Performance bond; payment bond; waiver of bonds
(1)Except as provided in ORS 279C.390 (Exemption of contracts from bid security and bonds), a successful bidder for a public improvement contract shall promptly execute and deliver to the contracting agency the following bonds:
(a)A performance bond in an amount equal to the full contract price conditioned on the faithful performance of the contract in accordance with the plans, specifications and conditions of the contract. The performance bond must be solely for the protection of the contracting agency that awarded the contract and any public agency or agencies for whose benefit the contract was awarded. If the public improvement contract is with a single person to provide both design and construction of a public improvement, the obligation of the performance bond for the faithful performance of the contract required by this paragraph must also be for the preparation and completion of the design and related services covered under the contract. Notwithstanding when a cause of action, claim or demand accrues or arises, the surety is not liable after final completion of the contract, or longer if provided for in the contract, for damages of any nature, economic or otherwise and including corrective work, attributable to the design aspect of a design-build project, or for the costs of design revisions needed to implement corrective work. A contracting agency may waive the requirement of a performance bond. A contracting agency may permit the successful bidder to submit a cashier’s check or certified check in lieu of all or a portion of the required performance bond.
(b)A payment bond in an amount equal to the full contract price, solely for the protection of claimants under ORS 279C.600 (Right of action on payment bond or public works bond of contractor or subcontractor).
(2)If the public improvement contract is with a single person to provide construction manager/general contractor services, in which a guaranteed maximum price may be established by an amendment authorizing construction period services following preconstruction period services, the contractor shall provide the bonds required by subsection (1) of this section upon execution of an amendment establishing the guaranteed maximum price. The contracting agency shall also require the contractor to provide bonds equal to the value of construction services authorized by any early work amendment in advance of the guaranteed maximum price amendment. Such bonds must be provided before construction starts.
(3)Each performance bond and each payment bond must be executed solely by a surety company or companies holding a certificate of authority to transact surety business in this state. The bonds may not constitute the surety obligation of an individual or individuals. The performance and payment bonds must be payable to the contracting agency or to the public agency or agencies for whose benefit the contract was awarded, as specified in the solicitation documents, and shall be in a form approved by the contracting agency.
(4)In cases of emergency, or when the interest or property of the contracting agency or the public agency or agencies for whose benefit the contract was awarded probably would suffer material injury by delay or other cause, the requirement of furnishing a good and sufficient performance bond and a good and sufficient payment bond for the faithful performance of any public improvement contract may be excused, if a declaration of such emergency is made in accordance with rules adopted under ORS 279A.065 (Model rules generally).
(5)This section applies only to public improvement contracts with a value, estimated by the contracting agency, of more than $100,000 or, in the case of contracts for highways, bridges and other transportation projects, more than $50,000. [2003 c.794 §118; 2005 c.103 §20; 2013 c.522 §9]
Notes of Decisions
When read with ORS 279C.600, successful bidder in public improvement contract must secure payment bond in amount equal to full contract price to protect potential claimant under ORS 279C.600 and claimant under ORS 279C.600 is not required to incorporate its contract or quasi-contract claims into bond claims. State v. Ross Bros. & Co., Inc., 268 Or App 438, 342 P3d 1026 (2015), Sup Ct review denied