Anyone here work with bid bonds?
 

My company is wanting to submit a proposal for a project, and the client wants a bid bond. In 20+ years of business, I've never seen a bid bond requirement in my industry.

How does it work? They apparently want us to provide a check with our proposal (or pay for a surety bond, which is silly in this case). But they don't cash the check, right? Or do they? If I win the project do they take the money? And if I'm paying for a cashier's check, then what happens if I don't win the project? The cashier's check is basically cash, so now do I have to do something to claw the money back?

It's a small project, and I don't feel a need to pay for a surety bond, but it seems like giving them a cashier's check to hold is going to be a royal pain in the keester. They specifically say that they won't accept a company check.

I work in municipal government where we have bids and these contracts require Bid Bonds.
Bid Bond checks are not usually cashed. It is security that you will maintain your bid.
A bid bond is typically obtained through a surety agency, such as an insurance company. It helps guarantee that a contractor, (your company), is financially stable and has the necessary resources to take on a project.

I recommend the cashiers check for your small project. Yes a pain in the ass but cheaper and quicker

Sounds similar to a deposit for bidding on foreclosed properties...

I’ve submitted bid bonds on bigger projects.

City, state, etc. are required to hold open bids for funded projects. Bid bonds are no big deal, it’s just a way for them to screen the pretenders.

They will hold the check, and if they cash it you have recourse (unless it’s in the contract) to charge them interest for the funds.

Won’t happen, though, unless you attempt to screw them over.

Cool, thanks for the lessons everyone. It seems like it should be the way you describe, but I couldn't find anything that confirmed it.

I don't do these things very often, but isn't a cashier's check a cash equivalent? As in, I would need them to send the check back or I'm out $1,000? Maybe they've got foolproof systems in place, but that's just a little scary to me. I'd rather send something that just gets used if needed, but they won't take a company check.

It still seems better than going through a surety company, though. I'm reading that they'll charge 1 to 4 percent of the contract amount, and even though it's not a ton of money it seems like it's just wasted money to pay for that.