Penalty for partial non-delivery of N.O.A/P.O

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Penalty for partial non-delivery of N.O.A/P.O

Post by jtronco on Wed Dec 19, 2012 12:55 pm

We would like to ask advice regarding this matter:
Scenario: PO was awarded to a supplier for 6 items. Supplier only delivered 4 items because according to them, no stocks are available. A formal letter was sent by the supplier to waive the 2 remaining items. No payment has been made yet.

What is the protocol or ruling for this transaction? Can the supplier be penalized for the non-delivery of the items? If yes, how do you solve the penalty charge?

Thanks!

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Re: Penalty for partial non-delivery of N.O.A/P.O

Post by regina avelino on Fri Dec 21, 2012 10:49 am

my advise will be based on two provisions of the law, one if from the Property and Supply Management System and the other one is from the Procurement Law:

Acceptance or Rejection of Deliveries:
Supplies or property or items whose quantity is short by volume or Purchase Order quantity is incomplete be subject to reduction on contract price at an amount equivalent to the undelivered items provided said delivered items are acceptable tot he agency. In such case, the 4 items delivered can be utilized separately from the other 2 undelivered items. Pay only the delivered items based on "quantum meruit". Rescind/terminate the contract.

For the undelivered portion:
Forfeit the performance security and initiate blacklisting if the reason of the supplier is not acceptable to you. Conduct public bidding or alternative mode of procurement if condition to adopt such alternative mode is present.

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Re: Penalty for partial non-delivery of N.O.A/P.O

Post by jtronco on Fri Dec 21, 2012 11:39 am

thank you mam and God Bless!

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Re: Penalty for partial non-delivery of N.O.A/P.O

Post by engrjhez® on Sat Dec 22, 2012 12:25 pm

jtronco wrote:We would like to ask advice regarding this matter:
Scenario: PO was awarded to a supplier for 6 items. Supplier only delivered 4 items because according to them, no stocks are available. A formal letter was sent by the supplier to waive the 2 remaining items. No payment has been made yet.

What is the protocol or ruling for this transaction? Can the supplier be penalized for the non-delivery of the items? If yes, how do you solve the penalty charge?

Thanks!

If after the delivery period stipulated in the contract the supplier defaulted to deliver some items, the contract cannot be rescinded immediately. Under pertinent provisions of the General Conditions of the Contract (GCC) provided for under Philippine Bidding Documents (4th Ed.) which may be controlling in that particular procurement:

x x x

18. Delays in the Supplier’s Performance

18.1. Delivery of the Goods and/or performance of Services shall be made by the Supplier in accordance with the time schedule prescribed by the Procuring Entity in Section VI. Schedule of Requirements.

18.2. If at any time during the performance of this Contract, the Supplier or its Subcontractor(s) should encounter conditions impeding timely delivery of the Goods and/or performance of Services, the Supplier shall promptly notify the Procuring Entity in writing of the fact of the delay, its likely duration and its cause(s). As soon as practicable after receipt of the Supplier’s notice, and upon causes provided for under GCC Clause 22, the Procuring Entity shall evaluate the situation and may extend the Supplier’s time for performance, in which case the extension shall be ratified by the parties by amendment of Contract.

18.3. Except as provided under GCC Clause 22, a delay by the Supplier in the performance of its obligations shall render the Supplier liable to the imposition of liquidated damages pursuant to GCC Clause 19, unless an extension of time is agreed upon pursuant to GCC Clause 29 without the application of liquidated damages.

19. Liquidated Damages

Subject to GCC Clauses 18 and 22, if the Supplier fails to satisfactorily deliver any or all of the Goods and/or to perform the Services within the period(s) specified in this Contract inclusive of duly granted time extensions if any, the Procuring Entity shall, without prejudice to its other remedies under this Contract and under the applicable law, deduct from the Contract Price, as liquidated damages, the applicable rate of one tenth (1/10) of one (1) percent of the cost of the unperformed portion for every day of delay until actual delivery or performance. The maximum deduction shall be ten percent (10%) of the amount of contract. Once the maximum is reached, the Procuring Entity shall rescind the Contract pursuant to GCC Clause 23, without prejudice to other courses of action and remedies open to it. (underscoring and emphasis supplied)

x x x

Section 22 refers to force majeure or fortuitous events interchangeably which is not applicable to the case as cited.

Section 23 provides for termination by default.

Section 29 refers to contract amendments subject to applicable laws.
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engrjhez®
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