IT Performance Bonds: Your Gateway to Government Tech Contracts
Software vendors, MSPs, and IT consultants: Performance bonds unlock federal and state technology contracts worth billions. Here's what you need to know about bonding requirements, costs, and getting approved.
Who Needs Them
Software vendors, MSPs, IT consultants on public sector projects
When Required
Many state/federal agencies for system implementations
Bond Amount
Often 50-100% of contract value for government IT projects
When Are IT Performance Bonds Required?
Understanding which government contracts require bonding
Many federal agencies require performance bonds for IT contracts over $150,000, especially for system implementations and software development.
- • DOD: System modernization projects
- • GSA: Enterprise software implementations
- • DHS: Cybersecurity solutions
- • VA: Healthcare IT systems
State requirements vary widely. Some require bonds for all IT contracts over $50,000, others only for critical infrastructure projects.
- • California: $100,000+ contracts
- • Texas: $500,000+ contracts
- • New York: Agency discretion
- • Florida: $200,000+ contracts
Critical infrastructure, healthcare systems, and financial applications almost always require performance bonds regardless of contract size.
Examples: EMR implementations, payment processing systems, voter registration databases
Established IT Company (3+ years, good credit)
Best rates available. Strong financials and track record mean lowest premiums in the 1-3% range.
Common IT Contract Requirements
What underwriters look for in IT companies
Working Capital
10-15% of desired bonding capacity
Credit Score
Personal 650+, Business 70+ (Paydex)
Financial Statements
CPA-prepared for bonds over $500K
Industry Experience
3+ years in relevant technology area
Contract History
Successful completion of similar projects
Certifications
Relevant technical certifications help
The SBA will guarantee up to 90% of your IT performance bond, making approval much easier and rates significantly lower. This is especially valuable for newer IT companies or those pursuing their first government contracts.
Quick Bond Program
Contracts up to $500K
- ✓ Simplified application
- ✓ 1-2 week approval
- ✓ Lower rate requirements
- ✓ Minimal financials
Standard Program
Contracts up to $14M
- ✓ 90% guarantee for certified small businesses
- ✓ 80% guarantee for other small businesses
- ✓ Federal contracts preferred
- ✓ Competitive rates
IT Bond Application Process
What to expect when applying for your first IT performance bond
Initial assessment of your bonding capacity:
- • Company overview
- • Financial snapshot
- • Project experience
- • Target contract size
Gather required documents:
- • 3 years tax returns
- • Financial statements
- • Bank statements
- • Project references
Surety evaluation (1-2 weeks):
- • Financial analysis
- • Credit review
- • Experience verification
- • Capacity determination
Final approval and issuance:
- • Rate confirmation
- • Agreement signing
- • Premium payment
- • Bond delivery
1. Start Small and Build Your Track Record
Don't jump from zero to a $1M federal contract. Start with smaller state or local contracts to build your bonding history and prove your capabilities.
2. Highlight Your Technical Expertise
Include relevant certifications, security clearances, and specialized technology experience in your bond application. Underwriters value technical competence.
3. Document Your Project Management Processes
Show how you manage timelines, budgets, and deliverables. IT projects are notorious for overruns - prove you're different.
4. Consider the SBA Program Early
Don't wait until you're desperate. Apply for SBA bonding assistance when you're first exploring government contracts, not after you've been rejected.
5. Maintain Strong Cash Flow
Government contracts often have slow payment cycles. Demonstrate you can fund operations for 60-90 days without contract payments.
Official list of Treasury-certified surety companies authorized to write federal bonds
SBA bonding assistance for small contractors on federal and private contracts
Ready to Secure Government IT Contracts?
Performance bonds open doors to billions in federal and state technology contracts. Start your application today and position your IT company for government opportunities.
No obligation. Free consultation to determine your bonding capacity and the best path forward for your IT company's government contracting goals.