What is the term for a cashier's check or surety bond with the proposal submitted by the bidder to guarantee that the bidder will enter into the contract?

What is the term for a cashier's check or surety bond with the proposal submitted by the bidder to guarantee that the bidder will enter into the contract?

• A. PROPOSAL
• B. PROPOSAL BOND
• C. PERFORMANCE BOND
• D. BID BOND

Answer: (B)

This is about bid security attached to a submitted bid. A proposal bond (often called a bid bond) is a cash or surety guarantee included with the bid to ensure the bidder is serious about entering into a contract if awarded. If the bidder declines to sign the contract after being selected, the bond can be forfeited to the owner to cover the costs of re-bidding or the difference in price to obtain another bidder. The idea is to deter frivolous or non-committal bids and protect the project owner from delays and extra expenses. After the contract is awarded, the successful bidder typically provides performance and payment bonds to guarantee execution of the work, but those bonds are separate from the initial proposal security. In short, the proposal bond secures the bidder’s commitment to enter into the contract based on the proposal submitted.

This is about bid security attached to a submitted bid. A proposal bond (often called a bid bond) is a cash or surety guarantee included with the bid to ensure the bidder is serious about entering into a contract if awarded. If the bidder declines to sign the contract after being selected, the bond can be forfeited to the owner to cover the costs of re-bidding or the difference in price to obtain another bidder. The idea is to deter frivolous or non-committal bids and protect the project owner from delays and extra expenses.

After the contract is awarded, the successful bidder typically provides performance and payment bonds to guarantee execution of the work, but those bonds are separate from the initial proposal security. In short, the proposal bond secures the bidder’s commitment to enter into the contract based on the proposal submitted.