U.

P Store-Purchase Rules
Sources:-

1. Financial Hand Vol V- Part- I; Chapter-XII, Para-255-260 d

Book - Vol V- Part- I; Appendix XVIII and XIX

2. Budget Manual- Para 12 and 174

3. Latest G.O's  Procurement of G.O- 5/2016/253 Date 01-04-2016

Goods manual
 E-Tender  3/2017/1067; Dtd-12-05-17
 6/2018/256; Dtd-24-04-18

 Gem Portal  11/2017/523; Dtd-23-08-2017

 12/2017/540; Dtd-25-08-2017
 19/2017/836; Dtd-28-11-2017
 21/2017/704; Dtd-30-11-2017
 13/2018/230; Dtd-27-04-2018

UTTAR PRADESH PROCUREMENT MANUAL

( Procurement of Goods) IN A NUTSHELL

This manual contains rules made for procurement of goods in Government departments.
These rules supersede the U.P Stores Purchase Rules contained in Appendix- IX of Industries
Department Manual which are also reproduced in Appendix- XVIII of Financial Handbook
Volume- V Part-I.
These rules shall come into force-on 1st April, 2016.
Applicability- These rules are applicable to the procurement of goods by the procuring
entities of all Government departments, their attached and subordinate offices.

Provided that the provisions of this manual, in so far as they are inconsistent with the
procedure specified in respect of the schemes/ projects funded by the Central Government,
International Financial Agencies or schemes/ project covered under International
Agreements, shall not apply to procurement of goods for such schemes/ projects.

General Principles:-

(1) Best Value for money.

(a) Purchasing at the right price.
(b) Purchasing at the right time.
(c) Purchasing at the right quality.
(d) Purchasing at the right quantity.
(e) Purchasing from the right source.

(2) Transparency, Competition, Fairness and Elimination of Arbitrariness.

 (3) Efficiency, Economy and Accountability .
(4) Financial Arrangments.

METHODS OF PROCUREMENT:-

Subject to the provisions of these rules, a procuring

entity, may procure the goods by means of any of the following methods:-

(1) Advertised Tender Enquiry (Open Competitive Bidding)

(2) Limited Tender (Limited Competitive Bidding )
(3) Two- Stage Bidding
(4) Single Source Procurement
(5) Electronic Reverse Auctions
(6) E- procurement
(7) Request for Quotations
(8) Spot Purchase
(9) Running contract/ Rate Contract

(10) Any other method of procurement notified by Goverment.

PRICE FOR TENDR FORMS:- Price of the tender document should take care of the
preparation and delivering cost only.

(A) Ordinary tenders involving supply of goods:-

Cost of Tender forms

Estimated value of
goods for which Original copy each (Rs) Duplicate copy each (Rs)
tenders are invited

Above Rs 1.00 lac 0.2% Of the cost of tender rounded to 50% of the cost of the
(Rs.ONE lac) and the nearest multiple of 100, subject to a original copy rounded to the
upto Rs.10 lac (Rs. minimum of Rs 400& maximum of Rs nearest multiple of 100 plus
TEN lac) 1500 plus local taxes as applicable local taxes as applicable

Above Rs 10 lac 0.15% Of the cost of the tender 50% Of the cost of the
(Rs TEN lac) rounded to the nearest multiple of original copy, rounded to the
100, subject to a maximum of Rs. nearest multiple of 100 plus
25000 plus local taxes as applicable local taxes as applicable
(B) Special tenders with drawing ,etc, involving erection of plant and machinery.

Cost of tender forms

Estimated value of
goods for which
Original copy each (Rs) Duplicate copy each (Rs)
tenders are invited

Up to Rs 10 lac (Rs 0.25% Of the cost of tender rounded to 50% of the cost of the
TEN lac ) the nearest multiple of 100 + local taxes original copy rounded to the
as applicable nearest multiple of 100 + local
taxes as applicable

Above Rs 10 lac 0.20% Of the cost of the tender 50% Of the cost of the
(Rs TEN lac) rounded to the nearest multiple of original copy rounded to the
100, subject to a maximum of rupees nearest multiple of 100 + local
35000 + local taxes as applicable taxes as applicable

General conditions of the contract for plant machinery and manufactured equipment
should be usually supplied with the special tender form and extra copy at Rs. 200/copy. The
cost of the tender forms may be accepted in cash or DD only. Postal orders, postal stamps
or bank cheques should not be accepted.

Earnest money deposit:-

In order to safeguard against a bidders withdrawing/ altering its bid during the bid
validity period in the case of tender enquiry, Earnest Money deposit (EMD) is to be obtained
from the bidders.
The amount of EMD should we decided on the basis of estimated value of the
goods to be purchased ,which is as under :-

Estimated value of goods up to Rs. 1.00 earnest money Rs 1500 (Rs One
Lac ( Rupee ONE Lac) Thousand Five Hundred)

for each additional Rs. 1.00 Lac ( Rs ONE Lac) a further amount of Rs 1000 (Rs One
or a part thereof Thousand)

Earnest money deposit ( Bid security) will not be taken in case of procurement by Spot
purchase, Request for Quotation, Limited Tender and Single Source Procurement.
Earnest money may be accepted in the form of Account Payee Demand draft or Fixed
Deposit Receipt pledged in favour of Head of Department/ Head of office/Other officer
authorised by the Government or Bankers Cheque or a Bank Guarantee from any of the
scheduled commercial banks.
The tenderers should be especially instructed in the advertisement not to enclose in the
envelope any Earnest money in cash.
EMD of a tenderer will be forfeited, if the tenderer withdraws or amends his tender or
impairs or derogates from the tender in any respect after expiry of the deadline for the
receipt of tender but within the period of validity of his tender. Further, if the successful
tenderer fails to furnish the required performance security within the specified period, his
EMD will be forfeited.
EMD furnished by all unsuccessful tenderers should be returned to them without any
interest whatsoever, at the earliest after expiry of the final tender validity period but not later
than 30 days after conclusion of the contract.
EMD of the successful tenderer should be returned, without any interest whatsoever after
receipt of performance security from him as called for in the contract.

Performance security (Security deposit) :-

To ensure due performance of the contract, performance
security is to be obtained from the successful bidder who is awarded the contract. It is to be
obtained from every successful bidder irrespective of his registration status, etc for a
contract value above Rs. 1.00 (one) lac.
Performance security may be furnished in the form of fixed deposit receipt or bank
guarantee from scheduled commercial bank.
The performance security should be equivalent to 5% of the value of the contract rounded
to the nearest multiple of hundred.
Performance security is to be furnished by a specified date (generally within 15 days from
the date of notification of the award/letter of acceptance) and it should remain valid for a
period of 30 days beyond the date of completion of all contractual obligations of the supplier,
including warranty obligations.
No security should be demanded or taken from any Government corporations, which supply
goods This provision will apply in the matter of purchase of goods from Government of India
undertaking as well.
Performance security is to be forfeited and credited to Government Account in the event of
a breach of contract by the supplier, in terms of the relevant contract.
LIQUIDATED Damages:-
There should be a suitable provision in the terms and condition of the contract for
claiming liquidated damages of appropriate amount from the supplier to take care of delays
in supplies and performance, for which the supplier is responsible.
Depending on the nature and value of the goods to be ordered and the urgency of
the requirement, a specific percentage of the delivered price of the delayed goods for each
week or part thereof delay, is to be incorporated in the contract term. Generally the
percentage is 0.5% per week or part thereof. There should also be an appropriate maximum
limit of such deduction, to be shown as a specific percentage of the contract value of
delayed supplies/ services and incorporated in the contract terms. This percentage is
generally 10%.
TOKEN LIQUIDATED DAMAGES:-
There may be situations when charging full liquidated damages may not be justified as
the reason for delay in delivery by the supplier may be largely due to circumstances well
beyond his control but nevertheless this may not be considered adequate to waive off
liquidated damages altogether or there may be such deficiancies. In service for which
quantification may not be feasible and no other remedy may be available in such cases at
the sole discretion of the purchaser token liquidated damages up to 10% of the normal
liquidated damages may be imposed in consultation with finance wing of the department.
Stipulations to this effect prescribing the kind of deficiencies and scale of Token Lquidated
Damages chargeable should be clearly brought out in the tender documents. This safeguard
should be consistent with the provisions of performance security.

Evaluation of tenders-
Determination of Responsiveness:- The bid evaluation committee's determination of
the responsiveness of a bid should be based on the contents of the bid itself. A responsive
bid is one that meets the requirements of the bidding documents without material deviation,
reservation or ommission where:
a) 'deviation' is a departure from the requirements specified In the bidding documents.
b) 'Reservation' is the setting of limiting condition or withholding from complete
acceptance of the requirement specified in the bidding documents; and
c) 'omission' is the failure to submit part or all of the information or documentation
required in the bidding documents

Lack of competition :-
Sometimes the purchase organisation may not receive sufficient number of
tenders. A situation may also arise where, after analysing the tenders the purchase
organisation ends up with one responsive tenderer.
In such situations, the purchase organisation is first to check whether, while
floating/ issuing the tender enquiry all necessary requirements like standerd tender enquiry
conditions, industry friendly specification, wide publicity,sufficient time for formulation of
tendrers, qualification criteria etc were fulfilled. If not, the tender is to be re-issued/ re-floated
after rectifying the deficiencies.
1- However, if after scrutiny it is found that all such aspects were fully taken care of, the
contract for a tender value does not exceed Rs. 50 lac and:
(a) the price quoted by the bidder is assessed to be reasonable;
(b) the bid is unconditional and complete in all respects;
(c) there is no obvious indicators of cartelisation amongst bidders,
the bid evaluation committee shall prepare a justification note for the approval of the next
higher authority of the procuring entity, who shall decided as to whether to sanction the
single bid or re- invite bids after recording reasons..
2) In case of contract for estimated value exceeding Rs. 50 (Fifty) lac but not exceeding Rs.5
(Five) crore, the tender should be refloated and if the purchase organisation again ends up
with only one responsive tender ,the contract may be placed on that tenderer, after ensuring
the aforesaid procedure.
3) Lastly for the contracts of estimated value exceeding Rs.5 (FIVE) crore the tender should
be retendered second time and if it also results in only one responsive tender, contract may
be finalised on the same basis as above.
Provided that in case the procuring entity is the administrative department of
Government ,approval of the next higher authority will not be required.
Reference: G.O. 05/ 2016/ 253/ 18-02-2016-3 (,l-ih) 2010, Dated: 01-04-16
Extracts: - Uttar Pradesh Procurement Manual
( Procurement of Goods)
Basic facts about Procurement Manual:-
G.O - 05/2016/253/18-2-2016-3(,l-ih-)/2010
Dtd- 01.04-2016
Department:- Micro, small and medium Industries.
Enclosure:- UP Pracurement Manual ( Pracurement of Goods)

Chapters :-
1 Extent of Applications.
2 Definition and General Explonations
3 General Principles of Procurement
4 General Principles of Entering into contract
5 Specifications and Allied Technical Particulars
6 Sources of supply and registration of suppliers.
7 Forecast, Indents and financial Arrangement.
8 Methods of Procurement
9 Earnest money deposit and performance security
10 Delivery Period, Transportation and Transit Insurance,
cancellation of contract.
11 Elements of price and terms of payment.
12 Quality control and inspection of ordered goods.
13 Advertised tender enquiry (open competitive bidding).
14 Evaluation of tenders, formulation of purchase proposal and
placement of contract.
15 E- Procurement.
16 Runing contract and rate contract.
17 Grievance redressal during Procurement process.
18 Code of Integrity for Procurement entites.
19 Losses and settlement of Disputes
20 Documentary record of procurement process and closing of
cases
21 Inventory management
22 Irregularties/ observed in public Procurement.
23 Miscellaneous
24 Timeline for Procurement of goods

Appendix -01 Frequently asked Questions.

Important concepts:-
Tolerance clause- To take care of any change in the requirement during the period
starting from issue of tender enquiry till placement of the contract a plus /minus tolerance
clause is incorporated in the tender document, reserving purchaser's right to increase or
decrease the quantity of the required goods up to that limit without any change in the terms
and conditions and prices quoted by the tenderers. While awarding the contract, the quantity
ordered may be increased or decreased, if necessary, within the prescribed plus/ minus
tolerance limit.
Force Majeure :- Force majeure means an event beyond the control of the supplier
and not involving the supplier's fault or negligence and which is not forseeable. Such events
may include, but are not restricted to, acts of the purchaser either in its sovereign or
contractual capacity, wars or revolution, hostility, acts of public enemy, civil commotion,
sabotage, earthquake, fire, floods, explosions, epidemics, quarantine restrictions, strikes,
lockouts and freight embargoes.
If there is delay in performance or other failures by the supplier to perform its
obligations under its contract due to event of a force majeure, the suppliers shall not be held
responsible for such delays/ failures.
Buy back offer:- When it is decided with the approval of the competent authority to
replace some existing old goods with their newer or better versions/ substitutes the
department may trade the existing old goods while purchasing the new ones. For this
purpose, suitable clauses are to be incorporated in the tender enquiry document so that the
interested tenderers formulate and submit their tenders accordingly.
(B) Special tenders with drawing ,etc, involving erection of plant and machinery.

Cost of tender forms

Estimated value of
goods for which original copy each (Rs) duplicate copy each (Rs)
tenders are invited

Up to Rs 10 lakh 0.25% Of the cost of tender rounded to 50% of the cost of the
(Rs 10 lakh ) the nearest multiple of 100 + local taxes original copy rounded to the
as applicable nearest multiple of 100 + local
taxes as applicable

Above Rs 10 lakh 0.20% Of the cost of the tender 50% Of the cost of the
(Rs 10 lakh) rounded to the nearest multiple of original copy rounded to the
100, subject to a maximum of rupees nearest multiple of 100 + local
35000 + local taxes as applicable taxes as applicable

General conditions of the contract for plant machinery and manufactured

equipment should be usually supplied with the special tender form and extra copy at rupees
200/copy. The cost of the tender forms may be accepted in cash or DD only, postal orders,
postal stamps or bank checks should not be accepted.

Earnest money deposit and performance security :-

In order to safeguard Against The bidders withdrawing/ altering it's bit during
the bid validity period in the case of tender enquiry, Earnest Money deposit (EMD) Is to be
obtained from the bidder.
The amount of EMD should we decided on the basis of estimated value of
the goods to be purchased ,which is as under :-

Estimated value of goods up to Rupee 1.00 earnest money rupees 15000 ( rupee one
lakh ( Rupee 1 lakh) thousand five hundred)

for each additional Rupee 1 lakh or a part for the amount of rupee 1000 ( Rs one
there of thousand)

Earnest money deposited ( Bid security) will not be taken in case of procurement by
spot purchase, Request for Quotation a Limited Tender.
Earnest money may be accepted in the form of account payee demand draught or
fixed deposit received pledge in favour of head of department/head of office/Other officer
authorised by the government or bankers cheque or bank guarantee from any of the
scheduled commercial banks.
 The tenderers should be especially instructed in the advertisement not to enclose
in the envelope any earnest money in cash.
EMD of a tenderer will be fortified if the tenderer withdrawal or amends
his tender or impairs or derogates from the tender in any respect after expiry of the
deadline for the receipt of tender but within the period of validity office tender further, if the
successful tenderer fails to furnish the required performance security within the specified
period, his EMD will be fortified.
.
EMD of the successful tenderer should be returned, without any interest whatsoever after
receipt of performance security from him as called for in the contract.
Performance security (Security deposit) :-
To ensure due performance of the contract,
performance security is to be obtained from the successful bidder who is awarded the
contract. It is to be obtained from every successful bidder irrespective of his registration
status, etc for a contract value ever rupee 1.0 (one) lac.
Performance security may be furnished in the form of fixed deposit
receipt or bank guarantee from a scheduled commercial bank.
The performance security should be equivalent to 5% of the value of the contract
rounded to the nearest multiple of 100.
Performance security is to be furnished by a specified date (generally within 15 days
from the date of notification of the award/letter of acceptance and it should remain valid for a
period of 30 days beyond the date of completion of all contractual obligations of the supplier,
including warranty obligations.
No security should be demanded or taken from any Government corporations which
supply goods. This provision will apply in the matter of purchase of goods from government
of India undertaking as well.
Performance security is to be forfeited and credited to government account in the
event of a breach of contract by the supplier, in terms of the relevant contract.
LIQUIDATED Damages:-
There should be a suitable provision in the terms and condition of the
contract for claiming liquidated damages of appropriate amount from the supplier to take
care of delays in supplies and performance, for which the supplier is responsible.
Depending on the nature and value of the goods to be ordered and the
urgency of the requirement a specific percentage of the delivered price of the delivered
goods for each week or part there of delay, is to be incorporated in the contract term.
Generally the percentage is 0.5% per week or part thereof. There should be an appropriate
maximum limit of such deduction, to be shown as a specific percentage of the contract value
of delayed supplies/ services and incorporated in the contract terms. This percentage is
generally 10%.
TOKEN LIQUIDATED DAMAGES:-
There may be situations when charging full liquidated damages may be
not justified as the reason for delay in the delivery by the supplier may largely be
due to circumstances well beyond his control but nevertheless this may not be
considered adequate to waive off liquidated damages altogether or there may be
such deficiancies in service for which quantification may not be feasible and no other
remedy may be available. In such cases, at the sole discretion of the purchaser,
Token liquidated damages up to 10% of the normal liquidated damages may be
imposed in consultation with finance wing of the department. Stipulations to this
effect prescribing the kind of deficiencies and scale of Token Lquidated Damages
chargeable should be clearly brought out in the tender documents. This safeguard should be
consistent with the provisions of performance security.
Evaluation of tenders-
Determination of Responsiveness:- The bid evaluation committee's determination of
the responsiveness of a bid should be based on the contents of the bid itself. A responsive
bid is one that meets the requirements of the bidding documents without material deviation,
reservation or ommission where:
a) 'deviation' is a departure from the requirements specified In the bidding documents.
b) 'Reservation' is the setting of limiting condition or withholding from complete
acceptance of the requirement is specified in the bidding documents, and
c) 'omission' is the failure to submit part or all of the information or documentation
required in the bidding documents.

Reasonableness of Price:-
Before placing the contract on the lowest evaluated responsive tenderer (L-1)
the Purchase organisation is to ensure that the price to be paid is reasonable. The broad
guidelines for judging the reasonableness of price are as under:-
1) Last purchase price of same( or, in its absence, similar) goods.
2) Current market price of sale( or, in its absence, similar) goods.
3) Price of raw materials, which go into the production of the goods
4) Receipt of competitive offers from different sources
5) Quantity involved
6) Terms of delivery
7) Period of delivery
8) Cost analysis (material cost, production cost, overheads, profit margin).
NOTE- Price paid in an emergency purchase or purchase price of goods offered by a
tenderer through 'distress sale' are not accurate guidelines for future use.
Price not Reasonable:-
If L-1’s price is not reasonable, then, in the first place, the purchase
organisation is to review its own data and details to recheck whether the reasonable price
so arrived is correct or not. If it is correct, the purchase organisation may, strictly as an
exception, negotiate the price only with the lowest evaluated responsive tender(L-1) in an
attempt to bring down the same .
If L-1 reduces the price to the desired (reasonable) level, contract may be
placed on it but if it does not agree, then further action like retendering etc, may be decided
by the purchase organisation depending on the merits of the case.
Lack of competition :-
Sometimes the purchase organisation may not receive sufficient number of
tenders. A situation may also arise where, after analysing the tenders the purchase
organisation ends up with one responsive tenderer. In such situations, the purchase
organisation is first to check whether, while floating/ issuing the tender enquiry all necessary
requirements like standerd tender enquiry conditions, industry friendly specification, wide
publicity,sufficient time for formulation of tendrers, qualification criteria etc were fulfilled. If
not, the tender is to be re-issued/ re-floated after rectifying the deficiencies.
1. However, if after scrutiny it is found that all such aspects were fully taken care of, the
contract for a tender value does not exceed Rs. 50 lac and:
(a) the price quoted by the bidder is assessed to be reasonable;
(b) the bid is unconditional and complete in all respects;
(c) there is no obvious indicators of cartelisation amongst bidders,
the bid evaluation committee shall prepare a justification note for the approval of the next
higher authority of the procuring entity, who shall decided as to whether to sanction the
single bid or re- invite bids after recording reasons..
2) In case of contract for estimated value exceeding Rs. 50 (Fifty) lac but not exceeding Rs.5
(Five) crore, the tender should be refloated and if the purchase organisation again ends up
with only one responsive tender ,the contract may be placed on that tenderer, after ensuring
the aforesaid procedure.
3) Lastly for the contracts of estimated value exceeding Rs.5 (FIVE) crore the tender should
be retendered second time and if it also results in only one responsive tender, contract may
be finalised on the same basis as above.
Provided that in case the procuring entity is the administrative department of
Government ,approval of the next higher authority will not be required.
Important concepts:-
Tolerance clause- To take care of any change in the requirement during the period
starting from issue of tender enquiry till placement of the contract a plus /minus tolerance
clause is incorporated in the tender document, reserving purchaser's right to increase or
decrease the quantity of the required goods up to that limit without any change in the terms
and conditions and prices quoted by the tenderers. While awarding the contract, the quantity
ordered may be increased or decreased, if necessary, within the prescribed plus/ minus
tolerance limit.
Force Majeure :- Force majeure means an event beyond the control of the supplier
and not involving the supplier's fault or negligence and which is not forseeable. Such events
may include, but are not restricted to, acts of the purchaser either in its sovereign or
contractual capacity, wars or revolution, hostility, acts of public enemy, civil commotion,
sabotage, earthquake, fire, floods, explosions, epidemics, quarantine restrictions, strikes,
lockouts and freight embargoes.
If there is delay in performance or other failures by the supplier to perform its
obligations under its contract due to event of a force majeure, the suppliers shall not be held
responsible for such delays/ failures.
Buy back offer:- When it is decided with the approval of the competent authority to
replace some existing old goods with their newer or better versions/ substitutes the
department may trade the existing old goods while purchasing the new ones. For this
purpose, suitable clauses are to be incorporated in the tender enquiry document so that the
interested tenderers formulate and submit their tenders accordingly.

Reference: G.O. 05/ 2016/ 253/ 18-02-2016-3 (,l-ih) 2010, Dated: 01-04-16
Extracts: - Uttar Pradesh Procurement Manual
( Procurement of Goods)