With reference to news item carried by Business Recorder Karachi, on 26.02.2012, entitled "Violation of rules pointed out in PSM tenders". The Spokesman for Pakistan Steel clarified that the letter of Transparency International Pakistan addressed to Chief Executive Officer Pakistan Steel has been published which has been replied by PSM on 27.02.2013.
The letter PPRA dated: 21.02.2013 has again specified rule 39 which described the maximum limit of performance guarantee ie 10% of the contract amount. The rule 39 of PPRA of 2004 stated that: "Where needed and clearly expressed in the bidding documents, the procuring agency shall require the successful bidder to furnish a performance guarantee which shall not exceed ten percent of the contract amount".
The spokesman said that it is quite obvious from the wording of the rule that it is not mandatory for a procuring agency to acquire performance guarantee essentially from the successful bidder, rather it is the discretion of the procuring agency whether to ask for the performance guarantee or not. If the procuring agency feels that performance guarantee is not needed, it can decided accordingly. It has already been clarified that PSM has so far concluded six generations of iron ore procurement (each generation comprising five years) and never included the requirement of performance bond in the tender documents. The reason is that, a long term contract is made for five years and performance bond is to be hold till the completion of the contract and no bidder will like to deposit a fixed amount for such a long period.
The spokesman also clarified that in short, to impose performance guarantee is the discretion of procuring agency and the letter of Deputy Director PPRA dated: 21.02.2013 does not bound PSM for imposing the performance bond. Therefore, it is not fair to extract such meaning form this letter. Spokesman of PSM said as clarified above, in the long term tender Pakistan Steel has not imposed bid bond and performance bond so the question that "the same are from bank only and insurance company having AA rating from PACRA/JCR" does not arise at all. The PSM Spokesman said that the minimum Fe content for lump ore is 60% which is same as we kept in previous generations. However, 58% is the absolute limit beyond which the material may be liable to rejection of special penalty.-PR