Bid Bonds
We have been encountering a newer phenomenon in our industry; bonds being needed to place a bid with school districts and municipalities. We have been recieveing bids for copiers that would total $200,000 plus in sales, that we are more than capable of handling, but they are requiring a deposit of 5% of the total bid be included in the packet. I don't know about you but we don't have $10,000 laying aroung to tie up just for the honor of trying to win your no margin bidding war. We can use our insurance comapny to get a policy for the bond but we actually have to get our credit approved. All this procedure is doing is eliminating the smaller companies from being able to bid on jobs that they are more than capable of doing. I am wondering if this has been standard practice in other industries because it is new to me.
Jeff Polites
Sterling Office Systems
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Jeff,
We use Pat Stevens at Competitive Insurance Co. for our Bid Bonds. I have several phone reps. that deal with school districts and bid bonds and they say Pat does a good job. His phone number is 248-625-8003.
Duane Ahola, CTS Companies
248-451-1236
Jeff,
When dealing with Schools or Municipalities it is common for them to require a bond. There are different types of bonds and we have access to many different insurance companies for you. One industry where bonding is very common is the construction industry. Anytime you are providing a type of service to a School or Municipality they are going to want to make sure you can do what you say, financially. One of the most common way to do that is thru a bond. Schools and Municipalities operate differently than companies and are somewhat more stringent on their requirements and regulations. I'm not surprised they are requiring it. If you need help with it give us a call. FYI-if there is a charge to provide a Bid Bond it should be very small, if there is even a charge at all.
Hope this helps.
Although I work in lower amounts than you speak of myself, these Bonds (called performance bonds) I regularly see in the schools and munis I have worked with. They require them for major projects, especially capital projects where they could really be left holding the bag if something happen to the vendor.
There is a lot at stake for a municipality - it's taxpayer dollars and remember both municipalities and school boards are elected officials. I understand your frustration - I've been there to an extent - but sometimes looking at a situation from the other side's shoes can create new solutions.
One of the challenges all of us in the small business world face is the size one - the deck is stacked against us a little. I know that a good percentage of people will buy the biggest companies' product just because they're the biggest. Was just talking with someone today about that same issue - even though the incumbent company isn't big in the area the potential client needs, but in another skill set completely. We can overcome it - but sometimes we need to be creative.
I hope that creativity is expressed in the above posters' referrals to help you find someone that will help you out.