• By Raymond Momanyi

Tender Bonds and Performance Bonds in Kenya

Tenders can open serious business opportunities. But to participate, many procuring entities require security. That is where tender bonds and performance bonds come in. 

For contractors, suppliers, service providers and SMEs, understanding bonds can make the difference between missing an opportunity and submitting a compliant bid. 

 
Many businesses find a good tender but get stuck because they do not have the required bid security, tender security or performance security.
 
Some wait until the last minute and end up rushing documents, paying unnecessary fees or missing submission deadlines.
 

 
A tender bond, also called bid security, assures the procuring entity that the bidder is serious and will honour the tender conditions if awarded.
 
A performance bond is usually required after award. It assures the procuring entity that the successful bidder will perform the contract as agreed.
 
In Kenya, the Public Procurement Regulatory Authority lists insurance companies authorized to issue bid securities.  PPRA also publishes standard tender documents and formats used by procuring entities and stakeholders. 

Tender Bond vs Performance Bond

 
Tender Bond / Bid Bond
Used during tender submission. It supports your bid and shows seriousness.

Performance Bond
Used after tender award. It protects the procuring entity if the contractor or supplier fails to perform.
 

Who Needs Bonds?

 
Bonds are useful for:
 

•  Contractors 
•  Suppliers 
•  Construction companies 
•  Service providers 
•  Logistics companies 
•  Cleaning companies 
•  Security firms 
•  ICT companies 
•  SMEs applying for tenders 
•  Importers and project-based businesses 

Options to Consider

 
Before requesting a bond, confirm:
 

•  Type of bond required 
•  Bond amount 
•  Validity period 
•  Tender closing date 
•  Procuring entity name 
•  Tender number 
•  Whether physical or digital submission is needed 
•  Whether insurer wording must match tender document 
•  Whether the provider is approved for the security required 

Mistakes to Avoid

 
Avoid:
 

•  Waiting until the tender deadline 
•  Using wrong procuring entity name 
•  Using wrong tender number 
•  Requesting wrong bond amount 
•  Ignoring validity period 
•  Submitting expired security 
•  Not checking tender document wording 
•  Assuming bid bond and performance bond are the same 
•  Choosing an unapproved provider 
•  Submitting incomplete documents 

Documents Needed

 
For a tender bond or performance bond, you may need:
 

•  Tender document 
•  Tender number 
•  Procuring entity name 
•  Bond amount 
•  Bond validity period 
•  Company registration documents 
•  KRA PIN 
•  Directors’ details where required 
•  Award letter for performance bond 
•  Contract details 
•  Financial statements where applicable 
•  Payment confirmation 

Imana Wisdom

 
Tender bonds and performance bonds help businesses access opportunities without locking up all their cash. But timing and accuracy matter.
 
Always start the bond process early.
 
Need help comparing tender bonds or performance bonds in Kenya?
Talk to Imana Insurance Agency Kenya Ltd or MyKava Travel & Insurance.

Call/WhatsApp: +254 796 209 402 | +254 113 619 635
Visit: www.imana.co.ke | www.mykava.co.ke