Mississippi Contractor Bonds: Costs, Claims, and Licensing

Mississippi contractor bond requirements for public work are straightforward at the core: on any public construction contract of $25,000 or more, the contractor must furnish both a performance bond and a payment bond, and each bond must equal at least the full contract price.¹ The bonds have to be in place before the contract begins. Premiums for a qualified contractor usually land between 1% and 3% of the bond amount.

When Bonds Are Required

The rule covers any formal contract with the state, a county, a city, or any other Mississippi public body for construction, repair, or alteration of a public building or public work. At the state level, every public contract triggers the bonding requirement. At the county or municipal level, there is one carve-out: if the contract is under $25,000, the public body may choose to pay a single lump sum after the work is finished and accepted, and in that case no bond is needed.¹

Public projects also carry a general liability insurance requirement that sits alongside the bonds. State contracts over $5,000 and county or city contracts over $25,000 require at least $1,000,000 in bodily injury and property damage coverage.¹

What the Performance Bond and Payment Bond Do

The performance bond runs to the public body that owns the project. If the contractor walks off the job or fails to finish, the surety either arranges for another contractor to complete the work or pays the public body for its losses, up to the bond’s face value. Mississippi sets the floor for the bond at the full contract price, so a $500,000 contract calls for a performance bond of no less than $500,000.¹

The payment bond protects everyone the contractor hires or buys from. Subcontractors and material suppliers are the primary beneficiaries, because public property cannot be liened the way private property can; the bond is their substitute remedy. It, too, must equal at least the full contract amount and is required alongside the performance bond on any public contract of $25,000 or more.¹

Bid Bonds Before the Contract Is Awarded

Before any of that, the bidding stage itself calls for security. Mississippi’s Bureau of Building requires bid security equal to 5% of the base bid, submitted as either a bid bond from a surety licensed in Mississippi or a certified check payable to the contracting agency.² The bid bond covers the public body if the winning bidder refuses to sign the contract. Once the contract is awarded and the performance and payment bonds are in place, the bid bond falls away.

What the Bonds Cost

The premium is a percentage of the bond’s face value, not the full face amount. For contractors with strong credit, solid financials, and a clean track record, premiums typically run 1% to 3%. Weaker credit or thin experience pushes the rate higher, sometimes as much as 10%. The surety looks at financial statements, credit score, current work backlog, and project history before quoting.

The bond itself has to come from a surety company authorized to do business in Mississippi and listed on the U.S. Treasury Department’s list of acceptable sureties. The law allows one alternative: a personal surety can back the bond by depositing cash or certificates of deposit with the State Treasurer in an amount at least equal to the contract value.¹ In practice, nearly every contractor goes with a commercial surety. Letting the bond lapse during the project can itself trigger a default, so keeping it active matters as much as getting it in the first place.

Licensing and the Certificate of Responsibility

Bonding and licensing are separate requirements, but they meet at the bid envelope. The Mississippi State Board of Contractors requires a commercial license for any contractor or subcontractor working on commercial projects over $50,000. The same $50,000 threshold applies to new residential construction. For residential remodeling, additions, or roofing, the threshold drops to $10,000.³

On public projects, any bidder must hold a certificate of responsibility. For bids over $50,000, the certificate number has to appear on the outside of the bid envelope. Envelopes without it are rejected and never opened. Knowingly bidding without a valid certificate is a misdemeanor, punishable by a fine of up to $1,000, up to six months in jail, or both, and the Board of Contractors can issue a cease-and-desist order and add civil penalties on top.⁴

Deadlines for Claims Against a Bond

If you are a subcontractor, supplier, or public body on the other side of one of these bonds, the deadlines are short and strict.

A suit on a performance bond must be filed within one year after the public body makes its final payment on the contract. If the contractor abandons the project or the public body terminates the contract first, the one-year clock starts from whichever event happens first.⁵

A suit on a payment bond must be filed within one year after the claimant last performed labor or supplied material on the project.⁵ Miss the date and the claim is barred, no matter how much money is owed. Subcontractors who finish their scope early on a long project should mark the calendar from their own last day of work, not the project’s completion.

Federal Projects Follow Different Rules

The state bonding statute does not reach federal construction in Mississippi. Federal projects run under the Miller Act, which requires performance and payment bonds on any federal construction, alteration, or repair contract exceeding $100,000. The payment bond amount must equal the total contract price unless the contracting officer finds that impractical and sets a lower figure in writing.⁶

Claim procedure is different too. A subcontractor or supplier not paid in full within 90 days after their last day of work can file a civil action on the payment bond. Second-tier claimants, those who contracted with a subcontractor rather than directly with the general contractor, must give the general contractor written notice within 90 days of their last day furnishing labor or materials, stating the amount claimed and identifying the party they supplied. Suit has to be filed within one year of the claimant’s last day on the project, in the federal district court for the district where the work was done.⁷

If you work both sides, the practical splits are the threshold ($25,000 state, $100,000 federal), the 90-day written notice requirement for second-tier payment bond claimants on federal jobs, and the forum: Mississippi state court for state bonds, federal district court for Miller Act bonds.

What Happens If You Skip the Bonds

Mississippi law does not set a specific criminal penalty for failing to obtain the required performance and payment bonds, but a contract entered without them is open to legal challenge and the public body can refuse to release payment. Unpaid subcontractors and suppliers who have no bond to claim against will chase the contractor directly, which typically means litigation on top of the underlying debt.

The licensing and bidding side carries explicit penalties. Bidding on a project over $50,000 without holding a certificate of responsibility is a misdemeanor, with fines up to $1,000 and up to six months in jail, plus a possible stop-work order and civil penalties from the Board of Contractors.⁴ A bonding or licensing violation also follows the contractor into future surety underwriting, raising premiums and shrinking the pool of sureties willing to write the next bond. For a contractor whose work is mostly public, that is the lasting cost.

1
FindLaw. Mississippi Code 31-5-51 – Bonds Securing Public Construction Contracts
2
Mississippi Department of Finance and Administration. Instructions to Bidders
3
Mississippi State Board of Contractors. Frequently Asked Questions
4
Justia. Mississippi Code 31-3-21 – Bidding and Awards
5
Justia. Mississippi Code 31-5-53 – Time for Bringing Suit on Bond; Venue
6
Office of the Law Revision Counsel. 40 USC 3131 – Bonds of Contractors of Public Buildings or Works
7
Office of the Law Revision Counsel. 40 USC 3133 – Right of a Person That Has Furnished Labor or Material