# ADOT Contractor Requirements: Bid Security, Bonds and Prompt Pay URL: https://mycontractorsinsurancequote.com/construction-surety-bonds/public-agency-contractor-requirements/adot Updated: 2026-10-29 · Reviewed by the Principal, Gleason Insurance Brokers, LLC Publisher: My Contractors Insurance Quote, a website of Gleason Insurance Brokers, LLC Arizona statutes require an ADOT bid to carry a certified check, cashier's check or surety bond for 10 percent of the bid under A.R.S. §28-6923, and the award is conditioned on performance and payment bonds, each equal to the full contract amount, under A.R.S. §34-222. A.R.S. §28-6924 then requires primes and subcontractors to pay their own subcontractors within seven days after receiving each progress payment. Insurance limits, prequalification and other contract terms come from ADOT's Standard Specifications and special provisions, which are confirmed with ADOT for each contract. ## Key Decision Points - A.R.S. §28-6923(F): bid security of 10 percent of the bid, by certified check, cashier's check or surety bond. - A.R.S. §34-222: a performance bond and a payment bond, each equal to the full contract amount, from a surety authorized in Arizona. - The performance bond runs during the life of any guaranty required under the contract. - A.R.S. §28-6924: primes and subcontractors pay their subcontractors within seven days after each progress payment. - Insurance limits and prequalification are set by ADOT's Standard Specifications and special provisions, confirmed per contract. ## Statutes First, Then ADOT's Specifications An ADOT highway construction contract rests on two layers. The first is Title 28 and Title 34 of the Arizona Revised Statutes, which fix the bid security, the contract bonds, the surety qualifications and the payment timing that ADOT and its contractors work within. The second is ADOT's Standard Specifications for Road and Bridge Construction and the special provisions in each project's bid documents, which set the insurance types and limits, prequalification, subcontracting, retention, warranty and the rest of the contract terms. This page explains only the statutory layer. ADOT's Standard Specifications and special provisions set insurance limits, prequalification and other terms. Those terms are confirmed with ADOT for each contract. A contractor reading this page should treat it as the floor that every ADOT bid sits on, not as a full list of what a given contract can require. For how ADOT compares with other state and district owners, see [state DOT and public agency contractor requirements](https://mycontractorsinsurancequote.com/construction-surety-bonds/public-agency-contractor-requirements). ## Ten Percent Bid Security Under A.R.S. §28-6923 Subsection F of A.R.S. §28-6923 states that a bid shall be accompanied by a certified check, cashier's check or surety bond for 10 percent of the amount of the bid. The percentage runs on the contractor's own bid, not on an engineer's estimate, so the security rises with the price the contractor submits. On a $20 million bid, the security is $2 million. That size is why most highway contractors use a bid bond rather than a check. A certified or cashier's check ties up cash for the bid period on every bid outstanding at once, while a bid bond usually draws only on the surety relationship. A bid bond also carries a practical signal: a surety that issues one is typically expecting to write the final performance and payment bonds if the contractor is low, so it underwrites the bid as if it were the contract. A contractor bidding several ADOT lettings in the same month can find its surety looking at the combined exposure of every outstanding bid, not each bid alone. For how sureties underwrite bid security, see [bid bonds for public lettings](https://mycontractorsinsurancequote.com/construction-surety-bonds/bid-bonds). ### Illustrative scenario: A Paving Contractor's First ADOT Letting Saguaro Flats Paving, which has worked mainly for cities, plans to bid a $14 million ADOT widening project. Its bid must carry security of 10 percent of the bid, about $1.4 million, so it asks its surety for a bid bond instead of tying up cash. The surety looks at the job as if it were already awarded, since a low bid would require a performance bond and a payment bond each equal to the full contract amount, and asks how long the contract's guaranty period runs because the performance bond stays open through it. The firm's subcontract form pays subcontractors only when the owner pays in full, so it revises the form to pay within seven days after each progress payment and to cap retention at ADOT's percentage. These details are hypothetical, and a real program depends on ADOT, the surety and carriers and the firm's own risk. ## Full-Amount Performance and Payment Bonds Under A.R.S. §34-222 Subsection I of §28-6923 awards the contract to the lowest responsible bidder on the contractor giving performance and payment bonds that follow the form and include the provisions required by Title 34. A.R.S. §34-222 sets the amounts: a performance bond in an amount equal to the full contract amount and a payment bond in an amount equal to the full contract amount. Only surety companies holding an Arizona certificate of authority may write them, and individual sureties are not accepted. Two features matter for bonding capacity. First, the full contract value lands on the surety's books twice over in practice, once as performance exposure and once as payment exposure, so a large ADOT award can absorb a meaningful share of a contractor's aggregate program. Second, the statutory performance bond form runs during the life of any guaranty required under the contract, which means the bond can stay open after completion for as long as the contract's guaranty lasts. The length of that guaranty is a contract term set by ADOT's specifications or special provisions, so it belongs on the list of items to confirm before bidding. Section 34-222 also lists irrigation, power, electrical, drainage, flood protection and flood control districts among the owners it reaches, so a contractor that works for both ADOT and Arizona districts sees the same bond amounts across both. For how sureties weigh full-amount performance bonds, see [performance bonds on public contracts](https://mycontractorsinsurancequote.com/construction-surety-bonds/performance-bonds). ## Who May Write the Insurance: §28-6923(E) The statute does not set ADOT's insurance limits, but subsection E of §28-6923 does address the insurer. Contractor insurance on these contracts must be placed with an insurer authorized to do business in Arizona or with an approved surplus lines insurer. For most liability and auto programs that is routine, but it can matter for a contractor whose excess, pollution or railroad coverage sits with a specialty market, since each placement needs to qualify under one of those two categories. Subsection A ties competitive advertising to a dollar threshold that starts from a $189,000 base in the statute, and subsection B adjusts it each year by the GDP price deflator. The adjusted figure for a given year is something to confirm with ADOT rather than assume from the base. ## Progress Payments and Seven-Day Flow-Down Under A.R.S. §28-6924 A.R.S. §28-6924 sets ADOT's side of the payment cycle. Progress payments are due within 14 days after the estimate is certified, an estimate is deemed approved seven days after submission unless the department issues a written finding, and late payments carry interest of 1 percent per month. The same section requires the prime and each subcontractor to pay their own subcontractors within seven days after receipt of each progress payment. The seven-day rule is the part that reaches into the contractor's own paperwork. Subcontract forms written for private work often pay on a longer cycle or only when the owner pays in full, and those terms need to be matched to the statute for ADOT work. The statute also refers to retained percentages and substitute security and caps the retention a contractor may hold from a subcontractor at the annual percentage retained by the department. ADOT's own retention percentage is set in its specifications, so the subcontract should tie retention to whatever ADOT holds on that contract rather than to a fixed number. Claims by unpaid subcontractors and suppliers against the payment bond follow the Title 34 procedure explained in the Arizona public works bond guide. For notice and suit rules on the payment bond, see [Arizona public works payment bond claims](https://mycontractorsinsurancequote.com/construction-surety-bonds/public-works-bond-requirements/arizona). ## Preparing an ADOT Bid and Bond Package Preparation starts with the surety. Before the letting, the surety typically wants the current financial statement, a schedule of work on hand with cost to complete, the bid tabulation history and the bid amount, since the 10 percent bid security and the two full-amount bonds all scale with that number. Insurance comes next: the current specifications and the project's special provisions set the limits, so the certificates and endorsements are matched to them once the bid documents are in hand, using insurers that meet §28-6923(E). Then come the subcontracts. Each one should carry the seven-day payment term, the retention cap tied to ADOT's percentage and the bond and insurance terms the prime's contract passes down. Encroachment permits for work in the state highway right of way are a separate process, explained in the Arizona encroachment permit bond guide. Prequalification, bonding capacity and insurance placement remain subject to ADOT, the surety and underwriting. Terms can vary by carrier guidelines and programs. For licensing and other Arizona rules that sit beside ADOT work, see [Arizona civil and infrastructure contractor requirements](https://mycontractorsinsurancequote.com/arizona/audiences/civil-infrastructure-contractors). ## Before You Ask for a Quote ### What to Gather - The project's bid documents and special provisions - ADOT's Standard Specifications edition named in the bid documents - Current financial statements and a schedule of work on hand for the surety - Bid amounts for every letting bid in the same period - Certificates showing each insurer is authorized in Arizona or an approved surplus lines insurer - Subcontract forms and their payment and retention terms ### What to Ask the Insurer or Surety - What insurance limits and endorsements do the specifications and special provisions require on this contract? - What prequalification does ADOT require for this letting, and is ours current? - How long is the contract's guaranty period, and will the surety's performance bond run through it? - What retention percentage does ADOT hold, so we can cap subcontractor retention to match? - Will our surety support the bid bond and both full-amount bonds on top of current work? - Do any specialty placements need to be moved to an authorized or approved surplus lines insurer? ## Broker Notes **Quick Answer:** Arizona law requires ADOT bids to carry 10 percent bid security, awards to be conditioned on full-amount performance and payment bonds from an Arizona-authorized surety and subcontractors to be paid within seven days of each progress payment. **Common Mistake:** Using a private-work subcontract form on an ADOT job. A.R.S. §28-6924 requires payment within seven days after each progress payment and caps retention at ADOT's percentage. **Broker Perspective:** The 10 percent bid security runs on the contractor's own bid, so several open ADOT bids at once can stack up on the surety's view of the firm's program. **Coverage Impact:** The statutes set who may write the insurance but not the limits; ADOT's specifications and special provisions do, and whether a policy responds depends on its terms and the facts. ## Questions Buyers Ask ### How much bid security does an ADOT bid need? A.R.S. §28-6923(F) requires a certified check, cashier's check or surety bond for 10 percent of the amount of the bid. Because the percentage runs on the bid itself, the security rises with the price submitted. ### What bonds does Arizona law require after an ADOT award? Under §28-6923(I) and A.R.S. §34-222, the contractor gives a performance bond and a payment bond, each equal to the full contract amount, from a surety holding an Arizona certificate of authority. Individual sureties are not accepted. ### Does the ADOT performance bond end when the project is complete? Not necessarily. The statutory performance bond form under §34-222 runs during the life of any guaranty required under the contract, so it can stay open after completion. The guaranty length is set by the contract, so confirm it with ADOT. ### How fast must a prime pay subcontractors on ADOT work? A.R.S. §28-6924 requires primes and subcontractors to pay their own subcontractors within seven days after receiving each progress payment. ADOT pays progress payments within 14 days after the estimate is certified, with interest on late payments. ### Where are ADOT's insurance limits and prequalification rules? Not in these statutes. ADOT's Standard Specifications for Road and Bridge Construction and the special provisions in each project's bid documents set insurance limits, prequalification and other terms. Confirm them with ADOT for each contract. ## Official Sources 1. [A.R.S. §28-6923, Bid requirements; procedure; bond](https://www.azleg.gov/ars/28/06923.htm), Arizona Legislature. 10 percent bid security by certified check, cashier's check or surety bond (F); award to lowest responsible bidder on Title 34 bonds (I); insurer authorized in Arizona or approved surplus lines (E); $189,000 advertising base adjusted by GDP price deflator (A, B) Verified 2026-10-26. 2. [A.R.S. §34-222, Surety bond required; suit on bond; limitations](https://www.azleg.gov/ars/34/00222.htm), Arizona Legislature. Performance and payment bonds each equal to the full contract amount; Arizona certificate of authority, no individual sureties; performance bond runs during the life of any guaranty; districts listed in subsection A Verified 2026-10-26. 3. [A.R.S. §28-6924, Progress payments; changed or additional work](https://www.azleg.gov/ars/28/06924.htm), Arizona Legislature. Progress payments within 14 days after certification; deemed approval after seven days; 1 percent monthly interest; seven-day payment to subcontractors; retention capped at the department's annual percentage; substitute security Verified 2026-10-26. ## Related Decisions - [public agency contractor requirements](https://mycontractorsinsurancequote.com/construction-surety-bonds/public-agency-contractor-requirements) - [Arizona encroachment permit bonds](https://mycontractorsinsurancequote.com/construction-surety-bonds/encroachment-permit-bonds/arizona) - [Arizona public works bonds](https://mycontractorsinsurancequote.com/construction-surety-bonds/public-works-bond-requirements/arizona) - [payment bonds for public contracts](https://mycontractorsinsurancequote.com/construction-surety-bonds/payment-bonds) - [public works contractor insurance and bonds](https://mycontractorsinsurancequote.com/who-we-serve/general-contractors/public-works-contractors) --- Start a quote request: https://mycontractorsinsurancequote.com/get-a-quote · Call 844-978-7283 Contract and insurance reviews are a courtesy service that may be available at times, depending on our workload and on the size, timing and complexity of the project. A review is not guaranteed and is limited to insurance considerations. It is not legal advice and is not a substitute for advice from your own legal counsel, which you may need before signing a contract or obtaining coverage. Insurance and surety services are provided through Gleason Insurance Brokers, LLC. Site information is educational and does not constitute legal advice, a binder, an offer of coverage, a guarantee of eligibility or confirmation of policy terms. Insurance conditions are governed by actual issued policies; surety rights and obligations are governed by bond and indemnity documents.