The bid guarantee is the cheapest bond most contractors buy, and the reason is structural rather than generous: its exposure is narrow and its face amount is a fraction of a number that is itself smaller than the contract.
What it is sized against
Every other bond on a construction job is sized against the contract. The bid guarantee is sized against your bid, and then only a portion of it.
That has a consequence people find counterintuitive: on the same solicitation, no two bidders post the same figure, because each one’s base is its own price. The agency does not choose the number.
The federal figure
FAR 28.101-2(b):
“The bid guarantee amount shall be at least 20 percent of the bid price but shall not exceed $3 million.”
Two features. It is a floor — at least — so a solicitation may ask for more. And it is capped, so above a certain job size the guarantee stops growing while the contract does not, which makes it proportionally smaller the larger the work gets.
FAR 28.101-2 also limits the acceptable forms on construction contracts to separate bid guarantees.
The state figures are smaller
Where states set a percentage at all, it is well below the federal one.
| Jurisdiction | Bid security | Statute |
|---|---|---|
| Federal | at least 20 percent of the bid price, not exceeding $3 million | FAR 28.101-2(b) |
| Delaware | a sum equal to at least 10% of the bid | 29 Del. C. § 6962 |
| Oklahoma | five percent (5%) of the bid, by certified check, cashier’s check or bid bond | 61 O.S. § 1 |
| Utah | at least 5% of the amount of the bid, for all competitive bidding for construction contracts | Utah Code § 63G-6a-1103 |
| South Carolina | required for competitive sealed bidding in excess of one hundred thousand dollars | S.C. Code § 11-35-3030 |
| Indiana | a bond or certified check in the amount specified in the notice of the letting | Ind. Code § 5-16-5.5-2 |
Two of those deserve a second look.
Delaware writes a floor rather than a figure. Under 29 Del. C. § 6962 the bid bond “need not be for a specific sum, but may be stated to be for a sum equal to 10% of the bid to which it relates and not to exceed a certain stated sum, if said sum is equal to at least 10% of the bid.” The instrument can describe itself as a proportion with a ceiling rather than naming an amount — which is a convenience for a bidder who does not want to reveal its price on the face of the bond.
Utah attaches no dollar threshold to the requirement. Utah Code § 63G-6a-1103 requires bid security “for all competitive bidding for construction contracts” — the percentage applies regardless of contract size, where most states switch the requirement on above a figure.
Penal sum is not premium
Everything above describes the size of the instrument — the maximum a surety could be called on to pay. It is not what you pay.
The premium for issuing a bid bond is a separate and much smaller charge, set per account by underwriting. We do not publish a rate for it, or for any bond, because surety rates are filed per company and applied per account and there is no public source that sets them. A page printing a bid bond rate is describing one agency’s book or an invented number.
What can be said structurally is why the premium is low: the surety’s exposure on a bid guarantee is the gap between your bid and the next acceptable one — capped, in Ohio expressly at the lesser of that difference and ten per cent under O.R.C. § 153.54 — rather than the value of the work.
The cheap instrument, the expensive consequence
The low cost hides where the risk actually sits.
A bid bond is a surety’s promise, not a deposit. If it is called, the surety pays the owner and you repay the surety. Where an obligee takes a certified or cashier’s check instead — as Oklahoma and Indiana both permit — the money is deposited with the agency and returned if you proceed. Two bidders who describe themselves as having posted “the same” bid security can be in materially different positions.
And a surety writing your bid bond has, in practice, already formed a view about the contract behind it, because the bid bond’s exposure is precisely the cost of your failure to post the performance bond. The instrument is cheap; the decision it represents is not.
What this page does not cover
It quotes only the jurisdictions whose bid-security provisions we have read in full. Bid security in most states lives in the procurement code rather than in the public-works bond statute, which is why a state’s Little Miller Act often says nothing about it — and why the bid-bond corpus is a separate read from the one behind these guides.
It also does not state when security is returned, forfeited or retained, which varies by jurisdiction and is a different provision from the one that sets the amount.
