Wages, bonds and the rulebook
What is a bid bond?
A bid bond, called a bid guarantee in the FAR, is security pledged with your offer that you will sign the contract and furnish the required performance and payment bonds if you win, and failing to include one when required makes a sealed bid nonresponsive.
Also written as: bid guarantee, bid security, what is a bid bond.
FAR 28.001 defines a bid guarantee as a form of security assuring that the bidder will not withdraw a bid within the period specified for acceptance, and will execute a written contract and furnish required bonds within the time specified. FAR 28.101-1 requires one whenever a performance or payment bond is required, unless waived.
It is not a payment. It is a contingent obligation: if you win and then walk away, the government can recover the excess cost of awarding to the next bidder, up to the amount of the guarantee.
The requirement is stated in the solicitation, and in sealed bidding a missing bid guarantee is one of the classic nonresponsive failures. It cannot be supplied after bid opening.
What this means when you bid
If the solicitation requires a bid guarantee, arrange it before the deadline. A bid without it is rejected regardless of price.
Bid bond compared with the terms it gets confused with
Bid bond vs Performance bond
A bid bond guarantees you will enter the contract if selected; a performance bond, furnished after award, guarantees you will complete the work.
What Performance bondmeans →Bid bond vs Payment bond
A bid bond protects the government against a bidder walking away; a payment bond protects your subcontractors and suppliers against not being paid.
What Payment bondmeans →Where this definition comes from
Federal contracting is one of the few fields where the authoritative answer is free, public and one click away. These are the sources this page is built from — go and read them.
- FAR 28.001→
Definitions.
- FAR 28.101-1→
Policy on bid guarantees.
- FAR Part 28→
Bonds and insurance.
This page explains a term in plain English and cites the authority it comes from. It is not legal advice, and the regulation governs where this page and the regulation differ.
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Bid bond— common questions
- What is a bid bond?
- A bid bond, called a bid guarantee in the FAR, is security pledged with your offer that you will sign the contract and furnish the required performance and payment bonds if you win, and failing to include one when required makes a sealed bid nonresponsive.
- What is the difference between Bid bond and Performance bond?
- A bid bond guarantees you will enter the contract if selected; a performance bond, furnished after award, guarantees you will complete the work.
- What is the difference between Bid bond and Payment bond?
- A bid bond protects the government against a bidder walking away; a payment bond protects your subcontractors and suppliers against not being paid.
- Why does a bid bond matter when you are bidding?
- If the solicitation requires a bid guarantee, arrange it before the deadline. A bid without it is rejected regardless of price.