Bid Bond and Performance Bond: How Guarantees Secure Public Tenders in Europe

The Belgian Naval Tender: More Than Ships, It’s a Matter of Trust

Early this September, a European shipbuilder set its sights on a strategic public tender in Belgium: the construction of advanced naval vessels. The numbers were huge, the competition fierce, and the stakes even higher.

Submitting the best technical proposal was not enough. To even be considered, the company needed to back its offer with a guarantee — proof of commitment, reliability, and financial strength.

This is where Credit Glorious stepped in.

The Bid Bond: The Ticket to Enter the Race

A Bid Bond, also known as a tender guarantee, is not just paperwork. It is the entry ticket to major tenders worldwide.

• It tells the contracting authority: “We are serious. If we win, we will sign the contract.”

• It protects the authority against bidders who withdraw or fail to honor their offers.

• Typically set at 2–5% of the tender value, it filters committed contenders from casual participants.

In Belgium, the shipbuilder’s Bid Bond validated the offer and kept them in the race for a contract worth hundreds of millions.

🔑 Without a bid bond, even the best proposal never leaves the dock.

The Performance Bond: From Promise to Delivery

Winning a tender is a milestone, not the finish line. Once awarded, the contractor must provide a Performance Bond — the final guarantee.

• Standardized in Europe, often at 5% of the contract value.

• Protects the authority by covering potential losses if the contractor fails to deliver.

• Provides assurance that ships, bridges, energy plants, or any project will not remain promises on paper.

In the Belgian naval contract, the Performance Bond gave the government the confidence that the shipyard would deliver not just plans, but vessels ready to sail.

✨ If the bid bond opens the door, the performance bond ensures it stays open until the project is complete.

Why Guarantees Drive International Tenders

Guarantees are more than compliance; they are the currency of trust in public procurement.

• Trust: authorities know bidders stand behind their offers.

• Access: guarantees make participation possible in multi-million tenders.

• Capital efficiency: companies don’t tie up cash — banks issue the guarantees.

• Universality: aligned with ICC URDG 758 rules, they are accepted worldwide.

Credit Glorious: Turning Guarantees into Competitive Advantage

At Credit Glorious, we help companies compete — and win — in strategic tenders across Europe and beyond. By structuring bid bonds, performance bonds, and financial guarantees, we transform obligations into opportunities.

Because in global procurement, success is not only about building ships. It’s about building confidence, compliance, and credibility — guarantee by guarantee.

FAQ

What is the difference between a bid bond and a performance bond? A bid bond secures the seriousness of a bid. A performance bond secures the execution of the contract.

What percentage is usually required for a performance bond in Europe? Generally around 5% of the contract value, unless otherwise specified in the tender documents.

Why are guarantees essential in public tenders? They ensure fairness, filter serious bidders, and protect contracting authorities against risks.