What is the primary purpose of a bid bond?

The primary purpose of a bid bond is to guarantee that a contract will be signed by the contractor, should their bid be selected. This bond acts as a form of security for the project owner, ensuring that the contractor is financially committed and will honor their bid by entering into the contract for the project at the proposed price. If the contractor fails to sign the contract after winning the bid, the bond can be forfeited, providing the project owner with some financial recourse.

In contrast to the other options, a bid bond does not primarily serve to ensure payment to subcontractors, cover project overruns, or guarantee the quality of work. While payment and quality assurance are important aspects of a construction project, those concerns are typically addressed through other types of bonds such as payment bonds or performance bonds. A bid bond specifically focuses on the obligation to enter into a contract, reflecting its role in the bidding process.