The surety is a financial guarantee that the contractor provides for the benefit of the authority. It protects the government against the risk that the contractor fails to meet its obligations. For tenderers, it is crucial to know the rules on surety posting, exemption and release — especially after the important 2023 reforms.
The basic rule
The Royal Decree on Execution of 14 January 2013 (the General Execution Rules, or AUR) provides that the contractor must post a surety of 5% of the original contract amount (excluding VAT), rounded up to the nearest ten euros.
The surety must be posted within 30 calendar days after the conclusion of the contract. Proof of surety posting is provided to the authority within the same period.
Forms of surety
The surety can be posted in three forms:
- Deposit with the Deposits and Consignments Office.
- Bank guarantee issued by a credit institution.
- Joint and several guarantee by a recognised guarantee company.
In practice, most contractors use a bank guarantee or a guarantee through an insurance company.
Exemption from surety
Threshold of €50,000
If the contract amount is €50,000 or less (excluding VAT), no surety is required, unless the specifications provide otherwise.
Exemption without justification (since 2023)
The Royal Decree of 4 September 2023 introduced an important change: the authority may now waive the surety in the specifications without having to justify this decision. Before 2023, the authority had to take a reasoned decision to deviate from the surety obligation.
This reform is intended to reduce the administrative burden for both authorities and contractors, particularly for smaller contracts and service contracts where the risk is limited.
Release of the surety
Automatic release (since 2023)
A second reform from the Royal Decree of 4 September 2023: the surety is now automatically released after the final acceptance, unless the authority objects within a certain period.
Concretely:
- After provisional acceptance, half of the surety is released.
- After final acceptance, the balance is released.
- The contractor no longer needs to submit a formal request for release — release occurs by operation of law.
Procedure in case of dispute
If the authority refuses release — for example due to defects in performance — it must communicate this in writing with reasons. The contractor can contest this refusal.
Consequences of non-posting
If the contractor does not post the surety in time, the authority may:
- Apply an automatic deduction from payments, equal to the surety amount.
- Impose a penalty of 0.02% of the contract amount per calendar day of delay, up to a maximum.
- In the extreme case, unilaterally terminate the contract for serious breach.
Special cases
Additional surety
For certain contracts, the specifications may require an additional surety on top of the standard 5%. This occurs in high-risk contracts or contracts with advance payments.
Surety in framework agreements
In a framework agreement, the surety depends on the structure:
- If the specifications state a fixed total value, the surety is calculated on that value.
- If the framework agreement has no guaranteed volume, the surety is calculated per order — or the specifications provide for a lump sum amount.
Surety in temporary associations
In a temporary association (combination), the members jointly post the surety. The surety must cover the full amount — not just each member’s share.
Practical tips
Inform your bank or guarantee company early. Issuing a bank guarantee can take several days. Do not wait until the award to start the process.
Watch the 30-day deadline. Late surety posting leads to automatic deduction and potential penalties. Include the deadline in your project planning.
Check the specifications for deviations. The specifications may increase the surety percentage, require an additional surety, or waive the surety entirely. Always read the execution provisions thoroughly.
Follow up on release. After provisional and final acceptance: verify that the surety is effectively released. If release does not follow automatically, contact the authority.