General Financial Rules, 2005

What it does

The General Financial Rules are a compilation of the rules of financial conduct for the Union government. They cover the management of public funds, the keeping of accounts, the grant of contracts, the procurement of goods and services, and the principles that officers apply when spending money. They are executive rules and not a statute. They draw their force from the executive power of the Union and bind the departments and officers they are addressed to.

The 2005 edition stood behind government contracts and procurement manuals for over a decade. The Defence Procurement Manual 2009 was, for instance, laid down in terms of Rule 135 of these Rules and came into force on 1 April 2009. The page is therefore a page about a superseded instrument: it is cited to explain where an older procedure came from and what it said at the time.

Who it binds

The Ministries and Departments of the Union Government and their attached and subordinate offices, and the officers who spend public money. A private contractor or supplier is not bound by the Rules, but the Rules shape the contract it is offered: the tender conditions, the form of security, the terms of payment and the rights of the department on delay. A contractor is bound by those through the contract and not directly by the Rules.

What has changed, and when

The General Financial Rules, 2017 replaced the 2005 Rules. A procurement manual or departmental order made under the 2005 Rules was issued by reference to rule numbers in that edition, and the numbering of the 2017 Rules is different, so a citation to a rule of 2005 cannot be carried across by number. The Defence Procurement Manual 2025, which replaced the 2009 Manual, was laid down in terms of Rule 142 of the 2017 Rules and came into force on 1 November 2025.

What turns on it in practice

The Rules matter in two ways to a business that supplies the government. The first is that an older contract, or a dispute about an older contract, may be read against the Rules in force when it was made. A supplier whose contract dates from the period of the 2005 Rules, or from a manual issued under them, will find the clauses on delay, security and damages framed by that regime. The second is that the successor instruments are still being rewritten. The Defence Procurement Manual 2025 is an example: the site's note on it records that the ceiling on liquidated damages for late delivery is now 5 per cent of the price, rising to 10 per cent only where the inexcusable delay exceeds one-fourth of the total delivery period, and that the rate remains 0.5 per cent a week.

The contracts and procurement practice area reads a government contract against three layers: the clause itself, the manual or order under which the department issued it, and the General Financial Rules that stand behind the manual. When the contract and the manual disagree, the order of precedence is a question the contract should answer, and the Rules supply the principle on which a court or tribunal will resolve a doubt about the department's powers. A contractor that cites a rule must cite the edition in force on the date of the contract.