The SF 25 performance bond is the one-page federal form a contractor and its surety sign to guarantee completion of a federal construction contract worth more than $150,000. You complete it after a Treasury-approved surety agrees to back you, you file it with the contracting officer before any notice to proceed can issue, and the penal sum written on it must match 100 percent of the contract price. The current version, revised October 2023, is available as a fillable PDF from the General Services Administration.1General Services Administration. Performance Bond
The bond requirement comes from 40 U.S.C. §§ 3131–3133, formerly the Miller Act, which requires both a performance bond (SF 25) and a payment bond (SF 25A) on any federal construction contract above $150,000.2Acquisition.GOV. Federal Acquisition Regulation 28.102-1 General The performance bond guarantees the work; the payment bond protects subcontractors and suppliers. Both must be furnished before you receive a notice to proceed, and the solicitation typically sets a specific return deadline, often around ten days after award.3eCFR. 48 CFR Part 28 Subpart 28.1 – Bonds and Other Financial Protections Miss that window and you usually forfeit your bid guarantee and lose the award.
Line Up a Surety Before You Touch the Form
You cannot fill in SF 25 in a vacuum. A surety company has to agree to back you first, and in practice the surety prepares the bond document and sends it to you for signature. Sureties evaluate contractors on what the industry calls the three Cs: character (your track record and reputation), capacity (whether your team, equipment, and experience match the contract scope), and capital (your financial health and liquidity).
Bonding is reassessed for each new project, and your capacity grows as you complete contracts on time and within budget. First-time applicants should expect to hand over detailed financial statements (often audited), a work-in-progress schedule, personal financial statements from each owner, and references from past project owners. The surety’s agent negotiates the premium, which appears on SF 25 as a rate per thousand dollars of the penal sum.
One check to run before signing anything: every corporate surety executing a federal bond must appear on the Department of the Treasury’s list of approved sureties, published as Circular 570.4Bureau of the Fiscal Service. Surety Bonds The contracting officer will verify this during review, and a bond from an unlisted company will be rejected. You can confirm status through the certified-companies search tool on the Bureau of the Fiscal Service website.
Filling Out Each Section of SF 25
The form is one page with printed instructions on the reverse. Every block on it can trip up a bond if the details do not match the underlying contract exactly.
Principal Information
Enter your full legal name and business address exactly as they appear on the contract. Small discrepancies (an ampersand where the contract spells out “and,” a missing “LLC”) can trigger rejection. Check the box for your organization type: corporation, partnership, individual, joint venture, or other.5General Services Administration. Standard Form 25 – Performance Bond
Surety Information
The surety’s legal name and business address go in the “Surety(ies)” section at the top. A single corporate surety also fills out the “Corporate Surety A” block farther down with its state of incorporation and liability limit. When co-sureties share the risk, each gets its own lettered block (Surety A, Surety B, and so on), only the letter identifiers appear in the header, and the combined liability limits must equal 100 percent of the penal sum.5General Services Administration. Standard Form 25 – Performance Bond
Contract Details and Penal Sum
Fill in the contract date and the contract number assigned by the procuring agency. The “Date Bond Executed” field must show a date the same as or later than the contract date. A bond dated before the contract is invalid.
The penal sum is the maximum the surety will pay if you default. Under FAR 28.102-2, it must equal 100 percent of the original contract price, and if the contract price later increases, the penal sum must increase by 100 percent of that increase.6Acquisition.GOV. Federal Acquisition Regulation 28.102-2 Amount Required A contracting officer can accept a lesser amount only by determining in writing that a lower sum still adequately protects the government. Write the penal sum in words in the designated spaces (millions, thousands, hundreds, cents) and confirm the numerical figure matches exactly.
Signatures and Seals
Both the principal and the surety sign at the bottom. An authorized person must sign for each party. For a corporation, that usually means an officer or someone holding a power of attorney. Signers for the surety are almost always attorneys-in-fact, and evidence of their authority must accompany the bond.5General Services Administration. Standard Form 25 – Performance Bond That evidence is typically a one-page power of attorney certificate with the surety’s seal. An original, photocopy, or facsimile is acceptable.7Acquisition.GOV. Part 28 – Bonds and Insurance
Corporations executing the bond must affix their corporate seal. Individuals sign opposite the “Corporate Seal” label and, if executing the bond in Maine, New Hampshire, or another jurisdiction that requires adhesive seals, must attach one.
Submitting the Bond Package
The completed package you deliver to the contracting officer should include:
- SF 25, signed by both principal and surety, with all fields filled in and corporate seals affixed.
- The power of attorney showing the surety agent’s authority to bind the insurance company.
- SF 25A, the payment bond, required alongside the performance bond on construction contracts over $150,000.2Acquisition.GOV. Federal Acquisition Regulation 28.102-1 General
- Any reinsurance agreements the surety requires, either included with the bond or submitted within 45 days of the bond’s execution.
Submit through the method the solicitation specifies. Many agencies accept secure electronic submissions; some still require original hard copies by certified mail or hand delivery. The contracting officer reviews for administrative sufficiency: correct dates, matching names, proper signatures and seals, the right penal sum, and the surety’s presence on Circular 570. If something is off, you usually get a short correction window, with the solicitation or the officer’s notice stating the exact number of days. Approval is a prerequisite for the notice to proceed. No valid bond on file, no work on site.8Acquisition.GOV. Federal Acquisition Regulation 28.106-1 Bonds and Bond-Related Forms
Adjusting the Bond After a Contract Modification
Change orders and scope adjustments can affect the bond. Under FAR 28.106-5, the contracting officer must obtain written consent from the surety when a modification either adds work outside the original contract scope or changes the contract price by more than 25 percent or $50,000, whichever comes first.9Acquisition.GOV. Consent of Surety Consent of surety is also required for novation agreements, where a new contractor takes over the existing contract.
The agency uses Standard Form 1414 (Consent of Surety) for this. If the penal sum needs to increase, the surety issues a rider or endorsement to the original bond, and your premium goes up accordingly. Because the penal sum tracks 100 percent of the contract price, a significant change order almost always triggers this process. Keep your surety agent informed of upcoming modifications; a surety that learns about a major scope change after the fact may balk at providing consent.
Alternatives to a Corporate Surety
Not every contractor uses a traditional insurance company. The FAR allows several substitutes.
Individual Sureties
An individual can back your bond, but the requirements are strict. Each individual surety completes Standard Form 28 (Affidavit of Individual Surety) and pledges eligible collateral whose net adjusted value (market value minus a margin set by Treasury) equals or exceeds the penal sum.10Acquisition.GOV. Acceptability of Individual Sureties You can use one individual surety whose pledged assets cover the full amount, or up to three whose combined pledged assets meet the threshold. The contracting officer verifies asset eligibility and valuation through Treasury’s collateral operations support team before accepting the bond.
Security in Lieu of Sureties
Instead of a surety of any kind, you can secure the bond by depositing one of the following with the contracting officer:11eCFR. 48 CFR Part 28 Subpart 28.2
- U.S. bonds or notes at par value, with a power of attorney authorizing their collection or sale if you default.
- Certified or cashier’s checks, bank drafts, money orders, or currency equal to the penal sum.
- An irrevocable letter of credit equal to the penal sum.
You can mix these options, and you can substitute one type for another during the life of the contract.12Acquisition.GOV. Alternatives in Lieu of Corporate or Individual Sureties When depositing security instead of using a surety, you still execute SF 25 as the principal, and a statement pledging the security gets incorporated into the form in place of surety signatures.
What Default on the Bond Actually Costs You
Read the indemnity paperwork the surety hands you before signing SF 25. A performance bond claim is triggered when the contracting officer determines the contractor has defaulted by abandoning the project, falling irreparably behind schedule, or producing work so deficient it amounts to non-performance. The government notifies the surety, which then has three options: finance the original contractor to finish, hire a replacement, or pay the government the penal sum or the actual cost of completion, whichever is less.
The consequences reach past the current project. Before issuing the bond, the surety required the contractor and usually every owner holding 10 percent or more of the business to sign a general indemnity agreement. That agreement obligates the contractor to repay the surety for every dollar it spends resolving the claim, including legal fees. Even if the business is an LLC or goes bankrupt, the personal indemnity provisions let the surety pursue the individual owners directly. Spouses of owners are typically required to sign the indemnity as well, blocking asset transfers designed to dodge repayment.
A claim also makes future bonding much harder. Sureties share loss data, and a contractor with a claim on their record will see higher premiums, lower bonding limits, or refusal from underwriters. For a small or mid-size contractor, a single performance bond default can end the ability to compete for federal work.