Subject: Request to Substitute Bank Guarantee with Surety Bond for Performance Security in Tender No. [Tender No.]

Hello Team,

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

LOI Details

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

Background

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. Ministry of Finance Office Memorandum (OM No. F.1/2/2023-PPD) – Defines surety bonds as an alternative to bank guarantees for public procurement.
2. Government eMarketplace (GeM) General Terms and Conditions (Version 4.0): – Explicitly allows surety bonds as a valid security instrument.
3. IRDAI Guidelines (2022, 2023, 2024) – Permit the use of surety bonds for material procurement and commercial transactions, strengthening their acceptance across industries.

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.

Our Request

To optimise resource allocation and align with national MSME-friendly policies, we kindly seek approval to:

• Permit the submission of Surety Bond of equivalent value (INR [Amount]) for the Performance Guarantee.