Performance Security in Procurement

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Questions and Answers

What is the penalty for delay in performing obligations under the contract?

0.1% or 1/1000 of the value of undelivered item for each day of delay

What is the maximum cumulative penalty that the supplier must pay for delay?

10% of the contract price

Under what conditions can the Public Body terminate the contract due to delay?

If the delay affects its activities

When must the successful bidder sign a contract with the Public Body?

Within 15 days of notification of award Signup and view all the answers

When can the Public Body sign a contract after notifying bidders of the bid results?

After seven working days Signup and view all the answers

What must the Public Body carefully consider before signing a contract?

Obligations and liabilities it may have to assume under the contract Signup and view all the answers

What is the purpose of requiring performance security in a procurement process?

To ensure that the supplier fulfills their obligations in accordance with the terms and conditions of the contract. Signup and view all the answers

When does the successful bidder have to provide performance security?

Within fifteen days from signing a contract. Signup and view all the answers

Under what circumstance can the performance security be returned to the supplier?

When the Procurement Endorsing Committee determines that the noncompliance of the supplier does not affect the interest of the Public Body and is not due to the fault of the supplier. Signup and view all the answers

What type of security can be accepted for construction contracts or contracts for the supply of drugs with local contractors or manufacturers of pharmaceutical products?

A conditional insurance bond. Signup and view all the answers

What action must the Public Body take when authorizing the return of performance security to a supplier?

Submit any related documents and account for its action to the Agency or other competent body if required. Signup and view all the answers

Can the Public Body require a supplier to provide professional indemnity insurance as performance security?

No, the text does not mention professional indemnity insurance as a form of performance security. Signup and view all the answers

When may a Public Body require a consultant to furnish professional indemnity insurance?

When the Public Body finds it appropriate to make provision for any damage it may sustain as a result of possible default on the part of the consultant. Signup and view all the answers

What is the alternative to performance security that small and micro enterprises can submit?

A letter of guarantee from the body organizing and overseeing them. Signup and view all the answers

How can enterprises engaged in insurance business and contracting with a Public Body use their reserve with the National Bank of Ethiopia as performance security?

By producing a certificate from the bank that the reserve they have is sufficient to cover the required performance security. Signup and view all the answers

When will the performance security furnished by a supplier be returned to them?

Upon complete performance of the contract, unless the parties agree otherwise. Signup and view all the answers

What is the maximum amount of advance payment that can be made in any public procurement?

30% of the total contract price. Signup and view all the answers

Under what condition may a supplier's performance security not be returned upon completion of the contract?

If the parties agree otherwise. Signup and view all the answers

Study Notes

In procurements not executed through request for quotation or rental services, a Public Body requires a supplier to provide performance security.
The successful bidder must provide performance security within fifteen days of signing the contract, in an amount equal to at least ten percent of the total contract price.
If a supplier fails to fulfill its obligations under the contract, the Public Body can exercise its rights over the security and demand or confiscate it.
The performance security may be returned to the supplier if the Procurement Endorsing Committee determines that the noncompliance does not affect the Public Body or incur additional costs and is not the supplier's fault.
The Public Body must submit documents related to the return of performance security and account for its actions if required by the Agency or other competent bodies.
Performance security for construction contracts and drug supply contracts can be in the form of a conditional insurance bond, and the conditions leading to forfeiture and supplier delay liabilities apply.
The supplier is liable for a penalty of 0.1% or 1/1000 of the value of undelivered items for each day of delay, with a maximum penalty of 10% of the contract price.
The Public Body may terminate the contract if the delay significantly impacts its activities, without waiting for the penalty to reach 10% of the contract value.
The Public Body must carefully consider its obligations and liabilities under a contract and may not sign contracts it cannot fulfill.
The successful bidder must sign the contract with the Public Body within fifteen days of notification of award, unless an exceptional situation arises.
A Public Body may require a consultant to provide professional indemnity insurance for consultancy services.
Small and micro enterprises must submit a letter of guarantee from their organizing and overseeing bodies instead of performance security.
Enterprises in the insurance business, contracting with a Public Body, can use their reserves with the National Bank of Ethiopia as performance security, with the requirement of a certificate from the bank.
The performance security is returned to the supplier upon complete performance of the contract, unless the parties agree otherwise.
An advance payment of up to 30% of the total contract price can be made in any public procurement.

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Description

Learn about the requirements of performance security in procurement contracts. Understand when and how suppliers must provide performance security, as outlined in the directive.