Bid bonds & performance bonds on federal construction

The Miller Act in one paragraph

For federal construction contracts over $150,000, the Miller Act (40 U.S.C. §§ 3131–3134) requires the prime contractor to furnish two bonds before work begins: a performance bond protecting the government if the contractor defaults, and a payment bond protecting the subcontractors and suppliers the contractor doesn't pay. Under the FAR's standard requirement, each bond is set at 100% of the contract price.

Between $35,000 and $150,000, the contracting officer instead selects alternative payment protections — options include a payment bond, an irrevocable letter of credit, or escrow — so smaller jobs aren't automatically bond-free either.

Bid guarantees

When a performance bond (or performance and payment bonds) will be required, the solicitation will generally also require a bid guarantee — usually a bid bond. Under FAR 28.101-2 the amount is at least 20% of the bid price, capped at $3 million. Showing up at bid opening without the bid guarantee in proper form is grounds for rejection, no matter how good your number is.

The mechanics matter: the bid bond commits your surety that you'll execute the contract and furnish the final bonds if you win. The required percentages and forms are stated in the solicitation — and they're among the fields JobsiteBids extracts from every parsed packet, so you know the bonding picture before you open a PDF.

Why subs should love the payment bond

There are no mechanic's liens against federal property — the payment bond replaces them. If a prime doesn't pay you for work on a Miller Act job, you can make a claim against the payment bond: first-tier subs can sue on the bond directly, and the statute sets the clock — you may bring the action 90 days after you last furnished labor or materials, and no later than one year after that date.

Practical discipline follows from those dates: keep delivery and labor records that establish your "last furnished" date, send notice early when payment slips, and get a copy of the payment bond at subcontract signing (you're entitled to ask).

Getting bonded as a growing shop

Surety credit runs on financials: CPA-prepared statements, working capital, a banking relationship, and a track record of completed work. Start the surety relationship before the job you need it for, and ask about the SBA's Surety Bond Guarantee program — it backs sureties writing bonds for small contractors that don't yet qualify on their own paper.

Bonding capacity is also a bid/no-bid filter: a job whose contract value exceeds your single-job limit isn't your job yet, no matter how well it scores on everything else. It's one of the five qualifying signals worth checking before the spec book.

Not legal advice

Thresholds and percentages here reflect the statute and FAR as of June 2026 and are stated for orientation, not reliance — your solicitation's own bonding provisions control, and a construction attorney or surety professional is the right reader for edge cases.