Para 9.4.3 — NONCONSULT_MANUAL

9.4.4. Performance Notice A situation may arise where the services has not been completed within the stipulated period due to negligence/ fault of the service provider; however, the contractor has not made any request for extension of the delivery period, but the contracted services are still required by the purchaser and the purchaser does not want to cancel the contract at that stage. In such a case, a performance notice (also known as notice-cum-extension letter) may be issued to the contractor by suitably extending the delivery date and by imposing LD with denial clauses, and so on, along identical lines as in para 9.4.3 above. The contractor’s acceptance of the performance notice and further action thereof should also be processed in the same manner as mentioned above. The text of the performance notice will be on similar lines to the Annexure 19.

9.4.5. Denial Clause If delay in services is attributable to the contractor, the procuring entity should protect itself against extra expenditure during the extended period by stipulating a denial clause (over and above levy of LD) in the letter informing the contractor of extension of the delivery period. In the denial clause (applicable for delays attributable to contractor), any increase in statutory duties and/ or upward rise in prices due to the PVC clause and/ or any adverse fluctuation in foreign exchange are to be borne by the contractor during the extended delivery period, while the purchaser reserves his right to get any benefit of a downward revisions in statutory duties, PVC, and foreign exchange rate. Thus, in cases of delays attributable to contractor, PVC, other variations and foreign exchange clauses operate only during the original delivery period of the services. The format of the denial clause is available in Annexure 18.

7. When it is decided to extend the delivery period subject to recovery of LD for delay in services, contractors must be given a warning to this effect in writing at the time of granting extensions. It is not correct to grant extensions without any mention of the LD if it is proposed to recover such charges eventually. It is also not correct to grant an extension of the delivery period by merely stating that the extension is granted “without prejudice to the rights of the purchaser under the terms and conditions of the contract” as this would mean that all the options given in the conditions of the contract would be available to the purchaser on expiry of the extended delivery period and would not amount to exercise of the option to recover LD. To take care of complex legalities brought out above, extension of the delivery period when granted should only be done in writing in the laid down format given in Annexure 18.

8. Organisations may put in place a graded authority structure whereby extension of time for completion of contract, beyond a specified threshold value of contract, may be granted by the next higher authority.

9.4.3. Extension or Refixation of Delivery 1. If at any time during the currency of the contract, the service provider encounters conditions hindering timely delivery of services, he shall promptly inform the concerned officer in writing. He should mention its likely duration and make a request for extension of the schedule accordingly. On receiving the contractor’s communication, the procuring entity shall examine whether the delay is attributable to the contractor or not (Please refer to para 9.4.2 above). 2. Refixation of Delivery: In case the delay is not attributable to the service provider (or in case of Force Majeure) the proposal (refer to Annexure 17) and, on approval from the CA, may agree to re-fix delivery period (i.e. a fresh delivery period, treated like original delivery period), which is arrived at by recasting the original contractual delivery period after taking care of the lost period for which the service provider was not responsible, without LD and without the denial clause (as defined in Para 9.4.5 below), for completion of the contractor’s contractual obligations. 3. Extension of Delivery: In case the delay is attributable (fully or partly) to the service provider the proposal (refer to Annexure 17) and, on approval from the CA, may agree to extend the delivery schedule, with LD and with the denial clause (as defined in Para 9.4.5, 9.4.6 and 9.4.7 below), for completion of the contractor’s contractual obligations, provided: a) That a higher rate in the original tender was not accepted against other lower quotations in consideration of the earlier delivery; and b) That there is no falling trend in prices for this item as evidenced from the fact that, in the intervening period, neither orders have been placed at rates lower than this contract, nor any tender been opened where such rates have been received even though the tender is not yet decided. In cases of certain raw material supplies, where prices are linked to the PVC, extension may be granted even in case of a falling trend in price indices, since the purchaser’s interests are protected by the price variation mechanism. However, in such cases it should be ensured that extensions are done with the denial clause. 4. Extension/ Refixation of time after its expiry: The power to extend the time for performance under Section 63 of the Indian Contract Act is not inherently limited to extensions granted before the original deadline. It can be exercised even after the stipulated time has passed, provided there is consent from both parties. The contract does not automatically terminate upon the expiry of the initial delivery date, if there is a shared intention to continue the contractual relationship and fulfil the obligations, albeit under a revised timeline. Therefore, such extension/ refixation of time can be done, even after expiry of original period, provided consent of the contractor is obtained. However, it is prudent to formalize the extension before the original delivery period expires, to avoid any arguments about the contract's validity or of extension of time after the initial deadline. 5. Extension/ Refixation of the delivery date amounts to amendment of the contract. Such an extension/ refixation can be only done with the consent of both parties (that is, the procuring entity and service provider). No extension/ refixation of the delivery date is to be granted suo motu unless the contractor specifically asks for it. However, in a few cases, it may be necessary to grant an extension/ refixation of the delivery period suo motu in the interest of the administration. In such cases, it is legally necessary to obtain clear acceptance of the extension/ refixation letter from the contractor. 6. No correspondence should be entered into with the contractor after expiry of the contract delivery period or towards the end of it, which has the legal effect of condoning the delay/ breach of contract. When it is necessary to obtain certain information regarding past services, it should be made clear that calling for such information is not intended to keep the contract alive and that it does not waive the breach and that it is without prejudice to the rights and remedies available to the purchaser under the terms of the contract. The last line of such a communication should therefore be: “This letter is issued without any prejudice to Procuring Entity’s rights and remedies under the terms and conditions of the subject contract and without any commitment or obligation.” A format for such correspondence is given in Annexure 19.