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Montana Department of Transportation MDTCTP102072 Rev. 01/2021Electronic Bid BondMontana Department of Transportation ECCB PO Box 201001 Helena, Mt 596201001 Email: mdtcntplns mt.govProject Name:.
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Lieu FAQ
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A bid bond only covers the bid itself, ensuring that the contractor selected can follow through on the project while a performance bond only becomes necessary once a bid is won and a contract is awarded to the contractor.
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A bid bond provides assurance to GCs and owners that if a subcontractor does not complete their work, the surety company will complete the obligations as stipulated in the contract. Bid bonds are required on most federal projects because of the Miller Act, though other types of projects may require bid bonds as well.
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While a bid bond ensures the contract bid upon will be honored, a performance bond will ensure that the work will be completed. In a performance bond, the surety will pay for the cost of replacing the contractor that cannot complete the project.
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Bid security can be thought of as a kind of risk mitigation tool specifically for use in the construction industry. The bid bond is a form of bid security for the owner of the project.
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A bid bond is a legal agreement that ensures contractors fulfill their stated obligations on a project. This form of assurance provides both financial and legal recourse to the owner of the project. Bid bonds are usually submitted in conjunction with the project's contract.
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Typically a bid bond is 10% of the contract price, but that isn't mandatory. Some owners will ask for 5%, a fixed dollar amount or any amount they think is worthy. The idea behind the bid bond is that the owner can recover the difference between low and second lowest bidder, and it provides a prequalification function.
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The bid bond guarantees the developer that if the principle is awarded the job, he or she will fulfill the terms of the contract including obtaining any other bond requirements such as a performance bond and a payment bond.
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The bid security is essentially saying that if the contractor is low and awarded the project, they will enter into the contract at the price represented in the bid. Bid security ensure they will provide Payment & Performance bonds that guarantee the contract.
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