Bid Bond Requirements by State: The Complete Contractor's Compliance Guide
Submitting a bid without the required bid bond gets your proposal thrown in the trash — no review, no consideration, no second chances. Public agencies enforce bonding requirements strictly because state and federal law mandates it, and contracting officers have zero discretion to waive bond requirements on projects that exceed statutory thresholds.
Understanding bid bond requirements by state saves contractors from two expensive mistakes: missing opportunities because you assumed bonding was required when it was not, and wasting estimating hours on projects where your bonding capacity falls short.
This guide covers bid bond requirements for all 50 states, federal Miller Act rules, surety bond costs, how to get bonded, and the common mistakes that disqualify contractors from bonded public work.
Key stat: 78% of public construction projects over $100,000 require bid bonds. Contractors without bonding capacity forfeit access to $287 billion in annual public works spending.
What Is a Bid Bond and Why Does It Matter?
A bid bond is a surety bond that guarantees a contractor will honor their submitted bid price if awarded the contract. It protects the project owner — typically a government agency — from contractors who submit unrealistically low bids and then refuse to sign the contract at that price.
Three parties are involved in every bid bond:
The three parties:
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Principal (Contractor): The construction company submitting the bid. You purchase the bid bond and are ultimately liable for any claims against it.
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Obligee (Project Owner): The government agency or private owner requiring the bid bond. They are protected if you fail to honor your bid.
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Surety (Bond Company): The insurance company that issues the bond and guarantees payment to the obligee if you default. The surety evaluates your financial ability to perform before issuing the bond.
If you win a project and refuse to sign the contract, the surety pays the project owner the difference between your bid and the next lowest bid, up to the bond amount. Then the surety comes after you to recover that payment. Bid bonds are not insurance — they are a guarantee backed by your personal and business assets.
Critical distinction: Bid bonds are NOT insurance. If a claim is made against your bid bond, you owe the surety company full repayment. This is fundamentally different from insurance, where the insurer absorbs the loss. Bid bond claims damage your bonding capacity for years.
How Much Does a Bid Bond Cost?
Bid bond costs range from 1% to 5% of the total bid amount, depending on your financial strength, experience, and credit profile.
| Contractor Profile | Typical Rate | Cost on $500K Bid | Cost on $1M Bid | |---|---|---|---| | Established, strong financials | 1-2% | $5,000-$10,000 | $10,000-$20,000 | | Mid-career, adequate financials | 2-3% | $10,000-$15,000 | $20,000-$30,000 | | Newer contractor, limited history | 3-5% | $15,000-$25,000 | $30,000-$50,000 | | SBA-guaranteed program | 2-4% | $10,000-$20,000 | $20,000-$40,000 |
Many surety companies provide bid bonds at no additional cost for established clients who maintain an ongoing bonding relationship. The surety recovers costs through performance and payment bond premiums, which are larger and more profitable. This arrangement means experienced contractors often get bid bonds free as part of their bonding program.
For smaller projects, some sureties charge flat fees of $100-$500 regardless of bid amount. This makes bid bonds accessible even on projects where the percentage-based premium would be minimal.
Cost-saving strategy: Establish a bonding line with a surety company rather than obtaining bonds project-by-project. A bonding line pre-approves you for a total aggregate amount (e.g., $2 million), letting you obtain bid bonds in 24 hours without per-project underwriting. This reduces costs and eliminates delays.
Federal Bid Bond Requirements: The Miller Act
The Miller Act (40 U.S.C. 3131-3134) is the federal law that governs bonding requirements on all federal construction projects. Enacted in 1935 and last amended in 1999, it sets clear thresholds that every contractor pursuing federal work must understand.
| Contract Value | Bid Bond Required? | Performance Bond | Payment Bond | |---|---|---|---| | Under $35,000 | No | No | No | | $35,000 - $150,000 | Contracting officer discretion | CO discretion | CO discretion | | $150,000 - $5,000,000 | Yes (20% of bid) | Yes (100% of contract) | Yes (100% of contract) | | Over $5,000,000 | Yes (20% of bid) | Yes (100% of contract) | Yes (100% of contract) |
The 20% bid bond requirement on federal projects is higher than most state requirements (typically 5-10%). This means a $1 million federal project requires a $200,000 bid bond, compared to a $50,000-$100,000 bid bond on a comparable state project.
Federal projects flow through agencies including the Army Corps of Engineers, General Services Administration (GSA), Department of Defense, Department of Veterans Affairs, Bureau of Reclamation, and Federal Highway Administration. All follow Miller Act requirements regardless of the contracting agency.
Contractors pursuing federal construction contracts must be registered in SAM.gov and maintain bonding capacity that covers the 20% bid bond plus 100% performance and payment bonds simultaneously.
State-by-State Bid Bond Requirements
Every state has enacted a Little Miller Act — a state-level version of the federal Miller Act that governs bonding requirements on state and local public construction projects. The threshold amounts and specific requirements vary significantly.
Key State Requirements Table
| State | Threshold Amount | Bid Bond % | Little Miller Act Citation | Notes | |---|---|---|---|---| | California | $25,000 | 10% | Civil Code 9550 | Lowest threshold in the nation. Counties and cities follow state minimum. | | Texas | $100,000 (formal) | 5% | Gov. Code Ch. 2253 | Informal bids up to $250,000 may waive bonding. | | Florida | $200,000 | 5% | §255.05 | Local governments may set lower thresholds. | | New York | All public work | 5-10% | State Finance Law §135 | No minimum threshold — all public construction requires bonds. | | Illinois | $50,000 | 5% | 30 ILCS 550 | Bond amounts can exceed 5% at agency discretion. | | Ohio | $50,000 | 10% | ORC §153.54 | Applies to all political subdivisions. | | Pennsylvania | $25,000 | 10% | 8 P.S. §191 | Second-lowest threshold. Strong subcontractor protections. | | Georgia | $100,000 | 5% | O.C.G.A. §13-10-1 | Department of Transportation has separate requirements. | | North Carolina | $300,000 | 5% | G.S. §44A-26 | Higher threshold reduces bonding burden on smaller projects. | | Virginia | $500,000 | 5% | Va. Code §2.2-4337 | Highest state threshold for mandatory bonding. | | Washington | $150,000 | 5% | RCW 39.08 | Retainage can substitute for bonds under $35,000. | | Massachusetts | $25,000 | 5% | M.G.L. c.149 §29 | Ties California and Pennsylvania for lowest threshold. | | Michigan | $50,000 | 5% | MCL 129.201 | School construction has separate bonding statutes. | | Colorado | $50,000 | 5% | C.R.S. 38-26-105 | Transportation projects follow CDOT-specific requirements. | | Arizona | $100,000 | 10% | A.R.S. §34-201 | Higher bond percentage than most states. |
Important: Municipal and county governments sometimes set bonding thresholds LOWER than their state minimum. Always check the specific bid documents for each project — the solicitation states the exact bonding requirements regardless of state thresholds.
States with the Lowest Bonding Thresholds
California ($25,000), Pennsylvania ($25,000), and Massachusetts ($25,000) have the most aggressive bonding requirements. Virtually every public construction project in these states above basic maintenance requires bid bonds. Contractors working in these states need bonding capacity from day one.
States with the Highest Bonding Thresholds
Virginia ($500,000) and North Carolina ($300,000) have the highest thresholds, meaning more small and mid-size projects proceed without bonding requirements. This creates opportunities for newer contractors who have not yet established bonding relationships.
For contractors tracking construction bids across multiple states, understanding these threshold differences determines which opportunities are accessible based on your current bonding capacity.
How to Get a Bid Bond: Step-by-Step Process
Getting your first bid bond takes 3-7 business days. Subsequent bonds from the same surety take 24-48 hours. Here is the complete process.
Step 1: Gather your financial documentation Prepare 2-3 years of company financial statements (CPA-reviewed or audited preferred), personal financial statements for all owners with 20%+ equity, bank reference letters, current work-in-progress schedule, completed project list with references, and business licenses and insurance certificates.
Step 2: Select a surety bond agent Work with a surety bond agent (not directly with surety companies). Agents represent multiple surety companies and match your profile to the best fit. Look for agents who specialize in construction bonds and are members of the National Association of Surety Bond Producers (NASBP). Ask for agents who handle contractors of your size and trade.
Step 3: Submit your application Your agent prepares and submits applications to 2-3 surety companies simultaneously. Each surety evaluates your financial strength (capital, liquidity, net worth), experience (completed project history, largest project size, trade expertise), and character (credit history, references, legal history). The underwriting process takes 3-5 business days.
Step 4: Receive your bonding line Approved contractors receive a bonding line specifying single project limits and aggregate limits. For example, a $1 million single/$3 million aggregate line means you can bond individual projects up to $1 million and have up to $3 million in total bonded work outstanding simultaneously.
Step 5: Request bid bonds per project With an established bonding line, request bid bonds for specific projects by providing the bid documents and your estimated bid amount. The surety issues the bid bond within 24 hours. For projects within your bonding line limits, approval is automatic.
SBA Surety Bond Guarantee Program
The Small Business Administration guarantees bid bonds for contractors who cannot obtain them through standard surety channels. This program is specifically designed for small, emerging, and minority-owned contractors.
Program details:
- Contract limit: Up to $6.5 million per contract, $10 million for federal contracts
- SBA guarantee: 90% of the bond amount, reducing surety risk
- Eligibility: Small businesses under SBA size standards for their NAICS code
- Processing time: 2-5 business days through a participating surety
- Cost: Standard surety rates (1-5%) plus a small SBA guarantee fee
- Available bonds: Bid, performance, and payment bonds
The SBA program has bonded over $8 billion in construction contracts since inception. Contractors who use SBA-guaranteed bonds for their first 3-5 projects typically build enough track record to qualify for standard bonding programs without the SBA guarantee.
For contractors pursuing their first government construction contract, the SBA program removes the bonding barrier that prevents most new contractors from entering the public works market.
Ready to find bonded construction bid opportunities? ConstructionBids.ai filters opportunities by bonding requirements, project size, and your trade — so you only see bids that match your bonding capacity.
Bid Bond vs. Performance Bond vs. Payment Bond
Public construction projects typically require all three bond types. Understanding the differences prevents confusion and ensures you budget correctly for bonding costs.
| Bond Type | When Required | Amount | Purpose | Duration | |---|---|---|---|---| | Bid Bond | With bid submission | 5-20% of bid | Guarantees contractor will sign contract if awarded | Until contract execution | | Performance Bond | After contract award | 100% of contract | Guarantees contractor will complete the project | Until project completion + warranty | | Payment Bond | After contract award | 100% of contract | Guarantees contractor will pay subs and suppliers | Until all payments made |
The combined bonding cost for a $1 million project typically breaks down as follows: bid bond premium $5,000-$20,000, performance bond premium $10,000-$30,000, and payment bond premium $10,000-$30,000. Total bonding costs of $25,000-$80,000 represent 2.5-8% of the contract value.
Experienced contractors with established surety relationships pay toward the lower end. Newer contractors or those with weaker financials pay toward the higher end. This cost difference is a competitive advantage for well-established contractors with strong bonding programs.
Factors That Affect Your Bid Bond Approval
Surety companies evaluate three primary categories when deciding whether to issue bid bonds and at what rate.
Financial Strength (50% of evaluation)
Key financial metrics:
- Working capital: Current assets minus current liabilities. Minimum $50,000 for small projects, scaling up with project size.
- Net worth: Total assets minus total liabilities. Surety companies typically bond contractors up to 10-15x their net worth.
- Liquidity: Cash and cash equivalents available to fund project startup costs before first payment.
- Debt-to-equity ratio: Below 3:1 preferred. Higher ratios indicate financial stress.
- Profitability: Consistent profits over 2-3 years demonstrate business viability.
Experience (30% of evaluation)
Surety companies want evidence that you have completed projects similar in size, scope, and complexity to the project you are bidding. Completing five $200,000 projects does not qualify you for a $2 million bond. Each project should increase in size incrementally — a 50% jump from your largest completed project is the typical maximum a surety will approve.
Character (20% of evaluation)
Personal credit scores (650+ minimum, 700+ preferred), tax compliance history, legal history (lawsuits, liens, judgments), and references from owners, architects, and subcontractors on previous projects.
Red flags that kill bond approval: Outstanding tax liens, personal bankruptcy within 7 years, active litigation from previous projects, history of bid bond claims, and financial statements showing negative working capital. Address these issues before applying for bonding.
Common Bid Bond Mistakes That Disqualify Contractors
These errors cost contractors projects every week. Each one is preventable.
Mistake 1: Bidding without confirming performance bond availability. Obtaining a bid bond does not guarantee the surety will issue the performance bond. Always get written confirmation that your surety will provide both the bid bond and the performance/payment bonds at your expected bid amount before submitting your proposal.
Mistake 2: Exceeding your bonding capacity. Your bonding line has a single project limit and an aggregate limit. Bidding on a $2 million project with a $1.5 million single project limit wastes your time and estimating resources. Know your limits and bid accordingly.
Mistake 3: Using the wrong bond form. Many agencies require bonds on specific forms (AIA A310, federal Standard Form 24). Submitting a bond on the wrong form can make your bid non-responsive. Read the bid documents carefully for form requirements.
Mistake 4: Missing the bond with your bid submission. Bid bonds must be included with your bid package at the time of submission. You cannot submit the bid and deliver the bond later. Late bonds equal rejected bids — no exceptions on public projects.
Mistake 5: Not updating your surety on financial changes. Surety companies underwrite based on your most recent financial information. Significant changes — winning a large project, losing a major contract, taking on debt — affect your bonding capacity. Keep your surety informed to avoid surprises at bid time.
How Bid Bonds Affect Your Bidding Strategy
Bonding requirements filter competition. Understanding this dynamic gives strategic advantages.
On projects requiring bid bonds, the contractor pool shrinks by 40-60% compared to non-bonded projects of similar size. Fewer competitors means higher win probability. Contractors with established bonding programs should actively seek bonded opportunities because the reduced competition improves win rates.
Competition data: Bonded public construction projects receive an average of 4.2 bids compared to 7.8 bids on non-bonded projects of similar size and scope. The bonding requirement alone cuts competition nearly in half.
This reduced competition also supports healthier margins. With fewer bidders, the spread between the highest and lowest bids narrows, reducing the race-to-the-bottom pricing pressure that plagues non-bonded work.
For contractors building their construction business growth strategy, expanding bonding capacity is one of the highest-ROI investments available. Every dollar increase in bonding capacity opens access to projects that most competitors cannot pursue.
Increasing Your Bonding Capacity
Contractors who want to bid on larger bonded projects need to systematically increase their bonding capacity.
Step 1: Improve financial statements Move from compiled to reviewed or audited financial statements. CPA-audited statements give surety companies the highest confidence and unlock the largest bonding lines. Cost: $5,000-$15,000/year for audited statements, but the increased bonding capacity pays for itself on the first additional project.
Step 2: Retain profits in the company Surety companies evaluate equity (retained earnings + capital). Owner distributions reduce equity and bonding capacity. Retaining $100,000 in profits can increase bonding capacity by $1-$1.5 million.
Step 3: Grow project size incrementally Complete projects at progressively larger sizes. Jump from $500K to $750K, then $750K to $1M. Surety companies approve incremental growth, not dramatic leaps. Document every completed project with owner references.
Step 4: Maintain clean receivables Aged receivables (90+ days) signal cash flow problems. Aggressively collect on outstanding invoices. Clean receivables improve your balance sheet and surety confidence simultaneously.
Step 5: Build your surety relationship Provide quarterly financial updates to your surety, even when they do not request them. Transparency builds trust. Surety companies extend larger bonding lines to contractors they trust. Annual meetings with your surety underwriter strengthen this relationship.
Finding Bonded Bid Opportunities
Knowing bid bond requirements by state is only useful if you can find projects that match your bonding capacity and trade specialties. Public bid opportunities are scattered across hundreds of agency websites, procurement portals, and plan rooms.
Stop searching for bids manually. ConstructionBids.ai aggregates public and private construction bids across all 50 states. Filter by bonding requirements, project size, trade, and location to find opportunities that match your capabilities.
Contractors using automated bid notification services spend 80% less time searching for opportunities and bid on 3x more projects per month. When bonding capacity limits which projects you can pursue, efficient bid discovery ensures you find every opportunity within your capacity.
Surety Bond Companies for Construction Contractors
Selecting the right surety company matters. The top surety bond writers for construction in 2026 include:
Top surety companies:
- Travelers: Largest construction surety writer in the U.S. Strong mid-market and large contractor programs.
- Liberty Mutual: Broad contractor appetite from small to enterprise. Competitive rates for well-qualified contractors.
- CNA Surety: Specializes in small to mid-size contractors. Accessible underwriting for emerging firms.
- Hartford: Strong small contractor program. Partners with the SBA guarantee program.
- Zurich: Focuses on large and enterprise contractors with $10M+ bonding needs.
- Chubb: Premium surety for large contractors with strong financials.
- Markel: Niche surety for difficult-to-place and specialty contractors.
Work with a surety bond agent who represents multiple companies rather than approaching surety companies directly. Agents compare rates, terms, and appetite across carriers to find your best fit. The National Association of Surety Bond Producers (NASBP) directory lists qualified agents by state.
State-Specific Compliance Tips
California
California's $25,000 threshold means virtually every public construction project requires bonding. The state requires bonds on the California Department of General Services form. Contractors must use surety companies admitted in California and listed on the California Department of Insurance website. California also requires a 10% bid bond — higher than the 5% standard in most states.
Texas
Texas distinguishes between formal bids (above $100,000, bonds required) and informal bids (below $100,000, bonds at agency discretion up to $250,000). The Texas Department of Transportation (TxDOT) has separate bonding requirements for highway construction that exceed standard state thresholds. Contractors bidding on Texas construction opportunities must verify bonding requirements per solicitation.
Florida
Florida requires bonding on public construction above $200,000 under Florida Statute 255.05. Local governments frequently set lower thresholds. The Florida Department of Transportation requires bonds on all highway contracts regardless of amount. Florida also has specific bond form requirements that differ from the standard AIA forms used in most states.
New York
New York requires bonding on all public work contracts with no minimum threshold — making it the strictest bonding state. The New York State Finance Law Section 135 and 137 governs state projects. New York City has additional requirements under the NYC Administrative Code. Contractors pursuing New York public works must maintain higher bonding capacity than contractors in states with higher thresholds.
The Bottom Line on Bid Bond Requirements
Bid bonds are the price of admission to public construction. Without bonding capacity, contractors forfeit access to the largest, most stable segment of the construction market.
Key takeaways by contractor size:
New contractors (under $1M revenue): Start with the SBA Surety Bond Guarantee Program. Build your bonding track record on projects under $500,000. Retain profits, maintain clean financials, and grow incrementally.
Growing contractors ($1M-$5M revenue): Establish a bonding line with a commercial surety through a specialized agent. Target bonded projects where reduced competition improves win rates. Move from reviewed to audited financial statements.
Established contractors ($5M+ revenue): Maximize bonding capacity through strong balance sheets and surety relationships. Pursue bonded projects strategically for better margins. Review your bonding program annually against business growth plans.
The 40-60% reduction in competition on bonded projects makes every dollar invested in bonding capacity one of the highest-return investments in construction. Contractors who master the bonding process and maintain strong surety relationships access opportunities that most competitors cannot touch.
Find bonded construction bids in your state today. ConstructionBids.ai delivers relevant bid opportunities filtered by bonding requirements, project size, trade, and location. AI-powered matching ensures you see every opportunity that fits your capabilities.
Frequently Asked Questions
For detailed answers to the most common bid bond questions, see the FAQ section at the top of this page. Topics covered include bid bond costs, state requirements, the Miller Act, how to get bonded, SBA programs, performance bond differences, and credit score requirements.