Section 4

Where contractors are required to lodge a guarantee in advance, it must be for an amount and a period that are sufficient for it to be activated. The guarantee shall be supplied by a bank or an authorised financial institution. It may be replaced by a joint and several guarantee by a third party, after acceptance by the contracting authority. The guarantee shall be denominated in euro. It shall have the effect of making the bank or financial institution or the third party stand as irrevocable collateral security, or first-call guarantor of the contractor’s obligations. In order to ensure that the works, supplies or services have been fully delivered and when final acceptance according to the terms of the contract cannot be given upon final payment, the authorising officer may demand a performance guarantee on a case-by-case basis and subject to a preliminary risk analysis. A guarantee corresponding to 10 % of the total value of the contract may be constituted by deductions from payments as and when they are made. It may be replaced by an amount withheld from the final payment in order to constitute a guarantee until final acceptance of the services, supplies or works. The amount shall be determined by the authorising officer and shall be proportionate to the risks identified in relation to the performance of the contract, taking into account its subject matter, as well as the usual commercial terms applicable to the sector. Conditions for such a guarantee shall be announced in the tender documents. After final acceptance of the works, services or supplies, guarantees shall be released in accordance with the terms of the contract. Once the contracting authority has established the need for a pre-financing, it shall assess the risks associated with pre-financing payments, before launching the procurement procedure, taking into account in particular the following criteria: the estimated value of the contract; its subject matter; its duration and pace; the structure of the market. A guarantee shall be required in return for the payment of pre-financing in the case referred to in the second subparagraph of Article 146(6), or when the authorising officer decides to do so pursuant to paragraph 1 of this Article. No guarantee shall be required for low value contracts as referred to in Article 137(1). The guarantee shall be released as and when the pre-financing is deducted from interim payments or payments of balances to the contractor in accordance with the terms of the contract. Contracts may be suspended under Article 116 of the Financial Regulation in order to verify whether presumed substantial errors or irregularities or fraud have actually occurred. If they are not confirmed, performance of the contract shall resume as soon as possible. A substantial error or irregularity shall be any infringement of a provision of a contract or regulation resulting from an act or an omission which causes or might cause a loss to the Union budget.

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Source: EUR-Lex (Cellar) · retrieved 2026-11-04 · Text as adopted (Official Journal); later amendments are not incorporated in this text.