Can Insurance Guarantee Certificates Replace Bank Guarantee Letters for Advance Payment and Warranty Bonds in Public Procurement?
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The Ministry of Finance answered a query on whether insurance guarantee certificates (giay chung nhan bao hiem bao lanh) can substitute for bank guarantee letters in advance-payment bonds (bao lanh tam ung) and warranty bonds (bao lanh bao hanh) in public investment projects. For advance-payment bonds: under Article 118, clause 2 of Decree 214/2025/ND-CP and Section 13.1 of Chapters VI and VII of the E-Bidding Document template for online goods procurement (Circular 79/2025/TT-BTC), advance-payment guarantees must be issued by a credit institution or a foreign bank branch established under Vietnamese law. Insurance guarantee certificates from insurance companies therefore cannot be used for advance-payment bonds. However, a contractor may use an alternative template if the project owner approves. For warranty bonds: procurement law does not prescribe a specific warranty guarantee template, so no binding rule restricts or permits the use of insurance guarantee certificates in that context.
Guidance on Advance-Payment and Warranty Bonds in E-Procurement
Advance-Payment Bonds
Legal basis: Article 118, clause 2 of Decree 214/2025/ND-CP; Section 13.1 of Chapters VI and VII of the E-Bidding Document template (Circular 79/2025/TT-BTC)
- Advance-payment guarantees must be issued by a credit institution or foreign bank branch established under Vietnamese law
- Insurance companies cannot issue advance-payment guarantees
- Contractors submit advance-payment bonds using Template No. 19, Part 4, or an alternative template approved by the project owner
- Using an insurance company's own guarantee certificate for advance-payment bonds: not permitted (because the issuing entity does not meet the legal requirement)
Warranty Bonds
- Procurement law does not prescribe a specific template for warranty bonds
- The authority's response provides no binding guidance on whether insurance guarantee certificates may or may not be used for warranty bonds
- Parties should agree on the form in the contract or seek further clarification from the competent authority