AT T r GOVERNMENT OF INDIA

HATT MINISTRY OF RAILWAYS

a RAILWAY BOARD
t New Delhi
No. 2020/RS(G}/779/16 Dated: 27/11/2020.
The General Managers, Al Indian Railways/PUs, NF(C), CORE
DG/RDSO/Lucknow, NAIRVadodara,
PCAO, DMWIPatiala, COFMOW/NDLS,
CAO, WPO/Patna, RWP/ Bela.
Sub: EMD and SD in Stores.
Ref ) Railway Board's letter no. 98/RS(G)709/1 dated30/05/2006
(i) Railway Board's letter no. 98/RS(G)/709/1 part. dated 08/09/2011.
(ii) Railway Board's letter no. 2018/Trans Cel/Store Procurement dated 02.01.2019.
(v) Railway Board's letter no. 2004/RS(G)/779/11/Pt. dated 27.03.2019.
() Railway Board's letter no. 2004/RS(G)/779/11/Pt. dated 23.12.2019.
(vi) DOE OM No. F.9/4/2020-PPD dated 12/11/2020 (Bid Security/ EMD).
(vl) DOE OM No. F.9/4/2020-PPD dated 12/11/2020 (Performance Security).
(vil) DOE OM No. F.9/4/2020-PPD dated 12/11/2020 (Additional Performance

Security) ***

1. Vide letter referred at (i to v) above, inter- alia, instructions on "Earnest Money Deposit (EMD) for
stores tenders" and "Security Deposit (SD}/Performance Security in stores contracts" were issued.
Ministry of Finance, Dept. of Expenditure, vide OMs at reference vi to vii above, has issued
instructions on the subject matter, which are applicable to procurements by Indian Railways.
2. The matter has been examined in Board and in view of above, following amendments to the above
refered instructions are issued:
2.1 Earnest Money Deposit (EMD) for Stores Tenders:
The policy issued vide this instruction shall apply to all tenders issued til 31/12/2021
. All bidders shaill be exempted from submission of EMD in all tenders except those disqualified
from such exemption vide note 2.1 ii below.
1. All bidders shall be required to sign the bid securing declaration as follows:
/ we hereby understand and accept that if / we withdraw or modify my/ our bids during the
period of validity, or if Wwe are awarded the contract and on being called upon to submit the
performance security/ Security Deposit, fail to submit the performance security/ Security Deposit
before the deadline defined in the request for biddocument Notice Inviting Tender, we shall be
debared from exemption of submitting Bid Security/ Earnest Money Deposit and perfomance
security/ Security Deposit for a period of 6 (six) months, from the date we are declared
disqualified from exemption from submission of EMD/SD, for all tenders for procurement of
goods issued by any unit of Indian Railways pubilished during this period.
Wherever, there are compelling circumstances to ask for Earnest Money Deposit/Bid Security
the same should be done only with the approval of the next higher authority to the authority
competent to finalise the particular tender or concerned Board Member, whichever is lower. In
such cases EMD shall be applicable as per the existing policy.
2.2 Security Deposit (SDJPerformance Security for Stores Contracts:
i. It is decided for all existing contracts, in case the performance security is more than 3% of the
value of the contract, to reduce Performance Security to 3% of the value of the contract

n
 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.
. Further, all tenders/ contracts issued/ concluded till 31/12/2021 shall have performance security
as per existing instructions or 3 % whichever is lower.
In all contracts where Performance Security has been reduced to 39% in view of above
stipulations, the reduced percentage of Performance Security shall continue for the entire
duration of the contract and there should be no subsequent increase of Performance Security
even beyond 31/12/2021. Similarly, in all contracts entered into with the reduced percentage of
Performance Security of 3%, there will be no subsequent increase in Performance Security even
beyond 31/12/2021.
N. Wherever, there is compeling circumstances to ask for Performance Security in excess of three
percent as stipulated above, the same should be done only with the approval of the next higher
authority to the authority competent to finalise the particular tender, or the concerned Board
Member, whichever is lower. Specific reasons justifying the exception shal be recorded. In such
cases performance security shall be applicable as per the existing policy.
3. Other instructions on the matter shall continue to apply. Tender conditions to be suitably altered by
the procuring agencies.
4. CRIS shall make necessary changes in the applications.

This is issued with the concurrence of Finance Directorate of Railway Board.

(Anurag Grover)
Dy. Dir. Rly. Stores(G)
Railway Board
No. 2020/RS(G)}/779/16 Dated: 27/1 1/2020.
1. PFAs, All Indian Railways &Production Units
2. The ADAI(Railways), New Delhi
The Directors of Audit, Al Indian Railways

ForMember (Fmance), Railway Board

LIST FOR DISTRIBUTION
Directors of all CTls,
CMDs /MDs of all Railway PSUs
PCMMs, PCEs, PFAs, PCMEs, PCEEs, PCSTEs, Al Indian Railways& PUs, COFMOW, CORE, WPO/Patna and RWP/Bela
Sr. Prof. (Material Management), NAIR, Vadodara, Executive Director (Stores), RDSO, Lucknow
Chief Commissioner, Railway Safety, Lucknow
Zonal Railway Training Institute, Sukadia Circle, Udaipur
Copy to:
The Genl. Secy., AIRF, Room No. 248, &NFIR Room No. 256-C, Rail Bhavan
The Secy. Genl, IRPOF, Room No. 268, FROA, Room No. 256-D &AIRPOA, Room No. 256-D Rail Bhavan.

Copyto: PS0/Sr. PPS / PPS/PS/APS to:

MR, MoS(R)
CRB&CEO, M(T&RS), M(lnfra.), M(OBD), M(F), SECY., DG (RHS), DG (RPF), DG(HR),
All AMs, PEDs & Executive Directors of Railway Board
 No. F.9/4/2020-PPD
Government of lndia
Ministry of Finance
Department of Expenditure
Procurement Policy Division

512, Lok Nayak Bhawan, New Delhi

Dated the 12th November 2O2O

OFFICE MEMORANDUM

Subject: Bid Security/ Earnest Money Deposit.

The Government is in receipt of many representations that on account of

slowdown in economy due to the pandemic, there is acute financial crunch among
many commercial entities and contractors, which in turn is affecting timely execution
of the contracts. lt has also been represented that this may affect the ability of
contractors to bid in tenders and hence reduce competition. Requests are being
received for reduction in quantum of Security Deposits in the Government contracts.

2. As per Rule 170 of General Financial Rules (GFRs) 2017, Micro and Small
Enterprises (MSEs) and the firms registered with concerned Ministries/ Departments
are exempted from submission of Bid Security. Further, in lieu of Bid Security,
Ministries/ Departments may ask bidders to sign "Bid Security Declaration" accepting
that if they withdraw or modify their bids during period of validity etc., they will be
suspended for the time specified in the tender documents. Similar provisions also
exist in the Manuals for Procurement of Works 2019 and Manual for Procurement of
Consultancy & other Services 2017.

3. ln this context it is noted that Bid Security (also known as Earnest Money
Deposit) is still being taken from the contractors by the various Ministries/
Departments, though the relaxations have already been provided in General
Financial Rules (GFRs) 2017.

4. ln view of above, it is reiterated that notwithstanding anything contained in

Rule 171 of GFRs 2017 or any other Rule or any provision contained in the
Procurement Manuals, no provisions regarding Bid Security should be kept in
the Bid Documents in future and only provision for Bid Security Declaration
should be kept in the Bid Documents.

5. Wherever, there are compelling circumstances to ask for Bid Security, the
same should be done only with the approval of the next higher authority to the
authority competent to finalise the particular tender or the Secretary of the Ministry/
Department, whichever is lower.

6. The above instructions will be applicable for all the tenders issued till
31.12.2021.
7 ' These instructions will be applicable for all kinds of procurements viz. Goods,
Consultancy, Works, non-consulting Services etc and are issued under Rule 6(1)
oi
the GFRs 2017.

K,'''-'L9/,
(Kotluru Narayana Rfiat) -
Deputy Secretary to the Govt. of lndia
Tet:24021305
Email: [email protected]

To,

Allthe secretaries and FinancialAdvisers to Government of lndia

Copy to: Secretary, Department of Public Enterprises with a request to issue the
same instructions to central public sector Undertakings (cpsUs).
 No. F.9/4/2020-PPD
Government of lndia
Ministry of Finance
Department of Expenditure
Procurement Policy Division

512, Lok Nayak Bhawan, New Delhi

Dated the 12th November 2O2O

OFFICE MEMORANDUM

Subject: Performance Security.

As per Rule 171 of General Financial Rules (GFRs) 2017, Performance

Security is to be obtained from the successful bidder awarded the contract for an
amount of five to ten percent of the value of the contract to ensure due performance
of the contract. Similar provisions also exist in the Manual for Procurement of Works
2019 and Manual for Procurement of Consultancy & other Services 2017 issued by
this Department.

2. The Government is in receipt of many representations that on account of

slowdown in economy due to the pandemic, there is acute financial crunch among
many commercial entities and contractors, which in turn is affecting timely execution
of the contracts. lt has also been represented that this may affect the ability of
contractors to bid in tenders and hence reduce competition. Requests are being
received for reduction in quantum of Security Deposits in the Government contracts.

3. ln view of all above, it is decided to reduce Performance Security from

existing 5-10o/o to 3o/o 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.

4. Further, all tenders/ contracts issued/ concluded ti]l 31 .12.2021 should also
have the provision of reduced Performance Security.

5. ln all contracts where Performance Security has been reduced to 3% in view

of above stipulations, the reduced percentage of Performance Security shall
continue for the entire duration of the contract and there should be no subsequent
increase of Performance Security even beyond 31.12.2021.

Similarly, in all contracts entered into with the reduced percentage of

Performance Security of 3%, there will be no subsequent increase in Performdnce
Security even beyond 31 .12.2021.

6. Wherever, there is compelling circumstances to ask for Performance Security

in excess of three percent as stipulated above, the same should be done only with
the approval of the next higher authority to the authority competent to finalise the
particular tender, or the Secretary of the Ministry/ Department, whichever is lower.
Specific reasons justifying the exception shall be recorded.

7. These instructions will be applicable for all kinds of procurements viz. Goods,
Consultancy, Works, non-consulting Services etc and are issued under Rule 6(1) of the
GFRs 2017.

( Kotl u ru' Na raya n a #fedd y)

Deputy Secretary to the Govt. of lndia
Tel:24621305
Email: kn. reddy@gov. in

To,

Allthe Secretaries and FinancialAdvisers to Government of !ndia

Copy to: Secretary, Department of Public Enterprises with a request to issue the
same instructions to Central Public Sector Undertakings (CPSUs).
 No. F.9/4/2020-PPD
Government of lndia
Ministry of Finance
Department of Expenditure
Procurement Policy Division

512, Lok Nayak Bhawan, New Delhi

Dated the 12th November 2O2O

OFFICE MEMORANDUM

Subject: Additional Performance Security in case of Abnormalty Low Bids

(ALBs).

The Government is in receipt of many representations that on account of

slowdown in economy due to the pandemic, there is acute financial crunch among
many commercial entities and contractors, which in turn is affecting timely execution
of the contracts. lt has also been represented that this may affect the ability of
contractors to bid in tenders and hence reduce competition. Requests are being
received for reduction in quantum of Security Deposits in the Government contracts.

2. ln this context, it is noted that Additional Performance Security in case of

Abnormally Low Bids (ALBs) is being taken from the contractors by various
Ministries/ Departments though there is no provision for the same in General
Financial Rules (GFRs) 2017 or the Manuals for Procurement issued by this
Department.

3 As per para 7.5.7 of the Manual for Procurement of Goods 2017 issued by
this Department, an Abnormally Low Bid is one in which the bid price, in combination
with other elements of the Bid, appears so low that rT raises material concerns as fo
the capability of the bidder to pefform the contract at the offered price. Procuring
Entity may in such cases seek written clarifications from the bidder, inctuding
detailed price analyses of its bid price in relation to scope, schedule, allocation of
risks and responsibilities, and any other requirements of the bids document. lf, after
evaluating the price analyses, Procuring Entity determines that the bidder has
substantially failed to demonstrate its capability to detiver the contract at the offered
price, the Procuring Entity may reject the bid/ proposal. However, it would not be
advisable to fix a normative percentage below the estimated cost, which woutd be
automatically be considered as an abnormally low bid. Due care should be taken
while formulating the specifications at the time of preparation of bid documenf so as
to have a safeguard against the submission of abnormally tow bid from the bidder.

4. ln view of above, it is reiterated that no provisions shoutd be kept in the

Bid Documents regarding Additiona! Security DeposiU Bank Guarantee (BG) in
case of Abnormally Low Bids.

5. Wherever, there are compelling circumstances to ask for Additional Security

DeposiU Bank Guarantee (BG) in case of ALBs, the same should be taken only with
the approval of the next higher authority to the authority competent to finalise the
particular tender, or the Secretary of the Ministry/ Department, whichever is lower.

6. These instructions will be applicable for all kinds of procurements viz. Goods,
Consultancy, Works, non-consulting Services etc.

Deputy Secretary to the Govt. of lndia

Tel:24621305
Email: [email protected]

To,

Allthe Secretaries and FinancialAdvisers to Government of lndia

Copy to: Secretary, Department of Public Enterprises with a request to issue the
same instructions to Central Public Sector Undertakings (CPSUs).