Rules for the Disposal of Goods in DOP

In any organization, efficient management of surplus, obsolete, or unserviceable goods is vital for maintaining operational effectiveness and financial integrity. The rules governing the disposal of such items not only ensure transparency but also help in minimizing wastage and preventing unnecessary clutter. This post outlines the key provisions from the General Financial Rules (GFR) regarding the disposal of goods within the Ministry or Department.

Declaring Items Surplus or Unserviceable

Rule 196: Disposal of Goods

1. Criteria for Declaration: An item may be declared surplus, obsolete, or unserviceable if it holds no utility for the Ministry or Department. The competent authority responsible for the purchase must record the reasons for such declarations.
2. Constituting a Committee: The competent authority may form a committee to assist in determining which items are surplus, obsolete, or unserviceable.
3. Valuation for Disposal: Before disposing of any surplus goods, it’s essential to determine the book value, guiding price, and reserved price. If calculating the book value is impractical, the original purchase price may be utilized. A report for disposal should be prepared using Form GFR-17.
4. Accountability: If an item becomes unserviceable due to negligence, fraud, or misconduct by a government employee, responsibility must be assigned accordingly.

Modes of Disposal

Rule 197: Modes of Disposal

1. High-Value Goods: Surplus or obsolete goods with a residual value above Rs. 2,00,000 must be disposed of either through:
   • Advertised tender
   • Public auction
2. Low-Value Goods: For items with a residual value below Rs. 2,00,000, the competent authority decides the mode of disposal, ensuring that accumulation of such goods is avoided to prevent space blockage and value deterioration.
3. Hazardous Items: Certain items, such as expired medicines, food grains, or ammunition, that pose health or environmental risks should be disposed of immediately using suitable methods.
4. Security Concerns: Goods that involve security issues, like currency or negotiable instruments, must be disposed of in compliance with rules governing official secrets and financial prudence.

Disposal Through Advertised Tender

Rule 198: Advertised Tender Process

1. Steps to Follow:
   • Prepare bidding documents.
   • Invite tenders for surplus goods.
   • Open and analyze bids.
   • Select the highest responsive bidder.
   • Collect payment and issue a release order for the goods.
2. Key Considerations:
   • Ensure transparency and fairness in the sale process, with broad publicity for the goods.
   • Include terms and conditions clearly in the bidding documents.
   • Provide potential bidders the opportunity to inspect goods before bidding.
3. Bid Security: Bidders must furnish a bid security, typically 10% of the assessed price, with specific amounts noted in the bidding documents.
4. Negotiation and Counter Offers: If the highest bid is unacceptable, negotiations may be held with that bidder. If negotiations fail, reasonable counter offers may be made to the next highest bidders.
5. Handling Defaulters: If the selected bidder fails to collect the goods, their bid security will be forfeited, and legal actions will be initiated.
6. Late Bids: Bids received after the deadline will not be considered.

Disposal Through Auction

Rule 199: Auction Process

1. Auctioning Goods: Goods can be auctioned directly or through approved auctioneers.
2. Transparency and Fairness: Similar principles apply as with advertised tenders to ensure transparency and competition. Publicity for the auction details must be thorough.
3. Auction Execution:
   • Clearly announce the condition and location of goods at the auction.
   • Immediately announce the acceptance or rejection of bids, with earnest money collected from successful bidders.
4. Auction Team Composition: The auction team must include an officer from the Internal Finance Wing.

Disposal at Scrap Value or Other Modes

Rule 200: Scrap Value Disposal

If a Ministry or Department cannot sell surplus or unserviceable items despite attempts through tender or auction, it may dispose of the items at scrap value with the competent authority’s approval. If unsold at scrap value, alternative disposal methods, including eco-friendly destruction, may be employed.

Sale Account and Write-Off Procedures

Rule 201: Sale Account

A sale account for disposed goods should be prepared using Form GFR-18, signed by the supervising officer.

Rule 202: Write-Off Powers

1. Recording Losses: Profits and losses due to various causes must be recorded and adjusted as necessary, with formal approval from the competent authority for losses.
2. Loss Analysis: Losses due to depreciation and other factors, such as theft or negligence, must be categorized and documented.
3. Extraordinary Losses: Losses arising from exceptional situations (e.g., natural disasters) must also be recorded appropriately.