Compliance
Bid Bonds & Performance Guarantees on Etimad: The 2026 Contractor Playbook
28 April 2026 · 11 min read · By NextBid Bid Experts · Updated 16 October 2026
The complete contractor playbook on bid bonds and performance guarantees for Saudi government tenders on Etimad - amounts, timing, issuance workflow, and the costly mistakes that keep qualified bidders out of contention.
If you have ever prepared a strong technical and commercial proposal only to be told your guarantee was rejected on submission day, you already know that a bank guarantee is not an administrative afterthought. A missing or defective guarantee is a single-line reason a qualified Saudi contractor can be disqualified from a government tender - and it can be avoided.
This guide explains exactly what the bid bond and performance guarantee are under the Saudi Government Tenders and Procurement Law, how they are issued through the Etimad platform, what amounts and timelines apply, and the mistakes to avoid.
What the bid bond is - and why it exists
Under the Saudi Government Tenders and Procurement Law and its Implementing Regulations, every bidder on a government competition, unless it is exempt (for example a local small or medium enterprise or a non-profit entity), must submit a bid bond (الضمان الابتدائي) with its offer. The bond is a formal bank guarantee, issued by a Saudi-licensed bank, payable unconditionally on demand to the tendering entity.
Its purpose is simple: it proves the bidder is serious. If a contractor withdraws its offer after the submission deadline and before the offer validity ends, or fails to produce the final performance guarantee within the prescribed period, the bid bond is not returned. A winner that refuses to sign the contract loses its final guarantee instead.
Standard parameters
| Parameter | Standard rule |
|---|---|
| Issuer | A bank licensed by the Saudi Central Bank (SAMA) |
| Form | Unconditional, payable on first demand |
| Amount | 1% to 2% of the total bid value, as specified in the tender booklet |
| Validity | At least 90 days from the opening date under the current law (extendable). The new law, which takes effect in early January 2027, changes offer validity to 90 working days, so follow the term in the tender booklet |
| Currency | Saudi riyals, unless the tender booklet states otherwise |
| Beneficiary | The government entity named in the tender |
The exact percentage, validity period, and beneficiary name are dictated by the tender booklet itself and must be matched character-for-character.
What the performance guarantee is
Once a contractor is awarded the tender, the winner must submit a performance guarantee (الضمان النهائي), and the bid bond stays in place until it does. This is a new bank guarantee, also issued by a Saudi-licensed bank, at a materially higher percentage.
Standard parameters
| Parameter | Standard rule |
|---|---|
| Amount | 5% of the contract value (some tenders specify higher) |
| Validity | Held until final handover of the project under the contract terms |
| Purpose | Secures delivery, quality, and contractual obligations |
| Release | On final acceptance and completion of all obligations |
Failure to issue the performance guarantee within 15 working days of the winner being notified of the award (the entity may extend the period by a similar period) triggers two consequences. First, the bid bond is confiscated. Second, the award moves to the next bidder and the case can be referred to the violations committee, which may ban a violator from government contracting for up to five years.
How to issue a bank guarantee through Etimad
Etimad provides an electronic bank guarantee service that lets you request the guarantee from your bank on the platform. The practical workflow a contractor uses is:
- Sign in to the Etimad supplier portal.
- Open the Bank Guarantees Management service.
- Select the guarantee type (initial or final).
- Link the guarantee to the specific competition by reference number.
- Fill in the guarantee data - amount, currency, validity, beneficiary - exactly as stated in the tender booklet.
- Select the issuing bank from the banks available on the platform.
- Pay the issuance fee and submit.
- Receive the electronic guarantee in the platform once the bank approves it.
One practical rule: start the guarantee process at least five working days before the submission deadline. Banks request supporting documents - commercial registration, board resolution, authorised signatory ID, financials - and a last-minute request is almost guaranteed to miss the cut-off.
Five guarantee mistakes to avoid
Check these five points before you upload a guarantee:
- Wrong beneficiary name. The beneficiary must match the tendering entity's name in the tender booklet exactly, in Arabic, with no abbreviations. Writing "وزارة الصحة" instead of "وزارة الصحة - المديرية العامة للشؤون الصحية" puts the guarantee at risk of rejection.
- Validity period too short. Under the current Implementing Regulations, the bid bond must be valid for at least 90 days from the date set for opening the offers. A shortfall of one or two days is ignored; a larger shortfall (up to 30 days) must be completed when the examination committee asks, otherwise the bidder is treated as having withdrawn and loses the bond. The new law, which takes effect in early January 2027, changes offer validity to 90 working days, which is longer than 90 days, and leaves the details to its new Implementing Regulations, so match the bond term to the tender booklet.
- Conditional language. Any conditionality ("subject to", "upon verification of") voids the unconditional nature required by law.
- Bank not SAMA-licensed. Guarantees must come from a bank licensed in the Kingdom, or from a foreign bank acting through a Saudi bank.
- Amount below the stipulated percentage. Rounding the bond amount down to a friendlier figure, rather than matching the tender percentage precisely, is non-compliant: the committee can accept a shortfall of up to 10% of the required amount only if the shortfall is completed within the period it sets (no more than 10 working days), and a larger shortfall means the offer cannot be accepted.
Financing the guarantee: what SMEs should know
Local SMEs do not need a bid bond, but a winning SME still needs the final guarantee unless an exemption applies, and that ties up working capital. Three practical routes exist:
- Cash collateral at the bank. Simple but immobilises cash. Best for low-value bids.
- Facilities against commercial credit lines. The bank blocks a portion of an existing facility rather than cash. Requires an established banking relationship.
- Asset-backed guarantee facilities. Ask your bank whether the guarantee can be structured against receivables, property, or other assets, and compare the all-in cost before you bid.
Kafalah (the Saudi SME financing guarantee programme) also guarantees part of the financing that banks extend to SMEs; ask your bank whether it can support a guarantee facility.
Frequently asked questions
Can a bid bond be issued in a currency other than SAR?
Normally no. Contract values are paid in Saudi riyals unless the tender documents designate another currency with the Ministry of Finance's approval, so follow the currency stated in the tender booklet.
Can I submit an offer without a bid bond?
Only if you are exempt (for example a local small or medium enterprise or a non-profit entity). Otherwise, under the current law, an offer without the required initial guarantee is disqualified. Exemption is not free of risk: under the current law, a local SME that withdraws its offer during the validity period or fails to provide the final guarantee pays a fine equal to the initial guarantee. The new law, which takes effect in early January 2027, makes any exempt bidder pay a fine of 2% of the offer value in those cases, keeps the 1% to 2% guarantee, and adds freelancers and urgent and emergency cases to the exemptions.
What happens if my bid bond expires before the award decision?
If the entity needs more time to decide, it asks bidders to extend their offers. Under the current Implementing Regulations, bidders who accept must extend their bonds and notify the entity within two weeks of that request, and those who do not respond in that time are treated as declining and get their bonds back, so their offers lapse. The new law, which takes effect in early January 2027, leaves these details to its new Implementing Regulations, so follow the deadline in the entity's request.
Can the performance guarantee amount exceed 5%?
Yes. The entity needs the Minister of Finance's prior approval to set a higher percentage and must state it in the tender documents. Always read the tender booklet.
Is a cheque acceptable in place of a bank guarantee?
For competitions held in the Kingdom, no. The guarantee must be a bank guarantee letter from a local bank, or from a bank outside the Kingdom submitted through a local bank, in the form approved by the Ministry of Finance. Cheques and cash are accepted only in limited cases, such as works executed outside the Kingdom.
Bringing it together
Bank guarantees are the quietest part of a proposal and an avoidable reason for rejection. A disciplined contractor treats the guarantee like a separately managed workstream that runs parallel to technical writing, starts early, and is double-verified against the tender booklet before upload.
NextBid Solutions' scope includes bid bond requests and performance guarantee letters, and its Submission Assurance service is an independent review of a completed proposal before you submit.