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<p><p> For example, the government may have a project to build a new road and since it does not really have the capability to build it, they may bid out the project to the public. After publishing the project, it may require contractors to signify their intention to do the project by submitting a "bid bond." After several contractors have bidded for the project (through submitting a bid bond), the project proponent will then choose and announce the winning bidder. Once the winning bidder has been announced, it will then require the winner to submit a performance bond. Other bid bonds submitted by losing bidders will just die a natural death.

However,for the winning bidder, this "bid bond" will now be replaced by a "performance bond. Essentially, this "performance bond" assures the project proponent project completion. As stipulated in a written agreement, throughout the project, there will be certain milestones that the contractor will have to meet, failing which, there shall be corresponding penalties due the project proponent. On a worst case scenario, the contract can be rescinded and may be given to another contractor.

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What is difference between bid security and Bid Bond?

There is no difference. Bid securities can come in different types. A bid bond is just one type of bid security.


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A bid bond is typically returned to the bidder after the bid opening if their bid is not chosen, or once the contract has been awarded and the performance bond is in place.


What is the difference between the bid and ask price for bonds?

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What is the difference between bid and offer bonds in the context of bond trading?

Bid bonds are submitted by potential buyers to show their commitment to purchasing a bond at a specific price, while offer bonds are submitted by sellers to indicate their willingness to sell a bond at a certain price.


If you use a bid bond and do not get awarded the contract do you get your money back?

No. The bid bond performed its function - allowing you to bid. This is why bid bonds are inexpensive. Had you been awarded the contract you would then need another bond, a "performance bond". This bond would be an extension of the bid bond and be priced equivalent to the value of the project. Yes. The above is incorrect atleast in the architecture/construction industry. Architectural handbook of professional practice 14 edition as reference. It is simply to insure a bidders intent to enter into contract if awarded the contract, and protect the owner if the bidder withdraws their bid


If issued a bid bond can surety not issue a payment bond?

Yes. If the bid spread is significant, and or if the financial situation of the contractor changes beyond the comfort level of the surety between the bid and award, or if the final bond is contingent on receiving info.


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