Did you know that subcontractors, material suppliers and laborers working on a public project cannot place a lien on such projects? That’s why performance and payment surety bonds are so crucial. A bond is also a sort of imprimatur for use of a contractor since the surety thoroughly investigates the reliability of the parties it backs and gives its quality stamp to the contractor by way of a financial guarantee the contractor will perform as agreed.
Surety bonds are also extremely important to protect taxpayer funds that are dedicated to public projects. For example, if a contractor cannot complete a highway or bridge project and defaults in the middle of the job, the surety issuing the performance bond will find a qualified contractor to finish the work. Bid bonds are the way sureties protect taxpayers from having to pay for a rehash of the entire bidding process when a selected bidder cannot fulfill its promises.
With many more bonds and benefits than just these, it may surprise you to find that some states are making it easier for firms without bonds to participate in public projects. Read more about the value of bonds in protecting stakeholders in public and public/private projects in a PC360 article by John Estes, branch manager in Charlotte, N.C., for Old Republic Surety, at https://bit.ly/3ZtTvZM.
