Which bond might be required to participate in public bidding?

A bid bond is often required in public bidding to ensure that the contractor who wins the bid will uphold their commitment to execute the project as per the terms and conditions set out in the bid. When a contractor submits a bid, the bid bond provides a guarantee to the project owner that the bidder will enter into the contract if selected and will provide any necessary performance and payment bonds required for the project.

If the winning bidder fails to honor their bid, the bid bond compensates the project owner for the difference in cost between the winning bid and the next lowest bid, which helps protect the owner from financial losses associated with the bid process. This mechanism encourages serious bidding and protects public resources and funds.

In contrast, other types of bonds serve different purposes. A performance bond ensures that a contractor completes a project as per the contract's specifications, while a license bond guarantees that a business complies with legal obligations tied to its professional license. A commercial bond is a more general type of bond that may cover various business activities but is not specific to the bidding process.