Bid Bond vs. Performance Bond: What Changes When You Win in Texas
A bid bond backs your promise to sign; a performance bond backs the finished job. Amounts, deadlines, cost, and a Texas bid-to-award timeline with a checklist.
Texas Bid Bond
Texas bid bonds, ready before bid opening.
Asked for by Texas counties, school districts, cities, and TxDOT on formally bid public work, and by many private owners. Guarantees you will sign the contract and post the performance and payment bonds if you win. Usually 5% of your bid on Texas public work, issued same-day for bid openings.
- Keeps your cash out of a 5% cashier's check
- Same-day issuance for prequalified contractors
- Harris County, TxDOT, statewide
What it is
The bond that lets you bid on Texas public work.
A Texas bid bond is a surety guarantee issued to an owner or public agency before bid opening. It promises that if your bid is the winning bid, you will (1) sign the contract at the bid price and (2) deliver the required performance and payment bonds.
On Texas public-works projects, bid security is set by the bid documents rather than by Government Code Chapter 2253, which covers only performance and payment bonds. Counties may require a 5% bid bond on public works or contracts over $100,000 (Local Government Code §262.032), and most school-district and city bid packets ask for one. Private owners use bid bonds selectively, especially on competitive commercial and industrial work.
A bid bond is underwritten with the performance and payment bonds in mind. The surety that writes it expects to write those bonds if you win, so it is usually part of a bonding program rather than a stand-alone purchase.
Who asks for it
Texas bid security by owner.
Bid security is the owner's word for whatever you post with your bid: a bid bond or a cashier's check. Each kind of Texas public owner sets it differently, and only counties have a statute that names a percentage.
| Owner | Bid security | Source |
|---|---|---|
| County e.g. Harris County | May require a 5% bid bond on public works or any contract over $100,000, from a surety authorized in Texas | Loc. Gov't Code §262.032(a) |
| School district (ISD) | No statute. The bid documents set it, commonly 5% of the greatest amount bid, by bid bond or cashier's check | District bid packet |
| City e.g. City of Houston | No statute. The bid documents set the amount and the forms accepted | City bid packet |
| TxDOT | Amount printed on the proposal form. E-bids take an electronic bid bond only; printed bids take a cashier's check, money order, teller's check, or bid bond | 2024 Std. Specs Item 2 §§8.2, 9.2; Transp. Code §223.016 |
| Federal e.g. Corps of Engineers | At least 20% of the bid price, capped at $3 million. Required only when a performance bond is also required | FAR 28.101-1, 28.101-2 |
Always use the percentage and form in your bid packet. It overrides any typical figure on this page.
The bid bond is the first of three bonds. If you win, the owner's thresholds decide whether you also post a performance bond, a payment bond, or both. See the Texas performance and payment bond thresholds by owner. A school-district job in excess of $25,000 already needs a payment bond, and one in excess of $100,000 needs both. For how the bid bond hands off to the final bonds after award, see bid bond vs. performance bond.
After you win
Ten to fifteen days to post the performance and payment bonds.
Winning the bid starts a short clock. Miss it and the owner keeps your bid security.
School district
Packets often allow 10 days. Edinburg CISD's bid form, for example, returns the 5% bid security unless the winning bidder fails to execute the contract and file the performance and payment bonds within ten days after the bid is accepted. If that happens, the security becomes the property of the district.
TxDOT
Contract and bonds are due within 15 days after written notification of award, each bond in the full amount of the contract (2024 Standard Specifications, Item 3 §4). Fail to execute and the proposal guaranty "will become the property of the State, not as a penalty, but as liquidated damages" (Item 3 §5).
County and city
The bid documents set the deadline. Where a county requires its own performance bond on a contract over $50,000 that Gov't Code Chapter 2253 does not already cover, it is due within 30 days of signing and before work starts (Loc. Gov't Code §262.032(b)).
What to do now
Line up your performance and payment bond approval before bid day, not after the award letter arrives. Send us the bid packet when you decide to bid and we will quote the bid bond and the bonds that follow it together.
What you pay
Bid bond or cashier's check: what each one costs you.
The alternative to a bid bond is cash. A 5% cashier's check on a $600,000 bid ties up $30,000 until the owner decides, and longer if you are the low bidder.
| On a $600,000 bid at 5% | Cashier's check | Bid bond |
|---|---|---|
| Cash out of your account | $30,000 | None. The $30,000 is a guarantee, not a payment |
| When you get it back | When the bids are decided. TxDOT holds the low bidder's check until the contract is awarded and executed | Nothing to return |
| Bidding three jobs at once | $90,000 tied up | One bond per bid |
| TxDOT electronic bid | Not accepted | Electronic bid bond required |
TxDOT return rule: 2024 Standard Specifications, Item 3 §7.
What the bid bond itself costs depends on the surety. Across the industry, many sureties charge no separate premium for it, because the premium is earned on the performance and payment bonds that follow a winning bid. Others charge a small flat fee. The ranges below are typical industry figures, not a quote.
| Situation | Typical bid bond charge | Notes |
|---|---|---|
| Active bonding program Surety already writes your bonds | Often $0 | Premium is on the performance and payment bonds |
| New client, first bid Program just set up | $0–$100 | Small flat fee at some sureties |
| One-time bid No ongoing program | $100–$500 | Flat fee per bond at some sureties |
| You win and refuse Bid security forfeited | Up to the full bond amount | Paid to the owner, recovered from you |
We confirm your bid bond cost when you apply. The real cost is the indemnity: if you win and refuse, you owe the surety up to the bond amount.
How to get bonded
Four steps, driven by prequalification.
- 01
Prequalification
For single jobs up to about $1M, our credit-based program needs your credit and a short application. Larger jobs go through full underwriting: financial statement, WIP schedule, business history, and bank reference. Surety establishes single and aggregate bonding capacity.
- 02
Bid request
Email us the solicitation, bid amount, and opening date. We review for single-job limits, project risk, and obligee acceptability. Use our pre-bid bid bond checklist to gather everything in one pass.
- 03
Bond issued
Bid bond executed on AIA A310 or obligee's required form. Delivered electronically or by runner before bid opening.
- 04
Award & P&P
If you win, we write the performance and payment bonds at your contract award. Bid bond obligation ends.
Legal requirements
Statute, common forms, and common failure modes.
Statute
No single Texas statute governs bid bonds. Counties: Local Government Code §262.032 lets the bid specifications require a 5% bid bond. Cities and school districts set bid security in their own bid documents. TxDOT sets it on the proposal form under Transportation Code §223.016, which allows a bid bond from a surety authorized in Texas. Federal bid guarantees follow FAR 28.101. Government Code Chapter 2253 governs the performance and payment bonds you furnish after award.
Bond amount
Set by solicitation documents. Texas public-works projects: typically 5% of the bid (the county figure in Local Government Code §262.032, and the usual figure in school-district and city bid packets). Federal: at least 20% of the bid price, capped at $3 million (FAR 28.101-2). Private projects: 5–20% depending on owner preference.
Common forms
AIA A310 (private work), federal SF-24 (U.S. government work), and custom owner forms. Form acceptability varies by agency.
Term
Bid bond remains in force until bid is accepted or rejected — typically 30–90 days after bid opening per solicitation.
What triggers a claim
Bidder wins but refuses to sign the contract at the bid price, or fails to deliver the required P&P bonds within the time the bid documents allow. Depending on the documents, the owner keeps the full bid security as liquidated damages (TxDOT, Item 3 §5) or claims the difference between your bid and the next-lowest, up to the bond amount.
Why Surety Bond Houston
Bid day doesn't wait.
Houston contractor depth
We write for Harris County, City of Houston, METRO, HISD, TxDOT, and every major Texas public owner — no form surprises.
Same-day bid delivery
Runner service within Harris County, e-bid files statewide. We meet the 2pm bid opening.
Prequalified pipeline
Once you're set up, bid bonds are on demand — no re-underwriting every solicitation.
Related bonds
The bonds that follow a winning bid.
FAQ
Bid bond questions from Texas contractors.
What is a bid bond?
A bid bond is a surety guarantee that if you win the bid, you will sign the contract at the bid price and post the required performance and payment bonds. If you don't, the owner claims against the bid bond. Depending on the bid documents, the owner either keeps the full bid security as liquidated damages (TxDOT does) or claims the difference between your bid and the next-lowest bid, up to the bond amount.
How much does a Texas bid bond cost?
Across the industry, many sureties issue bid bonds with no separate premium, or for a small flat fee, because the premium is earned on the performance and payment bonds that follow a winning bid. Whether a charge applies depends on the surety and your program, so we confirm your cost when you apply. Either way, the bond replaces the cash you would otherwise post: a 5% cashier's check on a $600,000 bid ties up $30,000.
What is the bid bond amount?
The bid documents set it, and no Texas statute sets one percentage for every owner. Texas counties may require 5% of the total contract price (Local Government Code §262.032). School-district and city bid packets commonly ask for 5% of the greatest amount bid. TxDOT prints the amount on the proposal form. Federal bid guarantees must be at least 20% of the bid price, capped at $3 million (FAR 28.101-2).
Do I need a bid bond for every Texas project?
No. You need one only when the invitation to bid or the specifications call for bid security. Counties may require one on public works or contracts over $100,000, and school-district, city, and TxDOT bid packets usually ask for bid security on formally bid work. Private owners vary. Smaller residential and commercial jobs usually don't require a bid bond at all.
How long do I have to post the performance and payment bonds after I win?
Your bid packet sets the deadline. TxDOT requires the contract and the performance and payment bonds within 15 days after written notice of award (2024 Standard Specifications, Item 3). School-district packets often allow 10 days. Edinburg CISD's bid form, for example, forfeits the bid security if the contract and bonds are not filed within ten days after the bid is accepted. Line up your performance and payment bond approval before bid day.
Does TxDOT accept a paper bid bond?
Not on electronic bids. TxDOT's 2024 Standard Specifications (Item 2, §8.2) require an electronic bid bond for e-bids: guaranty checks and printed bid bonds are not accepted, and you enter the bond authorization code into TxDOT's bidding system. On a printed bid, TxDOT accepts a cashier's check, money order, teller's check, or a printed or electronic bid bond (§9.2).
What happens if I win and refuse the contract?
You lose the bid security. TxDOT keeps the proposal guaranty "not as a penalty, but as liquidated damages" and will not consider you for the same work again unless the design changes substantially. Other owners award to the next bidder and claim the extra cost against your bid bond. Either way, the surety pays the owner up to the bond amount, then recovers from you under the general indemnity agreement — and the claim makes future bonding harder.
How fast can a bid bond be issued?
Same-day issuance is standard for prequalified contractors. For a first request on a single job up to about $1M, our credit-based program needs your credit and a short application; larger jobs need financial statements and a work-in-progress schedule for full underwriting. Apply when you decide to bid, not the day before, and bid bonds then issue on demand for approved projects.
Ready when you are
Get prequalified for bid bonds today.
Set up once, bid all year. Harris County and statewide.