Bid bond vs performance bond requirements

Published 16 October 2026. Updated 16 October 2026.

Three bonds, three jobs

Public construction solicitations commonly ask for up to three different bonds. They are issued by a surety company, they cover different stages, and the solicitation may state them in different places. Mixing them up is one of the easier ways to misread a bid package.

• Bid bond. Submitted with your bid. It assures the agency that, if you are the low responsive bidder, you will sign the contract and provide the required bonds at your bid price. If you refuse, the agency can claim against the bond, commonly for the difference between your bid and the next bid it accepts, up to the bond amount. Some solicitations say the whole bond amount is forfeited instead, so read that line.
• Performance bond. Provided after award, before work starts. It guarantees that the work will be completed in line with the contract. If the contractor defaults, the surety steps in under the terms of the bond.
• Payment bond. Also provided after award. It protects subcontractors, laborers and suppliers on the project, who generally cannot place a lien on public property, by guaranteeing they will be paid.

Public owners commonly require bonds on construction work above a contract value threshold. Federal work falls under the Miller Act, and states have their own bonding statutes, often called Little Miller Acts. The thresholds and percentages differ from state to state and between agencies, so the solicitation is what tells you what applies to this job.

How bond requirements are usually written

Read for four things, because each can be written in a different place.

1. The form of bid security. It is often a bid bond for a percentage of the bid amount. Some agencies accept a certified check or another security instead. The percentage varies, so take it from the document, not from memory.
2. The performance and payment bond amounts. Usually stated as a percentage of the contract price, often one hundred percent each. Some contracts set a different figure, and an addendum can change it.
3. Who may issue the bond. Solicitations often say the surety must be authorized to do business in the state, and some add a minimum financial rating for the surety. Federal work generally calls for a surety listed in the Treasury's Circular 570. Read the exact wording and send it to your surety.
4. When each bond is due. Bid security with the bid. The other two normally within a stated number of days after the notice of award, with the signed contract and before work starts.

Reading the requirement against your limit

A requirement and your capacity are two separate numbers. Do the arithmetic before you start estimating.

1. Find your bid price range. If the bid is not priced yet, use your best early estimate.
2. Find the performance and payment bond percentages and apply them to that price.
3. Compare the result with your surety's single-job limit, the largest contract it will bond for you.
4. Compare your total work on hand, including this job, with your aggregate limit.
5. Note any other bond-like item, such as maintenance or warranty security, that the contract adds.

A worked example, with invented numbers. A contract is expected to land around $1,800,000, and the document asks for performance and payment bonds at 100 percent each. The bond amount is $1,800,000. If your single-job limit is $2,000,000, that fits. Now suppose an addendum raises both bonds to 110 percent. The bond amount becomes $1,980,000. It still fits, but with little room, and a bid that ends up $300,000 higher would not. This is why the base figure alone is not enough.

Questions to ask your surety before you bid

• What is my single-job limit and my aggregate limit today?
• How much of the aggregate is already used by work in progress?
• What does the surety need from me for a larger-than-usual job, and how long does it take?
• Will the surety issue a bid bond on this solicitation?
• What are the premium and the fees, so they go into the estimate?

Bond premium is a real cost of the job, so check with your surety and put it in the number.

Common mistakes

• Reading the bid bond requirement and missing the performance and payment bond lines in another document.
• Using the base bond percentage and missing that an addendum changed it.
• Comparing the bond with your total capacity instead of your single-job limit.
• Checking the bond against an early number and forgetting that your price can grow as the estimate firms up, which raises the bond amount.
• Asking the surety for a bid bond on bid day, rather than before the estimate.

How Biddossier does this step

Biddossier reads the solicitation, its appendices and every addendum, up to 8 files and 300 pages in total, as text PDF, Word, text or Markdown files. It quotes each bonding requirement with its document and page, and code checks that the quote is on the page it names. When an addendum changes a bond figure, the base value and the addendum value are shown side by side.

If you add a short firm profile with your bonding limits, code compares each performance and payment bond with your single-job limit using plain arithmetic. When a bond is stated as a percentage, code applies it to the estimated value the solicitation itself states; if the solicitation gives no estimate, the bond is listed as one you need to work out, because your bid price is not known yet. No model does the arithmetic. The bid bond is quoted but not compared, and your aggregate limit is not checked, so steps 4 and 5 above stay with you. The result is a decision aid and not bonding or legal advice, and your surety has the final word on what it will issue.

If a solicitation says nothing about bonds in the pages Biddossier read, that category is listed as not found, and pages with no readable text are listed as not read, because scanned pages are not read yet. A second, stronger AI model reviews every result and lists what is left for you to decide; the drafting model corrects the serious problems the review finds, and code checks every correction. Results are not verified by a person.

You receive a dossier PDF, a requirements table as CSV and the full result as JSON. One solicitation is 20 credits, up to 300 pages, with no subscription. Sign up to run your next package. For the wider screen that bonds belong to, see the bid or no bid checklist, and for changes to bond figures see how to compare addenda to a bid package.

Questions

Is a bid bond the same as a performance bond?

No. A bid bond supports your bid and protects the agency if the low bidder will not sign the contract. A performance bond applies after award and guarantees the work is completed under the contract. They are issued for different stages.

What is a single-job limit?

It is the largest single contract your surety is willing to bond for you. Your surety sets it from its view of your finances and experience, and it sits alongside an aggregate limit for all your work in progress. Ask your surety for both figures.

Can I bid if I cannot get the bond?

If the solicitation requires bonds, a bid without bid security is typically rejected, and without the later bonds you cannot sign the contract. Ask your surety early, before you build the estimate, and read what alternatives the solicitation allows.