Common use of Bonds and Other Performance Security Clause in Contracts

Bonds and Other Performance Security. 6.2.1 Design-Builder shall furnish a Performance Bond and a Payment Bond in the forms provided in Exhibits F and G, respectively, or on any other form provided by City or approved by City. Design-Builder shall deliver to City, not later than fourteen (14) calendar days after the date of the award of the Contract letter issued by City, evidence satisfactory to City that Design-Builder is capable of furnishing the Bonds. The Performance Bond shall be furnished as a guarantee of the faithful performance of the requirements of the Contract Documents (including the obligation to pay liquidated damages) in an amount equal to one-hundred percent (100%) of the Contract Price. The Payment Bond shall secure payment of all claims, demands, stop payment notices, mechanics liens, or charges of material suppliers, mechanics or laborers employed by Design-Builder or by any Subcontractor or any person, form, or entity eligible to file a stop payment notice with respect to the Work in an amount equal to one-hundred percent (100%) of the Contract Price. Design-Builder shall maintain the Payment Bond in full force and effect until (a) Design- Builder has obtained unconditional releases pursuant to Civil Code § 8138 from all claimants who filed preliminary notice of a claim against the bond, or (b) expiration of the statutory period for claims against the bond. Bonds may be obtained through Design-Builder’s usual source and the cost thereof shall be included in the Contract Price. 6.2.2 The bonds shall be executed by California admitted surety with an A.M. Best Company minimum rating of no less than “A:IX”. If an A.M. Best rating is not available, the proposed surety must meet comparable standards of another rating service satisfactory to City. Bonds issued by a California admitted surety listed in the latest version of the U.S. Department of Treasury Circular 570 shall be deemed to be accepted unless specifically rejected 6.2.3 All such bonds shall be accompanied by a power of attorney for the surety company authorizing the person executing the bond to sign on behalf of the company. If the bonds are executed outside the State of California, all copies of the bonds must be countersigned by a California representative of the surety. The signature of the person executing the bond shall be acknowledged by a notary public as a signature of the person designated in the power of attorney. 6.2.4 If, during the continuance of the Contract, any of the sureties, in the opinion the City, are or become non-responsible or otherwise unacceptable to City, City may require other new or additional sureties which Design- Builder will furnish to the satisfaction of City within ten (10) days after written notice, and in default thereof, the Contract may be suspended and the work completed as provided in Article 15 of the General Conditions. 6.2.5 Upon the request of any person or entity appearing to be a potential beneficiary of bonds covering payment of obligations arising under the Contract, Design-Builder shall promptly furnish a copy of the bonds or shall permit a copy to be made. 6.2.6 In the event of increases in the Contract Price by change orders or otherwise aggregating to ten percent (10%) of the Contract Price or more, and by all such subsequent increases in the Contract Price thereafter, the Design-Builder shall submit to City evidence of additional bond coverage for such increases in the Contract Price. Design-Builder shall be compensated for such additional bond coverage.

Bonds and Other Performance Security. 6.2.1 Design-Builder shall furnish a Performance Bond and a Payment Bond in the forms provided in Exhibits F and G, respectively, or on any other form provided by City or approved by City. Design-Builder shall deliver to City, not later than fourteen (14) calendar days after the date of the award of the Contract letter issued by City, evidence satisfactory to City that Design-Builder is capable of furnishing the Bonds. The Performance Bond shall be furnished as a guarantee of the faithful performance of the requirements of the Contract Documents (including the obligation to pay liquidated damages) in an amount equal to one-hundred percent (100%) of the Contract Price. The Payment Bond shall secure payment of all claims, demands, stop payment notices, mechanics liens, or charges of material suppliers, mechanics or laborers employed by Design-Builder or by any Subcontractor or any person, form, or entity eligible to file a stop payment notice with respect to the Work in an amount equal to one-hundred percent (100%) of the Contract Price. Design-Builder shall maintain the Payment Bond in full force and effect until (a) Design- Design-Builder has obtained unconditional releases pursuant to Civil Code § 8138 from all claimants who filed preliminary notice of a claim against the bond, or (b) expiration of the statutory period for claims against the bond. Bonds may be obtained through Design-Design- Builder’s usual source and the cost thereof shall be included in the Contract Price. 6.2.2 The bonds shall be executed by California admitted surety with an A.M. Best Company minimum rating of no less than “A:: IX”. If an A.M. Best rating is not available, the proposed surety must meet comparable standards of another rating service satisfactory to City. Bonds issued by a California admitted surety listed in the latest version of the U.S. Department of Treasury Circular 570 shall be deemed to be accepted unless specifically rejectedrejected by City. Bonds from a California admitted surety not listed in Treasury Circular 570 must be accompanied by all the documents enumerated in California Code of Civil Procedure § 995.660(a). 6.2.3 All such bonds shall be accompanied by a power of attorney for the surety company authorizing the person executing the bond to sign on behalf of the company. If the bonds are executed outside the State of California, all copies of the bonds must be countersigned by a California representative of the surety. The signature of the person executing the bond shall be acknowledged by a notary public as a signature of the person designated in the power of attorney. 6.2.4 If, during the continuance of the Contract, any of the sureties, in the opinion the City, are or become non-responsible or otherwise unacceptable to City, City may require other new or additional sureties which Design- Design-Builder will furnish to the satisfaction of City within ten (10) days after written notice, and in default thereof, the Contract may be suspended and the work completed as provided in Article 15 of the General Conditions. 6.2.5 Upon the request of any person or entity appearing to be a potential beneficiary of bonds covering payment of obligations arising under the Contract, Design-Builder shall promptly furnish a copy of the bonds or shall permit a copy to be made. 6.2.6 In the event of increases in the Contract Price by change orders or otherwise aggregating to ten percent (10%) of the Contract Price or more, and by all such subsequent increases in the Contract Price thereafter, the Design-Builder shall submit to City evidence of additional bond coverage for such increases in the Contract Price. Design-Builder shall be compensated for such additional bond coverage.