Para 9.6 - Payment Deductions | KartavyaDesk
Original Rule Text
a) Liquidated Damages (LD); b) Price reduction enforced on account of shortfall in performance of service quality/ 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; and j) Inspection charges or loss of material in testing.
What This Means
Para 9.6 of the Manual for Procurement of Non-Consultancy Services outlines various deductions that a government department (the 'Procuring Entity') can make from payments due to a contractor. Think of it as a list of potential reasons why the contractor might not receive the full amount agreed upon in the contract. These deductions are meant to ensure that the government gets what it paid for and to recover any losses incurred due to the contractor's actions or inactions.
This rule applies whenever there's a contract for non-consultancy services – meaning services that aren't advisory or intellectual in nature, like cleaning, security, or transportation. It affects both the government department making the payment and the contractor receiving it. The rule ensures transparency and accountability in financial transactions related to these contracts. It helps the Procuring Entity to recover costs associated with poor performance, errors, or deviations from the contract terms.
Essentially, Para 9.6 is a safeguard for the government, allowing it to adjust payments to reflect the actual value received and to recoup expenses caused by the contractor's shortcomings. It's important for government employees involved in procurement to understand these deductions to ensure fair and accurate payments, and for contractors to be aware of them to avoid unexpected reductions in their earnings.
This explanation was generated with AI assistance for educational purposes. Always refer to the official gazette notification for authoritative text.
Key Points
- •Para 9.6 lists permissible deductions from contractor payments for non-consultancy services.
- •Deductions can be made for liquidated damages, poor service quality, contract deviations, and overpayments.
- •The Procuring Entity can deduct costs for services provided to the contractor (e.g., accommodation, utilities).
- •Deductions can also cover demurrage, insurance, customs duties, and statutory duties paid on behalf of the contractor.
- •Material reconciliation issues, price/exchange rate variations, and inspection charges can also lead to deductions.
Practical Example
The Ministry of Jal Shakti hired 'CleanCo' for office cleaning services. The contract stipulated a daily cleaning schedule and a penalty of ₹5,000 per day for missed cleaning sessions (Liquidated Damages). In the first month, CleanCo missed cleaning on two days. Additionally, the ministry discovered an overpayment of ₹2,000 due to a clerical error. The ministry also provided CleanCo with temporary storage space, which, according to the contract, cost ₹1,000 per month. Therefore, the ministry deducted ₹10,000 (2 days x ₹5,000) for liquidated damages, ₹2,000 for the overpayment, and ₹1,000 for the storage space from CleanCo's monthly invoice. The final payment to CleanCo was reduced by ₹13,000 based on Para 9.6 of the procurement manual.
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 the contractor disputes a deduction made under Para 9.6?▼
Does Para 9.6 apply to consultancy services?▼
Can the Procuring Entity deduct amounts not explicitly listed in Para 9.6?▼
How should the Procuring Entity document deductions made under Para 9.6?▼
Is there a limit to the total amount that can be deducted under Para 9.6?▼
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 9.6 of the Manual for Procurement of Non-Consultancy Services, which of the following is a valid reason for a Procuring Entity to deduct money from a contractor's payment?
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