Wages, bonds and the rulebook
What is a performance bond?
A performance bond is a surety's guarantee to the government that the contract will be completed according to its terms, furnished after award and required on federal construction contracts above the Miller Act threshold.
Also written as: what is a performance bond, surety bond government contract.
FAR 28.001 defines it as a bond securing performance and fulfilment of the contractor's obligations under the contract. If the contractor defaults, the surety must step in — completing the work itself, financing the contractor, or paying the government's excess completion costs up to the penal sum.
Underwriting is about the contractor, not the contract. A surety examines working capital, credit, the owners' personal financial position, and completed-project history, and it grants a single-job limit and an aggregate programme limit. Those limits, rather than crew size, are what determine the biggest federal construction job you can chase.
FAR 28.102-1 requires performance and payment bonds on construction contracts exceeding $150,000. FAR 28.103 allows performance bonds on non-construction contracts in limited circumstances, but they are the exception rather than the rule.
What this means when you bid
Start the surety relationship a year before you need it. Bonding capacity is built from completed work and clean financials, and neither can be produced on a deadline.
Performance bond: the published figures
Each figure below was read from the regulation cited beside it on 2026-08-04. Thresholds are adjusted for inflation and changed by statute — follow the citation and confirm the figure in effect on your solicitation's date before you rely on it.
Performance bond compared with the terms it gets confused with
Performance bond vs Payment bond
A performance bond protects the government against non-completion; a payment bond protects subcontractors and suppliers against non-payment. Federal construction above the threshold requires both.
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 28.102-1→
Performance and payment bonds.
- FAR 28.103→
Performance and payment bonds for other than construction contracts.
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.
Free tools for government contractors
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Performance bond— common questions
- What is a performance bond?
- A performance bond is a surety's guarantee to the government that the contract will be completed according to its terms, furnished after award and required on federal construction contracts above the Miller Act threshold.
- What is the difference between Performance bond and Payment bond?
- A performance bond protects the government against non-completion; a payment bond protects subcontractors and suppliers against non-payment. Federal construction above the threshold requires both.
- What is the required on federal construction contracts exceeding for Performance bond?
- $150,000, per FAR 28.102-1 This figure was read from that source on 2026-08-04; thresholds are revised, so check the citation before relying on it in a bid.
- Why does a performance bond matter when you are bidding?
- Start the surety relationship a year before you need it. Bonding capacity is built from completed work and clean financials, and neither can be produced on a deadline.
Related terms
- Payment bond
- Bid bond
- Miller Act
- Firm-fixed-price — Firm-Fixed-Price contract (FFP)
NAICS industries where this comes up most
An editorial pointer, not a measurement. These are the codes whose work most often involves a performance bond. Each page carries the official Census title, the SBA size standard where one is published for those exact digits, and whatever federal award history the record here holds for the code — which may be none, and says so when it is.