Para 9.7.5 - Subcontracting & IPR | KartavyaDesk
Original Rule Text
4. 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 of all subcontracts awarded under the contract if not already stipulated in the contract, in its original bid or later. Such notification shall not relieve the contractor from any of its liability or obligation under the terms and conditions of the contract. The subcontract shall only be for items bought out and incidental works/services. Subcontracts must comply with and should not circumvent the 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. 5. 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. They 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 the third party’s IPR. The Contractor (and its employees and subcontractors) shall maintain confidentiality and secrecy of the Procuring Entity’s information provided to it (or that it comes across during execution of the Contract).
What This Means
Para 9.7.5 of the Manual for Procurement of Goods, 2017, focuses on preventing contractors from outsourcing their entire contract or misusing intellectual property. Essentially, it states that a contractor awarded a government contract cannot simply pass it on to another company (sub-contract) without the procuring entity's (the government department) written permission. This is to ensure the government gets the quality and expertise they initially contracted for. The rule also protects the government's intellectual property rights related to the project's deliverables.
Furthermore, if sub-contracting is allowed, it should only be for specific, bought-out items or minor services, not the core work. The original contractor remains fully responsible even if they use subcontractors. The rule also emphasizes the importance of protecting the government's confidential information and intellectual property. The contractor must hand over all project-related documents and software upon completion and must protect the government from any intellectual property infringement claims.
This rule affects all government departments involved in procuring goods and all contractors bidding for or executing government contracts. It aims to maintain control over project execution, ensure accountability, and safeguard government assets and information.
This explanation was generated with AI assistance for educational purposes. Always refer to the official gazette notification for authoritative text.
Key Points
- •Contractors cannot assign or sub-contract the entire contract without prior written consent from the Procuring Entity (Government Department).
- •Sub-contracting, if permitted, should only be for bought-out items or incidental services, not the core work.
- •The original contractor remains fully liable and responsible for the entire contract, even with approved sub-contractors.
- •All deliverables and intellectual property created under the contract belong to the Procuring Entity and must be protected.
- •Contractors must maintain confidentiality of the Procuring Entity's information.
Practical Example
The Ministry of Electronics and Information Technology (MeitY) awards a contract to 'Tech Solutions Pvt. Ltd.' for developing a new citizen portal for ₹50 Lakhs. Para 9.7.5 applies here. Tech Solutions cannot simply outsource the entire portal development to 'Web Developers Inc.' without MeitY's written consent. If Tech Solutions needs to use Web Developers Inc. for a specific module like payment gateway integration (a bought-out item), they must inform MeitY. Tech Solutions remains responsible for the entire portal's functionality and security, even with Web Developers Inc.'s involvement. Upon completion, all source code and documentation belong to MeitY, and Tech Solutions must hand them over, ensuring no unauthorized copies are retained.
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 a contractor sub-contracts without permission?▼
Does informing the Procuring Entity about sub-contracts relieve the contractor of responsibility?▼
What kind of items can be sub-contracted?▼
Who owns the intellectual property created during the contract?▼
What are the implications of breaching confidentiality?▼
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 9.7.5 of the Manual for Procurement of Goods, 2017, under what condition can a contractor sub-let a portion of a government contract?
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