Iowa Contractor Bid Bond

Iowa requires bid security equal to 5% of the bid amount for virtually all state and local public improvement contracts under competitive bidding. This can be submitted as a bid bond, cashier's check, certified check, or share draft. The 5% standard is established under Iowa Code §73A.20 and applies to projects exceeding the competitive bid threshold ($139,000 in 2025 for vertical improvements).

If you're awarded the contract but fail to sign it or provide the required performance and payment bonds, the project owner can retain your bid bond amount as liquidated damages. Under Iowa Code §73A.20, the full bond amount is forfeitable for non-performance. This protects the owner from having to re-bid the project and potentially pay higher costs to the next lowest bidder.

Yes. Once awarded the contract, Iowa's Little Miller Act (Iowa Code §573.2) requires a performance and payment bond at 100% of the contract price for public improvement projects of $25,000 or more. The bid bond only guarantees you'll enter into the contract; the performance and payment bonds guarantee you'll complete the work and pay subcontractors and suppliers. These must be issued by an Iowa-licensed surety company.