What bonds are required on federal construction projects?

Under the Miller Act, federal construction contracts over $150,000 require three bonds: a bid bond (typically 20% of the bid price), a performance bond (100% of contract value), and a payment bond (100% of contract value). Contracts between $35,000 and $150,000 require a payment bond only.

What is the difference between a bid bond and a performance bond?

A bid bond guarantees you will enter into the contract at your bid price if awarded. A performance bond guarantees you will complete the work per the contract terms. A payment bond guarantees you will pay your subcontractors and suppliers. All three protect different parties and are typically required together on public projects.

How much does a construction bond cost?

Performance and payment bond premiums typically range from 0.5% to 3% of the contract value, depending on contract size, your financial strength, and surety relationship. Bid bond costs are usually included in the performance bond premium. Small contractors with limited credit history may pay higher rates.

What is the SBA Surety Bond Guarantee Program?

The SBA Surety Bond Guarantee Program helps small and emerging contractors that cannot get bonded in the traditional market. The SBA guarantees up to 90% of the bond premium loss to the surety, enabling sureties to issue bonds for contractors they would otherwise decline. Eligible contractors must meet SBA small business size standards.

Bond Requirement Estimator | Free Construction Bond Calculator

The Bond Requirement Estimator shows which construction bonds are required by project type and value, and estimates premium costs. Federal construction projects over $150K require bid, performance, and payment bonds under the Miller Act.

Project Details

Project / Contract Value ($)

Total contract amount you are bidding

Project Type

Who is funding this project?

Enter project value and type above to see bond requirements.

Example

A masonry subcontractor is bidding a $500,000 federal school project and needs to know what bonds to budget for.

Project value$500,000

Project typeFederal (Miller Act)

Performance bond requiredYes — 100% = $500,000 bond

Payment bond requiredYes — 100% = $500,000 bond

Bond cost range (1.0%–2.0%)$5,000 – $10,000 per bond

Estimated total bonding cost$10,000 – $20,000

How to Use This Tool

1Enter the estimated contract value for the project.
2Select the project type — federal, state, or local government, or private.
3Choose whether you are the prime contractor or a subcontractor.
4Review the required bond types, applicable thresholds, and estimated premium ranges.

How to Apply the Results

Use the estimated bond premium to add bonding cost as a line item in your bid. Contact your surety agent to confirm your bonding capacity and get an actual premium quote before submitting. Small contractors who lack surety relationships should explore the SBA Surety Bond Guarantee Program.

Frequently Asked Questions

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