What does a bid bond guarantee?

A bid bond serves a specific purpose in the construction bidding process. It guarantees that the contractor's bid is not only accurate but also that the contractor will enter into a contract at the bid price and post the required performance and payment bonds if awarded the project.

This bond acts as a financial assurance to the project owner that the contractor is committed to the bid submitted. If the contractor fails to fulfill these obligations, the project owner can claim the bid bond to recover losses incurred due to the contractor’s default. This ensures that the bidding process remains fair and that only serious bidders are considered, thereby protecting the interests of the project owner.

Other options, while related to project performance and contractor obligations, do not accurately describe what a bid bond specifically guarantees. For instance, the start of the project, timely completion, and payment to subcontractors pertain to later stages of the contract process rather than the bidding phase itself.