Guide

Bonding for your first federal construction job

Updated October 15, 2026

Which jobs need bonds

The federal Bonds statute, formerly known as the Miller Act, requires performance and payment bonds for any construction contract over $150,000, with narrow waivers such as work performed in a foreign country. [FAR 28.102-1, Bonds (Miller Act)] For construction contracts over $35,000 up to $150,000, the contracting officer picks two or more payment protections, such as a payment bond, an irrevocable letter of credit, a tripartite escrow agreement, or certificates of deposit, and you furnish one of them. [FAR 28.102-1, Bonds (Miller Act)] The statute also lets a contracting officer require a performance bond or other security in other cases, so read every solicitation for its bond section. [40 U.S.C. 3131, Bonds of contractors of public buildings or works]

How much the bonds must cover

Unless the contracting officer decides a lesser amount is enough, the performance bond must equal 100% of the original contract price, plus 100% of any later increase. The payment bond must also equal 100% of the original contract price unless the contracting officer finds in writing that this is impractical, and it can never be less than the performance bond. [FAR 28.102-2, Bond amounts required] The original contract price does not include options, except options exercised at the time of award. [FAR 28.102-2, Bond amounts required]

The bid guarantee

A contracting officer may not require a bid guarantee unless a performance bond, or a performance and payment bond, is also required. When those bonds are required, a bid guarantee is required too, unless the chief of the contracting office waives it. On construction contracts, only separate bid guarantees are acceptable. [FAR 28.101-1, Bid guarantees: policy on use] The bid guarantee must be at least 20% of the bid price and may not exceed $3 million. [FAR 28.101-2, Bid guarantee amount] In sealed bidding, failing to provide a required bid guarantee means the bid must be rejected, except in specific situations the FAR lists, such as when only one offer is received. [FAR 28.101-4, Noncompliance with bid guarantee requirements]

When the bonds are due

You must furnish all bonds or alternative payment protection before you receive a notice to proceed or are allowed to start work. [FAR 28.102-1, Bonds (Miller Act)] Line up your surety before you bid, not after you win.

Which sureties count

Corporate sureties on bonds for work in the United States must appear on the Department of the Treasury’s list of approved sureties, Treasury Department Circular 570. The bond amount should not exceed the surety’s underwriting limit in that list unless the excess is coinsured or reinsured. [FAR 28.202, Acceptability of corporate sureties] Treasury’s Bureau of the Fiscal Service publishes Circular 570 online. [Treasury Bureau of the Fiscal Service, Surety bonds and Circular 570]

Getting bonded as a small business

SBA guarantees bid, performance, and payment bonds issued by certain surety companies, which lets those sureties bond small businesses that might not meet other sureties’ criteria. To qualify, your business must be small under SBA size standards, the contract must be up to $14 million for federal work or $9 million for non-federal work, and you must meet the surety’s credit, capacity, and character requirements. You start by contacting an SBA-authorized surety agency. [SBA, Surety bonds] SBA charges a fee of 0.6% of the contract price on performance and payment bond guarantees, returns it if the bond is cancelled or not issued, and charges nothing for bid bond guarantees. [SBA, Surety bonds] For how bonds fit into your bid price, see our guide to pricing your first federal bid.

Why the payment bond matters to your subs and suppliers

The payment bond protects the people who supply labor and material on the job. Anyone who furnished labor or material and has not been paid in full within 90 days after their last work or delivery can bring a civil action on the payment bond. A supplier or sub that dealt only with your subcontractor must give you written notice within 90 days, and any action must be brought within one year after the last labor or material. [40 U.S.C. 3133, Rights of persons furnishing labor or material] When a payment bond has been furnished, the contracting officer must give a subcontractor or supplier who asks the surety’s name and address, the bond amount, or a copy of the bond. [FAR 28.106-6, Furnishing information] The same rules protect you when you work as a sub on someone else’s bonded federal job.

Common questions

Do I need a bond for a federal construction job under $150,000?

For construction contracts over $35,000 up to $150,000, the contracting officer picks two or more payment protections, such as a payment bond or an irrevocable letter of credit, and you furnish one. Performance and payment bonds are required above $150,000. [FAR 28.102-1, Bonds (Miller Act)]

How big does the bid bond have to be?

The contracting officer sets the amount, and it must be at least 20% of the bid price but not more than $3 million. [FAR 28.101-2, Bid guarantee amount]

What happens if I leave the bid bond out of a sealed bid?

The bid must be rejected, except in specific situations the FAR lists, such as when only one offer is received. [FAR 28.101-4, Noncompliance with bid guarantee requirements]

Does SBA charge for bond guarantees?

SBA charges 0.6% of the contract price for performance and payment bond guarantees and nothing for bid bond guarantees. The fee is returned if the bond is cancelled or not issued. [SBA, Surety bonds]

Can any insurance company write my federal bond?

No. Corporate sureties must appear on Treasury Department Circular 570, the list of companies approved to write federal bonds. [FAR 28.202, Acceptability of corporate sureties] [Treasury Bureau of the Fiscal Service, Surety bonds and Circular 570]

Sources

• FAR 28.102-1, Bonds (Miller Act)
• SBA, Surety bonds
• FAR 28.101-1, Bid guarantees: policy on use
• FAR 28.101-2, Bid guarantee amount
• FAR 28.102-2, Bond amounts required
• 40 U.S.C. 3131, Bonds of contractors of public buildings or works
• FAR 28.101-4, Noncompliance with bid guarantee requirements
• FAR 28.202, Acceptability of corporate sureties
• Treasury Bureau of the Fiscal Service, Surety bonds and Circular 570
• FAR 28.106-6, Furnishing information
• 40 U.S.C. 3133, Rights of persons furnishing labor or material

Checked against these sources on October 15, 2026. Rules change, so always read the current solicitation and regulation. This guide is general information, not legal advice.