Oregon Bid Bonds

Oregon Bid Bonds

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 bid bond needs.

What Are Oregon Bid Bonds?

The purpose of an Oregon bid bond is to protect the contracting authority or private project owner against financial harm caused by a contractor who:

  • Submits an inaccurate bid,
  • Does not have the capacity to purchase the necessary performance and payment bonds if awarded the contract, or
  • Does not accept the job if chosen as the winning bidder. 

In purchasing an Oregon bid bond, a contractor guarantees that none of these will occur. If the contractor (known as the bond’s “principal”) fails to honor that guarantee, resulting in monetary damages for the project owner (the bond’s “obligee”), the injured party can file a claim against the bond and be compensated for the loss. 

Project owners also have found that the bid bond requirement helps prevent frivolous bids. 

Who Needs Them?

Oregon state agencies trying to select a contractor through competitive bidding may require a bid bond from each bidder. The same is true for municipal contracting authorities and increasingly for private construction project owners as well. When the obligee is the state of Oregon or one of its agencies, the required bond amount is 10% of the bid price.

How Do Oregon Bid Bonds Work?

There is a third party to an Oregon surety bond in addition to the obligee and the principal. This is the “surety,” the bond’s guarantor. Although the principal is legally obligated to pay a valid claim, the surety has guaranteed its payment.  So the surety pays the claimant directly. That payment is an extension of credit to the principal, who must then repay that debt to the surety or risk the surety taking legal action to recover the funds.

How Much Do They Cost?

There are a number of factors that can affect the cost of a bid bond, including the contractor's credit history and the size and complexity of the project but they are typically between 5-10% of the total bid amount. At Surety Bond Professionals, we offer bid bonds without charge to our clients. However, there is a requirement that if the contractor is awarded the contract, they must purchase performance and payment bonds through the surety to move forward with the project.

When underwriting smaller contracts and businesses in Oregon, the primary consideration is the contractor's personal credit history. For larger projects, the underwriters may also consider the project's location, the contractor's stability and creditworthiness, and other factors.

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