If you’re new to government procurement, the different types of bonds can be confusing. Bid bonds and performance bonds both serve as guarantees, but they kick in at different stages of the bidding process and protect different interests. Mixing them up or submitting the wrong one can get your bid rejected on the spot.
Both bonds are required under RA 9184 and its IRR, but they serve completely different purposes. A bid bond says “I’m serious about this bid,” while a performance bond says “I will deliver on this contract.” Let’s break down exactly how they differ and when you need each one.
- Bid bond is submitted together with your bid documents at the time of bid submission — it guarantees that if you win, you’ll enter into the contract and post the required performance bond
- Performance bond is posted after winning the bid but before signing the contract — it guarantees that you will complete the project according to the terms, specifications, and timeline
- Bid bond amount is usually 2% of the Approved Budget for the Contract (ABC) for goods and infrastructure, or 1% for consulting services, but the exact percentage is specified in the bidding documents
- Performance bond amount is higher: 5% (cash or bank guarantee) or 10% (surety bond) of the total contract price — you choose the form that works best for your cash flow
- Bid bonds can be in the form of cash, bank guarantee, surety bond, or irrevocable letter of credit — cash is the simplest but ties up your working capital
- If you win and fail to post the performance bond, your bid bond gets forfeited — the government keeps it as compensation for the cost of re-bidding
- Performance bonds are released after the project is completed and accepted by the procuring entity — the defect liability period is usually one year after project completion
The Insurance Commission regulates surety bond providers in the Philippines. For surety bonds, you can check accredited providers through the Insurance Commission website. Before securing bonds, make sure you have all your eligibility documents ready, including the Omnibus Sworn Statement, which is a prerequisite for any bid submission under RA 9184. You’ll also want to check your PhilGEPS registration to make sure your profile is active and up-to-date.
For construction projects, note that the PhilGEPS portal lists which projects require bonds and the specific amounts. Always check the Invitation to Bid carefully because some projects have special bond requirements.
CONTACT US
For more information or to visit us, here are our branch addresses:
- Branch 1: Naungayan Building, Aala Road, Barangay Mankilam, Tagum City, Davao Del Norte
- Branch 2: Sobrecary Street (In front of Velox Gas Station), Tagum City, Davao Del Norte
- Email: gracezelguerra22@gmail.com
- Phone: 09460480491
- Business Hours: Monday – Friday: 8:00 AM to 5:00 PM (PH Time)
- Facebook Page: Visit our Facebook Page