Last reviewed: April 21, 2026|Next review due: July 20, 2026|Reflects current bid bond requirements

✓ 2026 Requirements Verified

Treasury-listed sureties · Same-day electronic bid bonds

Bid Bond CalculatorPenal Sum + Premium, Federal and Private

Every bid bond has two numbers. The penal sum is the face value the obligee can collect against — 20% of the bid on federal work per FAR 28.101-2, or 5–10% on state and private work. The premium is what you pay the surety — almost always $0 inside an approved bonding program.

Enter your bid below and pick a percentage. The math comes from a FAR 28.101-2 reading and state Little Miller Act statutes, not a marketing guess. For the next bond in the trinity, use the performance bond calculator and payment bond calculator. For the product background, see bid bonds and the bid bond requirements guide.

Run the Numbers

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Our underwriter tells you the exact penal sum the obligee requires and confirms bonding-line capacity before you submit your bid.

The Penal Sum Is a Percentage of the Bid

Bid bonds are the only contract-surety product where the face amount is a function of the bid itself. Performance and payment bonds key off the final contract price — bid bonds key off what you offered to do the work for. Three common percentages, one formula.

Bid Bond Penal Sum Formula

Worked Example

Given$2,500,000 federal contract bid

$2,500,000 × 20% (Miller Act floor)

Bond Amount$500,000

Given$2,500,000 federal contract bid

$2,500,000 × 20% (Miller Act floor)

Bond Amount$500,000

Federal floor: FAR 28.101-2(a)(1) — 'at least 20% of the bid price but not to exceed $3 million.' State/private default: 5–10% depending on solicitation language and state Little Miller Act.

Federal (Miller Act)

20%

Of bid price, capped at $3M. Applies to federal construction contracts that in turn require P&P bonds (Miller Act triggers at $150,000 per 40 USC §3132).

State / Municipal

5%–10%

Varies by state Little Miller Act. California Public Contract Code §10167 uses 10%; Texas Government Code §2253 and Florida §255.05 commonly run 5%.

Private / AIA A310

5%–10%

Owner dictates in the solicitation. AIA Document A310 defaults to 5% of the bid; some private owners mirror Miller Act and require 20%.

Miller Act Bid Bond: The 20% Rule, Spelled Out

Every federal construction contract above the Miller Act threshold needs three bonds — bid (on the bidding side), then performance and payment (on the awarded side). The bid bond rule is the one contractors miss most often because the percentage is unusually high and the statute is spread across two sources.

Official Federal (FAR / Miller Act) Requirements

"A bid guarantee shall be in an amount equal to at least 20 percent of the bid price but not to exceed $3 million."

Federal Acquisition Regulation • FAR 28.101-2(a)(1)

Threshold trigger

The bid bond requirement is a downstream consequence of needing a performance/payment bond. 40 USC §3131 requires P&P bonds on federal construction contracts over $150,000, which means bid bonds attach to the same job. Service contracts and supply contracts generally do not need a Miller Act bid bond unless the solicitation calls for one under FAR 28.103.

The $3M cap

FAR 28.101-2(a)(1) caps the bid guaranty at $3,000,000 regardless of bid size. A contractor bidding a $50M federal job does not post a $10M bid bond — they post $3M. The contracting officer can override this cap in writing but it is uncommon. The cap prevents mid-size contractors from being locked out of large federal work purely by bonding capacity.

The Treasury-Certified Surety Requirement

Federal bid bonds must be written by a surety listed in Treasury Circular 570 — the authorized surety list maintained by the Department of the Treasury, Fiscal Service. The contracting officer will reject a bid bond written by a non-listed carrier, which means your bid is non-responsive. Every surety in our program is Circular 570 listed with single-project capacity sized to Miller Act jobs.

Why Bid Bonds Issue at $0 Premium (Inside a Bonding Program)

This is the most misunderstood part of bid bond pricing. Surety companies are not writing free insurance out of charity. They are writing a loss-leader because the bid bond is evidence of a bonding line that will produce premium on the performance and payment bonds if the bid wins. The math works for the surety only if they expect to see the P&P bond afterward.

You submit a bid + bid bond

Surety issues the bid bond on your already-approved bonding line. No separate underwriting, no separate premium. The bond commits the surety to stand behind your performance/payment bonds if you win.

You win the contract

Surety issues the performance bond (typically 100% of contract price) and payment bond (also 100%). These are the premium-earning bonds — typically 0.5% to 3% of the contract price depending on credit, financials, and obligee.

Surety earns premium

A $5M contract at a 1.5% rate earns the surety $75,000 on the P&P bond. Against that earned premium, the cost of issuing a handful of $0 bid bonds during the bid cycle is negligible. That is the economics of contract surety.

What a bonding program approval requires

Financial statements: Internal statements for programs under $1M single / $3M aggregate; CPA-reviewed or audited for larger capacity.
Work-in-progress (WIP) schedule: Current contracts, billed-to-date, cost-to-complete. Underwriters live in the WIP.
Personal + business credit: Owners with 680+ personal FICO qualify for standard programs; below that routes to SBA Surety Bond Guarantee or functional equivalents.
General Indemnity Agreement (GIA): Owner(s) personally indemnify. This is non-negotiable for every surety program.
Business resume: Largest project completed, years in business, key personnel. This is how the surety sizes single and aggregate limits.

Start Bonding Program Underwriting

Little Miller Act Bid Bond Percentages (State Public Works)

Every state has a public-works bonding statute modeled on the federal Miller Act. Most landed around 5% for the bid bond; a handful run 10%. Always read the specific solicitation — an individual agency can require more than the statutory floor.

State	Bid Bond %	Statute	Notes
California	10%	Pub Cont Code §10167	State-funded public works; bid security required for bids over $25K.
Texas	5%	Gov Code §2253	State/local public works; governmental body may require more.
Florida	5%	§255.05	Public works over $200K local / $100K state (exemption thresholds).
New York	5%	State Finance §137	Also requires performance and payment bonds on state contracts.
Illinois	10%	30 ILCS 550	Bond Act of 1931; applies to state/municipal construction.
Ohio	10%	ORC §153.54	Public improvement projects; bid guaranty required.
Pennsylvania	10%	62 Pa.C.S. §903	Procurement Code; bid security for state public works.
Georgia	5%	OCGA §13-10-40	State/local public works; 100% P&P on award.

Percentages confirmed against each state legislature’s published statute as of April 2026. Individual solicitations may set a higher figure; always follow the bid package over the baseline statute.

Forfeiture: What the Penal Sum Actually Costs You

The penal sum is not theoretical. If you are the low bidder, win the award, and then fail to sign the contract or furnish the performance/payment bonds, the bid bond pays the obligee — and your surety comes to you for repayment under the indemnity agreement.

Federal (FAR 28.101-4)

The obligee’s measure of damages is the difference between your bid and the next-lowest responsive bid, capped at the penal sum. The surety pays the obligee. Then the surety invokes the General Indemnity Agreement to collect from the principal (and personal indemnitors).

Text: 40 USC §3131 + FAR 28.101-4

Worked scenario

You bid $2M on a federal job. 20% bid bond = $400K penal sum. You win, then discover your subs overpromised and you cannot deliver. The second-lowest bid was $2.35M. The government collects $350K from the surety. You owe the surety $350K plus fees — the $400K penal sum was just the ceiling.

Lesson: every bid bond is real exposure. Never bid work you cannot bond-back.

Alternative bid guarantees

FAR 28.101-1 allows contractors to post bid security as a certified check, cashier’s check, bank draft, postal money order, or U.S. bonds/notes instead of a surety bond. Almost no one does this on large work. A $3M bid at 20% ties up $600K in cash for the full bid-evaluation window — working capital that could fund three or four simultaneous bids if posted as surety bonds instead.

The only scenario where cash makes sense: a contractor who cannot qualify for any bonding line at all. If that is you, the SBA Surety Bond Guarantee Program guarantees sureties up to $9M so they can back otherwise-unbondable small contractors.

If You Do Not Have a Bonding Program: Standalone Pricing

Contractors without an approved bonding line can still get a bid bond, but the pricing changes. A standalone bid bond is underwritten as a one-off rather than part of a program, and the surety charges a small premium because there is no guaranteed P&P bond on the other side.

Standalone Bid Bond Premium by Credit Tier

Based on a $500,000 penal sum bond amount

Credit ScoreEst. Annual Cost

720+ (Excellent)Rate: 0.5% or $250 flat
$250
680–719 (Very Good)Rate: 0.75% or $400 flat
$400
640–679 (Good)Rate: 1.0% or $500 flat
$500
600–639 (Fair)Rate: 1.5%
$7,500
Below 600Rate: 2–3%
$10,000–$15,000

Standalone bid bonds on one-off jobs. Premium drops to $0 once an approved bonding program is in place. Figures reflect typical market rates for contract surety on a $500K penal sum; actual pricing depends on credit, financial strength, WIP, and obligee history.

Bonding program

Bid bonds issue at no premium. Surety earns on the P&P bond when you win. Requires underwriting up front (WIP, financials, GIA), then unlimited bid bonds within program limits.

Standalone / one-off

$100–$500+

Flat fee on smaller penal sums, 1–3% on larger. Use for one-time bids when you do not plan to bond more public work. Same-day issuance on clean credit.

Bid due this week?

Our underwriting desk issues electronic bid bonds same-day on approved lines and turns standalone one-offs in 2–4 hours for clean credit. Call 1-844-810-BOND (2663) or start online below.

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After the Bid: The Rest of the Contract Surety Trinity

The bid bond gets you to the award. These are the bonds that execute the work and pay the subs.

Performance Bond Calculator

100% of contract price, rate-based premium. Required when you convert the winning bid into an active contract.

Run the math

Payment Bond Calculator

Protects subcontractors and suppliers. On federal jobs, the same Treasury-listed surety must write both P&P bonds — they are usually issued as a pair.

Run the math

Construction Bond Calculator

All three bonds priced together as a program. Use this when you want the bid / performance / payment trinity quoted as a unit.

Subcontractor protection

Bid Bond Guide

Requirements by job type

Bid Bond Questions Contractors Actually Ask

Answers verified against FAR, 40 USC §3131, and state Little Miller Act statutes.

Does the Miller Act really require a 20% bid bond on every federal job?

FAR 28.101-2(a)(1) requires a bid guarantee on any federal construction contract that will in turn require a performance and payment bond (the trigger is the $150,000 Miller Act threshold under 40 USC §3132). The bid guarantee must be "in an amount equal to at least 20% of the bid price but not to exceed $3 million." The 20% is a floor, not a ceiling — the contracting officer can raise it. Outside federal work, state Little Miller Acts commonly land at 5% or 10% (California Public Contract Code §10167 uses 10%; most others use 5%).

Why do sureties hand out bid bonds with no premium?

Bid bonds are underwritten but rarely charged because the surety expects to earn its premium on the performance and payment bonds (typically 0.5% to 3% of the contract price) if the bid wins. The bid bond is essentially pre-approval evidence — it proves the contractor has a bonding line and can deliver the final bonds. A surety that declines to write the bid bond is telling the owner the contractor will not qualify for the P&P bond either. If you do not already have a bonding program, standalone bid bonds typically run $100–$500 flat or 1–2% of the penal sum.

What happens if I win the bid but refuse the job?

FAR 28.101-4 lays it out: if the low bidder refuses to execute the contract or furnish the required payment and performance bonds, the government recovers the difference between the defaulting bid and the next-lowest bid, up to the full penal sum of the bid bond. On state and AIA A310 private jobs, the same mechanic applies. This is why the penal sum is a real number — a $5 million bid at 10% creates a $500,000 exposure if you walk. Your surety indemnifies the obligee and then collects from you under the General Indemnity Agreement.

Is the bid bond amount the same as the cost to me?

No — and confusing the two is the most common calculator error. The penal sum (the "amount") is the face value of the bond, typically 5–10% of the bid or 20% on Miller Act work. The premium (your out-of-pocket cost) is a separate number, often $0 inside a bonding program or $100–$500 flat for a standalone issuance. A $2 million bid at 10% creates a $200,000 penal sum — not a $200,000 check you write to the surety.

Can I use a certified check or cashier’s check instead of a bid bond?

FAR 28.101-1 allows alternative bid guarantees including certified checks, cashier’s checks, bank drafts, postal money orders, and U.S. bonds/notes, but the cash equivalent must sit with the contracting officer for the duration of the award cycle. Most contractors use surety bonds because a bid bond is paper — it costs nothing to post and does not tie up working capital. On a $3M bid, a 20% certified check ties up $600,000; the bid bond costs $0 if you have a bonding line.

Do I need to be approved for a bonding program before I bid?

Yes. The surety needs to underwrite your company first — financial statements (CPA-prepared for larger programs), work-in-progress schedule, personal and business credit, and the indemnity agreement — before they will issue any bid bond, even a $0-premium one. Underwriting for a starter program (single $500K–$2M bond capacity) takes 3–10 business days. Larger aggregate programs ($10M+) require fuller financials and 1–3 weeks. Once approved, bid bonds are typically issued same-day from the surety’s electronic bid bond platform.

Post Your Bid Bond Without Tying Up Working Capital

Every surety in our program is listed on Treasury Circular 570. Same-day electronic bid bonds, $0 premium inside an approved program, Miller Act capacity up to the $3M federal cap and well beyond on state/private work.

Start Your Bid Bond Quote 1-844-810-BOND

Reviewed by Nick Thoroughman, Editorial Director

Surety review by Eric Drummond, Surety Specialist

Nevada DOI license pending issuance

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