Question on bonding for government..

I have been in business since 1993 and I have never had to have a bond....I have never did work for local government of any kind.

I have a county jail I am wanting to bid for roof replacement. This is gonna be a big job, lets guess around $200,000. In order to bid it I have to pay $50 non refundable fee for prints and specs at the pre-bid meeting. This is only to see if I am interested in the job.

Then to bid it I have to have a certified check or 10% surety bond of total amount. Then after all that I have to have a performance bond of 100% of bid.

Now here is my first question.......I know I lose $50 regardless. Now let's say I pay the $50 and bid the job, how much will a 10% surety bond cost me on 200K? How much for a performance bond?

Second question......And am I correct that if I don't win the bid I don't get my bond money back? So how much total could a guy lose and not even get this job??

More to follow......and Thanks guys!!

90% of our work is commercial for the State. I don't get invovled in bid bonds sureties etc, but as a project manager I do bid the jobs and manage them so am not unfamiliar with the bidding process. Here at least the lowest bid wins, by law. Paying attention to the specs and details and bringing ANY questions you have to the architect BEFORE the job is bid can only protect you and is something I have to do almost everytime. Many contractors just assume an architect knows what he is doing and I'm sure many do, but I've come accross more that a few that don't and whilst some will be receptive to suggestions and fixes some won't. Change orders are not a licence to print money when dealing with the state either, as it goes by the architect and state inspector who will quickly see if you are trying to fly one by. JSC is right in what he says too. We make decent money.

The red tape of bonded jobs turns a lot of your competitors away. That is exactly why you should pursue them.

There may be too much to do to get ready for this particular job because getting a bonding line takes some time and involves some preliminary work in itself ( submitting IT returns, financial statements, work on hand, etc) but get it ready for the next one.This process will also reveal what your bonding limit is.

BTW, I've never heard of a performance/payment bond being free. You pay a nominal annual fee for BID bonds, and if you get the job there is an additional premium for the actual performance and payment bond based upon the dollar amount of the contract.

Follow the plans and specs, addendums, etc. when bidding, and submit questions to the architect prior the bidding. To add in for a tearoff, for instance, when the P&S don't call for it will lose most every time. Play the change order game for such things.

Bonded work can be some of the most profitable. Many contractors are intimidated by the paperwork.

Thanks for the responses guys......guess I will pass on this. I just hated to let it slide by with work as hard to come by as it is.

They are not going to do this roof until Spring....but bids have to be in next week!

I know they have allowed up to $250,000 for this job to be completed.

It is no wonder government pays 4 times what they should pay to have a job done......all these costs kind of takes the affordable fish out of the lake. And to think.......they want to take care of our health :woohoo:

If you qualify for a performance bond, you can usually get the bid bond for free. If it is your first attempt at secureing a bond, you may have trouble with $200,000.00. I know that we could get $150,000.00 with no problem, but higher than that would take a bit of time. After you have had one, normally you can get another for 50% more total than the first and then 50% more than the second. It depends on you experience with the company.

Also, if you are working on a job with a performance bond, you will have a hard time getting another bond till the first job is completed. Pay attention to the details. You are personally responsible for ALL of the money the insurance company puts out if you fail. It is called "You bet hour house" That is normally what you put up as surety!

Make sure you read every page of the specs. Do they require you to pay rate. What is the rate for your field and area were the work is located at. What inspections are there and what about extras like unforeseen rot repair. Some of these jobs can be a bear with change orders and inspections. Did one and made money but it was a real hassle dealing with a white shirt that didn't have a clue about roofing. Example he wanted an expansion joint in my chimney flashing just like the SMACMA manual , The chimney was only 16 inches wide.

Look at the plans/specs at the bid office, to see if you have a good chance at it. Then resign yourself to the simple fact that it cost you 50 bucks just to bid it. Get together w/ a good bonding agent, but in order to not waste time, make sure you have the financial capability to do the project. That usually means you have sufficient capital and a worthwhile certified statement to present to the insurance company. If you dont , your just barking up the wrong tree, In years past, the fees for a bid/performance bond was 1%. At one time I even got it for 3/8%. About 5 years ago fees climbed to 3%. Just don t know what the costs are now. If you are not the successful bidder, your bid bond or cash will be returned to you. However, they can hold this up for at least 60 days usually, until the paper work is completed w/ the successful bidder. In lieu of a bid bond, you can put up a certified check or cash equivalent like municipal bonds. And if you are successful, you then have to obtain a performance bond, and when this is presented the bid funds will be returned. Good Luck.