Additional PG - Performance Guarantee calculation -If the Tenderer offered lower than the Tender Value

 

Additional PG calculation

If the Tenderer offered lower than the Tender Value

 

	excerpt of Para 16 (4) (h) of Revised GCC for Works-July 2020  Click for Revised GCC 2020
"The tenderer who has offered lower total cost as compared to tender value by more than 10 %, shall be required to submit additional Performance Guarantee of value equal to half the percentage of tender value by which offer is lower than 10%. (e.g. in a tender costing Rs 100, if contract value is Rs 80, additional Performance Guarantee shall be [0.5x{(100-80)-10}] percentage of tender value.)"

 

Object : To discourage the Contractors to quote the unreasonable rates and doing incomplete  work  or abandon the work after awarding the same, because of non viable/non feasible rates.

 

Example A:

Tender value is Rs 100.  Tenderer offered rate is Rs 80 only. So calculation of PG is as follows:

	PG Rate on Contract/Tender Value	Calculation	PG Amt (Rs)
Original PG	5% of Contract Value Rs. 80	5/100x80	4.00
Additional PG	0.5 % of 10 i.e., {(100-80)-10} (additional Performance  Guarantee of value equal  to half the percentage of  tender value by which offer is lower than 10%.	0.5/100x10	0.05
Total PG			4.05

 

Example B:

Tender value is Rs 100.  Tenderer offered rate is Rs 70 only. So calculation of PG is as follows:

	PG Rate on Contract/Tender Value	Calculation	PG Amt (Rs)
Original PG	5% of Contract Value Rs. 70	5/100x70	3.50
Additional PG	0.5 % of 20 i.e., {(100-70)-10} (additional Performance  Guarantee of value equal  to half the percentage of tender value by which offer is lower than 10%.	0.5/100x20	0.10
Total PG			3.60

 

In Simple , calculation of Additional PG is 0.5 % of  (90 % of Tender Value - Accepted Offer value)

Note:

If the Lowest quote is Rs. 90 and above against Tender Value of Rs. 100, the PG is just 5 % of Contract Value only.

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Performance Guarantee

Performance Guarantee

(as per GCC 2018)  Click here

Ø   Introduced in lieu of risk action procedure (contracts rescinded due to failure of contractors)

Ø The successful bidder shall have to submit the Performance Guarantee - 5%  of the Contract value

Ø    Time limit: within 21 days from the date of issue of Letter Of Acceptance (LOA).

Ø    Extension of Time limit: Beyond 21 days and up to 60 days from LOA by the Authority who is competent to sign the contract agreement.

Ø    Penal interest of 12% per annum  - beyond 21 days, i.e. from 22nd  day after the date of issue of LOA.

Ø    If 60th day happens to be a declared holiday in the concerned Railway office, submission of PG can be accepted on the next working day.

Ø    PG shall be valid up to the Date of completion of the work plus 60 days.  In case the completion time extended, the validity of PG extended to cover such extension plus 60 days.

Ø    If contractor fails to submit PG,

A.    the contract shall be terminated

B.     b)  forfeiting EMD and other dues, if any payable against that contract. and

C.      c) the failed contractor shall be debarred from participating in re-tender for that work.

Ø    After work started, whenever the contract is rescinded or withdrawn,

A.  the security deposit shall be forfeited

B.   the Performance Guarantee shall be encashed and

C.    the balance work shall be got done independently without risk and cost of the failed contractor.  (This is the main objective of introducing the Performance Guarantee procedure. Before that, the balance work is to be carried out by inviting fresh tenders and if any higher charges on account of the fresh tender, the same is at the risk and cost of failed contractors)

D.  The failed contractor shall be debarred from participating in the tender for executing the balance work.

Ø    Variations to the value of Contract - PG

A.   Up to 25 %  increase of original contract value - No additional PG.

B.   Beyond 25 % increase of original contract value - Additional

5 % PG for the excess value over the original contract value shall be deposited by the contractor.

C.   If the value of contract decreases by 25% of original contract value , PG amounting to 5% of decrease in the contract value shall be returned to the Contractor on the basis of his request.

Ø    The Performance Guarantee (PG) shall be released after physical completion of the work based on 'Completion Certificate' issued by the competent authority .

Ø    The Security Deposit shall, however, be released only after expiry of the maintenance period and after passing the final bill based on 'No Claim Certificate' from the contractor.

Performance Guarantee - various forms for submission

(i)     A deposit of Cash;

(ii)    Irrevocable Bank Guarantee;

(iii)   Government Securities including State Loan Bonds at 5% below the market value;

(iv)   Deposit Receipts, Pay Orders, Demand Drafts and Guarantee Bonds. These forms of Performance Guarantee could be either of the State Bank of India or of any of the Nationalized Banks;

(v)    Guarantee Bonds executed or Deposits Receipts tendered by all Scheduled Banks;

(vi)   A Deposit in the Post Office Saving Bank;

(vii)  A Deposit in the National Savings Certificates;

(viii) Twelve years National Defence Certificates;

(ix)   Ten years Defence Deposits;

(x)    National Defence Bonds and

(xi)   Unit Trust Certificates at 5% below market value or at the face value whichever is less.

(xii) Also, FDR in favour of FA&CAO (free from any encumbrance) may be accepted.

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