Conditions for adopting direct contracting
We should adopt direct contracting when:
- Extension of existing contracts for works or supply of goods is justifiable on economic grounds. For example, there is an existing contract (awarded through NCB) for the construction of 20 kilometres road by the Public Works Department (PWD). While the construction is in progress, PWD decides to construct a bye-pass road of length1.5 kilometres of the same specifications. Rather than inviting fresh bids for 1.5 kilometres of road (for which the mobilisation costs would be high), this length of road could be awarded at the same rates as of 20 kilometres road to the existing contractor on a direct contract basis.
- We standardise equipments. We can illustrate this with an example; let us consider that an organisation has 200 passenger cars of specific model of a particular manufacturer. The organisation wants an additional 10 passenger cars for new recruits. If the organisation chooses to go for procurement by open bids for these additional cars, they may end up procuring cars of a different model and different manufacturer. This will lead to maintaining different inventory and different service engineers, which is not in the best interest of the company.
- Proprietary equipment (those equipments which are known to be manufactured by a single manufacturer only, for example, a scientific equipment of a particular specification which is manufactured by a particular manufacturer only) and spares of that equipment are already with the purchaser (to achieve optimum operation efficiency).
- There is a need for early delivery to avoid costly delays (as in the case of breakdown of equipment resulting in heavy operational losses).
- Exceptional cases like natural disaster such as flood, earthquake, and so on occur.
- We purchase books, periodicals from publishers; software from the developers or producers, and works of art.
- We purchase published data (such as meteorological data, satellite imageries, and so on) from a Government agency.
- Contracts awarded to NGOs in the interest of project sustainability, achieve certain social objectives of project, utilisation of local know-how and materials.