Bid security and bid validity, explained for contractors

Tenders use three related instruments, and confusing them can make a bid non-compliant.

The World Bank's works document lets you choose among these forms, provided the security is a demand guarantee from a reputable source in an eligible country (ITB 19.3):

A non-bank issuer outside the employer's country needs a correspondent institution in that country to make the guarantee enforceable, unless the employer agrees in writing before submission that none is needed. A bank guarantee must use the bid security form in Section IV, or a substantially similar format the employer approved before submission. That form is subject to the ICC's Uniform Rules for Demand Guarantees (URDG 758).

Both figures are in the Bid Data Sheet (BDS), against the Instructions to Bidders (ITB) clause they complete, and an addendum can change either. In the World Bank document, BDS ITB 19.1 says whether a bid security or a bid-securing declaration is required (never both) and gives the amount and currency, per lot where there are lots; one security may cover several lots for their combined amount. BDS ITB 18.1 gives the date until which bids must remain valid.

In World Bank and ADB documents the amount is a fixed sum the employer sets, not a percentage of your own price, so read how your own tender states it. Development-bank guidance keeps it modest: the Asian Development Bank's user guide to its standard bidding documents for goods says it is normally computed as 1% to 2% of the estimated contract value.

Current World Bank works documents state validity as a calendar date (BDS ITB 18.1), and the Bank's drafting note explains that a date not linked to the submission deadline reduces bidders' errors. Many other documents give a number of days counted from the deadline; ADB's goods guide says validity should normally be 90 days. Either way the period must allow the employer to evaluate, obtain approvals and any prior review by the financing bank, and award (World Bank Procurement Regulations, paragraph 5.39).

The security outlasts the bid so the employer has time to call it. The Regulations put that margin at generally four weeks beyond the validity period (paragraph 5.33), and the works document fixes it at 28 days beyond the original validity date or any extended date (ITB 19.3). Use the margin your tender states.

For a tender that states validity in days, enter the submission deadline, the validity days and the number of days the security must outlast the bid (28 in World Bank and ADB documents). The calculator shows the last day your bid and your security must each cover. It runs in your browser and stores nothing you type.

If your tender gives a validity date instead, as World Bank documents do, your security must run to that date plus the stated margin. Either way, ask your issuer for a fixed expiry date, not a duration it counts for itself.

Evaluations overrun, and an employer that cannot award before validity ends may ask bidders to extend. Under the World Bank document (ITB 18.2), the request must come before validity expires, and both the request and your reply are in writing. You may refuse without forfeiting your bid security; your bid then lapses. If you agree, you must extend the security to 28 days beyond the new validity date, and you may not change your bid except as ITB 18.3 provides.

If the award is delayed more than 56 days beyond the original validity date, a fixed-price contract is priced at your bid adjusted by a factor the BDS states, an adjustable-price contract is not adjusted, and bids are still evaluated on the unadjusted price (ITB 18.3). When a request arrives:

Under the World Bank document, a bid security may be forfeited in two situations (ITB 19.7):

The deadlines after award are short. The winner must sign the contract agreement within 28 days of receiving it and furnish the performance security within 28 days of the letter of acceptance; failing either is grounds to annul the award, forfeit the security and award the contract to the next most advantageous bid (ITB 48 and 49). Arrange your performance guarantee facility before you bid, not after you win.

A bid-securing declaration swaps money for exclusion: if you withdraw or modify your bid during its validity, or win and fail to sign or provide the performance security, you are suspended from bidding for that employer's contracts for the period the tender states (Procurement Regulations, paragraph 5.35). Not being under such a suspension is itself a qualification requirement in the Bank's document. Where no bid security is required, the BDS can also provide for the borrower to declare a bidder ineligible for the employer's contracts for a stated period after the same failures (ITB 19.9).

Unsuccessful bidders' securities are returned once the winner has signed the contract and furnished its performance security; the winner's comes back once it has done both (ITB 19.5 and 19.6).

The security is checked with the technical part, before anyone reads your price, and a bid whose security or declaration is not substantially responsive is rejected (ITB 19.4). The defects are usually mechanical:

Some bidding documents let the employer ask for a compliant replacement within a short period: ADB's user guide for its goods bidding document gives Bid Data Sheet wording for this, with a period of generally 14 days. Do not plan on it. For the other ways bids fail, see why tenders are rejected.

When Bidligence analyses a tender pack, it records the bid security as structured fields: whether one is required, its form, the amount or the percentage of the bid price, the currency, how long it must be valid, the acceptable issuers and any prescribed wording. Bid validity is recorded in days and checked in a separate key-dates pass, which reads the date-bearing lines of every document and, within a length budget, the amendments, notices and instructions, newest amendment first, and records the document and clause that set it. If neither reading finds a figure, a fixed rule reads it from the tender text and skips sentences about the security, so the rule does not mistake a security's 28 days beyond validity for the bid's own validity. Where your tender states a validity date, as World Bank documents do, check BDS ITB 18.1 against the analysis.

The Submission Guard turns the tender's mandatory documents, bonds included, into a checklist matched against your Evidence Vault. When a security is required, its pre-submission audit restates the form, amount and validity the analysis recorded and tells you to check them, and the wording, against the instructions. The audit does not compare the guarantee your bank issues with the tender's form, so that check stays with you. The same audit flags expired linked evidence, claims in generated documents still to be confirmed, and a deadline two days or less away.

When you review an addendum, Bidligence records changes to the validity and the security terms, moves the bid's deadline when the closing date changes, and adds new mandatory documents to the Guard. On a paid plan, the Cover Letter & Bid Form generator states your bid validity, and the Forms & Declarations generator drafts a form for each declaration the analysis lists, noting where the tender's own wording must be copied in. A new account's 500 welcome credits cover analysing a tender; see AI tender analysis for what else the analysis reads.