Bonds and guarantees: bid, performance, advance, retention

A bond, or guarantee, is a written commitment from a bank or an insurer to pay the buyer if you do not keep your word. A contract can ask for several, at different moments, and each one weighs on your cash. Here is what each one is for, when it is due, when you get it back and how to obtain it without losing the bid over a detail.

At a glance

Guarantee	What it protects	When it is due	When it ends
Bid security	The seriousness of your bid	With the bid	After award or signature
Performance guarantee	Proper delivery of the contract	After notification	After acceptance
Advance guarantee	Money paid before the work	Before the advance is paid	Once the advance is repaid
Retention	Correction of defects	At each payment	At final acceptance, generally

Not all of them apply to every contract. The tender file says which ones are required and for what amount, and your country's rules appear under each section.

Bid security

The bid security (caution provisoire, caution de soumission or garantie d'offre in French notices) proves that your bid is serious. If you withdraw your bid after the deadline while it is still valid, refuse to sign the contract or fail to provide the performance guarantee, the buyer can call it.

When it is due. With the bid, usually as an original inside the package, and at the latest by the deadline. If the tender is split into lots, the amount is often set lot by lot.

When it is returned. To unsuccessful bidders after the award or the signature of the contract. To the winner, once the performance guarantee has been handed over. If nobody returns it, claim it in writing: while it runs, your bank may keep the cash blocked and keep charging.

If it is missing or wrong. This is one of the bluntest causes of rejection, because a committee checks it early. A security that is absent, too small, too short or on the wrong form can eliminate an excellent bid.

Some files ask for no security, or replace it with a signed declaration in which you accept a temporary exclusion if you fail to keep your commitments. Consulting contracts and small requests for quotation rarely ask for one. Read what your file requires rather than assuming.

🇳🇪The rule in Niger

• A bid guarantee is required when the nature or amount of the work justifies it. Its amount is stated in the tender dossier, between 1% and 3% of the estimated contract amount. It is issued by a financial institution approved by the Finance Minister (or with an approved correspondent). It is not required for intellectual services (art. 145 and 146). At opening, the presence or absence of the guarantee is read aloud (art. 34).[1]
• The code announces guarantee terms more favourable to SMEs, to be set by order of the Prime Minister (art. 146). No such order was found in the list published by ARCOP.[1][11]

Performance guarantee

The performance guarantee (caution définitive, or garantie de bonne exécution) covers the buyer if you do not deliver the contract or deliver it badly. It lets the buyer pay for a replacement or cover part of the loss.

When it is due. After notification of the award, within the period set by the file or the contract, and before work starts. That period is short. Warn your bank as soon as you decide to bid, without waiting until you have won.

When it is returned. After acceptance, provisional or final depending on the contract. Here too, ask in writing for the release (mainlevée): this is the document that frees the bank, and it does not always happen by itself.

If you do not provide it. The award can be cancelled, your bid security called and the contract offered to the firm ranked after you. Depending on the country and the amount, this guarantee may also not be required for small contracts, or may be replaced by a retention.

🇳🇪The rule in Niger

• The contractor provides a performance guarantee when the nature, amount or duration of the contract calls for it, except for intellectual services. The amount is set in the specifications and cannot exceed 5% of the base contract price, including amendments. If the winning bid looks abnormally low, the authority may require the guarantee to be raised to a level that covers its potential loss. It is released within one month after the warranty period starts, or at provisional acceptance if there is none (art. 147 to 149).[1]

Advance guarantee

The advance payment (avance de démarrage) is money the buyer pays you before you have done any work, to buy materials and set up. It is not a gift: it is repaid through deductions from your later payments. The advance guarantee protects the buyer until that repayment is complete.

When it is due. Before the advance is paid, and only if the contract provides for an advance and you ask for it.

When it ends. Its amount falls as the advance is repaid, and it lapses once repayment is complete. Check that the wording of the guarantee really says this.

If you do not provide it. As a rule, no guarantee means no advance. The contract still has to be delivered, and you fund it yourself. Do this sum when you price the bid: this is often where a small firm discovers that the contract is bigger than its cash.

🇳🇪The rule in Niger

• An advance may be granted on request for preparatory operations. Total advances never exceed 30% of the initial contract amount and must be guaranteed for the full amount. Since the February 2026 decree, this guarantee can be a bond from an approved financial institution or be built on the contractor's claims on the Treasury (art. 167 as amended). Advances are recovered by deduction from instalments or the balance, at the pace set in the contract (art. 169).[1][2]
• The guarantee in the form of Treasury claims goes through a request to the contracting authority, which refers it to the Finance Minister: the Budget Directorate has 24 hours, then the Treasury 48 hours, to review the file, freeze the funds and produce the pledge.[6]

Retention

Retention (retenue de garantie) does not start as a bank document. It is a share of each payment that the buyer keeps until the end of the contract, to be able to get defects fixed if they appear after acceptance.

When it applies. At each payment, deducted from the amount you receive.

When it is returned. Generally at final acceptance, once outstanding defects have been cleared. Some contracts let you get this money earlier by replacing it with a bank guarantee.

If you do not fix the defects. The buyer can pay someone else to fix them and take the cost from the retention. Build this sum into your cash plan, because it is part of your margin and it arrives last.

🇳🇪The rule in Niger

• When the contract has a warranty period, the authority withholds part of each payment, at most 5% of the amount, set in the specifications. The retention is fully built up when payments reach 80% of the contract. The contractor can replace it with an on-demand bank guarantee for the same amount, and the retention is returned at the end of the warranty period (art. 152).[1]

How to obtain a guarantee

Allow several days, sometimes several weeks, especially for a first request. Start as soon as you decide to bid.

1. 1

   Check who can issue it

   The file says so: a bank, an insurance company or an institution approved by the finance ministry where that is the rule. A guarantee issued abroad may have to go through a local correspondent. Check before paying any fee.

2. 2

   Prepare your request

   The bank will generally ask for your account statements, your articles of association, your company registration (RCCM), your latest financial statements, the notice and the guarantee form from the file. For guarantees after award, add the notification or the contract.

3. 3

   Understand what it costs

   There are two separate costs. The fee pays the bank, often based on amount and duration. The cash deposit is money the bank may ask you to block in an account, sometimes for a large part of the amount. That money stays yours, but you cannot use it for the whole life of the guarantee.

4. 4

   Hand over the form from the file

   The form in the tender file is copied word for word. Banks have their own wording and prefer to use it. Insist: a different text, even a better written one, can be refused.

5. 5

   Read the draft before it is signed

   Ask to see the draft before it is issued. A correction then takes a few minutes. Afterwards you may have to start again, hours before the deadline.

Five checks before it goes into the package

• The amount: the one in the file, for the right lot, with no mismatch between figures and words.
• The currency: the one the file requires.
• The validity: calculated from the deadline, taking into account what the file adds to the bid validity period. If an addendum moves the deadline, your security may become too short. Have it extended.
• The beneficiary: the buyer's exact name, as written in the file.
• The reference: the notice number, the subject of the contract and the lot. For a joint venture, the name of the group or its members, as the file requires.

If you have no banking history

A bank guarantees more readily a firm whose business it sees passing through its accounts. If you are starting from nothing, here are some routes to try:

• Run your business through one professional account, starting now, so the bank has something to read when the day comes.
• Talk to your bank before you need it. Ask what it would need and how long it would take.
• Offer a cash deposit. For a small guarantee, covering most of the amount with a deposit can remove the obstacle.
• Compare the accepted issuers. Depending on the country, an insurance company, a mutual guarantee society or a fund supporting small firms may say yes where a bank says no. Check that the file accepts it.
• Start with contracts that require no security, or with small amounts, to build your history.
• Join a joint venture with a stronger firm, which can carry the guarantee under your agreement. See Joint ventures and subcontracting.