Bid and Contract Security: How Much Money is Frozen and How to Calculate It

Participating in procurements involves not only price and documents but also money that is temporarily out of circulation. Bid security is blocked in a special account, contract performance security is paid before signing, and guarantee obligations are held for some time after acceptance. A company that does not account for this freeze in advance will eventually win a tender that it cannot secure. We will analyze the amounts that arise, when they occur, and how to plan for them.

Bid Security: Why It Is Necessary

Bid security serves as a pledge of serious intentions. It guarantees the customer that the winner will not refuse to sign the contract. According to 44-FZ (Federal Law on the Contract System in the Procurement of Goods, Works, and Services), bid security is required if the initial (maximum) contract price exceeds one million rubles; for lower prices, the customer does not set security.

The amount depends on the initial maximum contract price (IMCP):

• IMCP up to 20 million rubles — from 0.5% to 1% of the initial price;
• IMCP over 20 million rubles — from 0.5% to 5%.

The specific percentage is set by the customer in the notice — it is essential to check there rather than in the general rules.

Two Ways to Provide Bid Security

• Funds in a special account. The platform blocks the amount at the time of bid submission and unblocks it after the results are announced (for the winner — after the contract is signed). The money remains yours but is inaccessible.
• Independent guarantee. A bank or another organization from the list issues a guarantee that replaces the freezing of funds. A fee is paid for it, but working capital remains in use. The guarantee must comply with legal requirements and be included in the relevant register.

The practical conclusion: if you participate in several procedures simultaneously, the blocks accumulate. Three parallel bids with IMCP of 10 million rubles and 1% security mean 300 thousand rubles unavailable until the results.

Contract Performance Security

The winner provides contract performance security before signing it. The amount is set by the customer within from 0.5% to 30% of the initial price. If the contract provides for an advance, the security cannot be less than the advance amount. The methods are the same: money to the customer’s account or an independent guarantee.

Additionally, consider guarantee obligations if the customer has established them: they are provided at acceptance and are valid during the warranty period.

Anti-Dumping Measures

If you reduce the price by 25% or more from the IMCP, anti-dumping rules come into play. For IMCP over 15 million rubles, contract performance security is provided in one and a half times the amount. For IMCP up to 15 million rubles, the participant has an alternative: either increased security or proof of good faith — information from the contract register about contracts executed without penalties in the last three years.

This is an important point when planning bidding strategy: a significant drop in price can double the required amount and consume all the margin. The decision on how low to go should be made with a calculator, not in the excitement of the auction.

How to Calculate the Freeze: Example

Suppose the IMCP of the contract is 12 million rubles, bid security is 1%, and performance security is 10%, with no advance.

• at the submission stage, 120,000 ₽ is blocked;
• upon winning and signing, 1,200,000 ₽ is provided (or an independent guarantee with a fee is obtained);
• if you drop the price by 30% — for IMCP up to 15 million, you can confirm good faith; otherwise, performance security will increase by one and a half times to 1,800,000 ₽;
• the money will return after the contract is executed and closing documents are signed — that is, after the contract term plus acceptance.

Before submission, it is useful to calculate not only the profit from the contract but also the cost of this money: the guarantee fee or the lost profit from frozen funds.

What to Consider in Bid Economics

• bid security during the review period;
• contract performance security and the time of its return;
• guarantee obligations, if established;
• commission for the independent guarantee;
• platform fees from the winner, if provided for in the regulations;
• own costs: purchasing materials before the advance, logistics, installation, salaries;
• cash gap between delivery and payment — payment terms under the contract are known in advance.

It is the sum of these items, not “price minus cost,” that determines whether it is worth participating and to what price it makes sense to negotiate.

Typical Mistakes

• No funds in the special account at the time of submission. The bid simply will not be submitted — the platform will not be able to block the amount.
• The guarantee does not meet the requirements of the notice. The wording in the independent guarantee should be checked against the contract draft before receiving it, not afterward.
• The one and a half times amount is not considered in case of dumping. Winning turns into a refusal to sign, and refusal — into the risk of being listed as an unscrupulous supplier.
• Parallel bids are not coordinated with the budget. Two wins in one week can turn out to be unmanageable.

In Atlas Procurements, the calculation of bid economics is integrated into the procedure work: it shows how much money is frozen, what price remains profitable, and where the reduction limit lies. This is the very guideline needed when the auction is in real time. View your procurements →

Further on the topic: why bids are rejected in auctions and how to choose a system for working with tenders.

Amounts and rules are provided according to the current edition of the law on the contract system. Always check specific percentages and methods of security in the notice and contract draft for your procurement.