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Overview of Bonding Regulations for Contractors in 2017

For contractors across the U.S., a number of new bonding regulations have been passed in 2017 that deserve consideration.

In some cases, the new rules increase the amounts of contractor surety bonds required for getting licensed. For other contractors, there are new bond requirements being introduced. This may signify a trend towards better regulation of the construction industry through safety instruments such as bonds. At the same time, bonds can also serve as another option for providing financial security on projects.

Here are the most significant bonding regulations changes from 2017 that contractors need to be aware of.

Oregon water well contractors license bond increase

As of January 1, 2018, water well contractors in Oregon will need to post a higher surety bond amount to receive their license from the state Water Resources Department. The changes are introduced by House Bill 2296. The bond requirement is now $20,000, increased twofold from $10,000. The permit bond amount required of landowners for water well projects without a licensed water well contractor is now $10,000, up from $5,000.

Oregon public works bond requirement for subcontractors

Oregon Senate Bill 416, effective as of June 14, 2017, requires a surety bond from subcontractors who want to complete public works contracts. The bond amount is $30,000. Such a public works bond is already required of contractors working on such projects.

The requirement is now extended also to subcontractors awarded a public works contract by a contractor or a subcontractor. The purpose of the bond is to ensure the due payment of prevailing wages. Certain businesses such as disadvantaged, minority-owned, woman-owned, service-disabled veteran-owned, and certified emerging small companies can obtain a four year waiver from the bond requirement.

Oregon construction flagging contractors bond requirement

Construction flagging contractors also have to meet new bonding requirements. With Senate Bill 596, they now have to post a $20,000 bond. This is an indispensable criteria, so that they can obtain a state license to employ construction flaggers. The new rule is effective as of July 1, 2017. Contractors have to use the official bond form.

Virginia Class A and B contractors’ new surety bond option

Since July 1, 2017, Class A and B contractors in Virginia can post a surety bond instead of providing proof for minimum net worth. Previously, Class A contractors had to ensure a minimum net worth of $45,000, while Class B – of $15,000. With Senate Bill 1113, contractors can now post a $50,000 bond in lieu of the minimum net worth requirement.

Kansas P3 project bonds

Kansas P3 projects now require surety bonds in order to introduce better security for their completion. The regulation is set in Senate Bill 55 and is effective since July 1, 2017. On public-private partnership projects above $100,000, Kansas contractors will have to post payment and performance bonds.

Missouri electrical contractors bond

Missouri introduced new bonding requirements for electrical contracting firms. Senate Bill 240, which went into effect August 28, 2017, requires electrical contractors in the state to present surety bonds to their city or county authorities, as required by the relevant political subdivision. This will be a necessary requirement to obtain a statewide license from the state Division of Professional Registration.

Washington public improvement contractor bond

Washington House Bill 1538 introduced a new bond requirement for prime contractors on public improvement projects. They now may have to post a surety bond for each of their subcontractors’ retainage portion, if relevant bodies deem it necessary. The legislation is in force since July 23, 2017.

Changes to the SBA’s Surety Bond Guarantee Program

The Small Business Administration made changes to its Surety Bond Guarantee Program that came into effect on September 20, 2017. The SBA raised the eligible contract amount for its “quick bond” applicants. The threshold was previously set at $250,000, and now is increased to $400,000. The maximum guaranteed percentage in its Preferred Surety Bond Program was also raised from 70 to 90 percent. The purpose of the changes is to present more opportunities to small businesses to obtain the bonding they need.

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