Texas puts both bond requirements in a single subsection and gives them different triggers. It is one of the clearest examples in the country of why “what is my state’s bond threshold” is the wrong question — Texas has more than one, and they belong to different bonds.
The statute, in one sentence
Tex. Gov’t Code § 2253.021(a):
“A governmental entity that makes a public work contract with a prime contractor shall require the contractor, before beginning the work, to execute to the governmental entity: (1) a performance bond if the contract is in excess of $100,000; and (2) a payment bond if: (A) the contract is in excess of $25,000, and the governmental entity is not a municipality or a joint board created under Subchapter D , Chapter 22 , Transportation Code; or (B) the contract is in excess of $50,000, and the governmental entity is a municipality or a joint board created under Subchapter D , Chapter 22 , Transportation Code.”
Read the structure rather than the numbers and it resolves cleanly. One duty is imposed on the governmental entity — require these bonds — and it has two independent conditions attached, one per bond.
One bond, not two
The consequence is the thing worth carrying away. Between the payment bond figure and the performance bond figure, a Texas contractor owes a payment bond and does not owe a performance bond.
That is unusual. Most state statutes set a single threshold and attach both bonds to it, so the contractor is either fully bonded or not bonded at all. In Texas there is a band in which the people below you on the job are protected and the governmental entity is not.
Two practical effects follow. First, on a contract inside that band, expect the solicitation to ask for a payment bond only — and if it asks for both, that is the entity exercising its own discretion, not the statute compelling it. Second, when a subcontractor asks whether there is a bond to claim against on a mid-sized Texas job, the answer is more often yes than the contract value alone would suggest.
The trigger that moves
There is a third figure inside the same subsection, and it is easy to read past because it does not change the bond — it changes the number that triggers it.
The payment bond attaches above the general figure where the governmental entity is not a municipality or a joint board created under Subchapter D, Chapter 22 of the Transportation Code. Where the entity is one of those, the trigger is the higher figure instead.
So the identity of your obligee is a bonding fact, not just an administrative one. The same contract value can carry a payment bond requirement with a county or a school district and not with a covered municipality.
What the performance bond is, and who it is for
Section 2253.021(b) answers three questions in three clauses:
“The performance bond is: (1) solely for the protection of the state or governmental entity awarding the public work contract; (2) in the amount of the contract; and (3) conditioned on the faithful performance of the work in accordance with the plans, specifications, and contract documents.”
Solely for the protection of the entity. This is the clause subcontractors misread most often. The performance bond is not a fund for people who were not paid; it protects the owner against non-performance. The remedy for non-payment is the other bond.
In the amount of the contract. Texas states the penal sum flatly, with no percentage language and no discretion for the contracting body to set a lower figure. Where the federal regulation reaches the same place through a rule about percentage of the original contract price, and other states fix a fraction, Texas simply says the amount of the contract.
Conditioned on faithful performance. The condition is measured against the plans, specifications, and contract documents — which is a reminder that the bond follows the contract. Whatever is in those documents is what the surety has guaranteed you will do.
What this section does not tell you
Being straight about the edges of a source is part of using one.
Section 2253.021 is the triggering and amount provision. It is not the bid bond rule — in Texas, as in most states, bid security on public work is governed by the procurement statutes for the particular kind of entity, not by the bond chapter. And it is not the claims provision: the notice requirements and the deadlines a claimant has to meet to recover on a Texas payment bond live elsewhere in Chapter 2253, and we have not read them here, so this page does not state them.
If you are a subcontractor with an unpaid Texas invoice, that gap matters and you should not treat this page as timing advice. The threshold questions above are what it answers.
Getting the bonds
Both bonds are executed to the governmental entity before beginning the work, so they are a condition of starting, not a document you produce afterwards. On a contract at these figures the surety will want the contract documents themselves along with your financial statements and work-in-progress schedule, because the performance bond is written in the amount of the contract and the condition is measured against those documents.
We write both bonds in Texas, along with the license, permit and bid bonds the state’s counties, cities and agencies require.
