Para 9.7.6 — GOODS_MANUAL

9.7.6 Closure of Contract 1. While making the final payment to the contractor and before releasing the PBG, it should be ensured that nothing is outstanding from the contractor because it would be difficult to retrieve such amounts after releasing the bank guarantee/final payment. Before the bank guarantee is released, a “no claim certificate” may be obtained from the contractor as per the format given in Annexure 24. 2. The contract shall stand closed upon a) Successfully perform all obligations by both parties, including completion of warrantee obligations and final payment. b) Termination and settlements after that, if any. 3. At least in large contracts [above Rs. 50 (Rupees Fifty) lakhs], it should be ensured that before the release of the bank guarantee (final payment, if there is no bank guarantee), the following reconciliations should be done across Departments involved in the execution of the contract: 4. Materials Reconciliation: The stores and/or the indentor should confirm that all materials ordered in the contract and paid for have been received in good condition and that there is no shortfall. A full reconciliation of all raw materials, parts, and assembly provided to the contractor should be done, including wastages and scrap/off-cuts returned. 5. Reconciliation with the User Department: Besides material reconciliation, the User Department should certify in writing that the following activities (wherever applicable) have been completed by the contractor, to the Department’s satisfaction, as per the contract: a) Achievement of performance standards of material/equipment supplied; b) Installation and commissioning;

c) Support service during the warranty period, which has ended on ______; d) Training of operators/maintenance staff; e) Return of all ID cards, gate passes, documents, drawings, protective gear, material, equipment, facilities, and assets loaned to the contractor; f) Support during annual maintenance contract (if it was part of the contract), which has ended on ______.

6. Payment Reconciliation: The indenting/materials management Departments may reconcile payments made to the contractor to ensure that there is no liability outstanding against the contractor on account of:

a) LD; b) Price reduction enforced on account of shortfall in performance of material/equipment; c) Variations/deviations from the scope of the contract; d) Overpayments/duplicate payments, if any; e) Services availed from Procuring Entity and vacation thereof such as accommodation, electricity, water, security, transport, cranes, and other machinery, and so on, f) Demurrage, insurance premiums or claims, customs duties, and so on; g) Material reconciliation; h) Price and exchange rate variations; i) Statutory duties paid on behalf of the contractor by Procuring Entity; j) Inspection charges or loss of material in testing.

7. On satisfactory reconciliation and against a “no claim certificate” from the contractor, the bank guarantee may be released, and its acknowledgement is taken from the contractor.

8. On completion of all activities against a contract, the purchase file should be preserved for a period of five years in the record room and then destroyed after the expiry of the applicable mandatory retention period with the approval of the CA. However, Procuring Entity, at its discretion, may retain important records for future reference.