The function of bid bonds is to warrants the procuring organization that the winning bidder will satisfy the contract's requirements once it is awarded to them. The existence of a bid bond in Nairobi gives the business owner assurance that the bidder has the financial means to accept the job for the price quoted in the bid.
- They are used during the bidding stage of a tender
- They are used to reduce the cost of non-performance during the contract or service award
- They are generally between 2% to 5% of the value of the bid; they are inexpensive
- The duration of the render lasts typically between 30 to 150 days
- It is cash-free
- No account opening
- It is simple, convenient, and flexible
- Allows for cross border or international bidding
- Has a turnaround time of under 30 minutes
- Personalized service (we offer online application)
Bid bonds are generally required by law for public contracts because taxpayers’ money is being used to fund the projects. On the other hand, most private contracts also require bid bonds to protect the project and the facility owners.
Bid bonds in Nairobi are submitted with your proposal to the obligee (the person or entity requiring the bond). It is meant to protect the organization that has advertised for the service or contract (the project owner) as there is a total bond amount that a supplier or a contractor will be liable to pay if he or she breaches the contract by not taking on the project or by asking for a higher price.
In case of default by the service provider, the project owner can initiate a claim against which the guarantor, usually a financial institution, must pay.
A bid bond shows that the contractor is viable and capable of fulfilling the contract’s terms. This, however, does not necessarily mean that every bonded bidder will receive a winning bid because the developer will award the winning bid to the contractor with the lowest bid. Developers are also very likely to choose a contractor they frequently do business with since they are familiar with their operation.
- Bid bonds ensure that contractors can comply with bid contracts and fulfill their job responsibilities at agreed prices should they win the tender.
- The majority of public construction contracts require contractors or subcontractors to secure their bids by providing bonds that serve as a means of legal and financial protection to the client.
- In the absence of bid bonds, project owners would have no way of guaranteeing that the bidder they selected for a project would complete the job correctly, thus needing a bid bond. For instance, an underfunded bidder may run into cash flow problems along the way.
- Bid bonds also help clients avoid frivolous bids, saving time when analyzing and choosing contractors or service providers.
Within 30 minutes
• Copy of KRA PIN/VAT
• Copy of Memorandum and Articles of Association
• Copy of Tax Compliance
• Postal address and contact information
• Procuring entity (Employer) name
• Procuring entity's address
• Bid amount
• Tender description (Title)
• Bid validity (Period)