Ohio Moves to Address Bonding Issues of its Counties
Wednesday, May 2, 2012
introduced earlier this year, Ohio HB 340 would have raised the threshold for
bonding on county projects from $25,000 to $50,000, and would have permitted
counties to commissioners to exempt any project from the bid bond requirements
of the Little Miller Act if the estimated cost of the work is less than
$250,000. This effectively would have
raised the bond threshold for counties from $25,000 to $250,000. The Ohio Insurance Institute (OII) reported
that this was an effort the counties to cut costs in their budgets.
There was a meeting
on this bill of all interested parties.
John Petro, SFAA’s counsel in Ohio, attended the meeting for SFAA. At the meeting it became clear that the counties
were concerned about contracts for goods and services rather than construction
contracts. Under current law, Franklin
County requires a bid deposit of $500 on all such contracts in excess of
$25,000. The deposit can be a bond,
letter of credit or certified check.
There are numerous bidders on such contracts and the vendors can have
such deposits in place for months until the contract is awarded. This is burdensome for the vendors whose cash
is tied up and the county employees that have to return dozens of deposits to
As a result of that
meeting it that the county code will be amended such that : 1) for county
construction contracts in excess of $50,000, the contract must comply with the
competitive bidding requirements and the bid bond requirements in the Little
Miller Act; 2) for any other county contract, if the bid is in excess of
$50,000, the competitive bidding requirements apply and the county may require
a bid bond; and 3) for any contract, the county may waive the bid bond
requirements for projects under $100,000.
The above resolution of the issue has been
turned into amendments to HB 509. This
bill has passed the House and is moving in the Senate. We expect the Ohio legislature to pass this
bill before it recesses for the summer.
This is another example of the cooperative effort of the surety
companies and their trades—AIA, PCI and the Ohio Insurance Institute. The local contractor and subcontractor
associations supported us on the bonding issues.
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