Para 1.6.1 — GOODS_MANUAL

1.6.2 Right Quantity: There are extra costs and systemic overheads involved with both procuring a requirement too frequently in small quantities or buying significant quantities for prolonged use. Hence, the right quantity should be procured (in the appropriate size of the contract), which balances extra costs associated with larger and smaller quantities.

1.6.1 Right Quality: Procurement aims to buy just the right quality that will suit the needs – no more and no less – with precise specifications of the procuring entity’s requirements, a proper understanding of the functional value and cost, an understanding of the bidder’s quality system and quality awareness. The concept of the right balance of quality can be further refined to the concept of utility/value (Please refer to para 1.7 below). Technical specifications and quality assurance plans are the most vital ingredients for the right quality. In public procurement, it is essential to give due consideration to value for money while preparing the specifications.

1.6.3 Right Price: It is not correct to aim at the cheapest materials/ facilities/ Services available. The price should be just right for the quality, quantity, and other factors involved (or should not be abnormally low for facilities, works, or services, which could lead to a situation of non-performance or failure of contract). The concept of price can be refined further to consider not only the initial price paid for the requirement but also other costs such as maintenance costs, operational costs, and disposal costs (Also termed as life cycle costing - please also refer to para 1.7 below)

1.6.4 Right Time and Place: If an organisation needs the material (or facility or services) in three months, it will be costly to procure it too late or too early. Similarly, if the vendor delivers the materials/ facilities/ services in another city, extra time and money would be involved in logistics. An unrealistic time schedule for completion of a facility may lead to delays, claims, and disputes.

1.6.5 Right Source: Similarly, the source of delivery of Goods, Works and Services of the requirement must have just right financial capacity and technical capability for our needs (demonstrated through satisfactory past performance of contracts of the same or similar nature). Buying a few packets of printer paper directly from a large manufacturer may not be the right strategy. On the other hand, if our requirements are large, buying such requirements through dealers or intermediaries may also not be right.

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 valueengineered 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 Appendix 1.

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: