Who needs a bid bond?

If you’re bidding competitively, the answer is usually “you do.” Bid bonds are most common in these scenarios:

• Federal construction projects over $150,000 that fall under the Miller Act and almost always require bid security.
• State and municipal projects covered by each state’s Little Miller Act, including roads, bridges, public buildings, water and wastewater projects, and transportation work.
• School district and community college projects of nearly any size, which typically require bid security.
• Private commercial projects where the owner or developer wants protection against bid withdrawal.
• Subcontractors participating in formal competitive bid processes for major contractors.
• General contractors bidding on multiple public works projects across multiple states.

We’ve written bid bonds for general contractors, specialty trades, and subcontractors of every size, from solo electricians to nine-figure firms. If your bid documents call for bid security, we can help you meet the requirement.

 

How does a bid bond work?

The process from your perspective looks like this:

1. The owner publishes the bid documents. Look for the section on bid security. It will tell you the form required (often AIA A310, federal SF24, or a state-specific form), the bond amount or percentage, and the deadline.
2. You apply for the bid bond. Submit an application with basic financial information, the project details, and the bid amount.
3. The surety underwrites the bond. The surety reviews your finances, work history, and capacity to take on the project.
4. The bond is issued and submitted with your bid. You include the executed bond form in your bid package.
5. One of two things happens. If you don’t win the bid, the bond becomes void. If you do win, the bond stays in place until you provide the required performance and payment bonds, at which point it’s released.

If you’re awarded the contract and walk away, the obligee can claim against the bid bond to recover the difference between your bid and the next-highest qualifying bid. The surety pays the claim and then comes after you to recover that loss, which is why backing out of a winning bid is rarely a good idea.

 

Bid bond vs. performance bond: what’s the difference?

These two bonds get confused all the time. They are different products that do different things at different stages of the project.

	Bid Bond	Performance Bond
When required	Before the bid is submitted	After the contract is awarded
What it guarantees	You’ll honor your bid if you win	You’ll complete the work per the contract
Typical amount	5% to 20% of the bid	100% of the contract value
How long it lasts	Until contract award and performance bond is in place	Through completion (and often warranty period)

Same-day approvals are common for both. A bid bond is the front door; a performance bond is what you need to stay in the house. We’ve written a more detailed walkthrough in our Bid Bonds vs. Performance Bonds blog post if you want to dig in further. You’ll also want to learn about performance bonds and other construction bonds, which often go hand in hand.

 

How much does a bid bond cost?

Every situation is different. Bid bond pricing depends on the project size, your financial profile, your work experience, the surety carrier’s appetite, and the requirements of the obligee. We work with top-rated carriers nationwide and shop your bond to find you the best rate available.

 

A few principles worth knowing:

• The bond amount and the bond cost are not the same thing. If a project is $1 million and the bid bond is 10%, the bond’s face value is $100,000. That doesn’t mean you pay $100,000. You pay a much smaller fee for the bond itself.
• Most bid bonds carry a flat issuance fee. This is the case for the vast majority of standard bid bonds we write.
• We waive the issuance fee when you write your performance bond through us. If you’re awarded the contract and we issue the performance and payment bonds, the bid bond fee is on the house.
• Larger bonds may be priced as a percentage of premium. When the bond size or contract size is high, underwriters look at your finances more carefully and pricing reflects that.
• Annual premium, paid upfront. All of our bonds are paid as a single annual premium. We don’t offer monthly payments.

For a real number on your specific bid, call us at 800-333-7800 or request a free quote online. Bid bond quotes typically come back fast.

 

How long does it take to get a bid bond?

For most contractors with clean credit and a solid track record, we issue bid bonds the same day. We’ve had clients call us in the morning and walk into a bid opening that afternoon with the bond in hand.

 

Larger or more complex bonds take longer because the underwriter wants to see more financial detail. Plan on:

• Same day for standard bid bonds with prequalified contractors and clean files.
• One to two business days for new applicants with straightforward projects.
• Three to five business days for larger commercial or federal projects requiring full underwriting review.

If you have a bid coming up and you’re not sure if you’ll have time, call us early. We can often start the prequalification process well before the bid drops, so the bond is ready when you need it.

 

Federal and state bid bond requirements

This section is where the technical details live. Skip ahead if you’re just shopping for a bond. Stay if you want to understand the legal framework.

 

The Miller Act

The federal Miller Act (40 U.S.C. §§ 3131 to 3134) requires performance and payment bonds on federal construction contracts over $150,000. Bid bonds are required by federal solicitation under FAR Part 28 on most sealed-bid construction work. The bid bond amount is typically 20% of the bid price or $3 million, whichever is less. Federal bid bonds are usually written on form SF24 (Standard Form 24).

 

You can read more about federal surety requirements at the U.S. Small Business Administration’s surety bond program, which guarantees bonds for qualifying small contractors on federal and other public projects.

 

Little Miller Acts

Every state has a state-level equivalent of the Miller Act, often referred to as a Little Miller Act. These statutes apply the same general framework to state-funded public works, but specific bond amounts, project thresholds, and qualifying contractor requirements vary state by state. A few examples:

• California Public Contract Code § 20129 and following
• Texas Government Code Chapter 2253
• Florida Statutes § 255.05
• New York State Finance Law § 137

If you’re bidding on a state or municipal project, the bid documents will spell out exactly what’s required. Always read them carefully.

 

Common bid bond forms

The form you submit depends on the obligee:

• AIA A310: the standard form used on most private and AIA-administered projects.
• SF24: the federal Standard Form 24 for U.S. government contracts.
• State-specific forms: many state agencies, departments of transportation, and school districts use their own forms.

The obligee will tell you which form to use. We work with all major bid bond forms across all 50 states. If you’ve been handed something unusual, send it to us and we’ll review it.

 

What “bonding capacity” means

Underwriters use the term bonding capacity to describe the maximum amount of work a contractor can be bonded for. It’s based on:

• Working capital and net worth
• Current backlog of work
• Past project history and completion record
• Lines of credit and overall financial position
• Personal credit of owners and guarantors

If you’ve never been bonded before or your last project was years ago, your initial capacity may be modest. As you build a track record, your capacity grows. We’re happy to walk through your numbers and give you a realistic sense of where you’d land before you commit to a bid. For deeper industry resources, the National Association of Surety Bond Producers and the Surety & Fidelity Association of America both publish helpful information for contractors and project owners.

 

How to get a bid bond from Surety Bond Authority

Here’s the actual process, start to finish:

1. Reach out. Call 800-333-7800, request a quote online, or send your bid package details to info@suretyauthority.com.
2. Submit a short application. We’ll ask for basic business and financial information. For larger bonds, we may request CPA-prepared financial statements.
3. We shop the bond. Our team works with top-rated carriers across the country and finds the best fit for your situation and pricing.
4. You receive the executed bond. We email or overnight the original (whichever the obligee requires) so you can include it with your bid package.
5. If you win the bid, we write the performance and payment bonds. And we waive the bid bond fee when we do.

That’s it. No mystery, no runaround.

 

Frequently Asked Questions

How much does a bid bond cost?

Bid bond costs vary based on the project size, your financial profile, and carrier appetite. Most standard bid bonds carry a flat issuance fee, and that fee is waived if we write the performance bond on the awarded contract. Call 800-333-7800 for a free quote on your specific bid.

How fast can I get a bid bond?

Same day in most cases. Standard bid bonds for prequalified contractors with clean files are typically issued within hours. Larger or more complex bonds may take one to five business days for full underwriting.

Do I get my money back if I don’t win the bid?

Bid bonds aren’t paid as a deposit, so there’s no refund mechanism. You pay an issuance fee for the bond itself. If you don’t win the bid, the bond simply becomes void and no further premium is owed.

Who pays for the bid bond?

The contractor (the principal) pays for the bond. The cost is generally treated as a cost of doing business and is sometimes built into your bid as overhead.

Can I get a bid bond with bad credit?

Often, yes. We work with carriers who specialize in standard, preferred, and substandard markets. Credit is one factor; financial strength, project history, and the size of the bond also matter. Call us to talk through your specific situation.

What’s the difference between a bid bond and a performance bond?

A bid bond guarantees you’ll honor your bid if you win. A performance bond guarantees you’ll complete the work per the contract. Bid bonds are typically 5% to 20% of the bid amount, while performance bonds are usually 100% of the contract value.

Are bid bonds required on every public project?

Most state and federal public works projects above a certain threshold require bid bonds. The exact threshold and percentage vary by jurisdiction. Always read the bid documents carefully because they will specify what’s required.

What happens if I withdraw my bid?

If you withdraw before the bid opening, you generally won’t lose anything. If you withdraw after you’re awarded the contract, the obligee can claim against the bid bond for the difference between your bid and the next-highest qualifying bid. The surety pays the claim and recovers the loss from you.

 

Get your bid bond today

You don’t need to learn the entire surety industry to get a bid bond. You need a phone call. Surety Bond Authority has been writing bonds for over 50 years, we work with the top surety carriers in the country, and we cover all 50 states. Whether your bid is due in three days or three hours, we’ll do everything we can to get you bonded on time.

 

Call 800-333-7800 to talk to a licensed bond agent, or request your free quote online. Prefer email? Drop a note to info@suretyauthority.com or contact us through the website. Same-day approvals available in most cases.