Service Contracts

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In a case of delay in the performance of work or in the submission of a deliverable under the Contract due to liability of the Contractor, a Penalty for Delivery Delay is imposed. The penalty, for every day of delay of delivery, amounts to a percentage of the daily Contract Value of the work or of the deliverable. This percentage must be specified (in the terms of the Agreement) by the Contracting Authority taking into account the degree of significance of the contract scope and usually amounts to about 10% of the daily contractual value.

To calculate the penalty, the Project Manager must also take into account any possible inability to use other deliverables which have been submitted earlier due to the delay.

The penalties imposed by the Contracting Authority shall be withheld from the next payment of the Contractor or, in a case that the latter is insufficient, they will be collected by forfeiture of an equivalent amount of the performance guarantee or/ and the advance payment guarantee. In the event that the delivery periods set have been exceeded and the penalties for delay imposed in connection therewith have reached in total 10% of the Contract Value (or any other percentage specified in the contract), the Contracting Authority may declare the Contractor in default and terminate the Contract.

© 2007 Republic of Cyprus, Treasury of the Republic, Public Procurement Directorate
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