Performance Security is one of the most important post-award compliance requirements in government contracts. Unlike EMD, which is submitted during bidding, performance security is usually furnished after the work order or supply order is awarded. It protects the buyer against non-performance, delay, or breach of contract.
What is Performance Security?
Performance security is a financial guarantee submitted by the successful bidder to ensure proper execution of the contract. It may be provided as a bank guarantee, fixed deposit receipt, or another form accepted by the tendering authority.
Why Buyers Ask for It
- To reduce the risk of contract failure.
- To ensure timely delivery or project completion.
- To create financial accountability after award.
How It Differs from EMD
EMD is a bid-stage instrument used to establish seriousness during submission. Performance security is an award-stage instrument used to secure contractual performance. Both serve different legal and commercial purposes.
What Bidders Should Check
- Required percentage of the contract value.
- Validity period of the guarantee.
- Acceptable bank or instrument format.
- Timeline for submission after award.
- Conditions for release or forfeiture.
Practical Risks
Failing to submit performance security on time can delay work order issuance or lead to cancellation of award. In large tenders, the buyer may also insist on strict format compliance, so the exact wording and validity dates matter.
How BidSarathi Helps
BidSarathi helps teams keep track of award-stage requirements, generate the right supporting documents, and reduce delays between bid win and contract execution.
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