Are you a contractor who is interested in applying for government projects tenders? Did you know that the government requires you to file a bid bond upon winning the tender? Most contractors are required to prove their financial capability and capacity of undertaking government projects by filling contractor bonds or performance bonds. The bonds are mostly used as security for the bid proposals. The bonds are obtained from a surety firm. If you are unable to complete the project, then the surety firm takes all the risks of finding another qualified contractor to finish it before the lead time. This article will provide all the information about bid bonds that you definitely need to know. Here is some help on bidding on a government construction project.
Types of contractor bonds
Generally, there are 4 types of performance bonds, namely:
- Bid bond– This is a type of contractor bond that makes sure that you as the bidder will enter into a contractual agreement and will provide all bonds if you are given the contract.
- Payment bond– This is the bond that makes sure that all subcontractors and other suppliers are paid for all the work they have done within the contract period.
- Performance bond– It ensures that all the work according to the terms stated in the contract.
- Ancillary bond – it makes sure that all the requirements of the contract are adhered to.
How to obtain a contractor bond helping you bid for government projects
If you want to work on government projects, then you need a contractor bond to make sure that you will complete the project perfectly according to the contract. In the US a contractor is supposed to have a bond for any project above $10000. But for you get a contractor bond, you must first be registered and licensed by the relevant government agencies that regulate contractors. The license is granted after a thorough review of your professional competence of the owner plus those of his employees.How much does a contractor bond cost?
There is no uniform cost of contractor bonds. They vary depending on the type, size, and rate of the bond that is applicable to you. Contractors can make of a bond calculator to estimate the value of their bond. It is important to note here that not every contractor will qualify for a bond.
It is possible for contractors to withdraw a bid for a project without losing the bond, especially when the bid is not opened.
Contractor bonds will surely convince your clients that you are competent and have the necessary resource to complete their projects timely.