Bid guarantees in Israeli tenders: how they work and what disqualifies them

A bid guarantee (ערבות הצעה, also ערבות מכרז — arvut michraz) assures the buyer that a bidder will stand by its offer. If the winner refuses to sign the contract or breaks the tender terms, the public body may forfeit the guarantee — collect its amount from the bank. Defects in the guarantee are among the most common reasons bids are rejected, and tender committees and courts treat them especially strictly.

Types of guarantee

This guide focuses on the bid guarantee — the one that decides whether your bid is even considered.

What to check in the guarantee wording

The binding wording is in the tender appendix. Compare every line of the guarantee your bank issued against it:

• Beneficiary — exactly as named in the tender, for example “State of Israel — Ministry of Health”.
• Applicant — the same legal entity that submits the bid, with the same company number. A guarantee in the name of the owner, a parent company or an affiliate is a frequent cause of disqualification.
• Amount — exactly the amount set, in shekels: not less, and not “approximately”.
• Indexation — if the tender requires linkage to the consumer price index, check the base index it specifies.
• Validity — until the date in the tender, not a day earlier. If the deadline was postponed, check whether the required validity changed too.
• Autonomous and unconditional (ערבות אוטונומית) — the bank pays on first demand; the buyer does not have to prove anything.
• Tender number and name — as they appear in the tender.

Any change to the wording, however small, can make the guarantee conditional — and the bid invalid.

Bank, digital or insurance-company guarantee

• Bank guarantee — the most common. Submit the original, or a copy if the tender allows it.
• Digital guarantee (ערבות דיגיטלית) — the Accountant General has set a standard for digital guarantees in government tenders, and banks issue them. A digital guarantee is submitted as a file following the tender instructions, usually through the digital tender box. Check in advance that the tender accepts digital guarantees.
• Insurance-company guarantee — accepted only if the tender explicitly allows it, sometimes only from certain insurers.

Time and cost

A bank issues a guarantee within a few days, but if your business has no suitable credit facility it can take longer, and the bank may ask for collateral or a deposit. The cost is a fee calculated as a percentage of the guarantee amount, as agreed with your bank. Order the guarantee early so there is time to fix any wording mistakes.

After submission

• Unsuccessful bidders get their guarantees back, usually once the tender process is over.
• If the process drags on, the buyer may ask you to extend the guarantee; without an extension your bid may drop out.
• The winner replaces the bid guarantee with a performance guarantee under the contract.

Common mistakes

1. The guarantee is in the name of another entity, not the bidder itself.
2. The amount is lower than required, or in another currency.
3. The validity is shorter than required.
4. The wording differs from the appendix, including conditions the bank added.
5. An insurance-company guarantee where a bank guarantee is required.
6. A copy instead of the original, when the original is required.

SafPass extracts every guarantee requirement from the tender — amount, validity, indexation, wording and how to submit it — so you can give your bank a precise request.