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 Arizona
Arizona's public-works bonding statutes apply only to construction contracts. A.R.S. § 41-2574 requires performance and payment bonds at 100% of contract price for construction awards exceeding the $100,000 threshold in A.R.S. § 41-2535, but contains no provision for supply-only contracts. A.R.S. § 34-222 likewise covers only construction, alteration, or repair of public buildings and works. No Arizona statute was found that mandates a supply bond on a materials or equipment supply contract; public agencies and project owners may require one through contract terms.
- A.R.S. § 28-5631 addresses motor fuel supplier tax bonds (range $5,000–$5,000,000) for fuel-tax compliance, which is a distinct, unrelated bond type.
- Arizona Administrative Code § R2-7-508 (performance and payment bonds for state contracts) also addresses only construction contracts and does not mention supply bonds.
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.