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Para 7.7.3 - Contract Execution | KartavyaDesk

Goods Manual

Original Rule Text

7.7.4 Acknowledgement of Contract by Successful Bidder and Execution 1. After the successful bidder is notified that his bid has been accepted, he will be sent an agreement in duplicate for signature and return, incorporating all agreements between the parties. 2. The supplier should acknowledge and unconditionally accept, sign, date and return the agreement within 14 (fourteen) days from the date of issue of the contract in case of OTE and 28 (twenty-eight) days in case of GTE. Such acknowledgements may not be required in low-value contracts below Rupees two and a half Lakh or when the bidder’s offer has been accepted in its entirety without any modifications. While acknowledging the contract, the supplier may raise issues and/or ask for modifications against some entries in the contract; such aspects shall be immediately investigated for necessary action, and thereafter, the supplier’s unconditional acceptance of the contract must be obtained. If both parties (Procuring Entity and the supplier) simultaneously sign the contract across the table, further acknowledgement from the supplier is not required. It should also be made known to the successful bidder that in case he does not furnish the required performance security or does not sign the contract within the stipulated target dates, such non-compliance will constitute sufficient ground for punitive actions against it, as mentioned in para 7.6.2-3 above. The procuring Entity may also consider getting the contract digitally signed. 3. All contracts shall be signed and entered into after receipt and verification of the requisite performance security by an authority empowered to do so by or under the orders of the President of India in terms of Article 299 (1) of the Constitution of India. The words “for and on behalf of the President of India” should follow the designation appended below the signature of the officer authorised on this behalf. The various classes of contracts and assurances of property, which different authorities may execute, are specified in the DFPR. No contract on behalf of an organisation or Procuring Entity should be entered into by any authority which has not been empowered to do so under the orders of the Government.

What This Means

Para 7.7.3 of the Manual for Procurement of Goods, 2017 outlines the process of acknowledging and executing a contract after a bidder wins a tender. Basically, once a supplier's bid is accepted, the government agency sends them a contract to sign and return. This confirms that both parties agree to the terms. The supplier has a limited time to do this – 14 days for Open Tender Enquiries (OTE) and 28 days for Global Tender Enquiries (GTE), although this acknowledgement isn't always needed for small contracts (under ₹2.5 Lakhs) or when the original bid is accepted without changes.

If the supplier has concerns or wants to suggest changes to the contract, they can raise these issues while acknowledging it. The government agency must then investigate these concerns and take appropriate action before getting the supplier's final, unconditional acceptance. The rule also emphasizes the importance of performance security and warns that failure to provide it or sign the contract on time can lead to penalties. Finally, all contracts must be signed after the performance security is verified, and by an authorized official acting on behalf of the President of India, as per Article 299(1) of the Constitution.

This rule affects both government employees involved in procurement and suppliers bidding for government contracts. It ensures that contracts are properly acknowledged, executed, and legally sound, protecting the interests of both the government and the supplier.

This explanation was generated with AI assistance for educational purposes. Always refer to the official gazette notification for authoritative text.

Key Points

  • •Successful bidders must acknowledge and return the contract within 14 days (OTE) or 28 days (GTE).
  • •Acknowledgement may not be required for low-value contracts (under ₹2.5 Lakhs) or when the bid is accepted without modifications.
  • •Suppliers can raise issues or suggest modifications during acknowledgement, which the procuring entity must address.
  • •Failure to furnish performance security or sign the contract within the stipulated time can result in punitive actions.
  • •Contracts must be signed by an authorized official on behalf of the President of India after verification of performance security.

Practical Example

The Ministry of Textiles issues a tender for the supply of cotton bales worth ₹50 Lakhs. M/s. Cotton King wins the tender. The Ministry sends M/s. Cotton King a contract to sign. M/s. Cotton King notices a discrepancy in the delivery schedule mentioned in the contract compared to what was discussed during the bid. They raise this issue while acknowledging the contract within the 28-day GTE deadline. The Ministry investigates the discrepancy, corrects the contract, and then receives M/s. Cotton King's unconditional acceptance. M/s. Cotton King then provides the required performance security, which is verified by the designated officer, Mr. Sharma. Mr. Sharma, authorized to sign contracts on behalf of the President of India, signs the contract, ensuring it is legally binding.

This explanation was generated with AI assistance for educational purposes. Always refer to the official gazette notification for authoritative text.

Frequently Asked Questions

What happens if the supplier doesn't acknowledge the contract within the stipulated time?▼
Failure to acknowledge and sign the contract within the given timeframe (14 days for OTE, 28 days for GTE) can lead to punitive actions, as outlined in para 7.6.2-3 of the manual. This could include forfeiture of earnest money deposit or blacklisting.
Can a supplier suggest changes to the contract after it's been issued?▼
Yes, the supplier can raise issues or suggest modifications while acknowledging the contract. The procuring entity is then obligated to investigate these concerns and take appropriate action before obtaining the supplier's unconditional acceptance.
Who is authorized to sign the contract on behalf of the President of India?▼
The authority to sign contracts on behalf of the President of India is delegated to specific officers as per the Delegation of Financial Powers Rules (DFPR). The officer must be empowered to do so by or under the orders of the President of India in terms of Article 299 (1) of the Constitution of India.
Is digital signing of contracts allowed?▼
Yes, the procuring entity may consider getting the contract digitally signed, which can streamline the process and improve efficiency.
What is OTE and GTE?▼
OTE stands for Open Tender Enquiry, and GTE stands for Global Tender Enquiry. The acknowledgement timelines differ between the two.

This explanation was generated with AI assistance for educational purposes. Always refer to the official gazette notification for authoritative text.

Test Your Knowledge

Question 1 of 3

According to Para 7.7.3 of the Manual for Procurement of Goods, 2017, what is the timeframe within which a successful bidder in an Open Tender Enquiry (OTE) must acknowledge, sign, and return the contract agreement?

Related Rules

Para 9.4Manual for Procurement of Goods, 2024 - Para 9.4 - Chapter 9Para 9.5.5Manual for Procurement of Goods, 2024 - Para 9.5.5 - Chapter 9Para 1.8.2Manual for Procurement of Goods, 2024 - Para 1.8.2 - Chapter 1Para 2.2.2Manual for Procurement of Goods, 2024 - Para 2.2.2 - Chapter 2Para 2.2Manual for Procurement of Goods, 2024 - Para 2.2 - Chapter 2

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