We are looking at a county paving project. The IFB requires a bid bond at the bid opening in nine days. I called our insurance agent, and they said they don't write surety. This is our first time needing one. What is a bid bond, and who issues them? What paperwork do we need to provide as a first-time applicant, and how fast can we get one?
A bid bond guarantees to the government that if your company is the successful bidder, you will accept the contract award and furnish the required performance and payment bonds. The federal government requires performance and payment bonds for any construction contract that exceeds a certain dollar amount, as per the Miller Act. State and local governments have their own thresholds and rules for when these bonds are needed. These bonds are issued by a surety company, not your typical insurance agent.
To get one, you need to find a surety bond broker. These brokers specialize in working with surety companies. As a first-time applicant, you will need to provide financial statements for your company, personal financial statements for the owners, your bank references, and a resume of your construction experience. They will want to see your work in paving and how you manage projects. The time it takes varies, but for a first-timer, it can be a week or two, sometimes longer, because the surety company needs to underwrite your business. Nine days is a tight turnaround for a new relationship, so you need to move fast.