Section 39-1-4 Selection of Surety Company, Etc.; Approval of Bonds, Etc.
AI-assisted research summary: Officers and related agents of an awarding authority generally may not require bidders to use a particular surety or insurance provider for public works contracts, and may not themselves negotiate or procure most surety bonds or insurance; limited exceptions apply.
(a) No officer or employee of an awarding authority and no person acting or purporting to act on behalf of such officer or employee of an awarding authority, except a public agency or authority created pursuant to agreement or compact with another state, shall, with respect to any public works contract, require the bidder to obtain or procure any surety bond or contract of insurance specified in connection with such contract or specified by any law, ordinance, or regulation from a particular surety company, insurance company, bonding company, agent, or broker. No officer, employee, person, firm, or corporation acting or purporting to act on behalf of any officer or employee of an awarding authority shall negotiate, make application, obtain, or procure any surety bond or contract of insurance, except contracts of insurance for builder’s risk or owner’s protective liability, which shall be obtained or procured by the bidder, contractor, or subcontractor, with the following exceptions: (1) Contracts of insurance for builder’s risk, all risk, or owner’s protective liability; (2) Contracts of insurance of any kind for any public works project involving an amount in excess of forty million dollars ($40,000,000); (3) Contracts of insurance of any kind obtained or procured by a single awarding authority for a group of public works projects involving an aggregate amount in excess of ninety million dollars ($90,000,000) which are financed substantially by bond issues by the awarding authority or part of a programmatically related group of public works projects, and meeting all of the following criteria: a. All projects are located within the same county; b. All projects are located within 10 miles of each other; c. All projects are part of the same duly authorized annual capital development plan of the authority. (b) The provisions of subsection (a) shall not prevent an officer or employee on behalf of an awarding authority from exercising the right to approve the form, sufficiency, or manner of execution of the surety bonds or contracts of insurance furnished by the surety company, insurance company, or bonding company selected by the bidder to underwrite surety bonds or contracts of insurance. The insurance company, bonding company, or surety company shall meet all requirements for such companies otherwise provided for by law. (c) All provisions in any invitation for bids or in any of the contract documents in conflict with this section are declared to be void and unenforceable as contrary to the public policy of this state.