Logistics Performance Bonds for Government Supply Chain Contracts

An SDDC (Surface Deployment and Distribution Command) performance bond is required by USTRANSCOM for all Transportation Service Providers who move military freight. Domestic carriers must post a bond of $50,000 or 2.5% of previous-year DOD revenue, whichever is greater. International program participants must post at least $100,000 or 2.5% of previous-year international DOD revenue. The bond guarantees delivery of tendered DOD freight and covers carrier default, abandoned shipments, and bankruptcy.

BMC-84 bonds ($75,000 for freight brokers, required by FMCSA) protect shippers and carriers from broker non-payment. Performance bonds guarantee completion of a specific logistics contract. You may need both: the BMC-84 for your broker license and separate performance bonds for individual government contracts. The BMC-84 is a standing license requirement; performance bonds are contract-specific and vary by contract value.

Federal logistics contracts over $150,000 may require performance bonds at the contracting officer's discretion under FAR 28.103-2. DOD supply chain contracts are more likely to require bonds than civilian agency work. SDDC bonds are required regardless of contract size for military freight participation. State and local government logistics contracts follow state procurement rules, with thresholds ranging from $25,000 to $150,000 depending on jurisdiction.

SDDC bonds ($50,000-$100,000) typically cost $500-$3,000 annually depending on credit. Contract-specific performance bonds cost 1-3% of contract value for established carriers with good financials. A $2 million DOD supply chain contract would require approximately $20,000-$60,000 per year in bond premiums. Companies with fleet assets and consistent DOD delivery records get the best rates.

Yes. The SDDC program is designed to include carriers of all sizes. The minimum domestic bond of $50,000 costs as little as $500-$1,500 annually with decent credit. The SBA Surety Bond Guarantee Program can help small carriers who need larger performance bonds for specific contracts. Start with the base SDDC qualification and build your DOD delivery record before pursuing larger contract-specific bonds.

The government files a claim against your performance bond. The surety pays for alternative freight delivery or replacement logistics services. The surety then seeks reimbursement from you under the indemnity agreement you signed when the bond was issued. Beyond financial liability, a default triggers debarment proceedings that can exclude you from all government contracts for up to three years. Protect your bonding history aggressively.