Construction Glossary and Terms

Bid bond

A bond issued by a surety on behalf of a contractor that provides assurance to the recipient of the contractor’s bid that, if the bid is accepted, the contractor will execute a contract and provide a performance bond. Under the bond, the surety is obligated to pay the recipient of the bid the difference between the contractor’s bid and the bid of the next lowest
responsible bidder if the bid is accepted and the contractor fails to execute a contract or to provide a performance bond.

Bid security Funds or a bid bond submitted with a bid as a guarantee to the recipient of the bid that the contractor, if awarded the contract, will xecute the contract in accordance with the bidding requirements of the contract documents.

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