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Posting of Performance Security

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Posting of Performance Security

Post by TWG on Tue Mar 17, 2009 10:43 am

Good day to all.

May I be clarified please of Sections 37.3 and 39 of the draft GPRA IRR pertaining to the posting of Performance Security. Section 37.3 states that the winning bidder shall post the required Performance Security (PS) prior to formally entering into contract while Section 39 requires the posting of PS upon the signing of the contract. "Prior" means earlier or previous while "upon" means on or at the time of.

May I also share that banks do not usually issue bank guarantee unless a signed contract is presented. The same is true with surety companies. Thanks

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Re: Posting of Performance Security

Post by RDV @ GP3i on Tue Mar 17, 2009 3:56 pm

Nilo wrote:Good day to all.

May I be clarified please of Sections 37.3 and 39 of the draft GPRA IRR pertaining to the posting of Performance Security. Section 37.3 states that the winning bidder shall post the required Performance Security (PS) prior to formally entering into contract while Section 39 requires the posting of PS upon the signing of the contract. "Prior" means earlier or previous while "upon" means on or at the time of.

May I also share that banks do not usually issue bank guarantee unless a signed contract is presented. The same is true with surety companies. Thanks

It could either be posting of the Performance Security prior to entering the contract or at the same time as the contract signing, but never after the contract signing. Therefore, your information about the issuance of bank guarantee after contract is signed, is for the GPPB to know and probably consider in drafting of the new IRR.

If, however, a bank requires a signed contract, then you can either go to another bank or post another form of performance security.
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Posting of Performance Security

Post by TWG on Thu Mar 19, 2009 8:25 am

Thank you so much RDV, sir.

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Re: Posting of Performance Security

Post by RDV @ GP3i on Thu Mar 19, 2009 1:10 pm

You are most welcome, Nilo. Very Happy
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Re: Posting of Performance Security

Post by riddler on Wed Mar 25, 2009 1:14 am

RDV,

I believed Nilo is referring to the procurement of Goods. As for the procurement of Infrastructure project, there is still that almost forgotten requirement from the Philippine Bidding Documents requiring the winning Bidder to submit copy of its "Comprehensive All Risk Insurance (CARI)" covering the project before proceeeding to implement it. I observed that most of the LGU's and NGA's are turning a blind eye on this matter, just like the Warranty Bond.
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Re: Posting of Performance Security

Post by RDV @ GP3i on Wed Mar 25, 2009 10:08 am

tianchon,ruel wrote:RDV,

I believed Nilo is referring to the procurement of Goods. As for the procurement of Infrastructure project, there is still that almost forgotten requirement from the Philippine Bidding Documents requiring the winning Bidder to submit copy of its "Comprehensive All Risk Insurance (CARI)" covering the project before proceeeding to implement it. I observed that most of the LGU's and NGA's are turning a blind eye on this matter, just like the Warranty Bond.

Engr. ruel:

Whether procurement of goods or infra, I believe, my reply to nilo is applicable.

In the case of infra, requiring a winning bidder to submit, aside from Performance Security, a Comprehensive All-Risk Insurance or CARI, is up to the procuring entity. But the CARI cannot replace the required Performance Security.

The Philippine Bidding Documents do not contain the requirement for CARI, except under the GCC, which the contractor must obtain under its own name and cost and for its own benefits, but the GPPB opined that "the law does not prohibit procuring entities from customizing their bidding documents in accordance with their specific requirements by requiring the submission of additional documentary requirements under the caveat it must be reasonable and not contrary to any provision of the law."

It added that:

"The performance security operates to guarantee the faithful compliance by the contractor of the terms and conditions under his contract with the government; on the other hand, the CARI ensures that the contractor’s risk is properly covered and readily enforceable in case the contractor is rendered financially incapable to respond to all of its liabilities under the contract.

[T]here having been no apparent inconsistency between the provisions of law and that of mandating the submission of CARI as an additional requirement as provided in the General Conditions of the Contract (GCC), we are of the view that such practice is valid and is in keeping with standard industry practice"
.

To see that particular GPPB opinion, pls follow this link:

http://www.gppb.gov.ph/opinions/view_opinion.asp?o_id=364
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Re: Posting of Performance Security

Post by rpi on Fri Sep 25, 2009 1:04 pm

Sir,
The Procuring Entity requires only cash/Manager's check and bank guarantee for our Performance Security and it is stated in the notice of award. What can we do so that they will consider our prefered PF which is GSIS surety considering that GSIS is a government agency also...
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Re: Posting of Performance Security

Post by amang'65 on Fri Sep 25, 2009 1:20 pm

rpi wrote:Sir,
The Procuring Entity requires only cash/Manager's check and bank guarantee for our Performance Security and it is stated in the notice of award. What can we do so that they will consider our prefered PF which is GSIS surety considering that GSIS is a government agency also...

rpi:

It is the ageny's prerogative whether bidders should post their performance bond/security in the form of cash/bank quarantee/gsis surety, provided it has been clearly stated in your instruction to bidders that performance bond should be in such a form. i would rather suggest that you require them to post Performance security in the form of cash it is more soluble rather than surety bonds maraming papeles bago ma-settle.
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Re: Posting of Performance Security

Post by rpi on Fri Sep 25, 2009 1:51 pm

Sir for the record the procuring entity required only two forms cash or bank quarantee, no surety bond because they said mahirap daw maghabol..in the award. Again we prefer GSIS surety coz its cheap and madali para sa amin kumuha...
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Re: Posting of Performance Security

Post by sunriser431 on Fri Sep 25, 2009 1:53 pm

rpi wrote:Sir,
The Procuring Entity requires only cash/Manager's check and bank guarantee for our Performance Security and it is stated in the notice of award. What can we do so that they will consider our prefered PF which is GSIS surety considering that GSIS is a government agency also...

If it is clearly stated in the ITB the acceptable forms, then you have to comply the said requirements, however you can write them a letter asking for reconsideration, In my opinion it would be best if cash/Manager's check and bank guarantee it it easier to call, not unlike surety bond( GSIS), the check list of requirements are numerous, additional benefit if cash/check is applied it is refundable. Smile
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Re: Posting of Performance Security

Post by rpi on Fri Sep 25, 2009 2:01 pm

OK THANKS SIR..
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Re: Posting of Performance Security

Post by sunriser431 on Fri Sep 25, 2009 4:16 pm

rpi wrote:OK THANKS SIR..
You are welcome, Hope to hear more from you.
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