Guide

Bid and Performance Bonds for School Transportation

Many Massachusetts school transportation bids ask for a deposit with the bid or a surety bond after award, and a missed bond deadline can cost you a contract you've already won. The law doesn't set these requirements for transportation services; each district writes its own. Here is what the terms mean, what five Massachusetts invitations actually require, and how to be ready before you bid.

Bid deposits, performance bonds and payment bonds

A bid deposit, also called bid security or a bid bond, goes in with your bid. It protects the district if you win and then don't sign the contract or provide the performance bond: in that case you can lose it. It may be a check or a bond from a surety company, depending on what the invitation allows.

A performance bond comes after award. A surety company guarantees that you'll perform the contract, and if you abandon it, the surety answers for it. Salem's bond form, for example, commits the surety to act to complete the contract if the district asks.

A payment bond guarantees that a contractor pays its suppliers and subcontractors. It's standard in construction, but none of the five transportation invitations below asks for one.

The law leaves it to the district

Chapter 30B, the Uniform Procurement Act, decides how a district buys transportation, but it doesn't require a bid deposit or a performance bond for service contracts. Each invitation sets its own terms, so they vary widely, as the next section shows. Our Chapter 30B guide covers the rest of the process.

What five Massachusetts invitations require

Salem, regular and special education transportation, 2026 to 2029: no bid deposit. A performance bond from a surety qualified in Massachusetts for 100% of the first year's contract price, renewed each July 1. Before the third or a later year, the contractor can apply to have the bond reduced or waived if it performed all its duties in earlier years.
Nantucket Public Schools, 2026: bid security of $25,000 by certified, treasurer's or cashier's check. For the performance bond, one section asks for at least 50% of the contract price and others for 100% of the annual bid price, with a renewal bond due each September 15.
Franklin County, bid by the Franklin Regional Council of Governments for several districts, 2024 to 2029: a $10,000 bid deposit by surety bond or certified bank check, and a letter of intent from a bonding company with every bid. The performance bond is 10% of each year's contract price.
Andover Public Schools, special education transportation (2019): a performance bond for 100% of each year's bid price, renewed annually in advance.
Lowell Public Schools, Section 504 transportation, 2026: no bid deposit or bond requirement.

Deadlines, and what happens if you miss them

Bond deadlines run from the notice of award and are short. Nantucket's terms allow ten days to sign the contract and provide the bond, while its bid form says five business days; either way, a winner who misses the deadline can be passed over for the next lowest responsive and responsible bidder. Salem's invitation gives ten days. Franklin County's gives fifteen days, though one passage reads "fifteen (30) days", and it treats a missing bond as a default that forfeits the $10,000 bid deposit. Andover gives 20 calendar days and, if the bond doesn't arrive, withholds payments until it does or until the withheld amount reaches 25% of the coming year's contract, which then goes into escrow as performance security.

When an invitation states two different numbers, as Nantucket's and Franklin County's do, ask in writing before the question deadline. The district's answer usually comes as an addendum sent to every bidder.

Who pays for the bond

The premium is the contractor's cost. Nantucket's bid form says the premiums are paid by the contractor and included in the contract price, so they belong in your rates. Franklin County does it differently: bidders state the annual cost of the bond per $100,000 of contract, that cost is added to the contract, and it isn't used to decide who is the low bidder.

In all four contracts that require a performance bond, it renews every year, so budget the premium for each year of the term.

Getting bonded

A surety decides whether to bond you on your credit, your capacity to perform and your character, so expect to share financial statements. Franklin County asks every bidder for a certified financial statement and a credit reference, and both Franklin County and Andover tell bidders to verify their bonding capacity before they bid. Start with a surety agent well before bid day.

The federal Small Business Administration guarantees bid, performance and payment bonds issued by participating surety companies, which can help a small company get bonded. It covers contracts of up to $9 million that aren't federal. The SBA charges 0.6% of the contract price for a performance or payment bond guarantee and nothing for a bid bond guarantee, and you still have to meet the surety company's credit, capacity and character requirements. The SBA lists the surety agencies that offer its guaranteed bonds in each state.

Before you bid

Find the bond section of the invitation and note:

the bid deposit: amount, accepted forms, and when it's returned or forfeited;
the performance bond: percentage, and whether it's of one year's price or the whole contract;
the deadline after award, and the yearly renewal date;
whether the premium goes in your rates or is added to the contract separately;
whether your surety will write the bond, confirmed before bid day.

Sources

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