North Dakota Public Works Contractor Requirements: Bid Bonds, Tax Clearance, and Eligibility

Public Projects Have Extra Compliance Layers

Getting a state contractor license qualifies you for private-sector work in North Dakota. Public works projects — anything funded by a state agency, political subdivision, municipality, or school district — add requirements that can disqualify you before you even submit a bid.

The two big ones: tax clearance from the State Tax Commissioner and any bid bond required by the solicitation. Missing a required item can disqualify your bid, regardless of your pricing or qualifications.

Tax Clearance Is Mandatory

Under NDCC § 43-07-11.1, no public entity in North Dakota can enter into a construction contract — or issue final payment on an existing one — with any contractor who hasn't obtained a Tax Clearance from the Office of the State Tax Commissioner.

This applies to both prime contractors and subcontractors. If your drywall sub hasn't cleared their tax obligations, the public entity can't pay you either until the sub is clean.

To get the clearance, you submit SFN 59937 ("Application to Obtain Contractor's Request for Clearance") to the Tax Commissioner's office. This verifies that your business has paid all outstanding state income, sales, and use taxes. If you owe anything — even a small delinquent balance — the clearance won't issue until it's resolved.

The practical trap: tax clearance doesn't happen overnight. If you find out about an RFP with a two-week bid deadline and you haven't filed for clearance yet, you may not get the documentation in time. Contractors who regularly bid on public work keep their tax clearance current year-round so they're never scrambling before a deadline.

Bid Bond Requirements

Public works projects in North Dakota typically require a bid bond — a surety bond guaranteeing that if you're awarded the contract, you'll actually sign it and provide the required performance bonds. The bid bond protects the public entity against contractors who submit aggressive bids and then walk away.

Bond requirements vary by the contracting public entity:

• County highway projects (such as Cass County): electronic bids typically require a 5% bid bond based on the total contract value
• State-level projects: bid bond amounts are specified in the RFP
• Municipal projects: bond requirements follow each city's procurement ordinances

For public works projects exceeding $100,000, a performance bond and a payment bond are required after contract award. These are separate from the bid bond and equal 100% of the contract value each.

If the solicitation sets a 5% bid bond, a contractor bidding on a $500,000 school renovation would need $25,000 in surety coverage. That requires a surety company willing to underwrite your bonding capacity, which depends on your financial statements, work history, and credit.

License Timing Rules

North Dakota's public bidding laws include a timing trap. Under the statutes, a contractor must hold an active state license of the correct classification for at least 10 days prior to the bid opening date. Getting your license the day before the bid opening doesn't count — you'll be automatically disqualified.

This means you need to plan backwards from the bid deadline:

1. Determine which license class covers the project value (Class A for unlimited, Class B for up to $500,000, etc.)
2. If you need to upgrade your class, file the upgrade through the Secretary of State's FirstStop Portal
3. Confirm the upgrade is processed at least 10 days before the bid opening
4. File for tax clearance if you don't have one current
5. Secure bid bond capacity from your surety company

Any gap in this sequence — a license class too low, a clearance not yet issued, a bond not yet in place — and you're out.

Nonresident Contractors Face Additional Hurdles

Out-of-state contractors bidding on North Dakota public work face every requirement above plus their own set of compliance steps. Nonresident contractors must:

• File a Foreign Qualification with the Secretary of State to do business in North Dakota
• Appoint a North Dakota registered agent
• Register with Workforce Safety & Insurance (WSI) for any employees working in-state
• Register with the Tax Commissioner for sales, use, and income tax withholding
• Obtain the tax clearance before bidding

A Minnesota or Montana contractor who spots an attractive North Dakota highway project needs to start this process weeks — not days — before the bid deadline. The foreign qualification filing and the agency registrations add processing time.

Building Your Public Works Eligibility

For contractors who want to make public work a regular part of their business, the groundwork is worth doing once and maintaining:

• Keep your state contractor license in the highest class you might need
• Maintain current tax clearance with the Tax Commissioner year-round
• Establish a relationship with a surety company and maintain your bonding capacity
• Stay current on WSI premiums and tax filings so nothing holds up a clearance

The North Dakota General Contractor License Guide covers the full licensing sequence — state registration, tax obligations, WSI enrollment, and municipal requirements — and walks through the public works eligibility steps so you can build your compliance stack before the next RFP lands.

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