§ 22-9-404 — Subcontractor bonds

(a) (1) If required by the general contractor, each subcontractor must provide the general contractor with a payment and performance bond made by a surety company qualified under § 22-9-401 et seq., or a cash bond in a sum equal to the full amount of the subcontractor's bid on a portion of a public works contract when: (A) The subcontractor is the low responsible bidder for that portion of the contract; (B) The state, pursuant to § 22-9-204 , requires the general contractor to list the subcontractor in the general contractor's bid; and (C) The work value of the subcontractor's bid is in excess of fifty thousand dollars ($50,000). (2) If the general contractor requires the subcontractor to provide a bond, the subcontractor shall provide the bond to the general contractor within five (5) days after the award of the contract by the general contractor to the subcontractor. (b) If the subcontractor fails to provide a payment and performance bond when required by the general contractor, the subcontractor shall lose the bid and shall pay to the general contractor a penalty equivalent to ten percent (10%) of the subcontractor's bid or the difference between the low bid and the next responsible bid and the next responsible low bid, whichever is less, plus cost of recovery of the penalty, including attorney's fees. The purpose of this section is to compensate the general contractor for the difference between the low bid and the next responsible low bid. (c) The general contractor may enforce this section by a civil action in circuit court. (d) The provisions of this section shall not apply to contracts awarded by the State Highway Commission for construction or maintenance of public highways, roads, or streets.

Legislative History

Acts 1993, No. 190, §§ 1-3; 1993, No. 1061, §§ 1, 2.