NHAI Rationalises Additional Performance Security Requirements for Ongoing and Future Works

The National Highways Authority of India (NHAI) has modified the provisions governing Additional Performance Security (APS) applicable to works sanctioned at the NHAI level vide Policy Circular No. 11.94/2026 dated June 19, 2026 (the “Circular”). The Circular builds upon NHAI Policy Circular Nos. 11.84/2026 dated February 13, 2026, and 11.86/2026 dated February 21, 2026, which introduced revisions to the APS framework applicable to Engineering Procurement Construction (EPC), Operation and Maintenance (O&M), Short-Term Maintenance Contracts (STMC), Performance Based Maintenance Contracts (PBMC), Black Spot rectification works and other specified categories of projects.

The Circular gives effect to the decision of NHAI’s Executive Committee taken at its 719th meeting held on June 11, 2026, and reflects the Authority’s continuing efforts to calibrate bid security requirements while maintaining safeguards against risks associated with heavily discounted bids.

A key feature of the circular is the revision of the threshold triggering the requirement to furnish APS. Under the revised framework, where the bid price offered by the selected bidder is lower than 15% of the estimated project cost, the successful bidder shall be required to furnish APS, in addition to the prescribed performance security by way of an irrevocable bank guarantee (including an e-bank guarantee). The APS amount shall be calculated as the percentage by which the bid falls below the 15% threshold multiplied by the quoted bid price.

The Circular further clarifies that the amended provisions shall apply both to ongoing bidding processes as well as future works sanctioned at the NHAI level. The applicability extends across multiple categories of contracts, including:

1. National Road Connectivity Works (NRCW) executed on EPC mode
2. O&M contracts
3. STMC works undertaken under the Standard Bid Document for O&M Works dated September 1, 2016
4. PBMC works
5. Black Spot rectification works
6. Item-rate contracts based on the FIDIC framework under the Standard RFP dated December 1, 2025

By revising the APS framework, NHAI seeks to promote greater consistency and certainty in the treatment of discounted bids while maintaining an appropriate balance between competitive bidding and procurement safeguards.