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Subject: Request to Substitute Bank Guarantee with Surety Bond for Performance Security in Tender No. : RCC/ERO/38/2024-25/PT-GeM-168

Dear [Sir/Madam/Name],

I trust this message finds you well. We extend our gratitude for awarding us the Letter of Intent (LOI) for Tender No. [Insert] dated [Date]. We are eager to commence work on [Project Title] and deliver results aligned with your expectations.

LOI Details

• Tender Number: [Tender Number]
• Contract Value: [Insert]
• LOI Received Date: [LOI Received Date]

Background

While we submitted a Bank Guarantee (BG) during the bidding stage as mandated, we note that the Ministry of Finance’s GFR 2017 (amended) and IRDAI guidelines permit Surety Bonds as equivalent instruments for Performance Guarantees.

Specifically:

1. GeM GTC Version 4.0: The latest version, issued on [insert date], affirms the acceptance of Surety Bonds, as outlined in section [insert section number].
2. Ministry of Finance, General Financial Rules (GFR) 2017: These rules endorse the use of Surety Bonds, reflecting the government's commitment to fostering ease of doing business, particularly for MSMEs.
3. IRDAI Guidelines: The Insurance Regulatory and Development Authority of India (IRDAI) has recognised Surety Bonds as regulated financial instruments, ensuring security and assurance comparable to traditional bank guarantees.

Concern

While we are prepared to proceed with the project, we have noted that the current bid/tender document does not explicitly provide for the acceptance of Surety Bonds for the Performance Guarantee. This seems to be an oversight, given the clear guidelines from GeM GTC and GFR.

Our Request