What is the cash bond requirement for contracts over $100,000?

In the context of public contracting, a cash bond is a financial guarantee that ensures a contractor fulfills their obligations as per the terms of the contract. When contracts exceed a certain monetary threshold, which in this case is $100,000, it is common for jurisdictions to require a bond percentage based on that contract amount.

Typically, a 25% bond is standard for contracts over $100,000. This percentage helps mitigate the risk involved for the municipal entity funding the project, ensuring that a significant portion of the contract value is secured. This requirement protects the municipality from potential losses due to non-completion of the contract or failure to meet the conditions set forth. By requiring a 25% cash bond, municipalities can ensure that there are sufficient funds available to cover any potential liabilities or costs associated with replacing a defaulting contractor.

In contrast, lower bond percentages, such as 10% or 20%, may not provide adequate financial security for high-value contracts, as they may not cover the full extent of potential risks. Therefore, a 25% bond is designed to offer a balance between risk management and the need for contractors to maintain liquidity while fulfilling their contractual responsibilities.