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What is a Bid Bond?

A Bid Bond, also known as a Tender Bond, can sometimes be a requirement of a tender process. It is often, for example, required with the submission of a public work contract.

Usually an On-Demand Bond, a Bid Bond is submitted with a tender to secure the tender’s commitment to commence the contract. This bond protects the project owner in the event of the successful contractor failing to execute the contract or meet other specified conditions, for example: to provide a Performance Bond which is required to commence the project.

The presence of a Bid Bond is intended to provide the client, the project owner and in this case – the Obligee, with the assurance that the tenderer has the financial capabilities of accepting the contract for the price quoted in their bid.

If the bond is partially or fully forfeited, the Principal (typically the contractor) and the surety are jointly liable for the bond, which includes any additional costs the client incurs in selecting and awarding another supplier. Often this is the difference between the lowest bid and the second-lowest bid.

Why do you require a Bid Bond?

It allows for bids to be submitted on public works & commercial contracts that may otherwise be rejected in the absence of a valid bid bond.

Who requires a Bid Bond?

  • Contractors, often in the bidding process for international/public work contracts


Who is the beneficiary of a Bid Bond?

  • EU / UN funded contracts

  • Government bodies

  • Commercial companies

  • Main contractor

To get started

  • Complete the Bid Bond Proposal Form. Download here

  • Last two years consolidated audited accounts

  • Up-to-date management accounts

  • Details of banking and borrowing facilities (Bank information Form here) – client needs to send to their bank for completion

  • Instruct if the letter of intent is required

  • Advise form of contract

  • Advise form bond wording

At Surety Bonds we have extensive experience negotiating and securing Bid Bonds that are tailored to the specific project. Should you require a Bid Bond as you tender for a project, our team would be happy to talk you our team would be happy to talk you through the process. Contact us today.

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