I. About This Article
A tender guarantee, also known as an electronic guarantee, is one of the important legal and financial instruments for businesses participating in public procurement in Georgia. When participating in an electronic tender, a bidder is usually required to submit an electronic guarantee securing the tender proposal. This guarantee supports the bidder’s participation in the tender and, in certain cases, may also become a source of financial risk.
Many companies treat the electronic guarantee as a purely technical formality. In reality, however, it is connected with the right to participate in a tender, the consequences of disqualification, complaint strategy, tender status and the bidder’s financial interests.
A tender proposal in an electronic tender may be submitted only in a specific sequence: acceptance of the affidavit terms, submission of the electronic tender guarantee and payment of the relevant fee. Accordingly, without an electronic guarantee, a bidder cannot fully participate in the tender.
This article will help you understand what an electronic guarantee is, what amount must be submitted, how long it should remain valid, when it is returned to the bidder and what risks may arise in case of disqualification, tender termination or filing a complaint.
The article is based on the Rules for Conducting Electronic Tenders approved by Order No. 12 of the Chairperson of the State Procurement Agency and TB Legal’s practical experience in public procurement matters.
II. What Is an Electronic Guarantee Securing a Tender Proposal?
Under the Rules for Conducting Electronic Tenders, an electronic guarantee securing a tender proposal is a guaranteed mechanism submitted by the bidder to the State Procurement Agency through the electronic system to secure the tender proposal.
In other words, an electronic guarantee, or tender guarantee, is a financial security connected with the bidder’s participation in the tender. Its purpose is to encourage responsible conduct by participants and to prevent bad-faith use of the tender process.
The beneficiary of the electronic guarantee is the State Procurement Agency. The tender guarantee is submitted to the Agency through the electronic system after acceptance of the affidavit terms and before payment of the fee.
This detail is practically important because submission of the tender proposal is strictly linked to the sequence defined in the system. If the bidder does not complete these steps correctly, submission of the proposal may not be completed or a procedural problem may arise later.
III. What Is the Amount of the Electronic Guarantee?
As a rule, the electronic guarantee is submitted in the amount of 1% of the estimated value of the procurement object.
If the electronic tender is conducted on the basis of a price list, the amount of the tender guarantee is determined as 1% of the contractual value of the procurement object.
This means that the amount of the tender guarantee is directly linked to the value of the procurement. In high-value tenders, the guarantee amount also increases, which may become a financially important issue for the bidder.
Before participating in a tender, a business should consider not only qualification requirements and the proposed price, but also what amount must be secured as an electronic guarantee and in which cases that amount may remain temporarily “frozen” or be placed at risk.
IV. When Is Submission of an Electronic Guarantee Required?
A tender proposal may be submitted only through the electronic system and only after the bidder completes several actions required by the rules.
These actions are acceptance of the affidavit terms, submission of the tender guarantee and payment of the fee. This sequence is important because the electronic guarantee must be submitted in the system before the fee is paid.
In practice, this means that the bidder should ensure in advance that the guarantee exists and is submitted correctly through the system. Attempting to submit a tender guarantee at the last minute may be risky, especially where there is a technical delay, a delay in banking or insurance procedures, or incorrect data reflected in the system.
Many public procurement disputes begin with procedural mistakes. For this reason, a bidder should manage not only the commercial offer, but also the guarantee, fee, affidavit and other technical steps in a timely manner.
For more information about legal support in tender procedures, see our service page: Public Procurement Law Services in Georgia.
V. For How Long Should the Electronic Guarantee Remain Valid?
The validity period of an electronic guarantee depends on the form in which it is submitted.
If the electronic guarantee is issued through the electronic guarantee registry, its validity period must be at least 160 days from the moment the electronic tender receives the status “submission of proposals has started.”
If the electronic guarantee is submitted through a bank plastic card, its validity period is determined as 10 days after the electronic tender receives its final status.
These rules show that the validity period of the guarantee may differ depending on the form of submission. A bidder should know what type of guarantee is used and how this affects its financial resources.
The validity period becomes especially important where a complaint is filed, the tender is terminated, the tender ends with a negative result or the bidder is disqualified. In such cases, return of the guarantee may depend on an additional process or the outcome of the complaint.
VI. When Is the Electronic Guarantee Returned to the Bidder?
The rule for returning an electronic guarantee depends on the tender status, the grounds for disqualification and whether the decision has been appealed.
In general, the electronic guarantee may be returned to the bidder after 10 days from disqualification if the disqualification was based on certain grounds provided by the rules and no complaint exists.
The guarantee may also be returned after 10 days from the moment the electronic tender receives the status “contract concluded”, “terminated” or “completed with negative result”, provided that there is no circumstance preventing the return of the guarantee.
If the end of this 10-day period falls on a weekend or public holiday, the guarantee is returned to the bidder immediately after the end of the next business day.
Based on these rules, the bidder should monitor not only the date of disqualification or final tender status, but also whether there is a complaint, a special exception or a disqualification ground that may lead to a different result regarding return of the guarantee.
VII. What Happens in Case of Disqualification?
In case of disqualification, the fate of the tender guarantee depends on the legal ground for disqualification.
Not all disqualifications lead to the same result. The Rules for Conducting Electronic Tenders distinguish between cases where the guarantee is returned to the bidder and cases where the return may not occur or may be subject to additional conditions.
For a bidder, it is especially important to correctly assess the legal basis of disqualification. Sometimes the wording of the disqualification or the legal ground used may affect not only the result of participation in the tender, but also the issue of returning the guarantee.
If the bidder believes that the disqualification is unlawful, it may appeal the relevant decision. However, filing a complaint may itself affect the timing of the guarantee return, because in certain cases the guarantee is returned only after the complaint is declared inadmissible, withdrawn or after the decision of the Dispute Review Board rejecting the complaint is uploaded into the system.
For more information about tender appeals, see our blog: Tender Complaint – Anatomy of a Successful Public Procurement Dispute.
VIII. How Does a Complaint Affect Return of the Electronic Guarantee?
Filing a complaint in public procurement is an important mechanism for protecting the bidder’s rights. However, from the perspective of returning the tender guarantee, a complaint also has a practical financial effect.
If a bidder challenges the decision of the tender commission regarding its disqualification, return of the guarantee may be postponed until the complaint is reviewed. In such a case, the guarantee will be returned when the complaint is declared inadmissible, withdrawn or when the Dispute Review Board adopts a decision rejecting the complaint, provided that 10 days have already passed since the disqualification.
Similarly, if the complaint concerns an electronic tender that has been terminated or completed with a negative result, return of the guarantee may be linked to the final outcome of the complaint.
This means that before filing a complaint, the bidder should assess not only the legal prospects, but also the financial effect: how long the guarantee may remain unreleased and what impact this may have on the company’s financial position.
Of course, this does not mean that a bidder should not appeal an unlawful decision. On the contrary, where a violation exists, a complaint is an important protection mechanism. However, the complaint strategy should be planned in advance, including possible timeframes for return of the guarantee.
IX. What Is the Risk If the Electronic Guarantee Is Returned Incorrectly?
The Rules for Conducting Electronic Tenders provide for a situation where an electronic guarantee is returned to the bidder in violation of the conditions established by the rules.
In such a case, the bidder is obliged to return the amount of the electronic guarantee to the Agency immediately upon request.
This issue is practically important because the factual return of the guarantee does not always mean that the bidder no longer has any obligation related to it. If the guarantee was returned incorrectly, the Agency may have a claim for the amount to be returned.
In addition, if the guarantee was returned to the bidder because of an incorrect action by the contracting authority in the system, changing the tender or contract status and cancelling the ground for disqualification may depend on submission of a new bank guarantee issued under identical conditions and for the same period.
Therefore, even after the guarantee is returned, the bidder should keep relevant documentation and monitor whether there is any risk of an additional request by the Agency or a procedural change.
X. What Should a Bidder Check Before Submitting an Electronic Guarantee?
Before submitting an electronic guarantee, the bidder should check several issues.
First, the amount of the guarantee must be determined. As a rule, it is linked to 1% of the estimated value of the procurement object, and in a tender conducted on the basis of a price list, to 1% of the contractual value.
Second, the validity period of the guarantee must be checked. If the guarantee is issued through the electronic guaranteed registry, the validity period must comply with the minimum period established by the relevant rules.
Third, possible disqualification risks should be assessed. In some cases, the legal ground for disqualification may affect the return of the guarantee.
Fourth, the complaint strategy should be determined. If the bidder intends to challenge disqualification or termination of the tender, it should consider that return of the guarantee may depend on the outcome of the complaint procedure.
Fifth, it should be checked whether the sequence for submitting the tender proposal has been correctly completed: affidavit, electronic guarantee and fee.
XI. How TB Legal Can Help
TB Legal assists companies in public procurement matters by assessing legal risks, analysing tender documentation, evaluating the consequences of electronic guarantees and disqualification, preparing complaints and representing clients before the Dispute Review Board.
Our services include both preventive support before participation in a tender and legal response in case of disqualification, tender termination, delay in return of the guarantee or other procedural problems.
If your company participates in a public tender and wants to assess in advance the risks related to the tender guarantee, documentation or possible complaint, it is important to receive legal advice in time.
For more information about our public procurement services, see our service page: Public Procurement Law Services in Georgia.
XII. Conclusion
A tender guarantee is an important instrument for participation in an electronic tender. It is not merely a technical detail – the guarantee is connected with submission of the tender proposal, consequences of disqualification, complaint strategy and the bidder’s financial interests.
Before participating in a tender, the bidder should know what amount of guarantee is required, how long it must remain valid, when it is returned, in which cases return may be postponed and what risk exists if the guarantee is returned incorrectly.
Success in public procurement often depends not only on price and technical proposal, but also on strict compliance with procedural requirements. The issue of the electronic guarantee is part of this procedural precision.
Contact TB Legal if you need legal assessment of a tender guarantee, disqualification or a public procurement dispute. We will help protect your company’s interests.
XIII. Sources Used
This article is based on the following sources:
- Order No. 12 of the Chairperson of the State Procurement Agency of 14 June 2017 on approval of the Rules for Conducting Electronic Tenders.
- TB Legal’s practical experience in public procurement and tender disputes.
Disclaimer
This article has been prepared for general informational purposes only and does not constitute individual legal advice or a legal opinion. Issues related to tender guarantees, disqualification, complaints or public procurement procedures may be assessed differently depending on the specific tender conditions, grounds for disqualification, tender status, existence of a complaint and data reflected in the electronic system.
Before making a decision in a specific matter, it is recommended to obtain individual legal advice from a qualified lawyer.
