expired performance bond

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expired performance bond

Post by ziaragabriel on Thu Jan 28, 2010 3:29 pm

Good day fellow on-liners!
Need your comment/reply for this............What is the legal implication if the perfomance bond posted is due to expire before the end of the contract period?
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Re: expired performance bond

Post by Guest on Thu Jan 28, 2010 4:15 pm

Section 17. Form and Contents of Bidding Documents
x x x
k) Form, Amount, and Validity of Performance Security and Warranty; and
x x x

Under the provision the bidding documents must contain the validity period. If the PS submitted falls short of the required validity period in the Bidding document he/ she must be disqualified during the bidding.

Of course the period of delivery, period of service or the period of construction is considered in determining the validity period of the PS. If the winning bidder failed to perform to deliver, render service or finish the construction on the period provided in the BD, the PS may be forfeited.

Could you give me a specific instance in which you arrive in such situation? If the BAC is at fault, in my opinion I think you may advice the supplier, contractor or consultant to submit a new PS or extend the validity of the PS.

The IRR is silent on whether the PE may demand extension in this instance or whether the PS may be extended upon request of the PE to the supplier, consultant or contractors.

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Re: expired performance bond

Post by RDV @ GP3i on Thu Jan 28, 2010 5:31 pm

ziaragabriel wrote:Good day fellow on-liners!
Need your comment/reply for this............What is the legal implication if the perfomance bond posted is due to expire before the end of the contract period?

During the signing of the contract and posting of the PS, the procuring entity should have made sure of the validity of the PS - for Goods and Infra until Final Acceptance.

It is not correct that the PS is submitted as part of the bidding documents which would allow the procuring entity to disqualify the bidding if the validity period is less than the required period. That is only with regards to the Bid Security. The PS is posted after the issuance already of the NOA.

However, in your case, if it was not noticed that the validity period falls short, then you may require the supplier/contractor to extend the validity period as soon as possible and don't wait for it to expire first. If the supplier/contractor refuses, you can institute administrative measures necessary to penalize the supplier/contractor.
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Re: expired performance bond

Post by chris on Fri Jan 29, 2010 9:18 am

Good day!

I agree with sir RDV that Performance Security should not be part of Bidding Doucments thus, must not be the basis for disqualifying bidders in their failure to submit it during opening of bids. Peace Sir WormaixJr. Very Happy Section 39.1 of IRR clearly stated the same.
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Re: expired performance bond

Post by Guest on Fri Jan 29, 2010 9:33 am

chris wrote:Good day!

I agree with sir RDV that Performance Security should not be part of Bidding Doucments thus, must not be the basis for disqualifying bidders in their failure to submit it during opening of bids. Peace Sir WormaixJr. Very Happy Section 39.1 of IRR clearly stated the same.

I know that PS is not submitted together with the bidding document under section 39.1. I said in the preparation of the bidding documents, the form amount and validity period of the PS should be indicated by the PE in the bidding document under section 17, I did not say actual submission of the PS by the Bidder.

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Re: expired performance bond

Post by charlie brown on Fri Jan 29, 2010 12:38 pm

There is no mention of the reason for the PS expiring before the term of the contract. If due to oversight of the PE then it shall require the supplier to correct the defect of the PS. If it was due to time extensions occasioned by force majeure, just the same the PE before approving the extension, should have required for the extension of the validity of the PS as well. In any case, i think the PE still has considerable bargaining power as i presume the goods are not yet paid. in my opinion, there is no reason why the supplier will not agree to the PS validity extension.
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Re: expired performance bond

Post by amang'65 on Fri Jan 29, 2010 5:07 pm

i am a bit confused, isnt it that performance bond can only be withdrawn when there is already final acceptance of the project or delivery of goods?
therefore how could a performance bond "expire" when the project has not been accepted yet, otherwise the project/contract duration should have been granted extension, but still performance bond follows to be "extended" if there is extension of project/contract duration.
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Re: expired performance bond

Post by RDV @ GP3i on Sat Jan 30, 2010 10:30 am

WormaixJr wrote:
chris wrote:Good day!

I agree with sir RDV that Performance Security should not be part of Bidding Doucments thus, must not be the basis for disqualifying bidders in their failure to submit it during opening of bids. Peace Sir WormaixJr. Very Happy Section 39.1 of IRR clearly stated the same.

I know that PS is not submitted together with the bidding document under section 39.1. I said in the preparation of the bidding documents, the form amount and validity period of the PS should be indicated by the PE in the bidding document under section 17, I did not say actual submission of the PS by the Bidder.

The reaction was on the basis of the following statement of yours:

"Under the provision the bidding documents must contain the validity period. If the PS submitted falls short of the required validity period in the Bidding document he/ she must be disqualified during the bidding."

Since the Notice of Award (NOA) has already been issued by the procuring entity, the bidding process by the BAC has already been completed. However, failure to post the required Performance Security by the winning bidder could be a ground for the disqualification of the said bidder and the forfeiture of his Bid Security.
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Re: expired performance bond

Post by juv2 on Tue Jun 29, 2010 4:56 pm

"Sec. 39.3 the performance bond.. and posted in favor of the procuring entity x x x[u]"

Is it allowed if the performance security such as Manager's check be kept by the BAC? OR it should be deposited with the gov't agency's cahier?

thanks. Very Happy
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Re: expired performance bond

Post by sunriser431 on Tue Jun 29, 2010 7:43 pm

juv2 wrote:"Sec. 39.3 the performance bond.. and posted in favor of the procuring entity x x x[u]"

Is it allowed if the performance security such as Manager's check be kept by the BAC? OR it should be deposited with the gov't agency's cahier?

thanks. Very Happy
Excerpt from the GAA 2010 which is self explanatory
Sec. 7. Performance Bonds and Deposits. Performance bonds and deposits filed or posted by private persons or entities with agencies of the government shall be deposited with the National Treasury as trust receipts under the name of the agency concerned in accordance with E.O. No. 338, as implemented by COA-DBM-DOF Joint Circular No.1-97 dated January 2, 1997. Upon faithful performance of the undertaking or termination of the obligation for which the bond or deposit was required, any amount due shall be returned by the agency concerned to the filing party, withdrawable in accordance with pertinent accounting and auditing rules and regulations.

This provision shall apply to bonds posted in cash, such as bidders bond, guaranty bonds, bail bonds, judicial deposits for the benefit of clients, cash under litigation deposited in courts or quasi-judicial bodies, other refundable and judicial bonds, and all bonds and deposits required by law, rules and regulations to be posted in order to ensure the faithful performance of an activity or undertaking. bounce
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