Bid Bonds in Houston, TX
Bid Bonds
A bid bond is a type of surety bond that contractors submit along with a bid on a construction or service project. Project owners, particularly government agencies, often require bid bonds before they will consider a contractor’s proposal. They apply during the competitive bidding process and help ensure that only qualified, financially capable contractors are awarded contracts.
Our experienced team can help you obtain the bid bond that you need. Contact us today for more information.
What is a Bid Bond?
A bid bond guarantees that a contractor will honor the terms of a submitted bid and, if awarded the contract, will sign it and furnish any required performance and payment bonds. There are three parties to a bid bond, the principal, obligee and surety. The principal is the contractor submitting the bid, the obligee is the project owner requiring the bond, and the surety is the company that issues and backs it.
The bond amount is typically calculated as a percentage of the contractor’s bid, commonly 5, 10 or 20 percent. If a contractor withdraws a winning bid or fails to sign the contract and secure the required follow-on bonds, the obligee may file a claim. The surety then compensates the project owner for the difference between the winning bid and the next lowest qualifying bid, up to the bond amount. The contractor is responsible for reimbursing the surety for that expense.
Bid Bond Examples
Bid bonds are generally required for projects such as:
- Public construction contracts
- Federal, state and local government projects
- Large-scale private construction projects
- Service contracts requiring competitive bidding
Bid bond requirements and percentages can vary by project and jurisdiction. Contact your agent for details.
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Our knowledgeable team can help you secure the bid bond that suits your project’s needs. Contact us today to get started.