41-2574

41-2574. Contract performance and payment
bonds

A. The following bonds or security is required and is binding on the parties to the
contract if the value of a construction award exceeds the amount established by section
41-2535:

1. A performance bond that is executed and furnished as required under title 34,
chapter 2, article 2 or chapter 6, as applicable, in an amount equal to one hundred per
cent of the price specified in the contract conditioned on the faithful performance of
the contract in accordance with the plans, specifications and conditions of the contract,
except that:

(a) For job-order-contracting construction services, the performance bond shall
cover the full amount of construction under the job-order-contracting construction
services contract, shall not include any design services, preconstruction services,
finance services, maintenance services, operations services or other related services
included in the contract, may be a single bond for the full term of the contract, a
separate bond for each year of a multiyear contract or a separate bond for each job
order, as determined by the purchasing agency, and, if a single bond for the full term of
the contract or a separate bond for each year of a multiyear contract, shall initially be
based on the purchasing agency's reasonable estimate of the amount of construction that
the purchasing agency believes is likely to actually be done during the full term of the
contract or during the particular year of a multiyear contract, as applicable.

(b) For construction-manager-at-risk construction services and design-build
construction services, the amount of the performance bond shall be the price of
construction and shall not include the cost of any design services, preconstruction
services, finance services, maintenance services, operations services and other related
services included in the contract. This bond is solely for the protection of this state.
The conditions and provisions of the performance bond regarding the surety's obligations
shall follow the form required under section 34-222, subsection G or section 34-610,
subsection G, as applicable.

2. A payment bond that is executed and furnished as required by title 34, chapter
2, article 2 or chapter 6, as applicable, in an amount equal to one hundred per cent of
the price specified in the contract for the protection of all persons supplying labor or
material to the contractor or its subcontractors for the performance of the construction
provided for in the contract, except that:

(a) For job-order-contracting construction services, the payment bond shall cover
the full amount of construction under the job-order-contracting construction services
contract, shall not include any design services, preconstruction services, finance
services, maintenance services, operations services or other related services included in
the contract, may be a single bond for the full term of the contract, a separate bond for
each year of a multiyear contract or a separate bond for each job order, as determined by
the purchasing agency, and, if a single bond for the full term of the contract or a
separate bond for each year of a multiyear contract, shall initially be based on the
purchasing agency's reasonable estimate of the amount of construction that the purchasing
agency believes is likely to actually be done during the full term of the contract or
during the particular year of a multiyear contract, as applicable.

(b) For construction-manager-at-risk construction services and design-build
construction services, the amount of the payment bond shall be the price of construction
and shall not include the cost of any design services, preconstruction services, finance
services, maintenance services, operations services or other related services included in
the contract. The conditions and provisions of the payment bond regarding the surety's
obligations shall follow the form required under section 34-222, subsection F or section
34-610, subsection F, as applicable.

B. For design-bid-build construction, the bonds prescribed in subsection A of this
section shall be provided on and at the same time as execution of the construction
contract. For construction-manager-at-risk, design-build and job-order-contracting
construction services, the bonds prescribed in subsection A of this section shall be
provided only on and at the same time as execution of a contract or an amendment to a
contract that commits the contractor to provide construction for a fixed price,
guaranteed maximum price or other fixed amount within a designated time frame.

C. If the prime contract or specifications require any persons supplying labor or
materials in the prosecution of the work to furnish payment or performance bonds, these
bonds shall be executed solely by a surety company or companies holding a certificate of
authority to transact surety business in this state issued by the director of the
department of insurance pursuant to title 20, chapter 2, article 1. Notwithstanding the
provisions of any other statute, the bonds shall not be executed by an individual surety
or sureties, even if the requirements of section 7-101 are satisfied.