After a bidder successfully passes the tender evaluation and receives a government contract, several important post-award terms may appear in the documents. Three of the most common are government contract, performance security and work order.
These terms are connected, but they do not mean the same thing. The contract establishes the parties' obligations, performance security may provide financial assurance for proper contract performance where required, and a work order or similar instruction may authorize or define the work that must be carried out.
Understanding these documents is important because winning a tender does not give a contractor permission to ignore the conditions that follow the award.
This guide explains these concepts in simple terms for contractors, suppliers and new businesses participating in government tenders in Pakistan.
Three Important Post-Award Terms
A simple way to understand the three concepts is:
| Term | Simple Meaning |
|---|---|
| Government Contract | The formal agreement defining what the successful bidder and procuring organization must do. |
| Performance Security | Security that may be required from the successful bidder to support proper performance of contractual obligations. |
| Work Order | A formal instruction that may authorize or specify commencement or execution of particular work under the contract. |
The exact terminology and legal effect depend on the individual bidding and contract documents.
What Is a Government Contract?
A government contract is generally an agreement between a public procuring organization and the successful supplier, contractor, consultant or service provider for the delivery of specified goods, works or services.
The contract normally brings together important obligations that were established through the procurement process.
Depending on the procurement, the contract documents may address:
- Scope of work or supply
- Contract price
- Quantities
- Technical specifications
- Completion or delivery period
- Payment terms
- Inspection and acceptance
- Performance security where applicable
- Warranty requirements
- Defects obligations
- Delay-related provisions
- Insurance requirements
- Variation procedures
- Dispute resolution
- Termination conditions
- Other contractual obligations
The successful bidder should read these conditions carefully before signing.
The Contract May Include More Than One Document
Contractors sometimes think that the contract consists only of the pages containing the signatures.
In practice, the contractual documents may include several interconnected documents, depending on the tender.
These can include:
- Contract agreement
- Letter or notification of acceptance
- Conditions of contract
- Technical specifications
- Drawings
- Schedules
- Bill of quantities
- Accepted bid
- Price schedules
- Other documents identified as forming part of the contract
The bidding documents normally specify which documents form the contract and, where necessary, their order of precedence.
Do not read only the signature page and ignore the documents incorporated into the agreement.
What Should You Check Before Signing?
Winning the tender can create pressure to complete the agreement quickly, but the contractor should still perform a careful review.
Check that the contract correctly reflects:
- Your business name and details
- The procuring organization
- The awarded tender or package
- The accepted contract amount
- The required quantities
- The agreed specifications
- Delivery or completion period
- Payment conditions
- Performance-security requirements
- Warranty or defects obligations
- Other important conditions
If something appears inconsistent with the accepted bid or bidding documents, seek formal clarification before signing.
What Is Performance Security?
Performance security is generally a financial security that may be required from the successful bidder to provide assurance regarding performance of the awarded contract.
Depending on the procurement documents, it may be described as:
- Performance Security
- Performance Guarantee
- Performance Bond
- Bank Guarantee
- Another specified form of security
The exact permitted form should be taken from the bidding documents and contract.
The successful bidder should not assume that any bank guarantee format will be accepted.
Why Is Performance Security Required?
The procuring organization may require performance security because awarding a contract creates obligations that continue well beyond the tender evaluation.
Depending on the contract, the successful bidder may be required to:
- Deliver goods according to specifications
- Complete construction works
- Provide contracted services
- Meet agreed deadlines
- Correct defects
- Fulfil warranty obligations
- Comply with other contractual requirements
Performance security provides contractual protection where the bidding documents require it.
How Much Performance Security Is Required?
There is no percentage that contractors should blindly apply to every government tender.
The required amount or percentage must be checked in the actual bidding and contract documents.
Before bidding, identify:
- Whether performance security is required
- The required amount or percentage
- Acceptable form
- Required wording
- Issuing institution requirements
- Submission deadline
- Validity period
- Conditions for release
Knowing this before submitting the bid is important because arranging a bank guarantee or other security may affect the contractor's banking limits and working capital.
Bid Security vs Performance Security
| Feature | Bid Security | Performance Security |
|---|---|---|
| Stage | Bidding / award process | Post-award / contract performance |
| Provided By | Bidder where required | Successful bidder where required |
| Main Purpose | Supports bidding-stage obligations | Supports contract-performance obligations |
| Amount / Form | As specified in bidding documents | As specified in contract documents |
The two securities should not be treated as interchangeable unless the procurement documents expressly provide the relevant procedure.
When Is Performance Security Submitted?
The required timing depends on the procurement documents.
A successful bidder may be required to furnish performance security within a stated period after notification of award and before or in connection with contract execution.
The award communication or bidding documents should specify the applicable deadline.
Treat this as an important post-award deadline. Winning the tender does not remove the successful bidder's responsibility to complete the remaining award formalities.
What Happens If Performance Security Is Not Provided?
Failure to provide required performance security can have serious consequences under the bidding documents and applicable procurement rules.
Depending on the procurement, consequences may include failure to complete the award, action relating to bid security or other remedies provided by the procurement documents.
The contractor should therefore investigate performance-security requirements before submitting the original bid.
Do not wait until you win to discover that your bank cannot issue the required guarantee within the specified period.
When Is Performance Security Released?
The release or return of performance security depends on the contract conditions.
It may be linked to matters such as:
- Successful completion of contractual obligations
- Acceptance of goods or works
- Warranty obligations
- Defects-liability obligations
- Another contract-specific milestone
Read the security and contract conditions carefully so that you know how long your banking facility or guarantee may remain committed.
What Is a Work Order?
A work order is generally a formal instruction issued under a procurement or contract arrangement that tells the contractor to carry out specified work.
Depending on the contract, it may contain:
- Contract reference
- Description of work
- Work location
- Quantity or scope
- Contract value or applicable rates
- Commencement date
- Completion period
- Responsible project officer
- Other implementation instructions
The precise legal effect of the work order depends on the procurement documents.
Work Order, Purchase Order and Supply Order
Different types of procurement may use different terminology.
| Document | Common Context |
|---|---|
| Work Order | Construction, maintenance or other works |
| Purchase Order | Purchase of goods or equipment |
| Supply Order | Supply of specified goods or materials |
| Notice to Proceed | Formal commencement instruction where used by the contract |
These are general descriptions. Always follow the terminology and effect assigned to the document in your actual contract.
Does the Work Order Replace the Contract?
Not necessarily.
In some procurements, a work or purchase order operates within a broader signed contract. In other arrangements, the procurement documents may structure the contractual relationship differently.
Therefore, do not assume that every government procurement requires the exact sequence:
Contract → Work Order → Start Work
Instead, identify the sequence specified in your tender and contract documents.
When Should the Contractor Start Work?
The contractor should begin according to the commencement provisions of the awarded contract.
Depending on the procurement, commencement may be linked to:
- Contract signing
- Work order
- Notice to proceed
- Site handover
- Another formal instruction or contractual event
Starting too early can create disputes about whether costs were authorized.
Starting too late can create delay-related problems once the contractual commencement date has been triggered.
Record the official commencement date and calculate deadlines from the contract rather than from assumptions.
Example: Construction Contract
Consider a simplified example in which a contractor successfully bids for construction work.
The sequence might be:
- The contractor is identified as successful through the procurement process.
- The procuring organization issues the applicable award or acceptance communication.
- The contractor furnishes performance security as required.
- The parties execute the contract.
- The department issues the required commencement or work instruction.
- The contractor mobilizes to the site.
- Work is executed according to specifications and schedule.
- Progress is measured or certified according to the contract.
- Payments are processed according to contractual milestones.
- The project proceeds toward completion and final acceptance.
The actual sequence may differ, but this illustrates how tender award can lead into contract administration.
Example: Government Supply Contract
For goods, the sequence could look different:
- Supplier receives formal award or acceptance.
- Performance security is provided where required.
- The contract is completed according to the procurement documents.
- A purchase or supply order is issued where applicable.
- The supplier arranges the specified goods.
- Goods are delivered to the required location.
- The procuring organization inspects or tests them.
- Accepted goods are documented.
- The supplier submits the required invoice and supporting records.
- Payment proceeds according to the contract.
A supplier should not replace the awarded product with a cheaper alternative unless the contractual procedure formally permits the change.
The Contract Price Still Matters After Award
Winning the tender does not normally allow the contractor to freely revise the accepted price afterward.
Whether any price adjustment is possible depends on the contract.
Before signing, check whether the procurement uses:
- Fixed prices
- Adjustable prices
- Specified escalation provisions
- Another pricing mechanism
Do not assume that an increase in material, labour, fuel or exchange-rate costs automatically entitles the contractor to additional payment.
Follow the Scope Exactly
After receiving a work or supply order, compare it with the awarded scope.
Confirm:
- Quantities
- Specifications
- Location
- Rates
- Completion or delivery period
- Contract reference
If there is a significant difference, obtain clarification before committing resources.
Likewise, if an official later requests additional work outside the original scope, check the formal variation or amendment procedure before proceeding.
Understand Payment Conditions
The government contract should explain how the contractor becomes entitled to payment.
Depending on the procurement, payment may require:
- Delivery of goods
- Inspection and acceptance
- Completion of work milestones
- Measurement of works
- Certification by an authorized officer
- Invoice submission
- Tax documentation
- Other supporting records
A contractor should understand these requirements before beginning performance because they affect cash-flow planning.
Understand Delay and Completion Conditions
Contracts can contain consequences when delivery or completion is delayed.
Depending on the contract, these may involve:
- Liquidated damages
- Contractual deductions
- Extension-of-time procedures
- Default provisions
- Termination provisions
- Other contractual remedies
If circumstances arise that may delay performance, follow the contract's notice and extension procedures rather than simply allowing the completion date to pass.
Keep Everything in Writing
Contract administration produces many important records.
Maintain copies of:
- Signed contract
- Performance security
- Work or purchase orders
- Notices to proceed
- Official letters
- Emails
- Site instructions
- Inspection reports
- Delivery receipts
- Measurement records
- Invoices
- Payment certificates
- Variation orders
- Completion documents
Written records can become important if disagreements later arise about instructions, quantities, deadlines or payment.
Common Post-Award Mistakes
- Starting work too early: Confirm the required formal commencement authority.
- Ignoring performance security: Missing the required deadline can have serious consequences.
- Using the wrong guarantee format: Follow the specified wording and form.
- Signing without reviewing the contract: Check scope, price, dates and obligations.
- Confusing bid security with performance security: They serve different stages of procurement.
- Treating a work order as informal: Read its scope, dates and instructions carefully.
- Accepting verbal scope changes: Follow the contract's formal amendment or variation process.
- Ignoring payment documentation: Maintain the evidence required for invoicing and certification.
- Assuming prices can always be increased: Follow the contract's pricing provisions.
- Forgetting security expiry dates: Monitor validity and extension requirements where applicable.
Post-Award Document Checklist
- ☐ Evaluation result reviewed
- ☐ Formal award or acceptance received where applicable
- ☐ Contract amount checked
- ☐ Awarded scope checked
- ☐ Performance-security requirement confirmed
- ☐ Correct security form arranged
- ☐ Security validity checked
- ☐ Contract reviewed before signing
- ☐ Authorized representative confirmed
- ☐ Contract copy safely stored
- ☐ Work, purchase or supply order checked where applicable
- ☐ Official commencement date identified
- ☐ Completion or delivery deadline recorded
- ☐ Payment procedure understood
- ☐ Inspection requirements understood
- ☐ Warranty or defects obligations recorded
- ☐ Complete correspondence file created
Simple Relationship Between the Three Terms
For learning purposes, think of the concepts like this:
Defines the obligations
↓
Performance Security
Supports performance where required
↓
Work / Purchase / Supply Order
Provides the applicable implementation instruction where used
↓
Contract Performance
This is a simplified explanation rather than a universal legal sequence. Your bidding documents may arrange the post-award process differently.
Frequently Asked Questions
What is a government contract?
It is the agreement governing the goods, works or services to be provided by the successful bidder and the obligations of the contracting parties.
What is performance security?
It is security that may be required from the successful bidder to support performance of contractual obligations according to the awarded contract.
Is performance security required for every tender?
Do not assume that it is. Check the bidding documents and contract for the particular procurement.
Is performance security the same as bid security?
No. Bid security generally relates to the bidding and award stage, while performance security relates to performance of the awarded contract where required.
How much performance security do I need?
Use the amount or percentage stated in the actual bidding or contract documents. Do not apply a percentage taken from another tender.
What is a work order?
A work order is generally a formal instruction under a contract or procurement arrangement specifying or authorizing work to be performed.
Can I start work immediately after winning?
Not necessarily. Follow the formal commencement requirements in the contract, which may involve contract execution, performance security, a work order, notice to proceed or another specified step.
Is a purchase order the same as a work order?
They serve related implementation purposes but are commonly used in different procurement contexts. Purchase orders are often associated with goods, while work orders are commonly associated with works or maintenance. Follow the terminology used in your contract.
Can the department verbally increase my scope?
Do not rely solely on a verbal instruction for a significant change. Check the contract's formal variation or amendment procedure and obtain the required written authorization.
When is performance security returned?
The timing depends on the contract and may be linked to completion, acceptance, warranty or defects obligations. Check the specific security and contract conditions.
Can the contract price change after award?
Only according to the pricing, adjustment, variation or other mechanisms permitted by the contract and applicable procurement framework. A contractor should not assume that higher costs automatically increase the contract price.
Final Advice
Winning a government tender creates an opportunity, but it also creates contractual responsibilities.
The government contract tells you what must be delivered or completed and under what conditions. Performance security may provide assurance that those obligations will be fulfilled, while a work order, purchase order or similar instruction may define or authorize the next stage of implementation.
Do not rush from tender award directly into performance. Review the contract, arrange the required security, confirm the formal commencement procedure and understand your deadlines, payment conditions and technical obligations.
Most importantly, rely on the actual bidding documents, award communication and signed contract. The exact procedure can differ between procuring organizations and between works, goods and services contracts.
Continue with our Tender & Procurement Guides for more guidance on government contracts, bidding, securities and procurement procedures.
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