A bid bond is a surety bond submitted with a construction bid. It guarantees the awarding agency that if you are the winning bidder, you will enter into the contract at your bid price and furnish the required performance and payment bonds. If you back out, the agency can recover from the bond — generally up to its full amount — and you are obligated to reimburse the surety.
When Is a Bid Bond Required in California?
California's public contracting statutes require bid security on competitively bid public works. For state contracts under the State Contract Act, bidder's security must equal at least 10 percent of the amount bid (Public Contract Code § 10167). Cities, school districts, and other local agencies set the amount in their bid documents — 10 percent is the most common figure — and accept a bidder's bond from an admitted surety insurer as one of the permitted forms of security (see, for example, Public Contract Code § 20170 for cities).
Private owners and general contractors sometimes require bid bonds too, especially on larger commercial projects.
Bid Bond vs. Cash or a Cashier's Check
California law generally lets you secure a public bid with cash, a cashier's check, a certified check, or a bidder's bond. On a $2,000,000 bid, 10 percent security is $200,000 — cash that would sit with the agency until bids are awarded. A bid bond does the same job without freezing your working capital, which is why most contractors use one. Sureties often issue bid bonds at little or no charge to contractors they have already qualified for performance and payment bonds.
A Bid Bond Is a Promise About What Comes Next
When you win, the agency will require a performance bond and a payment bond — on California public works over $25,000, a payment bond is mandatory (Civil Code § 9550). A surety issues a bid bond only if it is prepared to write those final bonds, so bid-bond approval effectively pre-qualifies you for the job.
How Contractors Qualify
Because a bid bond commits the surety to the final contract bonds, underwriting looks at the whole job, not just the bid:
- Contractor financial statements and a work-in-progress schedule
- Experience with projects of similar size and type
- Personal and business credit
- Bank line of credit and working capital
Once you are established with a surety, individual bid bonds can usually be issued quickly against your approved single-job and aggregate limits.
How to Get a Bid Bond
- Send us the bid documents or bid form, the bid date, and your estimated bid amount.
- If you're new to us, complete a contractor application and send your financials.
- Get approved for the job and your bonding program.
- Receive the bid bond — on the agency's required form if one is specified — in time for the bid deadline.
Why Advanced Surety?
Bid deadlines don't move. We work with A-rated sureties that write construction bonds, get your bid bond out ahead of the deadline, and are already lined up for the performance and payment bonds when you're the low bidder.