Fall clause does not apply on the sale of drugs which have an expiry date: DoP

The Department of Pharmaceuticals (DoP) has issued a letter informing the Ministries/Departments involved in the procurement of drugs through agencies that fall clause does not apply on the sale of drugs, which have an expiry date. It has also instructed concerned agencies to ensure that tenders are issued in adherence with given instructions.

Fall clause is a price safety mechanism in rate contracts. It ensures that if the rate contract holder reduces its price or sells or even offers to sell the rate contracted goods or services following conditions of sale similar to those of the rate contract at a price lower than the rate contract price to any person or organisation during the currency of the rate contract, the rate contract price will be automatically reduced with effect from that date for all the subsequent supplies under the rate contract and the rate contract amended accordingly.

The issued letter by Byasadev Naik, Deputy Director, DoP, stated, “It has been brought to the notice of this department that many government procuring agencies are quoting the provision of fall clause in their tender documents for procurement of drugs despite the fact that the manual for Procurement of Goods, 2017 in para 8.1.14 of Chapter-8 provides for the exception of fall clause on sale of goods such as drugs, which have an expiry date. Accordingly, the Ministries/Departments, which are involved in the procurement of drugs through agencies under their administrative control are requested to take into account that the provision of fall clause does not apply on the sale of drugs which have an expiry date, and to ensure that tenders are issued accordingly.”

Ashok Madan, Executive Director, IDMA, “It’s going to help the companies in government procurement. It will help all those who are bidding in a large number of tenders and companies who are now aiming at AYUSHMAN and trying to quote very low prices. This will save those companies who quote different prices in different tenders. As per fall clause of the procurement manual, the bidder is mandated to give a declaration that the price quoted is the lowest.”

The issued letter has been addressed to the Ministry of Health & Family Welfare, Ministry of Defence and Ministry of Railways, Ministry of Labour and Employment.