Construction solicitations commonly ask for bonds and insurance that service or product contracts never mention, and getting caught unprepared for either can end your bid before price ever matters. Three kinds of bonds show up most often, and each protects a different party.
The three bonds
A bid bond guarantees that if you win, you will actually sign the contract at the price you bid, and it is typically a percentage of your bid price, posted with the offer itself. Walk away after winning and the bond covers the government's cost of re-competing. A performance bond guarantees the job gets finished: if your company defaults partway through, the surety steps in to cover completion, so the government is not left with a half-built project and no recourse. A payment bond guarantees your subcontractors and suppliers actually get paid. This one exists because a contractor cannot place a lien on federal property the way they could on private property, so the payment bond is the substitute protection Congress built for the people working underneath the prime. Bond premiums are a real cost too, and they belong in your price, not treated as an afterthought once you have already bid.
The Miller Act shape
Federal construction contracts above a dollar threshold generally require performance and payment bonds under the Miller Act, a rule that has applied in some form for decades. The exact threshold is adjusted periodically, so check the current figure on the solicitation and with acquisition.gov rather than assume last year's number still applies. Smaller construction buys can carry lighter bonding requirements, but do not assume a lower dollar value means no bonding at all. Read what the specific solicitation requires.
How a surety decides your capacity
A surety is not selling you a product off a shelf. It is underwriting your company's ability to finish the work, closer to how a lender evaluates a loan than how an insurer prices a policy. Expect a surety to look at your financial statements, your work in progress on other jobs, your bonding history, and your available equipment and workforce, before deciding how large a bond it is willing to write for you. That decision effectively sets a ceiling on how large a job you can pursue, independent of whether you have the crew and skill to actually do the work. A strong contractor with no bonding capacity cannot bid a bonded job until that capacity exists.
The SBA surety bond guarantee program
For businesses that cannot get bonded commercially at the size they need, or at all, the SBA runs a surety bond guarantee program that backs a portion of the surety's risk, making sureties more willing to write bonds for newer or smaller contractors without a long bonding track record. It is worth exploring specifically if commercial sureties have turned you down or quoted capacity well below what you need. Start with the SBA's surety bond program page to see current eligibility and how to find a participating surety.
Start before you need it
The single biggest mistake is treating bonding as a step you take once a specific bid is due. Sureties want a relationship and a track record, the same way a bank does, and a company that shows up asking for a large bond the week before a deadline, with no prior contact, no financials on file, and no history, is a hard sell no matter how capable the company actually is. A surety's underwriting and a lender's underwriting often lean on the same financial statements, so if working capital feels like the real constraint behind your bonding capacity, see financing a contract you have won. Open a conversation with a bonding agent or surety before you need the first bond, and treat your required insurance, general liability and workers' compensation at minimum, the same way: get quotes with enough lead time that a slow underwriter does not become your bid's deadline problem.