Q 1: What is the basic aim of evolution of IFA System?
Ans : The basic aim of the IFA system is to expedite decision making by delegation of financial powers to the executive authorities which are to be exercised in consultation with the IFAs to bring in the concept of authority with responsibility and accountability.
Q 2: What is the difference between Internal Audit and IFA ?
Ans : The difference between Internal Audit and IFA can be explained as under :-
1. The internal audit is independent of the executive whereas IFA forms integral part of it.
2. No expenditure out of public money can be incurred by the executive if the same has been objected to in internal audit whereas even in cases where CFA does not agree with the IFA , he is competent to sanction the expenditure despite the dissenting note of IFA subject to certain conditions.
3. CFA in the IFA system can overrule the IFA whereas internal audit cannot be overruled by the executive.
Q 3: What are the Exceptional situations where price negotiations may be concluded?
Ans : Following are the Exceptional situation where price negotiations may be concluded :-
1. Procurement of proprietary items.
2. Items with limited sources of supply i.e. single tender and resultant single tender.
3. Items where there is a suspicion of a cartel formation.
4. In multi vendor cases where the offered price is considered high with reference to the assessed reasonable price.
Auth : DPM 2009 Para 13.3.6
Q 4: What is meant by the statement “The terms of the contract must be precise and definite”?
Ans : While framing a contract it is absolutely essential that its terms are precise and definite so that there is no room for any ambiguity and scope for any misinterpretation. Vague terms and conditions are exploited by contractors with implications on cost and completion/delivery time.
Q 5: What is meant by the statement “Standard forms of contract should be adopted”?
Ans : Generally , standard forms of contracts should be adopted because these standard forms have been framed following adequate legal scrutiny of its terms and it can stand the legal scrutiny in the court of law. This also ensures uniformity in the framing of bidding documents.
Q 6: What is LD (liquidated damages)”?
Ans : The provision in the bidding documents for liquidated damages is required to be made to compensate for the loss on account of late delivery. If the contractor fails to deliver the stores / services or any instalment thereof within the stipulated delivery period the competent financial authority may recover from the contractor a sum equivalent as specified in the liquidated damage (LD) clause in the contract document . Generally the LD is fixed at 0.5 % of the S.O. value per week for the delay period subject to a maximum of 10 % .
Auth : DPM 2009 Para 7.10
Q 7: What is the prescribed procedure for exercising financial powers in case an officer possessing financial powers is absent on leave and no officer has been formally appointed in his place ?
Ans : In such a situation , financial responsibility will rest on the officer actually performing his duties who will for the time being exercise the full powers of the absentee. Further , the sub-ordinate officer’s signature should indicate that he signs “ For........................ Absent on........................”
Auth : Rule 65 (d) of FR Pt I Vol I
Q 8: What is the prescribed procedure for exercising financial powers in case an officer possessing financial powers has been posted out and on officer has been formally appointed in his place ?
Ans : In such a situation , financial responsibility will rest on the officer actually performing his duties who will for the time being exercise the full powers of the appointment.
Auth : Rule 65 (f) of FR Pt I Vol I
Q 9: What are the conditions under which re-tendering may be resorted to ?
Ans : Re-tendering may be considered under the following circumstances :-
1. Offer(s) are at variance with the qualitative requirements and other terms & conditions set out in the RFP.
2. There are major changes in specifications and quantity from the user side.
3. Prices quoted are found to be unreasonably high with reference to assessed reasonable price.
4. There is evidence of a sudden slump in prices after receipt of the bids.
5. Many vendors did not participate because of restrictive specifications leading to lack of competition.
Auth : DPM 2009 Para 4.16.1
Q 10: What is Capital procurement?
Ans : Expenditure incurred with the objective of acquiring tangible assets of a permanent nature or enhancing the utility of the existing assets are broadly classified as Capital expenditure and such procurement is termed as Capital procurement.
Q 11: What is Revenue procurement?
Ans : The revenue procurement implies procurement of items and equipments including replacement equipment assemblies and components to maintain and operate already sanctioned assets in the service , the necessity of which has been established and accepted by the govt.
Q 12: What is Indigenous procurement?
Ans : Procurement from indigenous sources is called indigenous procurement. It is the policy of the govt to encourage indigenization, particularly in the field of Defence to achieve self-reliance.
Q 13: What are the essential conditions governing Repeat Order?
Ans : The essential conditions governing Repeat Order are as under :-
(i) Items ordered against the previous order had been delivered successfully.
(ii) Original order should not have been placed to cover urgent/emergent demand.
(iii) Repeat order is not placed to split the requirement to avoid obtaining the sanction of the next higher CFA.
(iv) The original order should have been placed on the basis of lowest price accepted by the CNC and not on the basis of delivery or any other preference.
(v) There is no downward trend in the price of the item.
Q 14: What is Performance Security Deposit ?
Ans : Performance Security Deposit payable to the purchaser is furnished by the supplier in the form of a performance bank guarantee (PBG) issued by a public sector bank or a private sector bank authorized to conduct govt business , in the prescribed format within 30 days from the date of contract. The performance security deposit is meant to compensate the purchaser for any loss suffered due to failure of the supplier to complete his obligations as per the contract. Preferably, performance security is payable by the supplier at the rate of 10% of the contract value and should remain valid for a period of 60 days beyond the date of completion of contractual obligations. The bank guarantee is returned to the supplier on successful completion of all his obligations under the contract.
Q 15: What is Fall Clause ?
Ans : In cases where the contracts have to be concluded with the firms , whose rate contract with other central procurement agencies have expired and renewal of RC has not taken place , a “Fall Clause” should be incorporated in the supply order/contract. In case rates are found to be lower on conclusion of rate contract , the lower rates shall be applicable in the contract concluded in the absence of regular RC.
Q 16: Can ex-post facto concurrence be obtained under the delegation of financial powes ?
Ans : There is no provision under the delegated financial powers to obtain ex-post facto concurrence of integrated finance. Such case where prior concurrence is not obtained , though required as per the delegation of financial powers , would be treated as cases of breach of rules and regulations and referred to the next higher CFA for regularization. Such regularization will be subject to concurrence of IFA to the next higher CFA.
Q 17: What is Risk and Expense Purchase ?
Ans : In order to obviate a situation where the supplier fails to deliver the stores or any installment thereof within the period fixed for such delivery or at any time repudiates the contract before its expiry , it is important to include a clause on risk and expense purchase in the tender/contract. Vide this clause in the event of the above scenario taking place , the purchaser will be entitled to cancel the contract and re-purchase the stores not delivered at the risk and expense of the defaulting supplier.
Q 18: What is Turnkey contract ?
Ans : A turnkey contract is a mix of goods contract and works contract. Generally, in the tender documents for a turnkey contract , the purchase organization specifies the performance and output required from the plant proposed to be set up and broadly outlines the various parameters it visualizes for the desired plant. The inputs and other facilities , which the purchase organization will provide to the contractor are also indicated in the tender enquiry documents for turnkey contracts.