Compliance
Performance Bond
Security provided after award guaranteeing the contractor will complete the work as agreed.
Where a bid bond covers the gap between award and signature, a performance bond covers delivery. If the contractor fails to complete, the surety is liable up to the bond amount, commonly a substantial percentage of the contract value.
Together with bonding capacity generally, this is one of the most common structural barriers for smaller suppliers. It is also a reason subcontracting to an established prime can be a more realistic route into larger public work than bidding directly.
Related terms
- Bid BondSecurity submitted with a bid guaranteeing the bidder will enter the contract if selected.
- Prime ContractorThe supplier holding the contract with the buyer and accountable for the whole scope, including subcontracted work.
- SubcontractorA supplier engaged by the prime contractor to deliver part of the scope, with no direct contract with the buyer.
See this term in a real tender
Search current federal opportunities and read a live notice with this definition in mind.
This definition describes general Canadian federal practice and is not legal advice. Always confirm requirements against the official solicitation.