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Daily Legal Advice Series

PPRA Rules Query on Procurement Procedures

Client Query 120:- Hello, wanted to clarify that according to Rule 45 (Closing of Contract), where stated that “Defect liability or maintenance by the contractor as specified in terms of contract”. Can any procuring agency deduct or retained certain amount in case of defect liability or maintenance period in order to ensure that; if defects are not rectified to be rectified through other contractor on cost & risk of the contractor and what is the extent of amount in % value to be deducted for defect liability period of one year effective closing of contract. Your early response will be highly appreciated!


Yasir Nawaz, Spain


Answer:- Thanks for writing to us! As per your query, in terms of Rules 25 and 39 of Public Procurement Rules, 2004 bid security not exceeding upto 5% of the financial bid price and performance guarantee not exceeding 10% of the contract amount can be obtained by the procuring agency from all the bidders and the successful bidder respectively. At the time of award of contract performance guarantee is obtained by the procuring agency for all such sort of uncertainties. In addition, the final bill etc. can be withheld by the procuring agency in case of defect liability or maintenance period subject to categorical terms and conditions specified in the bidding documents. Hope this answers your query!

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