Proprietary Article Certificate

4th December, 2020 - 4:33 am Categories: Consumer Law Intellectual Property 0 Comments

Proprietary Article Certificate (PAC) is obtained after getting necessary approvals from the competent authorities (as per General Financial Rules-2017) if the buyer wants to buy any specific Original Equipment Manufacturer (OEM)[1] product.

PAC should be operated on manufacturer only. There are occasions when PAC products cannot be procured from OEM and have to be procured from another vendor as per sample, in the absence of detailed specifications or drawing. For such items, the supplier prepares detailed specification as well as drawing. Efforts could be taken to indigenize high value items as import substitute and in such cases, specifications including the drawing and other details could be formulated by the user department. Specification should be available (inspection can also be done) to ensure conformity with required quality standard of item being supplied.[2]

General-purpose items have easily available substitutes in the market and hence do not fall under the category of proprietary items. In addition, procurement of such general items from single agency/ manufacturer through PAC buying may lead to violation of Rule 149 (ii) and Rule 166 of GFR 2017.[3]

Obtaining a PAC
Rule 166 of the GFR 2017[4]– Single Tender Enquiry.

Procurement from a single source may be resorted to in the following circumstances:

(i) It is in the knowledge of the user department that only a particular firm is the manufacturer of the required goods

(ii) In a case of emergency, the required goods are necessarily to be purchased from a particular source and the reason for such decision is to be recorded and approval of competent authority obtained.

(iii) For standardisation of machinery or spare parts to be compatible to the existing sets of equipment (on the advice of a competent technical expert and approved by the competent authority), the required item is to be purchased only from a selected firm.

Proprietary Article Certificate in the following form is to be provided by the Ministry/Department before procuring the goods from a single source under the provision of sub Rule 166 (i) and 166 (iii) as applicable.

(i) The indented goods are manufactured by M/s ……………………

(ii) No other make or model is acceptable for the following reasons :…………………………

(iii) Concurrence of finance wing to the proposal vide: ………………..

(iv) Approval of the competent authority vide

Signature with date and                                                          Signature, Head of the Department

designation of Indenting Officer                                            With Office Seal

Date:
Availability of Specifications:
Industrial specifications of item available: Indenter must indicate general parameters (dimensional, performance, etc.) Such specifications must be broad enough to permit participation of suppliers and adequate competition must not be obviated.

Specifications not available: Firm’s certificate of quality acceptable.
Pricing Parameters
Proprietary Article Certificate (PAC) Buying (as per General terms and conditions on GeM 3.0 (Version 1.12)):

While making procurement under PAC Buying on GeM, Buyer has to comply with following conditions:

• In case a Govt. Buyer on GeM wants to make procurement on proprietary basis on the GeM Portal after obtaining the requisite approvals/PAC certificate from their competent authority as per Rule 166 of GFR-2017, the Buyer can use PAC filter provided on GeM for selecting a specific model/ make available from a particular GeM Seller.
• The Seller’s price on the Portal is just their offer prices and the proper discovery of price generally happens through bidding/RA. Moreover, in PAC procurement irrespective of multiple listing by authorised sellers, the important issue of price control remaining with the OEM cannot be overlooked. Therefore, in case of all the PAC procurements, the Buyers will have to carry out extra due diligence in establishing the reasonableness of prices before placement of contract as per Para (vii) of Rule -149 of GFR-2017.
• Except for direct buying up to Rs. 25,000/- subject to establishing the reasonableness of price, the bidding will be mandatory for procurements above Rs. 25,000/-. As result of bidding, the response could be as under:

1. Only OEM is available or only single authorised seller is available.
2. OEM as well as multiple authorised Sellers are available.
3. Multiple authorised Sellers of the OEM are available.

• After bidding, under PAC buying, the Buyer may take decision with the approval of the competent authority to process the procurement subject to establishing the reasonableness of prices before placement of contract as per Para (vii) of Rule – 149 of GFR-2017

Author: Harsshita Pothiraj (intern), a 3rd Year student of University School of Law & Legal Studies (GGSIPU), New Delhi, and Sudhansu Sahoo, Legal Associate, at Khurana & Khurana, Advocates and IP Attorneys. In case of any queries please contact/write back to us at sudhanshu@khuranaandkhurana.com.

References:
^{[1] An OEM is basically a company that manufactures and produces products/equipment etc. that are used and/or marketed by another company on its end products. Original Equipment Manufacturer (OEM), 2022, https://corporatefinanceinstitute.com/resources/knowledge/other/original-equipment-manufacturer-oem/}

^{[2] Procurement- Purchase of Proprietary Items- Circular- Reg., Circular Date: 23/04/2013 https://www.imu.edu.in//images/Proprietary%20Items.pdf (Page No.2-3)}

^{[3] id}

^{[4] General Financial Rules, 2017 https://doe.gov.in/sites/default/files/GFR2017_0.pdf (Page No. 48)}