In what scenarios are bid bonds commonly required?

Bid bonds are commonly required during the bidding process to ensure that bidders are serious and financially capable of fulfilling the terms of their proposal if awarded the contract. The primary function of a bid bond is to protect the project owner in the event that the winning bidder fails to proceed with the contract or does not provide the required performance bond after being awarded the project. By requiring a bid bond, owners can minimize the risk of financial loss due to non-performance and encourage responsible bidding practices.

In contrast, the other scenarios do not align with the purpose of bid bonds. For example, requiring bid bonds during the contract execution phase or once a project is completed would not serve the intended purpose of securing the bidding process itself. Similarly, while subcontractors may have their own bonding requirements, bid bonds specifically apply to the initial bidding stage, rather than the contracting or hiring phases.