CSLB Law & Business ExamPublic WorksMedium
A contractor is bidding on a public works project for a school district. The bid specifications require a 10% bid bond. The contractor's total bid is $1,500,000. What is the maximum amount the bid bond can be for, according to California public works laws?
- A$1,500,000
- B$150,000
- CTypically, bid bonds are not required for projects under $2,000,000.
- DThe bid bond amount is at the discretion of the awarding body.
Show answer & explanationAnswer & explanation
Correct answer: B. $150,000
California public works law (Public Contract Code § 10166) generally limits the bid bond requirement to 10% of the bid amount. For a $1,500,000 bid, 10% is $150,000.
Why the other options are wrong
- A. A bid bond of 100% of the bid amount is not standard and would be excessive for a bid bond.
- C. Bid bonds are commonly required for public works projects, regardless of value, to ensure bid integrity.
- D. While specifics are set by the awarding body, the maximum percentage is legally capped.
Public Works Bid Bond Limit
In California public works, a bid bond is typically required to ensure the bidder will enter into the contract if awarded. The maximum amount required for a bid bond is generally 10% of the total bid amount.
- Ensures contractor will sign contract if awarded.
- Maximum 10% of bid amount.
- Protects awarding body from contractor default after award.
Memory trick: Ten percent is the bid bond's extent!