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What Is a Surety Bond for Public Contracts (Bürgschaft, Germany)?
This is a German procurement term. A security instrument in which a third party, usually a bank, guarantees the contractor's performance of the contract.
What is a Bürgschaft in procurement?
A guarantee, usually from a bank or insurer, securing the contractor's obligations: performance of the contract, repayment of advance payments or warranty claims after completion.
When is it required?
The tender documents state which securities are required and when. Under the VOB/B, security is only allowed up to set percentages of the contract value.
What does it cost the bidder?
A fee to the guarantor and use of its credit line. Factor it into the price, as it is a real cost of the contract.
