Your reputation is the real collateral. The bond just makes it official.
The guarantee that the job gets finished
When an owner hands a contractor a project, a performance bond is the financial guarantee that the work will actually be completed to the contract’s terms. If the contractor defaults, the surety must step in — financing the original contractor, arranging a replacement, or paying the owner’s loss up to the bond amount. On federal and most public work it is not optional; it is the law.
What a performance bond guarantees
A performance bond protects the owner (the obligee) against a contractor who fails to complete the project per the plans, specifications, and contract terms. On a default, the surety chooses the remedy: fund the existing contractor to finish, tender a completion contractor, or pay the owner up to the penal sum (usually 100% of the contract price). It is paired almost always with a payment bond — performance guarantees the job is finished, payment guarantees everyone who worked on it gets paid.
The Miller Act and Little Miller Acts
On federal construction contracts, the Miller Act (40 U.S.C. §§ 3131–3134) requires performance and payment bonds — the statute triggers at contracts over $100,000, and federal acquisition rules require full bonds on construction over $150,000 (with alternative payment protections between $35,000 and $150,000). Every state has a “Little Miller Act” imposing similar bonding on state and local public work, but the dollar thresholds and percentages vary by state — we confirm the rule for your jurisdiction.
What a performance bond costs
Premium is a percentage of the contract amount, commonly around 1%–3% for well-qualified contractors (often quoted together with the payment bond). Rates are tiered and decline as contract size rises, and strong credit and audited financials earn the lowest rates. The premium is a legitimate, reimbursable project cost most contractors build into the bid. Underwriting looks at the “three C’s”: capital, capacity, and character.
Frequently Asked Questions
How much does a performance bond cost?
Premium is typically about 1%–3% of the contract price for well-qualified contractors, usually bundled with the payment bond. Rates decline as the contract gets larger, and strong financials and credit earn the best pricing. It’s a reimbursable cost you can build into your bid.
Is a performance bond required?
On federal construction it’s required by the Miller Act (over $100,000 by statute; full bonds over $150,000 under federal acquisition rules), and most state and local public work requires it under a state Little Miller Act. Many private owners and lenders require it too.
What happens if the contractor defaults?
The surety must remedy the default up to the bond amount — by financing the original contractor to finish, arranging a completion contractor, or paying the owner’s loss. The contractor remains obligated to reimburse the surety.
What’s the difference between a performance bond and a payment bond?
A performance bond guarantees the project is completed and protects the owner. A payment bond guarantees subcontractors and suppliers get paid. They’re almost always issued together on public and larger private work.
How do I get a performance bond through Cory Washington & Co.?
Request a quote or contact our team. We confirm your exact requirement, market your bond across multiple surety companies that compete for it, and handle the filing. Cory Washington & Co. LLC is licensed in all 50 states.
All surety bond descriptions on this website are provided by Cory Washington & Co. LLC strictly for general informational purposes. They are not intended to be, and should not be relied upon as, legal, financial, or bonding advice. Surety bonds are not insurance. Bond requirements — including amounts, obligees, and bond forms — are set by government authorities and other obligees and change over time; the information presented is general in nature and does not guarantee the availability, terms, conditions, or amount of any bond. Actual bond terms are governed by the bond form issued by the surety and the requirements of the obligee, and any bond remains subject to underwriting approval. Nothing on this website creates or implies an agent-client relationship, binds a surety, or issues a bond. Cory Washington & Co. LLC expressly disclaims any liability for actions taken, or not taken, based on the content provided here. For advice regarding your particular situation, please confirm current requirements with the relevant authority and consult directly with a licensed professional at Cory Washington & Co. LLC.