Administrative Services, Facilities Construction and Management

Section R23-1-40

Procurement of Construction

Notice of Proposed Rule

(Amendment)

DAR File No.: 36020
Filed: 04/02/2012 04:11:51 PM

RULE ANALYSIS

Purpose of the rule or reason for the change:

This rule establishes procedures for the procurement of construction by the Division. The Division is changing the amount of $50,000 to $100,000 for bonding and bid security requirements for the award of construction contracts by the Division. The reason for the amount change is due to inflation and changed market conditions.

Summary of the rule or change:

This rule establishes procedures for the procurement of construction by the Division. The Division is changing the amount of $50,000 to $100,000 for bonding and bid security requirements for the award of construction contracts by the Division. The reason for the amount change is due to inflation and changed market conditions.

State statutory or constitutional authorization for this rule:

• Section 63G-6-208

Anticipated cost or savings to:

the state budget:

This change will will have no impact on the state budget, if anything there will be a cost savings. Cost for bonds that are no longer required for projects between $50,000 and $100,000 will no longer passed onto the state.

local governments:

This rule does not apply to local governments.

small businesses:

This rule change will save costs for small businesses. Cost for bonds that are no longer required for projects between $50,000 and $100,000 will no longer passed onto the state.

persons other than small businesses, businesses, or local governmental entities:

This rule only results in savings to businesses dealing with the state.

Compliance costs for affected persons:

There are no added compliance costs, however there is a savings for projects between $50,000 and $100,000. The Division no longer requires bonds for firms bidding on projects for $50,000 to $100,000.

Comments by the department head on the fiscal impact the rule may have on businesses:

This rule is being changed to reflect inflation and changed market conditions. While some local companies may lose some business, many small businesses and taxpayers will save money as bonds will not be required for payments between $50,000 and $100,000.

Kimberly Hood, Executive Director

The full text of this rule may be inspected, during regular business hours, at the Division of Administrative Rules, or at:

Administrative Services
Facilities Construction and Management
Room 4110 STATE OFFICE BLDG
450 N STATE ST
SALT LAKE CITY, UT 84114-1201

Direct questions regarding this rule to:

• Priscilla Anderson at the above address, by phone at 801-538-9595, by FAX at 801-538-3378, or by Internet E-mail at phanderson@utah.gov
• Alan Bachman at the above address, by phone at 801-538-3105, by FAX at 801-538-3313, or by Internet E-mail at abachman@utah.gov
• Cecilia Niederhauser at the above address, by phone at 801-538-3261, by FAX at 801-538-9694, or by Internet E-mail at cniederhauser@utah.gov
• Chiarina Gleed at the above address, by phone at 801-538-3240, by FAX at 801-538-3313, or by Internet E-mail at cgleed@utah.gov

Interested persons may present their views on this rule by submitting written comments to the address above no later than 5:00 p.m. on:

05/15/2012

This rule may become effective on:

05/22/2012

Authorized by:

D. Gregg Buxton, Director

R23. Administrative Services, Facilities Construction and Management.

R23-1. Procurement of Construction.

R23-1-40. Acceptable Bid Security; Performance and Payment Bonds.

(1) Application. This section shall govern bonding and bid security requirements for the award of construction contracts by the Division in excess of [$50,000]$100,000; although the Division may require acceptable bid security and performance and payment bonds on smaller contracts. Bidding Documents shall state whether acceptable bid security, performance bonds or payment bonds are required.

(2) Acceptable Bid Security.

(a) Invitations for Bids and Requests For Proposals shall require the submission of acceptable bid security in an amount equal to at least five percent of the bid, at the time the bid is submitted. If a contractor fails to accompany its bid with acceptable bid security, the bid shall be deemed nonresponsive, unless this failure is found to be nonsubstantial as hereinafter provided.

(b) If acceptable bid security is not furnished, the bid shall be rejected as nonresponsive, unless the failure to comply is determined by the Director to be nonsubstantial. Failure to submit an acceptable bid security may be deemed nonsubstantial if:

(i)(A) the bid security is submitted on a form other than the Division's required bid bond form and the bid security meets all other requirements including being issued by a surety meeting the requirements of Subsection (5); and

(B) the contractor provides acceptable bid security by the close of business of the next succeeding business day after the Division notified the contractor of the defective bid security; or

(ii) only one bid is received.

(3) Payment and Performance Bonds. Payment and performance bonds in the amount of 100% of the contract price are required for all contracts in excess of [$50,000]$100,000. These bonds shall cover the procuring agencies and be delivered by the contractor to the Division at the same time the contract is executed. If a contractor fails to deliver the required bonds, the contractor's bid shall be found nonresponsive and its bid security shall be forfeited.

(4) Forms of Bonds. Bid Bonds, Payment Bonds and Performance Bonds must be from sureties meeting the requirements of Subsection (5) and must be on the exact bond forms most recently adopted by the Board and on file with the Division.

(5) Surety firm requirements. All surety firms must be authorized to do business in the State of Utah and be listed in the U.S. Department of the Treasury Circular 570, Companies Holding Certificates of Authority as Acceptable Securities on Federal Bonds and as Acceptable Reinsuring Companies for an amount not less than the amount of the bond to be issued. A co-surety may be utilized to satisfy this requirement.

(6) Waiver. The Director may waive the bonding requirement if the Director finds, in writing, that bonds cannot be reasonably obtained for the work involved.

 

KEY: contracts, public buildings, procurement

Date of Enactment or Last Substantive Amendment: [July 8, 2010]2012

Notice of Continuation: May 24, 2007

Authorizing, and Implemented or Interpreted Law: 63G-6-101 et seq.