PROCUREMENT GUIDELINES - Ministry of Finance and Planning

GOVERNMENT PROCUREMENT GUIDELINES 375.4.7 Alternatively, after the final completion of Works, contractors maybe allowed to replace the second half of retention money with aunconditional and irrevocable guarantee.5.4.8 WorksPerformance Security(a) Any contract for Works shall require a performance security ofnot less than five percent (5%) of the estimated contract sum tosafeguard the PE in case of breach of contract by the Contractor.(b) This security shall be provided by a performance guaranteeissued from an acceptable agency, and valid till twenty eight (28)days beyond the intended completion date.Theacceptableform ofperformancesecurity andacceptableagencies aregiven inProcurementManual 5.4.85.4.9 Waiver of Performance SecurityHowever, in smaller Works contracts, not exceeding Rs. 2m., therequirement of submitting a performance security may be waived offby the PE.5.4.10 Goods(a) In contracts for the supply of Goods, the need for performancesecurity depends on the market conditions and commercialpractice for the particular kind of Goods.(b) Suppliers are required to provide a performance guarantee tosafeguard the PE against non performance of the contract.(c) Such security in an appropriate amount of not less than 10%(ten percent) of the estimated contract sum may also coverwarranty obligations.(d) If warranty obligation is a requirement a percentage of thepayments may be withheld as retention money to cover suchobligations and any installation or commissioning requirements.Payment of Value Added Tax5.4.11 The amount of VAT on the Goods supplied or Works done shall bepaid to VAT registered contractors/suppliers after obtaining taxinvoice, if such Works, Goods or Services are not exempted fromVAT.Theacceptableperformancesecurities aregiven inProcurementManual 5.4.10The Detailedprocedure isgiven inProcurementManual 5.4.11