Why the 3.85% Floor Exists: Preventing Statutory Wage Undercutting
For years, predatory contractors secured government tenders by quoting zero service charges or fractional decimals (e.g., ₹0.0001), relying on fraudulent methods to recoup profits: illegally skimming guard EPF/ESIC, delaying salaries past statutory dates, or withholding annual bonus. The 3.85% floor establishes an irreducible minimum to cover bona fide administrative overheads:
Field officer inspections, motorized night checks, and incident response operations.
2 pairs of uniforms, boots, badges, whistles, rain gear, and night searchlights.
PSARA Section 9 syllabus, refresher fire drills, first-aid, and gate-frisking protocols.
Monthly ECR generation, biometric muster reconciliation, and audit management.
Earnest Money Deposit (Rule 170) & Performance Security (Rule 171)
GFR 2017 Rule 170: EMD & MSME Exemption
Bid Security & Exemption Standards
- Udyam MSME Exemption: Micro & Small Enterprises holding valid Udyam certificates under NIC Code 80100 (Private Security) are 100% exempt from paying EMD.
- Bid Security Declaration: In lieu of cash/BG EMD, exempt bidders must submit a legally binding declaration agreeing to debarment if the bid is altered or withdrawn during validity.
- Non-Exempt Bidders: Standard EMD quantum is fixed between 2% to 5% of the estimated tender value, deposited via BG or FDR.
GFR 2017 Rule 171: Revised PBG Norms (3% - 5%)
Performance Bank Guarantee Standards
- Revised 3% to 5% Quantum: The Ministry of Finance revised the historical 10% PBG requirement down to 3% to 5% of contract value to stimulate operational liquidity.
- Validity Period: The PBG must remain valid for the entire contract term plus an additional 60 days buffer for final statutory audits and no-due verification.
- Acceptable Instruments: Bank Guarantee from a Scheduled Commercial Bank, FDR pledged to the buyer, or online payment via GeM Treasury integration.
100-Point Technical Bid Evaluation Matrix (QCBS & Pre-Qualification)
Standard technical evaluation scorecard used by Tender Committees to screen prospective security contractors before financial envelope opening:
| Evaluation Parameter | Max Points | Statutory Evidence Required | Scoring Criteria Breakdown |
|---|---|---|---|
| 1. State PSARA Form-V License | 25 Pts | Certified Form-V certificate issued by State Home Department / Controlling Authority. | • Valid license covering site district = 25 Pts • License expired or out-of-state = Disqualified |
| 2. Audited Turnover (CA UDIN) | 20 Pts | 3-5 years balance sheets and P&L attested by CA with active ICAI UDIN. | • Turnover > 100% of tender value = 20 Pts • Turnover 50%–100% = 15 Pts • Turnover 30%–49% = 10 Pts |
| 3. Deployed Guard Strength & EPF Headcount | 20 Pts | Latest EPFO Electronic Challan cum Return (ECR) with TRRN matching bank payment. | • Active guards > 1,000 = 20 Pts • Active guards 500–999 = 15 Pts • Active guards 200–499 = 10 Pts |
| 4. Government / PSU Past Performance | 20 Pts | Work completion certificates from Central/State Govt or PSUs + Notarized Non-Blacklisting Affidavit. | • 5+ successfully executed public contracts = 20 Pts • 3-4 public contracts = 15 Pts • 1-2 public contracts = 10 Pts |
| 5. Quality & Safety Certifications | 15 Pts | Valid ISO 9001:2015 (QMS) and ISO 45001:2018 (Occupational Health & Safety). | • Both ISO 9001 and ISO 45001 = 15 Pts • Only ISO 9001 = 10 Pts • No accredited certifications = 0 Pts |
| Total Maximum Score | 100 Pts | Minimum Qualifying Benchmark: 70 - 75 Points required to qualify for Financial Bid Opening or Reverse Auction. | |
12-Point Pre-Bid Envelope Scrutiny Checklist
Interactive verification docket for Tender Inviting Authorities (TIA), Technical Evaluation Committees (TEC), and Finance Officers.
PSARA Form-V License (State Specific)
Required Document: Form-V Certificate issued by State Controlling Authority (Home Dept)
Udyam MSME Registration Certificate
Required Document: Udyam Registration Certificate with NIC Code 80100 (Private Security Activities)
Permanent Account Number (PAN)
Required Document: PAN Card of the Proprietorship / Partnership / Company
GSTIN Certificate & 3-Month Filing Receipts
Required Document: GST REG-06 Certificate and GSTR-3B filed acknowledgments for last 3 consecutive months
EPFO Electronic Challan cum Return (ECR & TRRN)
Required Document: EPFO Establishment Code letter + Recent ECR sheet with bank TRRN payment debit receipt
ESIC Monthly Contribution Challan & Payment Proof
Required Document: ESIC 17-digit Employer Code + Recent monthly payment challan with employee IP numbers
Form V under Contract Labour (R&A) Act, 1970
Required Document: Valid Form-V from previous Principal Employer / Form-VI Contractor License
3-5 Year Audited Balance Sheets with ICAI UDIN
Required Document: Balance Sheets, P&L Statements, and Turnover Certificates with active ICAI UDIN
Bank Solvency Certificate from Scheduled Commercial Bank
Required Document: Original Solvency Certificate issued by a Scheduled Commercial / Nationalized Bank
Notarized Non-Blacklisting & Vigilance Affidavit
Required Document: Notarized affidavit on non-judicial stamp paper attested by Notary Public / Oath Commissioner
PSARA Section 9 Recognized Training Institute MoA
Required Document: MoA / Agreement with Home Dept-recognized Security Guard Training Institute + Syllabus certificate
ISO 9001:2015 & ISO 45001 (OHSAS) Certifications
Required Document: Valid ISO 9001:2015 (Quality Management) and ISO 45001:2018 (Occupational Health & Safety) certificates
Scrutinizing Officer
Name / Designation
Technical Evaluation Committee (TEC)
Member Secretary
Tender Inviting Authority (TIA)
Signature & Stamp
Audited according to GFR 2017 Rule 170/171 and Ministry of Finance DoE OM No. F.6/1/2023-PPD. Generated via Advance Corporate Security B2G Procurement Portal.
Partner with ACS for Your Upcoming GeM Tender
Advance Corporate Security (ACS) is an active, verified GeM Seller with an unblemished 25-year public sector track record. We furnish full pre-bid compliance envelopes, UDIN-verified financial credentials, and state-wide PSARA licensing across Eastern India and NCR.
Technical & Legal FAQs on GeM Security Tenders
Why does GeM summarily reject security bids with service charges below 3.85%?
Under Ministry of Finance / Department of Expenditure Office Memorandum OM No. F.6/1/2023-PPD (dated 06.01.2023), bids quoting administrative or service charges below 3.85% are automatically classified as unviable and summarily rejected as non-responsive. The 3.85% statutory floor covers essential non-wage operational costs including supervisory visits, uniform & gear replacement, mandatory guard training, recruitment verification, and statutory accounting. Bids below this threshold inevitably lead to illegal deduction of EPF/ESIC from guards' take-home pay, ghost billing, or abrupt vendor abandonment, exposing the government buyer to severe audit and legal liabilities.
How do MSME security service providers claim EMD exemption under GFR 2017 Rule 170?
Under Rule 170(i) of the General Financial Rules (GFR), 2017, Micro and Small Enterprises (MSEs) registered with Udyam Registration or the National Small Industries Corporation (NSIC) are 100% exempt from depositing Earnest Money Deposit (EMD). To claim this exemption in GeM security tenders, the agency must hold a valid Udyam certificate specifically under National Industry Classification (NIC) Code 80100 ('Private security activities'). In lieu of EMD, the bidder must submit a signed and stamped 'Bid Security Declaration' accepting debarment from future public tenders if they withdraw or modify their bid during validity.
Can a security contractor bid on a GeM tender in one state using a PSARA license from another state?
No. Under the Private Security Agencies (Regulation) Act, 2005 (Section 4), a private security agency must hold an active Form-V license issued specifically by the Controlling Authority of the state or Union Territory where the personnel are to be deployed. Operating in a state without a local Form-V license is a cognizable criminal offense. In GeM technical evaluations, bids submitting out-of-state PSARA licenses are disqualified at Envelope A scrutiny, regardless of their financial quote.
What is the revised Performance Security (PBG) norm under GFR 2017 Rule 171?
Pursuant to Ministry of Finance procurement reforms under GFR 2017 Rule 171, Performance Security (PBG) for public service contracts is set between 3% to 5% of the total contract value (reduced from historical 10% ceilings to improve vendor liquidity). The PBG must remain valid for a period of 60 days beyond the completion of all contractual obligations, including final wage reconciliations and statutory EPF/ESIC clearances. Acceptable forms include an Irrevocable Bank Guarantee from any Scheduled Commercial Bank or a Fixed Deposit Receipt (FDR) pledged to the Tender Inviting Authority.
Why is a Chartered Accountant Turnover Certificate invalid without an ICAI UDIN?
Under mandatory guidelines issued by the Institute of Chartered Accountants of India (ICAI), every audit report, certificate, and financial document attested by a practicing CA must carry an 18-digit Unique Document Identification Number (UDIN). During GeM technical scrutiny, procurement officers verify the UDIN at udin.icai.org to authenticate genuine financial health. Certificates without a verifiable UDIN are treated as fraudulent or uncertified, resulting in immediate technical envelope disqualification under GFR Rule 151.