Chapter 3 — Government Procurement & Bidding
When Is a Surety Bond Used as Bid Security?
A surety bond may be used as Bid Security only when the applicable procurement rules and the bidding documents permit that form. Applicants should verify the permitted forms before requesting or submitting a Bid Bond.
Direct answer
A surety bond is used as Bid Security when the current procurement rules and the specific bidding documents allow a surety bond as an acceptable security form for the bid stage. The applicant should confirm the requirement from the bidding documents rather than assuming that a Bid Bond will be accepted.
Start with the requirement, not the bond name
The correct starting point is the Bid Security requirement in the bidding documents. That requirement may identify acceptable forms and conditions. A Bid Bond is relevant only if a surety bond is listed or otherwise permitted as a form of Bid Security for that procurement.
This distinction matters because a document labelled as a bond may still fail to match the required form, wording, amount, validity or issuer condition stated by the Procuring Entity.
When a Bid Bond may be appropriate
A Bid Bond may be appropriate where the bidder is allowed to use a surety bond to support its bid-stage commitment. The bond should match the bidding documents and identify the correct parties, amount, obligation and validity period.
The applicable requirement should be confirmed from the current procurement rules and the specific bidding documents.
The three parties in a Bid Bond
Principal
The Principal is the bidder whose bid-stage undertaking is supported by the bond.
Obligee
The Obligee is usually the Procuring Entity named in the bidding documents.
Surety
The Surety is the insurance or surety company that issues the bond. Where Philippine government procurement or bidding documents refer to issuer qualifications, those requirements should be verified from the current rules and the documents for the procurement. Do not rely on assumed accreditation details or generic certificates.
What the applicant should provide for evaluation
A Surety may request documents to evaluate the applicant and the bond requirement. Depending on the insurer, obligation and procurement documents, this may include company registration information, financial documents, project or contract details, board or signing authority documents, and copies of the relevant bidding-document pages.
SuretyPH can help receive and organize information for referral to the applicable participating insurer. Evaluation, underwriting, terms, approval and issuance remain functions of the applicable insurer or Surety.
Practical checks before requesting the Bid Bond
Applicants should check:
- Whether a surety bond is a permitted form of Bid Security
- The exact bond name or security description used in the documents
- Required amount or basis stated in the documents
- Required validity period and any extension language
- Exact legal name of the Principal
- Exact name of the Obligee
- Prescribed wording or required form
- Required signatures, notarization, authentication or attachments, if stated
- Any issuing-Surety requirements expressly stated in the documents
Important limitations
A Bid Bond does not guarantee contract award. It does not prove that a bid is responsive. It also does not replace the bidder's obligation to follow all bidding-document instructions.
If a bid is awarded, a separate post-award security requirement may apply. A Bid Bond should not be assumed to become a Performance Bond.
Key takeaway
A Bid Bond may be used as Bid Security only where permitted. Confirm the acceptable security form, wording, parties, amount, validity and issuer requirements from the actual bidding documents.
Related topics
Relevant bond information
Need information about a surety bond requirement?
Submit an inquiry with your project details, and SuretyPH will organize your submission for the applicable insurer's evaluation.
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.