Bid Bond Template

Full Description

This bid bond form is a simple template you can use with your surety company to guarantee a bid to a project owner. If you submit bids regularly, you will come across owners who require a bid bond, and this form helps you show them that your bid is backed and you are not going anywhere.

What is a bid bond?

A bid bond is a surety bond, typically issued by an insurance or surety company, that guarantees to the owner that a bidder will honor the terms of its bid. If the bidder wins but refuses to sign the contract at the bid price, or fails to provide the required performance and payment bonds, the bond compensates the owner, usually for the difference between that bid and the next-lowest bid, up to the bond amount. Bid bonds discourage contractors from submitting unrealistically low bids just to win a project.

When to use it

• Public works and government tenders that require bid security
• Private projects where the owner’s instructions to bidders call for a bid bond
• When a general contractor asks subcontractors to bond their bids
• When preparing a bid package with your surety broker, so the bond is ready before the bid deadline

What’s included

The download is an editable Word document (.docx). It is a simple bid bond form designed to be completed with your surety company, to certify to the owner that your bid is guaranteed.

How to fill it out

1. Read the bid documents. Confirm the required bond amount, or percentage of the bid, and whether the owner requires its own form.
2. Enter the principal (your company), the surety and the obligee (the project owner).
3. Describe the project and the bid, including the project name, location and bid date.
4. Enter the bond amount as required by the bid documents.
5. Send the form to your surety or broker for review and execution. The surety signs and seals the bond and usually attaches a power of attorney.
6. Include the signed bond with your bid package before the deadline.

Tips

• Contact your surety early. Bonds for large or unusual bids can take time to approve.
• Check names and dates carefully. Errors on a bid bond can make a bid non-responsive.
• Know your bonding capacity before you chase bigger work.
• If the owner supplies a specific bond form, use that form instead.

Related templates and guides

• Construction Bid Template
• Bid Compliance Certificate
• Construction Tender Tracking Template
• Construction Tendering: Everything You Need To Know

Frequently asked questions

What does a bid bond guarantee?

It guarantees that the bidder will enter into the contract at its bid price and provide any required performance and payment bonds if it is awarded the work. If it does not, the surety pays the owner up to the bond amount, typically to cover the extra cost of awarding the work to the next bidder.

Do bid bonds cost money?

Often, sureties issue bid bonds to established clients at little or no charge, because they expect to write the performance and payment bonds if the bid wins. Practices vary, and new contractors may need to qualify first. Ask your surety or broker how they charge.

How much is a bid bond?

The bond amount is set by the owner in the bid documents, commonly 5% to 10% of the bid price, though some public owners require more. Always use the amount and form the bid documents require.

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

A bid bond covers the bidding stage: it guarantees you will sign the contract if you win. A performance bond covers the construction stage: it guarantees you will complete the work under the contract. Payment bonds, often issued with performance bonds, guarantee that subcontractors and suppliers are paid.

What is SF 24?

SF 24 is the standard bid bond form used for US federal government construction contracts. Federal and many other public owners require their own prescribed forms, so check the bid documents before using a general template like this one.