Para 10.2.4 — CONSULT_MANUAL

2. Normally, the request for contract variation is prepared by the consultant or Consultancy firm and submitted to the Procuring Entity. However, these can also be initiated by the Procuring Entity, suo-moto. If the contractor does not raise objections within 14 days to any suo-moto modifications/ amendments made by the Procuring Entity, it shall be assumed that the contractor has consented to the amendment.

3. To take care of any change in the requirement during the contract period of IT Projects as well, there could be situations wherein variations in the scope of work becomes necessary. These situations should be dealt with objectivity and fairness and should not be considered to unduly push the vendor to undertake work or take risks which was not explicitly communicated in the tender document. At the same time, the contractor should not consider this as an opportunity to unduly charge the Procuring Entity due to lack of available options. Generally, the value of the change request should not be more than plus/ minus 15 (Fifteen) per cent. The RfP document should contain detailed mechanism through which such change requests would be carried out. A ‘Change Control Board/ Committee’ may be constituted by the Procuring Entity including experts from academics and industry to consider and approve the proposed change requests. The decisions of this board/ committee (both technical as well as financial) should be considered as final. Wherever variation is done through such a committee, all the members should sign the minutes of the recommendations.

4. No amendment shall be binding on the Procuring Entity unless and until the same is written and signed/ authorised by a competent authority.

5. Any amendment to the contract may have, inter alia, financial/ technical/ legal implications. The indentor may be consulted regarding the technical implications. Associated/ integrated Finance’s concurrence should be obtained before issuing any amendment that has financial implications/ repercussions. Further, if considered necessary, legal opinion may also be sought.

10.2.4 Issuing Contract Amendments/ Variations 1. The formal method of making and documenting a change in the Consultancy Services contract is through a contract variation. There are few Consultancy Services contracts of any type that do not require a contract variation at one time or another. Contract variations are issued when there are agreed-upon changes in the scope of work, personnel inputs, costs, timing of the submission of reports, or out-of-pocket expenditures. Normally, these relate to changes that have a cost implication, but when there is a significant change in the timing of an activity or a particular output, these should also be recorded through a contract variation. No amendment to the contract should be made that can lead to a vitiation of the original tender decision or bestow an undue advantage on the contractor. Where it becomes necessary/ inescapable, any modification shall be carried out with the prior approval of the CA.

10.2.5 Obligations Control: Deployment of Resources 1. Deployment of Resources and Penalty for Absence: a) Consultant must deploy the contracted resources, maintaining adequate records of attendance and audit trails. The Consultant shall be liable for all kinds of dues payable in respect of all personnel provided under the contract and the Procuring Entity shall not be liable for any dues for availing the services of the personnel. The Consultant should ensure that persons to be deployed are not alcoholic, drug addict and not indulge in any activity prejudicial to the interest of the Procuring Entity. b) Penalty for absence: In the case of absence (apart from allowed leaves) of a resource during project period, no payment will be made for the days a resource is absent (Daily wage will be calculated by dividing man month rate by number of working days in that month). In addition, a penalty (say 5% of the daily wage) per working day per resource will be levied on such absence. Fraction of a day in reckoning period in supplies shall be eliminated if it is less than half a day. Penalty would be deducted from the applicable payments.

2. Substitution of key personnel during the execution of a consultancy contract is a common type of variation that may occur due to unavoidable circumstances such as resignation, illness, accident, inadequate performance, or personality conflicts. Given the importance of key personnel in ensuring the quality of consultancy services, the following provisions and guidelines should be incorporated into the contract and tender documents to manage such substitutions effectively:

a) Conditions for Substitution: Substitution of key personnel should only be allowed in compelling or unavoidable situations. i) The replacement should be of equivalent or higher qualifications and experience compared to the person being replaced, to ensure the continued quality of service. ii) Any replacement should be subject to the procuring entity's approval, ensuring satisfaction with the substitute’s credentials. b) Limitations on Substitutions: Substitution should typically be limited to no more than 30% of the total key personnel deployed under the contract. This is to maintain the overall integrity and continuity of the project. The remuneration for replacements should not exceed the amount agreed upon for the original personnel. A system of remuneration reduction should be introduced for substitutions, with decreasing payment structures for repeated replacements: For the first 10% of replacements, a 5% reduction in remuneration may be applied. i) For the next 10%, a 10% reduction may be applied. ii) For the third 10%, a 15% reduction may be applied. iii) These reductions would apply from the date of replacement until the contract's completion. If necessary, the procuring entity may develop a different but similar remuneration adjustment system, reflecting these principles, to suit specific contract needs. c) Cost Implications: The consultant should bear all costs arising from or incidental to the replacement, such as travel expenses for the substitute expert. d) Monitoring Substitution and Deployment: To ensure compliance, public authorities may implement IT-enabled systems at the deployment site to monitor the presence of key personnel as per the deployment schedule.

3. Unsatisfactory Performance by Personnel: Poor performance may involve one or more particular staff from the consultant’s team, or the whole team or non-participation by the main qualifying consortium/ JV member. Based on the provisions of the contract, the Procuring Entity will advise the consultant to take the necessary measures to address the situation. Poor performance should not be tolerated; therefore, the consultant should act quickly to comply with a reasonable request to improve the performance of the team or to replace any particular staff member who is not performing adequately. If the consultant fails to take adequate corrective actions, the Procuring Entity may take up the issue with the top management of the consultant and issue notice to rectify the situation and finally consider terminating the contract.

4. Changes in Constitution/ Financial Stakes: The Contractor must proactively keep the Procuring Entity informed of any changes in its constitution/ financial stakes/ responsibilities during the execution of the contract, since that may vitiate the legal basis of the Contract. Where the contractor is a partnership firm, the following restrictions shall apply to changes in the constitution during the execution of the contract:

a) a new partner shall not be introduced in the firm except with the previous consent in writing of the Procuring Entity, which shall be granted only upon execution of a written undertaking by the new partner to perform the contract and accept all liabilities incurred by the firm under the contract before the date of such undertaking. b) On the death or retirement of any partner of the contractor firm before the complete performance of the contract, the Procuring Entity may, at his option, terminate the contract for default as per the Contract and avail any or all remedies thereunder. c) If the contract is not terminated as provided in Sub-para

(b) above: i) the remaining partners should give a written undertaking to perform the contract and accept all liabilities (including those of the expired/ retired partner) incurred by the firm under the contract before the date of such an event. ii) notwithstanding the retirement of a partner from the firm, that partner shall continue to be liable under the contract for acts of the firm until a copy of the public notice given by him under Section 32 of the Partnership Act, has been sent by him to the Procuring Entity in writing or electronically.

4. Obligation to Maintain Capability - Key Personnel, Critical Equipment: The contract is awarded to the contractor based on specific eligibility and qualification criteria. The Contractor is contractually bound to maintain such eligibility and qualifications during the execution of the contract. Any change which would vitiate the basis on which the contract was awarded to the contractor should be pro-actively brought to the notice of the Procuring Entity within 7 days of it coming to the Contractor’s knowledge. These changes include but are not restricted to change regarding any declarations in this regard made by it in its bid. Contractor should also indicate remedial measures he is taking in this regard, and how he proposes to ensure smooth execution of contract.

5. Avoiding Conflict of interest: Neither the contractor nor its Subcontractors nor the Personnel shall engage, either directly or indirectly, during the term of this Contract, any business or professional activities in India that would conflict with the activities assigned to them under this Contract and after the termination of this Contract, such other activities as may be stipulated in the contract.

6. No Assignment/ Sub-contracting: The contractor shall not, save with the previous consent in writing of the Procuring Entity, sublet, transfer, or assign the contract or any part thereof or interest therein or benefit or advantage thereof, in any manner whatsoever. He shall notify the Procuring Entity in writing, all sub-contracts awarded under the contract, if not already stipulated in the contract, in its original bid or later. Such notification shall not relieve the contract from any of its liability, or obligation under the terms and conditions of the contract. Sub-contracts shall be only for bought out items and incidental Works/ Services. Sub-contracts must comply with and should not circumvent Contractor’s compliance with its obligations. If the Contractor sublets or assigns the contract or any part thereof without such permission, the Procuring Entity shall be entitled, and it shall be lawful on his part, to treat it as a breach of contract and avail any or all remedies thereunder.

7. Indemnifying Procuring Entity regarding Intellectual Property (IPR): All deliverables, outputs, plans, drawings, specifications, designs, reports, and other documents and software submitted by the contractor under this Contract shall become and remain the property of the Procuring Entity and subject to laws of copyright and must not be shared with third parties or reproduced, whether in whole or part, without the Procuring Entity’s prior written consent. The contractor shall, not later than upon termination or expiration of this Contract, deliver all such documents and software to the Procuring Entity, together with a detailed inventory thereof. The contractor shall indemnify the Procuring Entity against any breach of third party’s IPR. The Contractor (and its allied firms) shall maintain confidentiality and secrecy of Procuring Entity’s information provided to it (or that it comes across during execution of Contract).

d) The performance security should be refunded to the contractor without interest, after he duly performs and completes the contract in all respects but not later than 60

8. Performance Security: a) The Contractor must maintain the Performance Security of the required amount in specified format during the currency of the Contract. In the event of any amendment issued to the contract, the contractor shall furnish suitably amended value and validity of the Performance Security in terms of the amended contract within twenty-eight days of issue of the amendment. b) If the contractor during the currency of the Contract fails to maintain the requisite Performance Security, it shall be lawful for the Procuring Entity at its discretion at its discretion to either terminate the Contract for breach of contract and avail any or all contractual remedies, or without terminating the Contract, recover from the contractor the amount of such security deposit by deducting the amount from the pending bills of the contractor under the contract or any other contract with the Procuring Entity or the Government or any person contracting through the Procuring Organisation or otherwise. c) The Procuring Entity shall be entitled, and it shall be lawful on his part, to deduct from the performance securities or to forfeit the said security in whole or in part in the event of: i) any default, or failure or neglect on the part of the contractor in the fulfilment or performance in all respect of the contract under reference or any other contract with the Procuring Organisation or any part thereof; ii) for any loss or damage recoverable from the contractor which the Procuring Entity may suffer or be put to for reasons of or due to above defaults/ failures/ neglect; iii) and in either of the events aforesaid to call upon the contractor to maintain the said performance security at its original limit by making further deposits, provided further that the Procuring Entity shall be entitled, and it shall be lawful on his part, to recover any such claim from any sum then due or which at any time after that may become due to the contractor for similar reasons.

10.2.6 Incentives for Excellence in Contract Execution Procuring Entities are encouraged to explore strategies that may incentivize contractors, service providers and consultants, such as offering bonuses, improved ratings, or recognition for early, timely, and quality completion of projects.

10.2.7 Safeguards for Handing over Procuring Entity Materials/ Equipment to Contractors For performance of certain contracts, Procuring Entity may have to loan stores, drawings, documents, equipment, and assets (such as accommodation, identity cards and gate passes, and so on) to the contractor. In certain situations, the contractor may also be supplied electricity, water etc. on payment/ hire basis. Whenever stores or prototypes or subassemblies are required to be issued to the firm/ contractor, these should be issued against an appropriate bank guarantee. In addition to the bank guarantee, appropriate insurance may be asked for if it is considered necessary. The Contractor shall use such property for the execution of the contract and no other purpose whatsoever. These assets shall remain the property of the Procuring Entity, and the contractor shall take all reasonable care of all such assets. The contractor shall be responsible for all damage or loss from whatever cause caused while such assets are possessed or controlled by the contractor, staff, workers, or agents. As a measure of transparency, the possibility of provision of such resources by Procuring Entity should have been announced in the tender document/ RfP or at least requested by the contractor in the tender and written in the contract. Before the final payment or release of PBG/ SD, a certificate may be taken from the concerned Department that the contractor has returned all documents, drawings, protective gear, material, equipment, facilities, and assets loaned, including all ID cards and gate passes, and so on, in good condition. Further, it should be certified that payment from the contractor has been received for usage of electricity, water, crane, accommodation, weighing facility, and so on. For low value items of less than Rs. 1,00,000 (Rupees One Lakh), this stipulation of the bank guarantee may be waived and, if feasible, an indemnity bond may be taken.

(sixty) days of completion of all such obligations including the warranty under the contract. No claim shall lie against the Procuring Entity regarding interest on cash deposits or Government Securities or depreciation thereof. Return of Bid/ Performance Securities should be monitored by the senior officers and delays should be avoided. If feasible, the details of these securities may be listed in the eProcurement Portal/ website of the Procuring entity, to make the process transparent and visible.