Government Fulfils Promise, Provides Relief to MSMEs for COVID-19 Period

In an order issued by the Department of Expenditure, Ministries have been asked to refund performance security/ bid security and liquidated damages forfeited/ deducted during the COVID-19 pandemic. The order has been issued as a follow-up to the “Vivad se Vishwas-I” scheme announced in the Budget Speech 2023-24 by the Union Finance Minister Nirmala Sitharaman. Relief will be provided toin all contracts for procurement of Goods and Services, entered into by any Ministry/ Department or other affiliated institutions. If the contractor or supplier is registered with the Ministry of MSME as on 31st March 2022 and also that the original delivery period or completion period was between 19th February 2020 and 31st March 2022.

The grant of relief will be monitored through Government e-Marketplace (GeM). MSME Vendors will be able to register on GeM portal and enter details of the applicable contracts.  The list of the procuring entities will also be available on the portal.  The portal will notify the nodal officers of each procuring entity to verify the claim of the MSME vendor.

To provide relief to the MSMEs, Government has in the last 2 years, announced many benefits for them. As a follow up to the relief measures announced earlier, the Ministry of Finance decided to give following additional benefits to MSMEs:

  • 95% of the performance security forfeited from such firms shall be refunded.
  • 95% of the Bid security (Earnest Money Deposit), if any, forfeited from MSME firms in tenders opened between 19.02.2020 and 31.03.2022 shall be refunded.
  • 95% of the Liquidated Damages (LD) deducted from such firms shall also be refunded. LD so refunded shall not exceed 95% of the performance security stipulated in the contract.
  • In case any firm has been debarred only due to default in execution of such contracts, such debarment shall also be revoked, by issuing an appropriate order by the procuring entity.

However, in case a firm has been ignored for placement of any contract due to debarment in the interim period (i.e. date of debarment and the date of revocation under this order), no claim shall be entertained.

  • No interest shall be paid on such refunded amount.

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