Título V

The firmness of the offer shall be secured by cash deposit or by bond, for a percentage not less than one percent (1%) nor greater than five percent (5%) of the value of the contract. It shall cover the period from receipt and opening of bids to approval of the award and, in any case, shall have a validity of one hundred twenty (120) days. However, its extension may be agreed with the awardee.

To guarantee compliance with all the obligations stipulated in the contract, the contractor shall provide a bond, cash deposit or constitute a mortgage in the percentages and conditions indicated by the regulation. In the case of works, this guarantee shall also cover failures or defects that may appear during performance of the contract, before the conservation guarantee is constituted.

Prior to receiving any sum as an advance, the contractor shall provide a guarantee by bond or mortgage in the amount of one hundred percent (100%) thereof. The guarantee may be reduced to the extent that the value of the advance is amortized, always covering the maximum of the outstanding balance owed, and shall remain in force until its full amortization. The regulation shall establish the reduction procedure and related matters in cases of rescission, resolution and termination of contract.

The contractor shall be liable for the preservation of the work, by means of a cash deposit, bond, mortgage or pledge, at its election, covering the value of repairs for failures or defects attributable to it that appear during the liability period of eighteen (18) months counted from the date of acceptance of the work. In the case of goods and supplies, a quality and/or functioning guarantee shall be provided, where applicable. The guarantee for preservation of the work, or for quality and/or functioning, shall be provided for the equivalent of fifteen percent (15%) of the original value of the contract, as a prior requirement for acceptance of the work, good or supply.

The expiry of the liability period provided for in the preceding paragraph does not exempt the contractor from those due to intent or fault on its part, for the time limit of five (5) years from the definitive acceptance of the work.

To guarantee payment of debit balances that might result in favor of the State, the corresponding entity or third parties in the settlement, the contractor shall provide a bond, cash deposit, or constitute a mortgage or pledge, at its election, for five percent (5%) of the original value of the contract. This guarantee shall be granted simultaneously with that of conservation of work as a prior requirement for acceptance of the work, good or supply. Once the settlement is approved, if there are no debit balances, this guarantee shall be cancelled.

The bonds referred to in this chapter shall be formalized by means of a policy issued by institutions authorized to operate in Guatemala, in accordance with the following provisions:

The validity of the bonds shall be exactly equal to the contractual time limit and shall be adjusted upon any extension or variation of the contract, maintaining the coverage conditions that applied to the original contract. The foregoing is not applicable to bonds for conservation of work, quality, functioning or debtor balances.

a)The bonds shall exactly and faithfully guarantee the obligations incumbent on the contractor or supplier. Such obligations must be stipulated in the original contract and in each of the documented modifications.

b)The corresponding public official shall be responsible for requiring the updating of the bonds granted by the contractor or supplier. Upon failure to do so, the public official shall incur breach of duties.

c)The contractor or supplier that fails to update the granted bond upon modifications to the original contract shall be subject to a fine and to immediate suspension of the payments to which it is entitled.

d)Where the guarantee consists of deposits, it shall be made in quetzales or by means of certified check. Where the guarantee is a mortgage or pledge, it shall be formalized through a duly registered public deed. In any case, the guarantee to be provided shall be left to the discretion of the contractor or supplier.

The bonds shall be published in the GUATECOMPRAS system. The boards referred to in Article 10 of this Law shall be responsible for verifying the authenticity of bid-maintenance bonds, and the authorities signing the contracts shall be responsible for verifying the authenticity of the other bonds referred to in this chapter.

The GUATECOMPRAS system shall keep a register of the bonds submitted, as well as of requests for enforcement, enforcement of bonds and payment thereof.

The regulation shall establish the procedures corresponding to the provisions of this article.

The contractor shall guarantee by means of insurance, cash deposit, mortgage or pledge, which cover the risks to which the property, supplies or works are subject, as indicated in the bidding documents. Such guarantees shall cover the risks determined in the contract.