Para 9.2.2 — GOODS_MANUAL

2. Conditions Governing Operation of Option Clause: Additional demands should be available for coverage, and over-provisioning may be avoided by keeping informed the officers concerned with provisioning/tender evaluation for the next cycle of procurement. The following points must be kept in mind while operating the option clause:

a) If the quantity has been increased under the option clause, the negative option clause should not be invoked thereafter, or vice a versa. b) In case of a decrease in the ordered quantity, it would be fair to allow the firm to supply work-in-progress or goods already put up for inspection; c) There should be no declining trend in the price of the stores as evidenced by the fact that no order has since been placed at lower rates and no tender has been opened since the time offers have been received at lower rates – even if not finalised; d) If the option clause exists during the provisioning of the next cycle and tender evaluation in the next cycle of procurement shows an increasing price trend, the application of the option clause must be positively considered. The contract management authority must also keep an eye on delivery against the contract. If other conditions are satisfied, the option clause must be exercised; e) The option clause is normally exercised after receipt of 50 (fifty) per cent quantity. If the delivery period is going to expire and other conditions are fulfilled, it can be exercised even earlier; f) The option clause shall be exercised during the currency of the contract so that the contractor has reasonable time/notice for executing such an increase. It can be exercised even if the quantity of the original ordered order is completed before the original last date of delivery. If not already agreed upon, the delivery period shall be fixed for the additional quantity on the lines of the delivery period in the original order. This will satisfy the requirement of giving reasonable notice to the supplier to exercise the option clause; g) This provision can also be exercised in case of PAC/single supplier OEM cases. h) However, where parallel contracts on multiple suppliers are available, care should be taken in exercising the option clause so that the original tender decision of splitting quantities and differential pricing is not upset or vitiated. Other things being equal, the supplier with the lower rate should first be considered for the option quantity.

9.2.2 Option Clause 1. Under this clause, the purchaser retains the right to place orders for an additional quantity up to a specified percentage of the originally contracted quantity at the same rate and terms of the contract during the currency of the contract. This clause and percentage should be part of the Tender Document and the contract and ideally should not exceed 25-30% (Please refer to para 7.6.4 above). Approval should be obtained from the CA (who originally approved the tender decision) to exercise the option clause based on the value of the contract and the increased quantity. In case the recalculated value of the contract goes beyond the delegation of powers of the original CA, approval of the CA for the enhanced value may be taken.