Construction Bid Bond Requirements California: Complete Contractor Guide 2025

Bid Bond Overview

California Bid Bond Requirements

Typical Amount:

10%

Of bid amount

Threshold:

$200,000

For public works

Maximum Cap:

None

Unless specified

A bid bond is a type of surety bond that guarantees a contractor will enter into a contract and provide required performance and payment bonds if awarded the project. In California, bid bonds are mandatory for most public works projects exceeding specific thresholds.

When Bid Bonds Are Required

State Projects

• All projects over $200,000
• 10% of bid amount standard
• Electronic bonds accepted
• Treasury-listed surety required

Local Agency Projects

• Varies by agency ($25K-$200K)
• 5-10% typical requirement
• Charter cities may differ
• Check specific requirements

California Specific Requirements

Legal Framework

Public Contract Code §20111

Cities: Bid security required for projects over $200,000

Public Contract Code §10162

State: 10% bid security for all formal bids

Education Code §81656

Community colleges: Projects over $200,000

Surety Requirements

Treasury-listed surety company
Licensed in California
A- or better rating (AM Best)
Power of attorney included
Original bond (not copy)

Bond Form Requirements

Agency-specific form if required
Exact legal entity name
Project identification number
Signatures and seal
Penal sum clearly stated

Obtaining Bid Bonds

Qualification Process

Financial Review

Submit financial statements (3 years)

Experience Verification

Provide project history and references

Credit Analysis

Personal and business credit review

Bonding Line Establishment

Determine single and aggregate limits

Cost Structure

Bid Bond Premium

• Often free with performance bond commitment
• $100-500 flat fee if charged separately
• 0.5-1% of bid amount for high-risk

Performance Bond Rates

• 0.5-3% of contract amount
• Based on contractor qualification
• Volume discounts available

Bid Bond Alternatives

Acceptable Alternatives (When Allowed)

Cashier's Check

• Must be from California bank
• Made payable to agency
• Full 10% amount required
• Immediate availability of funds

Certified Check

• Bank certification required
• Funds guaranteed by bank
• Less common than cashier's
• Some agencies don't accept

Note: Most agencies strongly prefer surety bonds over cash alternatives

Forfeiture Conditions

When Bid Bonds Are Forfeited

Failure to execute contract within specified time
Failure to provide performance/payment bonds
Withdrawal of bid during irrevocable period
Material error claims deemed invalid

Protecting Against Forfeiture

Review bid thoroughly before submission
Ensure performance bond availability
Verify subcontractor commitments
Document any bid conditions
Respond promptly if awarded