DoE Lowers Performance Security to 3%, Introduces Bid Security Declarations

DoE has reduced the performance security to 3 percent for all existing and future tenders concluded till December 31, 2021.

The Department of Expenditure (DoE) has notified that the Performance Security shall be reduced from existing 5 to 10 percent to 3 percent for all existing and future tenders concluded till December 31, 2021. The DoE had previously also conveyed that no provisions regarding Bid Security should be kept in the Bid Documents in future tenders and only provision for Bid Security Declaration should be included.

It has been notified that State Implementation Agencies (SIAs) under PM-KUSUM Scheme have been directed to ensure compliance with the instructions issued by the DoE. Further, in order to ensure performance by vendors under the Scheme, it has been decided that SIAs shall obtain a declaration from the vendors that in the event of non-performance or failure in fulfilment of contractual obligations under the contract, the vendors will be liable to submit 10 percent CPG apart from other penal provisions of the tender.

Further, in line with the instructions from DoE regarding bid security, in place of EMD/ Bid Security, Bid Security Declaration shall be obtained by SIAs/Central PSU for tenders conducted under PM-KUSUM Scheme.

In the orders, it has been revealed that the government had received many representations that on account of slowdown in the economy due to the pandemic, there is an acute financial crunch among many commercial entities and contractors, which in turn is affecting timely execution of the contracts. It had also been represented that this may affect the ability of contractors to bid in tenders and hence reduce competition. Requests were thus made for a reduction in the quantum of Security Deposits in the Government contracts.

ln view of all above, it was decided to reduce Performance Security from existing 5-10 percent to 3 percent of the value of the contract for all existing contracts. However, the benefit of the reduced Performance Security will not be given in the contracts under dispute wherein arbitration/ court proceedings have been already started or are contemplated.

Similarly, based on representations and requests made by stakeholders, it has been decided that no o provisions regarding Bid Security should be kept in the Bid Documents in the future and only provision for Bid Security Declaration should be kept in the Bid Documents.

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