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.
Under federal law
Federal agencies may require a bid guarantee on construction contracts that need performance and payment bonds. Under FAR 28.101-2 the guarantee is at least 20 percent of the bid price, capped at $3 million.
- The contracting officer sets the exact amount needed to protect the Government if the winning bidder does not sign the contract and furnish bonds.
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.