Bid security

Bid security (also called a bid deposit or bid guarantee) is money or a bond a bidder attaches to a tender to prove commitment: if the winning bidder refuses to sign the contract, the buyer keeps it.

What counts as bid security

Canadian buyers typically accept three forms: a bid bond from a licensed surety company (usually 10% of the bid price), a certified cheque, or an irrevocable letter of guarantee. A related document, the consent of surety (agreement to bond), is a surety company's promise to issue the performance bond if you win — many tenders require it alongside the bid bond itself.

When it is released

Bid security is returned to unsuccessful bidders once the contract is awarded and signed, and to the winner once the contract is signed and performance security (usually a 50% performance bond) is delivered. If the winning bidder walks away, the buyer normally cashes the security and may also bar the bidder from future tenders.

Common questions

How much does a bid bond cost?

Surety companies typically charge a small annual premium (often under 1–3% of the bond amount) against a bonding line established for the contractor. First-time bidders may need to apply for a bonding capacity with a surety broker, which takes days — start before the tender closes, not the closing afternoon.

Can I bid without bid security?

No — if the tender lists bid security as mandatory, a bid without it (or with the wrong amount or expiry) is usually declared non-compliant and is not evaluated, regardless of price.

Is bid security the same as performance security?

No. Bid security protects the bidding process; performance security (performance bond, labour and material payment bond) protects contract execution after award. See the bid bond vs performance bond comparison.

Related definitions

ITT vs RFT · Tender notice · Contract award notice · Standing offer