Requirements for certain state and federal construction projects include posting a surety bond. Performance Bonds are put in place to ensure the job is completed to the specifications outlined in the contract. This requirement was set for public work contracts of $100,000 and above by the Miller Act. If the contractor is unable to complete the project the bonding company will be brought in to make the obligee whole. The contractor will be responsible for reimbursing the surety company on any claim payout.
Performance Bonds are job-specific and different from your state-required Contractor License Bond.