If a Contractor does not accept a contract after receiving a Notice of Award, what will they lose?

In construction contracting, a Notice of Award is a formal notification that a contractor has been selected to perform work based on their bid proposal. If the contractor fails to accept the contract after receiving this notice, they typically incur specific penalties, one of which is related to their bid bond.

The bid bond is a guarantee provided by the contractor to the project owner that they will enter into a contract if awarded the project. If the contractor does not accept the contract, the project owner can claim the amount of the bid bond, thereby forfeiting the bond's face value. This serves to protect the owner from the risks and costs associated with a contractor backing out after being awarded the project.

This financial consequence emphasizes the importance of a contractor adhering to the commitment made in their bid. It financially penalizes the contractor who wins the bid but fails to follow through, thereby encouraging responsible bidding behavior.

While repercussions like losing privileges for future bids, damaging reputation, or losing the right to enter into the contract might occur due to a failure to accept the award, the most immediate and financial consequence tied specifically to the bid process is the loss of the bid bond's face value.