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DoD Performance Bond Overview
The DoD performance bond is a type of a surety bond, required from military freight carriers to guarantee that they transport all contracted cargo. The bond will cover losses in cases, such as carrier default, bankruptcy or abandoned shipments.
If a carrier is unable to deliver the freight, the surety bonds company which issued the performance bond will have to reimburse the DoD. The surety will then seek reimbursement from the carrier.
Keep in mind that the bond does not cover “operational problems such as late pickup or delivery, excessive transit time, refusals, no shows, improper or inadequate equipment or claims for lost or damaged cargo.”
If you need to get bonded to haul military freight, you can start your application now or continue reading if you want to learn more about DoD performance bonds. For any questions, do not hesitate to contact us at (866)-450-3412.
DoD Performance Bond Cost
The cost of your performance bond depends on the number of states you intend to serve, the number of years you have been in business, as well as the size of your company.
The bond amounts required from large freight companies are as follows:
- $25,000 for 1 state
- $50,000 for 2 to 3 states
- $100,000 for 4 states or more
Small carriers are considered those registered with the Small Business Administration (SBA). Their bond amounts are as follows:
- $25,000 for up to 3 states
- $50,000 for up to 10 states
- $100,000 for 11 states or more
Carriers who have worked with the DoD 3+ years
For carriers who have worked with the DoD for 3 years or more, the bond amount is calculated as
2.5 percent of their DoD revenue for the past 12 months. However, the amount can still be no less than $25,000 or more than $100,000.
Other DoD Performance Bond Amounts
Surface freight brokers and forwarders, shipper agents and air freight forwarder are required to post a $100,000 surety bond while the amount for bulk fuel carriers is $25,000. Carriers exempt from obtaining a performance bond are local drayage, commercial zone, barge, rail, sealift and pipeline carriers.
The above amounts are called the total bond amounts, i.e. the maximum compensation the bond offers to the DoD if a carrier fails to deliver their freight. But to get bonded, carriers need only pay a fraction of the total bond amount known as a premium.
Premiums vary between 0.75% and 2.5% per year for applicants with good credit or can go up to 10% for those with credit issues. Check out the table below for more detailed breakdown of costs.
|Surety bond amount||Above 700||Between 650-699||Between 600-649||Below 599|
Keep in mind that this is only an estimate based on your personal credit score and that of all owners. The only way to get an exact quote is by submitting an online application.
Getting Bonded with Bad Credit
You can still get bonded if you have bad credit thanks to our Bad Credit Program. However, as you can see from the table above, your bad credit will most likely result in a higher premium.
There are ways to reduce your cost even if you have bad credit. Submitting strong personal and business financial statements or showing proof of having liquid assets means you are capable of paying for potential claims, so the surety is likely to reduce your premium.
Start Your DoD Performance Bond Application
It’s easier than ever to apply for your DoD performance bond thanks to our 1-page online application. It takes a minute to complete. After submitting it, we will contact you with a your personal no-obligations quote.
Processing times under normal circumstances are quite fast so you can expect us to have your bond ready in 1-2 business days.
DoD Freight Carrier Registration
In order to be eligible to haul military freight, the SDDC will require you to become part of its Freight Carrier Registration Program (FCRP).
The first step is to obtain a Carrier Alpha Code (SCAC), which as 2 to 4-digit code used to identify carriers. You can get one issued by the National Motor Freight Traffic Association (NMFTA).
The second step is to have a US bank agreement and get a PowerTrack certification so you can get paid electronically.
Next, you submit the Carrier Registration Form (available online) after which the SDDC will notify you of its decision by email within 3 days.
After you have received confirmation from the SDDC, you can apply for your DoD Performance Bond.
Please note: The SDDC has announced an open season valid until 28 Feb 2017. However, at this time no new carriers will be allowed to register. Eligible carriers are those who have had a valid DOT authority for the past 3 years, considered continuous until 9 Jan 2017.