What is a bid bond used for in the procurement process?

A bid bond serves a specific purpose in the procurement process. It acts as a financial guarantee that the bidder will enter into a contract if they are awarded the bid. This commitment is crucial because it provides assurance to the project owner that bidders are serious and financially capable of undertaking the contract. If a bidder fails to sign the contract after being awarded the bid, the project owner can claim the bond, which compensates them for the costs associated with the bid process and the need to select another contractor.

The role of a bid bond is distinct from other types of bonds or guarantees, such as performance bonds, which ensure project completion, or payment bonds, which secure payment to subcontractors. Therefore, emphasizing the promise made by the bidder to accept the contract if awarded clarifies why this choice is the correct answer in the context of bid bonds.