Under the Miller Act, all bidders are required to submit bid bonds on a federal project. Many private firms decide to follow suit with this act to protect themselves during the bidding process. If you want your business to be a competitive contractor for government projects, you will likely need to have bid bonds and know the process since many states require Bid Bonds for all projects.
There are several ways you can meet the federal standards for bid bonds. Bonds issued by an individual surety pledge certain defined types of assets.
Cash
Marketable assets
Letters of credit from a federally insured financial institution.
Bonds issued by an approved corporate surety. (The Department of the Treasury maintains a list of corporate sureties approved to issue bonds for federal projects, Treasury Department Circular 570.)