What a bid bond is
A bid bond is a guarantee you submit with your bid. It tells the project owner that if you win, you'll sign the contract at your bid price and provide the performance and payment bonds the contract requires. If you walk away, the surety pays the owner's loss up to the bond amount, and you repay the surety.
In Alabama
Alabama requires a bid guarantee on public works bids under Ala. Code § 39-2-4. It is at least 5 percent of the estimated cost or the bid, capped at $10,000, or $50,000 when the awarding authority is the Department of Transportation.
- Bids for ALDOT and county highway, road, street or bridge projects use a similar bid guaranty under Ala. Code § 23-1-2, capped at $50,000.
You need this bond if you're
- A general contractor bidding public works
- A subcontractor whose general contractor asks for bid security
- A contractor bidding a private job where the owner asks for one
- A design-build team bidding a public project
What the surety looks at
Your business details, credit, experience and the job you're bidding. Larger jobs can also need financial statements and a list of work in progress.