Policy CCB - Construction Bonds & Security

Policy CCB - Construction Bonds & Security (PDF)

Issue Date; October 22, 2020

Bid Security Requirements 

Bid security in an amount equal to at least 5% of the amount of the bid shall be required for all competitive bidding for construction contracts estimated to exceed $50,000. The Procurement Official may require an acceptable bid security for construction projects of $50,000 or less. Bid security shall be a bond provided by a surety company authorized to do business in this state, the equivalent in cash, or any other form satisfactory to the District. 

When a bidder fails to comply with the requirement for bid security described in the invitation for bids, the bid shall be rejected as nonresponsive unless the District determines that the failure to comply with the security requirements is non-substantial. Failure to submit an acceptable bid security may be deemed non-substantial if: 

   1. The bid security is submitted on a form other than the required bid bond form and the bid security meets all other requirements including being issued by a surety meeting the applicable requirements and the contractor provides acceptable bid security by the close of business of the next succeeding business day after being notified of the defective bid security; or 

   2. Only one bid is received, and there is not sufficient tie to re-solicit; or 

   3. The amount of the bid security submitted, through less than the amount required by the invitation for bids, is equal to or greater than the difference in the price stated in the next higher acceptable bid; or 

   4. The bid security becomes inadequate as a result of the correction of a mistake in the bid or bid modification, if the bidder increases the amount of guarantee to required limits within 48 hours after the bid opening. 

After the bids are opened, they shall be irrevocable for the period specified in the invitation for bids. If a bidder is permitted to withdraw a bid before award, no action shall be taken against the bidder or the bid security. If the successful bidder fails or refuses to enter into the contract or furnish the additional bonds required, then the bidder’s bid security may be forfeited. 

When issuing an invitation for a bid, the Procurement Official may not require a person or entity who is bidding for a contract to obtain a bond from a specific insurance or surety company, producer, agent, or broker. 

Utah Code § 63G-6a-1102 (2020) 

Utah Code § 63G-6a-1103(3) (2020) 

Utah Admin. Rules R33-11-201 (June 21, 2017) 

Utah Admin. Rules R33-11-202 (June 21, 2017) 

Required Bonds 

When a construction contract is awarded by the District in excess of $50,000, the contractor to whom the contract is awarded shall deliver the following bonds or security to the District, which shall become binding on the parties upon the execution of the contract: 

   1. A performance bond satisfactory to the District that is in an amount equal to 100% of the price specified in the contract and is executed by a surety company authorized to do business in this state or any other form satisfactory to the District; and 

   2. A payment bond satisfactory to the District that is in an amount equal to 100% of the price specified in the contract and is executed by a surety company authorized to do business in this state or any other form satisfactory to the District, which is for the protection of each person supplying labor, service, equipment, or material for the performance of the work provided for in the contract. 

The performance bond shall be delivered to the District within fourteen days of the contractor receiving notice of the award of the construction contract. If the contractor fails to deliver the required performance or payment bond, the contractor’s bid shall be rejected, its bid security may be enforced, and award of the contract may be made to the next lowest responsive and responsible bidder. 

Neither the Procurement Official may require a contractor to whom a contract is awarded to obtain a performance or payment bond from a specific insurance or surety company, producer, agent, or broker. 

Utah Code § 63G-6A-1103 (2020) 

Utah Admin. Rules R33-11-301 (June 21, 2017) 

Utah Admin. Rules R33-11-303 (June 21, 2017) 

The District may waive the requirement of a performance or payment bond to the extent allowed by rules of the Procurement Policy Board in circumstances where the Procurement Officer determines that such bonds are unnecessary to protect the District. 

Utah Code § 63G-6a-1103 (2020) 

Form of Bonds 

The form of the bonds required by this policy shall be established by rule made by the Procurement Policy Board. Any person may obtain from the District a certified copy of a bond upon payment of the cost of reproduction of the bond and postage, if any. 

Utah Code § 63G-6a-1105 (2020) 

Waiver of Bonding Requirement 

The procurement Official may waive any bonding requirement if it determines in writing that: 

   1. Bonds cannot reasonably be obtained for the work involved; 

   2. The cost of the bonds exceeds the risk to the District; or 

   3. Bonds are not necessary to protect the District’s interest. 

If the District fails to obtain a payment bond it may become liable for unpaid amounts as provided by Utah Code § 14-1-19. 

Utah Admin. Rules R33-11-303 (June 21, 2017)