Chapter 3 — Government Procurement & Bidding
What Is Bid Security and Why Is It Required?
Bid Security is a procurement security requirement connected with a bidder's commitment during the bidding process. A Bid Bond is only one possible form of Bid Security where the applicable rules and bidding documents permit it.
Direct answer
Bid Security is a requirement designed to support the seriousness of a bid and the bidder's commitment to comply with the bidding process. It should not automatically be treated as a Bid Bond. Under the current Philippine procurement framework, the applicable requirement should be confirmed from Republic Act No. 12009, its applicable Implementing Rules and Regulations, and the specific bidding documents.
What Bid Security means
Bid Security refers to the security required at the bid stage. It is connected with the bidder's participation in the procurement process and the commitments made when submitting a bid.
The security requirement is usually stated in the bidding documents. Those documents should identify the acceptable forms, the amount or basis, validity, timing and other conditions that apply to the procurement.
Bid Security is not automatically a Bid Bond
A Bid Bond is a surety bond that may be used as Bid Security if the applicable procurement rules and bidding documents allow that form. Other forms may be permitted depending on the procurement.
For this reason, applicants should avoid using Bid Security and Bid Bond interchangeably. The first is the requirement. The second is a possible form of satisfying that requirement.
What obligation does Bid Security support?
Bid Security generally supports the bidder's commitment to stand behind its bid during the procurement process. The exact obligation depends on the applicable rules, the bidding documents and the security instrument.
Where a surety bond is used, the bond wording identifies the Principal, Obligee, Surety, amount, validity and obligation covered.
The parties where a surety bond is used
Principal
The Principal is the bidder whose bid-stage commitment is being supported.
Obligee
The Obligee is usually the Procuring Entity or other party named in the bidding documents and bond.
Surety
The Surety is the company issuing the bond, subject to its evaluation, underwriting, requirements, terms and approval.
What applicants should check
Before assuming that a Bid Bond is acceptable, applicants should review:
- The stated Bid Security requirement
- The list of permitted security forms
- The required amount or basis stated in the bidding documents
- The validity requirement
- The required Principal and Obligee names
- Any prescribed wording or form
- Issuing-Surety requirements, if stated
- The submission deadline and manner of submission
Do not substitute general assumptions for the actual bidding documents.
Important limitations
Bid Security does not mean every procurement requires a surety bond. It also does not mean the bidder is automatically eligible, responsive or entitled to award. A security instrument may support a specified obligation, but bid compliance depends on the current procurement rules, the bidding documents and the circumstances.
SuretyPH provides information, inquiries, document submission and application facilitation. It does not determine whether a government bid is legally compliant, responsive or eligible.
Key takeaway
Bid Security is the bid-stage requirement; a Bid Bond is only one possible form where allowed. Always confirm the exact requirement from the current procurement rules and the bidding documents.
Related topics
Relevant bond information
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Important Notice
Inquiries and supporting documents submitted through SuretyPH may be referred to the applicable participating insurer for evaluation. Submission does not constitute approval or issuance of a surety bond. Applications are subject to the insurer's requirements, evaluation, underwriting, terms, conditions, and approval.
SuretyPH is a digital platform for surety bond information, inquiries, requirements and request tracking. It does not underwrite, approve, bind, issue, or guarantee any insurance policy or surety bond. Evaluation, underwriting, approval, pricing and issuance are undertaken by the applicable licensed insurance company.