Bid Bond Agreement (Ghana)

A Bid Bond Agreement in Ghana records the obligations the parties accept and the terms governing their arrangement.

Section 44 of the Public Procurement Act 2003 (Act 663) permits procuring entities to require bid security not exceeding 3% of the estimated contract price. Bid security may be provided in any of the following forms acceptable to the procuring entity: a bank guarantee issued by a Bank of Ghana-licensed commercial bank; a certified cheque drawn on a Bank of Ghana-licensed institution; or a letter of credit. A bid bond issued by an insurer licensed by the National Insurance Commission (NIC) is also recognised in Ghanaian procurement practice, though bank guarantees are the most commonly required form under standard PPA bidding documents.

The Contracts Act 1960 (Act 25) provides the general contractual framework within which a bid bond operates in Ghana. A bid bond creates a tripartite relationship: the tenderer (the principal), the issuing bank or insurer (the surety), and the procuring entity (the beneficiary). If the tenderer's bid is accepted and the tenderer fails to sign the contract within the period specified in the bidding documents or fails to provide the required performance security, the procuring entity may call on the bid bond and receive the guaranteed amount from the surety. The surety then recovers the amount from the tenderer under the indemnity provisions of the bond.

A Bid Bond Agreement must be distinguished from a Performance Bond, which is a separate instrument submitted after award of the contract to guarantee the tenderer's performance of the contract itself. A Bid Bond guarantees only the tender phase obligations — the tenderer's commitment to sign the contract if awarded — whereas a Performance Bond under Act 663 guarantees the performance of the awarded contract. Tenderers for construction contracts in Ghana regulated by the Public Procurement Authority are typically required to submit a Bid Bond with their tender and replace it with a Performance Bond of 10% of the contract price within 28 days of award.

The Public Procurement Authority has issued Standard Bidding Documents for Procurement of Works, Goods, and Services, each of which contains a prescribed format for bid security. Tenderers who are prequalified under Section 38 of Act 663 for national competitive tendering should confirm with the procuring entity whether the prequalification certificate reduces or eliminates the bid security requirement. International competitive tenders issued by Government of Ghana ministries and state-owned enterprises may additionally require that the bid security be issued by a bank acceptable to international development partners such as the World Bank or the African Development Bank (AfDB).

A Bid Bond Agreement in Ghana is required in the following circumstances under the Public Procurement Act 2003 (Act 663) and the Public Procurement Regulations 2019 (L.I. 2400).

A Bid Bond is required when a company or individual submits a tender for a public sector procurement contract in Ghana where the procuring entity — a government ministry, department, agency, district assembly, or state-owned enterprise — has specified bid security in the bidding documents under Section 44 of Act 663. Failure to submit the required bid security results in automatic disqualification of the bid by the Tender Evaluation Committee.

A Bid Bond is needed when a company participates in a National Competitive Tender (NCT) or International Competitive Tender (ICT) conducted by the Public Procurement Authority (PPA) on behalf of any government entity. PPA standard bidding documents for NCT and ICT routinely require bid security of between 1% and 3% of the estimated contract price.

A Bid Bond is required when a contractor applies to be pre-qualified for a major infrastructure project — roads, bridges, public buildings, water systems — procured by the Ghana Highway Authority, Ghana Highways Authority, Ghana Water Company Limited, or the Ministry of Roads and Highways. Pre-qualification documents often require submission of a bid security commitment letter from a Bank of Ghana-licensed commercial bank.

A Bid Bond is needed when a supplier submits a tender to the Ghana Health Service, the Korle Bu Teaching Hospital, or any other public health institution procuring pharmaceuticals, medical equipment, or health services under Act 663. The Ghana Health Service procurement manual requires bid security for tender values exceeding GHS 200,000.

A Bid Bond is required for tenders submitted to the Electricity Company of Ghana (ECG), the Ghana National Petroleum Corporation (GNPC), or the Ghana Ports and Harbours Authority (GPHA) for services or goods contracts above the applicable procurement threshold under L.I. 2400. These state-owned enterprises follow PPA standard procedures and require bid security in the form of a bank guarantee from a Bank of Ghana-licensed institution.

Parties in Ghana should obtain the Bid Bond from a Bank of Ghana-licensed commercial bank well before the tender submission deadline, as banks typically require 3 to 5 working days to issue the guarantee. A related document — the Performance Bond — should be prepared in advance to be submitted promptly upon contract award.

A valid Bid Bond Agreement in Ghana under Section 44 of the Public Procurement Act 2003 (Act 663) and PPA standard bidding documents must contain the following essential elements.

Principal Details: Full legal name of the tenderer (the principal), company registration number issued by the Office of the Registrar of Companies (ORC) if a corporate entity, registered address, and Tax Identification Number (TIN) issued by the Ghana Revenue Authority (GRA). The tenderer's details must exactly match the bidding documents to prevent rejection by the procuring entity's Tender Evaluation Committee.

Beneficiary (Procuring Entity) Details: Full name of the procuring entity, its address, the tender reference number, the project description, and the closing date of the tender as published in the procuring entity's invitation to tender or in the Ghana Public Procurement Journal administered by the PPA.

Surety Details: Full legal name of the issuing bank or insurer, its Bank of Ghana banking licence number or National Insurance Commission insurance licence number, registered address, and the name and designation of the authorised signatory who signs the bond on behalf of the surety.

Guaranteed Amount: The face value of the bid bond stated in Ghana Cedis (GHS), not exceeding 3% of the tenderer's bid price or the procuring entity's estimated contract value as specified in the bidding documents under Section 44 of Act 663. The amount must be stated in both numerals and words.

Validity Period: The bid bond must remain valid for at least 28 days beyond the tender validity period specified in the bidding documents, to allow the procuring entity sufficient time to evaluate bids and notify the successful tenderer. PPA standard bidding documents typically require a validity period of 120 days for NCT and 150 days for ICT.

Calling Conditions: A clear statement of the conditions under which the procuring entity may call on the bond — specifically, that the tenderer withdraws the bid during the validity period, fails to sign the contract within the period specified in the letter of acceptance, or fails to furnish the required performance security. The bond must be unconditional and payable on first written demand by the beneficiary.

The forms-legal.com Bid Bond Agreement template for Ghana incorporates all 6 mandatory elements required by PPA standard bidding documents and the Public Procurement Act 2003 (Act 663). Tenderers should also prepare a Performance Bond under Act 663 to be submitted within 28 days of receiving the letter of acceptance from the procuring entity.

Additional compliance elements for a Bid Bond Agreement (Ghana) used in Ghana include: Under the Companies Act 2019 (Act 992), the Registrar General's Department (RGD) maintains the register of Ghanaian companies. Section 7 of the Companies Act 2019 governs company incorporation. The Ghana Revenue Authority (GRA) administers corporate tax under the Income Tax Act 2015 (Act 896). The Commercial Division of the High Court in Accra adjudicates business disputes. The Ghana Investment Promotion Centre (GIPC) regulates foreign investment under the GIPC Act 2013 (Act 865). Forms-legal.com provides this template as a starting point for Ghana-compliant documentation.