Bid Bond (Bietungsgarantie)
A bid bond protects a tender issuer against a bidder withdrawing its offer before the bid validity period expires or failing to accept the award.
Concept
A bid bond protects a tender issuer (the awarding party) in a procurement process against a bidder withdrawing its binding offer before the bid validity period expires, failing to sign the contract after being awarded the tender, or failing to provide the further security required (such as a performance bond).
Amount and Term
A bid bond is typically provided in an amount of 1% to 5% of the offer price and is limited to the duration of the bid validity period; it generally lapses automatically if the bidder is not awarded the tender or duly meets its obligations after being awarded it.
Relevance for International Procurement
Bid bonds are standard in international public tenders and major projects and are frequently structured as demand guarantees, enabling the tender issuer particularly fast and straightforward recourse.