Bonding

A bond is a financial guarantee by a surety company that work will be completed as described in a contract. This resource can be used by program directors and their facilities planning teams to understand the relevant requirements for bonding. Most construction contractors are familiar with the process of obtaining surety bonds.

The minimum requirements follow:

  • A bid guarantee from each bidder equivalent to 5 percent of the bid price. The bid guarantee shall consist of a firm commitment, such as a bid bond, certified check, or other negotiable instruments accompanying a bid as assurance that the bidder will, upon acceptance of his or her bid, execute such contractual documents as may be required within the time specified.
  • A performance bond on the part of the contractor for 100 percent of the contract price. A performance bond is one executed in connection with a contract to secure fulfillment of all the contractor's obligations under such contract.
  • A payment bond on the part of the contractor for 100 percent of the contract price. A payment bond is one executed in connection with a contract to assure payment as required by law of all persons supplying labor and materials in the execution of the work provided for in the contract.
  • Contractor's Liability Insurance is required of the contractor to protect the grantee from claims arising out of or a result of the contractor's operations under the contract.

Bonding. The National Head Start Facilities Assistance Desk. HHS/ACF/ACYF/HSB. n.d. English.

Last Reviewed: April 2009

Last Updated: August 7, 2015