Originally posted 2011-07-25 09:00:48.
Recently, the legal/construction blogosphere (if that’s still a word) has been discussing a move by Ohio State University to eliminate the need for construction payment and performance bonds on public projects for the university. Needless to say, this move is not popular with certain portions of the construction industry. In fact the Surety and Fidelity Association of America (SFAA) and the American Subcontractors Association (ASA) filed a joint action to require OSU to require bonding on their projects.
This move by OSU is not the only step toward lowering bonding requirements by various states. The Commonwealth of Virginia, my home turf, recently enacted a change in the minimum size of a project on which bonding is required. This change raised the minimum project value from $100,000 to $500,000 and substituted a choice to pre-qualify contractors for public projects.
These matters have been discussed here at Construction Law Musings and by both of my pals Doug Reiser (@douglasreiser) and Chris Cheatham (@chrischeatham) on their respective blogs (linked above) so I won’t get into the specifics of the particular construction projects or the legislation. I do however, want to get thoughts of all of you great readers on the implications of this move.
