1Why this confuses everyone (including smart QSs & engineers)

On real projects you’ll often see phrases like:

• “Bid Security / Earnest Money Deposit (EMD)…”
• “Tender Fee (non-refundable)…”
• “Bid Securing Declaration in lieu of EMD…”

Different departments mix these terms in slightly different ways. Add CPWD’s own wording (“Earnest Money” in the Works Manual) plus GFR and Ministry of Finance circulars, and it’s very easy for teams to blur the lines between:

• money that is security (you should get it back if you behave), and
• money that is just a fee (you will never get it back).

Let’s clean this up in simple, CPWD-friendly language.

2. Plain-English definitions 🧾

2.1 Bid Security (a.k.a. EMD in Indian procurement)

Under Government of India procurement manuals, Bid Security is the formal name for the deposit taken with the bid to protect against withdrawal or alteration during the bid-validity period. The manuals explicitly say it is “also known as Earnest Money Deposit (EMD)”.

Key points:

• Paid with the bid – you must submit it along with your tender.
• Typically 2–5% of the estimated value (exact % is set in the NIT / tender).
• Refundable if the bidder behaves and the process runs its course (no withdrawal, no refusal to sign agreement, no failure to give performance guarantee).
• May be replaced by a Bid Securing Declaration in some cases (for example, special policy relaxations for MSMEs or during certain periods).

2.2 Earnest Money Deposit (EMD)

In Indian practice, EMD is simply the traditional term for Bid Security:

Bid Security = Earnest Money Deposit (EMD) in GFR-style procurement.

Manuals for procurement of works and goods repeatedly describe bid security as “also known as Earnest Money Deposit (EMD)” and say it is obtained from bidders to safeguard against withdrawal or alteration of bids during bid validity.

CPWD’s Works Manual 2022 uses the term “Earnest Money” in Chapter 5.1 for the same role in works tenders – a refundable deposit with the tender to deter:

• withdrawal of the bid after opening,
• refusal to sign the agreement, or
• failure to furnish the performance guarantee.

So in your CPWD world, you can safely read:

“Earnest Money” in CPWD = “Bid Security / EMD” in GFR language.

2.3 Tender Fee (Tender Cost / Document Fee)

Tender Fee is totally different from Bid Security / EMD.

It’s a small, non-refundable amount you pay just to access the tender documents. Think of it as a document purchase or processing charge, not a security.

Typical traits:

• Paid before or at bid submission (often as a separate online payment, e.g., via e-tender portal).
• Non-refundable, whether you win or lose the tender.
• Usually a fixed amount (e.g., ₹500, ₹1,000, ₹2,000…), clearly printed in the NIT.
• Sometimes exempted for MSMEs / Startups as per policy, similar to EMD exemptions.

1Why this confuses everyone (including smart QSs & engineers)

On real projects you’ll often see phrases like:

• “Bid Security / Earnest Money Deposit (EMD)…”
• “Tender Fee (non-refundable)…”
• “Bid Securing Declaration in lieu of EMD…”

Different departments mix these terms in slightly different ways. Add CPWD’s own wording (“Earnest Money” in the Works Manual) plus GFR and Ministry of Finance circulars, and it’s very easy for teams to blur the lines between:

• money that is security (you should get it back if you behave), and
• money that is just a fee (you will never get it back).

Let’s clean this up in simple, CPWD-friendly language.

2. Plain-English definitions 🧾

2.1 Bid Security (a.k.a. EMD in Indian procurement)

Under Government of India procurement manuals, Bid Security is the formal name for the deposit taken with the bid to protect against withdrawal or alteration during the bid-validity period. The manuals explicitly say it is “also known as Earnest Money Deposit (EMD)”.

Key points:

• Paid with the bid – you must submit it along with your tender.
• Typically 2–5% of the estimated value (exact % is set in the NIT / tender).
• Refundable if the bidder behaves and the process runs its course (no withdrawal, no refusal to sign agreement, no failure to give performance guarantee).
• May be replaced by a Bid Securing Declaration in some cases (for example, special policy relaxations for MSMEs or during certain periods).

2.2 Earnest Money Deposit (EMD)

In Indian practice, EMD is simply the traditional term for Bid Security:

Bid Security = Earnest Money Deposit (EMD) in GFR-style procurement.

Manuals for procurement of works and goods repeatedly describe bid security as “also known as Earnest Money Deposit (EMD)” and say it is obtained from bidders to safeguard against withdrawal or alteration of bids during bid validity.

CPWD’s Works Manual 2022 uses the term “Earnest Money” in Chapter 5.1 for the same role in works tenders – a refundable deposit with the tender to deter:

• withdrawal of the bid after opening,
• refusal to sign the agreement, or
• failure to furnish the performance guarantee.

So in your CPWD world, you can safely read:

“Earnest Money” in CPWD = “Bid Security / EMD” in GFR language.

2.3 Tender Fee (Tender Cost / Document Fee)

Tender Fee is totally different from Bid Security / EMD.

It’s a small, non-refundable amount you pay just to access the tender documents. Think of it as a document purchase or processing charge, not a security.

Typical traits:

• Paid before or at bid submission (often as a separate online payment, e.g., via e-tender portal).
• Non-refundable, whether you win or lose the tender.
• Usually a fixed amount (e.g., ₹500, ₹1,000, ₹2,000…), clearly printed in the NIT.
• Sometimes exempted for MSMEs / Startups as per policy, similar to EMD exemptions.

3. Why Bid Security/EMD exists vs why Tender Fee exists 🎯

Bid Security / EMD – behaviour control

Bid Security / EMD is a risk-control device. It exists to:

• Stop bidders from withdrawing or altering bids during the bid-validity period.
• Discourage the L1 bidder from refusing to sign the contract or failing to submit the Performance Security.
• Shield the Employer from the cost and delay of re-tendering or going to L2.

The essential idea is:

“If you want us to spend time evaluating you, you must put some money at stake.”

Tender Fee – cost recovery

Tender Fee is not about behaviour; it is about cost recovery:

• It covers the administrative cost of preparing, hosting, and distributing tender documents.
• It also helps cover the cost of processing and evaluating bids.

It is not security, and it is not refunded even if the Employer cancels the tender.

So, in one line:

• EMD = refundable security for seriousness
• Tender Fee = non-refundable payment for documents & processing

4. Where does “Bid Securing Declaration” fit in? ✍️

During COVID and the resulting liquidity crunch, the Ministry of Finance issued OMs allowing departments to replace Bid Security / EMD with a Bid Securing Declaration for a period.

The idea was simple: instead of blocking 2–5% of contract value as EMD, bidders sign a declaration that:

• if they withdraw or modify their bid during the validity period, or
• if they refuse to sign the contract or fail to submit performance security on time,
• they can be suspended / debarred as per the tender conditions.

So, in practice:

Bid Security (cash / BG) OR Bid Securing Declaration = tools to enforce seriousness.

CPWD and other works departments follow these GFR-driven relaxations via their own circulars and manuals. For you as a QS or engineer, the working rule is:

• if you see a Bid Securing Declaration clause, treat it as the behavioural equivalent of EMD, but without blocking the bidder’s cash;
• still keep a close eye on forfeiture / debarment triggers in the NIT and contract data.