Section 19 in Rajasthan Public Procurement Rules, 2012
19. Rate contract.
(1)A running rate contract for a period, commonly known as Rate Contract (RC) is an agreement between the procuring entity and the bidder or service provider for supply of goods or execution of a work or rendering specified services at specified price and terms and conditions (as incorporated in the agreement) during the period covered by the rate contract. A rate contract is in the nature of standing offer from the bidder or service provider. The period of rate contract will be generally one year, preferably a financial year to match with budget provisions and levy of taxes. It may be a shorter period, if variations in market prices are expected to be significant. It may also be a longer period upto two years if the variations in market prices are not expected to be significant. The reasons for selecting the period for RC shall be recorded.(2)Conditions for adopting the method of rate contract. - (a) A procuring entity may choose to engage in a rate contract procedure in accordance with these rules, where it determines that-(i)the need for the subject matter of procurement is expected to arise on an indefinite or repeated basis during a given period of time;(ii)by virtue of the nature of the subject matter of procurement, the need for that subject matter may arise on an urgent basis during a given period of time.(3)Procedure of entering into a rate contract. - (a) A procuring entity may award a rate contract on the basis of open competitive bidding. If it is not possible to adopt the method of open competitive bidding, by means of other procurement methods in accordance with the provisions of these rules. An approximate quantity of required goods, works or service during the period will be indicated in the NIB, but no minimum quantity is guaranteed.(b)The procedure for entering into a rate contracts and award of work order fall in two stages and shall include the following, namely:-(i)in the first stage single part or two part bids shall be invited;(ii)a rate contract will be entered for price without a commitment for quantity, place and timing of placing supply or work order with the bidder of lowest priced bid or most advantageous bid;(iii)in the second stage supply or work order will be placed at the contracted price for supply or execution of the required quantity of the subject matter of procurement, as and when needed;(iv)rate contracts may be concluded with more than one bidder as parallel rate contracts provided there is such provision in the bidding documents, in the order of their standing in final evaluation, by giving them counter offer of prices of the lowest bidder. This may be done in order to secure prompt delivery or execution of goods, works or service, if the quantity of the subject matter of procurement required is beyond the capacity of the lowest bidder;(v)the terms and conditions of the rate contract including provision for liquidated damages, shall be similar to those prescribed for procurement by open competitive bidding;(vi)the prices under a rate contract shall be subject to price fall clause to be incorporated in the terms and conditions of RC. Price fall clause is a price safety mechanism in rate contracts and it provides that if the rate contract holder quotes/reduces its price to render similar goods, works or services at a price lower than the rate contract price to anyone in the State at any time during the currency of the RC, the rate contract price shall be automatically reduced with effect from the date of quoting lower price for all delivery of goods and services under that RC and the RC shall be amended accordingly. The firms holding parallel RCs shall also be given opportunity to reduce their price by notifying them the reduced price giving them 15 days time to intimate their agreement to the revised price. If a parallel RC holding firm does not agree to the reduced price, further transaction with it shall not be conducted. Similarly, if a parallel RC holding firm reduces its price under the price fall clause during currency of the RC, its reduced price shall be conveyed to other parallel RC holding firms and the original RC holding firm for corresponding reduction in their prices. Care should be taken to ensure that declaring reduction in prices does not become a guise to unethical means of securing more orders;(vii)it should be ensured that new rate contracts are made operative right after the expiry of the existing rate contracts without any gap. In case it is not possible to conclude the new rate contracts due to unavoidable reasons, the existing rate contracts may be extended on same price, terms and conditions for a period not exceeding 3 months. In such cases it shall be ensured that market prices have not fallen down during the period for the subject matter of procurement or its constituents, to be procured under the RC.
