Finance ministry extends benefit of reduced performance security for government contracts
The finance ministry has extended the benefit of reduced performance security of 3 percent for all central government tenders/contracts issued/concluded till March 31, 2023. According to the rules, a successful bidder awarded a government contract has to deposit a performance security of 5-10 per cent of the value of the contract with the government.
With this relief, the industry could deploy additional resources in project execution as timely and economical project execution by industry is vital for high speed development of infrastructure as envisaged through the National Infrastructure Pipeline. The relief has benefitted industries especially in construction, manufacturing and service sectors and will enable them to respond with vigour to the demands of the government for efficient execution of the projects.
In November 2020, the finance ministry had reduced this performance security to 3 per cent for all tenders/contracts issued or concluded till December 31, 2021, in order to help commercial entities and contractors tide over the liquidity crunch post the first wave of the COVID pandemic.
