FAQ - Bonds/Insurance
When issuing a bid, when do I need to include a bid bond?
Answer: Bid bonds are security posted by a bidder, at the time of their bid submission to ensure performance in accordance with a bid (in other words, the bidder’s commitment to execute a contract). This bond is often required of contractors bidding on construction work or very large purchase contracts to ensure that the successful bidder will accept the job/contract and will also provide a performance bond. Bid bonds can be in the form of a bond (issued by a surety company) or in the form of a certified check.
For purposes of agency purchases under General Letter #71, bid bonds are usually not required or requested as the purchasing dollar thresholds or scope of work are typically not of a significant amount (under $50,000).
When issuing a bid, when do I need to include a performance bond?
Answer: A performance/surety bond is a bond in which a surety (insurance company) agrees to assume responsibility for the performance of an obligation of another (contractor) in the event of contract default. These bonds are intended to cover the actual work/services the contractor has obligated himself to through the contract; these too are also used for construction work and/or very large purchase contracts.
For purposes of agency purchases under General Letter #71, performance bonds are usually not required or requested as the purchasing dollar thresholds or scope of work are typically not of a significant amount.
When issuing a bid, when do I need to request an insurance certificate?
Answer: Insurance Certificates – All contractors providing
certain services to the state (i.e., construction and service contracts, tenants and facility use contracts, concessionaires and professional service contracts) should be required to maintain reasonable insurance coverage and provide written proof of this protection. This insurance becomes especially important when the contractor has agreed to defend and indemnify the State. The State Insurance and Risk Management Board (SIRMB) provides insurance guidelines for contracts. The insurance required in the various state contracts will vary and will depend on the nature of the work being performed and the resulting exposures. SIRMB can train agencies on insurance certificate review and monitoring procedures.