Bid bond

A bid bond is a surety guarantee that pays the buyer an agreed sum if a bidder withdraws its bid or refuses to sign the contract after winning. It converts the promise that a tender is binding into money the buyer can actually collect.

Bid bonds are standard in construction tendering, typically set as a percentage of the bid price and issued by a surety — which underwrites the contractor's capacity before providing one. The practical point for smaller firms: sureties prequalify you before the buyer does, and a surety relationship is built over years of financials and completed work. Withdrawing a bonded bid typically costs the bond amount and the relationship. And read the bond requirements early: a missing or wrongly worded bond is treated like any other mandatory defect — the bid is out.

@misc{pi-2026-definitions-bid-bond,
  author = {{The Procurement Institution}},
  title  = {Bid bond — definition},
  year   = {2026},
  url    = {https://procurementinstitution.org/definitions/bid-bond},
  note   = {Release 2026.10}
}