In one minute
- A bid bond is a promise from a surety company that if you win, you'll sign the contract at your bid price. Agencies use it to weed out bids that aren't serious.
- Many public bids ask for bid security of 10% of the bid, as a bid bond, cashier's check or certified check. The notice says which.
- If you win, expect performance and payment bonds too. Line up a surety before you need one.
What a bid bond does
When you submit a bid, the agency wants to know you'll stand behind your price. A bid bond is a three-way promise between you, the agency and a surety (a company that guarantees contractors). If you win and then refuse to sign the contract, the surety pays the agency, usually the difference up to the bond amount, and then comes to you to repay it.
How much, and in what form
- Amount: often 10% of your total bid, but the notice sets it. For example, recent notices from the Fallbrook Public Utility District and the City of Lemon Grove asked for 10% bid security.
- Form: usually a bid bond from an admitted surety, a cashier's check, or a certified check. Some agencies accept only certain forms.
- Missing or wrong bid security usually makes a bid non-responsive: it gets thrown out.
The bonds that come after you win
- Performance bond: guarantees you'll finish the work as the contract says. Often 100% of the contract.
- Payment bond: guarantees you'll pay your subcontractors and suppliers. Also often 100%.
Check the notice before you bid: the City of Del Mar, for example, requires payment and performance bonds on contracts over $25,000, and the City of Lemon Grove's 2025 sewer notice asked for 100% of each.
How a small contractor gets bonded
- Talk to a surety bond agent or broker who works with contractors. They place your bonds with surety companies.
- Have your paperwork ready: business and personal financial statements, a list of jobs completed and in progress, your license, and references.
- Start small. Sureties set a bonding limit (per job and in total) based on your finances and track record. It grows as you complete jobs.
- Ask about help for small businesses. The County of San Diego's procurement forecast page mentions a County program, run by Founders First CDC, that helps small businesses and nonprofits with bonding and insurance costs.
Common questions
What does a bid bond cost?
Often little or nothing once you have a relationship with a surety; you pay mainly for the performance and payment bonds when you win. The price of those depends on your finances and experience. Ask your bond agent.
Do small informal bids need bonds?
Sometimes not. Smaller informal jobs often have lighter requirements, but each notice decides. Read the bid security section before you price.
Can I bid without a surety if I use a cashier's check?
If the notice accepts a cashier's check, yes, but that ties up 10% of your bid in cash until bids are awarded, and you'll still need performance and payment bonds if you win.
Sources
Checked November 2, 2026.
General guidance for San Diego County public bids. Every agency sets its own rules: the bid's official notice is always the final word.