Book Examination Clause

BOOK EXAMINATION CLAUSE

v  Meaning: Government/Purchaser to call for and verify and examine the books of the contractor/Supplier is called Book Examination Clause.

v  Books include Account books, vouchers, receipts, memorandum, paper or writing or any copy of or extract from any such document.

v  Object: Verifying or ascertaining the cost of execution of the contract.

v  When : before or after the prices have been finally fixed.

v  Contractor's duty: Afford facilities to the Government Officer concerned to visit the Contractors works for the purpose of examining the processes of manufacture and estimating or ascertaining the cost of production of the articles. If any portion of the work be entrusted by a sub-contractor or any of its subsidiary, the authorized Government Officer shall have power to examine all the relevant books of such sub- books of such sub-contractor or any subsidiary shall be open to his inspection as mentioned in clause.

v  Period: The Contractor or its agency is bound to allow examination of its books within a period of 60 days from the date the notice is received by the Contractor, or its agencies.

v  If Contractor fail to produce the Books:  The purchaser can reduce the Contract price according to his best judgment.  The decision of the Purchaser in regard contract price is final and binding on the Contractor and his agencies.

v  Result :  If on such examination, it is established that the contracted price is in excess of the actual cost plus reasonable margin of profit, the Purchaser shall have the right to reduce the price and determine the amount to a reasonable level.

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