Para 9.2.6 - Asset Protection | KartavyaDesk
Original Rule Text
fabrication, these should be issued against an appropriate bank guarantee. In addition to the bank guarantee, appropriate insurance may be asked for if it is considered necessary. For low value items of less than Rs. 1,00,000 (Rupees One Lakh), or for sending spares for repairs to the OEMs, this stipulation of the bank guarantee may be waived and, if feasible, an indemnity bond may be taken. The Contractor shall use such property for the execution of the contract and no other purpose whatsoever. These assets shall remain the property of the Procuring Entity, and the contractor shall take all reasonable care of all such assets. The contractor shall be responsible for all damage or loss from whatever cause caused while such assets are possessed or controlled by the contractor, staff, workers, or agents. As a measure of transparency, the possibility of provision of such resources by Procuring Entity should have been announced in the tender document or at least requested by the contractor in the tender and written in the contract. Before the final payment or release of PBG/SD, a certificate may be taken from the concerned Department that the contractor has returned all documents, drawings, protective gear, material, equipment, facilities, and assets loaned, including all ID cards and gate passes, and so on, in good condition. Further, it should be certified that payment from the contractor has been received for usage of electricity, water, crane, accommodation, weighing facility, and so on.
What This Means
Para 9.2.6 of the Manual for Procurement of Non-Consultancy Services deals with situations where the government (the 'Procuring Entity') provides assets like materials, equipment, or facilities to a contractor for completing a project. This rule aims to protect the government's property and ensure its safe return after the contract is finished. It essentially says that if the government is providing valuable resources to a contractor for fabrication or other purposes, the government should secure itself financially. This is usually done through a bank guarantee from the contractor, and sometimes insurance, to cover potential loss or damage to the assets. For smaller items (less than ₹1,00,000) or sending items for repair, the bank guarantee might be waived, and an indemnity bond could be used instead. The contractor is responsible for using the assets only for the project and taking good care of them.
This explanation was generated with AI assistance for educational purposes. Always refer to the official gazette notification for authoritative text.
Key Points
- •Bank guarantee is generally required when the Procuring Entity provides assets to the contractor.
- •Insurance may be required in addition to the bank guarantee, if deemed necessary.
- •Bank guarantee can be waived for low-value items (less than ₹1,00,000) or for sending spares for repairs; an indemnity bond may be taken instead.
- •Contractor is responsible for the care and any damage/loss of the Procuring Entity's assets.
- •A certificate confirming the return of all assets in good condition is required before final payment.
Practical Example
The Ministry of Rural Development hires 'Construction Corp' to build a rural road. As part of the contract, the Ministry provides Construction Corp with cement worth ₹5,00,000 for the road construction. According to Para 9.2.6, the Ministry should obtain a bank guarantee from Construction Corp for ₹5,00,000 to cover the cost of the cement. The Ministry also decides to take out an insurance policy covering the cement against theft or damage during the construction period. Before releasing the final payment to Construction Corp, the Ministry's engineer, Mr. Sharma, must certify that all the cement provided has been properly used in the road construction and that no cement is missing or damaged. Mr. Sharma also confirms that Construction Corp has paid for the electricity used from the Ministry's supply during the project.
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 bank guarantee, and why is it required?▼
When can the bank guarantee be waived?▼
What is an indemnity bond?▼
Who is responsible if the government-provided equipment is damaged during the contract?▼
What happens if the contractor doesn't return all the assets?▼
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 9.2.6 of the Manual for Procurement of Non-Consultancy Services, when a Procuring Entity provides assets to a contractor for fabrication, what financial security is generally required?
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