A Bid Security Declaration (BSD) is a signed undertaking a bidder submits instead of paying Earnest Money Deposit (EMD). In it, the bidder agrees to be suspended from bidding for a stated period if it withdraws or modifies its bid during validity, or fails to sign the contract or furnish performance security after winning.
The Bid Security Declaration was introduced to ease the cash burden of EMD on bidders, especially MSEs and startups. Following amendments to the General Financial Rules 2017 through Office Memoranda from the Department of Expenditure, buyers were allowed to accept a BSD in place of blocking a bidder’s money as EMD. The intent is to keep the deterrent against frivolous bidding while freeing up bidder working capital.
The mechanism is behavioural rather than financial. Instead of forfeiting money, a bidder who breaches the declared conditions — backing out during bid validity, refusing the award, or failing to provide performance security — is barred from participating in that buyer’s (or a wider set of) tenders for a defined period. The threat of suspension replaces the threat of losing EMD.
A BSD is usually submitted on the prescribed format included in the tender document, signed by the authorised signatory using the Digital Signature Certificate. Because it is a declaration and not a payment, there is nothing to refund, which also removes the common post-tender headache of chasing EMD refunds from government buyers.
Not every tender uses a BSD. Buyers retain discretion, and some still require EMD, particularly for high-value or high-risk contracts. Some tenders use a hybrid approach depending on bidder category — for instance accepting a BSD from exempt categories while still asking others for EMD. Always read the tender to confirm which applies before assuming your money is not required.
Treat a Bid Security Declaration with the same seriousness as EMD, because the consequence — suspension from future tenders — can be more damaging to a regular bidder than losing a deposit. Only sign a BSD when you are genuinely committed to honouring the bid, the award, and the performance security, for the full bid validity period.
BidShakti detects whether a tender requires EMD, a Bid Security Declaration, or offers an exemption based on your MSE or startup status, and surfaces it in the go/no-go summary. Its bid-pack includes the correct BSD format as part of your document checklist, so you submit a properly executed declaration on the right template instead of discovering the requirement at the last minute.
Frequently asked questions
What is a Bid Security Declaration?
It is a signed undertaking submitted instead of EMD, agreeing that the bidder will be suspended from bidding if it withdraws its bid or fails to honour an award.
Does BSD replace EMD completely?
It can, where the tender allows it under GFR 2017 amendments, but buyers retain discretion and some high-value tenders still require EMD.
What happens if I breach a Bid Security Declaration?
You can be barred from participating in tenders for a defined period — suspension replaces the forfeiture of money that EMD used to enforce.
Why was the Bid Security Declaration introduced?
To reduce the working-capital burden of EMD on bidders, especially MSEs and startups, while retaining a deterrent against frivolous or withdrawn bids.
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