Make Bid Bonds Great Again

You acclimated to adulation them. They were so easy. Now they are in dollar amounts and percentages, sometimes with a bound best value. They can be cyberbanking or digital. Sometimes a letter is appropriate instead. Sometimes annihilation is appropriate instead! There may be a individual or anniversary allegation for it or maybe it is free! It’s outta control…

So actuality is your adventitious to bolt up with everybody’s favorite: The fun and alluring apple of Bid Bonds.

The Basics

These instruments accompany a contractor’s angle during the accretion action for a new project. This is accepted on accessible work, such as federal accompaniment and bounded borough contracts. The action may aswell be acclimated on clandestine projects at the arrangement owner’s discretion.

The band guarantees that, if awarded, the applicant will assurance the contract, accouter the appropriate Performance and Payment Bond, and arise with the plan – or – pay the aberration amid their bid and the next college applicant (subject to the best dollar bulk of the bid bond.)


Usually chargeless although the aggressiveness is advantaged to allegation for them. Typical accuse could be an anniversary bid band account fee or a per band charge.


The accommodation to affair the bid band is based on the underwriter’s alertness to accommodate the accompanying P&P bond, because that is the absolute money transaction. The accommodation is NOT based on the dollar bulk of the bid bond. Rely on the actuality that the advocate will not accommodate the bid band if they do not feel they can abutment the final bond.

Bid Spreads

If the applicant is added than 10% beneath the next applicant afterwards a believable account (I access a appropriate machine, I already access materials, I’m already alive next door, I’m cool fabulous, etc.) the aggressiveness could decline the final bond, consistent in a bid band claim.

Alternative Forms of Security

In accession to a bid bond, proposals may aswell be anchored application a cashier’s analysis or certain letter of credit, depending on what the activity buyer (Obligee) is accommodating to accept.


The Invitation or Bid Solicitation describes the angle requirements. It will accompaniment if a bid band is appropriate and the amount.

The band bulk is generally bidding as a percentage. Example “20% of the absorbed angle amount.” This is adequate because the advocate doesn’t wish to apperceive the absolute bid bulk (to bottle the bid confidentiality). It is the best way to accurate the absolutely actual bulk if accounting the band in advance.


Because the allotment band in fact has an alien dollar bulk at the moment it is executed, accent is sometimes added establishing the a lot of it can be account (to anticipate a berserk top bulk the advocate didn’t expect). Example, “10% of the absorbed bid, not to beat $100,000.”

Fixed Penalty

“Bond Penalty” is the appellation acclimated to accurate the band dollar value. A anchored amends band has a assured amount, behindhand of the bid. Example, “Maximum bid band bulk required: $20,000.”

Surety Letter

Some owners accept to crave a letter from the bonding company, but no bond. Federal projects are handled this way at times. The letter talks about how abundant they adulation the applicant and the affairs they are accommodating to bond.

Consent of Surety

This letter is the surety’s written affiance to issue the P&P band if the arrangement is awarded.


A scanned archetype (pdf) of the accomplished band may be adequate for an online bid.


Some accompaniment departments of busline use this. The aggressiveness registers with the obligee in advance and the bid band is “filed” online application a altered identification number.

Funky Land

Now some of the awe-inspiring stuff:

  • You may appointment a bid band requirement, but no final band (P&P bond) to chase
  • Can aswell access the opposite: No bid aegis appropriate but a final band is needed
  • No! You are not appropriate to use the aforementioned aggressiveness for the bid and final bonds – although the bid band provider absolutely expects to be the final band provider and may coursing you down and annihilate you. (Just kidding!!!)
  • Yes! If you access a bid band beneath the affiance to accommodate collateral, you are accustomed to get the final band from a altered aggressiveness that is not ambitious collateral. (But you face the coursing and annihilate affair again)
  • If you access a activity application a Consent provided by ABC Aggressiveness (their affiance to accommodate the band aloft accolade of the contract), you are not prohibited from demography the final band from XYZ Surety. However, acceptable agreement dictates that you abide loyal to those who enabled you to access the job (meaning ABC).

No Chargeless Lunch

If you absence (cause a band claim), the aggressiveness will appear afterwards the contractor, it’s owners and spouses for recovery. Remember: Bonds are not insurance.

Make Bid Bonds Great Again

So there you access it. These instruments are careful and sometimes complicated. It is acute that they be accomplished accurately and filed on time or it can could could cause the bid to be befuddled out (loss of contract.) This consistently makes humans actual acid (Read: LAWSUIT).

The key is to review the accounting bonding requirements as declared in the bid advertisement. Use any binding band forms that are assured and bifold analysis the actual beheading and accounting of the certificate including name spelling, job description, activity identification data and the actual bid band amount.

Now that you know, you can alpha to adulation bid bonds again!