What is bid bond and why is it required in tendering?. Put in English language

A bid bond is a type of tender guarantee provided by a bidder to the procuring entity (the client) as part of their bid submission. It's essentially a financial guarantee from a third party (usually a bank or insurance company) that the bidder will enter into the contract if their bid is accepted.

It is required in tendering for several key reasons:

• Ensures Bidder Commitment: It guarantees that the bidder is serious about their proposal and will sign the contract if they are the successful tenderer.
• Protects the Procuring Entity: If the winning bidder withdraws their bid after selection or refuses to sign the contract, the procuring entity can claim a specified amount from the bid bond to cover the costs of re-tendering or the difference in price with the next lowest bidder.
• Deters Frivolous Bids: By requiring a financial commitment, bid bonds discourage companies from submitting bids without a genuine intention or capability to perform the work.