How are performance bonds typically valued in relation to the contract price on federal projects?

Performance bonds are typically valued at 100% of the contract price on federal projects. This means the bond amount is equivalent to the total value of the contract, ensuring that the contractor is financially backed to complete the project as agreed.

This practice emphasizes the federal government's commitment to ensuring that contractors deliver on their obligations, providing a level of assurance to both the government and taxpayers that funds are in place to cover potential failures in project completion. By setting the bond value at the full contract price, it protects the interests of the project owner and mitigates the risk of financial loss if the contractor defaults.

In contrast, lower percentages such as 50% or 75% would not provide sufficient protection against potential contractor issues, while a figure like 125% could be seen as excessive and not standard practice for federally mandated performance bonds. Therefore, valuing the bond at 100% is the most effective way to safeguard against non-completion or substandard work.