Bid Bond

BID BOND

BID BOND

Bond Number: [BOND NUMBER]

Bid Opening Date: [BID OPENING DATE]

Penal Sum: [DOLLAR AMOUNT IN WORDS] Dollars ($[NUMERICAL AMOUNT])
(Typically 5% to 20% of bid amount)

PARTIES

PRINCIPAL (Bidder):
[BIDDER/CONTRACTOR LEGAL NAME]
[ADDRESS]
[CITY, STATE ZIP]
(hereinafter "Principal" or "Bidder")

SURETY:
[SURETY COMPANY LEGAL NAME]
[ADDRESS]
[CITY, STATE ZIP]
(hereinafter "Surety")

OBLIGEE:
[PROJECT OWNER/GOVERNMENT AGENCY LEGAL NAME]
[ADDRESS]
[CITY, STATE ZIP]
(hereinafter "Obligee" or "Owner")

PROJECT INFORMATION

Project Name: [PROJECT NAME]

Project Location: [PROJECT ADDRESS/LOCATION]

Invitation for Bids/Solicitation Number: [IFB/SOLICITATION NUMBER]

Project Description: [BRIEF DESCRIPTION OF WORK]

Principal's Bid Amount: $[BID AMOUNT]

Bid Submission Date: [DATE]

RECITALS

WHEREAS, Principal has submitted or is about to submit a bid (the "Bid") to Obligee for the above-referenced project pursuant to the Invitation for Bids or Solicitation identified above; and

WHEREAS, Obligee requires, as a condition of bid submission, that Principal furnish a bid bond or other acceptable bid security guaranteeing that Principal will:
(a) Enter into a contract with Obligee if awarded the contract;
(b) Furnish performance and payment bonds as required; and
(c) Commence work within the time specified;

NOW, THEREFORE, Principal and Surety, jointly and severally, bind themselves, their heirs, executors, administrators, successors, and assigns to Obligee in the Penal Sum stated above, subject to the following conditions.

BOND CONDITIONS

Section 1. Obligation

Principal and Surety are bound to Obligee in the Penal Sum for the payment of which Principal and Surety bind themselves, their heirs, executors, administrators, successors, and assigns, jointly and severally.

Section 2. Conditions Precedent - Bond Becomes Void If:

This Bond shall be void if Principal:

(a) Contract Execution: Enters into a written contract with Obligee within the time specified in the bid documents (or any extension granted by Obligee) in the form required, in accordance with the Bid as accepted;

(b) Performance and Payment Bonds: Furnishes performance and payment bonds to Obligee in the form and amounts required by the bid documents, executed by a surety acceptable to Obligee, within the time specified; and

(c) Commencement of Work: Commences work under the contract within the time specified in the contract documents.

Section 3. Obligation Triggered If:

If Principal fails to fulfill any of the conditions in Section 2, then:

(a) Surety's Obligation: Surety shall pay Obligee, upon demand, the lesser of:
(i) The Penal Sum; or
(ii) The difference between Principal's Bid and the bid of the next lowest responsible and responsive bidder who is awarded the contract (the "Bid Differential");

(b) Additional Damages: Surety shall also pay Obligee any costs reasonably incurred by Obligee in re-bidding or re-procuring the project if no other acceptable bids were received, up to the Penal Sum.

Section 4. Penal Sum

4.1 Amount. The Penal Sum of this Bond is [DOLLAR AMOUNT IN WORDS] Dollars ($[NUMERICAL AMOUNT]), which represents [___]% of Principal's Bid Amount.

4.2 Federal Projects. For federal construction projects, the bid bond shall be at least 20% of the bid price, or such other amount as specified in the solicitation (FAR 28.101-2).

4.3 State/Local Projects. For state and local projects, the required percentage varies:

☐ 5% of bid amount
☐ 10% of bid amount
☐ 20% of bid amount
☐ Other: ___% of bid amount

Section 5. Measure of Damages

5.1 Bid Differential. If Principal defaults, Obligee's damages shall be measured as the difference between:
(a) Principal's Bid Amount; and
(b) The amount for which Obligee contracts with another party to perform the work (whether the next lowest bidder or through re-procurement).

5.2 Maximum Recovery. Obligee's total recovery from Surety shall not exceed the Penal Sum, regardless of the actual Bid Differential or other damages.

5.3 Example:

• Principal's Bid: $1,000,000
• Penal Sum (10%): $100,000
• Next Lowest Bid: $1,150,000
• Bid Differential: $150,000
• Obligee Recovery: $100,000 (limited to Penal Sum)

Section 6. Bid Validity Period

6.1 Duration. This Bond shall remain in effect for a period of [60/90/120] days from the Bid Opening Date, or such longer period as may be specified in the bid documents or agreed to by Principal and Surety.

6.2 Extension. If Obligee extends the bid acceptance period, Surety consents to such extension without notice, provided the extension does not exceed [30] additional days beyond the original validity period. Extensions beyond this period require Surety's written consent.

6.3 Expiration. This Bond shall automatically expire and become void upon the earliest of:
(a) Award of the contract to another bidder;
(b) Withdrawal of Principal's Bid with Obligee's consent;
(c) Execution of the contract and delivery of required bonds by Principal;
(d) Rejection of Principal's Bid by Obligee; or
(e) Expiration of the bid validity period (including any agreed extensions).

Section 7. Notice Requirements

7.1 Notice of Default. Obligee shall notify Surety and Principal in writing of any alleged default within [10] business days of Obligee's determination that Principal has failed to meet the conditions of this Bond.

7.2 Surety's Response. Upon receipt of notice, Surety shall have [15] days to:
(a) Investigate the claimed default;
(b) Cure the default by arranging for Principal to execute the contract and furnish required bonds; or
(c) Pay the Obligee the amount due under this Bond.

Section 8. Withdrawal of Bid

8.1 Before Bid Opening. Principal may withdraw the Bid at any time before the time set for bid opening without liability under this Bond.

8.2 After Bid Opening. After bid opening, Principal may withdraw the Bid only:
(a) With the written consent of Obligee; or
(b) If permitted under applicable procurement regulations due to clerical error or other justifiable cause.

8.3 Effect of Withdrawal. If Principal properly withdraws the Bid as permitted above, this Bond shall become void without liability to Surety.

Section 9. Surety's Rights

9.1 Subrogation. Upon payment under this Bond, Surety shall be subrogated to all of Obligee's rights against Principal.

9.2 Indemnity. Principal shall indemnify Surety for any payment made under this Bond pursuant to the General Indemnity Agreement between Principal and Surety.

REGULATORY COMPLIANCE

Federal Acquisition Regulation (FAR) Compliance

☐ If this Bid Bond is for a federal procurement:
(a) This Bond complies with FAR Part 28 - Bonds and Insurance;
(b) The Penal Sum is at least 20% of the bid price (or as specified);
(c) Surety is listed on Treasury Circular 570 and authorized in the state where the project is located;
(d) Surety's underwriting limitation is sufficient for this Bond;
(e) The Bond is on Standard Form 24 or equivalent acceptable form; and
(f) Power of Attorney is attached if signed by Attorney-in-Fact.

State/Local Procurement Compliance

☐ If this Bid Bond is for a state or local procurement:

State: [STATE NAME]
Statutory Citation: [e.g., State Procurement Code Section]
Required Percentage: [___]%
Special Requirements: [DESCRIBE]

ALTERNATIVE BID SECURITY (If Permitted)

☐ Certified Check in the amount of $[AMOUNT], payable to [OBLIGEE]
☐ Cashier's Check in the amount of $[AMOUNT], payable to [OBLIGEE]
☐ Irrevocable Letter of Credit in the amount of $[AMOUNT]
☐ U.S. Treasury Bonds with market value of at least $[AMOUNT]

SURETY QUALIFICATIONS

Surety represents and warrants that:
(a) Surety is a corporation duly organized and authorized to transact surety business in [STATE WHERE PROJECT IS LOCATED];
(b) Surety is listed on the U.S. Treasury Department's Listing of Approved Sureties (Treasury Circular 570), if required;
(c) Surety has an A.M. Best rating of [A- / A / A+] or higher;
(d) Surety's underwriting limitation is sufficient for this Bond;
(e) The person executing this Bond on behalf of Surety has authority to do so; and
(f) Surety is prepared to issue performance and payment bonds if Principal is awarded the contract.

EXECUTION

IN WITNESS WHEREOF, Principal and Surety have executed this Bid Bond as of the date shown below.

PRINCIPAL (BIDDER):

[BIDDER/CONTRACTOR LEGAL NAME]

By: _____________________________________
Name: ___________________________________
Title: ___________________________________
Date: ____________________________________

[Corporate Seal]

SURETY:

[SURETY COMPANY LEGAL NAME]

By: _____________________________________
Name: ___________________________________
Title: Attorney-in-Fact
Date: ____________________________________

[Surety Seal]

ACKNOWLEDGMENT - PRINCIPAL

STATE OF _____________ )
) ss.
COUNTY OF ____________ )

On this ___ day of __________, 20__, before me personally appeared [NAME], [TITLE] of [PRINCIPAL], who acknowledged execution of this Bid Bond on behalf of said entity.

_____________________________________
Notary Public

My Commission Expires: _______________

ACKNOWLEDGMENT - SURETY

STATE OF _____________ )
) ss.
COUNTY OF ____________ )

On this ___ day of __________, 20__, before me personally appeared [ATTORNEY-IN-FACT NAME], proved to be the Attorney-in-Fact of [SURETY NAME] and acknowledged execution of this Bond pursuant to a valid Power of Attorney.

_____________________________________
Notary Public

My Commission Expires: _______________

REQUIRED ATTACHMENTS

☐ Exhibit A: Power of Attorney for Surety's Attorney-in-Fact
☐ Exhibit B: Certificate of Authority (if required)
☐ Exhibit C: Treasury Circular 570 Listing (for federal projects)
☐ Exhibit D: Copy of Bid Documents/Invitation for Bids (recommended)

ATTORNEY/CONTRACTOR CHECKLIST (DO NOT INCLUDE IN FINAL DOCUMENT)

☐ Verify bid bond percentage required by solicitation (typically 5%-20%)
☐ Verify Surety is authorized in project state and on Treasury Circular 570 (if federal)
☐ Obtain valid Power of Attorney with sufficient limits
☐ Confirm bid validity period matches solicitation requirements
☐ Verify Surety is prepared to issue performance and payment bonds
☐ Review General Indemnity Agreement with Surety
☐ Confirm bid amount is correctly stated
☐ Ensure bond is executed before bid submission deadline
☐ Verify any state-specific bid bond requirements
☐ Keep copy of executed bond with bid submission

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