The Top 10 Things Public Owners Should Know About Surety Bonds

Surety bonds on a public construction project offer an owner the best possible fiscal and risk management tool: (1) thorough prequalification of the contractor and assurance that the bonded contractor is qualified to perform the contracted obligation; (2) a guarantee that the contract will be completed if the contractor defaults on its performance obligation; and (3) payment of certain laborers and suppliers if the contractor fails to pay for work performed or materials supplied.

Surety bonds on public works projects protect the public treasury from the potentially devastating expense of contractor failure by transferring the burden of construction risk from the public owner to the surety company.