Section 59: Termination of Procurement Contract and Remedy Therefor

1) The procurement contract shall have to specify the grounds on which such contract may be terminated.

2) The main grounds under sub-section (1) may be the following:

(a) The public body may terminate the procurement agreement if the supplier, consultant, service provider or construction entrepreneur fails to perform the work in accordance with the procurement agreement, fails to comply with the conduct in accordance with sub-section (2) of Section 62, or misuses the advance.

(b) The public body may terminate the procurement agreement on the basis of convenience for the public interest, the supplier, consultant, service provider or construction entrepreneur may terminate the procurement agreement, and

(c) The procurement agreement may be terminated due to circumstances beyond its control.

3) The procurement agreement shall include provisions for financial settlement and compensation, including the following matters, when terminating the procurement agreement pursuant to sub-section (1):

(a) Payment of any outstanding payments for work, supplies or services that have been satisfactorily completed,

(b) Liability of the public body for additional expenses incurred by it in performing or getting the work done or done by the supplier, consultant, service provider or construction entrepreneur due to the supplier, consultant, service provider or construction entrepreneur not performing the work as per the procurement agreement,

(c) Amount of actual loss or damage suffered by the public body due to the supplier, consultant, service provider or construction entrepreneur terminating the procurement agreement without any default.

4) Unless otherwise provided in the procurement agreement, the public body may terminate the procurement agreement on the grounds of convenience in the public interest.

5) In the event of termination of a procurement agreement pursuant to sub-section (4), the public body shall be required to pay the following amounts for the work completed prior to the termination of the agreement:

(a) the outstanding payment pursuant to sub-section (2) Clause (a),

(b) the actual expenses incurred in the event of a provision to reimburse the expenses,

(c) the value of goods specially manufactured for the public body under the procurement agreement,

(d) the expenses incurred in terminating the procurement agreement, excluding the amount referred to in sub-section (3) Clause (c), and

(e) other expenses as prescribed.

6) Notwithstanding anything contained elsewhere in this Section, the person making the procurement agreement shall not be entitled to terminate the agreement without prior notice to the public body.

7) If the person making the procurement agreement with the public body does not commence the work in accordance with the agreement, abandons the work after commencement or does not progress the work in accordance with the agreement, the public body may terminate such contract at any time.

8) If the contract is terminated pursuant to sub-section (7), the entire security deposit for the work shall be forfeited. Any amount required to complete the remaining work under the contract due to the termination of the contract shall be recovered from the bidder who does not perform the work as per the contract as a government due.

9) If the contract is terminated pursuant to sub-section (7), in order to complete the remaining work under such contract, a financial proposal may be requested from the bidders selected pursuant to Section 25 within a period of fifteen days, and an agreement may be made.

10) Before requesting a financial proposal pursuant to sub-section (9), approval shall be obtained from the officer at the next higher level.

11) The financial proposal pursuant to sub-section (9) shall be applicable only in the case of an agreement concluded through open bidding for construction work.

12) If an agreement cannot be reached pursuant to sub-section (9), the procurement process in accordance with this Act shall be initiated by adopting the procurement procedure.