You submit:

• Your company’s financials and CIPC documents.

• Details of the tender (employer, value, closing date).

• Your previous construction experience.
  The insurer assesses your ability to take on the project and then issues the bond.

Not usually. Insurers may ask for some form of security if your financials are weak or the tender value is very high, but most bid bonds are issued against a small premium only.

They can only call the bond if you win the tender and then:

• Refuse to sign the contract, or

• Fail to provide the required performance guarantee.
  Insurers will investigate if the call is valid before paying.

No. It is not a deposit. You pay a premium (a fee) for the guarantee to be issued.

No. They are mostly required on public sector projects, large commercial contracts, and by certain employers who want extra assurance.

In essence, Bid Bonds provide a guarantee that the Bidder (Contractor), if awarded the Contract will enter into the said agreement and furnish the prescribed Performance Bond. A cash deposit is required which is subject to full or partial forfeiture if the winning contractor fails to either execute the Contract or provide the required performance and/or Payment Bonds.

• Company profile (including an organogram and copies of the current and previous contracts)
• Two years’ financial statements and three months’ bank statements
• Letter of appointment
• Contract information
• Guarantee wording requirements
• Company registration documentation
• Copies of all members’ identity documents and income tax numbers
• Copy of letterhead
• Tax clearance certificates
• CIDB certificate

• All applications are subject to a thorough analysis to establish the Contractor’s risk profile. This will include an assessment of the Contractors’ financial standing and their resource capabilities to fulfill the Contract obligations.

  For Corporate Clients, emphasis is placed on:

  • the financial standing of the Contractor
  • the company structure and shareholding
  • the Contract information
  • the Guarantee wording requirements
  • the securities available

If you are awarded the contract but then refuse or fail to sign the construction contract within the required timeframe, the employer can call on the bid bond.
Example: You win a R50 million tender, but after award you decide not to go ahead because your pricing was too low. The employer can claim against your bid bond.

Most tenders require that after award, you must submit a Performance Bond (Performance Guarantee). If you cannot provide this within the set period, the employer may call the bid bond.

Example: Employer awards you a project and expects a 10% performance guarantee within 14 days. You fail to arrange it. The employer claims under the bid bond.

If you withdraw your tender before the expiry of the bid validity period (usually 90–120 days), the employer may call the bond.

Example: You bid for a school project, but two months later you try to withdraw your tender before award because material prices have gone up. The employer can claim on the bond.

If the employer discovers that you submitted false information or qualifications in your tender that disqualify you after award, they may trigger the bid bond.

Example: Claiming to have CIDB grading or references you do not actually hold.

Some tender conditions allow a call on the bid bond if you fail to comply with any material condition of the tender award (e.g., not attending a compulsory site handover or not mobilising when required).