Guarantee
A performance guarantee is a formal assurance that the customer will receive the goods and/or services that the supplier was contracted for in the event of supplier failure.
Guarantor
A Guarantor is a company, usually part of the corporate family, who agrees to financially support, and will fulfil the contractual obligations of the supplier if the supplier contracted can’t by completing a deed of guarantee.
In other words, a Guarantor takes on the responsibility of the contract for a supplier if the supplier can’t.
How Guarantors are identified
CCS makes a financial assessment of suppliers bidding on commercial agreements to ensure they can meet the requirements expected of them. We continue to monitor suppliers for the length of the commercial agreement.
In some cases, if the supplier cannot meet the financial assessment criteria they can nominate a Guarantor who meets the criteria instead.
We recommend that buyers assess a supplier’s financial health through their own due diligence when tendering contracts (asking suppliers to bid) and managing suppliers.
Arranging a Guarantor
A label will show next to the supplier when a Guarantor is recommended for a call-off. It indicates that a supplier has a pre-approved guarantor and is awarded a place on a commercial agreement. Customers can mitigate risks by using a guarantee at call-off level.
- check if there is a label next to the supplier that says ‘Guarantor recommended’
- if there is a label contact our customer service centre providing:
- the name of the supplier
- the commercial agreement number
- the lot number
- Our customer service centre will give you details of the supplier’s approved Guarantor.
When placing a direct award or running a further competition we recommend buyers:
- review the status of eligible suppliers listed on the commercial agreement
- decide if they want to include a Guarantor in your call-off contract at the point of tendering
- consider the value and duration of your contract, the goods and services provided, and the potential risk to your business if the supplier fails
The Guarantee usually forms a schedule of the terms and conditions for each commercial agreement. You can find these in the ‘documents’ tab of the relevant commercial agreement. For agreements using the Public Sector Contract this will be in Joint Schedule 8.