XL EagleBid bond (Bid bond (bid guarantee))
Bid bond stands for Bid bond (bid guarantee). A bid bond, also called a bid guarantee, is submitted with your offer on many construction bids. It guarantees that if you win, you will sign the contract and furnish the required performance and payment bonds.
If you win and back out, the government can keep or collect on the guarantee to cover the extra cost of awarding to the next bidder. Federal bid guarantees are commonly set at 20 percent of the bid price, subject to a cap, and the exact requirement is stated in the solicitation.
Why it matters to a small contractor
Missing or defective bid bonds are a common reason construction bids are rejected outright. Order the bond from your surety agent well before the due date and check that names, amounts and the solicitation number match.
Example
A paving contractor bidding a federal road resurfacing job gets a bid bond from its surety for the required percentage and attaches the signed original, with power of attorney, to its bid package.
Bid bond: common questions
Can I use a cashier's check instead of a bid bond?
Often yes. Federal rules allow other forms of bid guarantee, such as certified checks, but read the solicitation to see what is accepted.
Does a bid bond cost money?
Many sureties issue bid bonds at little or no charge to contractors who have an established bonding relationship.
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