2014 Kentucky Revised Statutes CHAPTER 45A - KENTUCKY MODEL PROCUREMENT CODE 45A.190 Performance bond and payment bond -- Recommendations on whether performance bond should be required -- Audit of contract performance -- Release from performance bond.
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45A.190 Performance bond and payment bond -- Recommendations on
whether performance bond should be required -- Audit of contract
performance -- Release from performance bond.
(1)
(2)
(3)
As used in this section, "agency contract administrator" means the state
agency employee responsible for the administration of a contract.
When a construction contract is awarded in an amount in excess of forty
thousand dollars ($40,000), the following bonds shall be furnished to the
Commonwealth, and shall be binding on the parties upon the award of the
contract:
(a) A performance bond satisfactory to the Commonwealth executed by a
surety company authorized to do business in this Commonwealth, or
otherwise supplied, satisfactory to the Commonwealth, in an amount
equal to one hundred percent (100%) of the contract price as it may be
increased; and
(b) A payment bond satisfactory to the Commonwealth executed by a surety
company authorized to do business in the Commonwealth, or otherwise
supplied, satisfactory to the Commonwealth, for the protection of all
persons supplying labor and material to the contractor or his
subcontractors, for the performance of the work provided for in the
contract. The bond shall be in an amount equal to one hundred percent
(100%) of the original contract price.
When any contract in an amount in excess of forty thousand dollars ($40,000)
for commodities, supplies, equipment, or services of any kind, or when a
contract for construction services costing forty thousand dollars ($40,000) or
less is proposed for presentation to vendors or contractors, the agency contract
administrator shall evaluate whether a performance bond should be required in
the procurement document, and make his recommendation to the purchasing
agency. The agency contract administrator shall note the reason that a
performance bond is or is not recommended and his notation shall be a part of
the permanent record relating to the contract. If a performance bond is
required, the requirement shall be included in the invitation to bid, request for
proposal, or other procurement document. The agency contract administrator
shall make audits of the performance of contracts upon completion of one-third
(1/3) of the contract and upon completion of two-thirds (2/3) of the contract. For
contracts taking longer than one (1) year to complete, audits of performance
shall be conducted at least annually. Before a vendor is released from a
performance bond, the agency contract administrator shall review the audits of
performance, make a final performance review, and promptly determine
whether, in his or her opinion, the vendor has fully complied with the terms of
the contract. The opinion of the agency contract administrator shall be made in
writing or electronically, set forth the reasons for his or her opinion regarding
compliance or noncompliance, and be signed by the agency contract
administrator. This opinion may have an electronic signature. The using
agency head shall, after consideration of the performance audits, the final
performance review, and the opinion of the agency contract administrator
regarding compliance or noncompliance, determine whether to recommend to
the purchasing agency that the performance bond be released or whether a
(4)
claim should be made against the performance bond. This determination of the
using agency head shall be in writing, signed by the using agency head, and
forwarded to the purchasing agency. This determination may have an
electronic signature and be transmitted electronically. If the recommendation of
the using agency is not followed by the purchasing agency, the purchasing
agency shall place a statement in the file explaining why it is not followed.
Nothing in this section shall be construed to limit the authority of the
Commonwealth to require a performance bond or other security in addition to
those bonds, or in circumstances other than specified in subsection (2) or (3) of
this section.
Effective:June 20, 2005
History: Amended 2005 Ky. Acts ch. 85, sec. 72, effective June 20, 2005. -Amended 1998 Ky. Acts ch. 324, sec. 1, effective July 15, 1998. -- Created 1978
Ky. Acts ch. 110, sec. 38, effective January 1, 1979.
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