A proposal or offer.

When a contractor bids on a construction project that will require a contract surety bond, he or she must provide a bid bond with the bid. The bid bond guarantees the project owner that if the contractor is awarded the contract, he or she will undertake the project at the price quoted and will provide a contract surety bond. If the contractor, upon receiving the project, refuses to enter into the contract at the agreed-upon price, the bid bond reimburses the project owner for the difference between the low bid awarded and the next lowest bid.For example, suppose Ace Construction bids $2,000,000 to pave two miles of state highway for the State of Texas. Upon receiving the contract, Ace Construction refuses the job stating that it made a mistake and cannot undertake the project for that price. Zone Construction also bid on the project with a bid of $2,300,000. Ace Construction’s bid bond pays the $300,000 difference to the State of Texas. (See Surety Bond). 

A guarantee that the contractor will enter into a contract, if it is awarded to him, and furnish such contract bond (sometimes called “performance bond”) as is required by terms thereof.