Differences between SD and PG

DIFFERENCES BETWEEN

Security Deposit (SD)	Performance Guarantee (PG)
1.       In token for the due fulfilment of the contract	1. In token for the purpose of successful performance by the Contractor to execute the work. Introduced in lieu of risk action procedure (contracts rescinded due to failure of contractors)
2.       EMD of successful tenderer will be retained as part S.D., balance will be recovered at the rate of 10% of the bill amount till the full Security Deposit is  recovered,	2.  Obtained from successful bidder after issuance of LOA, but within 60 days of issue of LOA. a)      Within30 days from LOA – No interest b)      31 to 60 days from LOA – penal Interest 15 % per annum
3.       Balance Security Deposit will be recovered only from the running bills of the  contract and no other mode of collecting SD shall be permitted	3.  Submit the Performance Guarantee in any of the forms i.e., Cash, Irrevocable Bank Guarantee, Govt securities, DDs of nationalized banks, Post office SB deposit, NSCs etc.
4.       There is no question of failing to submit the balance SD, because the same is recovered from running bills at the rate of 10% of bill amount till the full SD is recovered.	4.  In case the contractor fails to submit the requisite PG even after 60 days from the date of issue  of LOA, the contract shall be terminated duly forfeiting EMD and other dues, if any payable against that contract. The failed contractor shall be debarred from participating in re-tender for that work.
5.       Can be released subject to A)     Physical completion of the work and Maintenance period if any. B)      After passing Final Bill C)      Obtaining the No Claim certificate from the Contractor D)     Obtaining the No Dues certificate against   Contractor from the Executive	5.  Can be released immediately after physical completion of the work.

                Click here for article on PG

                              Performance Guarantee                          

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