The short definition
A bid bond is a surety guarantee, issued by a bank or bonding company, that you submit alongside your bid. It guarantees that if you are awarded the contract you will honour your bid: sign on the terms you tendered and provide any performance bond required. If you walk away, the buyer can claim against the bond, typically to cover the cost of awarding to the next bidder. It is usually set as a fixed sum or a percentage of the bid value, valid for a stated period.