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Para 4.11 - Bid Security (EMD) | KartavyaDesk

WORKS_MANUAL

Original Rule Text

4.11 Bid Security/ Earnest Money Deposit (EMD) To safe guard against a bidder’s with drawing or altering its bid during the bid validity period in the case of OTE and GTE tenders, bid security [also known as Earnest Money Deposit (EMD)] is to be obtained from the bidders along with their bids. Any bid not accompanied by the requisite bid security shall be rejected as non-responsive in accordance with provisions of the bidding document. The amount of bid security should generally be between two to five per cent of the estimated value of the goods to be procured. The amount of bid security, rounded off to the nearest thousands of Rupees, as determined by the Procuring Entity, is to be indicated in the bidding documents.

What This Means

Para 4.11 of the Works Manual deals with Bid Security, also known as Earnest Money Deposit (EMD). Think of it as a safety net for the government when it's inviting bids for projects or procuring goods through Open Tender Enquiry (OTE) and Global Tender Enquiry (GTE). The government wants to ensure that companies submitting bids are serious and won't back out or change their offers midway through the bidding process. This rule applies specifically to OTE and GTE tenders, ensuring fairness and preventing frivolous bids. It directly affects all bidders participating in these types of tenders and the government departments responsible for procurement. If a bid doesn't include the required EMD, it will be rejected outright.

This explanation was generated with AI assistance for educational purposes. Always refer to the official gazette notification for authoritative text.

Key Points

  • •Bid Security (EMD) is mandatory for OTE and GTE tenders.
  • •The EMD protects against bidders withdrawing or altering bids during the validity period.
  • •Bids without the required EMD will be rejected as non-responsive.
  • •The EMD amount is typically 2-5% of the estimated value of the goods/services.
  • •The specific EMD amount, rounded to the nearest thousand Rupees, must be stated in the bidding documents.

Practical Example

The Ministry of Rural Development issues an Open Tender Enquiry (OTE) for the construction of 100 rural roads. The estimated cost of the project is ₹5,00,00,000 (5 Crore Rupees). As per Para 4.11, the tender document specifies that a Bid Security (EMD) of 3% of the estimated cost is required, which comes to ₹15,00,000. M/s. RoadConstruct submits a bid but forgets to include the EMD. M/s. BuildWell submits a bid with the required EMD. According to Para 4.11, M/s. RoadConstruct's bid will be rejected as non-responsive because it lacks the required bid security, while M/s. BuildWell's bid will be considered.

This explanation was generated with AI assistance for educational purposes. Always refer to the official gazette notification for authoritative text.

Frequently Asked Questions

What happens to the EMD if my bid is unsuccessful?▼
The EMD is typically returned to unsuccessful bidders after the tender process is complete and the contract has been awarded to the successful bidder.
Can the EMD be forfeited?▼
Yes, the EMD can be forfeited if the bidder withdraws their bid during the bid validity period or fails to sign the contract after being awarded the tender.
What forms of EMD are generally accepted?▼
Commonly accepted forms of EMD include Demand Drafts, Banker's Cheques, and Bank Guarantees from nationalized or scheduled commercial banks.
Is EMD required for all types of tenders?▼
No, Para 4.11 specifically applies to Open Tender Enquiries (OTE) and Global Tender Enquiries (GTE). Other types of tenders may have different rules regarding bid security.
Who determines the exact percentage of EMD required?▼
The Procuring Entity (the government department or organization issuing the tender) determines the specific percentage of EMD, within the range of 2-5%, based on the estimated value of the procurement.

This explanation was generated with AI assistance for educational purposes. Always refer to the official gazette notification for authoritative text.

Test Your Knowledge

Question 1 of 3

According to Para 4.11 of the Works Manual, for which types of tenders is Bid Security (Earnest Money Deposit) mandatory?

Related Rules

Para 3.2.4Manual for Procurement of Works, 2022 - Para 3.2.4 - Chapter 3Para 3.5.13Manual for Procurement of Works, 2022 - Para 3.5.13 - Chapter 4Para 3.2.6Manual for Procurement of Works, 2022 - Para 3.2.6 - Chapter 3Para 4.10Manual for Procurement of Works, 2022 - Para 4.10 - Chapter 4Para 4.12Manual for Procurement of Works, 2022 - Para 4.12 - Chapter 4

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