What a supply bond is
A supply bond guarantees a supplier will deliver materials or equipment as the contract says. Public agencies and project owners use them on large supply contracts.
In Alabama
For state purchases under Alabama's competitive bid law, Ala. Code § 41-16-28 provides that a bond for faithful performance of the contract, with adequate surety, shall be required in an amount specified in the advertisement for bids. The buying agency sets the amount; for local agencies covered by § 41-16-58, a performance bond may be required.
- Example: Troy University's bid package, citing § 41-16-28, sets its performance bond at no less than 10% of the contract amount or one month's service cost, whichever is greater.
You need this bond if you're
- A material supplier on a public contract
- An equipment vendor or manufacturer
- A distributor supplying a large private project
What the surety looks at
Your business, credit and the supply contract. Large contracts can need financial statements.