey projects
i) Local manufacturer not included in pre-approved list;
ii) Specification tailor made to suit foreign products;
iii) Foreign technical standards indicated in the specification;
iv) Technical parameters to favour foreign products viz. (-) 25-degree temperature
compatibility (or EPBX equipment being procured for airport in Central India).
5. Bespoke Software Development: Bespoke software development involves creating
customized software solutions tailored to specific organizational needs. Unlike off-the-shelf
software, bespoke applications are designed from scratch, considering unique requirements,
workflows, and business processes. Here are key considerations for procuring bespoke
software:
a) Defining Requirements: The procurement process begins with a thorough
understanding of business needs. Engage stakeholders, gather functional and non-
functional requirements, and define clear objectives. Stipulate an agile development
approach that allows iterative development, frequent feedback, and adaptability. Agile
ensures alignment with evolving requirements and minimizes risks.
b) Technical Qualifications: Evaluate bidders based on their expertise, track record, and
ability to deliver custom solutions. Consider factors like technical proficiency, domain
knowledge, scalability, security, and support and project management capabilities.
6. Cloud-Based Services: Cloud-based services offer scalability, flexibility, and cost-
effectiveness. When procuring cloud services, consider the following:
a) Defining Requirements:
i) SLAs and Data Privacy: Define service-level agreements (SLAs) regarding
uptime, performance, and support. Address data privacy and compliance
requirements, especially if handling sensitive information.
ii) Migration Strategy: Plan the migration process carefully. Assess existing
applications for cloud readiness, choose the right migration approach (lift-and-
shift, re-architecting, or hybrid), and ensure minimal disruption.
b) Service Models: Understand the different cloud service models:
i) Software as a Service (SaaS): Ready-to-use applications hosted by the provider.
ii) Platform as a Service (PaaS): Development platforms and tools for building
custom applications.
iii) Infrastructure as a Service (IaaS): Virtualized computing resources (servers,
storage, networking).
c) Technical Qualifications: Evaluate cloud providers based on factors such as reliability,
security, compliance, data sovereignty. Consider well-established cloud services
providers.
151Chapter 9: Special Types of Engagements
7. Composite IT System Integration Services: Composite IT system integration
involves connecting disparate systems, applications, and data sources to create a cohesive
ecosystem. Here's how to approach procurement:
a) Defining Requirement:
i) Integration Strategy: Define the integration scope, including APIs, middleware,
and data synchronization. Consider whether real-time or batch processing is
required.
ii) Interoperability and Scalability: Ensure that integrated components can
communicate seamlessly. Scalability is crucial to accommodate future growth
and changing business needs.
iii) Testing and Maintenance: Specify testing requirements (unit, integration, and
end-to-end testing). Also, outline ongoing maintenance and support
expectations.
b) Technical Qualification: Select vendors with expertise in integrating complex systems.
Look for experience in integrating diverse technologies (ERP, CRM, legacy systems)
and handling data transformations.
8. Cyber auditing and Testing of hardware: The tenders issued by the Procuring
Entities should include detailed requirements for security auditing and testing of devices
intended for perpetual internet connectivity e.g., Servers, loT (Internet of Things) devices/
CCTV cameras etc., to mitigate security vulnerabilities and breaches of Government Systems.
The specifications must underscore the necessity of security measures at both hardware and
software levels to ensure the security and integrity of such devices or systems. CERT-IN77
empanelled organizations specialize in conducting security auditing, vulnerability
assessments, and penetration testing of computer systems, networks, and applications.
However, their primary domain may not encompass comprehensive hardware security testing
and evaluation of loT Devices/ CCTV cameras, which is the domain of STQC-IN. STQC, under
the aegis of the Ministry of Electronics and Information Technology (MeitY), has expertise for
thorough evaluation of loT Devices' hardware to ensure adherence to specified standards and
comprehensive evaluation of security aspects in the loT Devices.
9. For more details, Ministry of Electronics & Information Technology’s latest Model RfP
Documents for Selection of Implementation Agencies78 (which includes Guidance Notes) may
please be referred.
9.10 Hiring Consultants for Digital India Projects
1. Overview: The Digital India initiative, under the Ministry of Electronics and Information
Technology (MeitY), seeks to transform India into a digitally empowered society and
knowledge economy. The hiring of consultants is pivotal for implementing large-scale e-
governance and technology projects that support this vision. National e-Governance Division
(NeGD) an autonomous business division within Digital India Corporation, has established a
robust framework for hiring consultants through empanelment of qualified consulting
organizations. More details are available in NeGD’s notification79.
_______________________
77 Detailed in IPHW Division of MeitY’ s No.W-43/6/2020-IPHW dtd 24.02.2024
78 https://www.meity.gov.in/writereaddata/files/model_rfp_for_selection_of_implementation_agencies-2018.pdf
79 F.N. N-22018/33/2022-NeGD dated 17.05.2024
152Manual for Procurement of Consultancy Services, Second Edition, 2025
2. Empanelment and Scope of Services NeGD has empanelled consulting
organizations through a competitive Request for Empanelment (RFE) process. This
empanelment is valid for three years, extendable by two years. The empanelment framework
simplifies the hiring process, ensuring quick access to skilled professionals while maintaining
cost and quality control. This ensures the availability of specialized skills, adherence to
national standards, and alignment with the program's vision of fostering a digitally empowered
society. Government entities are encouraged to utilize this framework to achieve seamless
execution of their digital transformation projects. By leveraging following three pre-defined
categories and standardized rates, government organizations can efficiently implement
diverse Digital India initiatives, ranging from large-scale IT system rollouts to innovative
technology adoption.:
3. Categories:
a) Project/Program Management and Advisory Services (Category A)
i) Developing project proposals, roadmaps, and templates.
ii) Managing e-governance projects, including agile methodologies, bid processes,
and change management.
iii) Conducting audits (security, performance, and quality) and risk assessments.
b) Digital Ecosystem and Architecture Development (Category B)
i) Designing digital ecosystem blueprints in line with national standards.
ii) Preparing implementation plans, including business requirements, data
governance strategies, and technology modernization approaches.
iii) Supporting the adoption of scalable and agile solutions.
c) Technology Management and Emerging Technologies (Category C)
i) Advising on emerging technologies such as AI, blockchain, IoT, and quantum
computing.
ii) Ensuring technology compliance and managing cybersecurity and GIS solutions.
4. Hiring Process: The hiring of consultants involves the following steps:
a) Request for Proposals or Concept Notes: Ministries, departments, and other
government organizations leveraging NeGD's empanelment notify empanelled
agencies about specific assignments. Agencies submit technical proposals or
concept notes, which are evaluated on merit.
b) Selection and Deployment: Selected agencies deploy consultants with expertise
relevant to the project. Consultants are required to provide their own equipment and
work collaboratively with government teams at designated project sites.
c) Terms of Engagement: Empanelled consultants operate on a time-limited project
basis without implying employment obligations by NeGD. Sub-contracting of services
is prohibited.
d) Compliance and Terms:
i) Intellectual Property Rights: All intellectual property generated during the
project belongs to NeGD or the client organization.
ii) Performance Standards: Consultants must adhere to timelines and quality
benchmarks specified in the work order.
iii) Penalties and Termination: Delays or non-performance can result in penalties
up to 10% of the project value or termination of the engagement.
153Chapter 9: Special Types of Engagements
iv) Confidentiality: Consultants must maintain confidentiality of all project-related
data.
154Manual for Procurement of Consultancy Services, Second Edition, 2025
Chapter 10: Monitoring Consultancy Services
Contract
10.1 Contract Management
10.1.1 The Purpose of Contract Management
1. The purpose of contract management is to ensure that the contract delivers the desired
outcomes as per the terms and conditions of the contract. It also ensures that the payments
made to the contractor match the performance. Implementation of the contract should be
strictly monitored, and notices issued promptly whenever a breach of provisions occurs.
Monitoring should ensure that contractor adhere to contract terms, performance expectations
are achieved (such as timelines, quality of outcomes, discharge of Consultant’s contracted
obligations, and so on) and any problems are identified and resolved in a timely manner.
Without a sound monitoring process, there can be no assurance that “we get what we pay and
contract for and pay for only for what we get.” Normally, the following issues are handled in
management of Services Contracts:
a) Contract Administration:
i) Issuing the notice to proceed;
ii) Meetings and Reviews
iii) Amendments/ variations to the contract;
iv) Obligations Control: Monitoring that key experts and contracted resources are
actually employed.
v) Safeguards for handing over Procuring Entity materials/ equipment to
contractors;
vi) Resolving problems faced by consultants;
vii) Dispute resolution and arbitration;
viii) Breach of contract, remedies, and termination of services prior to the end of the
contract;
ix) Contract closure upon completion;
b) Scope Control and Quality Assurance:
i) Deciding on possible modifications to scope of work and issuing contract
variations;
ii) Monitor that all deliverables are delivered as per contract - reports including draft
final report and the final report.
iii) Quality assurance: Review quality of outcomes at inception phase, mid-term, and
final phase.
c) Time Control: Monitoring progress and delays in timelines/ milestones of assignment;
d) Cost Control:
i) Billing, payment and monitoring the expenditure vis-à-vis progress;
ii) Release of final payment and guarantees (if any) and closing the contract;
e) Post contract evaluation.
2. Due to lack of physically/ tangibly measurable outcomes in Services contracts, intense
and continuous monitoring of the Contract by the Procuring Entity is essential for the success
of the assignment. Suitable provision for this should be made in the contracts which should
155Chapter 10: Monitoring Consultancy services Contract
also take care of the need to terminate/ penalize the consultant or to suspend payments till
satisfactory progress has not been achieved. The Procuring Entity shall form a Contract
Monitoring Committee (CMC) to monitor the Contract. The Procuring Entity should also
designate a counterpart Project Manager with adequate technical qualification, managerial
experience, and power and authority as the nodal person to interact with the consultant’s team.
A system of reporting may be developed so that a statement covering all ongoing Consultancy
contracts may be submitted within the Department in detail, so as to enable Management by
Exception based on various Risk and Mitigation strategies pointed out at relevant process
milestones in this manual. (Rule 195 of GFR 2017).
10.1.2 Contract Monitoring Committee – (CMC)
1. Rule 205 of GFR 2017 enjoins that the Ministry or Department be involved throughout
the conduct of the contract and continuously monitor the performance of the contractor. The
Procuring Entity shall constitute a CMC comprising at least three members at the appropriate
level, including the user's representative, after the selection procedure is over for monitoring
the progress of the contract. If considered appropriate, the Procuring Entity may select all or
any of the members of CEC as members of CMC. The Procuring Entity may also include
individual experts from the government/ private sector/ educational/ research institute or
individual consultant in the CMC. The cost of such members, if any, shall be borne by the
Procuring Entity. The CMC shall be responsible for monitoring the progress of the assignment,
to oversee that the assignment is carried out as per the contract, to assess the quality of the
deliverables, to accept/ reject any part of assignment, to levy appropriate liquidated damages
or penalty if the assignment is not carried out as per the contract and if the quality of services
is found inferior and for any such deficiency related to the completion of the assignment.
2. For the assignments which are overly complex and/ or are of highly technical nature,
the Procuring Entity may decide to appoint another qualified consultant to assist the CMC in
carrying out its functions.
10.2 Contract Administration
10.2.1 Issuing Notice to Proceed, Kick-off Meeting and Pre-requisites.
1. A notice to proceed is required to initiate consultancy services. It is normally issued as
soon as possible after the contract has been signed. After the issuance of the notice to
proceed, the contract normally commences upon the arrival of the consultant or the
Consultancy team’s members at the premises for the Procuring Entity, if so required under the
description of services.
2. A kick-off meeting is held, where the parties discuss and make sure that they are on
same page as far as the outcomes and the contract management issues are concerned. The
Procuring Entity and the consultant agree on the detailed content of outputs - inception,
progress, and final report. Schedule of meetings and reviews are also laid down during this
discussion.
3. Before issuing notice to proceed, the Procuring Entity and the consultant should check
that all pre-requisites for the contract execution are in place:
a) Supervising/ monitoring arrangements (including CMC) are in place;
b) Procuring Entity’s counterpart staff (including counterpart project manager) are
nominated and are available;
c) Facilities to be provided by the Procuring Entity as per the contract are ready for use
by the consultant;
156Manual for Procurement of Consultancy Services, Second Edition, 2025
d) All parties involved in the assignment (users, security team and other relevant
departments) are informed;
e) All consortium/ JV members and key experts needed at the beginning of the
assignment are effectively participating in the assignment as required by the
Contract;
f) Guarantees and advance payments, if any, are implemented;
g) Data and background information are made available; and
h) All authorisations (if needed) are provided.
10.2.2 Review of Inception Phase
For more complex consultancies, the work is divided into phases, of which one of the most
critical is the inception phase. The inception phase covers the submission and review of the
work plan with the Procuring Entity, and the initiation of the field work. It is common for an
inception report to be prepared to cover the consultant’s experience and observations during
this period, and often a workshop or seminar is held to discuss it. This may also be a milestone
for payment. Resulting from the factual study of ground situation by the consultants, following
issues will need resolution at end of the inception phase:
1. Overall, Scope of Work;
2. Work Plan and Staffing Schedule;
3. Specific Terms of Reference;
4. Access to Professional and Logistic Support;
5. Working Arrangements and Liaison
10.2.3 Reporting and Monitoring of Progress
1. Monitoring of Contract should ensure that Consultants adhere to contract terms,
performance standards are achieved (such as timely deliverables, service outputs/ outcomes,
adherence to the proper procedure for submitting invoices, and so on), and any problems are
identified and resolved in a timely manner. Without a sound monitoring process, there can be
no assurance that the buyer has received what was contracted and is paying only for what is
received. A sound system for monitoring the performance of the contractor in a contract would
also be useful in selecting a good consultant for future procurement of the same or similar
assignments. Implementation of the contract should be strictly monitored, and notices should
be issued promptly whenever a breach of provisions occurs.
2. Monitoring of progress: The timing, nature, and number of reports that the consultant
should provide are normally contained in the Consultancy services contract. If the assignment
is of a routine nature over an extended period (for example, implementation supervision), then
monthly, quarterly, and annual progress reports may be required. On the other hand, if the
assignment is to prepare a study or to implement a particular task, a more specific type of
reporting may be required. This could entail, besides the inception report mentioned above,
interim or midterm reports, design reports, reports at the end of each phase of the work, a
draft final report, and a final report. These may be provided in a number of media and formats
but normally will entail hard and soft copy versions. The production or acceptance of various
reports is often used as a milestone for payments. CMC should review the reports as they are
produced (in final report draft final report is also reviewed), to provide feedback, and to monitor
the implementation progress of the assignment. Shortcomings in the quality of the work
produced or deviations from the implementation schedule should be brought to the immediate
attention of the CA, so that they can be addressed at the earliest opportunity.
157Chapter 10: Monitoring Consultancy services Contract
3. Costs of Delays in Contract Management Decisions: Payments and decisions in
contract management requested by the contractor should be made within a reasonable time.
An atmosphere of lackadaisical dilatory functioning in such matters is liable to lead to bidders
quoting higher prices in future bids, besides delays in services and disputes in the contract.
4. Monitoring Deliverables/ Outputs/ Outcomes: Especially in consultancy services,
progress of deliverables/ outcomes/ outputs has also to be monitored. There should be a
stipulation in the contract for large value works (magnitude to be specified), for the Consultant
to submit project specific monthly progress report of the work in a computerized form
(Management Information System Reports– MIS reports). The progress report shall contain
the following apart from whatever else may be required to be specified:
a) Project information, giving the broad features of the contract.
b) Introduction, giving a brief scope of the work/ Activity Schedule under the contract.
c) Progress of assignment through a bar chart for the next three quarters for as may be
specified, showing the milestones, targeted tasks and up to date progress.
d) Progress chart of the various components of the assignment that are planned and
achieved, for the month as well as cumulative up to the month, with reasons for
deviations, if any, in a tabular format.
e) Resources/ tools/ equipment statement, indicating those deployed, and their working
status.
f) Man-power statement, indicating individually the names of all the key-staff. Monthly
or fortnightly progress review by Procuring Entity with contractor may be necessary
to ensure that contractor deploys sufficient resources to meet the deadlines.
g) Financial statement, indicating the broad details of all the running account payments
received up to date, such as gross value of work done, advances taken, recoveries
effected, amounts withheld, net payments, details of cheque payments received, etc.
h) A statement showing the variations/ change requests submitted by the contractor, and
the payments received against them, broad details of the bank Guarantees, clearly
indicating their validity periods, broad details of the insurance policies taken, if any,
the advances received and adjusted from the department, etc.
i) Progress photographs/ videography, in colour, of the various items/ components of
the work done up to date, to indicate visually the actual progress of the work. Use of
Geotagging (adding geographical metadata - latitude and longitude coordinates) in
photos, videos, reports, may help in monitoring physical progress on the ground. Such
information would also be useful later during use of such facilities.
j) Quality assurance and quality control tests conducted (for example in the case of
construction supervision consultancy contracts) during the month, with the results
thereof.
k) Any hold-up shall be specified.
l) Dispute, if any, shall also be highlighted.
5. Monitoring a Time-based Contract: As indicated earlier, the performance of a time-
based contract may depend on the progress in other contracts (for example, the progress of
a construction supervision contract depends on the progress of a construction contract). In
such situations, the mobilisation and demobilisation of resources/ key experts and time
employed by them should be mobilised and monitored carefully as it is possible that the
contract period and the total amount under the contract are spent fully, and construction work
158Manual for Procurement of Consultancy Services, Second Edition, 2025
being supervised is not even half complete. These situations could lead to claims and
disputes.
6. Monitoring a Lump-sum Contract: As Lump-sum contract is based on output and
deliverables, it important that the quality of draft reports is checked carefully before release of
stage payment as subsequent dispute after completion of the task could lead to disputes. In
this form of contract, if there are extra additional services, there should be timely amendment
to the contract to reflect these increases and to regulate payment. In general, in a lump-sum
contract, the increase should not be more than 10-15 (ten to fifteen) per cent.
10.2.4 Issuing Contract Amendments/ Variations
1. The formal method of making and documenting a change in the Consultancy Services
contract is through a contract variation. There are few Consultancy Services contracts of any
type that do not require a contract variation at one time or another. Contract variations are
issued when there are agreed-upon changes in the scope of work, personnel inputs, costs,
timing of the submission of reports, or out-of-pocket expenditures. Normally, these relate to
changes that have a cost implication, but when there is a significant change in the timing of
an activity or a particular output, these should also be recorded through a contract variation.
No amendment to the contract should be made that can lead to a vitiation of the original tender
decision or bestow an undue advantage on the contractor. Where it becomes necessary/
inescapable, any modification shall be carried out with the prior approval of the CA.
2. Normally, the request for contract variation is prepared by the consultant or
Consultancy firm and submitted to the Procuring Entity. However, these can also be initiated
by the Procuring Entity, suo-moto. If the contractor does not raise objections within 14 days to
any suo-moto modifications/ amendments made by the Procuring Entity, it shall be assumed
that the contractor has consented to the amendment.
3. To take care of any change in the requirement during the contract period of IT Projects
as well, there could be situations wherein variations in the scope of work becomes necessary.
These situations should be dealt with objectivity and fairness and should not be considered to
unduly push the vendor to undertake work or take risks which was not explicitly communicated
in the tender document. At the same time, the contractor should not consider this as an
opportunity to unduly charge the Procuring Entity due to lack of available options. Generally,
the value of the change request should not be more than plus/ minus 15 (Fifteen) per cent.
The RfP document should contain detailed mechanism through which such change requests
would be carried out. A ‘Change Control Board/ Committee’ may be constituted by the
Procuring Entity including experts from academics and industry to consider and approve the
proposed change requests. The decisions of this board/ committee (both technical as well as
financial) should be considered as final. Wherever variation is done through such a committee,
all the members should sign the minutes of the recommendations.
4. No amendment shall be binding on the Procuring Entity unless and until the same is
written and signed/ authorised by a competent authority.
5. Any amendment to the contract may have, inter alia, financial/ technical/ legal
implications. The indentor may be consulted regarding the technical implications. Associated/
integrated Finance’s concurrence should be obtained before issuing any amendment that has
financial implications/ repercussions. Further, if considered necessary, legal opinion may also
be sought.
159Chapter 10: Monitoring Consultancy services Contract
10.2.5 Obligations Control: Deployment of Resources
1. Deployment of Resources and Penalty for Absence:
a) Consultant must deploy the contracted resources, maintaining adequate records of
attendance and audit trails. The Consultant shall be liable for all kinds of dues payable
in respect of all personnel provided under the contract and the Procuring Entity shall
not be liable for any dues for availing the services of the personnel. The Consultant
should ensure that persons to be deployed are not alcoholic, drug addict and not
indulge in any activity prejudicial to the interest of the Procuring Entity.
b) Penalty for absence: In the case of absence (apart from allowed leaves) of a resource
during project period, no payment will be made for the days a resource is absent
(Daily wage will be calculated by dividing man month rate by number of working days
in that month). In addition, a penalty (say 5% of the daily wage) per working day per
resource will be levied on such absence. Fraction of a day in reckoning period in
supplies shall be eliminated if it is less than half a day. Penalty would be deducted
from the applicable payments.
2. Substitution of key personnel during the execution of a consultancy contract is a
common type of variation that may occur due to unavoidable circumstances such as
resignation, illness, accident, inadequate performance, or personality conflicts. Given the
importance of key personnel in ensuring the quality of consultancy services, the following
provisions and guidelines should be incorporated into the contract and tender documents
to manage such substitutions effectively:
a) Conditions for Substitution: Substitution of key personnel should only be allowed in
compelling or unavoidable situations.
i) The replacement should be of equivalent or higher qualifications and experience
compared to the person being replaced, to ensure the continued quality of service.
ii) Any replacement should be subject to the procuring entity's approval, ensuring
satisfaction with the substitute’s credentials.
b) Limitations on Substitutions: Substitution should typically be limited to no more than
30% of the total key personnel deployed under the contract. This is to maintain the
overall integrity and continuity of the project. The remuneration for replacements
should not exceed the amount agreed upon for the original personnel. A system of
remuneration reduction should be introduced for substitutions, with decreasing
payment structures for repeated replacements: For the first 10% of replacements, a
5% reduction in remuneration may be applied.
i) For the next 10%, a 10% reduction may be applied.
ii) For the third 10%, a 15% reduction may be applied.
iii) These reductions would apply from the date of replacement until the contract's
completion. If necessary, the procuring entity may develop a different but similar
remuneration adjustment system, reflecting these principles, to suit specific
contract needs.
c) Cost Implications: The consultant should bear all costs arising from or incidental to
the replacement, such as travel expenses for the substitute expert.
d) Monitoring Substitution and Deployment: To ensure compliance, public
authorities may implement IT-enabled systems at the deployment site to monitor the
presence of key personnel as per the deployment schedule.
3. Unsatisfactory Performance by Personnel: Poor performance may involve one or more
particular staff from the consultant’s team, or the whole team or non-participation by the
160Manual for Procurement of Consultancy Services, Second Edition, 2025
main qualifying consortium/ JV member. Based on the provisions of the contract, the
Procuring Entity will advise the consultant to take the necessary measures to address the
situation. Poor performance should not be tolerated; therefore, the consultant should act
quickly to comply with a reasonable request to improve the performance of the team or to
replace any particular staff member who is not performing adequately. If the consultant
fails to take adequate corrective actions, the Procuring Entity may take up the issue with
the top management of the consultant and issue notice to rectify the situation and finally
consider terminating the contract.
4. Changes in Constitution/ Financial Stakes: The Contractor must proactively keep the
Procuring Entity informed of any changes in its constitution/ financial stakes/
responsibilities during the execution of the contract, since that may vitiate the legal basis
of the Contract. Where the contractor is a partnership firm, the following restrictions shall
apply to changes in the constitution during the execution of the contract:
a) a new partner shall not be introduced in the firm except with the previous consent in
writing of the Procuring Entity, which shall be granted only upon execution of a written
undertaking by the new partner to perform the contract and accept all liabilities
incurred by the firm under the contract before the date of such undertaking.
b) On the death or retirement of any partner of the contractor firm before the complete
performance of the contract, the Procuring Entity may, at his option, terminate the
contract for default as per the Contract and avail any or all remedies thereunder.
c) If the contract is not terminated as provided in Sub-para (b) above:
i) the remaining partners should give a written undertaking to perform the contract
and accept all liabilities (including those of the expired/ retired partner) incurred
by the firm under the contract before the date of such an event.
ii) notwithstanding the retirement of a partner from the firm, that partner shall
continue to be liable under the contract for acts of the firm until a copy of the
public notice given by him under Section 32 of the Partnership Act, has been sent
by him to the Procuring Entity in writing or electronically.
4. Obligation to Maintain Capability - Key Personnel, Critical Equipment: The
contract is awarded to the contractor based on specific eligibility and qualification criteria. The
Contractor is contractually bound to maintain such eligibility and qualifications during the
execution of the contract. Any change which would vitiate the basis on which the contract was
awarded to the contractor should be pro-actively brought to the notice of the Procuring Entity
within 7 days of it coming to the Contractor’s knowledge. These changes include but are not
restricted to change regarding any declarations in this regard made by it in its bid. Contractor
should also indicate remedial measures he is taking in this regard, and how he proposes to
ensure smooth execution of contract.
5. Avoiding Conflict of interest: Neither the contractor nor its Subcontractors nor the
Personnel shall engage, either directly or indirectly, during the term of this Contract, any
business or professional activities in India that would conflict with the activities assigned to
them under this Contract and after the termination of this Contract, such other activities as
may be stipulated in the contract.
6. No Assignment/ Sub-contracting: The contractor shall not, save with the previous
consent in writing of the Procuring Entity, sublet, transfer, or assign the contract or any part
thereof or interest therein or benefit or advantage thereof, in any manner whatsoever. He shall
notify the Procuring Entity in writing, all sub-contracts awarded under the contract, if not
already stipulated in the contract, in its original bid or later. Such notification shall not relieve
161Chapter 10: Monitoring Consultancy services Contract
the contract from any of its liability, or obligation under the terms and conditions of the contract.
Sub-contracts shall be only for bought out items and incidental Works/ Services. Sub-contracts
must comply with and should not circumvent Contractor’s compliance with its obligations. If
the Contractor sublets or assigns the contract or any part thereof without such permission, the
Procuring Entity shall be entitled, and it shall be lawful on his part, to treat it as a breach of
contract and avail any or all remedies thereunder.
7. Indemnifying Procuring Entity regarding Intellectual Property (IPR): All
deliverables, outputs, plans, drawings, specifications, designs, reports, and other documents
and software submitted by the contractor under this Contract shall become and remain the
property of the Procuring Entity and subject to laws of copyright and must not be shared with
third parties or reproduced, whether in whole or part, without the Procuring Entity’s prior written
consent. The contractor shall, not later than upon termination or expiration of this Contract,
deliver all such documents and software to the Procuring Entity, together with a detailed
inventory thereof. The contractor shall indemnify the Procuring Entity against any breach of
third party’s IPR. The Contractor (and its allied firms) shall maintain confidentiality and secrecy
of Procuring Entity’s information provided to it (or that it comes across during execution of
Contract).
8. Performance Security:
a) The Contractor must maintain the Performance Security of the required amount in
specified format during the currency of the Contract. In the event of any amendment
issued to the contract, the contractor shall furnish suitably amended value and validity
of the Performance Security in terms of the amended contract within twenty-eight
days of issue of the amendment.
b) If the contractor during the currency of the Contract fails to maintain the requisite
Performance Security, it shall be lawful for the Procuring Entity at its discretion at its
discretion to either terminate the Contract for breach of contract and avail any or all
contractual remedies, or without terminating the Contract, recover from the contractor
the amount of such security deposit by deducting the amount from the pending bills
of the contractor under the contract or any other contract with the Procuring Entity or
the Government or any person contracting through the Procuring Organisation or
otherwise.
c) The Procuring Entity shall be entitled, and it shall be lawful on his part, to deduct from
the performance securities or to forfeit the said security in whole or in part in the event
of:
i) any default, or failure or neglect on the part of the contractor in the fulfilment or
performance in all respect of the contract under reference or any other contract
with the Procuring Organisation or any part thereof;
ii) for any loss or damage recoverable from the contractor which the Procuring
Entity may suffer or be put to for reasons of or due to above defaults/ failures/
neglect;
iii) and in either of the events aforesaid to call upon the contractor to maintain the
said performance security at its original limit by making further deposits, provided
further that the Procuring Entity shall be entitled, and it shall be lawful on his part,
to recover any such claim from any sum then due or which at any time after that
may become due to the contractor for similar reasons.
d) The performance security should be refunded to the contractor without interest, after
he duly performs and completes the contract in all respects but not later than 60
162Manual for Procurement of Consultancy Services, Second Edition, 2025
(sixty) days of completion of all such obligations including the warranty under the
contract. No claim shall lie against the Procuring Entity regarding interest on cash
deposits or Government Securities or depreciation thereof. Return of Bid/
Performance Securities should be monitored by the senior officers and delays should
be avoided. If feasible, the details of these securities may be listed in the e-
Procurement Portal/ website of the Procuring entity, to make the process transparent
and visible.
10.2.6 Incentives for Excellence in Contract Execution
Procuring Entities are encouraged to explore strategies that may incentivize contractors,
service providers and consultants, such as offering bonuses, improved ratings, or recognition
for early, timely, and quality completion of projects.
10.2.7 Safeguards for Handing over Procuring Entity Materials/ Equipment to
Contractors
For performance of certain contracts, Procuring Entity may have to loan stores, drawings,
documents, equipment, and assets (such as accommodation, identity cards and gate passes,
and so on) to the contractor. In certain situations, the contractor may also be supplied
electricity, water etc. on payment/ hire basis. Whenever stores or prototypes or sub-
assemblies are required to be issued to the firm/ contractor, these should be issued against
an appropriate bank guarantee. In addition to the bank guarantee, appropriate insurance may
be asked for if it is considered necessary. The Contractor shall use such property for the
execution of the contract and no other purpose whatsoever. These assets shall remain the
property of the Procuring Entity, and the contractor shall take all reasonable care of all such
assets. The contractor shall be responsible for all damage or loss from whatever cause caused
while such assets are possessed or controlled by the contractor, staff, workers, or agents. As
a measure of transparency, the possibility of provision of such resources by Procuring Entity
should have been announced in the tender document/ RfP or at least requested by the
contractor in the tender and written in the contract. Before the final payment or release of PBG/
SD, a certificate may be taken from the concerned Department that the contractor has returned
all documents, drawings, protective gear, material, equipment, facilities, and assets loaned,
including all ID cards and gate passes, and so on, in good condition. Further, it should be
certified that payment from the contractor has been received for usage of electricity, water,
crane, accommodation, weighing facility, and so on. For low value items of less than Rs.
1,00,000 (Rupees One Lakh), this stipulation of the bank guarantee may be waived and, if
feasible, an indemnity bond may be taken.
10.3 Controlling Scope of Supply and Quantity
10.3.1 Scope of Services
1. The Contractor must perform/ delivery Services of the description, scope/ quantum,
performance standards and quality outlined in the contract during the contract Period specified
therein. The Services shall conform to performance and quality standards as stipulated in the
contract or as per the best standards in the market, where not so specified. The Services shall
include all incidental works/ Goods, and such other work-elements not mentioned explicitly in
this Contract, but that can be reasonably inferred from the Contract as being required for
attaining Completion of the Services.
163Chapter 10: Monitoring Consultancy services Contract
2. The contractor shall perform the Services and its obligations with all due diligence,
efficiency, and economy, observing sound management practices, and employ appropriate
advanced technology and safe methods as per the performance standards and quality control
parameters stipulated in the contract. For matters where the contract does not specify any
Standard, the Services delivered shall conform to National/ International Standards or
generally accepted professional techniques and practices.
10.3.2 Performance Standards, Quality Control
1. The Procuring Entity shall check the quality of the Services and shall inspect the
contractor’s performance according to the Contract. The Procuring Entity shall promptly notify
the contractor of any identified defects, requesting the correction of the notified defect within
a reasonable time.
2. If the contractor has not corrected notified defect within the time stipulated in the
Procuring Entity’s notice, the Procuring Entity shall assess the cost of having the defect
corrected. Without prejudice to any of its other remedies under this Contract or applicable law,
procuring Entity shall be legally entitled to deduct such cost from the contract’s payments,
together with the damages for the shortfall in performance (as per clause below), a sum
equivalent to the percentage stipulated in the contract.
3. Damages for Shortfall in Performance: Procuring Entity’s shall, without prejudice to
other rights and remedies under the contract, recover as damages for the shortfall in
performance, but not as a penalty, 0.5 (half) percent (or any other percentage prescribed) of
the delivered price (including elements of GST & freight) of the defective Services, without
having to prove actual loss incurred.
10.4 Time Control
10.4.1 Delays in Performance of Services:
1. Contractor shall be required to adhere to the delivery schedule (including any incidental
Work/ Goods) specified in the Contract (or as extended) and, if there is a delay in performance
of services, it amounts to breach of contract, since ‘Time is the Essence of the Contract’. The
consultant should notify the Procuring Entity and explain the causes of such delays.
Consultancy Services may be delayed for a variety of reasons, including sometimes delays in
discharge of its obligations by the Procuring Entities.
2. Delays Attributable to the Consultant: In case of delays attributable to the
Consultant. the Procuring Entity may without prejudice to his other rights:
a) recover from the contractor liquidated damages as per para 10.4.5 below, or
b) treat the delay as a breach of contract as per para 10.8.1 below and avail all the
remedies therein, although it is in purchaser’s interest to resort to this provision only
as a last resort, in case of inordinate delays.
3. Delay in Performance for which Consultant is not Responsible:
a) In cases where there is a delay for which the Consultant is not responsible; the
delivery period needs to be re-fixed without imposing any penalty (i.e., without LD
and without a denial clause). If corrective action requires extra work and the delay
cannot be attributed to the consultant the extra work should be reimbursed in
accordance with the contract. Normally, in the following circumstances, the
Consultant may not be considered to be responsible for the delay:
164Manual for Procurement of Consultancy Services, Second Edition, 2025
i) Cases where the Consultant is dependent on the approval/ decision of the
Procuring Entity, and the delay occurs in such approval/ decision, though
requested by the Consultant in time;
ii) Where extension in the delivery period is granted on account of some omission
on the part of the purchaser, which affects the due performance of the contract
by the Consultant,
iii) Cases where the service delivery has been affected by Force Majeure or
statutory change or specific executive instructions issued by Govt.
b) There may be delays for which both buyer and consultant may be responsible to a
different extent. In such cases, the levy of LD and Denial clause may be decided on
merits.
4. Inordinate Delays: Inexcusable delays of more than one-fourth (25%) of the total
completion period shall be treated as inordinate delays. Such inordinate delays may be treated
as breach of contract and shall be noted as deficient performance and be held against the
contractor in future tenders. A show-cause notice shall be issued to the contractor before
declaring it a deficient performance. Such delays may be considered as a breach of the
contract at the option of the Procuring Entity.
10.4.2 Extension or Refixation of Delivery
1. If at any time during the currency of the contract, the contractor encounters conditions
hindering timely delivery of services, he shall promptly inform the concerned officer in
writing. He should mention its likely duration and make a request for extension of the
schedule accordingly. On receiving the contractor’s communication, the procuring entity
shall examine whether the delay is attributable to the contractor or not (Please refer to
para 10.4.1 above).
2. Refixation of Delivery: In case the delay is not attributable to the Consultant (or in case
of Force Majeure) the proposal (refer to Annexure 21) and, on approval from the CA, may
agree to re-fix delivery period (i.e. a fresh delivery period, treated like original delivery
period), which is arrived at by recasting the original contractual delivery period after taking
care of the lost period for which the consultant was not responsible, without LD and without
the denial clause (as defined in Para 10.4.4 below), for completion of the contractor’s
contractual obligations.
3. Extension of Delivery: In case the delay is attributable (fully or partly) to the Consultant
the proposal (refer to Annexure 21) and, on approval from the CA, may agree to extend
the delivery schedule, with or without LD and with or without the denial clause (as defined
in Para 10.4.4 below), for completion of the contractor’s contractual obligations, provided:
a) That a higher rate in the original tender was not accepted against other lower
quotations in consideration of the earlier delivery; and
b) That there is no falling trend in prices for this item as evidenced from the fact that, in
the intervening period, neither orders have been placed at rates lower than this
contract nor any tender been opened where such rates have been received even
though the tender is not yet decided. In cases of certain raw material supplies, where
prices are linked to the PVC, extension may be granted even in case of a falling trend
in price indices, since the purchaser’s interests are protected by the price variation
mechanism. However, in such cases it should be ensured that extensions are done
with the denial clause.
4. Extension/ Refixation of time after its expiry: The power to extend the time for
performance under Section 63 of the Indian Contract Act is not inherently limited to
165Chapter 10: Monitoring Consultancy services Contract
extensions granted before the original deadline. It can be exercised even after the
stipulated time has passed, provided there is consent from both parties. The contract does
not automatically terminate upon the expiry of the initial delivery date, if there is a shared
intention to continue the contractual relationship and fulfil the obligations, albeit under a
revised timeline. Therefore, such extension/ refixation of time can be done, even after
expiry of original period, provided consent of the contractor is obtained. However, it is
prudent to formalize the extension before the original delivery period expires, to avoid any
arguments about the contract's validity or of extension of time after the initial deadline.
5. Extension/ Refixation of the delivery date amounts to amendment of the contract. Such
an extension can be only done with the consent of both parties (that is, the purchaser and
supplier). No extension/ refixation of the delivery date is to be granted suo motu unless the
supplier specifically asks for it. However, in a few cases, it may be necessary to grant an
extension/ refixation of the delivery period suo motu in the interest of the administration.
In such cases, it is legally necessary to obtain clear acceptance of the extension letter from
the supplier.
6. No correspondence should be entered into with the supplier after expiry of the contract
delivery period or towards the end of it, which has the legal effect of condoning the
delay/breach of contract. When it is necessary to obtain certain information regarding past
supplies, it should be made clear that calling for such information is not intended to keep
the contract alive and that it does not waive the breach and that it is without prejudice to
the rights and remedies available to the purchaser under the terms of the contract. The
last line of such a communication should therefore be: “This letter is issued without any
prejudice to Procuring Entity’s rights and remedies under the terms and conditions of the
subject contract and without any commitment or obligation.” A format for such
correspondence is given in Annexure 23.
7. When it is decided to extend the delivery period subject to recovery of Liquidated Damages
(LD) for delay in supplies, contractors must be given a warning to this effect in writing at
the time of granting extensions. It is not correct to grant extensions without any mention of
the LD if it is proposed to recover such charges eventually. It is also not correct to grant
an extension of the delivery period by merely stating that the extension is granted “without
prejudice to the rights of the purchaser under the terms and conditions of the contract” as
this would mean that all the options given in the conditions of the contract would be
available to the purchaser on expiry of the extended delivery period and would not amount
to exercise of the option to recover LD. To take care of complex legalities brought out
above, extension of the delivery period when granted should only be done in writing in the
laid down format given in Annexure 22.
8. Organisations may put in place a graded authority structure whereby extension of time for
completion of contract, beyond a specified threshold value of contract, may be granted by
the next higher authority.
10.4.3 Performance Notice
A situation may arise where the supply/services has not been completed within the stipulated
period due to negligence/fault of the consultant; however, the supplier has not made any
request for extension of the delivery period, but the contracted goods/services are still required
by the purchaser and the purchaser does not want to cancel the contract at that stage. In such
a case, a performance notice (also known as notice-cum-extension letter) may be issued to
the supplier by suitably extending the delivery date and by imposing LD with denial clauses,
and so on, along identical lines as in para 10.4.2 above. The supplier's acceptance of the
166Manual for Procurement of Consultancy Services, Second Edition, 2025
performance notice and further action thereof should also be processed in the same manner
as mentioned above. The text of the performance notice will be on similar lines to the Annexure
22.
10.4.4 Denial Clause
If delay in delivery is attributable to the consultant, the procuring entity should protect itself
against extra expenditure during the extended period by stipulating a denial clause (over and
above levy of LD) in the letter informing the supplier of extension of the delivery period. In the
denial clause (applicable for delays attributable to consultant), any increase in statutory duties
and/or upward rise in prices due to the PVC clause and/or any adverse fluctuation in foreign
exchange are to be borne by the consultant during the extended delivery period, while the
purchaser reserves his right to get any benefit of a downward revisions in statutory duties,
PVC, and foreign exchange rate. Thus, in cases of delays attributable to Consultant, PVC,
other variations, and foreign exchange clauses operate only during the original delivery period.
The format of the denial clause is available in Annexure 22.
10.4.5 Liquidated Damages
Compensation of loss on account of late delivery (actually incurred as well as notional) where
loss is pre-estimated and mutually agreed to is termed as LD. Law allows recovery of pre-
estimated loss provided such a term is included in the contract and there is no need to
establish actual loss due to late supply [MallaBaux Vs. UOI (1970)]. However, it would
strengthen Procuring Entity’s rights, if it is established and kept on record, that inconvenience
and loss has been caused due to the delay in supplies, though the loss cannot be exactly
quantified, and hence liquidated damages are applicable as a genuine pre-estimate of the
loss.
10.4.6 Quantum of LD
1. While granting extension of the delivery period for delays attributable entirely to the
contractor, where the delivery of services or any activity thereof is accepted after expiry of the
original delivery period, the Procuring Entity may recover from the contractor, as liquidated
damages for each week of delay or part thereof until actual delivery or performance, but not
as a penalty, a sum equivalent to the 0.5% (half percent, or any other percentage if prescribed)
of the value of delayed portion (that includes variations, taxes and duties) of the Services,
subject to a maximum of 5% (Five percent) of the total contract value. Besides liquidated
damages during such a delay, the denial clause shall also apply. The Procuring Entity may
deduct liquidated damages from payments due to the consultant. Payment of liquidated
damages shall not affect the consultant’s liabilities. For purpose of GST, LD should be shown
as deduction on the invoice value by the contractor.
2. In case of inordinate delays, this upper limit of LD shall be 10% (Ten percent) of the
contract value. (Refer para 10.4.1-4 to understand inordinate delay).
3. In contracts governed by any type of variation (PVC, ERV or statutory variations), LDs
(if a percentage of the price) will be applicable on the price as varied by the operation of the
PVC.
4. In case of delays for which both procuring entity and consultant may be responsible to
a different extent, procuring entity with the approval of CA and concurrence of finance decide
a lower quantum of LD, and consider waiver of denial clause on the merit of the case.
5. LDs accrue only in case of delayed services. Where or as far as no services have been
rendered under a contract, upon cancellation, recovery of only the loss occasioned by breach
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of contract can be made, notwithstanding the fact that prior to the cancellation one or more
extensions of the delivery period with reservation of the right to LD are granted.
10.4.7 Waiver of LD
1. There should normally be no system of waiver of LDs for delayed services and it may
strictly be an exception rather than a rule. For an extension of the delivery date with waiver of
LD, approval of the CA with consultation of associated Finance may be taken and justifications
recorded.
2. Government establishments/ Departments, as distinct from PSUs, which execute
contract should not be dealt with as ordinary contractors and not generally be penalised for
late delivery and claims for loss on risk-purchase should not be enforced against them. Serious
cases of defaults should, however, be brought to the notice of the HOD or the Government
Department concerned.
3. As mentioned in para 10.5.3-3-e) below, for purpose of GST, liquidated damages
should be shown as deductions on the invoice value by the contractor
10.4.8 Limit on total Damages.
Deduction on account of damages for delays and performance, put together shall be subject
to a maximum of 5% (Five percent) (or any other percentage if prescribed) of the entire value
of Contract of Services. The damages cannot exceed the amount stipulated in the contract.
10.4.9 Force Majeure
1. A Force Majeure (FM) means extraordinary events or circumstance beyond human
control such as an event described as an act of God (like a natural calamity) or events such
as a war, strike, riots, crimes (but not including negligence or wrong-doing,
predictable/seasonal rain and any other events specifically excluded in the clause). An FM
clause in the contract frees both parties from contractual liability or obligation when prevented
by such events from fulfilling their obligations under the contract. An FM clause does not
excuse a party's non-performance entirely, but only suspends it for the duration of the FM.
The firm has to give notice of FM as soon as it occurs, and it cannot be claimed ex-post facto.
There may be a FM situation affecting the purchase organisation only. In such a situation, the
purchase organisation is to communicate with the supplier along similar lines as above for
further necessary action. If the performance in whole or in part or any obligation under this
contract is prevented or delayed by any reason of FM for a period exceeding 90 (ninety) days,
either party may at its option terminate the contract without any financial repercussion on either
side.
2. Notwithstanding the punitive provisions contained in the contract for delay or breach
of contract, the supplier would not be liable for imposition of any such sanction so long as the
delay and/or failure of the supplier in fulfilling its obligations under the contract is the result of
an event covered in the FM clause.
10.5 Cost Control: Billing and Payments
10.5.1 Payment to Consultants
1. Periodic Payments:
a) Payment is made to the consultant based on a schedule agreed on in contract, often
based on certain milestones or outputs.
b) Release of payment and settlement of the final bill should be processed through the
Associated/ integrated Finance as per the terms and conditions of the contract;
168Manual for Procurement of Consultancy Services, Second Edition, 2025
c) No payments to contractors by way of compensation or otherwise outside the strict
terms of the contract or more than the contract rates should be allowed;
d) All correspondence with the supplier will be handled by procuring entity.
2. Invoices:
a) The consultant submits an invoice to the Procuring Entity detailing the expenditures
for personnel and out-of-pocket items.
b) The documents, which are needed from the supplier for release of payment, are to
be clearly specified in the contract. The paying authority is also to verify the
documents received from the supplier with corresponding stipulations made in the
contract before releasing the payment. The invoice submitted by the supplier shall be
verified and signed by the contract manager and pay order form or any other relevant
forms shall be prepared by the procuring entity and signed by an officer authorised
to sign pay-orders.
c) Before the payment is made, the invoice should be cross-checked with the actual
receipt of services to ensure that the payment matches the actual performance;
d) In normal practice, if any item needs further scrutiny before the Procuring Entity can
approve payment, payment of undisputed items should be made. But payment of any
disputed items will be withheld until the circumstances are clarified.
e) While claiming the payment, the supplier must also certify on the bill that the payment
being claimed is strictly in terms of the contract and all the obligations on his part for
claiming this payment have been fulfilled as required under the contract. There should
also be a suitable provision for verification of the authenticity of the person signing
the invoice, and so on, to claim the payment.
3. Deductions of Taxes: Deduction of applicable taxes at source from payments to
consultant shall be done as per the existing law in force during the currency of the contract.
As soon as possible, but not later than the date of submission of tax returns, the procuring
entity must provide the statutory certificates for the taxes deducted from the supplier so that
he can claim set-offs and refunds from the concerned authorities. Detailed payment advice
showing the calculations and reasons for the amounts disallowed and taxes deducted must
be issued to the supplier along with payment.
4. Timely Payment:
a) In a services contract, delivery of services is the essence of the contract for the
purchaser. Similarly, receiving timely payment for the services is the essence of the
contract for the consultant. A healthy buyer-contractor relationship is based on the
twin foundation of timely and quality service, on the one hand, and prompt and full
payment to the contractor, on the other. It should be ensured that all payments due
to the firm, including release of the performance security, are made on a priority basis
without avoidable delay as per the tender/contract conditions. Any foreseeable
payment delays should be communicated to the contractors in advance. Payments
and decisions in contract management requested by the contractors should be made
within a reasonable time. An atmosphere of lackadaisical dilatory functioning in such
matters is liable to lead to bidders quoting higher prices in future bids, besides delays
in services and disputes in the contract.
b) Additionally, procuring entities are encouraged to ensure final bill payments are
processed within three months of project completion. For contracts with payments
exceeding Rs.100 crore annually, it is recommended to implement an online system
169Chapter 10: Monitoring Consultancy services Contract
to track bill submissions and payments, providing contractors with transparency and
timely updates80.
5. Delay in payment to the contractors:
a) Public authorities may put in place a provision for payment of interest in case of
delayed payment of bills by more than 30 working days after submission of bill by the
contractor. Where interest is to be paid, the rate of interest should be the rate of
interest of General Provident Fund. In case of unwarranted discretionary delays in
payments, as prescribed above, responsibility shall be fixed on the concerned
officers. There should be a system to monitor delays in payments and to identify such
unwarranted delays including an online system for monitoring of the bills submitted
by contractors. Such system shall have the facility for contractors to track the status
of their bills. It shall be mandatory for all contractor’s bills to be entered into the system
with date of submission and date of payment. 81
b) As far as MSE contractors are concerned, MSME Act 2006 has provisions (refer to
para 1.10.1-4-c) for details) for timely payments within 45 days and a levy of penal
interest for delayed payment and arbitration/ conciliation for related complaints by
Micro and Small Enterprises Facilitation Councils.
6. Handling Securities: Proper procedures for safe custody, monitoring and return of
bank guarantees and other instruments may be followed. Chapter 6 has more details in this
regard. Before making a final payment or before releasing the performance bank guarantee,
a ‘No Claim Certificate’ (Annexure 24) may be insisted upon from the contractor to prevent
future claims. Whenever a bank guarantee is released following due procedure and
safeguards, acknowledgement thereof should also be taken from the contractor.
7. Advance Payment, as per Contract: The terms and conditions of such payments are
set out in the contract wherein the amount of advance payment is specified, as are the timing
of the payment and the amount of advance payment security to be provided by the Consultant.
The advance payment is set off by the Procuring Entity in equal instalments against monthly
billing statements until it has been fully set off. Once an advance has been provided, requests
for any additional advance are not considered until the consultant liquidates the previous
advance. The advance payment security is then released. In some contracts there may be
provision for mobilization fee to be paid. (Please refer to para 6.4)
8. Electronic Bill (e-Bill) processing system was announced in Union Budget 2022-
23, as part of ‘Ease of Doing Business and Digital India eco-system’ to bring broader
transparency and expedite the process of payments. It will enhance transparency, efficiency,
and faceless-paperless payment system. Contractors shall submit their bills electronically
through the e-Bill portal, wherever such facilities are available. Concerned authorities verify
these bills for discrepancies, authenticity, and adherence to rules. Once verified, the bills shall
be approved for payment. The approved bills are integrated with the electronic payment
systems. Funds are allocated from the relevant budget heads. The system generates payment
orders. The e-Bill system allows real-time on-line tracking of bill processing by Contractors.
10.5.2 Price Variations
1. In case the contract provides for a Price Variation Clause (PVC) or variation on any
other account, the price shall be subject to adjustment on a quarterly basis, as per such
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80
DoE’s OM NO.F.1/1/2021-PPD dtd 29.10.2021
81
DoE’s OM NO.F.1/1/2021-PPD dtd 29.10.2021
170Manual for Procurement of Consultancy Services, Second Edition, 2025
clauses, only during the original Delivery Period. With the payment of such variations, no
additional individual claim shall be admissible on account of fluctuations in market rates,
increases in taxes/any other levies/tolls, etc.
2. Please refer to para 6.5-2) for provisions of PVC (formula, base date, delivery date,
time lag for both base/ delivery dates, lower and upper cap on PVC, applicability of PVC during
after original delivery period);
3. Calculations for all variations should be based on the basic price without taxes and
duties. Therefore, contracts involving customs duty, foreign exchange fluctuations, GST,
duties and taxes, the percentage and element of duties and taxes included in the price should
be specifically stated, along with the selling rate of foreign exchange element considered in
the calculation of the price of the imported item. Taxes/ duties chargeable and payable ad-
valorem shall be charged at the nett price after variations.
4. In contracts governed by any type of variation (PVC or statutory variations), LDs (if a
percentage of the price) will be applicable on the price as varied by the operation of the PVC.
For purpose of GST, LD should be shown as deduction on the invoice value by the contractor.
5. If the Contract provides for some inputs to be provided by the Procuring Entity free or
at a fixed rate, or advance or stage payments have been already made, the value of such
inputs and advance/ stage payments shall be excluded from the value of the Services
delivered in the relevant quarter for payment/recovery of price variation.
6. If there is a downward price trend, the Contractor may tend to hide this fact. Therefore,
while claiming payments where such variations are applicable, the contractor must submit its
calculations for each invoice, even if the payment on account of these variations is zero. Price
reductions due to such variations must be passed on to the Procuring Entity. Care should be
exercised to finalise the price before final payment is made and after obtaining data and
documents in support of claims for escalation, if any. Where the contractors submit no such
claims, an examination of whether there has been a downward trend in the cost, which the
contractor may not bring out, is required. At any rate, an undertaking should be obtained from
the contractor to the following effect in case it becomes necessary to make the final payment
before he has submitted the required data/documents related to the PVC:
“It is certified that there has been no decrease in the price because of a
decrease in price variation indices in the price variation formula. In the event of
any decrease of such indices that come to light later regarding the payment
claimed by us, we shall promptly notify the purchaser, and we undertake to
refund and agree to the purchaser deducting from our future payment due any
excess payment made to us in this regard.”
7. Notwithstanding the above formalities, it should be appreciated that it is in the interest
of the purchaser to be vigilant about downward variation, and it is, therefore, the basic
responsibility of the purchase officers to make sure that the benefits of downward variation,
wherever it occurs, are fully availed of.
10.5.3 Payment of Taxes and Duties
1. The contractor shall be entirely responsible for all taxes, duties, fees, levies etc.,
incurred until delivery of the Services to the Procuring Entity.
2. If applicable under relevant tax laws and rules, the Procuring Entity shall deduct
required taxes on account of GST Reverse Charge Mechanism; Tax Deducted at Source
(TDS), and Tax Collected at Source (TCS) relating to Income Tax, labour cess, royalty etc
from all payments due to the Contractor and deposit these to respective authorities as per the
171Chapter 10: Monitoring Consultancy services Contract
existing law in force during the currency of the contract. In the case of foreign bidders,
Corporate tax shall be deducted at source from each invoice as per instructions/orders of the
Government of India, Indian Income Tax Authority.
3. Goods and services Tax: GST shall be paid as per the rate at which it is liable to be
assessed or has been assessed, provided the transaction of the sale is legally liable to such
taxes and is payable as per the terms of the contract subject to the following conditions:
a) The payment of GST and GST Cess to the contractor shall be made only on the latter
submitting a GST compliant Bill/ invoice indicating the appropriate HSN code and
applicable GST rate thereon duly supported with documentary evidence as per the
provision of relevant GST Act and the Rules made there under. The delivery shall be
shown being made in the name, location/ state, and GSTIN of the consignee only;
the location of the procurement office of the procuring entity has no bearing on the
invoicing.
b) The Procuring Entity shall not pay a higher GST rate if leviable due to any
misclassification of the HSN number or incorrect GST rate quoted mistakenly by the
Contractor. Wherever the contractor invoices the Services at GST rate or HSN
number, which is different from that incorporated in the contract, payment shall be
made as per GST rate, which is lower of the GST rates incorporated in the contract
or billed. However, the Procuring Entity shall not be responsible for the contractor's
tax payment or duty under a misapprehension of the law. The Contractor shall be
required to adjust his basic price to the extent required by a higher tax rate billed as
per invoice to match the all-inclusive price mentioned in the contract.
c) In case of undue profiteering by the contractor relating to GST tax, the Procuring
Entity shall treat it as a violation of the Code of Integrity in the contract and avail any
or all punitive actions thereunder, in addition to recovery and action by the GST
authorities under the Act.
d) The contractor should issue Receipt vouchers immediately on receipt of all types of
payments along with tax invoices after adjusting advance payments, if any, as per
Contractual terms and GST Provisions.
e) Liquidated damages or any other variations (Price Variation or Exchange Rate
variation, etc.) should be shown as deductions on the invoice, and GST shall be
applicable only on the net balance payment due.
f) While claiming reimbursement of duties, taxes etc. (like GST) from the Procuring
Entity, as and if permitted under the contract, the contractor shall also certify that in
case it gets any refund out of such taxes and duties from the concerned authorities
later, it (the contractor) shall refund to the Procuring Entity, the Procuring Entity’s
share out of such refund received by the contractor. The Contractor shall also refund
the appropriate amount to the Procuring Entity immediately on receiving the same
from the concerned authorities.
g) All necessary adjustment vouchers such as Credit Notes/ Debit Notes for any short/
excess services delivered or revision in prices or any other reason under the contract
shall be submitted to the Procuring Entity in compliance with GST provisions.
4. For Procuring Entities eligible for availing Input Tax Credit:
a) Contractors shall provide necessary documents/ compliances / invoices for enabling
Procuring Entity (for commercially run entities) to avail of Input tax credit benefits
under GST legislation.
172Manual for Procurement of Consultancy Services, Second Edition, 2025
b) The successful bidders should upload the details of the invoices raised on Procuring
Entity on the GST Network within the prescribed time limits and undertake to adhere
to all other compliances under the GST regulations/ legislations.
c) In case any credit, refund or other benefit is denied or delayed to the Procuring Entity
due to any non-compliance of GST legislation by the bidder, such as failure to upload
the details of the supply on the GST portal, failure to pay GST to the Government or
due to non-furnishing or furnishing of incorrect or incomplete documents/ information
by the bidder, the bidder would reimburse the loss to the Procuring Entity or it shall
recover may recover the same, but not limited to, the tax loss, interest and penalty.
5. Statutory Variation Clause: Unless otherwise stated in the contract, statutory
increase in applicable GST rate only during the original delivery period (or refixed delivery
period – para 10.4.2 above) shall be to Procuring Entity’s account. Any increase in the rates
of GST beyond the original completion date during the extended delivery period (for delays
attributable to the consultant) shall be borne by the contractor, however the benefit of any
reduction in GST rate must be passed on to the Procuring Entity during the original and
extended delivery period. GST rate amendments shall be considered for quoted HSN code
only, against documentary evidence, provided such an increase of GST rates after the last
date of bid submission. The Procuring Entity is not liable for any claim from the contractor on
account of fresh imposition and/ or increase (including statutory increase) of GST, customs
duty, or other duties on raw materials and/ or components used for the purpose of delivery of
the contracted services taking place during the pendency of the contract unless such liability
is expressly agreed to in terms of the contract.
10.6 Concluding the Assignment and Post Contract review
1. The contract is normally considered closed on the day after the completion date listed
in the contract. Any expenditure incurred after the completion date are unlikely to be paid. It
is, therefore, important, under all types of assignments, for the consultant to request an
extension of the completion date if it appears that additional items will need to be billed after
the completion date. The consultant should submit the final claim promptly after completing
the assignment. The standard consultant contract states that the claim must be submitted
within 60 (sixty) days of completion.
2. While making the final payment to the contractor and before releasing the PBG, it
should be ensured that there is nothing outstanding from the contractor, because it would be
difficult to retrieve such amounts after releasing the bank guarantee/final payment. Before the
bank guarantee is released a “no claim certificate” may be taken from the contractor as per
the format given in Annexure 24.
3. The contract shall stand closed upon
a) successful performance of all obligations by both parties, including completion of
warrantee obligations and final payment.
b) termination and settlements after that, if any.
4. At least in large contracts [above Rs. 50 (Rupees Fifty) lakhs], it should be ensured
that before the release of the bank guarantee (final payment, if there is no bank guarantee),
the following reconciliations should be done across Departments involved in the execution of
the contract:
5. Deliverables Reconciliation: The user department and/or the indentor should confirm
that all deliverables specified in the consultancy contract and paid for have been received in
173Chapter 10: Monitoring Consultancy services Contract
acceptable quality and completeness, in line with Terms of Reference (ToR). Full reconciliation
of all outputs- such as reports, data sets, software tools, advisory notes, presentations, or
other consultancy products – should be done, including documents of any deviations, delays,
or shortfalls. All interim and final submissions should be verified and archived appropriately.
6. Reconciliation with the User Department: Besides deliverables reconciliation, the
user Department should certify in writing that the following activities (wherever applicable)
have been completed by the contractor, to the Department’s satisfaction, as per the contract:
a) Achievement of performance indicators or service levels defined in the ToR;
b) Completion of fieldwork, data collection, or stakeholder consultations (if applicable);
c) Provision of support or handholding during the implementation phase or transition
period which ended on ______;
d) Capacity building or training of departmental staff (if part of the contract);
e) Return of all ID cards, gate passes, documents, draft versions, drawings, tools,
devices, or any assets or facilities provided to the consultant; and
f) Any post contract support, advisory, or monitoring obligations (if part of the contract),
which concluded on ______.
7. Payment Reconciliation: The indenting/ user Departments may reconcile payments
made to the consultant to ensure that there is no liability outstanding or dues recoverable from
the consultant on account of:
a) LD;
b) Price reduction enforced on account of shortfall in quality, deliverables or
performance standards;
c) Variations/deviations from the scope of the contract or Terms of Reference (ToR);
d) Overpayments/duplicate payments, if any;
e) Services availed from Procuring Entity and vacation thereof such as accommodation,
electricity, water, security, transport, internet, or other support services;
f) Reimbursements or claims related to travel, lodging, communication, and other
expenses where the payment responsibility lies with the consultant but was initially
borne by the procuring entity;
g) Deliverables reconciliation;
h) Price and exchange rate variations;
i) Statutory duties paid on behalf of the contractor by Procuring Entity; and
j) Testing, validation, or review charges incurred by the procuring entity on draft
deliverables, software, models, or pilot exercises, including any losses due to failure
of such validations.
8. On satisfactory reconciliation and against a “no claim certificate” from the contractor,
the bank guarantee may be released, and its acknowledgement taken from the contractor.
9. On completion of all activities against a contract, the purchase file should be preserved
for a period of five years in the record room and then destroyed after expiry of the applicable
mandatory retention period with the approval of the CA. However, Procuring Entity, at its
discretion, may retain important records for future reference.
10.7 Disputes and Conflicts
10.7.1 Disputes
1. Normally, there should not be any scope for dispute between the purchaser and
contractor after entering a mutually agreed valid contract. However, due to various unforeseen
174Manual for Procurement of Consultancy Services, Second Edition, 2025
reasons, problems may arise during the progress of the contract leading to a disagreement
between the purchaser and contractor. Therefore, the conditions governing the contract
should contain suitable provisions for settlement of such disputes or differences binding on
both parties.
2. In its directives82 regarding contractual disputes, Department of Expenditure, Ministry
of Finance has stressed that:
“Government departments/ entities/ agencies should avoid and/ or amicably
settle as many disputes as possible using mechanisms available in the contract.
Decisions should be taken in a pragmatic manner in overall long-term public
interest, keeping legal and practical realities in view, without shirking or avoiding
responsibility or denying genuine claims of the other party.”
3. All disputes and differences between the parties, as to the construction or operation of
the contract, or the respective rights and liabilities of the parties on any matter in question;
dispute or difference or any other account whatsoever, but excluding the Excepted Matters
(detailed below); arising out of or in connection with the contract, whether before or after the
completion/ termination of the contract, that cannot be resolved amicably between the
Procurement Officer and the contractor within thirty (30) days from aggrieved Party notifying
the other Party of such matters, shall be hereinafter called the “Dispute”.
4. The aggrieved party shall give a ‘Notice of Dispute’ indicating the Dispute and claims
citing relevant contractual clause to the designated authority and requesting for invoking the
following dispute resolution mechanisms. The Dispute shall be attempted to be resolved
without recourse to courts through dispute resolution mechanisms detailed subsequently, in
the sequence as mentioned below, and the next mechanism shall not be invoked unless the
earlier mechanism has been invoked or has failed to resolve it within the deadline mentioned
therein. While processing a case for dispute resolution/litigation/arbitration, the procuring
entity is to take legal advice, at appropriate stages.
a) Adjudication
b) 83Mediation
c) Arbitration
10.7.2 Excepted Matters
Matters for which provision has been made in any clause of the contract shall be deemed as
‘excepted matters’ (matters not disputable/ arbitrable), and decisions of the Procuring Entity,
thereon shall be final and binding on the contractor. The ‘excepted matters’ shall stand
expressly excluded from the purview of the Dispute Resolution Mechanism, including
Arbitration. However, where the Procuring Entity has raised the dispute, this sub-clause shall
not apply. Unless otherwise stipulated in the contract, excepted matters shall include but not
limited to:
1. any controversies or claims brought by a third party for bodily injury, death, property
damage or any indirect or consequential loss arising out of or in any way related to the
performance of this Contract (“Third Party Claim”), including, but not limited to, a Party’s right
to seek contribution or indemnity from the other Party in respect of a Third-Party Claim.
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82
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83
The conciliation part of the Arbitration and Conciliation Act, 1996 has been replaced by mediation by the recent
Mediation Act, 2023.
175Chapter 10: Monitoring Consultancy services Contract
2. Issues related to the pre-award tender process or conditions.
3. Issues related to ambiguity in contract terms shall not be taken up after a contract has
been signed. All such issues should be highlighted before the signing of the contract by the
contractor.
4. Issues related to contractual action/ termination of contract etc., by the Procuring Entity
on account of fraud, corruption, debarment of contractors, criminal or wilful negligence of the
contractor etc.
5. Issues that are already under investigation by CBI, Vigilance, or any other investigating
agency or government.
6. Provisions incorporated in the contract, which are beyond the purview of The
Procurement Entity or are in pursuance of policies of Government, including but not limited to
a) Provisions of restrictions regarding local content and Purchase Preference to Local
suppliers in terms of Make in India policy of the Government.
b) Provisions regarding restrictions on Entities from Countries having land-borders with
India in terms of the Government’s policies in this regard.
c) Purchase preference policies regarding MSEs and Start-ups
10.7.3 Adjudication
1. After exhausting efforts to resolve the Dispute with the Purchasing Officer executing
the contract on behalf of the Procuring Entity, the contractor shall give a ‘Notice of
Adjudication’ specifying the matters which are in question, or subject of the dispute or
difference indicating the relevant contractual clause, as also the amount of claim item-wise to
Head of Procurement or any other authority mentioned in the contract (hereinafter called the
“Adjudicator”) for invoking resolution of the dispute through Adjudication.
2. Where necessary, e.g., matters of high value, Procuring Entity may proceed with
adjudication by a high-level committee as para 10.7.4-3-a) to e) below.
3. During his adjudication, the Adjudicator shall give adequate opportunity to the
contractor to present his case. Within 60 days after receiving the representation, the
Adjudicator shall make and notify decisions in writing on all matters referred to him. The parties
shall not initiate, during the adjudication proceedings, any mediation or arbitral or judicial
proceedings in respect of a dispute that is the subject matter of the adjudication proceedings.
4. If not satisfied by the decision in adjudication, or if the adjudicator fails to notify his
decision within the abovementioned time-frame, the contractor may proceed to invoke the
process of Mediation as follows.
10.7.4 Mediation
1. Any party may invoke Mediation by submitting “Notice of Mediation” to the Head of the
Procuring Organisation. A neutral third party, known as the Mediator, facilitates the mediation
process. If the other party is not agreeable to Mediation, the aggrieved party may invoke
Arbitration.
2. The Mediation Act: The Mediation shall be conducted as per The Mediation Act
202384.
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84
The Act would be fully notified at a later date. Hence some of the provisions like registration of mediators, and
MSPs/ MCI may get activated later.
176Manual for Procurement of Consultancy Services, Second Edition, 2025
3. Guidelines for Mediation: Department of Expenditure, Ministry of Finance has issued
guideline on Mediation85. Government departments/ entities/ agencies are encouraged to
adopt mediation under the Mediation Act 2023 and/ or negotiate amicable settlements to
resolve disputes. Where necessary, e.g., matters of high value, they may proceed in the
manner discussed below:
a) Government departments/ undertakings may, where they consider appropriate, e.g.,
in high-value matters, constitute a High-Level Committee (HLC) for dispute
resolution, which may include the following (this composition is purely indicative and
not prescriptive):
i) A retired judge.
ii) A retired high-ranking officer and/ or technical expert.
b) ln cases where a HLC is constituted, the Government department entity/ agency may
either
i) negotiate directly with the other party and place a tentative proposed solution
before the HLC or
ii) conduct mediation through a mediator and then place the tentative mediated
agreement before the HLC or
iii) use the HLC itself as the mediator.
c) This will enable decisions taken for resolving disputes in appropriate matters to be
scrutinized by a high-ranking body at arms-length from the regular decision-making
structure, thereby promoting fair and sound decisions in the public interest, with
probity.
d) There may be rare situations in long-duration works contracts where a renegotiation
of the terms may best serve public interest due to unforeseen major events. In such
circumstances, the terms of the tentative re-negotiated contract may be placed before
a suitably constituted High-Level Committee before approval by the competent
authority.
e) Approval of the appropriate authority will need to be obtained for the final accepted
solution. Section 49 of the Mediation Act 2023 is also relevant in this regard.
f) Mediation agreements need not be routinely or automatically included in procurement
contracts/ tenders. The absence of a mediation agreement in the contract does not
preclude pre-litigation mediation. Such a clause may be incorporated where it is
consciously decided to do so.
g) Disputes not covered in an arbitration clause and where the methods outlined above
are unsuccessful should be adjudicated by the courts.
h) General or case-specific modification in the application of the above guidelines may
be authorised by the Secretary concerned (or an officer not below the level of Joint
Secretary to whom the authority is delegated by him) in respect of Government
Ministries/ Departments, attached/ subordinate offices and autonomous bodies, or
the Managing Director in respect of Central Public Sector Enterprises including Banks
and Financial institutions etc.
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177Chapter 10: Monitoring Consultancy services Contract
4. Appointment of Mediator(s):
a) Mediators can be of any nationality and must be registered with the Mediation Council
of India (MCI) or empanelled by a court-annexed mediation centre or empanelled by
an Authority constituted under the Legal Services Authorities Act, 1987 or empanelled
by a mediation service provider (MSP) recognised by MCI.
b) Within 30 days of receipt of the “Notice of Mediation”, the Head of the Procuring
Organisation shall propose names of three likely mediators from its panel, asking the
other party to choose one as Mediator. The mutually accepted mediator shall then be
appointed to conduct mediation.
c) If parties do not agree on the mediator, they can approach a mediation service
provider ("MSP", recognised by MCI), who shall appoint a mediator based on the
suitability and preferences of the parties within 7 days.
d) As brought out in Annex-2 of Annexure 18, in contracts having an Integrity Pact,
Independent External Monitors (IEMs) can be appointed as mediators, as per the
Standard Operating Procedure (SOP) issued by the Central Vigilance Commission
(CVC).
e) After a mediator is appointed, they must disclose any conflict of interest. Either party
can seek a replacement of the Mediator after such disclosure.
5. Venue: Mediation must be conducted within the territorial jurisdiction of the Court,
which has jurisdiction to decide the dispute unless both parties agree to do it online or at any
other place.
6. The Process:
a) The Mediator independently and impartially encourages open communication and
cooperation between disputing parties to reach an amicable settlement, but he does
not have the authority to impose a settlement upon the parties to the dispute. The
parties shall be informed expressly by the mediator that he only facilitates in arriving
at a resolution of the dispute and that he shall not impose any settlement nor give
any assurance that the mediation may result in a settlement.
b) Unlike court proceedings, Mediation is informal and flexible and allows for creative
problem-solving and exploration of various solutions. The Code of Civil Procedure or
the Bhartiya Sakshya Adhiniyam (BS), 2023 shall not be binding on the mediator. The
parties can determine the mediation’s venue, manner, and language.
c) Confidentiality: All the acknowledgements, opinions, suggestions, promises,
proposals, apologies, and admissions made during the mediation; acceptance/
willingness to accept proposals in the mediation; documents prepared solely for the
conduct of mediation are strictly confidential. These can neither be relied upon as
evidence in any subsequent court proceedings nor be asked to be disclosed by any
court/ tribunal. No audio or video recording of the mediation proceedings shall be
made or maintained by the parties or the participants, including the mediator and
mediation service provider, whether conducted in person or online, to ensure the
confidentiality of the mediation proceedings.
d) Online Mediation: The Act allows parties to opt for online/ virtual Mediation, which
shall be deemed to occur within the jurisdiction of a competent court. The Act also
requires online mediation communication mechanisms to ensure confidentiality.
e) The mediator initially meets the parties separately and communicates the view of
each party to the other to the extent agreed upon by them. He assists them in
178Manual for Procurement of Consultancy Services, Second Edition, 2025
identifying issues, advancing better understanding, clarifying priorities, exploring
areas of the parties’ responsibility, identifying common interests, and encouraging
compromise. He then meets them jointly to encourage a mutually acceptable
resolution. At any stage of the mediation proceedings, at the parties’ request, the
mediator may suggest a dispute settlement in writing.
f) Termination of Mediation: The process must be completed within 120 days, though
parties can extend it by another 60 days through mutual consent. If Mediation is not
completed within this timeline, the Mediator shall prepare a non-settlement report
without disclosing the cause of non-settlement or any other matter or thing referring
to their conduct during mediation for the parties or the Mediation Service Provider
(MSP). Mediation shall also stand terminated on a declaration of the mediator, after
consultation with the parties or otherwise, that further efforts at mediation are no
longer justified or on communication by a party(ies) in writing, addressed to the
mediator and the other parties that they wish to opt out of mediation. On termination
of Mediation, if the dispute is still alive, the aggrieved party shall be free to invoke
Arbitration.
g) Mediated Settlement Agreement (MSA): If the parties resolve the dispute and
execute a mediated settlement agreement (“MSA”), then the Mediation is successful.
An MSA is a written agreement settling some or all disputes and may extend beyond
the disputes referred to mediation. It must be valid under the Indian Contract Act,
signed by both parties, and duly authenticated by the Mediator for the parties or the
MSP. The Act provides options for MSA registration. During the pendency of
proceedings, parties can also execute other agreements, settling some of the subject-
matter disputes.
h) Challenge to MSA: MSA can be challenged within 90 days on limited grounds of (a)
fraud, (b) corruption, (c) impersonation, and (d) subject matter being unfit for
Mediation.
i) Execution of MSA: If there is no challenge or a challenge is unsuccessful, the Act
ensures that the MSA is binding and enforceable, akin to a judgment or decree. This
means that if one party fails to comply with the MSA, the non-defaulting party has a
right to enforce it through the Court.
j) Costs: The parties shall equally bear all costs of mediation, including the fees of the
mediator and the charges of the mediation service provider.
k) No claim of Interest during Mediation proceedings: Parties shall not claim any
interest on claims/counter-claims from the date of notice invoking Mediation till the
execution of the settlement agreement if so arrived. If parties cannot resolve the
dispute, either party shall claim no interest from the date of notice invoking Mediation
until the date of Termination of Mediation Proceedings.
l) The parties shall not initiate, during the mediation proceedings, any arbitral or judicial
proceedings in respect of a dispute that is the subject matter of the mediation
proceedings.
10.7.5 Arbitration
1. Arbitration Agreement: If an amicable settlement is not forthcoming, provided an
Arbitration clause agreement is included in the contract, recourse may be taken to the
settlement of disputes through arbitration as per the Indian Arbitration and Conciliation Act,
179Chapter 10: Monitoring Consultancy services Contract
1996 [Amended 201586 and 202187]. For this purpose, when the contract is with a domestic
contractor, a standard arbitration clause (hereinafter called the ‘Agreement’) may be included
in the Tender Document (Please refer to the Model Tender Document) indicating the
arbitration procedure to be followed, based on which the Arbitration Act shall become
applicable.
2. This Agreement shall continue to survive termination, completion, or closure of the
Contract for 3 years after that. Unless otherwise stipulated in the Contract, the venue of
arbitration should be the place from where the contract has been issued.
3. The Micro, Small and Medium Enterprises Development (MSMED) Act, 2006 provides
parties to a dispute (where one of the parties is a Micro or Small Enterprise) to be referred to
Micro and Small Enterprises Facilitation Council if the dispute is regarding any amount due
under Section 17 of the MSMED Act, 2006. If a Micro or Small Enterprise, being a party to
dispute, refers to the provisions in MSMED Act 2006, these provisions shall prevail over this
Agreement.
4. Government Guidelines on Arbitration in Contracts88: Department of Expenditure,
Ministry of Finance has issued following guidelines for arbitration in contracts of domestic
procurement by the Government and by its entities and agencies (including Central Public
Sector Enterprises [CPSEs], Public Sector Banks [PSBs] etc. and Government companies) :
a) Arbitration as a method of dispute resolution should not be routinely or automatically
included in procurement contracts/ tenders, especially in large contracts.
b) As a norm, arbitration (if included in contracts) may be restricted to disputes with a
value less than Rs. 10 crores. This figure is regarding the value of the dispute
(inclusive of both claims and counterclaims) not the value of the contract, which may
be much higher. It may be specifically mentioned in the bid conditions/ conditions of
the contract that arbitration will not be a method of dispute resolution in all other
cases.
c) Inclusion of arbitration clauses covering disputes with a value exceeding the norm
specified in sub-para (b) above should be based on careful application of mind and
recording of reasons and with the approval of:
i) Regarding Government Ministries/ Departments, attached/ subordinate offices
and autonomous bodies, the Secretary concerned or an officer (not below the
level of Joint Secretary) to whom authority is delegated by the Secretary.
ii) Regarding CPSEs/ PSBs/ Financial institutions etc., the Managing Director.
d) In matters where arbitration is to be resorted to, institutional arbitration may be given
preference (where appropriate, after considering the reasonableness of the cost of
arbitration relative to the value involved).
e) General or case-specific modification in the application of the above guidelines may
be authorised by the Secretary concerned (or an officer not below the level of Joint
Secretary to whom the authority is delegated by him) in respect of Government
Ministries/ Departments, attached/ subordinate offices and autonomous bodies, or
the Managing Director in respect of Central Public Sector Enterprises including Banks
and Financial institutions etc.
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86 https://lawmin.gov.in/sites/default/files/ArbitrationandConciliation.pdf
87 https://egazette.nic.in/WriteReadData/2021/225832.pdf
88 OM issued by PPD, DoE, MoF: No. F. 11212024-PPD dtd 03.06.2024
180Manual for Procurement of Consultancy Services, Second Edition, 2025
10.7.6 Foreign Arbitration
1. The Arbitration and Conciliation Act 1996 has provisions for international commercial
arbitration, which shall be applicable if one of the parties has its central management and
control in any foreign country.
2. When the contract is with a foreign contractor, the contractor has the option to choose
either the Indian Arbitration and Conciliation Act, 1996 or arbitration in accordance with the
provisions of the United Nations Commission on International Trade Law (UNCITRAL)
arbitration rules.
3. The arbitration clause with foreign firms should be in the form of self-contained
agreements. This is true especially for large value contracts or those for costly plant and
machinery. The venue of arbitration should be in accordance with UNCITRAL or arbitration
rules of India, whereby it may be in India or in any neutral country.
10.7.7 Notice for Arbitration
1. ‘The Appointing Authority,’ to appoint the arbitrator shall be Head of the Procuring
Organisation named in the contract and includes if there be no such authority, the officer who
is for the time being discharging the functions of that authority, whether in addition to other
functions or otherwise.
2. In the event of any dispute as per para 10.7.1 above, if the Adjudicator fails to decide
within 60 days (as referred in para 10.7.3 above), or the Mediation is terminated (as referred
in sub-para 10.7.4 above) then, parties to the contract, if there is an Arbitration clause in the
contract, after 60 days but within 120 days of ‘Notice of Dispute” shall request the Appointing
Authority through a “Notice for Arbitration” in writing requesting that the dispute or difference
be referred to arbitration.
3. The “Notice for arbitration” shall specify the matters in question or subject of the dispute
or difference indicating the relevant contractual clause, as well as the amount of claim item-
wise.
10.7.8 Reference to Arbitration
After appointing Arbitrator(s), the Appointing Authority shall refer the dispute to them. Only
such dispute or difference shall be referred to arbitration regarding which the demand has
been made, together with counter-claims or set off. Other matters shall be beyond the
jurisdiction of Arbitrator(s)
10.7.9 Appointment of Arbitrator
1. Invalidation of Unilateral Appointment Clauses: On November 8, 2024, the
Supreme Court of India, in a landmark ruling, stemming from the case (2024 INSC 857)
Central Organisation for Railway Electrification (CORE) v. ECL-SPIC-SMO-MCML, ruled that:
a) arbitration clauses allowing a government department or PSU to unilaterally appoint a
sole arbitrator or mandate that the private party select an arbitrator from a panel
curated exclusively by the government department or PSU are invalid.
b) PSUs or government departments cannot compel the private party to choose from their
panel of arbitrators. The private party must have the autonomy to nominate its
arbitrator independently, ensuring a balanced and fair process.
c) a private party can waive objections to bias or ineligibility under Section 12(5) of the
Act, but this waiver must be explicit, in writing, and made after the dispute arises—not
at the contract formation stage. Pre-dispute waivers embedded in contracts are not
valid.
181Chapter 10: Monitoring Consultancy services Contract
2. Therefore, the appointing authority for arbitrators, may ask the contractor to
recommend his nominee arbitrator either from names suggested from approved panel of the
Procuring Organisation or from an approved panel of the Indian Council of Arbitration (ICA)
within 30 days from the date of dispatch of the written and valid acceptance of the demand for
arbitration by the appointing authority. Guidelines of ICA Rules for Domestic Commercial
Arbitration are as under:-
a) The contractor may access the ICA's panel of arbitration through the ICA's official
webpage: https://icaindia.co.in/pdf/Engineers.pdf.
b) A formal request for nomination shall be submitted to ICA, accompanied by:-
i) A brief Statement of Claim outlining the nature and quantum of the disputes
ii) A copy of the relevant contract and any supporting documents
iii) A copy of the notice intimating the other party of the initiation of arbitration
proceedings, with proof of delivery (if any).
c) Ad-hoc appointment fees for the nomination and appointment of arbitrators shall be as
per the ICA Rules for Domestic Commercial Arbitration and revised from time to time.
The fee shall be submitted along with the request.
d) The nomination and appointment of arbitrators from the ICA panel shall be as per the
ICA Rules for Domestic Commercial Arbitration and shall be amended from time to
time.
3. Qualification of Arbitrators:
a) In the case of retired officers of The Procuring organisation, he shall have retired in
the rank of Senior administrative grade (or equivalent) and shall have retired at least
1 years prior and must not be over 70 years of age on the date of Notice for arbitration.
b) In the case of serving officers, they shall not be below JA Grade level.
c) In case of serving or retired officer, he should not have been:
i) involved in current vigilance/ CBI cases or against whom disciplinary or
prosecution proceedings are not in process.
ii) imposed a major penalty or two or more minor penalties or undergone
administrative action three times or more, or
iii) imposed a minor Penalty and undergone two administrative actions due to
vigilance/CBI action while in service.
d) Independence and Impartiality:
i) Retired or serving officers shall not have had an opportunity to deal with the
matters to which the contract relates or who, in the course of his/ their duties as
officers of the Procuring Organisation, expressed views on any or all the matters
under dispute or differences. Arbitrator shall make a declaration in this regard as
per Annexure 29. The proceedings of the Arbitral tribunal or the award made by
such Tribunal shall, however, not be invalid merely because one or more
arbitrators had in the course of his service, an opportunity to deal with the matters
to which the contract relates or who in the course of his/ their duties expressed
views on all or any of the matters under dispute.
ii) Arbitrators (including from panel of ICA) shall be independent and impartial
(section 12(1) of the Arbitration Act) and disclose in writing any circumstances
(past or present relationships with parties or counsel) that may give rise to
justifiable doubts about their independence or impartiality. Disclose any direct or
indirect interest in the dispute’s outcome.
iii) Disclosure by all arbitrators shall be in format of Annexure 29.
182Manual for Procurement of Consultancy Services, Second Edition, 2025
e) An Arbitrator may be appointed notwithstanding the total no. of arbitration cases in
which he has been appointed in the past.
f) Not be other than the person appointed by The Appointing Authority and that if for
any reason that is not possible, the matter shall not be referred to arbitration at all.
4. Panel of Arbitrators: The procuring Organisation may prepare, with the approval of
the head of the procuring organisation, a panel of serving and retired officers who are willing
and qualified (as per sub-para 3 above) to be empanelled as Arbitrators based on integrity,
ethics, the experience of dealing in contracts/ tenders, temperament of taking fair decisions,
feedback, general image, career profile etc. Such persons should have vigilance clearance
and should not be working in the vigilance wing. The performance of empanelled arbitrators
should be reviewed annually. The empanelment of a retired officer as arbitrator shall be limited
to three procuring entities only, and at any given time, a maximum of two arbitration cases
shall be assigned to any arbitrator in a Procuring entity.
5. Replacement of Arbitrators: If one or more of the arbitrators appointed as above
refuses to act as arbitrator, withdraws from his office as arbitrator, or in the event of the
arbitrator dying, neglecting/ unable or unwilling or refusing to act for any reason, or his award
being set aside by the court for any reason, or in the opinion of The Appointing Authority fails
to act without undue delay, the Appointing Authority shall appoint new arbitrator/ arbitrators to
act in his/ their place in the same manner in which the earlier arbitrator/ arbitrators had been
appointed. Such a re-constituted Tribunal may, at its discretion, proceed with the reference
from the stage at which the previous arbitrator (s) left it.
6. Appointment of Arbitrator:
a) Appointment of Arbitrator where the applicability of section 12 (5) of the
Arbitration and Conciliation Act has been waived off: (refer para 1-c) above)
i) In cases where the total value of all claims in question added together does not
exceed ₹ 1,00,00,000/- (Rupees One Crore), the Arbitral Tribunal shall consist of
a Sole Arbitrator who shall be a serving officer of the procuring organisation, not
below Junior Administrative Grade, nominated by the Appointing Authority. The
sole arbitrator shall be appointed within 60 days from the day when a written and
valid demand for arbitration is received by the designated Appointing Authority.
ii) In cases not covered by sub-para i) above, the Arbitral Tribunal shall consist of a
panel of three serving officers not below Junior Administrative Grade or two
serving officers not below Junior Administrative Grade and a retired officer
(retired not below the rank of Senior Administrative Grade Officer), as the
arbitrators. For this purpose, the Appointing Authority shall send a panel of at
least four (4) names of Officers, which may also include the name(s) of retired
Officer(s) empanelled to work as Arbitrator, to the Contractor within 60 days from
the day when a written and valid demand for arbitration is received by the
Appointing Authority. The contractor will be asked to suggest at least 2 names
out of the panel for appointment as the Contractor’s nominee within 30 days from
the date of dispatch of the request to him. The Appointing Authority shall appoint
at least one out of them as the Contractor’s nominee and shall also
simultaneously appoint the balance number of arbitrators either from the panel
or from outside the panel, duly indicating the ‘presiding arbitrator’ from amongst
the 3 arbitrators so appointed. The Appointing Authority shall complete this
exercise of appointing the Arbitral Tribunal within 30 days from the receipt of the
names of the Contractor’s nominees. While nominating the arbitrators, it shall be
183Chapter 10: Monitoring Consultancy services Contract
necessary to ensure that one of them is from the Finance/ Accounts Department
(officer of Selection Grade of the Finance/ Accounts Department shall be
considered as of equal status to the officers in Senior Administrative Grade of
other departments for appointment of an arbitrator).
iii) The serving officer working in arbitral tribunal in the ongoing arbitration cases as
per sub-para i) and ii) above can continue as arbitrator in the tribunal even after
his retirement.
b) Appointment of Arbitrator where the applicability of Section 12 (5) of the
Arbitration and Conciliation Act has not been waived off:
i) In cases where the total value of all claims in question added together does not
exceed ₹ 50,00,000/- (Rupees Fifty Lakh), the Arbitral Tribunal shall consist of a
sole arbitrator. For this purpose, the Appointing Authority will send a panel of at
least four (4) names of retired Officer(s) (retired not below the rank of Senior
Administrative Grade Officer) empanelled to work as Appointing Authority
Arbitrator duly indicating their retirement dates to the Contractor within 60 days
from the day when a written and valid demand for arbitration is received by the
Appointing Authority. The contractor will be asked to nominate to the Appointing
Authority at least 2 names of arbitrators. These can be out of the panel suggested
by the approving authority or from an approved panel of the Indian Council of
Arbitration (ICA – refer sub-para 2 above) within 30 days from the date of
dispatch of the request by the Appointing Authority. The Appointing Authority shall
appoint at least one out of them as the arbitrator within 30 days from the receipt
of the names of the Contractor’s nominees.
ii) In cases where the total value of all claims in question added together exceeds
₹ 50,00,000/- (Rupees Fifty Lakh), the Arbitral Tribunal shall consist of a Panel
of three (3) arbitrators. For this purpose, the Appointing Authority will send a
panel of at least four (4) names of retired Officers (retired not below the rank of
Senior Administrative Grade Officer) empanelled to work as Arbitrator duly
indicating their retirement date to the Contractor within 60 days from the day
when a written and valid demand for arbitration is received by the Appointing
Authority. The contractor will be asked to nominate to the Appointing Authority at
least 2 names of arbitrators. These can be out of the panel suggested by the
approving authority or from an approved panel of the Indian Council of Arbitration
(ICA – refer sub-para 2 above) within 30 days from the date of dispatch of the
request by the Appointing Authority. The Appointing Authority shall appoint at
least one out of them as the Contractor’s nominee and shall also simultaneously
appoint his nominee arbitrator either from the panel or from outside the panel.
The Appointing Authority shall complete this exercise of appointing the Arbitral
Tribunal within 30 days of the receipt of the names of the Contractor’s nominees.
Two selected arbitrators are free to select a presiding arbitrator (3rd arbitrator)
within thirty (30) days from their appointment. The presiding arbitrator may be
selected from an approved panel of the procuring organisation or from an
approved panel of the Indian Council of Arbitration (as per mutual agreement),
which will be approved by the appointing authority within 30 days of receipt of
such name.
c) If the contractor does not suggest his nominees for the arbitral tribunal within the
prescribed timeframe, or the two appointed arbitrators fail to nominate a presiding
184Manual for Procurement of Consultancy Services, Second Edition, 2025
arbitrator, the Appointing Authority shall proceed with the appointment of the arbitral
tribunal within 30 days of the expiry of such time provided to the contractor.
d) Failure to Appoint Arbitrators: If The Appointing Authority fails to appoint an
arbitrator, or two appointed arbitrators fail to agree on the third arbitrator, within 60
(sixty) days, then subject to the survival of this Arbitration Agreement, in international
commercial arbitration, the Supreme Court of India shall designate the arbitral
institution for the appointment of arbitrators. In case of national arbitrations, the High
Court shall designate arbitral institutions. The Arbitration Council of India must have
graded these arbitration institutions. These arbitral institutions must complete the
selection process within thirty days of accepting the request for the arbitrator's
appointment.
10.7.10 The Arbitral Procedure
1. Effective Date of Entering Reference: The arbitral tribunal shall be deemed to have
entered the reference on the date on which the arbitrator(s) have received notice of their
appointment. All subsequent time limits shall be counted from such date.
2. Seat and Venue of Arbitration: The seat of arbitration shall be the place from which
the Letter of Award or the contract is issued. The venue of arbitration shall be the same as the
seat of arbitration. However, in terms of section 20 of The Arbitration Act, the arbitrator, at his
discretion, may determine a venue other than the seat of the arbitration without in any way
affecting the legal jurisdictional issues linked to the seat of the arbitration. The Arbitral Tribunal
shall decide any matter related to Arbitration not covered under this Arbitration Agreement as
per the provisions of The Arbitration Act.
3. If the Adjudication and/ or Mediation mechanisms had not been exhausted before such
reference to Arbitration, the Arbitrator should ask the aggrieved party to approach designated
authority for such mechanisms before the Arbitration proceedings are started.
4. The claimant shall submit to the Arbitrator(s) with copies to the respondent his claims
stating the facts supporting the claims along with all the relevant documents and the relief or
remedy sought against each claim within 30 days from the date of appointment of the Arbitral
Tribunal unless otherwise extension has been granted by Arbitral Tribunal.
5. On receipt of such claims, the respondent shall submit its defence statement and
counter claim(s), if any, within 60 days of receipt of the copy of claims, unless otherwise
extension has been granted by Arbitral Tribunal.
6. No new claim shall be added during proceedings by either party. However, a party may
amend or supplement the original claim or defence thereof during arbitration proceedings
subject to acceptance by the Tribunal having due regard to the delay in making it.
7. Statement of claims, counterclaims and defence shall be completed within six months
from the effective reference date.
8. Oral arguments to be held on a day-to-day basis: Oral arguments as far as possible
shall be heard by the arbitral tribunal on a day-to-day basis, and no adjournments shall be
granted without sufficient cause. The arbitrator (s) may impose an exemplary cost on the party
seeking adjournment without sufficient cause.
9. Award within 12 (twelve) months: The arbitral tribunal is statutorily bound to deliver
an award within 12 (twelve) months from the date when the arbitral tribunal enters reference.
The award can be delayed by a maximum of six months only under exceptional circumstances
where all parties consent to such extension of time. The court's approval shall be required for
further extension if the award is not made out within such an extended period. During the
185Chapter 10: Monitoring Consultancy services Contract
period of an application for extension of time is awaiting before the court, the arbitrator's
proceedings shall continue until the disposal of the application.
10. Cost of Arbitration and Fees of the Arbitrators: The concerned parties shall bear
the cost of arbitration in terms of section 31 (A) of The Arbitration Act. The cost shall inter-alia
include fees of the Arbitrator. Further, the fees payable to the Arbitrator shall be governed by
instructions issued on the subject by the Procuring Entity and/ or the Government from time
to time, in line with the Arbitration and Conciliation Act, irrespective of the fact whether the
Arbitrator is appointed by the Procuring Entity or the Government under this clause or by any
court of law unless directed explicitly by Hon'ble court otherwise on the matter. However, if
any of the three arbitrators is selected from the Panel of Indian Council of Arbitration (ICA),
the fee of the arbitrators shall be determined as per the rates fixed/revised by the Indian
Council of Arbitration from time to time and the fee shall be borne equally by both the parties.
A sole arbitrator shall be entitled to a 25% extra fee over such a prescribed fee. The arbitrator
shall be entitled to a 50 percent extra fee if the award is made within 6 months in terms of
provisions contained in section 29(A) (2) of The Arbitration Act. Besides the above, Arbitrator
shall also be entitled to this extra fee in cases where Fast Track Procedure in terms of section
29 (B) of The Arbitration Act is followed.
11. Fast Track Procedure: The parties to arbitration may choose to opt for a fast-track
procedure either before or after the commencement of the arbitration. The award in fast-track
arbitration is to be made out within six months, and the arbitral tribunal shall be entitled to
additional fees. The salient features of the fast-track arbitration are:
a) The dispute is to be decided based on written pleadings only.
b) Arbitral Tribunal shall have the power to call for clarifications in addition to the written
pleadings where it deems necessary.
c) An oral hearing may be held only if all the parties request or the arbitral tribunal
considers it necessary.
d) The parties are free to decide the fees of the arbitrator(s) for fast-track procedure.
12. Powers of Arbitral Tribunal to grant Interim Relief: The parties to arbitration may
approach the arbitral tribunal for seeking interim relief on the grounds available under section
9 of the act. The tribunal has the powers of a court while making interim awards in the
proceedings before it.
13. Confidentiality: As provided in Section 42A of The Arbitration Act, all the details and
particulars of the arbitration proceedings shall be kept confidential, except in certain situations
like if the disclosure is necessary for the implementation or execution of the arbitral award.
14. Obligation During Pendency of Arbitration: Performance of the contract shall,
unless otherwise directed by the Procuring Entity, continue during the arbitration proceedings,
and no payment due or payable by the Procuring Entity shall be withheld on account of such
proceedings, provided; however, it shall be open for Arbitral Tribunal to consider and decide
whether or not the performance of the contract or payment therein should continue during
arbitration proceedings.
15. The Arbitral Award: In the case of the Tribunal, comprising of three members, any
ruling on award shall be made by a majority of members of the Tribunal. In the absence of
such a majority, the views of the Presiding Arbitrator shall prevail. The arbitral award shall
state item-wise the sum and reasons upon which it is based. The analysis and reasons shall
be detailed enough so that the award can be inferred from it. It shall be further a term of this
arbitration agreement that where the arbitral award is for the payment of money, no interest
shall be payable on whole or any part of the money for any period till the date on which the
186Manual for Procurement of Consultancy Services, Second Edition, 2025
award is made in terms of Section 31 (7) (a) of The Arbitration Act. The award of the arbitrator
shall be final and binding on the parties to this contract. A party may apply for corrections of
any computational errors, typographical or clerical errors, or any other error of similar nature
occurring in the award or interpretation of a specific point of the award to the Tribunal within
60 days of receipt of the award. A party may apply to the Tribunal within 60 days of receiving
the award to make an additional award as to claims presented in the arbitral proceedings but
omitted from the arbitral award.
10.7.11 Challenging Arbitration/ Judicial Awards
1. ln matters covered by arbitration/ court decisions89, the guidance contained in ‘General
Instructions on Procurement and Project Management’ dated 29.10.202190 should be kept in
mind. In cases where there is a decision against the government/ public sector enterprise, the
decision to challenge/ appeal should not be taken routinely, but only when the case genuinely
merits going for challenge/ appeal and there are high chances of winning in the court/ higher
court.
2. In cases where the Ministry/ Department has challenged an arbitral award and, as a
result, the amount of the arbitral award has not been paid, 75% of the arbitral award (which
may include interest up to date of the award) shall be paid by the Ministry/ Department to the
contractor/ concessionaire against a Bank Guarantee (BG). The BG shall only be for the said
75% of the arbitral award as above and not for the interest which may become payable to the
Ministry/ Department should the subsequent court order require refund of the said amount.
3. The payment may be made into a designated Escrow Account with the stipulation that
the proceeds will be used first, for payment of lenders' dues, second, for completion of the
project and then for completion of other projects of the same Ministry/ Department as mutually
agreed/ decided. Any balance remaining in the escrow account after settlement of lenders'
dues and completion of projects of the Ministry/ Department may be allowed to be used by the
contractor/ concessionaire with the prior approval of the lead banker and the Ministry/
Department. If otherwise eligible and subject to contractual provisions, retention money and
other amounts withheld may also be released against BG.]91
4. Arbitration /court awards should be critically reviewed. In cases where there is a
decision against government / public sector enterprise (PSE), the decision to appeal should
not be taken in a routine manner, but only when the case genuinely merits going for the appeal
and there are high chances of winning in the court/ higher court. There is a perception that
such appeals etc. are sometimes resorted to postpone the problem and defer personal
accountability. Casual appealing in arbitration / court cases has resulted in payment of heavy
damages / compensation / additional interest cost, thereby causing more harm to the
exchequer, in addition to tarnishing the image of the Government.
5. The Organisation should monitor the success rate of appealing against arbitration
awards. There should be a clear delegation to empower officials to accept arbitration / court
orders. A special board/ committee may be set up to review the case before an appeal is filed
against an order. Arbitration/ court awards should not be routinely appealed without due
application of mind on all facts and circumstances including realistic probability of success.
The board/ committee or other authority deciding on the matter shall clarify that it has
_______________________
89Notified vide OM No. F. 11/21/2024-PPD issued by Department of Expenditure dated 03.06.2024
90Notified vide OM No. F./1/9/2021-PPD issued by Department of Expenditure dated 29.10.2021.
91New rule 227A of GFR, 2017 notified vide OM No. F./1/9/2021-PPD issued by Department of Expenditure dated
29.10.2021.
187Chapter 10: Monitoring Consultancy services Contract
considered both legal merits and the practical chances of success and after considering the
cost of, and rising through, litigation/ appeal/ further litigation as the case may be, it is satisfied
that such litigation/ appeal/ further litigation cost is likely to be financially beneficial compared
to accepting the arbitration/ court award.
6. Statistics have shown that in cases where the arbitration award is challenged, a large
majority of cases are decided in favour of the contractor. In such cases, the amount becomes
payable with the interest, at a rate which is often far higher than the government's cost of
funds. This results in huge financial losses to the government. Hence, in aggregate, it is in
public interest to take the risk of paying a substantial part of the award amount subject to the
result of the litigation, even if in some rare cases of insolvency etc. recovery of the amount in
case of success may become difficult. Instructions have been issued in this matter in the past
but have not been fully complied with.
7. The only circumstances in which such payment need not be made is where the
contractor declines, or is unable, to provide the requisite bank guarantee and/or fails to open
an escrow account as required. Persons responsible for not adhering to are liable to be held
personally accountable for the additional interest arising, in the event of the final court order
going against the procuring entity92.
10.7.12 Mechanism for Resolution of Commercial Disputes between CPSEs
and Government Agencies
1. Introduction: To streamline and ensure the effective resolution of commercial
disputes between Central Public Sector Enterprises (CPSEs) and Government
Departments/Organizations, the Government of India has established the Administrative
Mechanism for Resolution of CPSEs Disputes (AMRCD). This mechanism, effective from May
22, 2018, supersedes the earlier Permanent Machinery of Arbitration (PMA), and applies to
all commercial disputes concerning the interpretation and application of provisions in contracts
between:
a) CPSEs inter se, and
b) CPSEs and Government Departments/Organizations, excluding disputes related to
Railways, Income Tax, Customs, and Excise Departments.
2. Structure of AMRCD: The AMRCD operates on a two-tier structure:
a) First Level (Tier 1): Disputes are initially referred to a Committee comprising the
Secretaries of the respective Administrative Ministries/Departments involved and the
Secretary of the Department of Legal Affairs. The Financial Advisors (FAs) of the
concerned Ministries/Departments represent the issues before this Committee.
b) Second Level (Tier 2): If the dispute remains unresolved at the first level, it is
escalated to the Cabinet Secretary, whose decision is final and binding.
3. Procedure: The claiming party must approach the Financial Advisor of its
Administrative Ministry/Department to initiate the dispute resolution process. Meetings are
held to examine and resolve the dispute on its merits. The Committee is expected to finalize
its decision within three months of receiving the dispute notice. An aggrieved party can appeal
the first-level decision to the Cabinet Secretary within 15 days.
_______________________
92
As notified under para 16.1 to 16.5 of OM No.F.1/1/2021-PPD issued by Department of Expenditure dated
29.10.2021.
188Manual for Procurement of Consultancy Services, Second Edition, 2025
4. Inclusion in Contracts: All CPSEs must include a specific clause in relevant contracts
to ensure that disputes are resolved through the AMRCD as stipulated in the DPE93 O.M.
Ongoing contracts should also be amended to incorporate this clause.
10.8 Terminating Services Prior to End of Contract
10.8.1 Breach of Contract
1. In case the contractor undergoes insolvency or receivership; neglects or defaults or
expresses inability or disinclination to honour his obligations relating to the performance of the
contract or ethical standards or any other obligation that substantively affects the Procuring
Entity’s rights and benefits under the contract, it shall be treated as a breach of Contract. Such
defaults could include inter-alia:
a) Default in Performance and Obligations: if the contractor fails to deliver any or all
the services or fails to perform any other contractual obligations (including Code of
Integrity or obligation to maintain eligibility and Qualifications based on which contract
was awarded) within the period stipulated in the contract or within any extension
thereof granted by the Procuring Entity.
b) Insolvency: If the contractor being an individual or if a firm, any partner thereof, shall
at any time, be adjudged insolvent or shall have a receiving order or order for the
administration of his estate made against him or shall take any proceeding for
composition under any Insolvency Act for the time being in force or make any
conveyance or assignment of his effects or enter into any assignment or composition
with his creditors or suspend payment or if the firm be dissolved under the Partnership
Act, or
c) Liquidation: if the contractor is a company being wound up voluntarily or by order of
a Court or a Receiver, Liquidator or Manager on behalf of the Debenture-holders is
appointed, or circumstances shall have arisen which entitle the Court or Debenture-
holders to appoint a Receiver, Liquidator or Manager
2. As soon as a breach of contract is noticed, a show-cause ‘Notice of Default’ shall be
issued to the contractor, giving two weeks' notice, reserving the right to invoke contractual
remedies. After such a show-cause notice, all payments to the contractor would be temporarily
withheld to safeguard needed recoveries that may become due on invoking contractual
remedies. If there is an unsatisfactory resolution, remedial action may be taken immediately.
10.8.2 Termination of Contract
1. In some cases, termination is the optimal choice; in others, it is detrimental to the
overall intent of the assignment. This implies a missed opportunity, and a waste of the funds
already expended on the assignment. For these reasons, termination should be avoided, if
possible, even if this means a considerable re-staffing of the Consultant’s team.
2. Termination may be initiated by any party. Termination must be undertaken within the
terms of the contract document. These provide for a notice period of 30 (thirty) days and
payment by the Procuring Entity of any legitimate outstanding fees and costs to the consultant,
and the payment of legitimate costs to wind-up the Non-consultancy service team (unless the
termination was occasioned by the default of the consultant).
_______________________
93
No. 4(1)/2013-DPE(GM)/FTS-1835 dated May 22, 2018, with latest amendment issued by Department of Public
Enterprises vide OM No. 05/0003/2019-FTS-10937 dated 14.12.2022.
189Chapter 10: Monitoring Consultancy services Contract
3. The CMC would indicate which of the final billings by the firm are eligible for payment
and which are not. In case of dispute over what is or is not a legitimate expense, eligible for
payment, the dispute mechanism described above is invoked and, if it is not possible to resolve
the matter amicably, the issue is submitted for arbitration. The contract will remain valid until
the arbitration decision is made.
10.8.3 Termination of Contract for Default
1. In the event of unsatisfactory resolution of ‘Notice of Default’ within two weeks of its
issue as per para above, the Procuring Entity, if so decided, shall by written ‘Notice of
Termination for Default’ sent to the contractor, terminate the contract in whole or in part,
without compensation to the contractor. Before cancelling the contract and taking further
action, it may be desirable to obtain legal advice. Such termination shall not:
a) prejudice or affect the rights and remedies, which have accrued and/ or shall accrue
to the Procuring Entity after that.
b) affect the performance of the contract to the extent not terminated, unless otherwise
instructed by the Procuring Entity,
c) extinguish liability of the contractor, for the services already supplied, if any.
2. If the contract is terminated in whole or in part, additionally, recourse may be taken to
any one or more of the following actions:
a) Temporarily withhold payments due to the contractor till recoveries due to invocation
of other contractual remedies are complete.
b) Call back any loaned property or advances of payment, if any, with the levy of interest
rate (e.g., the interest rate of the General Provident Fund-GPF) prevailing on the date
of release of advance payment, plus 2% to be compounded quarterly.
c) Recover liquidated damages and invoke denial clause for delays.
d) Prefer claims against insurances, if any.
e) Encash and/ or Forfeit performance security or
f) Invoke any other contractual securities, including Termination of Contract for Default
g) Initiate proceedings in a court of law for the transgression of the law, tort, and loss,
not addressable by the above means.
10.8.4 Determination of Contract for Default/ Convenience of Procuring Entity or
for Frustration of Contract
1. After placement of the contract, there may be an unforeseen situation compelling
Procuring Entity to terminate the contract, in whole or in part for its (the Procuring Entity’s)
convenience, by serving written ‘Notice for Determination of Contract’ on the contractor at any
time during the currency of the contract. The notice shall indicate inter-alia, that the termination
is for the convenience of the Procuring Entity or the frustration of the contract and also the
extent to which the contractor’s performance under the contract is terminated, and the date
with effect from which such termination shall become effective.
2. Such termination shall not prejudice or affect the rights and remedies accrued and/ or
shall accrue after that to the Parties.
3. Unless otherwise instructed by the Procuring Entity, the contractor shall continue to
perform the contract to the extent not terminated.
4. All warranty obligations, if any, shall continue to survive despite the termination.
5. Determining the contract by Procuring Entity for its convenience is not its legal right –
and the contractor must be persuaded to acquiesce. Depending on the merits of the case, the
contractor may have to be suitably compensated on mutually agreed terms for terminating the
190Manual for Procurement of Consultancy Services, Second Edition, 2025
contract. Suitable provisions to this effect should be to be incorporated in the tender document
as well as in the resultant contract.
6. The Services and incidental Goods/ Works that are complete and ready in terms of the
contract for delivery and performance within thirty days after the contractor’s receipt of the
notice of termination shall be accepted by the Procuring Entity as per the contract terms. For
the remaining Services and incidental Goods/ Works, the Procuring Entity may decide:
a) To get any portion of the balance completed and delivered at the contract terms,
conditions, and prices; and/ or
b) To cancel the remaining portion of the Services and incidental Goods/ Works and
compensate the contractor by paying an agreed amount for the cost incurred by the
contractor, if any, towards the remaining portion of the Services and incidental Goods/
Works.
10.8.5 Frustration of Contract
Upon a supervening cause occurring after the effective date of the contract, including a change
in law, beyond the control of either party whether because of the Force Majeure clause or
within the scope of section 56 of the Indian Contract Act, 1872, that makes it impossible to
perform the contract within a reasonable timeframe, the affected party shall give a ‘Notice of
Frustration Event’ to the other party giving justification. The parties shall use reasonable efforts
to agree to amend the contract, as may be necessary to complete its performance. However,
if the parties cannot reach a mutual agreement within 60 days of the initial notice, the Procuring
Entity shall issue a ‘Notice for Determining the contract’ and terminate the contract as per para
10.8.4 above, due to its frustration, without repercussions on either side.
10.8.6 Limitation of Liabilities
Except in cases of criminal negligence or willful misconduct:
1. neither Party shall be liable to the other Party, whether in contract, tort, or otherwise,
for any indirect or consequential loss or damage, loss of use, loss of production, or
loss of profits or interest costs, which may be suffered by the other Party in connection
with the Contract, provided that this exclusion shall not apply to any obligation of the
Contractor to pay liquidated damages to the Employer and
2. the aggregate liability of the Contractor to the Procuring Entity, whether under the
Contract, in tort or otherwise, shall not exceed the total Contract Price, provided that
this limitation shall not apply to any obligation of the Contractor to indemnify the
Employer with respect to patent infringement.
3. the aggregate liability of the Employer to the Contractor except for patent infringement,
whether under the Contract, in tort or otherwise, at any point of time during the
execution/performance of the Contract, shall not exceed the ‘total Contract Price less
payments already released to the Contractor’.
109. Monitoring of Consultancy Contracts – Risks and Mitigation
Risks Mitigation
1. Substitution of key experts in The Procuring Entity needs to deal with such
implementation: When the contract requests strictly in terms of contract provisions
progresses, over a period of time, the which permit substitution of key experts in
request for substitution of key staff is exceptional circumstances such as “death or
medical incapacity”. Substitution of a person
191Chapter 10: Monitoring Consultancy services Contract
Risks Mitigation
made by the firm citing reasons of non- “of equivalent or better qualification and
availability, health, and so on. experience” should receive utmost scrutiny
and compliance, as diluting such a provision
leads to loss of quality of work and a serious
integrity issue. Such substitution should not
give any undue financial benefit to the
contractor.
2. Cost overruns in time-based This type of contract should include an upper
contracts: Time and Cost over-run is a limit of total payments to be made to the
major risk in Time-based contracts, as the consultants for the assignment to safeguard
payment is based on time and delay may against excessive prolonging of time and
result in unanticipated benefit to the payments. After this limit is reached, or the
consultant and the assignment may get period of completion is exceeded, CA should
delayed. review justification for extension of the
contract. One of the ways to prevent cost
overruns in time-based contract is that
Procuring Entities should acquire contract
management capacity to manage consultants
contract before contract is signed. It is
Procuring Entity’s mandate to monitor
consultant’s contracts and also to request
consultants to keep producing progress reports
and highlighting the status of their contract as
it reaches milestones such as 50% and 80%
progress. Procuring Entity must carefully
authorise mobilisation and demobilisation of
key experts and examine the time sheets and
other reimbursable expenditures.
3. Advance payments: This is an Any mobilisation or other advance payments
area of risk in public procurement with should be interest bearing and should be only
undue and unintended benefits to the for justifiable cases. Terms of such advances
contractor, which vitiates the original should be expressly stated in the NIT/tender
selection criteria. documents. The advance payment may be
released in not less than two stages depending
upon the progress of the contract. Advance
should be progressively adjusted against bills
cleared for payment. Interest should be
charged on delayed recoveries irrespective of
the reason stated.
4. Contract changes and Contract modifications and renegotiations
renegotiations: This is also a risk area, should not substantially alter the nature of the
where the procuring entity may not get contract. It should not vitiate the basis of the
what it contracted and paid for or may pay selection of the contractor. It should not give
for what it has not received. On the other undue or unintended benefits to the contractor.
hand, the contractor may not get timely or However, for any changes caused by the
procuring entity, the contractor should be
192Manual for Procurement of Consultancy Services, Second Edition, 2025
Risks Mitigation
proper amendments due to changes adequately and timely compensated within the
asked by the procuring entities. contractual terms.
5. Supervising agencies/individuals A contract management manual or operating
are unduly influenced to alter the contents procedure should be prepared for large value
of their reports so changes in quality, contracts. There should be inbuilt systems of
performance, equipment, and checks and balances.
characteristics go unnoticed. All large contracts should be formally
6. Contractor’s claims are false or reconciled for closure to ensure that the scope
inaccurate and are protected by that in- of the work is completed. This should include
charge of revising them. the dispute resolution forum for resolving
disputes in a fixed timeframe with provision of
7. Payment to the contractor is
escalation level.
delayed intentionally or otherwise.
All payments/recoveries should also be
8. Contractor gets final payment,
reconciled. It should also be ensured that
but contract closure has not been formally
material/assets loaned to him including
done. As a result, material/assets loaned
security passes are accounted for.
to him are not accounted for.
9. Every dispute lands up in
arbitration or court cases since the
procuring entity is reluctant to grant
compensation for its own lapses to the
contractor.
10. Agents/ Sub-contractors and Normally Procuring Entity should deal with the
partners, chosen in a non-transparent contractor directly and not though agents. If
way, are unaccountable or are used to foreign contractors in GTE contracts use
channel bribes. agents, then the relationship between
contractor and Agent should be as per the
contract (and Integrity Pact Annexure 18, if
applicable) in conformity with paras 3.3.3-b)
and 3.9. Sub-contracting should be regulated
as per the contract and paras 3.2.3-1, 5.2.2-3-
c), and 9.2.5-7.
193Manual for Procurement of Consultancy Services, Second Edition, 2025
ANNEXURES
195Manual for Procurement of Consultancy Services, Second Edition, 2025
Annexure 1: Financial Powers to Sanction
Expenditure for Purchases and Execution of
Contracts
(Refer Para 1.5-1, 4.3-2, 8.2.1-5, 8.7.4-3)
1. DFPR, 2024, Rule 11, Sub-Rule (1): Subject to the provisions of DFPR 2024 and the
provisions of the General Financial Rules, governing the procurement of goods and services,
a Department of the Government of India shall have full powers to sanction expenditure for
purchases and for execution of contracts.
a) DFPR 2024, Annexure II (General Conditions for incurring expenditure), para 11: In
order to derive the benefit of these delegations optimally, the Departments of the
Government of India should not only make full use of the delegated powers but also
further re-delegate powers to their subordinate organisations to match the latter’s
requirements. A complete review of such re-delegations may be undertaken at least
once in three years.
2. Powers to sanction expenditure for purchases or execution of contracts to be exercised
by Secretary of the Department, shall be as follows:
Sub-rule (2) For open or limited tender contracts Rs. 100 crores
Sub-rule (3) For negotiated or single tender or proprietary contracts
Rs. 25 crores
and agreements
3. Sub-Rule (4): Contracts or purchases, the amount of which exceeds the value stated
in sub-rules (2) and (3) above, in the categories stated, shall require the approval of the
Minister in charge of the Department.
4. Sub-Rule (5): Subject to the provisions of DFPR 2024, Secretaries of the Departments
of Government of India may, by general or special order, confer powers not exceeding those
vested in them as specified in Sub-rule (2) and (3) of Rule 11 ….. upon an Administrator or
Head of the Department or any other authority subordinate to him in consultation with the
Financial Advisor of the Department or Ministry.
a) Redelegation of Powers: Rule 12, sub-rule (3): The Administrator or Head of the
Department ……. by an order in writing, authorise a Gazetted Officer serving under
him to exercise to such extent, as may be specified in that order, all or any of the
powers conferred on such Administrator or Head of the Department …. The
Administrator or Head of the Department shall, however, continue to be responsible
for the correctness, regularity and propriety of the decisions taken by the Gazetted
Officer so authorised.
b) Charter for FA, 2023, Para 20: Under Rule 12 of the Delegation of Financial Powers
Rules (DFPR), and orders of DoE, certain powers have been given to Departments
and to Heads of Department to decide the financial limits up to which they wish to
further delegate powers for incurring certain types of expenditure. Such cases of re-
delegation of powers may be either with a requirement to consult with Financial
Adviser in individual cases while exercising the re-delegated power or without a
requirement to consult the Financial Adviser in individual cases while exercising the
re-delegated power. All orders of re-delegation of powers require consultation of the
Financial Adviser on both these points, viz. the extent of re-delegation and whether
or not consultation of the Financial Adviser in individual cases will be required.
197Annexure 1: Financial Powers to Sanction Expenditure for Purchases and Execution of
Contracts
5. Sub-Rule (6): Notwithstanding anything contained in sub-rules (1), (2), (3) and (4),in
cases where powers to award contract or purchase or consultancy in a Project or Scheme has
been considered and allowed by Public Investment Board (PIB) or Expenditure Finance
Committee (EFC) or Cabinet, as the case may be, such cases will be processed as per the
financial limits laid down for sanction of such Schemes or Projects by that Authority.
Clarification w.r.t Rule 11 (6) It is clarified that where the award of contract,
purchase or engagement of consultancy services forms part of a Project or
Scheme, which has been appraised by the PIB or EFC, and approved by the
Competent Financial Authority (including the Cabinet), and where financial limits
for such powers have been specifically prescribed in such approval, the limits
allowed by the Competent Financial Authority shall be followed.
6. Explanation: If a contract extends over a period of time, the total value over the entire
period of currency shall be taken for the purpose of applying the limit.
7. These rules shall not apply to –
a) the Ministry of Railways and authorities subordinate to that Ministry;
b) the Ministry of Defence and authorities subordinate to that Ministry in relation to
expenditure debitable to Defence Services Estimates.
c) the Departments of Atomic Energy and Space;
d) the Department of Telecommunications;
e) the Government of India’s representatives abroad whose powers shall be determined
in accordance with the rules or orders issued separately in consultation with the
Finance Ministry.
198Manual for Procurement of Consultancy Services, Second Edition, 2025
Annexure 2: Suggested Structure of Schedule of
Procurement Powers (SoPP)
(Refer Para 1.5-1, 4.3-3, 8.2.1-5, 8.2.7-3, 9.1-4)
A suggested structure of SoPP94 is given below. However individual threshold values
(wherever not given in GFR/ DFPR) would depend on the respective circumstances of various
Organisations.
Sanction Item Threshold Value in Rupees (Lakh)
Five columns for level of officers are just indicative, there would be more levels as per
competent Financial Authorities (CFAs, including Minister or Board of Directors in CPSEs)
in organisations.
Competent Financial Authority Level -1 Level-2 Level 3 Level-4 Level-n
> Level 1 is lowest and Level -
n is highest
Procurement Proposal initiation, approvals and Signing: Including formulation of
ToR/ Activity Schedules and Cost Estimates
In Principle Approval, initiation,
and approval of Procurement
Proposals for Services
Initiation, Approval of Terms of
ToR/ Activity Schedules, and
Cost estimates for Services
Final Administrative, Budgetary
Approval for Starting
Procurement
Approval for Floating of Tenders of Various Types including
Approval Selection of System of
Selection of consultants – other
than LCS
Approval for Selection by
nomination of Services
Preparation and Approval of
Bidding Documents and floating
of Tenders – EoI/ RfP for
services
Approval of Retendering of a
discharged tender after second
attempt
_______________________
94
The procuring entities will indicate the stages and the value threshold above which consultations with/
concurrence/ vetting from IFD would be required.
199Annexure 2: Suggested Structure of Schedule of Procurement Powers (SoPP)
Competent Authority (CA) for Evaluation and Acceptance of Tenders
Procurement without calling Quotation
Procurement Through a Purchase
Committee
Direct Approval of Tenders Without Tender
committee
Tender Committee/ CEC Composition and CA for Acceptance – EoI/ RfP for Services.
Slabs below are suggestive but would depend on the frequency of cases in various
slabs of procurements in an organisation.
Slab 1 (e.g., Rs 10 Levels of TC/ Member
to 50 Lakhs) Secy
Acceptance Level
Slab 2 (e.g., Rs 50 Levels of TC/ Member
lakhs to 5 Crores) Secy
Acceptance Level
Slab 3 (e.g., Rs 5 Levels of TC/ Member
to 20 Crores) Secy
Acceptance Level
Slab 4 (e.g., Rs 20 Levels of TC/ Member
to 100 Crores) Secy
Acceptance Level
Slab 5 (e.g., Rs Levels of TC/ Member
100 Crores and Secy
above)
Acceptance Level
Formulation and Placement of Contracts
Contracts after following Tendering Process
Acceptance of Special Conditions with concurrence of Finance before Award of
Contract as per recommendation of TC/ CA
Acceptance of Advance Payments
Other Variations demanded by Bidders in
special circumstances.
Post Contract Powers, including
Bill Passing and Payments, Handing over assets/ equipments/ material/ utilities to
Contractor; Extensions with or without LD, or approvals of Variations, Contract Closure,
Terminations, Arbitrator appointment, Accepting and sanctioning Court and Arbitration
award
Waiver of Liquidated Damages
Allowing release of Time-barred claims
Enlistment and Debarment of consultants/ service providers
Initiation and Approval
of Enlistment of service
providers
200Manual for Procurement of Consultancy Services, Second Edition, 2025
Initiation and Approval
of Removal from
Enlistment of service
providers due to
misdemeanours
Initiation and Approval
of Holiday Listing/
Suspension of service
providers due to
misdemeanours
Initiation and Approval
of Banning of service
providers within the
Ministry or
recommendation to
Ministry of Commerce
for Country-wide
201Manual for Procurement of Consultancy Services, Second Edition, 2025
Annexure 3: Format of Procurement Proposal
Procurement Proposal (Concept Paper) for Procurement of Consultancy/ Non-
consultancy services
(Refer Para 2.2.1)
NO. Date
Category of Assignment Consultancy Services/ Non-consultancy
services
Name of Officer/ Office proposing the
Assignment
Brief Description of Consultancy/ Non-consultancy services Proposed:
Proposed Period of Engagement:
Place and Nodal Officer for execution
Total Estimated Cost:
Estimate Name/ number:
Allocation No Allocation Code
No
1. Purpose/ Objective Statement of Services
a) Description of service:
b) Background of the Organisation and the Project:
c) Purpose/ Objectives of the Assignment: (Highlight how the proposed
procurement of services would fit in with short-term and strategic goals of Procuring
Entity)
2. Service Outcome Statement - Outcomes expected from the Procurement of
Services:
a) Broad List of Activities/ Steps involved in achieving objectives:
b) Expected Time-frame of assignment/ Duration of Engagement:
c) Rough estimate of cost of Procurement of services: (including related costs to
be incurred by the organization)
3. Justification for the procurement of Services - Capabilities required for carrying
out the assignments:
4. Rough assessment of available in-house capabilities as compared to required
capabilities:
5. Precedence and similar assignments carried out earlier in our organisation/ similar
organisations
6. The eligibility and pre-qualification criteria to be met by the consultants:
7. Justification: Based on assessment of required and in-house capabilities;
a) In case of Consultancy Services: It is certified that; the hiring of consultants is
justified for following reasons (Tick points applicable). Please also add a narrative justification:
i) Inadequacy of Capability or Capacity of required expertise in-house; or
ii) There is internal capacity/ capability to do the job but there are consideration
of economy, Speed, and efficiency in relation to additional requirement/ commitment/
usage of;
1) Staff/ Management/ Organization;
2) Technological and Material Resources;
202Annexure 3: Format of Procurement Proposal
3) Money, and
4) Time/ Speed of execution; and
iii) Also tick one or more of following:
1) The need to have qualified consultant for providing a specialized high-
quality service; or/ and
Need for impartial advice from a consultant (acting independently from any
affiliation, economic or otherwise) to avoid conflicts of interest;
2) The need for Transfer of Knowledge/ Training/ Capacity and capability
building as a by-product of such engagement
3) Need to acquire information about/ Identifying and implementing new
methods and systems
4) Need for planning and implementing organizational change
b) In case of Other (Non-consultancy) Services:
It is certified that, the procurement (outsourcing) of these services is justified for following
reasons (Tick one main point below). Please also add a narrative justification:
i) An administrative policy decided by the Ministry/ Department to outsource
specific (class of) services; or
ii) Economy, Speed and efficiency and more effective delivery of public services
relating to additional requirement/ commitment/ usage of (tick one or more below):
1) Staff/ Management/ Organization;
2) Technological and Material Resources;
3) Money, and
4) Time/ Speed of execution.
8. In principle approval
In principle approval may kindly be accorded, for further processing. Final administrative and
budgetary approvals would be taken after development of Terms of Reference/ Activity
Schedule and detailed estimates.
Proposing Officer
Signatures/ Name/ Designation/ Department
Comments and Instructions:
Approving Officer
Signatures/ Name/ Designation/ Department
203Manual for Procurement of Consultancy Services, Second Edition, 2025
Annexure 4: Terms of Reference (ToR) Format
(Refer Para 2.3-3)
1. Description of Assignment
2. Procuring Entity’s Organisation Background
3. Assignment Background
4. Statement of Purpose/ Objectives
5. Statement of Assignments Outcomes
6. Detailed Scope of Work and Time-lines
7. Tasks, Activities, dependencies, bar chart and Gantt Chart, Milestones
8. Place of Assignment and Touring Requirements if any
9. Length and Duration of assignments
10. Team Composition and Qualification Requirements for the Key Experts (and any other
requirements which will be used for evaluating the key experts under the Bid data sheet)
11. Capacity Building, Training and Transfer of Knowledge, if any
12. Deliverables, Reporting Requirements and Time Schedule for Deliverables [If no reports
are to be submitted, state here “Not applicable.”]
a) Format, frequency, and contents of reports; dates of submission
b) Number of copies, and requirements for electronic submission (or on computer media)
c) Persons (indicate names, titles, submission address) to receive them;
13. Background material, Data, reports, records of previous surveys, and so on, to be provided
to the consultant (Mention a caveat about reliability of material provided and need for the
consultant to verify and crosscheck vital aspects)
14. Facilities such as local conveyance, office space, office machines, secretarial assistance,
utilities, local services, etc., which would be provided to the consultant by the Procuring
Entity (Specifically mention, what facility/ utilities would not be provided and also, charges
if any for facilities offered)
15. Institutional and organisational arrangement
a) Counterpart Project Manager and Team
b) Contract Monitoring Committee
c) Chain of Command for reporting
16. Procedure for review of the work of consultant after award of contract
204Manual for Procurement of Consultancy Services, Second Edition, 2025
Annexure 5: Bid Opening Attendance Sheet cum
Report
(Refer Para 5.6-3-a) and h), 8.5.1-1)
[Name of Procuring Entity]
Bid Opening Attendance Sheet cum Report
Type of EoI/ Technical/ No Date and Time
Openin Financial of Opening
g
Title of
Tender
Attendance Record
Sr No Bidder’s Name Bidder’s Bidder’s Represented by Contact No. Signature of
Address Authorisatio Representativ
n and Date e
Bid Opening Report
Offer Bidder’ Bidder’ Submission Submission of No of Rate Quoted Other Special Features
No. s Name s Ref of Requisite other Cuttings/ and Taxes/ Announced
and EMD Mandatory Overwriting Duties
Date (Y/N) Documents s (Financial Bid)
(Y/N)
--/---
--/--
--/--
Total no. of regular tenders taken out from the tender box to be opened as mentioned
above................................................... (In figures and in words)
Signature, Date and Time Signature, Date and Time
Name and Designation of Tender Opening Name and Designation of Tender Opening Officer
Officer
Received total regular tenders....................... (In figures/words) as above
Signature, Date and Time Signature, Date and Time
Name and Designation of Procuring Entity Name and Designation of Procuring Entity Officer
Officer
205Manual for Procurement of Consultancy Services, Second Edition, 2025
Annexure 6: CEC Committee Minutes Format for
Consultancy Services
(For EoI/ Techno-Commercial/Financial Bids)
(Refer Para 7.3.4-4, 8.2.8-1 and 8.4.7)
Organisation:_____________________________
_______________________________________________
Minutes of Tender Committee Meeting
(EoI/ Techno-commercial/Financial Bids)
Stage of Evaluation: EoI/ Technical/ Financial
Section I: Top Sheet
File No: Date:
Procuring Entity/ Method of LCS/ QCBS/
Client Selection SSS
Type of Contract Lump-sum/ Time Based/ Percentage/ Retainer cum Success Fee/
Indefinite Delivery
Name of Estimated Cost:-
Assignment
Tender Stage Date of
Published In Publication
Bid Validity and Bid Opening Date
Extensions taken
Past Precedents/ Procurements
Sr. service Order Reference Description Cost Details Remarks
No. provider & Date of Service
Members of the Tender Committee
Sr. Name Designation Sr. Name Designation
No. No.
1 2
3 4
Section II: Background of the Assignment
Include a brief description, context, scope, and objectives of the services. Mention technical
and financial approvals; estimated cost; budgetary provisions; urgency of requirement;
special technical requirements and other connected procurements which are part of same
package/project.
Review special conditions, restriction if any, on participation of bidders; purchase
preferences, requirements prescribed in bid documents (EMD, document submission, etc.)
Describe briefly the selection process that has been completed before this stage: mode of
bidding; bidding document contents; bid publication; Pre-proposal Conferences,
Amendment/ Clarifications sought and given, withdrawals of firms before proposal
submissions, level of competition obtained; issues if any noticed during bid-opening (bids
not opened due to lack/ unsatisfactory EMD, etc.), the establishment of the shortlist, EoI,
and. Describe major events that may have affected the timing (delays, complaints from
consultants, reference of RfP document (attach with the Evaluation Report or make it
206Annexure 6: CEC Committee Minutes Format for Consultancy Services
available for review/approving authority), extension of proposal submission date, and so
on).
Names/nationality of firms/associations (mark domestic firms and firms that had expressed
interest) of Firms who participated and Shortlisted Bidders prior to this stage – EoI/
Technical Evaluation:
i) Participated/ Expressed Interest:
ii) Shortlisted in EoI/ Technical Evaluation prior to this
Section III: Preliminary Evaluation of Responsiveness (Refer to Annexure 8)
Review handling of any complaints received
Discuss preliminary evaluation for determining substantially responsive bids and for minor
corrections and clarifications
Section IV: Evaluation of Responsive Bids: Technical Evaluation
i) Briefly describe the meetings and actions taken by the evaluation committee: formation
of a technical evaluation team, outside assistance, evaluation guidelines, justification
of sub-criteria and associated weightings as indicated in the standard RfP and
compliance of evaluation with RfP.
ii) Summary of Evaluation Criteria and Weights assigned
iii) Grading and Rating Scheme in the Bid documents or decided before the Evaluation
iv) Present results of the technical evaluation: scores and the award recommendation
(based on Rating System agreed among evaluators prior to receipt of proposals).
v) Highlight strengths and weaknesses of each proposal (most important part of the
report).
a) Strengths: Experience in very similar projects in the country; quality
of the methodology, proving a clear understanding of the scope of the
assignment; strengths of the local partner; and experience of proposed staff
in similar assignments.
b) Weaknesses: Of a particular component of the proposal; of a lack of
experience in the country; of a low level of participation by the local partner;
of a lack of practical experience (experience in studies rather than in
implementation); of staff experience compared to the firm’s experience; of a key
staffer (e.g., the team leader); of a lack of responsiveness; and of disqualifications
(conflict of interest).
vi) Comment on individual evaluators’ scores (discrepancies). Items requiring further
negotiations.
Technical Evaluation Report should also contain
a) Technical Evaluation Summary (simplified in case of LCS or EoI, otherwise detailed,
if so chosen in RfP, Formats given in Annexure 7, 8 and 9)
b) Evaluation of Consultancy Firm’s Experience (In case of Detailed Technical
Evaluation specified, Formats given in Annexure 10)
c) Evaluation of Methodology & Work Schedule (In case of Detailed Technical
Evaluation specified, Formats given in Annexure 11)
d) Evaluation of the Key Professionals (In case of Detailed Technical Evaluation
specified, Formats given in Annexure 12)
Section V: Evaluation of Technically Successful Bids: Financial Evaluation
i) Start with review of techno-commercial evaluation and shortlisted Firms and
approval and directions by CA
ii) Briefly describe the meetings and actions taken by the evaluation committee:
formation of a financial evaluation team, outside assistance, evaluation guidelines,
justification of associated weightings as indicated in the standard RfP and
compliance of evaluation with RfP.
207Manual for Procurement of Consultancy Services, Second Edition, 2025
iii) Insert a summary table of evaluated financial scores/ combined weighted scores
iv) Deliberations should be in the sequence of financial/ combined scores etc. Indicate:
any issues faced during the evaluation, such as difficulty in obtaining the exchange
rates to convert the prices into the common currency used for evaluation purposes;
adjustments made to the prices of the proposal(s) (mainly to ensure consistency with
the technical proposal) and determination of the evaluated price (does not apply to
Quality-based (Quality-based), Selection- based on Qualifications (Qualifications),
and Single-source Selection (Single-Source));arithmetical correction in case of
Time-based Contract, tax-related problems; award recommendation; and any other
important information.
v) Attach Minutes of Public Opening of Financial Proposals
Section VI: Summary of Recommendations
Bid-wise recommendation should be recorded
In case of evaluation of financial bids,
1. Give a summary of recommended bids, award value, bid expiry date and special
conditions, if any;
2. Also mention that the rates recommended are considered reasonable (and basis for
such determination);
3. Total value of the recommendations for determining level of acceptance authority;
4. Mention that none of the TC members have any conflict of interest with the parties
recommended for award;
5. Request acceptance of recommendations by competent authority and that it’s within his
powers of acceptance as per SoPP/ DFPR.
Signature Name and Designation of the Members
1 2
Date: Date:
(Name & Designation) (Name & Designation)
3 4
Date: Date:
(Name & Designation) (Name & Designation)
Remarks by the Accepting Authority:
_____________________________________________
Signature:______________________________ Date:__________________
Name & Designation of Accepting Authority___________________________
208Manual for Procurement of Consultancy Services, Second Edition, 2025
Annexure 7: Format for Evaluation of
Responsiveness
(Refer to Annexure 6)
Name of the consultancy firm:
Sr. No. Item Required
response
1 Has the consultant paid the RfP document fees? Yes
2 Has the consultant submitted the requisite bid processing fee and bid Yes
security?
3 Have all the pages required to be signed by the authorized representative Yes
of the consultant been signed?
4 Has the power of attorney been submitted in the name of authorized Yes
representative?
5 In the case of JV/consortium, whether the MoU has been submitted? Yes
6 Has the consultant submitted all the required forms of the technical Yes
proposal?
7 Technical proposal does not contain any financial information? Yes
8 Is financial proposal submitted separately in a sealed cover? Yes
209Manual for Procurement of Consultancy Services, Second Edition, 2025
Annexure 8: Format for Simplified Evaluation of
Quality (LCS/ EoI)
(Refer to Annexure 6)
(If so, specified in Bid Documents)
Sr. Item Required
No. response
1 Does the consultancy firm have the required experience? Yes
2 Does the proposed methodology of work fulfil the objectives of the Yes
assignment/ job till the last detail of the ToR?
3 Do the methodology, work plan and staffing schedule provide coverage Yes
of the entire scope of work as described in ToR?
4 Does the team leader fulfil the minimum educational qualification and Yes
experience criteria?
5 Has the consultant provided for all the professionals for requisite Yes
expertise?
6 Does the key professional (indicate the position) fulfil the minimum Yes
educational qualification and experience criteria? [Evaluate for all the
proposed key personnel]
7 Does the staffing schedule including the key professionals proposed, Yes
the responsibility assigned to them and the support staff together is
adequate for performing the entire scope of work indicated in the ToR?
Note: If the answer is yes, in all the cases, the consultancy firm is considered technically
qualified for the assignment.
210Manual for Procurement of Consultancy Services, Second Edition, 2025
Annexure 9: Format for Detailed Technical
Evaluation - Summary Sheet
(If so specified in RfP)
(Refer to Annexure 6)
(To be compiled from Annexures 11 to 13)
S.No. Name of Firm’s Methodology Qualifications of Total Ranking
the Experience & Work Key Marks. of
consultant Marks schedule Professionals Awarded Technical
Awarded Marks Marks Awarded Marks
Awarded
Max. Marks Max. Marks = Max. Marks = Max.
= Marks
100
211Manual for Procurement of Consultancy Services, Second Edition, 2025
Annexure 10: Evaluation of Consultancy Firm’s
Experience
(Refer to Annexure 6 and 9)
(Averaged from individual worksheets of CEC members)
Sr.No. Name of the Firm Number of Projects of Marks Awarded
Consultancy similar nature
Max. Marks =
212Manual for Procurement of Consultancy Services, Second Edition, 2025
Annexure 11: Evaluation of Methodology & Work
Schedule
(Refer to Annexure 6 and 9)
(Averaged from individual worksheets of CEC members)
S.No. Name of the Firm’s Work Plan & Organization Total –
Consultancy Understanding Methodology and Staffing for Marks
of ToR – Marks – Marks the proposed Awarded
Awarded Awarded assignment –
Marks Awarded
Max. Marks = Max. Marks = Max. Marks = Max
Marks =
213Manual for Procurement of Consultancy Services, Second Edition, 2025
Annexure 12: Evaluation of the Key Professionals
(Refer to Annexure 6 and 9)
(Averaged from individual worksheets of CEC members)
Name of the Consultancy Firm:
Sr Name of Education Marks No. of Marks Experien Marks Total
. the Key al Award Projec Award ce of the Award Mark
N Profession Qualificati ed ts of ed region ed s
o. als on simila (No. of (4+6+
r Projects 8)
Max. nature Max. in the Max. Max.
Marks Marks region) Marks Mark
= = = s=
1 2 3 4 5 6 7 8 9
Grand Total for the consultant:
Name of the Consultancy Firm:
Grand Total for the consultant:
Name of the Consultancy Firm:
Grand Total for the consultant:
Name of the Consultancy Firm:
Grand Total for the consultant:
214Manual for Procurement of Consultancy Services, Second Edition, 2025
Annexure 13: Certificate for Procurement of
Consultancy Services without Quotation
(Refer Para 4.3-3-e-i)
Ref ____________________________________________________________
No:
Place: ____________________ Date: ____________________
“I, ___________________, am personally satisfied that the Non-consultancy services
executed as described below are of the requisite scope and performance standards and have
been got executed from a reliable service provider at a reasonable price.”
Description of Service:
Justification:
Place and Nodal Officer
for availing the Services
Contract Basis Lump-Sum/ Unit (Item) Rate/ Time-based
Scope/ Quantum/
Performance Standards
Rate:
Taxes/Duties:
Other Charges:
Total Contract Price:
service provider M/S
Vide Bill No.:
Cheque may be drawn in
favour of
Name of Procuring
Officer:
Designation:
Signature:
215Manual for Procurement of Consultancy Services, Second Edition, 2025
Annexure 14: Purchase Committee Certificate for
Procurement of Consultancy Services
(Refer Para 4.3-3-e-ii)
Ref __________________________________________
No:
Place: __________________________ Date: _________________________
Description of Service:
Justification:
Place and Nodal Officer for availing the
Services
Contract Basis Lump-Sum/ Unit (Item) Rate/ Time-based
Scope/ Quantum/ Performance Standards
Details of Prices Ascertained
service Rate: Taxes/Duties: Other Total Total Recommendations
provider Charges: Unit Price: & Comments
Price:
Selected service provider
Unit Rate, Taxes/ Duties/ Other
Charges
Total Unit Rate
Total Value of Purchase
Cheque may be drawn in favour
of
Signature: Signature: Signature:
Name 1: Name 2: Name 3:
Designation: Designation: Designation:
“Certified that we the undersigned, members of the purchase committee are jointly and
individually satisfied that the above-described Services are executed at a reasonable price
and are of the requisite scope and performance standards and have been got executed from
a reliable service provider, and it is not debarred by Department of Expenditure or
Ministry/Department concerned.” The details of recommended purchase are:
216Manual for Procurement of Consultancy Services, Second Edition, 2025
Annexure 15: Limited Tender Form
(Refer Para 4.3-3-c-i)
(For Techno-Commercial/Financial Bids)
Name of the Procuring Entity __________________________________________
Firm’s Reference Date
Firm Registration No. (if any) PAN (attach
photocopy)
TIN/ GST# Address:
Phone
LIMITED
TENDER FORM
Fax
Email
M/s: Enquiry No. and
Date
Date of Tender
Opening
The tender would be opened at three pm on the date
of tender opening above, at the address mentioned
above.
Please submit on or before 3:00 pm on the date of tender opening, your quotation for the following
services, in accordance with the terms and conditions printed overleaf, in a sealed cover, marked
on top with – Enquiry No; Date of Tender Opening.
Yours Sincerely
Procuring Officer
Services and Activities Schedule: All Rates in Figures and in Words in Rupees
Sr No: Description of Services/ Qty Unit Delivery Rate per Unit Taxes Total Total
Activities Terms & Rate Value
Duties per
Unit
Delivery Schedule:
Enclosed Performance Standards /Special Conditions of Contract:
I/ we engage to delivery of Service(s) to your office and comply the following:
1. Services and Activities schedule and Performance indicated.
2. Special conditions of Contract for this tender.
3. Terms and conditions printed overleaf.
4. General conditions of contract (signed at the time of supplier registration).
217Annexure 15: Limited Tender Form
5. I/we confirm that set off for the GST, etc. Paid on the inputs have been taken into consideration
in the above quoted price and further agree to pass on such additional duties as sets offs as may
become available in future under GST, etc.
6. This offer is valid for 90 (ninety) days from the date of opening of the tender.
7. An undertaking that we have not been debarred by the Procuring Entity (Government/
Department/ CPSE) that has issued this Limited Tender Enquiry. An undertaking that we have not
been debarred by Department of Expenditure (DoE), Ministry of Finance, Government of India.
8. That the bid submitted by us is properly sealed and prepared so as to prevent any subsequent
alteration and replacement.
Signature & Seal Name of Authorised
Place & Date: Signatory:
Address: Tel. No./ Fax. No./
Mobile No.
Email Id:
TERMS AND CONDITIONS OF LIMITED TENDER
1. The quotation must be in the form furnished by procuring entity and should be free
from corrections/erasures. In case there is any unavoidable correction it should be properly
attested. If not, the quotation will not be considered. Quotation written in pencil will not be
considered.
2. Quotation will be opened on due date at 3.00 pm at the indicated venue in presence
of the bidders or their representatives who may wish to be present.
3. The Procuring Entity reserves the right to accept the offer in full or in part, to reject any
or all proposals without assigning any reason thereof, and does not bind itself to accept lowest
quotations.
4. Participation in this tender is by invitation only and is limited to the selected procuring
entity’s registered consultants/ service providers. Unsolicited offers are liable to be ignored.
However, consultants/ service providers who desire to participate in such tenders in future
may bring it to the notice of procuring entity and apply for registration as per procedure. Note:
to get registered as an approved consultant/ service provider with the procuring entity, please
download consultant/ service provider approval form from ____________________ and
submit.
5. Consultant’s name and country of origin of services offered must be clearly specified.
Please quote whether your organisation is large scale industry or small-scale industry. If you
have NSIC/ MSE/ MSI Certificate, please attach it to the quotation. Mention your registration
details. Purchase Preference and restriction policies of the Government of India shall be
applicable in this Tender.
6. Complete details and performance standards if any must accompany the quotation. If
you have got any counter offer as suitable to the Services required by us, the same may be
shown separately.
7. All Services/ Deliverables submitted under the consultancy contract shall be subject to
review and acceptance by the Procuring Entity.
8. The Procuring Entity reserves the right to modify the quantity specified in this enquiry.
9. The prices quoted should be firm till the services are completed. Please quote the rates
in words and figures. Price quoted should be net and valid for a minimum period of three
months from the date of opening of the quotation.
218Manual for Procurement of Consultancy Services, Second Edition, 2025
10. Payment of GST is primarily the responsibility of the consultant/ service provider and
will not be paid unless the percentage value is clearly mentioned in the quotations. If no
indication regarding GST is recorded in the quotation, the GST will be considered as included.
11. Delivery period required for delivering the services should be invariably specified in the
quotation.
12. In case your quotation is accepted, and order is placed on you, the services against
the order should be completed within the period stipulated in the order. The Procuring Entity
reserves the right to recover any loss sustained due to delayed delivery of services by way of
penalty. Failure to perform Services within the stipulated period shall entitle Procuring Entity
for the imposition of penalty without assigning any reasons @ 0.5% (half percent) of the total
value of the services covered in order as penalty per day subject to a maximum of 5% (five
percent) unless extension is obtained in writing from the office on valid ground before expiry
of delivery period.
13. If the consultant/ service provider fails to deliver the agreed outputs within the specified
timelines, and due to that account Procuring Entity is forced to obtain services at your risk and
cost from elsewhere, the loss or damage that may be sustained there by will be recovered
from the defaulting consultant/ service provider.
14. Dispute clause: Any dispute relating to the enquiry shall be subject to the jurisdiction
of the court at [indicate Place] only.
15. Our normal payment terms are 100% (hundred percent) within 30 (thirty) days on
receipt and acceptance of services at our site.
219Manual for Procurement of Consultancy Services, Second Edition, 2025
Annexure 16: Example of Formula for Price Variation
Clause
[Refer Para 6.5-2)d)x)]
(The formula for price variation should ordinarily include a fixed element, a material element,
and a labour element. The figures representing the material element, and the labour element
should reflect the corresponding proportion of input costs, while the fixed element may range
from 10 to 25% (ten to twenty-five percent). That portion of the price represented by the fixed
element and profits and is not subject to variation. The portions of the price represented by
the material element and labour element along will attract price variation.)
The formula for price variation will thus be:-
𝑀𝑀1 𝐿𝐿1
⎡�𝐹𝐹+𝑃𝑃� �+𝑏𝑏� ��⎤
𝑀𝑀𝑃𝑃 𝐿𝐿𝑃𝑃
⎢ ⎥
𝑃𝑃𝑃𝑃 = 𝑃𝑃𝑃𝑃 −𝑃𝑃𝑃𝑃
⎢ ⎥
100
Where: - ⎢ ⎥
⎣ ⎦
P is then adjustment amount payable to the supplier (a minus figure will indicate a reduction
a
in the contract price) on the date of supply.
P is the contract price on the base date (which is taken as the date on which tender is due to
o
open).
F is the fixed element (as the percentage of the total price) not subject to price variation.
a is the assigned percentage to the material element in the contract price.
b is the assigned percentage to the labour element in the contract price.
(F, a, and b being percentages should total 100)
L and L are the average wage indices for the quarter before the quarter in which base month
o 1
falls and for the quarter before the quarter in which date of supply falls; respectively. For
example, for a tender opening on March 17, 2016 (base date), L would be average wage
o
index for the quarter of Oct-Dec 2015.
M and M are the material prices/indices as average of the month, two months prior to the
o 1
month in which base month falls and average of the month, two months prior to the month in
which date of supply falls, respectively. For example, for a tender opening on March 17, 2016
(base date), M would be prices/index as average of the month of January 2016. All material
o
prices/indices will be basic prices without excise duty and without any other central, state,
local taxes, and duties and Octroi.
If more than one major item of material is involved, the material element can be broken up into
two or three components such as M , M , M .
x y z
The following conditions would be applicable to price adjustment:
1. There is a Time-lag period between the date of supply/ base date respectively and the
dates on which indices/ prices are to be considered as per above formula. This time lag
can be a few months/ weeks prior to such base date/ date of supply, depending on the
frequency of publishing/ availability of indices/ prices and the supply chain process of
manufacturing. This must be specified in the definitions of L / L and M /M indices in the
0 1 0 1
formula in the tender document as above.
2. Base date shall be assumed to be the date of last bid submission deadline.
3. No price increase is allowed beyond original delivery period.
220Annexure 16: Examples of Formula for Price Variation Clause
4. No price adjustment shall be payable on the portion of contract price paid to the seller as
an advance/interim payment after the date of such payment.
5. No price adjustment shall be payable if this is less than or equal to 2% (two percent) of
Po.
6. Total adjustment will be subject to maximum ceiling of ____% (to be specified in tender
document), beyond which the price variation would be capped at this level. As soon as it
comes to light that price variations are likely to go beyond this ceiling, and if the Supplier
is not agreeable to the price variation being capped at that level, he may notify the
Purchaser under ‘Frustration of Contract’ provisions in the Tender Document/ Clause, for
termination of contract.
7. Payments for each supply would initially be made as per the base price mentioned in the
contract. Price adjustment bill should be submitted only quarterly for the supplies made
during the quarter.
8. In GTE tenders extra care should be taken in selecting the price indices. Preferably the
price indices should be from the same country and of same currency as the country and
currency of the bidder. In case price is in a currency of a country where inflation is low and
the indices are from country with much higher inflation rates, and should be
𝑀𝑀1 𝐿𝐿1
multiplied by a correction factor of exchange rates , where E�0𝑀𝑀 is
𝑀𝑀
�the ex�c 𝐿𝐿h 𝑀𝑀a�nge rate of
𝐸𝐸𝑀𝑀
country of M and L indices with reference to currency of price P. For example, if M&L are
�𝐸𝐸1�
from India and P is in $, then E is Number of Rs. in a $ on base date and E is the exchange
o 1
rate on determination date.
9. Even if there is no price adjustment claim, supplier must submit all relevant data to prove
that there is no downward variation. In any case he must submit a declaration as follows;
“It is certified that there has been no decrease in the price because of decrease
in price variation indices in the price variation formula. In the event of any
decrease of such indices that come to light later regarding the payment claimed
by us, we shall promptly notify this to the purchaser, and we undertake to refund
and agree to the purchaser deducting any excess payment made to us in this
regard, from our future payment due.”
221Manual for Procurement of Consultancy Services, Second Edition, 2025
Annexure 17: Model Clauses to be inserted in
Tenders etc. w.r.t Order (Public Procurement No.4)
(including tenders issued manually or any electronic portal including GeM)
[Refer para 1.10.3-7]
(While adhering to the substance of the Order, procuring entities and GeM are free to
appropriately modify the wording of the clause/ certificate based on their past experience, local
needs etc. The conditions relating to specified ToT (as shown in italics) should be incorporated
only in the tenders which attract the restrictions due to specified ToT.)
A. Model Clauses for Tenders (including tenders issued manually or any
electronic portal, including GeM):
I. Any bidder from a country that shares a land border with India will be eligible to bid in any
procurement, whether of goods, services (including consultancy services and non-consultancy
services) or works (including turnkey projects) only if the bidder is registered with the
Competent Authority. Further, any bidder (including bidder from India) having specified
Transfer of Technology (ToT) arrangement with an entity from a country which shares a land
border with India, shall also require to be registered with the same competent authority.
II. “Bidder” (including the term ‘tenderer’, ‘consultant’ or ‘service provider’ in certain contexts)
means any person or firm or company, including any member of a consortium or joint venture
(that is an association of several persons, or firms or companies), every artificial juridical
person not falling in any of the descriptions of bidders stated hereinbefore, including any
agency branch or office controlled by such person, participating in a procurement process.
III. “Bidder from a country which shares a land border with India" for the purpose of this Order
means: -
a. An entity incorporated, established, or registered in such a country; or
b. A subsidiary of an entity incorporated, established, or registered in such a country; or
c. An entity substantially controlled through entities incorporated, established, or registered
in such a country; or
d. An entity whose beneficial owner is situated in such a country; or
e. An Indian (or other) agent of such an entity; or
f. A natural person who is a citizen of such a country; or
g. A consortium or joint venture where any member of the consortium or joint venture falls
under any of the above
IV. The beneficial owner for the purpose of (III) above will be as under:
1. In case of a company or Limited Liability Partnership, the beneficial owner is the natural
person(s), who, whether acting alone or together, or through one or more juridical person, has
a controlling ownership interest or who exercises control through other means.
Explanation—
a. “Controlling ownership interest” means ownership of or entitlement to more
than twenty-five per cent, of shares or capital or profits of the company;
b. ‘‘Control’’ shall include the right to appoint majority of the directors or to control
the management or policy decisions including by virtue of their shareholding or
management rights or shareholders agreements or voting agreements;
222Annexure 17: Model Clause to be inserted in Tender etc. w.r.t Order (Public Procurement No.
4)
2. In case of a partnership firm, the beneficial owner is the natural person(s) who, whether
acting alone or together, or through one or more juridical person, has ownership of entitlement
to more than fifteen percent of capital or profits of the partnership;
3. In case of an unincorporated association or body of individuals, the beneficial owner is
the natural person(s), who, whether acting alone or together, or through one or more juridical
person, has ownership of or entitlement to more than fifteen percent of the property or capital
or profits of such association or body of individuals;
4. Where no natural person is identified under (1) or (2) or (3) above, the beneficial owner
is the relevant natural person who holds the position of senior managing official;
5. In case of a trust, the identification of beneficial owner(s) shall include identification of
the author of the trust, the trustee, the beneficiaries with fifteen percent or more interest in the
trust and any other natural person exercising ultimate effective control over the trust through
a chain of control or ownership.
V. An Agent is a person employed to do any act for another, or to represent another in dealings
with third person.
VI. [To be inserted in tenders for Works contracts, including Turnkey contracts] The successful
bidder shall not be allowed to sub-contract works to any contractor from a country which
shares a land border with India unless such contractor is registered with the Competent
Authority.
VII. The registration shall be valid at the time of submission of bid and at the time of
acceptance of bid.
VIII. If the bidder was validly registered at the time of acceptance/ placement of order,
Model Certificate for Tenders
‘‘I have read the clause regarding restrictions on procurement from a bidder of
a country which shares a land border with India; I certify that this bidder is not
from such a country or, if from such a country, has been registered with the
Competent Authority. I hereby certify that this bidder fulfils all requirements in
this regard and is eligible to be considered. [Where applicable, evidence of valid
registration by the Competent Authority shall be attached.]"
Model Certificate for Tenders for Works involving possibility of sub-contracting:
“I have read the clause regarding restrictions on procurement from a bidder of
a country which shares a land border with India and on sub-contracting to
contractors from such countries; I certify that this bidder is not from such a
country or, if from such a country, has been registered with the Competent
Authority and will not sub-contract any work to a contractor from such countries
unless such contractor is registered with the Competent Authority. I hereby
certify that this bidder fulfils all requirements in this regard and is eligible to be
considered. [Where applicable, evidence of valid registration by the Competent
Authority shall be attached.]"
Model additional certificate by Bidders in the cases of specified To T:
"I have read the clause regarding restrictions on procurement from a bidder
having a Transfer of Technology (ToT) arrangement. I certify that this bidder
does not have any To T arrangement requiring registration with the competent
authority. "
OR
223Manual for Procurement of Consultancy Services, Second Edition, 2025
"I have read the clause regarding restrictions on procurement from a bidder
having a Transfer of Technology (ToT) arrangement. I certify that this bidder has
valid registration to participate in this procurement."
B. Model Certificate for GeM (to be taken by the GeM from the seller during registration
on GeM. GeM should also obtain this certificate from all existing bidders as soon as
possible):
“I have read the clause regarding restrictions on procurement from a bidder of
a country which shares a land border with India; I certify that this vendor/ bidder
is not from such a country or, is not from such a country, has been registered
with the Competent Authority. I hereby certify that this vendor/ bidder fulfils all
requirements in this regard and is eligible to be considered for procurement on
GeM. [Where applicable, evidence of valid registration by the Competent
Authority shall be attached.]"
224Manual for Procurement of Consultancy Services, Second Edition, 2025
Annexure 18: Integrity Pact Format
(Refer para 3.4-2)
INTEGRITY PACT
Between
[the Procuring Organisation] hereinafter referred to as “The Principal,” and
__________________ hereinafter referred to as “The Bidder/ Contractor.”
Preamble
The Principal intends to award contract/s for__________________, under laid down
organisational procedures, The Principal values full compliance with all relevant laws of the
land, rules, regulations, economical use of resources, and fairness / transparency in its
relations with its Bidder(s) and / or Contractor(s).
To achieve these goals, the Principal shall appoint Independent External Monitors (IEMs) who
shall monitor the tender process and the execution of the contract for compliance with the
abovementioned principles.
Section 1 – Commitments of the Principal
1) The Principal commits itself to take all measures necessary to prevent corruption and to
observe the following principles: -
a. No employee of the Principal, personally or through family members, shall in
connection with the tender for, or the execution of a contract, demand, take a promise
for or accept, for self or third person, any material or immaterial benefit which the
person is not legally entitled to.
b. The Principal shall treat all Bidder(s) with equity and reason during the tender process.
The Principal shall, in particular, before and during the tender process, provide to all
Bidder(s) the same information and shall not provide to any Bidder(s) confidential /
additional information through which the Bidder(s) could obtain an advantage in the
tender process or the contract execution.
c. The Principal shall exclude from the process all known persons having conflict of
interest.
2) If the Principal obtains information on the conduct of any of its employees which is a
criminal offence under the BNS/ PC Act, or if there be a substantive suspicion in this
regard, the Principal shall inform the Chief Vigilance Officer and in addition shall initiate
disciplinary proceedings.
Section 2 – Commitments of the Bidder(s)/ Contractor(s)
1) The Bidder(s)/ Contractor(s) commits themselves to take all measures necessary to
prevent corruption. The Bidder(s)/ Contractor(s) commits themselves to observe the
following principles during participation in the tender process and the contract execution.
a. The Bidder(s)/ Contractor(s) shall not, directly or through any other person or firm,
offer, promise, or give to any of the Principal’s employees involved in the tender
process or the execution of the contract or to any third person any material or other
benefit which they are not legally entitled to, in order to obtain in exchange any
advantage of any kind whatsoever during the tender process or the execution of the
contract.
b. The Bidder(s)/ Contractor(s) shall not enter with other Bidders into any undisclosed
agreement or understanding, whether formal or informal, in violation of the
Competition Act, 2002 (as amended from time to time). This applies in particular to
225Annexure 18: Integrity Pact Format
prices, specifications, certifications, subsidiary contracts, submission or non-
submission of bids or any other actions to restrict competitiveness or to introduce
cartelisation in the tender process.
c. The Bidder(s)/ Contractor(s) shall not commit any offence under the relevant BNS/
PC Act; further, the Bidder(s)/ Contractor(s) shall not use improperly, for purposes of
competition or personal gain, or pass on to others, any information or document
provided by the Principal as part of the business relationship, regarding plans,
technical proposals, and business details, including information contained or
transmitted electronically.
d. The Bidder(s)/Contractors(s) of foreign origin shall disclose the name and address of
the Agents/representatives in India, if any. Similarly, the Bidder(s)/Contractors(s) of
Indian Nationality shall furnish the name and address of the foreign principals, if any.
Further details, as mentioned in the “Guidelines on Indian Agents of Foreign
Suppliers,” shall be disclosed by the Bidder(s)/Contractor(s). Further, as mentioned
in the Guidelines, all the payments made to the Indian agent/representative must be
in Indian Rupees only. Copy of the “Guidelines on Indian Agents of Foreign Suppliers”
is placed on Annex hereto.
e. The Bidder(s)/ Contractor(s) shall, when presenting their bid, disclose any and all
payments made, is committed to, or intends to make to agents, brokers, or any other
intermediaries in connection with the award of the contract.
f. Bidder(s) /Contractor(s) who have signed the Integrity Pact shall not approach the
Courts while representing the matter to IEMs and shall wait for their decision.
2) The Bidder(s)/ Contractor(s) shall not instigate third persons to commit offences outlined
above or be an accessory to such offences.
Section 3 - Disqualification from the tender process and exclusion from future contracts
If the Bidder(s)/Contractor(s), before award or during execution, has committed a
transgression through a violation of Section 2, above or in any other form such as to put their
reliability or credibility in question, the Principal is entitled to disqualify the
Bidder(s)/Contractor(s) from the tender process or take action as per laid down procedure to
debar the Bidder(s)/Contractor(s) from participating in the future procurement processes of
the Government of India.
Section 4 – Compensation for Damages
1) If the Principal has disqualified the Bidder(s) from the tender process before the award
according to Section 3, the Principal is entitled to demand and recover the damages
equivalent to Earnest Money Deposit/ Bid Security.
2) If the Principal has terminated the contract according to Section 3, or if the Principal is
entitled to terminate the contract according to Section 3, the Principal shall be entitled to
demand and recover from the Contractor liquidated damages of the Contract value or the
amount equivalent to Performance Bank Guarantee.
Section 5 – Previous transgression
1) The Bidder declares that no previous transgressions occurred in the last three years with
any other Company in any country conforming to the anti-corruption approach or with any
Public Sector Enterprise in India that could justify his exclusion from the tender process.
2) If the Bidder makes an incorrect statement on this subject, the Principal shall act like para
2) of Section 4 above.
Section 6 – Equal treatment of all Bidders / Contractors / Subcontractors
226Manual for Procurement of Consultancy Services, Second Edition, 2025
In the case of Sub-contracting, the Principal Contractor shall take responsibility for adopting
the Integrity Pact by the Sub-contractor.
a. The Principal shall enter into agreements with identical conditions as this one with
all Bidders and Contractors.
b. The Principal shall disqualify from the tender process all bidders who do not sign
this Pact or violate its provisions.
Section 7 – Criminal charges against violating Bidder(s) / Contractor(s) / Subcontractor(s)
If the Principal obtains knowledge of the conduct of a Bidder, Contractor, or Subcontractor, or
of an employee or a representative or an allied firm of a Bidder, Contractor or Subcontractor
which constitutes corruption, or if the Principal has substantive suspicion in this regard, the
Principal shall inform the same to the Chief Vigilance Officer.
Section 8 – Independent External Monitor
1) The Principal shall appoint competent and credible Independent External Monitor(s) for
this Pact after approval by the Central Vigilance Commission. The task of the Monitor is
to review, independently and objectively, whether and to what extent the parties comply
with the obligations under this agreement.
2) The Monitor is not subject to instructions by the parties' representatives and performs
their functions neutrally and independently. The Monitor would have access to all
Contract documents whenever required. It shall be obligatory for them to treat the
information and documents of the Bidders/Contractors as confidential. They report to the
Management of the Principal.
3) The Bidder(s)/Contractor(s) accepts that the Monitor has the right to access without
restriction, all Project documentation of the Principal, including that provided by the
Contractor. Upon their request and demonstration of a valid interest, the Contractor shall
also grant the Monitor unrestricted and unconditional access to their project
documentation. The same applies to Sub-contractors.
4) The Monitor is under contractual obligation to treat the information and documents of the
Bidder(s)/ Contractor(s)/ Sub-contractor(s) with confidentiality. The Monitor has also
signed declarations on ‘Non-Disclosure of Confidential Information’ and ‘Absence of
Conflict of Interest.’ In case of any conflict of interest arising later, the IEM shall inform
the Management of the Principal and recuse themselves from that case.
5) The Principal shall provide the Monitor with sufficient information about all meetings
among the parties related to the Project, provided such meetings could impact the
contractual relations between the Principal and the Contractor. The parties offer the
Monitor the option to participate in such meetings.
6) As soon as the Monitor notices, or believes to notice, a violation of this agreement, they
shall inform the Management of the Principal and request the Management to discontinue
or take corrective action or other relevant action. The Monitor can, in this regard, submit
non-binding recommendations. Beyond this, the Monitor has no right to demand from the
parties that they act in a specific manner, refrain from action, or tolerate action.
7) The Monitor shall submit a written report to the Management of the Principal, within 8 to
10 weeks from the date of reference or intimation to him by the Principal and, should the
occasion arise, submit proposals for correcting problematic situations.
8) If the Monitor has reported to the Management of the Principal a substantiated suspicion
of an offence under the relevant BNS/ PC Act, and the Management of the Principal has
not, within the reasonable time, taken visible action to proceed against such offence or
227Annexure 18: Integrity Pact Format
reported it to the Chief Vigilance Officer, the Monitor may also transmit this information
directly to the Central Vigilance Commissioner.
9) The word ‘Monitor’ would include both singular and plural.
Section 9 – Pact Duration
This Pact begins when both parties have legally signed it. It expires for the Contractor 12
months after the last payment under the contract, and for all other Bidders, 6 months after the
contract has been awarded. Any violation of the same would entail disqualifying the bidders
and exclusion from future business dealings.
If any claim is made / lodged during this time, the same shall be binding and continue to be
valid despite the lapse of this Pact as specified above, unless it is discharged / determined by
the Management of the Principal.
Section 10 – Other provisions
1) This agreement is subject to Indian Law. The place of performance and jurisdiction is the
place from where the Tender/ Contract is issued.
2) Changes, supplements, and termination notices must be submitted in writing. Side
agreements have not been made.
3) If the Contractor is a partnership or a consortium, this agreement must be signed by all
partners or consortium members.
4) Should one or several provisions of this agreement turn out to be invalid, the remainder
of this agreement remains valid. In this case, the parties shall strive to come to an
agreement according to their original intentions.
5) Issues like Warranty / Guarantee, etc., shall be outside the purview of IEMs.
6) In the event of any contradiction between the Integrity Pact and its Annex, the Clause in
the Integrity Pact shall prevail.
________________________________ ________________________________
(For & On behalf of the Principal) (For and on behalf of Bidder/ Contractor)
(Office Seal) (Office Seal)
Place -------------- Date --------------
Witness 1: _________________________ Witness 1: _________________________
(Name & Address (Name & Address
228Manual for Procurement of Consultancy Services, Second Edition, 2025
Annex-1 to Integrity Pact - Guidelines for Indian Agents of
Foreign Suppliers
(Refer Section 2-1-d) and 10-6 of Annexure 18)
1.1 There shall be compulsory registration of agents for all Global Tender Enquiries (GTE) and Limited
Tender Enquiries (LTE). An agent not registered with the Procuring Entity shall apply for
registration with them.
1.2 Registered agents shall file an authenticated Photostat copy duly attested by a Notary
Public/Original certificate of the Principal confirming the agency agreement and giving the status
being enjoyed by the agent and the commission/remuneration/salary/ retainer ship being paid by
the Principal to the agent before the placement of an order by the Procuring Entity.
1.3 Wherever the Indian representatives have communicated on behalf of their principals and the
foreign parties, have stated that they are not paying any commission to the Indian agents, and the
Indian representative is working based on salary or as a retainer, a written declaration to this effect
should be submitted by the party (i.e., Principal) before finalising the Contract.
2.0 Disclosure of Particulars of Agents/ Representatives in India, if any.
2.1 Bidders of Foreign nationality shall furnish the following details in their offer:
2.1.1 The name and address of the agents/representatives in India, if any and the extent of
authorisation and authority given to commit the Principals. If the agent/representative is a
foreign Company, it shall be confirmed whether it is a real functioning Company, and
details of the same shall be furnished.
2.1.2 The amount of commission/remuneration included in the quoted price(s) for such
agents/representatives in India.
2.1.3 Confirmation of the Bidder that the commission/ remuneration, if any, payable to his
agents/representatives in India, may be paid by the Procuring Entity in Indian Rupees only.
2.2 Bidders of Indian Nationality shall furnish the following details in their offers:
2.2.1 The name and address of the foreign principals indicating their nationality as well as
their status, i.e., whether manufacturer or agents of manufacturer holding the Letter of Authority
of the Principal specifically authorising the agent to make an offer in India in response to tender
either directly or through the agents/representatives.
2.2.2 The amount of commission/remuneration included in the price (s) quoted by the Bidder
for himself.
2.2.3 Confirmation of the foreign principals of the Bidder that the commission/remuneration,
if any, reserved for the Bidder in the quoted price (s) may be paid by the Procuring Entity in India
in equivalent Indian Rupees on satisfactory completion of the Project or supplies of Stores and
Spares in case of operation items.
2.3 In either case, in the event of the contract materialising, the payment terms shall provide for
payment of the commission /remuneration, if any, payable to the agents/representatives in India
in Indian Rupees on expiry of 90 days after the discharge of the obligations under the contract.
2.4 Failure to furnish correct and detailed information as called for in paragraph - 2.0 above shall
render the concerned bid liable to rejection or, in the event of a contract materialising, the same
liable to termination by the Procuring Entity. Besides this, there would be a penalty of banning
business dealings with the Procuring Entity or damage or payment of a named sum.
229Manual for Procurement of Consultancy Services, Second Edition, 2025
Annex-2 to Integrity Pact – Appointment and Role of IEMs
(Refer to para 3.4-3, 10.7.4-4-d)
1. Appointment of IEMs
i). Integrity Pact would be implemented through a panel of Independent External Monitors
(IEMs) nominated by CVC at an organisation's request from its list of empanelled IEMs.
Three IEMs shall be appointed for Maharatna and Navratna PSUs, and two IEMs shall be
nominated in all other organisations.
ii). The IEMs appointed should be eminent persons of high integrity and reputation. A
periodical notice inviting applications from eligible persons shall be published on the CVC’s
website. After due scrutiny and verification of the applications and accompanying
documents, as may be deemed appropriate, the name(s) would be included in the panel
for nomination as IEM.
iii). The zone of consideration of eminent persons for empanelment as IEMs would consist of:
a) Officers who have held the post of Additional Secretary to Govt of India or were in the
equivalent or higher pay scale at the time of retirement (whether serving with Govt of
India or any State Govt.).
b) Persons who held the CMD post of Schedule ‘A’ Public Sector Enterprise and were
equivalent to Additional Secretary to Govt of India at retirement.
c) Persons who have held the post of CMD/MD and CEO of Public Sector Banks,
Insurance Companies, and other Financial Institutions at retirement.
d) Chief Executive Officer of an organisation (other than listed above and were
equivalent or higher to Additional Secretary to Govt, of India, at the time of
retirement).
e) Armed Forces Officers in the pay scale equivalent or higher to Additional Secretaries
to Govt of India at retirement.
f) The age of IEM should not be more than 70 years at the time of appointment.
g) If a retired person has accepted a full-time assignment, post-retirement, either in the
government sector, private sector, or elsewhere, he shall not be eligible to be on the
panel of IEMs. All those empanelled persons who accept full-time assignments
elsewhere would cease to remain on the panel from the date they have taken the
assignment. In this regard, it would be incumbent upon the empanelled persons to
immediately inform CVC about the acceptance of full-time assignment by them.
h) All IEMs should sign non-disclosure agreements with the organisation in which they
are appointed.
i) A person acting as an IEM shall not be debarred from taking up other assignments,
such as consultancy with other organisations or agencies, subject to his declaring
that their additional assignment does not involve any conflict of interest and is not a
full-time assignment. The IEMs must also sign a declaration of absence of conflict of
interest with existing assignments. In case of any conflict of interest arising later from
an entity wherein he is or has been a consultant, the IEM should inform the CEO and
recuse themselves from that case.
j) A person may be appointed as an IEM in a maximum of three organisations at a time.
An empanelled person cannot be appointed in one organisation for over three years.
2. Role of IEMs in Integrity Pact
i). Bidders or their authorised representative may address to the IEMs all the
representations/grievances/complaints related to any discrimination on account of lack of
230Annex-2 to Integrity Pact – Appointment and Role of IEMs
fair play in modes of procurement and tendering systems, tendering method, eligibility
conditions, bid evaluation criteria, commercial terms & conditions, choice of
technology/specifications etc.
ii). The entire panel of IEMs should examine the matter jointly, who would investigate the
records, conduct an examination, and submit their joint recommendations to the
Management of the Procuring Entity. If the entire panel is unavailable for unavoidable
reasons, the available IEM(s) shall examine the complaints. Consent of the IEM(s), who
may not be available, shall be taken on record. The IEMs would be provided access to all
documents/records of the tender for which a complaint or issue is raised before them, as
and when warranted.
iii). The role of IEM is advisory, and the advice of IEM is non-binding on the Organization;
however, their advice would help properly implement the Integrity Pact.
iv). IEM should examine the process integrity; they are not expected to concern themselves
with fixing the responsibility of officers. IEMs should not associate CVO and /or the officials
of the vigilance wing during the examination of the complaints in any manner. A matter
being examined by the IEMs can be separately investigated by the CVO if a complaint is
received or directed to them by the CVC.
3. Systemic Improvements:
i). The Procurement wing of the organisation shall hold quarterly meetings with the IEMs. A
summary of contracts awarded in the previous quarter, covered under the Integrity Pact,
shall be shared with the IEMs during the quarterly meeting. Such a summary of contracts
should include details like tender number, mode of tendering, the period allowed for
publicity, number of bids received, number of bidders considered eligible, and name and
address of the successful bidder.
ii). The above summary of contracts is to help the IEMs in analysing whether an appropriate
mode of tendering is being adopted by the organisation, i.e., limited tender mode or
nomination mode is not unduly used, the number of bidders is not too low, a large number
of bidders are not excluded while judging the eligibility or during the technical bid
evaluation stage, and whether particular firm or set of specific firms is repeatedly getting
contracts etc. Based on their analysis, the IEMs can suggest to the management suitable
systemic improvement(s) and measures to improve objectivity in decision-making,
capacity building, etc.
iii). It would be desirable to have structured meetings of the IEMs with the Chief Executive of
the Organization on a half-yearly basis to discuss and review the information on tenders
awarded during the preceding six-month period. Additional such meetings, however, can
be held as per requirement. All such meetings with the Procurement wing or with the
organisation's Chief Executive should be minuted.
4. Dispute Mediation:
In case of any dispute between the management and the contractor relating to those contracts where
an Integrity Pact is applicable, in case both the parties are agreeable, they may try to settle the dispute
through mediation before the panel of IEMs in a time-bound manner. If required, the organisations
may adopt any mediation rules for this purpose. However, no more than five meetings shall be held
for dispute resolution. Both parties shall equally share the fees/expenses on dispute resolution. If the
dispute remains unresolved even after mediation by the panel of IEMs, the organisation may take
further action as per the terms & conditions of the contract.
5. Entitlements of IEMs
231Manual for Procurement of Consultancy Services, Second Edition, 2025
i). IEMs shall be paid fees of ₹ 25,000/- per sitting subject to a maximum of ₹ 3,00,000/- in a
calendar year for the sitting fees.
ii). The travel and stay arrangements for the IEMs for such meetings shall equal their
entitlements at retirement. Booking travel tickets, as per the mode of travel indicated by
the IEM in writing (including email), the organisation shall do local transport and stay. The
organisation concerned shall provide a place for meetings and secretarial assistance to
IEMs for rendering their job. No payment instead of secretarial aid shall be paid to the
IEMs.
iii). As mentioned above, the travel/ stay arrangements and fees for meetings held by IEMs
for mediation between the management and the contractor shall be the same but in
addition to the fees for the regular meetings and would be over and above the ceiling of
3,00,000/- as per calendar year.
232Manual for Procurement of Consultancy Services, Second Edition, 2025
Annexure 19: FAQs in Respect of Public
Procurement Policy for MSEs Order, 201295
[Refer Para 1.10.1-7-d]
Q.No.1: What is the share of procurement from MSEs out of the total procurement made by
Central Government Ministries/ Departments/ Public Sector Undertakings?
Ans. Under amended Public Procurement Policy for MSEs, Order 2012 a minimum 25 per
cent share out of the total annual procurement by Central Government Ministries /
Departments / Public Sector Undertakings are to be made from MSEs.
Q. No.2: Is there any reservation for MSEs owned by SC/ST/ Women entrepreneurs?
Ans. Yes, out of 25% target of annual procurement from MSEs (Not in the specific tender), a
sub-target of 4% of annual procurement from MSEs is earmarked for procurement from MSEs
owned by Scheduled Caste (SC) / Scheduled Tribe (ST) entrepreneurs and 3% of annual
procurement from MSEs is earmarked for procurement from MSEs owned by women
entrepreneur. However, in event of failure of such MSEs to participate in tender process or
meet tender requirements and L1 price, 4% sub-target for procurement earmarked for
MSEs owned by SC/ST entrepreneurs and 3% earmarked to women entrepreneur will
also be met from other MSEs.
Q No.3: Who is eligible for availing the benefits under the Public Procurement Policy?
Ans. As mentioned in Section 7(4) of Ministry of MSME's Notification No. S.O2119(E) dated.
26th June 2020, an enterprise registered with any other organization under the Ministry of
MSME shall register itself under Udyam Registration. With effect from 01.07.2020, MSEs
registered under Udyam Registration are eligible to avail the benefits under the Policy. MSEs
registered under Udyog Aadhaar Memorandum (UAM), validity of which is till 31.03.2022, are
also eligible to avail the benefits under the Policy.
Q.No.4: What is the date of implementation of the policy?
Ans. The policy is applicable with effect from 1.4.2012 and became mandatory with effect
from 1.4.2015 onwards.
Q.No.5: Is the Policy transparent, competitive, and cost effective?
Ans. The Policy rests upon core principles of competitiveness, adhering to sound procurement
practices and execution of orders for supply of goods and services in accordance with a
system which is fair, equitable, transparent, competitive, and cost effective.
Q.No.6: Is the policy implemented in parts or fully from its inception?
Ans. As per Gazette Notification (S.O. 5670(E) dated 8th November 2018, it is mandatory for
all Central Government Ministries / Departments/ CPSEs to procure at least 25% of their
annual procurement from MSEs including 4% from MSEs owned by SC/ST entrepreneur and
3% from MSEs owned by women entrepreneur.
Q.No.7: Is there any monitoring system for assessing the Government procurement from
MSEs?
Ans. To monitor the progress of procurement by Central Government Ministries/ Departments
and CPSEs from MSEs, Ministry of MSME has launched the MSME Sambandh Portal on 8th
_______________________
95
https://www.dcmsme.gov.in/FAQs-PPP_25032022.pdf
233Annexure 19: FAQs in Respect of Public Procurement Policy for MSEs Order, 2012
December 2017 for uploading procurement details by all CPSEs on a monthly and an annual
basis which is regularly monitored by the Ministry.
Q.No.8: Is there a price matching facility for procurement from MSEs over large scale?
Ans. (i) Price quotation in tenders: In tender, participating Micro and Small Enterprises,
quoting price within price band of L1+15 percent shall also be allowed to supply a portion of
requirement by bringing down their price to L1 price in a situation where L1 price is from
someone other than a Micro and Small Enterprise and such MSE shall be allowed to supply
up to 25 per cent of total tender value.
(ii) In case of more than one such Micro and Small Enterprise, the supply shall be shared
proportionately (to tendered quantity).
Q.No.9: What steps are to be taken by the Central Government Ministries/ Departments/
CPSEs to develop MSE Vendors to achieve their targets for MSEs procurement?
Ans. The Central Government Ministries/ Departments/ Public Sector Undertakings shall take
necessary steps to develop appropriate vendors by organizing Vendor Development
Programmes (VDPs) or Buyer-Seller Meets focused on developing MSEs for procurement
through the GeM Portal. To develop vendors belonging to MSEs for Public Procurement
Policy, the Ministry of MSME is regularly organizing State Level VDPs and National Level
VDPs under the Procurement and Marketing Support Scheme.
Q.No.10: What steps are to be taken by the Central Government Ministries/ Departments/
CPSEs to develop vendors from MSEs owned by SC/ST/Women entrepreneurs?
Ans. For enhancing the participation of MSEs owned by SCs / STs/ Women in Government
procurement, Central Government Ministries / Departments / CPSEs must take the following
steps:
i. Special Vendor Development Programmes/ Buyer-Seller Meets would be conducted
by Departments/ CPSEs for SC/STs and Women.
ii. Outreach programmes will be conducted by National Small Industries Corporation (NSIC)
to cover more and more MSEs from SC/STs under its schemes of consortia formation; and iii.
NSIC would open a special window for SCs/ STs under its Single Point Registration Scheme
(SPRS). iv. A National SC/ST hub scheme was launched in October 2016, for providing
handholding support to SC/ST entrepreneur which is being coordinated / implemented by the
NSIC under this Ministry.
Q.No.11: What are the other benefits /facilities available to the MSEs under the policy?
Ans. To reduce transaction cost of doing business, MSEs will be facilitated by providing them
tender sets free of cost, exempting MSEs from payment of earnest money deposit, adopting
e-procurement to bring in transparency in tender process. However, exemption from paying
of Performance Bank Guarantee is not covered under the policy. MSEs may also be given
relaxation in prior turnover and prior experience criteria during the tender process.
Q.No.12: Is there any review mechanism for monitoring and reviewing of the policy?
Ans. A Review Committee has been constituted under the Chairmanship of Secretary,
Ministry of MSME for monitoring and reviewing of Public Procurement Policy for MSEs. M/O
MSME will review and/or modify the composition of the Committee as and when required. This
Committee will, inter alia, review the list of 358 items reserved for exclusive purchase from
MSEs on a continuous basis, consider requests from Central Government Departments,
CPSEs for exemption from 25% target on a case-to-case basis and monitor achievements
under the Policy.
234Manual for Procurement of Consultancy Services, Second Edition, 2025
Q. No.13: What is the grievance redressal mechanism in case of non-compliance of the Policy
by any Government Department?
Ans. To redress the grievances of MSEs related to non-compliance of the Policy a Grievance
Cell named “CHAMPION Portal” has been set up in the Ministry of MSME.
Q. No.14: Whether there is any kind of purchase that has been kept out of the purview of
procurement under the Policy? If yes, how is the monitoring of the set goal done?
Ans. Given their unique nature, Defence armament imports will not be included in computing
25% goal for M/o Defence. In addition, Defence Equipments like weapon systems, missiles,
etc. will remain out of purview of such policy of reservation. Monitoring of goals set under the
policy will be done, in so far as they relate to the Defence sector, by Ministry of Defence itself
in accordance with suitable procedures to be established by them.
Q.No.15: From where can the details of the Policy be obtained?
Ans. Policy details are available on the website of this office at www.dcmsme.gov.in.
Q.No.16: Is this policy mandatory under any Act?
Ans. Yes, the Policy is mandatory and notified under the MSMED Act, 2006.
Q.No.17: How many items are reserved for exclusive purchase from MSEs?
Ans. There are 358 items reserved for exclusive purchase from MSE Sector.
Q.No.18: Whether this policy is applicable for works/ trading activities also?
Ans. Policy is meant for procurement of only goods produced and services rendered by MSEs.
However, traders/ distributors/ sole agent/ Works Contract are excluded from the purview of
Public Procurement Policy for MSEs Order,2012.
Q.No.19: Whether the Policy is applicable for MSEs registered with NSIC?
Ans. The Policy is applicable for all MSEs registered under Udyam Registration and Udyog
Aadhar Memorandum (valid till 31.03.2022).
Q.No.20: Whether the Policy provides benefits for exemption from Security Deposit/
Performance Bank Guarantee to MSEs?
Ans. No, there is no exemption on Security Deposit/ Performance Bank Guarantee under the
Policy.
Q.No.21: Can MSEs quoting a price within the band L1+15% be given complete supply to
tender in case tender item cannot be split /divided?
Ans. In case of tender item cannot be split or divided, etc. the MSE quoting a price within the
band L1+15% may be awarded for full/ complete supply of total tendered value to MSE,
considering the spirit of the Policy for enhancing Govt. Procurement from MSEs.
Q.No.22: Which are the MSEs owned by SC/ST enterprises?
Ans. The definition of MSEs owned by SC/ ST is as given under:
(a) In case of proprietary MSE, proprietor(s) shall be SC /ST.
(b) In case of partnership MSE, the SC / ST partners shall be holding at least 51% shares in
the unit.
(c) In case of Private Limited Companies, at least 51% share shall be held by SC/ST
promoters.
Q.No.23: Can the Central Government Ministries/ Departments/ CPSEs who have a meagre
value of total procurement be exempted from the Policy?
Ans. The Policy is applicable to all the Central Government Ministries / Departments / CPSEs,
irrespective of the volume and nature of procurement.
235Annexure 19: FAQs in Respect of Public Procurement Policy for MSEs Order, 2012
Q.No.24: Does the Policy have a provision for exemption from 25% procurement target?
Ans. The Review Committee may consider any request of Ministries / Departments / CPSEs
for exemption from the present 25% procurement targets on a case-to-case basis.
Q.No.25: Does laminated paper Gr. I, II and III fall under the paper conversion product
(Sl.No.202) and is a reserved item for exclusive procurement from MSEs?
Ans. As per Policy Circular No. 21(6)/2016-MA dt. 26th May 2016, it is clarified that only paper
bags, envelopes, ice-cream cups, paper cups and saucers and paper plates are covered
under the head "Paper Conversion products" at SI. No. 202 of the list of reserved items under
the Public Procurement Policy for MSEs Order-2012.Accordingly, the description of SI. No.
202 as indicated in the English version of the Reserved List will be applicable.
Q.No.26: Are MSEs having Udyam Registration Certificate eligible for availing benefits under
the PP Policy?
Ans. Yes, Udyog Aadhar has been replaced with Udyam Registration Certificate w.e.f.
01.07.2020. Udyam Registered MSEs can avail the benefits under the Public Procurement
Policy. The UAM will also remain valid till 31.03.2022.
Q.No.27: Does the Ministry give any certificate for MSEs having Udyam Registration?
Ans. The Erstwhile Udyog Aadhaar Memorandum (UAM valid till 31.03.2022) has been
replaced by Udyam Registration Certificate (w.e.f. 01.07.2020). As part of ease of doing
business, Udyam Registration Certificate (URC) has been introduced through a dedicated
portal on self-certification basis. An acknowledgement of URC is generated online instantly
which is accepted by all Central Government Ministries / Departments / CPSEs and State
Govts.
Q.No.28: Is the Public Procurement Policy applicable to State Governments/ State
Departments/ State PSUs?
Ans. The Public Procurement Policy for MSEs Order, 2012 is applicable to Central
Government Ministries/ Departments and CPSEs. This Policy is not applicable to State
Government Ministries/ Departments/ PSUs.
Q.No.29: Are the benefits of Public Procurement Policy applicable to MSEs who are not
registered for the tendered items?
Ans. The benefits of PPP should be given to all eligible MSEs irrespective of relevance of
product Category and as per Sl. No. 3 of FAQ.
Q.No.30: Can the relaxation of norms for start-ups and MSEs in Public Procurement Policy in
prior experience and prior turnover criteria be given to all MSEs?
Ans. It is clarified that all Central Government Ministries/ Departments/ Central Public Sector
Undertakings may relax conditions of prior turnover and prior experience with respect to Micro
and Small Enterprises in all public procurement, subject to meeting of quality and technical
specifications (In exercise of Para 16 of Public Procurement Policy for Micro and Small
Enterprises, Order 2012).
However, there may be circumstances (like procurement of items related to public safety,
health, critical security operations and equipment, etc.) where procuring entity may prefer the
vendor to have prior experience rather than giving orders to new entities
(O.M.No.F.20/2/2014PPD(Pt.) dated 20.09.2016 issued by DoE).
Q.No.31: Has the Ministry clarified the sub target of procurement from SC/STs/Women
entrepreneurs under amended Public Procurement Policy for MSEs, Order 2012?
236Manual for Procurement of Consultancy Services, Second Edition, 2025
Ans. It is clarified that sub-targets of 4% (within 25% of annual procurement target) and 3%
(within 25% of annual procurement target) have been earmarked for procurement from MSEs
owned by SC&ST and Women entrepreneurs, respectively under the amended Public
Procurement Policy for MSEs Order, 2012.
Q.No.32: Are Works Contracts a part of Services? What is the difference between Works and
Services?
Ans. Works Contracts are not covered under the purview of Public Procurement Policy for
MSEs. The definition is available in GFR Rules 130, 143, 177 & 197.
Q.No.33: Is there any provision to take action against the defaulting MSEs under the Policy?
Ans. There is no such provision under the Policy. The procuring entity may take appropriate
action as per terms and conditions (T&C) of the tender documents and/or as per GFR Rules.
Q.No.34: Are financial institutions/ autonomous bodies included in the PP Policy?
Ans. The Policy is applicable for all Central Government Ministries/ Departments and CPSEs.
Q.No.35: Can the Ministry take action against the procuring agency for Delay in return of the
Security Deposit of the MSEs?
Ans. There is no such provision under the Policy. The matter can be referred to the department
concerned for taking appropriate action in the interest of the MSE complainant.
Q.No.36: Is it mandatory for MSEs to disclose their status as SC/ST/Women in Udyam
Registration Certificate (URC)?
Ans. Yes, it is mandatory to disclose the status as SC/ST/Women for in Udyam Registration.
Q.No.37: Have the State Governments been asked to frame a Public Procurement Policy for
MSEs?
Ans. Yes, all the State Governments have been requested to frame the Public Procurement
Policy on similar lines.
Q.No.38: Have all the CPSEs been uploading their monthly and annual procurement details,
on MSME SAMBANDH Portal?
Ans. Most of the CPSEs are uploading their procurement details on the portal.
Q.No.39: Is there any provision to take action against the procuring agency for noncompliance
of PPP-MSE under the Policy?
Ans. No, there is no such provision in the Policy.
Q.No.40: What is the objective of the Policy?
Ans. The objective of the Policy is to promote Micro and Small Enterprises (MSEs) by
improving their market access and competitiveness through: - Increased participation in
Government purchase.
• Encouraging relationship (including product development) between MSEs and Public Sector
Undertaking (PSUs).
• Increased share of supplies of MSEs to Central Government Ministries/ Departments and
CPSEs.
• Increased share of supplies of MSEs to Central Government Ministries/ Departments and
CPSEs.
Q.No.41: What are the items or goods which can be procured from MSEs to achieve the target
of 25% from MSEs?
Ans. To achieve the target Government / CPSEs they can procure.
i. The items from the list of 358 items reserved for procurement from MSEs.
237Annexure 19: FAQs in Respect of Public Procurement Policy for MSEs Order, 2012
ii. Items which are being manufactured by MSEs, besides reserved items.
Q.No.42: How is the status of Enterprises as MSEs be verified?
Ans. The status of enterprises as MSEs can be verified through their Udyam Registration
Certificate or UAM certificate, which is valid till 31st March, 2022.As per notification No. S.O.
2119(E) dated 26.06.2020, in case of any discrepancy or complaint, the General Manager of
the District Industries Centre of the District concerned shall undertake an inquiry for verification
of the details of Udyam Registration/UAM submitted by the enterprise and thereafter forward
the matter with necessary remarks to the Director or Commissioner or Industry Secretary
concerned of the State Government who after issuing a notice to the enterprise and after giving
an opportunity to present its case and based on the findings, may amend the details or
recommend to the Ministry of MSME, Government of India, for cancellation of the Udyam
Registration Certificate/UAM.
Q.No.43: Can sub-contracting be considered under the procurement target from MSE?
Ans. Yes, if subcontract is given to MSEs, it will be considered as procurement from MSEs.
Q.No.44: If MSEs participate in tender but the procuring agency denies providing benefits
under the Policy, how can the problem be addressed?
Ans. The problem can be resolved through the Grievance Cell constituted to tackle such
situations and the matter may be referred to the procuring agency concerned to redress the
problem.
Q.No.45: What are the steps taken by the Ministry of MSME to promote marketing through
GeM portal for supply of Goods or rendering services from MSEs to Government Departments
and CPSEs?
Ans. CEO, GeM has been requested to make a provision in the GeM portal for procurement
of goods and services from MSEs through linking URC.
• Udyam Registration Portal has a facility through which an entrepreneur can opt for
linking itself with Government e-market (GeM) place by selecting an option on Udyam Portal.
The enterprise will be linked to GeM portal and flow of information will start between these two
portals. With this facility, MSEs can link themselves with the Government’s procurement
system and can participate in Government’s mandatory procurement programme from MSEs.
• All CPSEs have been requested to procure goods and services from MSEs, through
GeM portal only.
• The Ministry of MSME has signed an MOU with CEO, GeM, for mobilizing MSEs for
onboarding themselves on the GeM portal for supply of goods & services from MSEs.
• All UAM holders had been requested to register themselves on GeM portal for supply
of goods and services through GeM portal.
Q.No.46: What is the difference between PPP-MII Order, 2017 and PPP-MSE Order, 2012?
Ans. The Public Procurement Policy for MSEs Order, 2012 is a delegated legislation deriving
authority from the Act of Parliament. PPP-MII, Order, 2017 is an executive Order.
Q.No.47: Can Joint Ventures take the benefits of the Public Procurement Policy for MSEs
Order, 2012?
Ans. No, Under Udyam Registration (and earlier under UAM), there is no provision of
registration of Joint Ventures. As mentioned in S. No. 3 above, benefits of the Public
Procurement Policy for MSEs Order, 2012 can be availed by those MSEs which are registered
on the Udyam Registration portal.
238Manual for Procurement of Consultancy Services, Second Edition, 2025
Q.No.48: Can Consortiums with Foreign Company takes the benefits of the Public
Procurement Policy for MSEs Order, 2012?
Ans. No, Under Udyam Registration (and earlier under UAM), there is no provision of
registration of Consortium. As mentioned in S. No. 3 above, benefits of the Public Procurement
Policy for MSEs Order, 2012 can be availed by those MSEs which are registered on the
Udyam Registration portal.
Q.No.49: Can trader benefits from Public Procurement Policy, for MSEs Order, 2012?
Ans. No, as mentioned in O.M. No. 5/2(2)/2021-E/P & G/Policy dated 02.07.2021, Retail and
Wholesale traders can register on Udyam Registration Portal for the purpose of Priority Sector
Lending (PSL) only.
239Manual for Procurement of Consultancy Services, Second Edition, 2025
Annexure 20: Letter (Notification) of Award (LoA) of
Contract
(Refer Para 8.7.1-2)
Name of the procuring
entity____________________________________________________
Letter of Award of Contract
Confidential
Contract No: [Insert date]
Contract Title:
To,
M/s. [Insert name & address]
Sub: Award of contract for contract no: [insert contract number] and contract title: [insert
contract title]
REF. Your offer no. [insert offer number] against our tender no. [insert tender no] opened on
[insert date of opening of tender]
Dear Sir/ Madam
I am directed to inform you that after evaluating the bids submitted by you on ----[enter date]
---------[Enter Name of Procuring Entity] is pleased to inform you that you have been selected
as the successful bidder for the performance of Services [enter description]. The total
purchase price shall be [enter amount] as indicated in your financial bid submitted on [enter
date], in accordance with the procedures intimated in the relevant tender documents.
You/your authorised representative(s) are requested to be personally present at [insert
address] for the signing of the contract by [enter date].
In this respect, we also request you to submit the performance security of [insert amount of
Rupees in words] by [insert date]. Security deposit being 10% (ten percent) of the total cost =
Rs._______________.
Please apply for refund of EMD deposited over and above the SD of if any.
You are requested to execute necessary agreement within seven days from the date of issue
of this letter in the enclosed agreement form. Special adhesive stamp of Rs.10 (Rupees Ten)
and revenue stamp of Rupee one shall be affixed on the enclosed agreement form. Treasury
receipts of EMD and SD shall be deposited in office within the stipulated time limit as above.
This notification concludes the legally binding contract between you and the Government of
India, till issue of a formal contract.
Yours truly,
[Authorised Officer]
Enclosure: Agreement Form along with the schedule of delivery
240Manual for Procurement of Consultancy Services, Second Edition, 2025
Annexure 21: Proposal for Extension of Delivery
Period
(Refer Para 10.4.2-2, 10.4.2-3)
Proposal for Extension of Delivery Period
Department Office
Description Contract value
Contract No: Date:
Variations applicable PVC/ ERV/ Statutory Type of contractor Govt. Dept. /
Variations PSU/ MSE
Contractor & Regn. No.: Quantity on order
Deliverables completed Deliverables
pending
Details of earlier Is it a contract: Development/
extensions granted Indigenisation
Reference and date of Reasons cited for
request for extension extension
Original/extended Proposed
delivery period/ date extension of period/
date
Signature of Procuring Officer Date
Remarks of Indentor:
Regarding the proposed extension of delivery period/date, the following remarks are given
regarding loss and inconvenience due to delay:
Loss: (strike out options not applicable): No loss would be incurred/ loss is incurred but cannot
be quantified/ loss to the extent of Rs. -------------------- would be incurred
Inconvenience: (strike out what is not applicable): No inconvenience would be
incurred/inconvenience would be incurred
Proposed extension in delivery is recommended with above remarks.
Signature of Indenting Officer and Date
Proposal by Procuring Entity
It is certified that:
a) That a higher rate in the original tender was not accepted against other lower quotations
in consideration of the earlier delivery;
b) That there is no falling trend in prices for the services as evidenced from the fact that in
the intervening period neither orders have been placed at rates lower than this contract
nor any tender has been opened where such rates have been received even though
tender is not yet decided.
241Annexure 21: Proposal for Extension of Delivery Period
It is proposed to grant extension of delivery period/date up to ___________________, (strike
out options not applicable) with recovery of liquidated damages/ with recovery of token
liquidated damages/ without any liquidated damages and with/without denial clause, in view
of justifications recorded below:
--------------------------------------------------------------------------------------------------------------------------
In view of value of the contract and proposal regarding liquidated damages, this would require
approval of -------------------- (competent authority). This would/ would not require financial
concurrence.
Signature of Procuring Officer and Date
Head of Office recommendations/approval
Signature of Superintending Engineer/date
242Manual for Procurement of Consultancy Services, Second Edition, 2025
Annexure 22: Format for Extension of Delivery
Period/ Performance Notice
(Refer Para 10.4.2-7), 10.4.3 and 10.4.4)
Name of the Procuring Entity________________________________________________________
Extension of Delivery Period/Performance Notice
To M/s (name and address of form)
Sub: Contract No ---------------- dated --------------for the [enter Consultancy
Procurement title or detail] -------------------------
Ref: Your letter no. ------------------ dated: --------------------
Dear Sir,
1. You have failed to deliver {the (fill in details of deliverables} within the contract delivery
period [as last extended up to] (fill in date). In your letter under reply you have asked
for [further] extension of time for delivery. In view of the circumstances stated in your
said letter, the time for delivery is extended from (fill in date) to (fill in date)
2. Please note that notwithstanding the grant of this extension in terms of Clause (fill in
clause number) of the subject contract an amount equivalent to........................%
(...............per cent) of the delivered price of the delayed services for each week of
delay or part thereof (subject to the ceiling as provided in the aforesaid clause) beyond
the original contract delivery date/the last unconditionally re-fixed delivery date (as & if
applicable), viz., (fill in date) will be recovered from you as liquidated damages. You
may now submit the deliverables for review [balance of the deliverables] in terms of
this letter. Deliverables if any already submitted by your for review and approval, but
not reviewed will be now reviewed accordingly.
3. You are also required to extend the validity period of the performance guarantee for
the subject contract from (fill in present validity date) to (fill in required extended date)
within 15 (fifteen) days of issue of this amendment letter.
4. Denial Cause: The above extension of delivery date will also be subject to the following
Denial Clause.
1) That no increases in price on account of any statutory increase in or fresh Imposition of
customs duty, excise duty, GST or on account of any other taxes/duty, leviable in respect
of the Deliverables specified in the said contract which takes place after (insert the original
delivery date) shall be admissible on such of the said Deliverables, as are submitted after
the said date; and.
2) That notwithstanding any stipulation in the contract for increase in price on any other
ground including foreign exchange rate variation, no such increase which takes place after
(insert the original delivery date) shall be admissible on such of the said Deliverables as
are delivered after the said date.
3) But nevertheless, the purchaser shall be entitled to the benefit of any decrease in price on
account of reduction in or remission of customs duty, excise duty, GST or on account of
any other Tax or duty or on any other ground as stipulated in the price variation clause or
foreign exchange rate variation which takes place after the expiry of the above mentioned
date namely (insert the original delivery date)
243Annexure 22: Format for Extension of Delivery Period/ Performance Notice
5. All other terms and conditions of the contract remain unaltered. This is without any
prejudice to purchasers’ rights under the terms and conditions of the subject contract.
6. Please intimate your unconditional acceptance of this amendment letter within 10 (ten)
days of the issue of this letter failing which the contract will be cancelled at your risk and
expense without any further reference to you.
Yours faithfully,
(Authorised Officer)
Duly authorised, for and on behalf of
The President of India
Note: Select one option within { } brackets; delete portion within [ ] brackets, if not applicable;
fill in ( ) brackets. Brackets and this note are not to be typed.
Substitute following first para instead of first para in format above, for issuing a performance
notice.
1. You have failed to submit {enter details of the deliverables/ the entire deliverables as
per the scope of Work/ Terms of Reference} within the contract delivery period [as last
extended up to] (fill in date). In spite of the fact that the time of delivery of the services
stipulated in the contract is deemed to be of the essence of the contract, it appears
that (fill in the outstanding deliverables) are still outstanding even though the date of
delivery has expired. Although not bound to do so, the time for delivery is extended
from (fill in date) to (fill in date) and you are requested to note that in the event of your
failure to deliver the services within the delivery period as hereby extended, the
contract shall be cancelled for the outstanding services at your risk and cost.
244Manual for Procurement of Consultancy Services, Second Edition, 2025
Annexure 23: Model Format for Correspondence with
Consultant after Expiry of Delivery Date
(Ref Para 10.4.2-6)
Registered Acknowledgement Due
To
M/s _______________________________
____________________________________
____________________________________
Sub : Contract No………………………………………… dated …………………….….. for supply
of …………………………………………………………………………...
Dear Sirs,
The date of completion of the subject contract expired on ____________. As the required
deliverables under the contract have not yet been completed, this constitutes a breach of the
contract on your part. As information is required regarding past deliverables against this
contract, you are requested to send the particulars regarding the deliverables submitted so far
under the contract along with, the list of deliverables submitted but pending review or formal
acceptance and the deliverables that were ready for submission but were not submitted for
review or acceptance prior to the expiry of the contract completion date.
The above information is required for the purpose of verification of our records and is not
intended to keep the contract alive and does not waive the breach. This is without prejudice
to the rights and remedies available to the purchaser in terms of the contract and law
applicable in this behalf.
Yours faithfully,
(----------------------)
for………………………
245Manual for Procurement of Consultancy Services, Second Edition, 2025
Annexure 24: No Claim Certificate
(Refer Para 10.5.1-6 and 10.6-2)
(On company letterhead)
To,
(Contract Executing Officer)
Procuring Entity_______________________
NO CLAIM CERTIFICATE
Sub: Contract Agreement no. ---------------- dated --------------for the [Enter name of Consultancy
Assignment] -------------------------
We have received the sum of Rs. (Rupees
______________________________________only) in full and final settlement of all the
payments due to us for the deliverables under the scope of work/ Terms of Refrence under
the above mentioned contract agreement, between us and Government of India. We here by
unconditionally and without any reservation whatsoever, certify that with this payment, we
shall have no claim whatsoever, of any description, on any account, against Procuring Entity,
against aforesaid contract agreement executed by us. We further declare unequivocally, that
with this payment, we have received all the amounts payable to us, and have no dispute of
any description whatsoever, regarding the amounts worked out as payable to us and received
by us, and that we shall continue to be bound by the terms and conditions of the contract
agreement, as regards performance of the contract.
Yours faithfully,
Signatures of contractor or
officer authorised to sign the contract documents.
on behalf of the contractor
(company stamp)
Date:
Place:
246Manual for Procurement of Consultancy Services, Second Edition, 2025
Annexure 25: Guidelines for Evaluation of
Concurrent Application of the MSE and MII
Preferences
(Refer Para 8.5.8)
1. The concurrent application of the two procurement orders i.e., MSE Procurement Order of
2012 and PPP-MII Order may create confusion to the procuring entities on how to evaluate
the bidders falling within the purview of both policies. To bring predictability both to the
procuring entities as well as bidders, DoE issued guidelines. These guidelines are
explained below. Examples to illustrate the application of these guidelines are given in the
Annex to this Annexure.
2. The Class-I local suppliers, under PPP-Mll Order, participating in any government tender,
may or may not be MSEs, as defined under the MSME Act. Similarly, MSEs participating
in any government tender, may or may not be Class-I local suppliers. Suppliers may be
categorised in following four broad categories for consideration or applicability of purchase
preference:
Category: If Supplier is: Terminology: Supplier Acronym for this
Para
both MSE & Class-I local supplier "MSE Class-I local" M-C1
MSE but not Class-I local supplier "MSE but non-Class-l local" M-NC1
not MSE but is Class-I local supplier "Non-MSE but Class-I NM-C1
local"
Supplier is neither MSE nor Class-I local "Non-MSE non-Class-l NM-NC1
local"
3. The applicability of PPP-MSE Order and PPP-Mll Order in various scenarios, involving
simultaneous purchase preference to MSEs and Class-I local suppliers under PPP-MSE
Order and PPP-Mll Order respectively, shall be as under:
a) Scenario-1: Items for which Nodal Ministry has notified sufficient local capacity
and competition (para 1.10.2-3)a) of this manual): For these items, only Class-I
local suppliers are eligible to bid irrespective of purchase value. Hence, Class-Il
local suppliers or Non-local suppliers, including MSEs which are Class-Il local
suppliers/ Non-local suppliers, are not eligible to bid. Possible scenarios can be as
under:
i) L-1 is "MSE Class-I local supplier" - 100% of the tendered quantity is to be
awarded to L-1.
ii) L-1 is "Non-MSE but Class-I local supplier" - Purchase preference is given to
MSEs as per PPP-MSE Order. Balance quantity is to be awarded to the L-1
bidder.
b) Scenario 2: Items reserved exclusively for procurement from MSEs as per PPP-
MSE Order: These items are reserved exclusively for purchase from MSEs. Hence,
247Annexure 25: Guidelines for Evaluation of Concurrent Application of the MSE and MII
Preferences
non-MSEs are not eligible to bid for these items. Possible scenarios can be as
under:
i) L-1 is "MSE Class-I local supplier" - 100% of the tendered quantity is to be
awarded to L-1
ii) L-1 is "MSE non-Class—l local supplier" - Purchase preference is to be given
to “MSE Class-I local supplier” if any, as per PPP-Mll Order. Balance quantity
is to be awarded to L-1 bidder.
c) If items are neither notified for sufficient local capacity nor reserved for MSEs, then
the process will be as follows:
i) Scenario 3: Items covered under (para 1.10.2-3)b) of this manual) which are
divisible items and both MSEs as well as Class-I local suppliers are eligible for
purchase preference. Possible scenarios can be as under:
1) L-1 is "MSE Class-I local supplier" - 100% of the tendered quantity is to be
awarded to L-1.
2) L-1 is "Non-MSE but Class-I local supplier" - Purchase preference is to be
given to “MSE Non-ClassI Local Supplier”, if any if eligible, as per PPP-
MSE Order. Balance quantity is to be awarded to L-1 bidder.
3) L-1 is "MSE but non-Class-l local supplier" - Purchase preference is to be
given to “Non-MSE Class-I local supplier”, if any if eligible, as per PPP-Mll
Order. Balance quantity is to be awarded to L-1 bidder.
4) L-1 is "Non-MSE non-Class-l local supplier" - Purchase preference is to be
given to MSEs as per PPP-MSE Order. Thereafter, purchase preference
is to be given to Class-I local suppliers for "50% of the tendered quantity
minus quantity allotted to MSEs above" as per PPP- Mll Order. For the
balance quantity, contract is to be awarded to L-1 bidder. (Kindly refer to
the illustrative example in the annex to this annexure).
ii) Scenario 4: Items covered under (para 1.10.2-3)b) of this manual) which are
non-divisible items and both MSEs as well as Class-I local suppliers are eligible
for purchase preference. Possible scenarios can be as under:
1) L-1 is "MSE Class-I local supplier" - Contract is awarded to L-1.
2) L-1 is not "MSE Class-I local supplier" but the "MSE Class-I local supplier"
falls within 15% margin of purchase preference Purchase preference is to
be given to lowest quoting "MSE Class-I local supplier". If the lowest
quoting "MSE Class-I local supplier" does not accept the L-1 rates, the next
higher "MSE Class-I local supplier" falling within 15% margin of purchase
preference is to be given purchase preference and so on.
3) If conditions mentioned in sub paras 1) and 2) above are not met i.e., L-1
is neither "MSE Class-I local supplier" nor "MSE Class-I local supplier" is
eligible to take benefit of purchase preference, the contract is to be
awarded/ purchase preference to be given in different possible scenarios
as under:
a) L-1 is "MSE but non-Class-l local supplier" or "Non-MSE but Class-I
local supplier" — Contract is to be awarded to L-1.
b) L-2 is "Non-MSE non-Class-l local supplier" - First purchase
preference to be given to MSE as per PPP-MSE Order. If MSE is not
eligible/ does not accept - purchase preference to be given to Class- I
248Manual for Procurement of Consultancy Services, Second Edition, 2025
Local supplier as per PPP-Mll Order. If Class-I Local supplier also not
eligible/ does not accept — contract to be awarded to L-1.
d) Scenario 5: Items reserved for both MSEs and Class-I local suppliers: These items
are reserved exclusively for purchase from MSEs as well as Class-I local suppliers.
Hence, only "MSE Class-I local supplier" are eligible to bid for these items. Non-
MSEs/ CIass-II local suppliers/ Non-local suppliers cannot bid for these items.
Hence the question of purchase preference does not arise.
e) Scenario 6: Non-local suppliers, including MSEs falling in the category of Non-
local suppliers, shall be eligible to bid only against Global Tender Enquiry..
249Manual for Procurement of Consultancy Services, Second Edition, 2025
Annex to Annexure 25: Examples of Evaluation of
Concurrent Application of the MSE and MII Preferences
(Refer Annexure 25)
1. Given below are the examples to explain the different scenarios that may arise during
the concurrent evaluation of MSE and Class-I local suppliers. The scenarios are further
divided into the various sub-scenarios considered as ‘Distribution (D)’ to provide clarity
on the quantity distribution, which shall take place among the MSE and Class-I local
suppliers. Please note the following acronyms, in table in para 2 of Annexure 26 above.
2. Example explaining applicability in scenario explained in Scenario 3 in Annexure 25 (:
Divisible items, both MSEs as well as Class-I local suppliers eligible for purchase
preference.) Item — Desktop computer, Qty — 100 Nos.
i) L-1 is ‘Non-MSE but Class-I Local Supplier’ (NM-C1) [Scenario 3 -2) in Annexure 25]
Details of bids received:
Rates D-1 D-2 D-3 D-4
Status of
S.# Bidder quoted Rank
bidder
(INR)
1. A 100 L1 NM-C1 74 (L1) 75 (L1) 75 (L1) 100 (L1)
B L2 Accepts Accepts Does not Does not
2. 110 M-NC1
13 (MSE) 25 (MSE) accept accept
L3 Not Eligible Not Not Eligible Not Eligible
3. C 112 NM-NC1
Eligible
D L4 Accepts Does not Accepts Does not
4. 115 M-NC1
13 (MSE) accept 25 (MSE) accept
E L5 Not Eligible Not Not Eligible Not Eligible
5. 118 NM-C1
Eligible
F L6 Not Eligible Not Not Eligible Not Eligible
6. 120 MC1
Eligible
a) First purchase preference is to be given to MSEs as per PPP-MSE Order.
b) MSE bidders to be invited for placement of 25% of tendered quantity of 100 Nos. i.e.,
25 Nos.
c) Those MSE bidders are to be invited whose quoted rates falls within 15% margin of
purchase preference, to match the L1 price.
d) Accordingly, the following distributions may happen:
A. Distribution-1 (D-1)
1) MSE bidders B (L2) and D (L4) are invited to match L1 price i.e., INR 100/-.
2) Both bidders B and D agree to match the L1 price.
3) The quantity of 25 nos. is distributed equally among bidders B and D i.e., 25/2=12.5
nos. (say 13 nos.)
250Annex to Annexure 25: Examples of Evaluation of Concurrent Application of the MSE and MII
Preferences
4) Bidders B and D are awarded the quantity of 13 nos. of computers each (i.e., a total of
26 nos. of computers placed on MSE bidders)
5) The remaining quantity of 74 nos. of computers [100-26] is placed on the L1 bidder.
B. Distribution-2 (D-2)/ Distribution-3 (D-3)
1) Either bidder B or bidder D agrees to match the L1 price.
2) 25 nos. quantity (25% of 100 nos.) is placed on the bidder (B or D).
3) The balance quantity of 75 nos. computers (100-25) is placed on the L1 bidder.
C. Distribution-4 (D-4)
1) None of the MSE bidders agree to match the L1 price. No MSE preference
given.
2) Entire quantity of 100 nos. computers is placed on the L1 bidder i.e., Bidder
“A”, being a Class I bidder.
ii) L-1 is “MSE but non-Class-I Local Supplier (M-NC1) [Scenario 3 -3) in Annexure 25].
Details of bids received:
Rates D-1 D-2 D-3 D-4
Status of
S.# Bidder quoted Rank
bidder
(INR)
1. A 100 L1 M-NC1 50 (L1) 50 (L1) 50 (L1) 100 (L1)
B L2 Not Eligible Not Not Eligible Not Eligible
2. 110 NM-NC1
Eligible
L3 Accepts Does not Does not Does not
3. C 112 NM-C1
50 (MII) accept accept accept
D L4 Not Eligible Not Not Eligible Not Eligible
4. 115 M-NC1
Eligible
E L5 Not Eligible Accepts Does not Does not
5. 118 NM-C1
50 (MII) accept accept
F L6 Not Eligible Not Accepts Does not
6. 120 MC1
Eligible 50 (MII) accept
a) First purchase preference is to be given to Class-I local supplier as per PPP-MII Order,
for placement of 50% of tendered quantity of 100 Nos. i.e., 50 Nos.
b) The Class-I local supplier is to be invited whose quoted rates falls within 20% margin
of purchase preference, to match the L1 price.
c) Accordingly, the following distributions may happen:
A. Distribution-1 (D-1)
1) Class-I bidder C (L3) is invited to match L1 price i.e., INR 100/-.
2) Bidders C agrees to match the L1 price.
3) Bidder C is awarded the quantity of 50 nos.
4) The balance quantity of 50 nos. of computers [100-50] is placed on the L1
bidder.
251Manual for Procurement of Consultancy Services, Second Edition, 2025
B. Distribution-2 (D-2)/ Distribution-3 (D-3)
1) The bidder C does not agree to match the L1 price, then the next Class-I bidder
i.e., Bidder E is invited to match the L1 price.
2) Bidder E agrees to match the L1 price, and the 50 nos. quantity is awarded on
Bidder E.
3) The balance quantity of 50 nos. computers (100-50) is placed on the L1 bidder
‘A’.
4) In case, Bidder E does not agree to match the L1 price, the next Class-I bidder
is invited which is Bidder ‘F’.
5) Bidder F agrees to match the L1 price, then the 50 nos. of quantity are awarded
to Bidder F, while the balance quantity of 50 nos. computers is placed on the
L1 bidder ‘A’.
C. Distribution-4 (D-4)
1) None of the Class-I local suppliers agree to match the L1 price. No MII
preference given.
2) Entire quantity of 100 nos. computers is placed on the L1 bidder i.e., Bidder ‘A’.
iii) L-1 is "Non-MSE non-Class-l local supplier" (NM-NC1) [Scenario 3 -4) in Annexure
25]. Details of bids received:
Rates D-1 D-2 D-3 D-4 D-5 D-6 D-7
Bidder
S.# Bidder quoted Rank
Status
(INR)
A L1 NM- 37 (L1) 37 (L1) 37 (L1) 37 (L1) 37 (L1) 50 (L1) 75 (L1)
1. 100
NC1
Accept Accepts Does Does not Does Accept Does
B L2 s 38 (MII) not accept not s not
2. 110 NM-C1
37 accept accept 50 accept
(MII) (MII)
Accept Accepts Does Accepts Accepts Does Accept
L3 s 25 not 13 (MSE) 25 not s
3. C 112 M-NC1
13 (MSE) accept (MSE) accept 25
(MSE) (MSE)
Accept Does Accepts Accepts Does Does Does
D L4 s not 25 13 (MSE) not not not
4. 115 MC1
13 accept (MSE) + + 37 (MII) accept accept accept
(MSE) 38 (MII)
Not Not Not Not Does Not Does
5. E 118 L5 NM-C1 Eligible Eligible Eligible Eligible not Eligible not
accept accept
252Annex to Annexure 25: Examples of Evaluation of Concurrent Application of the MSE and MII
Preferences
Not Not Not Not Accepts Not Does
6. F 120 L6 MC1 Eligible Eligible Eligible Eligible 38 (MII) Eligible not
accept
G L7 Not Not Not Not Not Not Not
7 120 M-NC1
Eligible Eligible Eligible Eligible Eligible Eligible Eligible
a) First purchase preference is to be given to MSEs as per PPP-MSE Order.
b) MSE bidders having their quoted rates within 15% margin of purchase preference to
be invited for placement of 25% of tendered quantity, subject to matching the L1 price.
c) The next purchase preference is to be given to Class-I local supplier as per PPP-MII
Order, whose quoted rates falls within 20% margin of purchase preference, to match
the L1 price.
d) Post these purchase preferences, the balance quantity is placed on the L1 bidder who
is Non-MSE non-Class-I local supplier.
e) Accordingly, the following distributions may happen:
A. Distribution-1 (D-1)
1) MSE bidders C and D are invited to match L1 price i.e., INR 100/-. Bidder F
and G, being the MSE bidders are not invited since their quoted prices falls
beyond the margin of preference of 15%.
2) Both bidders C and D agree to match the L1 price.
3) The quantity of 25 nos. is distributed equally among bidders B and D i.e.,
25/2=12.5 nos. (say 13 nos.)
4) Bidders C and D are awarded the quantity of 13 nos. of computers each (i.e.,
a total of 26 nos. of computers placed on MSE bidders)
5) The balance quantity remaining is 74 nos. (100-26). Next, purchase preference
shall be given as per MII Order for the placement of 50% of the balance
quantity, i.e., for 37 nos. of computers (50% of 74).
6) Bidder B, being a Class-I local supplier, is invited to match the L1 price, since
its quoted rate falls within margin of purchase preference of 20%.
7) Bidder B agrees to match the L1 price. The quantity of 37 nos. of computers is
awarded to bidder ‘B’.
8) The balance quantity of 37 nos. of computers [100-26-37], is placed on the L1
bidder ‘A’.
B. Distribution-2 (D-2)
1) MSE bidder C and D are invited to match L1 price i.e., INR 100/-.
2) MSE bidders C agrees to match the L1 price, but MSE bidder D does not agree
to match the L1 price.
3) The quantity of 25 nos. (25% of 100 nos.) is placed on the MSE bidder C.
4) The balance quantity remaining is 75 nos. (100-25). Next, purchase preference
shall be given as per MII Order for the placement of 50% of the balance
quantity, i.e., for 37.5 or say, 38 nos. of computers.
5) Bidder B, being the Class-I local supplier, is invited to match the L1 price, since
its quoted rate falls within margin of purchase preference of 20%.
6) Bidder B agrees to match the L1 price. The quantity of 38 nos. of computers is
awarded to bidder ‘B’.
253Manual for Procurement of Consultancy Services, Second Edition, 2025
7) The balance quantity of 37 nos. of computers [100-25-38], is placed on the L1
bidder ‘A’.
C. Distribution-3 (D-3)
1) MSE bidder C and D are invited to match L1 price i.e., INR 100/-.
2) MSE bidders C does not agrees to match the L1 price, but MSE bidder D
agrees.
3) The quantity of 25 nos. (25% of 100 nos.) is placed on the MSE bidder D.
4) The balance quantity remaining is 75 nos. (100-25). Next, purchase preference
shall be given as per MII Order for the placement of 50% of the balance
quantity, i.e., for 37.5 or say, 38 nos. of computers.
5) Bidder B, being the Class-I local supplier is invited to match the L1 price, since
its quoted rate falls within margin of purchase preference of 20%.
6) Bidder B does not agree to match the L1 price. Hence, the next Class-I local
supplier, bidder ‘D’ is invited to match the L1 price. Bidder D agrees and the
quantity of 38 nos. of computers is awarded to bidder ‘D’.
7) The balance quantity of 37 nos. of computers [100-25-38], is placed on the L1
bidder ‘A’.
D. Distribution-4 (D-4)
1) MSE bidder C and D are invited to match L1 price i.e., INR 100/-.
2) MSE bidders C and D agree to match the L1 price. The quantity of 25 nos. is
distributed equally among bidders B and D i.e., 25/2=12.5 nos. (say 13 nos.)
each.
3) The balance quantity remaining is 74 nos. (100-26). Next, purchase preference
shall be given as per MII Order for the placement of 50% of the balance
quantity, i.e., for 37 nos. of computers.
4) Bidder B, being the Class-I local supplier is invited to match the L1 price, since
its quoted rate falls within margin of purchase preference of 20%.
5) Bidder B does not agree to match the L1 price. Hence, the next Class-I local
supplier, bidder ‘D’ is invited to match the L1 price. Bidder D agrees and the
quantity of 37 nos. of computers is awarded to bidder ‘D’.
6) The balance quantity of 37 nos. of computers [100-26-37], is placed on the L1
bidder ‘A’.
E. Distribution-5 (D-5)
1) MSE bidder C and D are invited to match L1 price i.e., INR 100/-.
2) MSE bidders C agrees to match the L1 price, however, bidder D does not
agree. Hence, the 25% of 100 nos. of computers i.e., 25 nos. are awarded to
MSE bidder C.
3) The balance quantity remaining is 75 nos. (100-25). Next, purchase preference
shall be given as per MII Order for the placement of 50% of the balance
quantity, i.e., for 37.5, say 38 nos. of computers.
4) Bidder B, being the Class-I local supplier is invited to match the L1 price, since
its quoted rate falls within margin of purchase preference of 20%.
5) Bidder B does not agree to match the L1 price. Hence, the next Class-I local
supplier, bidder ‘D’ is invited to match the L1 price. Bidder D also does not
agree to match the L1 price. The next class-I local supplier ‘E’ is invited that
does not agree either. The next class-I local supplier ‘F’ is invited (who happens
to be a MSE bidder as well, however, since the quoted price of bidder ‘F’ in
case of MSE preference was beyond 15% margin of preference, hence it was
254Annex to Annexure 25: Examples of Evaluation of Concurrent Application of the MSE and MII
Preferences
not invited to match the L1 price while going for MSE preference). For MII
preference, the price quoted is within the margin of 20%. The bidder ‘F’ agrees
to match the L1 price. The quantity of 38 nos. of computers is placed on bidder
’F’.
6) The balance quantity of 37 nos. of computers [100-25-38], is placed on the L1
bidder ‘A’.
F. Distribution-6 (D-6)
1) MSE bidder C and D are invited to match L1 price i.e., INR 100/-.
2) Neither of the MSE bidders (C and D) agrees to match the L1 price. Hence, no
MSE purchase preference is given.
3) The next purchase preference is given to Class-I local supplier as per the MII
Order for the 50% of the tendered quantity i.e., for 50 nos. of computers. Bidder
‘B’ being the lowest quoting Class-I local supplier with its quoted price falling
within the margin of purchase preference of 20% is invited to match the L1
price.
4) Bidder ‘B’ agrees to match the L1 price. The quantity of 50 nos. of computers
is awarded on bidder ‘B’.
5) The balance quantity of 50 nos. of computers [100-50] is placed on the L1
bidder ‘A’.
G. Distribution-7 (D-7)
1) MSE bidder C and D are invited to match L1 price i.e., INR 100/-.
2) MSE bidder ‘C’ agrees to match the L1 price only. Hence, 25% of the total
tendered quantity i.e., 25 nos. of computers are awarded on the MSE bidder
‘C’.
3) The next purchase preference is to be given to Class-I local supplier as per the
MII Order for the 50% of the balance quantity of 75 nos. i.e., for 37.5 or say 38
nos. of computers. First Class-I bidder invited is bidder ‘B’ to match the L1 price.
Bidder ‘B’ does not agree to match the price. Subsequently, bidders ‘D,’ ‘E’ and
‘F’ are invited one by one, after each of the bidder does not agree to match the
L1 price.
4) None of the Class-I local suppliers agree to match the L1 price. Hence, no
purchase preference under MII order is given.
5) The balance quantity obtained, after the placement of 25 nos. quantity of
computers on MSE bidders, is placed on bidder ‘A’ the L1 bidder for 75 nos.
computers.
3. Example explaining applicability in Scenario 4 in Annexure 26 (Non-Divisible items,
both MSEs as well as Class-I local suppliers eligible for purchase preference.). Item
— Software License, Unit — 100 Nos..
i) L-1 is “Non-MSE but Class-I Local Supplier” [Scenario 4 -2) in Annexure 25]. Details
of bids received:
Name of Rates Price
Sr. No. Status of bidder
bidder quoted Ranking
1. A 100 L1 “Non-MSE but Class-I local supplier"
2. B 110 L2 "MSE but non- Class-I local supplier"
255Manual for Procurement of Consultancy Services, Second Edition, 2025
3. C 112 L3 "MSE Class-I local supplier"
4. D 115 L4 "MSE Class-I local supplier"
5. E 118 L5 "Non MSE non-Class-I local supplier"
6. F 120 L6 "MSE Class-I local supplier"
a) Here, purchase preference is to be given to the lowest quoting ‘MSE Class-I local
supplier,’ provided its rate falls within the purchase preference of 15%.
b) Bidder ‘C’ is MSE Class-I local supplier with price within the 15% margin of preference.
Bidder C is invited to match the price of L1. If agreed, the entire order (100 nos. of
software licenses) is to be placed on Bidder C.
c) If lowest quoting ‘MSE Class-I local supplier’ (Bidder ‘C’) does not agree to match the
L1 price, the next higher ‘MSE Class-I local supplier’ i.e., bidder ‘D’ is invited to match
the L1 price. If agreed, the entire order is to be placed on bidder ‘D.’
d) Bidder ‘F’ though MSE Class-I local supplier, cannot be considered since its price falls
beyond the 15% margin of preference.
ii) L-1 is “MSE but non-Class-I Local Supplier” [Scenario 4 -1) in Annexure 26]: The
approach explained in example 2. (i) above to be followed.
iii) L-1 is neither “MSE Class-I Local Supplier” nor “MSE Class-I Local Supplier” is
eligible [Scenario 4 -3) in Annexure 25], then:
1) L-1 is MSE but non-Class-I local supplier: Entire quantity [100 nos. of software
license] is to be placed on the L-1; or
2) L-1 is Non-MSE but Class-I local supplier: Entire quantity [100 nos. of software
license] to be placed on the L-1.
iv) L-1 is “Non-MSE non-Class-I Local Supplier”. Details of bids received:
Name of Rates Price
Sr. No. Status of bidder
bidder quoted Ranking
1. A 100 L1 “Non-MSE non-Class-I local supplier"
2. B 110 L2 "MSE but non- Class-I local supplier"
3. C 112 L3 "Non MSE but Class-I local supplier"
4. D 115 L4 "MSE but non- Class-I local supplier"
5. E 118 L5 "Non MSE but Class-I local supplier "
6. F 120 L6 “MSE but non- Class-I local supplier”
7. G 125 L7 "MSE Class-I local supplier"
1) First, MSE preference shall be exercised. Hence, lowest quoting MSE but non-Class-
I local supplier is invited to match the price of L-1. Bidder ‘B’ has quoted the price that
256Annex to Annexure 25: Examples of Evaluation of Concurrent Application of the MSE and MII
Preferences
falls within the purchase preference of 15%. If Bidder ‘B’ agrees, the entire order is to
be placed on bidder ‘B.’
2) If bidder ‘B’ does not agree, bidder ‘D’ shall be invited (price falling within the purchase
preference of 15%), to match the L-1 price. If agreed, entire order to be placed on
bidder ‘D.’
3) If bidder ‘D’ also does not agree, now, purchase preference to Class-I local supplier
shall be provided. Bidder ‘F’ cannot be considered since the quoted price is beyond
the margin of preference of 15%.
4) Bidder ‘C’ is invited to match the L-1 price [quoted price within the purchase preference
of 20%, as per the PPP-MII Order]. If bidder ‘C’ agrees, the entire order is to be placed
on ‘C.’
5) If bidder ‘C’ does not agree, bidder ‘E’ to be invited, as the quoted price is within the
purchase preference of 20%. If bidder ‘E’ agrees, the entire order is to be placed on
bidder ‘E.’
If the non MSE but Class-I local supplier, bidder ‘E’ also does not agree to match the L-1 price,
then the entire order is to be placed on the L-1 i.e., bidder ‘A’.
257Manual for Procurement of Consultancy Services, Second Edition, 2025
Annexure 26: FAQs About PPP-MII Order, 2017
(Refer para 1.10.2-20)
Question 1. How to calculate Local Content?
Answer: Para 2 of the PPP-MII Order, 2017 (as amended on 16.09.2020) defines local
content as
Local content’ means the amount of value added in India which shall, unless otherwise
prescribed by the Nodal Ministry, be the total value of the item procured (excluding net
domestic indirect taxes) minus the value of imported content in the item (including all customs
duties) as a proportion of the total value, in percent.
Mathematically,
Local content = (Sale price - Value of imported content) * 100/ Sale price
Where, “Sale price” means price excluding net domestic indirect taxes and “Value of imported
content” means price of imported content inclusive of all customs duties
Question 2. How to calculate Local Content in bids involving supply of multiple items from
single bidder?
Answer: In case of bids requiring supply of multiple items (say “X ”, “X ” and “X ”) by a single
1 2 3
bidder, the local content in the bid shall be
Local content = ((Sale price of “X ” - Value of imported content in “X ”) + (Sale price of “X ” -
1 1 2
Value of imported content in “X ”) + (Sale price of “X ” - Value of imported content in “X ”)) *
2 3 3
100/ (Sale price of “X ” + Sale price of “X ” + Sale price of “X ”)
1 2 3
Question 3. How to obtain Make in India “MII” certificate?
Answer: No such certificate issued by Government of India. As per para 9 (a) of PPP-MII
Order, 2017 (as amended on 16.09.2020), the bidders are required to self-certify the local
content in their product for purchase value less than Rs.10 crore. For purchases more than
Rs.10 crore, as per para 9 (b) of PPP-MII Order, 2017, a certificate from the statutory auditor
or cost auditor of the company (in the case of companies) or from a practicing cost accountant
or practicing chartered accountant (in respect of suppliers other than companies) is required
to be submitted.
Question 4. What is the meaning of class-I local supplier, class-II local supplier and non-local
supplier?
Answer: PPP-MII Order, 2017 (as amended on 16.09.2020) classifies the suppliers into
following 3 categories:
a. ‘Class-I local supplier’ – Suppliers offering items with equal to or more than 50% local
content
b. ‘Class-II local supplier’ - Suppliers offering items with equal to or more than 20% but
less than 50% local content
c. ‘Non-local supplier’ - Suppliers offering items with Less than 20% local content
Nodal Ministries/ Departments are authorized to notify a higher minimum local content
requirement for any item, i.e., higher than 50/20%, if they deem fit
Question 5. Details of product categories for which nodal Ministry have been notified by DPIIT
for PPP-MII, Order 2017 may be provided?
Answer: DPIIT has notified 20 nodal Ministries for different product categories. The details of
such product categories and associated Ministry/ Department are available on DPIIT website.
Refer link: https://dpiit.gov.in/sites/default/files/Approved%20product%20category%20list
%20as%20per%2012th%20SCM.pdf
Question 6. Can an item be procured from non-local suppliers, if there are no Class-I/ Class-
II local suppliers in the country.
Answer: Non-local suppliers can only participate in global tender enquiry. Against domestic/
national tenders, only Class-I and Class-II local suppliers can participate in the bidding
process. Hence, in case item is not available locally from Class-I/ Class-II local suppliers,
258Annexure 26: FAQs About PPP-MII Order, 2017
global tender enquiry may be floated for procuring item after taking approval of competent
authority, as notified by Department of Expenditure under Rule 161(iv) of GFR.
Question 7. Are provisions of PPP-MII Order applicable only in procurement of the items for
which nodal Ministries have been notified and the items for which nodal ministries have issued
local content notification?
Answer: No. The provisions of PPP-MII Order are applicable on procurement of all the items
by Central Government procurement entities. For the items, for which nodal ministries have
not been designated and the items for which nodal ministries have not issued minimum local
content notification, the default provision of PPP- MII Order shall apply.
Question 8. Will the cost of transportation, insurance, installation, commissioning, training
and after sales service support like AMC/CMC etc. will be considered as a part of local
content?
Answer: The cost of transportation, insurance, installation, commissioning, training and after
sales service support like AMC/CMC etc. will not be taken into account for calculating local
content in any item. DPIIT OM No.P-45021/102/2019-BE-II- Part(1) (E-50310) dated
04.03.2021 refers, available on DPIIT Website. Refer link
https://dpiit.gov.in/sites/default/files/Letter%20to%20All%20Ministries030420
21_clarification.pdf
Question 9. Can administrative Ministries grant exemption/ relaxation for procurement of
imported items with the approval of Hon’ble Minister In-charge under Para 14 of PPP-MII
Order?
Answer: Procurement of imported item is governed by Rule 161 (iv) of GFR. Hon’ble Minister
In-charge of administrative Ministry is not the appropriate authority for any exemption/waiver
in GFR. As such, procuring entities are advised to follow the procedures as prescribed in GFR
Rule 161 (iv) for procurement of imported items. In this regard, minutes of 14th Standing
Committee Meeting held on 20.09.2022 issued by DPIIT, refers. (Agenda point Number 5.)
Question 10. Can administrative Ministry/Departments give exemption for wide range of
product categories for an extended period of time under Para 14 of PPP- MII Order with the
approval of Hon’ble Minister In- charge?
Answer: The administrative Ministries/ Departments shall grant only tender specific
exemptions under Para 14 of the Order. Exemptions granted shall remain valid for a period of
maximum 01 year only. If the same items are procured again within the aforesaid period of
01year, fresh approval of Minister-in-charge is not required. If any administrative Ministry/
Department intends to grant exemption beyond a period of 01 year, it shall do so only with
prior written concurrence of concerned nodal Ministry. In this regard, minutes of 14th Standing
Committee Meeting held on 20.09.2022 issued by DPIIT, refers. (Agenda point Number 5.)
Question 11. How do I apply for DPIIT registration under Rule 144 (xi) GFR for entities having
beneficial ownership in land border sharing countries?
Answer: The application format for registration of bidders under Rule 144 (xi) GFR is available
on DPIIT website. Refer link: https://dpiit.gov.in/sites/default/files/Revised-Format-Bidders-
31March2021.pdf. Applicants are required to submit one hard copy in the prescribed format
along with soft copy (pdf), as detailed in the covering letter of the format. The applicant shall
be asked to submit additional hard copies, if required at the later stage.
Question 12. What will be the category of the local suppliers having exactly 20% and 50%
local content?
Answer: Vide its para 5, the Public Procurement (Preference to Make in India) Order, 2017
dated 16.09.2020 stipulates the minimum local content requirement as under:
“The ‘local content’ requirement to categorize a supplier as ‘Class-I local
supplier’ is minimum 50%. For ‘Class-II local supplier,’ the ‘local content’
requirement is minimum 20%. Nodal Ministry/Department may prescribe only a
higher percentage of minimum local content requirement to categorize a
supplier as ‘Class-I local supplier’/’Class-II local supplier.’ For the items, for
which Nodal Ministry/Department has not prescribed higher minimum local
259Manual for Procurement of Consultancy Services, Second Edition, 2025
content notification under the Order, it shall be 50% and 20% for ‘Class-I local
supplier’/” Class-II local supplier’ respectively.”
Accordingly, the local suppliers having exactly 20% and 50% local content will be categorized
as "Class-II Local Supplier" and ‘Class-I Local Supplier’ respectively.
Question 13. Whether a Central Government/CPSE Buyer can take cognizance of open
undertakings/ futuristic declarations and treat bidder as Class I/ Class II local supplier through
the present level of local content of the bidder happens to be below 50%/ 20% respectively?
Answer: Detailed Procedure for Verification of local content declared by suppliers
/vendors is elaborated on clause 9 of PPP-MII Order, 2017 dated 16.09.2020 and as per the
Order, futuristic declarations regarding local content is not allowed.
260Manual for Procurement of Consultancy Services, Second Edition, 2025
Annexure 27: Format for Show-cause Notice for
Debarment
(Refer para 3.8.2-3-c)
[On Department Letterhead]
File No: [….]
[Date]
[DoE/ Ministry/ Department/ CPSE/ Organisation]
[Address]
To,
The [Company Name]
[Company Address]
Subject: Show Cause Notice for debarment of your Company from participation in Tenders
of [Govt. of India/ Ministry/ Department/ CPSE/ Organisation] for the following misdemeanour
References: Relevant Tenders/ Contracts: [……….]
Dear Sir/Madam,
1. As a supplier participating in government tenders/ contracts, you must maintain the
highest standards of ethical conduct and transparency, as laid down in the Code of
Integrity in Public Procurement and other provisions in the relevant Tender
Documents/Contracts.
2. Due to your misdemeanour mentioned below relating to the Tender Document/
Contract referred to above, you are proposed to be debarred from participation in all
tenders/ contracts of [Govt. of India/ Ministry/ Department/ CPSE/ Organisation] for a
period not exceeding two years.
3. Articles of Misdemeanours: As per the imputations detailed in Annexure-1 attached
herewith, it is determined that you have committed the following serious
misdemeanours relating to the tender/ contract referred to above:
a) [You breached the Code of Integrity in Public Procurement as specified in [clause
…..] in the Tender Document/ Contract referred to above (please also see Rule
175 of GFR 2017).
b) [You made a false declaration of local content as Class I/ Class II local suppliers
under Public Procurement (Preference to Make in India, Order 2017, Dtd
16/09/2020 or later, i.e., the Make in India Order), which is also be treated as a
breach of code of integrity.]
c) [any other actions or omissions96 by the firm that, in the opinion of the Ministry/
Department, warrants debarment].
4. Opportunity to Explain:
_______________________
96
[Supply of substandard material; non-supply of material; abandonment of works; substandard quality of works;
failure to abide by “Bid Securing Declaration”; conviction under the Prevention of Corruption Act, 1988;
conviction under any law for causing any loss of life or property or causing a threat to public health as part of
executing a public procurement contract; employs a government servant who has been dismissed or removed
on account of corruption; employs a non-official convicted for an offence involving corruption or abetment of
such an offence in a position where he could corrupt government servants, or employs a government officer
within one year of his retirement who has had business dealings with him in an official capacity before
retirement.]
261Annexure 27: Format for Show-cause Notice for Debarment
a) In light of the above misdemeanours, we hereby grant you a fair opportunity to
explain in writing why you should not be debarred, as mentioned in para 2
above.
b) Your response should include Specific Reasons, Mitigating Factors, and
Corrective Measures that you intend to take to rectify the situation and prevent
recurrence.
c) Please also mention if you desire to avail of additional opportunities for an oral
hearing in addition to the written submissions.
d) Please address your response to the undersigned using the contact details
mentioned below.
e) Response Deadline: Please submit your response within 15 days of receiving
this notice. Failure to do so will result in further action, including an order for
debarment.
5. You are required to give details of all ‘allied’ firms that come within the sphere of
effective influence based on the following criteria:
a) You, being a proprietary firm, own it,
b) You, being a partnership firm, have common (all or majority of) partners, or any
one of partners having a profit share of 20% or more in it.
c) You have common Management (say the majority of the directors) with it.
d) Your partners or directors have a majority interest in its management;
e) You have a controlling voice by owning substantial or majority (20% or more)
shares in it.
f) You directly or indirectly control it, are controlled by it, or are under common
control through any agreement/ MoU or otherwise.
g) You are a successor/ subsidiary to it or vice-a-versa;
h) You have common offices/ manufacturing facilities with it.
6. Annexure-1 details the imputation based on which these misdemeanours have been
determined.
7. Annexure 2 lists the documents relied upon for establishing such imputation.
Sincerely,
[Name]
[Designation]
[Contact Information]
Annexure 1: [Details of actions/ omissions committed by the firm]
Annexure-2: [List of relied upon documents]
DA: [Copies of documents attached]
262Manual for Procurement of Consultancy Services, Second Edition, 2025
Annexure 28: Format for Debarment Order
(Refer para 3.8.2-3-b)
[On Department Letterhead]
File No: [….]
Date: [….]
[DoE/ Ministry/ Department/ CPSE/ Organisation]
[Address]
To,
The [Company Name]
[Company Address]
Subject: Your company has been debarred from participating in Tenders of [Govt. of India/
Ministry/ Department/ CPSE/ Organisation].
References:
a) Relevant Tender/ Contract: [….]
b) This office Show-Cause notice No. [….], dated [….]
c) Your Written reply(ies) to the show-cause notice No [….], dated [….] and
d) [Oral Hearing grant to you on [….] with [….]]
Dear Sir/Madam,
1. After thoroughly evaluating the evidence and your submission mentioned above, it has
been established that your company committed the serious misdemeanour mentioned
below. As a result, this [Govt. of India/ Ministry/ Department/ CPSE/ Organisation] has
decided to debar your company from participating in any of our tenders of all entities
covered under the jurisdiction mentioned below for a period mentioned below.
a) The Debarment shall automatically extend to all your allied firms, listed in
Annexure-2, attached herewith. In the case of a joint venture/ consortium, all
partners shall also stand debarred.
b) Debarment does not impact the procuring entities' other contractual or legal rights.
c) Contracts concluded before the issue of the debarment order shall not be affected
by the debarment Orders.
2. Reasons for Debarment:
2.3.1 It is determined that you have committed the following serious misdemeanours
relating to the tender/ contract referred to above. Details of these misdemeanours are
given in Annexure-1, attached herewith:
2.3.2 [Please see the format of show-cause notice for possible misdemeanours]
3. Other Consequences of Debarment:
a) During the validity of the debarment order, no contract of any kind whatsoever shall be
placed on your firm, including your allied firms, by any Ministries/ Departments/
Attached/Subordinate offices, including autonomous bodies and CPSEs, covered
under the jurisdiction mentioned above.
b) If your firm, including your allied firms, submitted the bid before this debarment, it shall
be ignored.
c) Your firm, including your allied firms, stands removed from the list of registered/
approved contractors maintained, if any, by all entities covered by the jurisdiction
mentioned above.
263Annexure 28: Format for Debarment Order
d) Your firm's Bid Security/ Performance Security for the subject tender/ contract shall be
forfeited.
4. Jurisdiction of Debarment:
[This debarment applies to this Ministry and all its departments, attached and subordinate
offices, Public Sector Enterprises, and autonomous bodies.
OR
This debarment applies to this Ministry and all its departments, attached and subordinate
offices, Public Sector Enterprises, and autonomous bodies as an interim measure. However,
the Government of India reserves its right to extend this debarment to all its Ministries,
Departments, and their attached and subordinate offices, Public Sector Enterprises, and
autonomous bodies after following due process.]
OR
This debarment applies to the Government of India and all its Ministries and departments, their
attached and subordinate offices, Public Sector Enterprises, and autonomous bodies.]
5. Debarment Duration:
Effective immediately, your company is debarred from participating in any procurement
process of the entities covered by the jurisdiction mentioned above for a period of [six to two
years].
6. Appeal Process:
If your company wishes to appeal against this decision, you may submit an appeal within 15
days of receiving this letter. The appeal, supported by relevant evidence and addressed to the
appellate authority [….], should be sent to the undersigned using the contact details below.
7. Revocation of Debarment:
Upon completion of the debarment period, this debarment shall automatically stand revoked,
and your company may apply for registration again as per procedure.
We trust that your company shall rectify its conduct after the debarment period.
Sincerely,
[Name]
[Designation]
[Contact Information]
Annexure 1: [Details of actions/ omissions committed by the firm]
Annexure-2: [List of Allied Firms that also stand debarred]
Copy To:
1. All Allied Firms as per Annexure-2 – Your firm also stands debarred as above.
2. Ministry/ Department (or GeM-CPPP in case of debarment by DoE) for publication on
the Website
3. Circulation to Procuring Entities
264Manual for Procurement of Consultancy Services, Second Edition, 2025
Annexure 29: Format of Declaration by the Appointed
Arbitrator
(Refer para 10.7.9-3-d)-i),ii))
(On Letterhead of Arbitrator)
1. Name
2. Contact Details:
3. I hereby certify that I have retired from (Organisation/ Unit) w.e.f. _______in______grade.
Or
I hereby certify that I am serving Officer and am presently posted as______ in grade.
Or
I hereby certify that I am currently empanelled as arbitrator by Indian Council for Arbitration
(ICA) in the category of ___________.
4. I have no past or present relationship in relation to the subject matter in dispute, whether
financial, business, professional or other kind.
Or
I have past or present relationship in relation to the subject matter in dispute, whether financial,
business, professional or other kind. The list of such interests is as under:
--------
5. I have no past or present relationship with or interest in any of the parties whether financial,
business, professional or other kind, which is likely to give rise to justifiable doubts as to my
independence or impartiality in terms of the Arbitration and Conciliation Act 1996.
Or
I have past or present relationship with or interest in any of the parties whether financial,
business, professional or other kind, which is likely to give rise to justifiable doubts as to my
independence or impartiality in terms of the Arbitration and Conciliation Act 1996. The details
of such relationship or interest are as under:
-------
6. There are no concurrent circumstances which are likely to affect my ability to devote
sufficient time to the arbitration and in particular to finish the entire arbitration within twelve
months.
Or
There are circumstances which are likely to affect my ability to devote sufficient time to the
arbitration and in particular to finish the entire arbitration within twelve months. The list of such
circumstances is as under:
---------
Signature
(Name ----------------------)
265