Question

Why is the contractor normally required to submit a bid bond when making a proposal to an owner on a competitively bid contract?

Answer 1

Answer:

It serves as a guarantee that the contractor who wins the bid will honor the terms of the bid after the contract is signed.

Explanation:

A bid bond is a type of construction bond that protects the obligee in a  construction bidding process.

A bid bond typically involves three parties:

The obligee; the owner or developer of the construction project under bid. The principal; the bidder or proposed contractor.

The surety; the agency that issues the bid bond to the principal example insurance company or bank.

A bid bond generally serves as a guarantee that the contractor who wins the bid will honor the terms of the bid after the contract is signed.