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TWO PERFORMANCE SECURITIES IN ONE CONTRACT

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Re: TWO PERFORMANCE SECURITIES IN ONE CONTRACT

Post  GWK on Fri Jun 13, 2014 3:34 pm

RJM

My advice is the PE to abide to provisions in the tender dozier. Provision for the performance security often is the bidder to submit a genuine bank guarantee of a certain percentage therefore I don't see the problem if one has submitted securities from two banks but having a total coverage as described in the document. The advantage part of it is "DON'T PUT ALL EGGS IN ONE BASKET".

GWK

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TWO PERFORMANCE SECURITIES IN ONE CONTRACT

Post  RJM on Thu Apr 28, 2011 3:13 am

PE advertised a tender for supply of 25 Motor Vehicles. Eventually ABCD Company Ltd emerged a winner for the corrected contract sum of Tshs. 1.95 billion. The bid document requires the winning bidder to submit a performance bond or security of 10% of the envisaged contract sum. For this particular case ABCD was required to submit a performance bond or security of Tshs. 195 million prior signing the contract. Due to difficulties in securing performance security in one bank, ABCD managed to get performance securities from two different banks i.e. Bank X agreed to guarantee 50% of the required security and Bank Y of the remaining 50%.

These two securities were submitted to PE. PE is in dilemma whether to accept or not.

What is your advise on this? Should PE go on signing the contract?
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RJM

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