1. Introduction

1.1 Background: With the transfer of funds to the local bodies, the local governments in Kerala have become major purchasers of goods and services. Some of the areas of the devolved functions that have procurement roles for the Village Panchayats are given in Annexure 1.

1.2The Kerala Panchayat Raj Act 1994, the Kerala Municipality Act 1994, Kerala Store Purchase Rules and Kerala Panchayat Raj (execution of Public Works) Rules 1997 provide the legal foundation for the local government's procurement system and management. In addition, the LSO Department also takes a major advisory and regulatory role in defining and supervising the procurement management in the Local governments.

1.3 The Government of Kerala also allows beneficiary groups to undertake works at the LSG level the rationale being-to increase people's participation in the development process, to increase a sense of ownership and to introduce a platform for greater accountability between the LSGs and the community. Beneficiary groups like the Padasekharam Committee, Parent Teachers Association, Mother's Committee (for anganwadi works), do not have any financial limits for works to be undertaken in related sectors.

1.4 Howeverthere is a growing realization that there is a need for a Consolidated procurement manual.

1.5 The vision of responsible public procurement by Local Self Governments in Kerala captures this

spirit: Vision: Procurement in LSGs in Kerala

For Environmentally Responsible and Fiduciarily Accountable Procurement at LSGs

Contributing, through economic, efficient, transparent and fair procurement practices to the effective use of resources available to the LSG, as set out in the provision in Section 174(i) of the Panchayat Raj Act 1994 and Section 30 of the Municipality Act 1994

Delivering year on year efficiencies and savings by using whole life Costing methods to assess costs and benefits and by securing Commitment to effective, consistent and coordinated procurement from elected members and implementing officers of the LSG.

Promoting sustainable procurement by reducing procurement of new products and services with a significant environmental impact such as timber, Construction materials, energy, fuel, food, vehicles and equipment, stationery, clothing and cleaning products by ensuring the effective maintenance of goods and assets, and repairing or reusing existing products

Ensuring that the quality of procurement outcome is measured by improved ability of the LSG to deliver its services to the people, seeking feedback from general public

Raising awareness of the regulatory and fiduciary framework in which procurement operates and its potentially high risk with financial; legal; environmental; health & safety; fraudulent, corrupt, coercive, Collusive, obstructive practices; and reputation impacts

1.6 The Objective of this manual is to enable the Local Governmentagencies to procure goods, and services for use in the Local Governments and transferred institutions in the context of transfer of functions and functionaries.

2. Procurement Process

2.1 Goods and Services: Procurement is the process of obtaining goods and services (including consultancy) spanning the whole life costing of the asset or service contract. “Whole Life costing” is defined as being from the initial definition of the need through to the end of the useful life of the asset and its subsequent disposal or to the end of the service contract. In the Context of LSG procurement, the term "procurement” has a far broader meaning than that of purchasing, buying or commissioning. It is about securing services and products that best meet the needs of the citizens in its widest sense. This strategy provides a common framework within which all procurement by a LSG is to be managed.