The Finance Department, Puducherry on September 01, 2022, issued a notification regarding the revision of the notification on Discount Rate for Life Cycle Cost Based Procurement of Works/ Goods/Services, with reference to I.D. Note /O.M. No. 635/FD/F3/2021-22, dated November 22, 2021, of the Finance Department, Puducherry.
It has been advised that the Life Cycle Costing (LCC) may be considered in the procurement and other decisions relating to projects/works, and other proposals involving a time-dispersed series of payments and/or revenue recoveries/earnings.
It is instructed that in the procurement of capital goods with a useful life of more than or equal to five years, bids for the product shall be evaluated on an LCC basis. The LCC includes the cost of Annual Maintenance Contracts (AMC), Spares, etc. in addition to the upfront capital cost. Therein, a discount rate of 7% was specified for discounting all costs to be incurred throughout the course of the product's life cycle in order to determine its net present value (NPV).
[Notification No. 635/FD/F3/2022]
