What is a bid bond?

What is a bid bond?

• A. Used after project completion
• B. It is a type of worker's comp bond
• C. Guarantees bid price will not change
• D. States that contractor will enter into a contract when tendered by the owner at price bid and the contractor will file a performance & payment bond

Answer: (D)

A bid bond is a form of bid security that accompanies a contractor’s bid on a project. It guarantees that if the bid is accepted, the contractor will sign the contract at the bid price and furnish the required performance and payment bonds. This protects the project owner from losses if the winning bidder backs out or fails to proceed, by providing a remedy up to the bond amount. It’s placed during the bidding process, not after project completion, and it isn’t a workers’ compensation bond. It also doesn’t promise that the bid price itself won’t change—bids are fixed at the time of bidding, but the bond’s purpose is to ensure the bidder will move forward with the award and provide the necessary bonds.

A bid bond is a form of bid security that accompanies a contractor’s bid on a project. It guarantees that if the bid is accepted, the contractor will sign the contract at the bid price and furnish the required performance and payment bonds. This protects the project owner from losses if the winning bidder backs out or fails to proceed, by providing a remedy up to the bond amount.

It’s placed during the bidding process, not after project completion, and it isn’t a workers’ compensation bond. It also doesn’t promise that the bid price itself won’t change—bids are fixed at the time of bidding, but the bond’s purpose is to ensure the bidder will move forward with the award and provide the necessary bonds.