Third-party companies (contractors) that provide services to school districts are often required to post bid and performance bonds.
Bus routes are a great example. Before a school bus service provider has a project in hand, they must first bid on the desired job. There are many bid submittal items, but one that is often overlooked is the bid bond.
What is a bid bond for a school bus company?
A bid bond helps prequalify bidders. When a school district is looking through bid packages, a bid bond is important for applicants to have. It ensures the school district that the contractor can post a performance bond if they’re the low bidder.
To qualify for a bid bond, you’ll need to provide the following items:
- Corporate financial statements
- Personal financial statements on the owner
- Additional information on the company and the project itself
What is a performance bond for a bus company?
Performance bonds ensure the performance of the underlying contract. There are three parties in the surety bond.
- Principal (bus company)
- Obligee (the school district)
- Surety bond company
Every party involved is essential in a school bus bond contract. The surety bond company guarantees the performance of the bus company for the length of the contract.
How much do bid bonds and performance bonds cost?
The cost for these bonds ranges from 1-3% of the bond amount required and depends on the applicant’s financial qualifications.
School bus route bonds can be tricky, so ensure you’re working with a trusted surety professional like ZipBonds.