Norcal PTACNorthern California Procurement Technical Assistance Center

Ask Ed | Bonding – Just What Is It?

A Monthly Public Works Column By Ed Duarte, Construction & Public Works Specialist

Quite often in the seminars I conduct for Estimating & Bidding, the subject of bonding arises and I am often surprised at the number of people who don’t fully understand what a bond is. So, let me start by stating what a bond is and what it is not.

As utilized in the public works construction industry, a bond is NOT an insurance policy. A bond is a guarantee that the contractor who provides the bond will meet the contract provisions and deliver a project for the owner.

There are four (4) types of bonds typically used in Public Works Construction Projects:

  • Bid Bond - This bond guarantees that the low bidder will sign the contract awarded to them for the price they submitted. It accompanies the Bid Proposal
  • Performance Bond – This bond guarantees the owner that the contractor will build the job per plans & specs for the price stated in their bid proposal
  • Payment Bond – This bond guarantees the contractor will pay all the bills; the subs, suppliers, and workers - the proper payments as required
  • Maintenance Bond – This bond guarantees the contractor will honor all maintenance requirements specified in the contract

Qualifying for bonding is a complicated process, but necessary if you want to build a public works project.

 


 

Norcal PTAC clients with any specific questions on bonding practices or public works, can request a counseling session with Ed. Reach out to your Procurement Specialist to set it up!

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This procurement technical assistance center is funded in part through a cooperative agreement with the Defense Logistics Agency