What is bid security?
Bid security is the umbrella term for whatever guarantees a bid — usually EMD or a bid bond. How it differs from a performance guarantee.
Bid security is the general term for anything a bidder puts up to guarantee they will stand by their bid. In Indian tenders it usually takes the form of an EMD; internationally it is more often a bid bond issued by a bank or surety company.
Bid security vs performance guarantee
These are frequently confused because both are guarantees and both involve a bank. The difference is when they apply:
| Bid security | Performance guarantee | |
|---|---|---|
| Covers | The bidding period | The contract period |
| Protects against | A bidder walking away from their own bid | A contractor failing to deliver |
| Released | On award, or on contract signing | On satisfactory completion |
| Typical size | Small percentage of estimated value | Larger percentage of contract value |
A bidder may need both, in sequence: bid security to bid, then a performance bank guarantee to hold the contract.
What people get wrong
Assuming it is refundable in all circumstances. Bid security is refundable if you behave — it is forfeited if you withdraw a live bid or refuse the award.
Letting validity lapse. Bid security must remain valid at least as long as the bid itself. If the tender is delayed and bid validity is extended, the security usually has to be extended too, and a lapsed instrument can invalidate an otherwise winning bid.
On Bidancer
Credits are the bid security equivalent: bidding spends them, and an unsuccessful bid is refunded. There is no instrument to issue, extend, or chase.