A bid bond is the most basic type of a bank guarantee. It is also called a tender security, tender guarantee, or bid security arranged by Ableways International , and it is usually required in order to protect the employer/procuring entity against the bidder’s/tenderer’s conduct which would warrant either:
- Failure or refusal by the bidder/tenderer to raise a performance bond bank guarantee within the stipulated timeline
- Failure or refusal by the bidder/tenderer to correct an arithmetic error in his tender when called upon to do so by the employer or the procuring entity
- Failure or refusal by the bidder/tenderer to sign the contract agreement within the stipulated duration in accordance with the instructions to tenderers
- The bidder/tenderer withdrawing his tender during the period of tender validity specified in the instructions to tenderers
Most of these conditions are usually set forth in the format of the bid bond. It is usually very important for bidders to have a look at these conditions because they are the main reasons why their bid bond would be called up by an employer or rejected and hence non responsive. Most bidders do overlook the format of the tender security. This is a grievous mistake because tender documents of various employers usually differ in formats although the main idea of the bid security is the same. Every procuring entity/employer sets the substandard minimum terms and conditions that a bidder needs to meet in the tender so that that his tender can be accepted. This is the whole essence of a tender document. A bid bond bank guarantee or tender guarantee for that case therefore ensure that a bidder’s bid is acceptable to the procuring entity. The bid bond is called a tender security or bid security because once the bidder/tenderer has given his quote, he cannot change the quoted price for that tender; even if the market conditions change as it secure the procuring entity against such instances.
Why are bid bonds so important in public procurement? Why can’t the employer just ask for quotes alone instead of these ridiculous instruments that make my bank walk all over me with their processes?
Bid bond bank guarantees in Kenya especially are enshrined in the constitution to protect the Government, which is the largest consumer of both goods and services. They are contained in the Public Procurement and Disposal Act 2015 (Latest Version). The government needs to save money by getting quotes from different suppliers and under normal terms, the tender is usually awarded to the bid which; in Government’s assessment; will give it a ‘value for money’. Since every bidder presents their own quote, the Government has to evaluate each of the presented quotes. Under normal terms, bid bonds are usually between 0.5% – 2% of the total contract sum. That same Act of Parliament also gives rise to insurance bid bonds whereby Insurance companies have also been permitted to issue insurance bid bonds
Ableways International Limited, through our contracts and associations with various reputable banking institutions residing in Kenya usually has the capacity to organize for bid bonds on behalf of its customers. Since we are in the business of financial inter-mediation, we are able to address both the banked and the un-banked to ensure that they are able to participate at the same level with other stable bidding firms that they compete with.
What sets us apart from the competition is our pricing, our turnaround time, our customer service as well as our affiliations with various reputable banking partners. Banks work under the ideology of pooling resources together on behalf of their depositors. They have a moral and financial duty to protect their depositors funds against any risk of loss projected or assessed. For this reason, most banks will require their clients to cover their facilities either with an asset, cash, credit insurance or a combination. These collateral assets are then pooled together and a limit of utilization; called the global limit is extended to the client, usually for various types of facilities. There are clients who have these kind of arrangements and when one part of the facility is fully utilized, they will either have to seek for higher limit approvals or add more assets to cover the bank against the asset – liability mismatches. This process can be tedious and time consuming to bidders/tenderers as well as very expensive; especially when the bidding company cannot get a bid bond in good time because requisite approvals have to be sought.
Bidders usually get their prices at the last minute from their suppliers. They usually prepare all other docs 2-3 days to the tender opening date and so a bid bond is usually the last bit after getting and tabulating the total contract sum. Bidders need to have a partner who will deliver the much needed bid security within minutes if not hours. That partner that any bidder could count on even in the eleventh hour is Ableways International Limited. Our bid bonds are prepared within minutes, at the cheapest prices in town on the correct format, with no mistakes whatsoever. Additionally, we are located in the CBD to ensure that we serve you within the shortest time possible. Additionally, all our bid bonds are authentic, and fully backed by assets that are good, clean and cleared with our various reputable commercial banking partners in Kenya.
To make things better, we have even enabled our contractors to be able to send their guarantees online. Now you can open a bidders account, submit the relevant KYC documents and apply for your bid bond or any tender bank guarantee online while on the go! We invite bidders to register on our website. You can type your email on our website and we will give you more details on what needs to happen or sign up as as bidder. Either way, its a win win situation. Go, on log on to Ableways International Limited Website and Get sorted with your bid bond.