What is an Arizona Bid Bond?
A bid bond is a type of surety bond that contractors are required to submit when bidding on construction projects, particularly public sector ones. It serves as a financial guarantee that the contractor who wins the bid will enter into the contract and provide the required performance and payment bonds. If the winning contractor fails to honor their bid and proceed with the project, the bond compensates the project owner for the difference between the defaulting contractor’s bid and the next lowest bid, ensuring that the owner is not financially disadvantaged.
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How to get a Arizona Bid Bond in 3 easy steps with Southwest Bond Services
Request a Quote
Fill out our online form or give us a call to request a free quote. Our team will promptly assess your requirements and provide you with a competitive quote tailored to your specific circumstances, ensuring clarity and transparency throughout the process.
Provide Required Information
Provide the necessary information requested by our team. Whether it's details about your project, business, or personal information, rest assured that your data will be handled securely and confidentially to facilitate a smooth experience.
Pay & Sign
Complete the process by making your payment for the bond premium and signing the required documents. Our team will guide you through the each step of the process to ensure accuracy and compliance with all legal and contractual requirements.
Who Needs an Arizona Bid Bond?
Anyone bidding a project that requires a bid security or bid bond. By Arizona revised statute Title 41-2573, a bid security is required for all construction projects in the amount of 10% of the bid amount.
In addition to bidding directly to public entities, a General Contractor may require Subcontractors to provide a bid bond ranging in the amount of 5%-20% of the bid amount. Likewise, a private project may also require a bid bond.
If you are bidding a federal project, a 20% bid bond is required.
How Much Does a Bid Bond Cost in Arizona?
Usually, there is no fee for a bid bond. We charge premium if the bidder is awarded the project and payment and/or performance bonds are required.
The cost of a payment and/or performance bond varies based on the amount, applicant’s credit history and financial presentation.
Usually ranging from 1%-3% of the contract amount.
Arizona Bid Bond FAQs
How Does an Arizona Bid Bond Work?
A bid bond is a financial guarantee for project owners, ensuring that a contractor will enter into a contract, pursuant to their bid, if awarded the project.
This bond is important in the construction industry, among others, as it protects the interests of project owners by providing assurance that the contractor is serious about their proposal and has the ability to fulfill the contract.
Essentially, a bid bond reduces the risk of contractors backing out after winning a bid.
The purpose of a bid bond is to ensure that the contractor will not only enter in to contract but also provide the performance and payment bonds, if required.
If the contractor does not honor their commitment, the project owner can make a claim on the bond to recover any losses incurred due to the contractor’s default.
This tool creates trust and accountability within the construction industry, which makes bid bonds an essential part of the bidding process.
How do I get an Arizona Bid Bond?
An Arizona Bid Bond can be requested either through our online bond request form or by telephone.
We are a small, locally owned agency so you can rest assured that you will always be dealing with the same people. We’d need an application completed and emailed to us along with the bid documents.
Bid amounts up to $1,000,000.00 can be considered based on credit history alone. Over that amount will require additional information.
Our turn around for most bid bonds is within 24 hours depending on the size, complexity and ability to provide us with the required information.
Can I Get an Arizona Bid Bond With Bad Credit?
Bid amounts up to $1,000,000.00 can be considered based on credit history and experience only. Above those amounts, we will require additional information in the form of financial statements, resumes, etc.
If a contractor has credit that does not qualify in our usual markets, we have markets that will offer different tools, like funds control or collateral, in order to approved the bid bond.
In addition, we are set up with the SBA which has a surety bond program to support small businesses.
The SBA does not utilize credit history as an underwriting tool therefore, they are a great asset in order to consider bid bonds for applicants without good credit history.
