E-Bonds: An Elegant Way of simplifying the Bid Submission Process

in #ebond3 months ago (edited)

Whenever one talks about the world of construction and getting major contracts and jobs, the first thought that comes to mind is the bidding process and the bonds associated with it. While this process has remained largely unchanged for years barring any changes to the legal requirements, it has witnessed a big change in recent years. With such huge amounts and projects on the line, every agency wants to employ the most practical, easy, and effective way to make sure their vendors are financially stable: electronic bonds, also known as e-bonds.

A bond is not just a document. It is a way that construction companies use to show potential buyers that they possess enough funding to not just start the project, but also finish it completely including the payment of staff’s wages and the materials they plan to use. These bonds are issued by a financial backer of sorts, mostly surety agencies or banks. In case of any failure of payment during construction, it becomes the liability of the institution that issued the bond to pay up and meet all the terms of the contract.


For many decades, before everything became digital, each bond had to be made physically. Everything from its procurement to its delivery had to be done in person. Now with advancements in software, they can be made in an electronic fashion, saving the money involved and more importantly the time is taken to make a paper bond.

So what exactly are e-bonds?

E-bonds are simply bonds that are created online rather than on paper. But surely, there is more to them. An e-bond should be encrypted properly to ensure the document is not just completely safe and secure but also verifiable with the vendors. They are generally made in PDF format because it is easy to secure them.

What is not an e-bond?

If you take a photo of a physical bond and make a PDF out of it, it doesn’t become an e-bond. This is a violation of the guidelines of the industry because any such photo can easily be changed with any editing software available online.

What constitutes a proper electronic bond?

All electronic bonds have a few criteria they should fulfill:

1. Secured with a pin or password

No e-bond can be a normal PDF file. It has to be secured with a pin or a password so that only those in authority can get to view it.

2. Unchanged content
You have to be given an assurance that all of the content in the document is original and has not been tampered with.

3. It can be enforced
The document you receive should be enforceable in a court of law and has to be executed by all of the involved parties.

Some of the most common aspects that should be present in an e-bond are a digital seal, signature, and a tag or a link which can be used to verify that no changes have been made.

How does an e-bond work?

E-bonds are quite similar to physical bonds in the process of procurement the only difference being they are obtained digitally. All you have to do is submit a request to an institution that is willing to back you and they will give you the certificate with the seal. You can then send it to the buyer.

As a general industry practice, all the suppliers are just asked to submit their e-bond’s photos during the bidding process. After the completion of the submission period, the buyer will just see the seal on the bond which will lead them to the institution that backed the supplier.
After this, the buyer can confirm the authenticity and validity of the e-bond and once they ensure that the supplier is financially capable of handling the project and covering all the charges, they can then make a decision on whether the supplier is the right firm for the work or not.

How does using an e-bond simplify and optimize the bidding process?

The benefits of using an e-bond over a paper bond are manifold and concern all the parties involved: the buyer, surety provider, and the supplier.

1. It saves a lot of time

The greatest benefit of an e-bond over a paper bond is the boost it gives to efficiency by reducing the time taken.
• There is no requirement of mailing the documents or delivering them by hand. This is especially important because a lot of deadlines are not met because of external factors not in anyone’s control.
• Once an e-bond has been set up properly, it can be easily sent at a preferred time by setting up a timed e-mail and can be uploaded to any required platform as well.

2. It saves quite a bit of money

• Everyone knows time saved equals money earned. But just how much? An e-bond takes less time to produce and almost zero time to send.
• The buyer doesn’t incur any cost in an e-bond at all.
• The suppliers are often given better rates and prices for getting an e-bond instead of a paper bond.

3. E-bonds are extremely simple

Unlike paper bonds, the procurement process of an e-bond is extremely simple, enabling anyone to get one.
• Every service provider has an overview of the process which is extremely comprehensive.
• It is extremely simple for both the backing institution and the suppliers to register on the sites.

4. E-bonds are environmentally friendly

While this is definitely not the main reason for the popularity of e-bonds, it’s good to see large corporations take some steps in the nice direction, even if they are for their own reasons.

Are all e-bonds bid bonds as well?

While many people think that every e-bond is a bid bond as well, this is not true. Almost every service provider listed federally has an option of creating a bid bond as well as a performance bond.

While e-bonds started gaining prominence quite some time ago, the covid-19 pandemic has made this development extremely crucial in the government bidding sector. E-bonds provide an opportunity to exchange extremely important documents over the internet which is extremely critical for any government during times like these. All physical interaction is eliminated from the process, simplifying it to its bare essentials. This makes the process more efficient and secure.