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Contract Management (PPA, Contract Act)

CA. Bhava Nath Dahal Advocate Public Procurement National Instructor

July 19, 2013

PMAN by BN Dahal

Contract Document Purchase Order/ Site-delivery Variations (goods, works, services) Contract Amendments Extension of contract period Payments (Interim, Final, Retention) Handling Claims Completion or termination Work completion report

July 19, 2013

PMAN- by BN Dahal

Numerous Acts for Contract

Public Procurement Act, 2063 Contract Act, 2056

Nepal Arbitration Act, 2056

Income Tax Act, 2058

July 19, 2013

PMAN- by BN Dahal

Site Delivery-Start date (works)

Post Bid-conference (PPR111) Site delivery (at agreed time, contract period/days starts from this date) Insurance (>1m) Never use at once, as possible, to the extent possible or similar words in the contract. Always use mile-stone dates or activities.

In case of delay in site delivery or free access to site- a matter of extension and CLAIMs.
July 19, 2013 PMAN- by BN Dahal 4

Purchase Order -Goods

Post Bid-conference (PPR111) Purchase order (at agreed time)
No PO before contract.
No goods to be received before PO. To agreed party only (not to third party, not to manufacture not bided to PE). No LC or other arrangement to producer if not a party in contract (local agent is not a bidder) . Risk of 3rd party payment lies with payer NOT to bidder. Work plan (mile-stone) as per PPR111.
July 19, 2013 PMAN- by BN Dahal 5

Change of Key Person

Applicable to Consulting, works and goods (some cases).

Agreed person may be changed if acceptable to employer; having equal or higher qualification, skill, experience and competency. Evaluation of new offer required but Evaluation Committee evaluation not required. Fee should be as per old-one; if new rate contract amendment procedure.
July 19, 2013 PMAN- by BN Dahal 6

Variation Order (), use of Provisional Sum and Day-works.

Price Adjustment is not VO/amendment.

VO may be:
of BOQ items New items required for contract execution.

Liquidated Damage -Redction in works not VO

Approval based on original contract

See limits in VOs.docx
July 19, 2013 PMAN- by BN Dahal 7

Test to be done based on contract. Pre-shipment supervision/test of goods.

Goods test and acceptance.

If not accepted immediate refund. If not taken back, make auction and pay remaining amount. Letter to take back is must.

Work acceptance report-for goods and works based on tests and supervision.

July 19, 2013

PMAN- by BN Dahal

Contract Amendments
Basic output and main substance cannot be changed.

VO, price adjustment, termination by convenience is not a amendment.

Both sides to be agreed on the contract amendment. Written contract. Contract signing right cannot be delegated.

July 19, 2013

PMAN- by BN Dahal

Change of Legislation
Any change in law that was 30 days before final bid-submission date- employers risk.

It change the contract amount- not payable

If additional cost due to change in law or reduction in cost- to be paid or deduct.
Changes in Nepal law (local or center). Change in treaty substance (e.g. air-route)

Change in legal subject (e.g. royalty by Municipality as per new law)

Change in legal interpretation (e.g. HS code)
July 19, 2013 PMAN- by BN Dahal 10

Contractor Claim vs Employers claim Claim vs Counter claim

Disputes settlement mechanism

Amicable settlement Adjudicator (single man appointed by both party)
Upto Rs. 100 m, if amicable settlement not finalised within 30 days, claim to be lodged to Adjudicator within 15 days.

Decision to be made within 30 days.

Dispute resolution committee (3 members) Arbitration (as per Nepal Arbitration Act)
July 19, 2013 PMAN- by BN Dahal 11

Other Points
Bankruptcy of JV Partner(s)
Remaining partners are liable for full.

Contract term extension

Possible only if in contract and applied before 7 days Condition beyond the control or reasonable grounds PE not provided the inputs as agreed Upto 6 month by bid approving authority there after DG (public enterprises as per their rule).

Termination by Convenience.
July 19, 2013 PMAN- by BN Dahal 12

Other Points
Work Completion and Taking Over (works):
On completion PE should issue taking over stating the date. DLP starts from this date. Contractor should file as-built drawings within 30 days from completion.

After completing DLP correction, PE should technically verify the completed work.
Approval of completion certificate, if not approved (or disapproved) within 45 days, works deemed to be accepted. Work Completion Certificate to be issued.
July 19, 2013 PMAN- by BN Dahal 13

Other Points
Acceleration and bonus.
If mandated by contact- acceleration (see FIDIC)

If mandated by contact- bonus.

Advance payment and settlement (separately covered) Interim or final payment (separately covered)

July 19, 2013

PMAN- by BN Dahal