Para 3.7.5 — MSO (Audit)
Original Rule Text
3.7.5 Standing contracts should be reviewed occasionally and if Audit has reason to believe that the rates accepted in those contracts are considerably higher than the rates prevailing at the time of review, such variations should be brought to the notice of the competent authority.
# Source Documents
What This Means
Standing contracts (long-term contracts at fixed rates) should be periodically reviewed by Audit. If the Audit Officer finds that the rates in these contracts are significantly higher than the current market rates, this discrepancy must be brought to the notice of the competent authority. This ensures the government does not continue paying above-market rates when prices have dropped.
This explanation was generated with AI assistance for educational purposes. Always refer to the official gazette notification for authoritative text.
Key Points
- 1Standing contracts should be reviewed occasionally by Audit
- 2Contract rates should be compared against prevailing market rates
- 3Significantly higher-than-market contract rates must be flagged
- 4The finding must be reported to the competent authority
- 5This prevents the government from paying above-market rates over extended periods
Practical Example
A government department has a standing contract for paper supplies at Rs 400 per ream, signed two years ago. During a review, the Audit Officer finds that the current market rate has dropped to Rs 280 per ream — a 30% difference. She brings this to the notice of the department head, recommending that the contract be renegotiated or a fresh tender invited to secure better rates and save public money.
This explanation was generated with AI assistance for educational purposes. Always refer to the official gazette notification for authoritative text.
Frequently Asked Questions
What is a 'standing contract'?▼
How often should standing contracts be reviewed?▼
What happens after the Audit Officer flags the issue?▼
This explanation was generated with AI assistance for educational purposes. Always refer to the official gazette notification for authoritative text.