Bid Bond — What It Is, Why It Matters, and When Contractors Need One
A bid bond is a surety bond that guarantees a contractor will honor their bid and sign the contract if they win the job. It protects project owners from wasted time, unrealistic bids, or contractors backing out after being awarded the project.
Why a bid bond exists:
Owners and GCs need assurance that the low bidder is serious and financially capable of completing the work. A bid bond adds accountability to the bidding process.
Why it’s helpful for contractors:
Shows you’re legitimate and financially backed
Makes your bids more competitive
Gives owners confidence that you can take on larger projects
When it’s required:
Bid bonds are standard on public contracts, municipal projects, federal jobs, and large private or commercial projects.
Bottom line:
If you’re entering a competitive bidding environment, you’ll almost always need a bid bond. It’s the first step in securing larger, more profitable jobs.