What type of bond guarantees a contractor will provide required performance and payment bonds if awarded the contract?

A bid bond serves as a guarantee that a contractor will enter into the contract at the price they submitted and will provide the necessary performance and payment bonds if they are awarded the contract. This type of bond is particularly important during the bidding process as it protects the project owner from potential losses if a contractor fails to follow through after winning the bid. Essentially, the bid bond assures the owner that the contractor has the financial backing to proceed with the project and adhere to contractual obligations.

The performance bond ensures that the contractor completes the project according to the contractual terms, and the payment bond guarantees that the contractor will pay their subcontractors and suppliers. However, neither the performance bond nor the payment bond is specifically tied to the bid phase; they are required once the contract is awarded. An insurance bond does not specifically ensure the provision of performance and payment bonds, so it would not apply in this context.