California · Project bonds
California Bid Bond
California public agencies commonly require bid security of 10% of the bid. The exact requirement is in each solicitation.
Fast approvals and straightforward guidance.
— Josh A., Los Angeles, CA
California overview
Bid Bond in California
California licenses contractors through the Contractors State License Board (CSLB). Anyone who takes on work valued at $500 or more in combined labor and materials must hold a license, and most license applicants must file a contractor license bond.
California public works payment bond law (Cal. Civ. Code §§ 9550-9566). California requires a payment bond on public works contracts above a set dollar amount, and public agencies set their own bid security and performance bond requirements in the bid documents.
- Federal projects in California use Standard Form 24.
A bid bond is a surety bond that guarantees a contractor who wins a bid will sign the contract and provide the required performance and payment bonds at the bid price. If the winning bidder backs out, the surety pays the project owner the cost difference, up to the bond amount.
What a bid bond guarantees
A bid bond tells the owner that your price is real. If you win and then refuse to sign the contract or cannot provide the required bonds, the owner can claim against the bid bond.
The owner is usually paid the difference between your bid and the next lowest responsible bid, up to the bond amount. This is how the bond protects the bidding process.
When a bid bond is required
Most public works solicitations require bid security. The bid documents state the form and amount, which is a percentage of the bid or a fixed dollar figure. Private owners ask for bid bonds less often, but many do on larger projects.
Bid security can sometimes be a certified check instead of a bond. A bond is usually the better choice because it does not tie up your cash.
How the bid bond amount works
The amount, called the penal sum, is set by the owner. It is commonly 5% to 10% of the bid and in some cases up to 20%. Federal projects use Standard Form 24, and many other owners accept AIA bid bond forms or their own.
| Bid price | Bond at 5% | Bond at 10% |
|---|---|---|
| $250,000 | $12,500 | $25,000 |
| $1,000,000 | $50,000 | $100,000 |
| $5,000,000 | $250,000 | $500,000 |
How it works
How to get a bid bond in California
Share the bid details
Tell us the project, owner, bid due date, and the bid security requirement from the solicitation.
Financials for $1,000,000 and up
Bonds up to $1,000,000 need no financials. Bonds of $1,000,000 or more need a financial statement and a work-on-hand schedule.
Underwriting review
An underwriter reviews your experience, credit, and capacity. Bonds up to $1,000,000 get an answer within 1 business day.
Receive and submit the bond
You get the executed bid bond to include with your bid package before the deadline.
Cost
What a California bid bond costs
Bid bonds are free. You pay nothing for the bid bond itself. Approval still goes through underwriting, because the surety is vouching that it can bond the full project if you win.
What underwriters review
- Whether the surety will also write the performance and payment bonds
- Contract size and bid amount
- Contractor experience on similar work
- Credit and financial statements
- Bid bond form and penal sum required by the owner
Who to contact
California licensing authority
Sources: Contractors State License Board; California Legislative Information. Requirements change. Confirm with the agency before you buy.
Other contractor bonds in California
Contractor License Bond
Required by your state or city before you can get or renew a contractor license.
Performance Bond
Guarantees you will finish the project under the contract terms.
Payment Bond
Guarantees you will pay your subcontractors, laborers, and suppliers.
Maintenance Bond
Covers defects in materials or workmanship after the project is finished.
California bid bond questions
Is a bid bond required in California?
California public agencies commonly require bid security of 10% of the bid. The exact requirement is in each solicitation.
How much does a California bid bond cost?
Bid bonds are free. You pay nothing for the bid bond itself. Approval still goes through underwriting, because the surety is vouching that it can bond the full project if you win.
What is a bid bond?
A bid bond guarantees that a contractor who wins a bid will sign the contract and provide the required bonds at the bid price. If the contractor does not, the surety pays the owner the difference up to the bond amount.
How much does a bid bond cost?
Nothing. Bid bonds are free. Approval still goes through underwriting, and the surety is typically also the one that will write your performance and payment bonds if you win.
How much is the bid bond amount?
The owner sets it, usually 5% to 10% of the bid and sometimes up to 20%. The amount is in the bid documents.
How long does it take to get a bid bond?
Bonds up to $1,000,000 get an answer within 1 business day, with a credit check and no financials. Bonds of $1,000,000 or more need financials and a soft credit check, so allow extra time and apply before the bid date.
Can I get a bid bond with bad credit?
Sometimes. Underwriters look at credit, experience, and financials together. Options exist for contractors with limited credit, sometimes with added collateral on the larger bond.
Is a bid bond the same as a performance bond?
No. A bid bond covers the bidding stage. A performance bond covers completing the work after you win. See the performance bond page for details.
Do I need a bid bond for a private project?
Only if the owner requires it. Public owners almost always do. Private owners ask for them mostly on larger or higher risk projects.
Bid Bond in other states
Don't see your state? Contact us or browse all contractor bonds.