Understanding Bid, Performance & Payment Bonds

Bid, performance and payment bonds serve different purposes in the construction process.

Bid bond

A bid bond is commonly submitted with a bid and supports the contractor’s commitment to enter the contract and provide required final bonds if awarded.

Performance bond

A performance bond supports the contractor’s performance obligations under the bonded contract, subject to the terms of the bond.

Payment bond

A payment bond supports covered payment obligations to subcontractors, suppliers and labor as defined by the bond and applicable contract requirements.

Requirements vary by project. Always review the actual solicitation, contract and bond forms.