Inquiries and applications submitted through SuretyPH are endorsed to the relevant duly licensed insurance company. Approval is subject to verification of submitted information, eligibility requirements, and the underwriting guidelines of that insurance company.

Government Procurement

Performance Bonds

Performance security for awarded contracts, typical percentages, and how the bond is released.

Published Jul 12, 2026

Purpose

A performance bond secures faithful performance of an awarded contract. If the contractor defaults, the obligee can call on the bond up to its face amount.

Typical basis

For Philippine government contracts, performance security posted as a surety bond is commonly set at 30% of the contract amount — again higher than cash or letter-of-credit equivalents. Private owners often set their own percentage, frequently between 10% and 30%.

Validity and duration

Performance security is usually required to remain effective until the issuance of the certificate of final acceptance or the equivalent contractual milestone. Variation orders and contract-time extensions may require a corresponding bond amendment or rider.

What underwriters look at

Contract value against the contractor's working capital and net worth.
Track record on similar scope and scale.
PCAB licence category and classification for construction work.
Backlog of ongoing committed work.
Available collateral where exposure warrants it.

Release

The bond is released when the obligee confirms completion or final acceptance, and the insurer cancels its exposure. Secure that written confirmation — it is what closes the file.

Renewals and extensions

Where the contract period extends, arrange the extension before the bond expiry. A lapsed performance bond can constitute contractual default independent of physical progress.

Approval, premium, and collateral requirements are determined by the authorized issuing insurance company after evaluation.