Kentucky Construction Bidding Process

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Surety Bond Professionals is a family-owned and operated bonding agency with over 75 years of experience. With access to a broad range of surety markets, our expert agents are ready to assist with all of your construction bond needs.

What is the Bid Process in Construction?

The construction bidding process involves five steps: bid solicitation, bid submission, bid selection, contract formation, and project delivery. For a contractor in Kentucky to achieve success in the construction bidding process, you need to plan and improve in each of these areas.

If you’re a new contractor or are looking to secure more bids more often, follow our guide below.

What Should a Construction Bid Include?

Successful construction bids generally contain the total cost of building the structure, including expenses for subcontractors, general contractors’ costs, overhead profit, and scope of work. A bid will also need to contain information such as company details, the date, a clear definition of the work, and a project name. Without all of these elements combined, you may not meet the necessary standards.

How Do You Estimate a Construction Bid?

An accurate estimate is not only vital for winning a bid, but it can also determine which Kentucky Construction bonds you may need. A professional estimate will include:

Direct costs: This includes materials, labor, and equipment expenses tied directly to construction activities.
Indirect costs: Consider costs that don’t involve direct construction work, like permits, utilities, security, quality control, administration, and legal fees.
Labor hours: Wages paid to construction teams should be factored in, including potential overtime.
Subcontractor expenses: Don’t forget to calculate costs associated with hiring subcontractors for specialized tasks like plumbing, electrical work, or HVAC installation.

What Are the Five Steps in the Process of Bidding?

Bid Solicitation: This is when the project owner or general contractor invites contractors to submit bids.
Bid Submission: Contractors prepare and submit their bids with all necessary details, such as pricing, scope of work, and deadlines.
Bid Selection: The owner of the project will look over bids, including the contractor’s costs, qualifications, and the scope of work suggested. Based on this information, they will choose a bid they believe is best.
Contract Formation: Once the project owner chooses a bid, they will set up a contract with the winning contractor.
Project Delivery: At this phase, the contractor will begin work on the project and secure any further surety bonds they may need.

What Licenses and Bonds Do You Need for Kentucky Construction Bidding?

Kentucky does not issue a single, statewide general‑contractor license. Instead, most builders are regulated at the city or county level, while contractors in key specialty trades—such as electrical, plumbing, and HVAC—must be licensed by the Department of Housing, Buildings, and Construction.

Highway and bridge projects are handled separately. To bid on work for the Kentucky Transportation Cabinet (KYTC), contractors must file a pre‑qualification package (Form TC 14‑1) each year and obtain a Certificate of Eligibility, which limits both work types and maximum dollar volume before an Authorization to Bid is issued.

Any firm doing business with the Commonwealth must also register with the Kentucky Secretary of State and complete the Kentucky Tax Registration Application via the Business One Stop portal (or MyTaxes.ky.gov) to secure state tax account numbers before contracts can be awarded.

Kentucky’s Model Procurement Code requires that every competitive sealed bid for construction include bid security—typically a bid bond—equal to at least 5% of the bid amount. The security is forfeited if the low bidder declines to execute the contract.

Once a contract is awarded, the state’s Little Miller Act mandates performance and payment bonds on construction contracts over $100,000, each for 100% of the contract price, to protect the owner as well as subcontractors, suppliers, and laborers.

Because these bonds directly affect bid competitiveness, working with a knowledgeable surety agency such as Surety Bond Professionals can help Kentucky contractors secure the required bid, performance, and payment bonds quickly and at the most favorable rates.

Common Mistakes Made While Bidding

Even a well-prepared contractor can be rejected for a bid. Some common reasons this might happen are:

Incomplete documentation, such as proof of bonds and licenses.
Inaccurate cost estimates, where your estimate is much higher or lower than average.
Lack of experience, unproven track record.
Simple mistakes, like not following the guidelines for the bid strictly or missing paperwork.
Ambitious timelines, if your proposed timeline does not align with the average timelines submitted you may face rejection.

State vs. Federal Bids?

Understanding the difference between state and federal bids can help you stay compliant when you submit your bid.

Topic	State	Federal
Procurement Laws and Regulations	State-specific procurement laws and regulations, varying by state.	Must comply with the Federal Acquisition Regulation, which is stricter and more rigorous.
Bonding Requirements	Often need state licensing and bonds like bid bonds and performance bonds.	Also needs bonds but is often required from a federally approved surety company.
Project Scope	Projects can range from small repairs to large public works in a specific area.	Contracts can be large-scale, spanning multiple states.
Set-Aside Programs	Some states have set-aside programs for small businesses, minority-owned, or veteran-owned businesses, but this varies.	The federal government has many set-aside programs for small businesses, veteran-owned, women-owned, and disadvantaged businesses through programs like 8(a) or HUBZone.
Competition	Often limited to nearby areas, reducing competition.	Open to contractors nationwide, increasing competition and opportunities.

Unique Aspects of the Kentucky Construction Bidding Process

State-level credentials and business registration. Kentucky does not issue a single, statewide general contractor license. Instead, licensing is handled at the local level by city or county governments. However, certain specialty trades—such as electrical, plumbing, and HVAC—are licensed at the state level by the Department of Housing, Buildings, and Construction. Contractors who sell taxable materials or services must also register for a Kentucky Business Tax (IBT) number with the Department of Revenue to collect and remit sales and use tax.
Contractor Prequalification for Public Works: To bid on highway or bridge work in Kentucky, contractors must be prequalified by the Kentucky Transportation Cabinet (KYTC) and obtain a Certificate of Eligibility. This certification determines which types of work and contract sizes a contractor is eligible to bid on. It must be renewed annually before receiving an Authorization to Bid.
Building Codes and Plan Review: Kentucky is a home rule state, meaning local jurisdictions adopt and enforce their own building codes, often based on the International Building Code (IBC) and International Residential Code (IRC). For state-funded vertical construction, the Kentucky Finance and Administration Cabinet oversees compliance. The 2021 Kentucky Energy Conservation Code, based on the IECC with state amendments, took effect January 1, 2024. Additional local requirements may apply in regions prone to severe weather events, such as tornadoes.
Environmental and Water Permits: Construction sites disturbing one acre or more must file a Notice of Intent (NOI) and comply with the Kentucky General Permit for Stormwater Discharges from Construction Activities. Work in floodplains, streams, or wetlands may require additional permits from the Kentucky Division of Water and coordination with the U.S. Army Corps of Engineers. Projects that affect protected species or sensitive habitats may be subject to environmental review under state and federal regulations.
Insurance Requirements: Under the Kentucky Workers’ Compensation Act, any employer with one or more employees must carry workers’ compensation insurance—there is no minimum-hour exemption. While general liability insurance is not mandated statewide, it is commonly required by local permitting agencies, public project owners, and lenders. As such, maintaining adequate liability coverage is essential for prequalification and bid acceptance on most construction contracts.
Public Bidding and Bonding Thresholds: The Kentucky Model Procurement Code requires competitive sealed bidding for construction contracts over $100,000. Bidders must typically submit a bid bond equal to 5%–10% of the bid amount. Upon contract award, performance and payment bonds—each equal to 100% of the contract price—are required under the Public Construction Bond Act. As of January 1, 2024, through January 1, 2029, the bond threshold has been temporarily raised from $50,000 to $150,000. However, public entities may still require bonding below that amount at their discretion.

Kentucky Bid Network

Contractors and suppliers seeking Commonwealth work monitor two primary sources:

eProcurement / Vendor Self Service (VSS). Operated by the Finance & Administration Cabinet, VSS is Kentucky’s 24-hour, 7-day portal for vendor registration, browsing current and archived solicitations, viewing bid tabs and awards, and submitting electronic responses when permitted. Open, closed, and awarded documents for goods, services, and non-highway construction are searchable from a single dashboard. Maintaining an active VSS profile keeps firms in the email alert loop for new opportunities.
Kentucky Transportation Cabinet (KYTC) Construction Procurement. Road, bridge, and maintenance lettings—including tentative schedules, bulletins, bid results, and award memos—are posted on KYTC’s dedicated site and require separate highway contractor prequalification.

All solicitations—Invitations for Bid (IFBs), Requests for Proposals (RFPs), Requests for Qualifications (RFQs), and Requests for Information (RFIs)—must follow the Kentucky Model Procurement Code (KRS 45A), which mandates public notice, sets advertising lead times, and prescribes competitive sealed bidding as the default method (competitive negotiation is allowed when sealed bidding is impracticable).

Because VSS and KYTC’s bulletins are purpose-built for government-to-business (G2B) and business-to-business (B2B) transactions, they do not support consumer sales. By registering in VSS (linked to the Commonwealth’s eMARS system) and keeping company data current, vendors gain full visibility into statewide contracting and receive automated notifications whenever new opportunities match their commodity codes.

Succeed in the Kentucky Construction Bidding Process

To succeed in the Kentucky construction bidding process, you need accurate estimates and documentation as well as a solid grasp of the requirements and nuances of state vs federal bids. However, one of the most important components of your bid is securing the right surety bonds, such as bid bonds, performance bonds, and payment bonds.

When you choose a reliable surety bond agency, you can feel confident that your bond will meet all legal and regulatory requirements. At Surety Bond Professionals, we know the challenges you may face and are here to support you with all your bond needs. Contact us today for a quote.