Bid deposit

A bid deposit is security a bidder attaches to a tender — most often a bid bond — guaranteeing that if the bid is accepted, the bidder will actually enter the contract and provide any required contract security. Walk away after winning, and the buyer cashes it.

What the federal rules say

Under the federal Government Contracts Regulations, bid security is defined as "a bid bond or a security deposit given by a person to His Majesty to guarantee entry into a contract if the contract is awarded" — which is the bid deposit in a nutshell. CanadaBuys' Buyer's Guide for federal buyers describes this as "offer financial security": it protects Canada against loss if an offeror fails to enter into a contract. Key rules buyers must follow: offerors have the right to choose the form of security they provide — surety bonds or security deposits such as government guaranteed bonds, bills of exchange, or irrevocable standby letters of credit; buyers must not require offer financial security for procurements valued at or below CAD 500,000; and if a winning bidder fails to provide the required contract security, the forfeited amount must not exceed the difference between the offer price and the value of the contract with Canada.

Forms you will actually see

For federal construction work, PSPC's standard bid bond form (PWGSC-TPSGC 504, published on canada.ca) is set at 10% of the total bid amount. On Ontario construction tenders published through CanadaBuys, notices routinely require a "bid deposit" of not less than 10% of the bid price in the form of a digital bid bond from a recognized surety company, often accompanied by a digital undertaking to bond (consent of surety). Provincial and municipal owners set their own requirements — always read the deposit section of the tender documents rather than assuming 10%.

When the deposit is at risk

A bid deposit is forfeited if the winning bidder refuses to sign or fails to deliver the required performance security within the required timeframe — capped, for federal offers, at the difference between the bid and the actual contract value. Because a compliant tender is irrevocable once submitted (the "Contract A" principle from the Supreme Court's Ron Engineering decision), the deposit is what makes that promise enforceable.

Common questions

Is a bid deposit the same as bid security?

Functionally yes — "bid deposit" is the common term for the bid security demanded by a tender. See our bid security definition for the mechanics.

Do all tenders require one?

No. Federal rules bar offer financial security on procurements valued at or below CAD 500,000, and many lower-value competitions skip it. If the tender does list it as mandatory, a bid without the correct deposit is usually non-compliant and not evaluated.

When do I get it back?

Unsuccessful bidders' security is returned after award; the winner's is released once the contract is signed and the required contract financial security is in place — federal buyers must not release it earlier.

Related definitions

Bid security · Bid bond vs performance bond · Consent of surety