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 Tennessee
Tennessee has no statute specifically requiring a supply bond on standalone material or equipment supply contracts. T.C.A. § 12-4-201 (the Little Miller Act) requires a payment bond on public construction contracts over $100,000, which protects suppliers furnishing materials to those jobs, but that is a payment bond rather than a supply bond. Tennessee's state procurement regulation, Tenn. Comp. R. & Regs. 0690-03-01-.07, authorizes proposal bonds (up to 5% of estimated contract value) and performance bonds on state procurement contracts but does not list supply bonds as a separate required category. Owners may require supply bonds through contract terms.
- Suppliers and materialmen on public construction jobs over $100,000 are protected by the payment bond required under T.C.A. § 12-4-201; they may make a bond claim within 90 days of project completion.
- State procurement regulation 0690-03-01-.07 permits the Chief Procurement Officer to require a proposal bond of up to 5% of estimated contract value and a performance bond, but does not create a separate supply bond category.
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.