Chapter 3 — Government Procurement & Bidding
How Do You Read Bond Requirements in Bidding Documents?
Reading bond requirements in bidding documents starts with identifying the exact security requirement, then confirming whether a surety bond is an accepted form and what conditions apply. Do not rely on generic percentages, deadlines or assumptions.
Direct answer
To read bond requirements in bidding documents, first identify the security requirement, then verify the permitted form, required amount or basis, parties, wording, validity, issuer requirements and submission instructions. The applicable requirement should be confirmed from the current procurement rules and the specific bidding documents.
Read the security requirement exactly
Do not begin by asking only for a bond type. Begin with the language in the bidding documents. The documents may refer to Bid Security, Performance Security, warranty security, advance payment security or another requirement.
Each requirement can have different timing, purpose, acceptable forms and conditions.
Confirm whether a surety bond is allowed
After identifying the requirement, check whether a surety bond is listed as an acceptable form. A Bid Security requirement is not automatically a Bid Bond requirement. A Performance Security requirement is not automatically a Performance Bond requirement.
If the document permits multiple forms of security, the applicant should confirm which form it intends to submit and whether that form satisfies all stated conditions.
Check the amount or basis stated in the documents
The bidding documents may state an amount, formula, basis or other method for determining the security. Do not use a generic percentage or a previous project as a substitute for the actual requirement.
If the basis is unclear, ask the Procuring Entity or appropriate adviser before submission.
Verify the parties
Principal
The Principal should match the legal name of the bidder, contractor, supplier or service provider required to provide the security.
Obligee
The Obligee should match the Procuring Entity or beneficiary named in the bidding documents.
Surety
The Surety should meet any issuer requirement stated in the documents and applicable rules. The applicant should not assume that every bond issuer or bond form will be accepted.
Review wording, validity and form
Look for prescribed wording, exact forms, notarization, signing authority, authentication, attachment, seal, validity and extension requirements. These details may determine whether the submitted security matches the bidding documents.
A surety bond should be prepared against the actual documents, not against a summary or memory of a previous bid.
Check submission instructions
Submission rules may cover where the security must be included, whether an original is required, how electronic submission works, the deadline, and whether additional documents must accompany the bond. Follow the bidding documents rather than assumptions.
Practical reading checklist
- Exact security requirement
- Permitted security forms
- Required amount or basis
- Principal name
- Obligee name
- Prescribed wording or form
- Validity requirement
- Submission deadline
- Issuing-Surety requirements
- Other express conditions in the bidding documents
What SuretyPH can and cannot do
SuretyPH can help an applicant organize an inquiry and supporting documents for the applicable insurer's evaluation. SuretyPH does not decide legal compliance, bid responsiveness, eligibility or acceptance by a Procuring Entity.
Key takeaway
The safest way to read bond requirements is to separate the security requirement from the permitted form, then verify the parties, amount, validity, wording, issuer conditions and submission instructions in the actual bidding documents.
Related topics
Relevant bond information
Need information about a surety bond requirement?
Submit an inquiry with your project details, and SuretyPH will organize your submission for the applicable insurer's evaluation.
Important Notice
Inquiries and supporting documents submitted through SuretyPH may be referred to the applicable participating insurer for evaluation. Submission does not constitute approval or issuance of a surety bond. Applications are subject to the insurer's requirements, evaluation, underwriting, terms, conditions, and approval.
SuretyPH is a digital platform for surety bond information, inquiries, requirements and request tracking. It does not underwrite, approve, bind, issue, or guarantee any insurance policy or surety bond. Evaluation, underwriting, approval, pricing and issuance are undertaken by the applicable licensed insurance company.