Why use FarmerBrown.com to get your bid bonds?
Bid bonds are important parts of contracting and if you are new to the game you might not be as fluent in the term as you need to be. Let’s take a look at some of the basics of bid bonds.
What is a Bid Bond?
In short a bid bond shows proof of guarantee to the owner of a project that you can comply with the bid contract and that you will be able to accomplish the job as it is laid out in the contract. It assures the project owner that you have the capability to take on and carry out the project if you are selected for the project during the bidding process. In normal circumstances project owners have no idea if a contractor is able to financially handle a project, having a bid bond takes that guess work out. Bid bonds will make a project owner feel more comfortable and they are more likely to go with a contractor who has one, knowing if the contract is not signed they can make a claim against the Bid Bond. Bid bonds in most instances are 5% or 10% of the bid amount. Federal bid bonds are 20% of the bid amount.
Please fill out the form for your Bid Bonds Quote or if you wish to speak with agent now please call (866) 704-0510
What will happen if the obligation is not met?
If the obligations of the bid bond are not met the contractor and surety are liable jointly for the bond. The owner of the project can choose to make a claim on the bond to the Surety company. The maximum amount of liability is the face value or the penal sum listed on the bond. The Surety will then collect the money paid out from the Contractor they issued the bond to.
How they work
When a bid bond requirement is made for a project it keeps contractors from submitting frivolous bids and helps project managers to feel secure in the contractor choice. Bond issuing companies do a full and comprehensive credit and financial review before they will provide a bond for any company. During the bidding process contractors submit what they think it will cost to get the job done.
Requirements of the bid bond
Under the Miller Act all bidders are required to submit bid bonds on a federal project. There are many private firms who have decided to follow suit with this act to protect themselves during the bidding process. If you want to be a competitive contractor it is almost certain that you will need to have bid bonds and know the process. At FarmerBrown.Com we use are exsentive knowledge to make the bonding process as hassle free as possible.
The ways you can meet the federal standards for bid bond is make sure they are Bonds issued by an approved corporate surety.The Department of the Treasury maintains a list of corporate sureties approved to issue bonds for federal projects, Treasury Department Circular 570.
These are the basics of bid bonds but there is a great deal more to know when setting them up. If you have any questions you can always contact us. One of the best ways to grow your business is to have the ability to bid the types of projects that require bonds from a contractor.
If you wish to know more, please call (866) 704-0510 to talk with our Bid Bond expert.