Para 2.16.22 — When checking contracts, agreements, tenders, and
Original Rule Text
2.16.22 PROCEDURAL INSTRUCTIONS FOR THE CHECK OF CONTRACTS AND AGREEMENTS AND CONTRACTOR'S BILLS
(i) Check of Contracts and Agreements, Tenders etc: The general checks to be exercised are indicated in the earlier paragraphs. Other checks are detailed below:
(a) that the particulars regarding quantity and rates are furnished and the prices stipulated are firm. Particulars of the contracts providing the price variation clause or provisional rates, should be carefully examined;
(b) that there is no omission of any important clause e.g. date and place of delivery, dispatch instructions, name of consignee, etc;
(c) that it is signed by an authority which is competent to enter into the contract. In case the signature on the order is that of an authority who is not competent to enter into the contract, a certificate to the effect that the purchase has been approved by the competent authority, is recorded thereon mentioning also the designation of the authority whose approval has been obtained. Note- In the copies of Acceptances of Tender, Supply Orders etc; all the sheets containing rates, prices and other important conditions should be signed in ink by the purchasing officer concerned.
(d) the provision for the payment of tax, wherever applicable, should be checked with reference to the instructions issued by the Government from time to time. Vague provisions, such as, " tax will be paid, if legally leviable" should be objected to and the contracting officers asked to state in definite terms whether tax, etc. are payable and if so at what rate and on what amount; and
that the contract has been signed for and on behalf of the President of India.
(ii) All contracts and agreements required to be checked should be reviewed by the AAO and submitted to the Pay and Accounts Officer for further review. Before checking purchase bills, the Pay and Accounts Officer should satisfy himself that the sanctions and agreements were properly checked and bear suitable endorsement of check and review.
Cases of the type mentioned below may be scrutinised carefully, wherever needed:
(a) inclusion of any new item of expenditure not originally contemplated in a contract;
(b) extension in the date of delivery in contract where higher prices have been allowed on account of early delivery of stores;
(c) Compensation allowed to firms in respect of contracts;
(d) any extraordinary stipulation in a contract even if it is sanctioned by Government etc;
(e) any special and apparently objectionable procedure of purchase, inspection and payment sanctioned by Government etc;
(f) all contracts on cost plus profit basis;
(g) all contracts with private firms to act as Government stockists; and
(h) all sanctions to ex-gratia payments.
2.16.23 Execution of major/minor/repair/original works through Letter of Authorisation/GeM/Tender etc.
The following points should be kept in mind: i. The execution of major/minor/ repair/ original works should be executed as per provision contained in Chapter 5 of GFR-2017 and in accordance with financial powers delegated to Head of Department/Head of Office etc. concurrence of IFD and approval of Secretary is required beyond the power delegated to Head of Department for execution of Major/Minor/Repair works etc. ii. The expenditure for major/minor/repair/original works etc. should be booked in accordance with amendment to Rule 8 of DFPR issued by MoF, DoE vide their notification dated16.12.2022. iii. Name of PAO & DDO should be clearly mentioned in the sanction order proposed to be issued for Letter of Authorization (LoA) in favour of CPWD along with correct object head of account to avoid any adverse comments of audit on misclassification of expenditure at later stage. iv. In case the work is executed other than CPWD. the work order/contract indicating payment terms and other terms and conditions of contract issued to the agency should be provided with bill. Final payment should be made on the basis of the certificate that the work has been executed as per specifications laid down in Contract/Agreement/work order. (Rule 139
(vii) GFR,2017).
What This Means
When checking contracts, agreements, tenders, and contractor bills, the PAO must exercise detailed scrutiny beyond the general checks. This includes verifying that quantity and rate particulars are firm, that all essential clauses (delivery date, dispatch instructions, consignee name, penalty clauses, warranty terms) are present, and that no important terms have been omitted. For contractor bills, the PAO checks that the quantities and rates match the contract, that advances (if any) are properly adjusted, and that security deposits and performance guarantees are in order.
This explanation was generated with AI assistance for educational purposes. Always refer to the official gazette notification for authoritative text.
Key Points
- 1PAO must verify that contract prices are firm and any price variation clauses are carefully examined
- 2Essential clauses must be present: delivery date, dispatch instructions, consignee, penalties, warranty
- 3Contractor bill quantities and rates must match the contract terms
- 4Advances paid to contractors must be properly adjusted in subsequent bills
- 5Security deposits and performance guarantees must be verified and tracked
Practical Example
A contractor submits a running account bill for Rs.80 lakh for construction work at a government office. The PAO checks the bill against the original contract: verifying that the rates charged match the scheduled rates, that the quantities of work done are certified by the competent authority, that a 10% mobilization advance paid earlier is being recovered proportionally, and that a 5% security deposit has been withheld. The PAO also confirms that the contractor's performance guarantee is valid and has not expired.
This explanation was generated with AI assistance for educational purposes. Always refer to the official gazette notification for authoritative text.
Cross References
Frequently Asked Questions
What specific clauses should the PAO look for in contracts?▼
How are advances to contractors handled?▼
What is the PAO's role regarding performance guarantees?▼
This explanation was generated with AI assistance for educational purposes. Always refer to the official gazette notification for authoritative text.