Bid vs. Performance vs. Payment — What Each Actually Does
A bid bond (typically 5-10% of the bid amount) guarantees that if you win the job you will actually enter the contract and post the performance bond. If you back out, the surety pays the owner the difference between your bid and the next lowest bidder. A performance bond (typically 100% of contract value) guarantees you will complete the work per contract. If you default, the surety either completes the job with a substitute contractor or pays damages up to the bond amount. A payment bond (also 100%) guarantees that subs and material suppliers get paid — critical because a lien from an unpaid sub on a bonded public job can wipe out your entire receivable. All three are usually written on a single package by the same surety.
Underwriting the Contractor, Not the Bond
Surety companies underwrite the contractor’s financial capacity, character, and completed-work history — not the individual bond. Getting bonded means qualifying for a bond program with a fixed single-job limit (say $500K) and an aggregate limit (say $2M across all jobs). We assemble the underwriting package: last three years of CPA-reviewed financial statements, work-in-progress schedules, aging schedules on receivables, personal financial statements from owners, and references from GCs. First-time contractors often qualify for programs up to $250K single/$500K aggregate on personal indemnity alone — no financial statement required. We know which surety programs match your specific stage and structure the application to maximize approval.
Missouri Public Works Bond Requirements
Missouri Section 107.170 and 107.180 require payment and performance bonds on public works projects exceeding $25,000 (state) or $50,000 (municipal), varying by jurisdiction. MoDOT prequalification is a separate process for state highway work. Cities like St. Louis, Kansas City, and Springfield have their own registered-contractor requirements layered on top of bond requirements. dealoutlaws.com handles bond issuance, MoDOT prequalification support, and city registration paperwork on the same file — one point of contact for every contractor administrative task.
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