If you work in construction, you’ve probably asked yourself: Does your company require bonding to bid on contracts? In most cases—especially for public projects—the answer is yes.
A Bid Bond proves that your company stands behind its offer and can deliver once the contract is awarded. It’s not just a formality; it’s a layer of financial trust that ensures project owners can rely on you.
What Is a Bid Bond?
This bond guarantees that the contractor will sign the contract and provide the necessary Contract Bond or performance and payment bonds if selected.
If a contractor backs out or fails to meet the conditions after winning, the project owner can file a claim against the bond.
In short, a Bid Bond keeps the bidding process serious and ensures only qualified contractors participate.
Bid Bond Requirements You Should Know
Typically, you’ll need to present:
- Financial statements and credit history.
- Proof of experience and past completed projects.
- Details about your available resources, including labor and equipment.
- The total bid amount to calculate the bond value—usually 10% of the contract price.
Public works, infrastructure, and any project funded by federal, state, or municipal governments usually make this mandatory. A surety bond company reviews your information to confirm you have the financial stability and capacity to take on the work.
When Is a Bid Bond Required
The rule is straightforward: whenever a project owner demands it or when public funds are involved. That means government infrastructure projects, public schools, and highway works typically require it.
Some regulations also define how long the bond must remain active—commonly three months—and how much it should cover, often a percentage of the total bid or multiple times the minimum value for leases.
The bond is released once you sign the contract or lose the bid. However, if you win and then fail to sign, the project owner can keep the bond as compensation.
How Do You Get a Bid Bond
The process is simple if you know where to start:
- Reach out to a surety expert. You can contact your insurance agent or a specialist who understands construction bonds.
- Submit your financials and project data. The surety will review your credit, history, and resources.
- Wait for approval. Once cleared, the Bid Bond is issued—often at no cost.
Why Bid Bonds Matter in Construction
A Bid Bond is more than paperwork—it’s proof that your company has credibility and financial strength. It reassures project owners that you can follow through, making your bid more competitive.
For contractors, this bond opens doors. Many public projects won’t even consider bids without it, and having one signals that your company meets the necessary compliance standards.
It also protects owners by guaranteeing coverage if the selected bidder withdraws or fails to honor their offer.
The Role of a Bid Bond Company
A Bid Bond Company specializes in assessing and backing contractors during the bidding stage. Unlike traditional insurance agents, these companies focus on the construction sector and understand its legal and financial nuances.
They evaluate your business, verify that you can handle the project, and issue the bond as a formal guarantee.
Choosing a qualified surety partner rather than a general insurance agent ensures precision, speed, and better communication throughout the bonding process.
Common Situations That Require Bid Bonds
You’ll often need a Bid Bond when bidding on:
- Federal or state-funded construction projects.
- Infrastructure development, such as roads or bridges.
- Municipal projects like schools or public facilities.
- Private contracts with public financing.
In all these cases, the bond guarantees that once awarded, the contractor will proceed as promised.
Building Trust Through Bonding
So, does your company require bonding to bid on contracts? In almost every public construction opportunity, yes. A Bid Bond is your assurance that your offer is genuine and your company can deliver.
It builds trust, ensures compliance, and helps you win contracts confidently.
At Avla, we work closely with contractors to make this process clear and straightforward. Whether you’re bidding for your first project or managing a portfolio of contracts, our team and trusted partners are ready to help. Contact us today to start your bonding process with confidence.
