The representative (Greg Leon?) from Mittauer and Associates Engineers PROVIDED the White Springs Town Council with the recommendation that the Kendrick Street Paving and Drainage Improvements Project be awarded to Curt’s Construction, Inc.
Curt’s Construction, Inc. was the Low Bid at $310,350.43. The next lowest bid was through Art Walker at $404,950.88 with the highest bid from Anderson Construction of $416,828.06. The Florida Department of Transportation approved the bid of $310,350.43 from Curt’s Construction and FDOT increased the amount of the initial award to meet 100% of the cost with a Supplemental agreement.
Councilman Walter McKenzie was concerned that there was such a difference in bids and whether Curt’s Construction could do the job for the price they bid. The representative stated that the Town is protected by Bid and Performance Bonds.
As information on bonds 101, there are three parties to a surety Bond. There is the Surety who guarantees the performance of another…the principal, Curt’s Construction, to a third party, the Obligee (The Town of White Springs).
Bonds are not insurance and if the principal, Curt’s Construction is liable, they must reimburse the surety for any payments made up to the maximum penalty (surety bond amount). If the maximum penalty (The bond amount is called a penalty)of the bond is exceeded, Curt’s construction would be held liable for damages beyond the maximum amount payable by the surety. One can see why no one wishes to default on a bond.
The Bid Bond promises that Curt Construction will enter into a contract and furnish the other contract bonds, which are necessary under the contract. If the principal should fail to enter into a contract, the owner is entitled to be paid the difference between the amount which the principal bid and the bid finally accepted by the owner, the Town of White Springs.
The Performance bond guarantees the owner, the Town of White Springs, will be indemnified for any loss due to the contractor’s failure to perform the work in accordance to the contract, plans, specifications and duration. If the contractor defaults, the surety has the following options.
- Complete the contract using the existing contractor/principal
- Complete the contract using a replacement contractor
- Allow the owner to make the arrangements for the completion of the work with any losses (damages) payable by the Surety Company up to the penalty amount.
- Provide financial assistance to the existing contractor/principal so the project may be completed.
- Pay over the penalty amount to the Town of White Springs (owner/obligee)
So Councilors, you need not worry. You are in the best position since not only a Bid Bond will be in place but also the Performance Bond. The only time I have seen a major default was in Las Vegas because of numerous Construction Defects that could not be repaired affordably and some contractors went bankrupt.
Mittauer has done such a great job for White Springs.
Karin for the blog