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What's New: Government Affairs

Ohio Moves to Address Bonding Issues of its Counties

Wednesday, May 2, 2012  

As originally 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 unsuccessful bidders.

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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