Public Contract Guarantees and Supplier Registration Rules
Exclusion of Supplier Registration
A supplier may be excluded from registration for the following reasons:
- Death or extinction of the natural or legal person.
- The express statement by the enrolled provider.
- Disqualification under Section 100 of the Government Contracts Act.
- Lack of interest by the Administration to continue contracting the good or service.
- Failure to meet quality standards indicated in Administration regulations or technical standards issued by the competent bodies (applicable to non-taxable suppliers).
- Maturity or expiration of registration, or other reasons determined in domestic legislation.
Contract Guarantees and Security
Ensuring Participation Security
When deemed appropriate or necessary to protect institutional interests, the Administration, through the tender documents (cartel), may request a participation guarantee. This guarantee is typically a percentage between 1% and 5% of the quoted amount, or a fixed amount if the contract is of inestimable value and does not represent an outlay.
Remedying Insufficient Participation Guarantees
A participation guarantee that is insufficient in amount may be remedied by the offeror at the request of the Administration, provided the offered amount is not less than 80% of the amount fixed in the tender documents (cartel).
Forfeiture of the Participation Guarantee
The security shall be forfeited (executed) in cases where the bidder defaults. Grounds for execution include, but are not limited to, the following:
- Withdrawing an offer that has not been excluded from the contest.
- Failing to respond in time, without justification, to an Administration request regarding a critical issue.
- Providing false information.
- Submitting a quote while being covered by a ground of prohibition (disqualification).
- The contractor, without justification, refusing to sign the respective contract, provide the performance security, or satisfy other requirements necessary for the contract to be effective.
Performance Security Requirements
The Administration shall always require a performance guarantee of between 5% and 10% of the awarded amount in public tenders and abbreviated procedures, and optionally in other procurement procedures.
Procedure for Performance Guarantee Enforcement
The performance bond will be executed partially or totally, up to the amount necessary to compensate the contracting Body for the damages caused by the contractor’s failure to comply with the contract terms.
Acceptable Forms of Guarantees
Guarantees, both participation and performance (compliance), may be provided in the following ways:
- Surety bonds issued by insurance institutions recognized in the country.
- Deposit certificates from banks within the National Banking System or the People’s Bank and Communal Development.
- Bonds or similar instruments issued by its institutions, and so on.
Validity and Term of Guarantees
The Administration, through the tender documents (cartel), sets the minimum term for both the participation and performance guarantees. In case of default, the following rules shall govern the extension of validity:
- The participation guarantee must be extended for a further month until the maximum date established for issuing the award ceremony.
- The performance bond must be extended up to two months beyond the expected date of final acceptance of the contractual object.
Substitution of Collateral
Participation and performance guarantees may be substituted at any time upon request of the offeror or contractor, following acceptance by the Administration, provided that the substitution does not deteriorate the terms of the original warranty.
Repayment of Guarantees
The Administration has the power to return guarantees, partially or fully, upon request of the contractor, in proportion to the part of the contracted object already executed, especially when partial deliveries are feasible.