A Tender Security or Bid Bond is a written guarantee (providers are usually financial institutions) submitted to the individual/organization that has advertised for a service by a business that is willing to supply the service. The bid security is to ensure that upon receiving the tender, they shall take on the job and in the price terms that they had put in the tender.

In the event of a default by the service provider, the project owner can file a claim against the bid bond, which the guarantor – usually a bank or insurance firm – will pay in the amount of how much more he has to pay to contract the next-lowest bidder for the project or of the face value of the bid bond. 

How tender securities work

Most public institutions in Kenya will require that you have a bid bond submitted in their tender advertisements. Potential bidders are required to submit bids that are valid for a period specified in the bidding documents.

Procuring entities have the option to demand bid security which can be a fixed sum or a percentage of the estimated value of the contract. This is specified in the bidding documents and can be up to 2% of the contract price.

Tender security is only valid if it extends at least thirty days after the expiry of the tender validity period. Thereafter, the bid securities are released to respective unsuccessful bidders once the contract is awarded to the successful bidder. 

Any tender security that you seek to submit within your tender should be from a reputable bank (local or international), insurance company (approved by PPRA) or in the form of cash or letter of credit, in the amount specified in the bid document. Every time this is done, a receipt should be attached to the returned tender as proof of payment.

Here’s the full list as at July 2020

Below is the latest list of all insurance companies approved as tender/bid security providers as provided by PPRA, with links to their websites for further details: 

1. AAR Insurance Kenya Limited
2. Africa Merchant Assurance Company Limited
3. AIG Kenya Insurance Company Limited
4. Allianz Insurance Company of Kenya Limited
5. APA Insurance Company Limited
6. Britam general Insurance Company (K) Limited
7. Cannon Assurance Limited
8. CIC Insurance Group Limited
9. Corporate Insurance Company Limited
10. Fidelity Shield Insurance Company Limited
11. First Assurance Company Limited
12. GA Insurance Limited
13. Geminia Insurance Company Limited
14. ICEA Lion General Insurance Company Limited
15. Intra Africa Assurance Company Limited
16. Invesco Insurance Company Limited
17. Kenindia Assurance Company Limited
18. Kenyan Orient Insurance Company Limited
19. Madison Insurance Company Limited
20. Mayfair Insurance Company Limited
21. Occidental Insurance Company Limited
22. Pacis Insurance Company Limited
23. Phoenix of East Africa Assurance Company Limited
24. Pioneer General Insurance Company Ltd
25. Resolution Insurance Company Limited
26. Saham Assurance Company (K) Limited
27. Sanlam General Insurance Limited
28. Takaful Insurance of Africa Limited
29. Tausi Assurance Company Limited
30. The Heritage Insurance Company Limited
31. The Jubilee Insurance Company of Kenya Limited
32. The Kenya Alliance Insurance Company Limited
33. The Monarch Insurance Company Limited
34. Trident Insurance Company Limited
35. UAP Insurance Company Limited
36. Xplico Insurance Company Limited