What each guarantee secures
| Guarantee | Amount | What it secures | When required |
|---|---|---|---|
| Bid guarantee (provisional) | Up to 3% of the base budget (excl. VAT) | Maintenance of the bid until award | Exceptional: only where the documents justify it with reasons |
| Performance guarantee (definitiva) | 5% of the final offered price (excl. VAT) | Penalties, damages for breach, defects during the warranty period | General rule, before award |
| Additional guarantee (complementaria) | Up to a further 5% | Reinforcement in special cases | Typically, awardees initially caught by the abnormality presumption |
Two calculation details avoid errors. The performance guarantee is calculated on the offered price, not on the base budget: the discount also reduces the guarantee. And in contracts with provisional prices or certain particularities, the documents may adjust the base; the exact figure is always in the documentation request, which gives 10 working days to lodge it, a deadline whose breach amounts to withdrawing the bid.
Forms of lodging and their real cost
The guarantee may be lodged in cash or securities (locks up cash: the most expensive form in opportunity cost), through a bank guarantee or a surety insurance policy, and, in works, the documents may allow retention from the price (deducted from the first certificates until the 5 per cent is complete: no fees, but advancing unpaid work). The choice is made by weighing fees against the opportunity cost of tied up cash.
The bank guarantee versus surety insurance comparison deserves more attention than it gets. The bank guarantee consumes banking credit line: every live guarantee reduces the financing available for working capital and for the other projects, on top of its periodic fee. Surety insurance, issued by an insurer, performs the same guarantee function without consuming banking lines, with competitive premiums for companies with a good record. For a contractor running several public contracts at once, migrating the guarantee stock to surety insurance frees real financing capacity; it is a structural decision, not a formality.
The life cycle: enforcement, replenishment, release
During the contract, the guarantee answers in cascade: penalties that cannot be deducted from certificates, compensation for breach, warranty period obligations. If the administration partially enforces the guarantee, the contractor must replenish it within the legal period, and failing to do so is a ground for termination.
Release comes at the end of the road: once the warranty period has expired and the final account is approved with no liabilities, release or cancellation is ordered. The right does not activate itself: formally requesting release as soon as the conditions are met (and insisting against silence) is basic treasury management, because every month of a needlessly live guarantee has a direct cost and a capacity cost.
The 10-day requirement: the guarantee against the clock
The performance guarantee's critical moment is not its cost but its calendar: the request to the top-ranked bidder grants 10 working days to submit the supporting documents and lodge the guarantee, and breach is treated as withdrawal of the bid, with the contract moving to the next-ranked bidder and a possible penalty. Ten working days is little to arrange a bank guarantee from scratch: bank risk analysis, fees, guarantee wording conforming to the documents' template (the administration's objections to the wording consume days), validation where required.
A company that bids seriously does not arrange the guarantee upon receiving the request: it preconditions it when submitting the bid. With the bank or insurer, a pre-approved guarantee facility with agreed amounts and wording; internally, the exact 5 per cent calculation on the offered price done on bid day. In UTEs, the law allows the guarantee to be lodged by one or several of the grouped companies provided it covers the required total and joint and several liability is preserved; deciding in the UTE agreement who provides it and against which internal counter-guarantees avoids improvisation inside the request period.
Enforcement: when and how the guarantee answers
The performance guarantee is not enforced by informal unilateral decision: forfeiture requires a reasoned resolution by the contracting authority, with a prior hearing for the contractor, specifying the ground (non-deductible penalties, liquidated damages, culpable termination) and the amount. That resolution can be appealed administratively and, where applicable, in court; and if enforcement was partial, the replenishment obligation runs from notification.
For the contractor, the prior hearing is the decisive station, and it works like the modification or abnormality hearings: what is not raised there, with numbers and documents, rarely revives later. The typical defence attacks two fronts: attributability (the delay or defect motivating enforcement had a documented external cause) and quantum (the damage valuation or penalty calculation does not follow the contract). A well-kept project file throughout execution (minutes, updated programme, written communications) is, once again, what turns the hearing into a real defence rather than a formality.
Worked example: what the guarantee stock costs
A mid-sized contractor holds three live public contracts with performance guarantees of EUR 52,000, 38,000 and 61,000: EUR 151,000 in bank guarantees. With annual bank fees in the order of 0.8 per cent plus arrangement costs, the direct cost is around EUR 1,200 a year; the indirect cost (consumed credit line that raises the price of, or caps, the rest of the financing) is larger and harder to see.
The first project finished its warranty period five months ago, with the final account approved, but nobody requested release: EUR 52,000 of live guarantee serving no function. The correct routine fits on one sheet: each guarantee with its contract, its expected release milestone and its request date. In parallel, migrating the guarantees to surety insurance at renewal frees EUR 151,000 of banking line for the working capital of ongoing projects. Neither task scores in any tender; both are worth hard cash.
Note: the amounts and references cited reflect Spanish legislation in force in 2026 (Ley 9/2017, articles 106 to 111). Always check the guarantee regime in the documents of each specific contract.