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 performance bond needs.
What Are Oklahoma Bid Bonds?
An Oklahoma bid bond serves as a contractor’s guarantee that:
- The bid submitted is complete and accurate,
- The contractor is qualified to purchase performance and payment bonds if awarded the job, and
- The contractor will accept the job and enter into a contract with the project owner if chosen as the winning bidder.
The purpose of an Oklahoma bid bond is to prevent the project owner (the bond’s “obligee”) from incurring unplanned costs if moving ahead with the winning bidder (the bond’s “principal”) turns out not to be an option. A principal who can’t deliver on the above guarantee is legally obligated to compensate the obligee for the resulting monetary damage.
Who Needs Them?
Oklahoma requires contractors submitting bids greater than $100,000 for state-funded projects to furnish a bid bond (or a certified check or cashier’s check) for 5% of the bid amount unless otherwise specified in the Solicitation for Bids.
How Do Oklahoma Bid Bonds Work?
The third party to an Oklahoma bid bond is the bond’s guarantor (known as the “surety”). Although it’s the principal that is legally obligated to pay a valid claim by the obligee, the surety guarantees that it will be paid. Toward that end, the surety agrees to extend credit to the principal to make sure the claim is paid. Going one step farther, the surety will pay the claim initially, then collect on that debt from the principal at a later date. A principal who does not repay the surety is likely to end up as the defendant in a lawsuit.
How Much Do They Cost?
The project owner, who is the obligee for the Oklahoma bid bond, determines the required bond amount. This usually amounts to 5% or 10% of the total bid amount.
Bid bonds are provided without charge at Surety Bond Professionals. These bonds are usually issued with the understanding that if awarded the contract, you will purchase P&P bonds through the surety to move forward with the project.
When underwriting smaller contracts and enterprises, the primary consideration is the contractor’s personal credit history. When it comes to larger projects, the underwriters of the assurance may further investigate the project’s location as well as the contractor’s stability and creditworthiness in order to find the final cost.
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