Business FinancesQuestion 629 of 1605
The primary purpose of a bid bond on a California public works project is to:
a.Ensure that subcontractors and suppliers are paid
b.Cover defects in workmanship for one year after completion
c.Guarantee that the project will be completed on time
d.Guarantee that, if the bidder is awarded the contract, it will execute the contract and furnish required performance and payment bonds; otherwise the surety pays the difference between the bid and the next acceptable bid, up to the bond amount
Explanation
A bid bond (typically 10% of the bid on public works under Public Contract Code §10221 for state contracts) protects the awarding body if the apparent low bidder refuses to execute the contract or post required bonds after award. The surety then pays the agency the lesser of the bond amount or the difference between the defaulting bid and the next acceptable bid. Completion is guaranteed by a performance bond; subcontractor/supplier payment is guaranteed by a payment bond under Civil Code §9550; workmanship warranties are contract-specific, not bond-specific.
Law Reference: Public Contract Code §10221Practice all 1605 questions free — no signup required.
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Reviewed by Abraham Chen — Licensed California General Contractor (CSLB License #1101856 — verify)