Bid Surety Bonds

Get on the bid list, and stay on it.

Public owners will not open your bid without a bid bond attached. BF Bond has placed contract surety since 1949, and we can usually turn a bid bond around in time for the letting.

The Basics

What is a bid bond?

A bid bond is a contract surety bond that guarantees two things to a project owner: that your bid was submitted in good faith and is genuine, and that if you are awarded the contract you will actually sign it and furnish the performance and payment bonds the contract requires. It is the owner protection against a contractor who wins a job and then walks away from it.

If you are the low bidder and you refuse the award, the owner has to go to the next bidder, and the difference between your price and theirs is real money. That difference is what the bid bond covers, up to the bond penalty. The surety pays the owner and then seeks reimbursement from you, so a bid bond default is not a cost-free way out of a bid you regret.

The practical point most contractors miss is that a bid bond is really a preview of the final bond. A surety issuing you a bid bond is signalling it is prepared to issue the performance and payment bonds if you win, which is why underwriting happens before the bid, not after the award. Getting your surety relationship established early is what keeps you from missing lettings.

Guarantees your bid is genuine and that you will sign if awarded
Commonly written at five to twenty percent of the bid amount
Required on virtually all public work and much private work
Approval signals the surety will back the performance bond too

Bid bonds at a glance

Bond amount

Usually five to twenty percent of your bid, with ten percent the most common requirement

Premium

None. BF Bond issues bid bonds at no charge, earning premium on the performance and payment bonds if you are awarded the work

Term

Runs from bid opening until the contract is executed and the final bonds are furnished

Who requires it

Federal, state, and municipal owners, school districts and authorities, and private owners and general contractors

Alternative

A bid deposit in the form of a certified or cashier check, which ties up your cash instead

Where They Are Required

When you will be asked for one

If the job is competitively bid, assume a bid bond is part of the package.

Public Lettings

Federal, state, county, and municipal projects, where bid security is generally required by statute rather than owner preference.

Institutional Owners

School districts, transit and housing authorities, and public universities running formal competitive bid processes.

Private Developers

Private owners and lenders who require bid security to keep the bid field serious and protect the project budget.

Subcontract Bids

General contractors requiring bid bonds from trade subs on larger scopes before including their numbers in a prime bid.

How It Works

How we get you bid-ready

Apply online

Start with our guided application, about five minutes. Save and resume while you gather figures.

Establish your program

We build the underwriting file once: financials, work in progress, references. That sets your single and aggregate limits.

Request per bid

Once your program is open, call or email the bid details and we issue the bond for that letting, often the same day.

Win and convert

When you are awarded, the same surety issues the performance and payment bonds without starting the process over.

Questions

Bid bond FAQs

How much does a bid bond cost?

Nothing. There is no premium on a bid bond. The surety is underwriting the relationship rather than the individual bid, and earns its premium on the performance and payment bonds if you are awarded the work. What matters is getting your bonding program established, because once it is open you can request bid bonds for letting after letting at no cost.

How fast can I get one?

If your bonding program is already established, often the same day, sometimes within the hour. If we are starting from scratch, the first bid bond takes longer because underwriting has to review your financials and work in progress first. If you have a letting coming up, call us at (800) 921-1008 well before the bid date rather than the morning of it.

What happens if I win and do not sign?

The owner can call the bid bond. It pays the difference between your bid and the next bid the owner has to accept, up to the bond penalty, and the surety then seeks reimbursement from you and your indemnitors. Beyond the money, defaulting on a bid damages your standing with both the owner and your surety, which affects every bid after it. If you find an error in your bid, tell us immediately, since there are legitimate routes to withdraw a mistaken bid in many jurisdictions.

Can I get a bid bond as a new contractor?

Yes. Carriers run small and emerging contractor programs for exactly this, and the SBA Surety Bond Guarantee Program supports contractors who do not yet fit standard underwriting. Expect a modest single-job limit at first that grows as you complete bonded work. Clean personal credit and a CPA-prepared financial statement help more than company age.

What is the difference between a bid bond and a bid deposit?

They serve the same purpose in different currencies. A bid deposit is a certified or cashier check you hand over with your bid, which ties up working capital on every job you chase and is returned only after the award is settled. A bid bond does the same job without immobilizing cash, which matters a great deal when you are bidding several projects at once.

What will underwriting want to see?

For a modest program, often the application and a personal financial statement. As limits rise, expect company financial statements for the last two or three years, a current work-in-progress schedule, receivable and payable agings, bank and supplier references, and resumes for key staff. We will tell you exactly what your carrier requires before you spend time assembling anything.

Keep Exploring

More Contract bonds

Next letting is on the calendar.

Get your bonding program open now so the bid bond is never the reason you sit one out.