A bid bond is a surety bond submitted with a construction bid that guarantees the contractor will honor the bid price and enter into a contract if awarded.

What is a performance bond?

A performance bond guarantees a contractor will complete a construction project according to the contract terms. If the contractor defaults, the surety steps in to finish the project or compensate the owner.

Are both bonds required on Texas public projects?

Yes. Under the Texas Little Miller Act (Government Code §2253), public projects over $25,000 require both a performance bond and payment bond at 100% of contract value.

Bid Bond vs Performance Bond: What's the Difference?

Texas contractors need both. The bid bond is submitted at bidding; the performance bond is required at contract signing. Here's how they work and when each is required.

Bid Bond

Submitted with your bid proposal. Typically 5–10% of bid amount. Guarantees you will sign the contract if you win. Often no charge to the contractor.

Performance Bond

Required at contract signing. Typically 100% of contract value. Guarantees you will complete the project. Premium: 1–3% of contract value.

Texas Little Miller Act Requirements

Public projects over $25,000 require a performance bond and payment bond at 100% of contract value under Government Code §2253.

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