Para 1.4 — NONCONSULT_MANUAL

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, the 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 the manufacture of goods is done in the 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 viceversa. b) Main Difference Between ‘Goods’ and ‘Works’ on the one hand and ‘Services’ on the other is the intangibility of outputs of Services. c) The main difference between consultancy and non-consultancy services is the level of intellectual inputs, which are predominant in consultancy and not central to nonconsultancy. Another difference is that Non-consultancy services are repetitive and 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) A simpler procurement procedure should be followed in the case of blurred border lines and grey areas. In case of doubt between:

1.4. Categorisation of procurements 1. Categories: 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 the procurement Glossary):

i) Goods and works/ NC services/ consultancy, it should be processed as procurement of goods. 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, and commissioning of an IT system, including hardware supply, software development, bandwidth, and operation/maintenance of the system for a defined period after go-live, etc. c) 8 Composite 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.

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, or erection of a mechanical or electrical nature should be treated as procurement of Works if elements of procurement of Goods are incidental. 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 the relative value of this 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 a 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 the selection of a consultant.

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 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 redelegation has been done within the limits permissible under the rules/ general orders/ general instructions of the DoE. Unless a special procedure is approved by the Secretary of the Department with the concurrence of the DoE, this procedure shall be followed.

b) Special Procedure: With the prior concurrence of Secretary Expenditure, the Secretary of the Department may 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/ nonconsultancy, goods and works contracts etc. or any permutation thereof.

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 that 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 the Procurement Cycle. A suggested structure of such SoPP is enclosed as Annexure 2.

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 the need for an item, facility or service is identified till the need is satisfied) is designed to achieve such a right balance. Although couched in the jargon of procurement of Goods, it’s equally applicable to procurement of Consultancy and Non-consultancy services. The term ‘Right’ is used here in the sense of being ‘optimal balance’:

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 Chapter 1 and ‘Appendix 1: Advanced Concepts of Value for Money’ of the Manual for Procurement of Goods, 2024.

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.

1. Right quality; 2. Right quantity; 3. Right price; 4. Right time and place; and 5. Right source. (For more details on the 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).