An Act To Amend the Public Works Contractors' Surety Bond Law of 1971
Sec. 1. 14 MRSA §871, sub-§3, as amended by PL 1993, c. 436, §1, is further amended to read:
When required by the contracting authority, the contractor shall furnish bid security in an amount which the contracting authority considers sufficient to guarantee that if the work is awarded the contractor will contract with the contracting agency.
The bid security may be in the form of United States postal money order, official bank checks, cashiers' checks, certificates of deposit, certified checks, money in escrow, bonds from parties other than bonding companies subject to an adequate financial standing documented by a financial statement of the party giving the surety, bond or bonds from a surety company or companies duly authorized to do business in the State.
The bid security may be required at the discretion of the contracting authority to assure that the contractor is bondable.
The bid securities other than bid bonds must be returned to the respective unsuccessful bidders. The bid security of the successful bidder must be returned to the contractor upon the execution and delivery to the contracting agency of the contract and performance and payment bonds, in terms satisfactory to the contracting agency for the due execution of the work.
In the case of contracts on behalf of the State, the bonds must be payable to the State and deposited with the contracting authority. In the case of all other contracts subject to this section, the bonds must be payable to and deposited with the contracting body awarding the contract.
Sec. 2. 14 MRSA §871, sub-§3-A is enacted to read:
(1) Issued in favor of the State or other contracting authority by an issuer;
(2) In a form satisfactory to the State or other contracting authority; and
(3) In an amount equal to the full amount of the contract.
For purposes of this subsection, “letter of credit” has the same meaning as in Title 11, section 5-1102, subsection (1), paragraph (j).
summary
This bill amends the Public Works Contractors' Surety Bond Law of 1971 by:
1. Increasing from $100,000 to $250,000 the threshold limit for a contract for the construction, alteration or repair of any public building or other public improvement or public work for which a person must provide a performance bond and a payment bond; and
2. Allowing, at the discretion of the State or other contracting authority, the person to provide an irrevocable letter of credit instead of either or both the performance bond and the payment bond.