Bidding on government contracts

Performance and bid bonds in government contracts usually only show up in construction contracts. You need to check the specific solicitation to which you are responding to see whether there is any bonding requirement. Normally, the government pays within 30 days of delivery and acceptance by the government (by ACH transfer). If you are providing a commercial product, there is a possibility for government financing, either 15% up front or up to 70% spread out in monthly payments. What you may need to look into is bank financing. Since there is a legal mechanism that the government will accept for assigning contract proceeds to a bank (the bank gets paid directly by the government), banks do consider factoring government contracts. Although the government has the right to assurance that you have a financially sound business (i.e., that you are "responsible" in government contracting lingo), a specific asset level is usually not a requirement.

Obviously, some of this depends on what kind of terms your vendor will give you. You may be able to work out something between the vendor and the bank (if a bank gets an assignment of the government contract), so that the vendor will be assured that it gets paid, thus giving you better payment terms than might otherwise be possible.

I've added a link to a blog posting I did on the Anti-Assignment Act which controls bank financing of government contracts.