Question: Hi, wanted to ask that in case of contracts for hiring of services, specifically for outsourced staff, is it allowed to incorporate in tender documents for Annual Contract that “in case of satisfactory services/performance, the contract may be extended for another year”? The initial tender is for one year but incorporating this clause can allow it to be extended for another year without re-tendering. The rationale is to save additional costs and time on re-tendering, hiring, training etc. of outsourced staff every year.
Answer Thank you very much for your query.
In the context of contracts for the hiring of services, specifically for outsourced staff, it is legally permissible to incorporate a clause in the tender documents for an annual contract stating that “in case of satisfactory services/performance, the contract may be extended for another year.” This provision allows for the extension of the initial one-year contract without the need for re-tendering, provided the performance of the outsourced staff meets the agreed-upon standards.
Incorporating such a clause is often justified by the practical benefits it offers. It helps in saving additional costs and time associated with the re-tendering process, as well as the subsequent hiring and training of new staff each year. This continuity can be advantageous in maintaining service quality and operational efficiency.
However, it is crucial to ensure that the clause is clearly drafted and included in the initial tender documents to avoid any potential legal disputes. The clause should explicitly state the conditions under which the extension will be granted and any other relevant terms. Additionally, compliance with any applicable procurement regulations and policies is essential to avoid any issues related to fairness and transparency in the procurement process.
Thus, by incorporating this clause in the bidding documents, the contract period can indeed be extended for another year without the necessity for re-tendering, provided the services rendered are satisfactory and meet the stipulated performance criteria.