The Public Procurement Act and the contract prevail.
Performance guarantee
Money that sits blocked for the life of the contract. The form you choose bears directly on your working capital.
- How much is the performance guarantee?
- What forms may the guarantee take?
- When is the performance guarantee released?
- Why this concerns us
- Under Art. 111 of the Bulgarian Public Procurement Act the performance guarantee may not exceed 5 per cent of the contract value excluding VAT.
- Three forms are permitted: cash, bank guarantee and insurance policy.
- Under Art. 111(5) the form is chosen by the contractor — the authority may not narrow it to one.
- Under Art. 111(7) insurance is available only where the guarantee does not exceed a set amount (BGN 500,000 under the 2024 wording).
- It is released on the terms of the contract, usually after acceptance of the works.
How much is the performance guarantee?
Under Art. 111 of the Bulgarian Public Procurement Act the performance guarantee may not exceed 5 per cent of the contract value excluding VAT. The authority sets the exact percentage in the documents.
On high-risk contracts or those with a long defects period, the authority may also require a separate warranty guarantee.
Five per cent sounds small until you calculate it on a contract of EUR 500,000. That is EUR 25,000 not working for you for the whole term.
What forms may the guarantee take?
Under Art. 111(5) the form is chosen by the tenderer selected as contractor — the authority may not narrow it to one.
Cash — transferred to the authority's account. The simplest and the most expensive, because the money leaves your working capital.
Bank guarantee — the bank undertakes the obligation against a fee and usually against security. The cash stays with you, but you block a credit line.
Insurance policy securing performance. Often the cheapest in fee terms, but subject to a material limit: under Art. 111(7) of the Public Procurement Act this form is available only where the guarantee does not exceed a set amount (BGN 500,000 under the wording in force from 2024). Check the current threshold and its euro value before relying on insurance. The policy wording must also meet the documented requirements.
When is the performance guarantee released?
The terms are written into the contract. Typically the guarantee is released after acceptance of the works and expiry of the period stated in the contract.
On staged contracts partial release is possible. Where the documents allow it, it is worth asking for — it frees working capital earlier.
The authority retains the guarantee in whole or in part on non-performance, delay and the other grounds listed in the contract. That is why a material delivery date is not an abstraction but directly tied to your money.
Why this concerns us
The guarantee makes delay expensive in a way the quote does not show. A contractor with EUR 25,000 blocked cannot afford a supplier who will "confirm the date later".
So we work to written deadlines and say no in good time. A quote with a date that will not be met costs you more than the dearer quote that will.
The legal information on this page was verified on 11 September 2026 against the text of the provisions cited.
Bulgarian procurement legislation changes often, and the value thresholds were redenominated into euro on 1 January 2026. Before acting, check the current text of the law and — always — the documents of the specific contract, which prevail over any general explanation.
This is not legal advice. For a binding interpretation, consult a lawyer.
If something here has held up your delivery, send the specification — we will say what is possible and by when.