Tuesday, December 2, 2008

Sample Letter Releasing Bid Bond Obligation

When a contractor submits a bid bond on a public works project, the bond becomes a matter of public record and should not be returned to the contractor, even if the contractor requests it.

Instead, if you receive such a request, you may send a letter to the contractor notifying them that you are releasing them from the obligations of the bid bond.

Such a letter should only be sent after you have executed a contract with another bidder.
If you release the bid bond prior to contract execution, there is the possibility that the low bidder may, for some reason, not enter into a contract. In such an event, you may end up awarding the project to the bidder who requested the release of their bid bond. If they then fail to enter into a contract, and you have released their bid bond, you would not have any recourse against the bidder for failing to enter into a contract.

The following is sample language that could be used in a letter to a bidder requesting release of their bid bond:

Dear Contractor:

On ________, your firm submitted a Bid Bond along with your bid for the above-referenced project. The contract has since been awarded to another contractor and a contract has been executed. Per your request, this letter is your notice that we hereby release your firm and your bonding company from the obligations and liabilities of the Bid Bond. Because the Bid Bond is a matter of public record, as a matter of policy, we do not return Bid Bonds to contractors. Please let me know if you have any questions.

You may contact me at ( ) ______.


Public Agency Name

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