1. Bid bonds are issued for an amount stipulated in the bid invitation, typically 10-20% of the bid amount. For some public works projects in New Jersey, the maximum amount is $20,000 regardless of the proposal amount. 2. A bidder's financial plan does not need to show the exact same amount in cash as the bid bond amount. The surety considers the bidder's entire financial picture when approving the bond application. 3. After the bid opening, the bid bond becomes void after a period of time, usually 3 months. The bidder is not required to return the bid bond to the surety.

1. All About Bid Bonds
1. What's the bidbondamount?They're issuedtohave an amountstipulatedwithinthe bidinvitation.
The specificationsfrequentlyneedasecuritycomparabletotenor twentyPercent fromthe bidamount.
In some instances,the dollarvalueispreset.Forinstance onNj publicwork,the dollarvalue isgenerally
no more than $20,000 whateverthe proposal amount.
2. Does myfinancial planhave toshowexactlythe same amountincash to entitledtothe bond?Not
always.Yourapplicationisdependantonthe entire financialpicture.
3. What goeson towardsthe bidbondfollowingthe bidopening?Afterawhile (3monthswithrespect
to the surety) itmightbe voidinstantly.
4. Must i give itback towardsthe surety?No.
5. What goeson if I am secondor 3rd bidder?Yourbidsecuritytakesplace before the contractis
awardedsothe obligee hasgotthe optiontoprovide youwiththe workwhentheywish.Thisisan
excellentreasontonot use cash securityinsteadof abond.
6. fourth,fifthor greater?You're releasedfromthe obligation.
7. The amountof myconnectingcapacityisconsumedonce the bidbondis disseminated?Anything
amountis deductedinthe availablecapacity.
8. When doesmycapacityget restored?It'srestoredonce the suretyisnotifiedthatyou're notthe
"apparentlowbidder."
9. Let's say I decide tonotbid the workin the lastsecond?Informthe suretyandalsothe transactionis
goingto be deleted.
10. Will there be claims?Absolutely!Forthisreasonit'sneeded.

2. 11. Do all publicprojectsrequire them?Generallyyes,exceptforsmall contracts,emergencyworkalong
witha couple of othergroups.Some federal projectsonlyneedaconnectingcapacityletter inthe
surety.
12. If I haven'tgot a connectingcompany,can one still bidthe work?Yes,withalternativebidsecurity
whichmay be describedwithinthe bidspecifications.However,if uponawardyoucan't fulfillthe
performance bondrequirement,the bidsecuritymightbe forfeited.
13. Exactlywhatis a cappedbidbond?Thisdoesn'tsupportan offeramountmore than a collection
amount.
14. Exactlywhatis a Consentof Suretyto accompanythe bid?The suretyissuesthisletterpromisingto
supply the performance andpaymentbonduponrequest.
15. How come SuretyCapacityletterssometimesused?Some obligeesrelyonthemtopre-qualifythe
biddersevenif theydon'tplantorequire (orpurchase) aperformance bond.
16. Couldtheybe simplertoobtainthanthe usual bond?No.
17. May i suretyissue the bidbondandanotherperformthe performance andpaymentbond?Yes,as
lengthybecause theybothsatisfythe mentionedneeds.Manysuretiesare unwillingtofollow another's
bidbond.
18. Do all bidbondscost exactlythe same?Yes.Generallythey're issuedatnocost.
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