Bid bonds debacle


The Malawi Building and Civil-Engineering Allied Traders Association (Mabcata), a grouping for indigenous constructors in Malawi, has said bid declaration is more powerful than bid a bid bond.

The sentiments have been echoed by a number of stakeholders lobbying for the removal of the bid bond from the tendering process.

Recently, engineers, contractors and the Office of the Director of Public Procurement said usage of the bid bond sidelines Small and Medium Enterprises (SMEs) from tendering for major projects.


The three groups have said the bid bond eliminates competition on the local market, as only big companies, mainly foreign-based, are able to tender for the projects.

Mabcata Trustee, Patrick Khambadza, noted that construction activities and output are an integral part of a country’s national economy and industrial development.

He said, as such , the industry has to be competitive and not just provide a platform for bigger players only.


“The constr uction industry is a driver of economic growth, especially in developing countries like Malawi.

“The industry can mobilise and effectively utilise local human and material resources to promote local employment and improve economic efficiency. This implies that construction has a strong linkage with many economic activities and whatever happens to the industry will directly and indirectly influence other industries and ultimately, the

wealth of a country. As such, the industry has to receive full support,” Khambadza said.

He further said the bid bond acts as a form of security to ensure that the contractor chosen by a tendering authority will enter into the construction contract with the owner.

“If the chosen contractor refuses to enter into a construction contract with the tendering authority, the tendering authority may seek compensation for the difference between the tender price of the defaulting contractor and the amount for which the tendering authority contracts with another person, up to the face value of the bid bond.

“On the other hand, a bid securing declaration was introduced as part of a bidding process by the contractor to the project owner, to attempt to guarantee that the winning bidder will undertake the contract under the terms at which they bid. If the winning bidder refuses to do so, the bidder is barred from bidding for a given period stated in the declaration,” he said.

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