MACo Research Director Robin Eilenberg testified before the Senate Education and Health and Environmental Affairs Committee in support with amendments of Senate Bill 778, “Procurement – Payment Security – Construction Contracts”, on February 27, 2018.
The bill would require contractors on construction contracts exceeding $100,000 to provide payment security in the amount of 100 percent of the total amount of the construction contract. This would remove local autonomy from the bonding requirement process for contracts.
From MACo Testimony:
Counties are concerned that increasing the amount of bond coverage required under all public construction contracts will increase contract costs for jurisdictions that do not already require this threshold of coverage under local law. Requiring this level of payment security may be prudent in many cases, and accordingly, many counties already require 100 percent payment security. However, each individual county should be able to retain discretion to determine their bonding requirements for their own contracts. Counties may opt to require over 50 percent but less than 100 percent payment security in cases where competition is limited, fewer subcontracts are anticipated, or protections for subcontractors are afforded by alternative methods other than by payment security, which requires costly and timely efforts by subcontractors for them to receive recovery.
MACo requests an amendment to ensure that counties retain local authority to set payment security requirements according to their individual contracting needs.”
Follow MACo’s advocacy efforts during the 2018 legislative session here.