Performance And Payment Bonds Required
(a) A governmental entity that makes a public work contract with a prime contractor shall require the contractor, before beginning the work, to execute to the governmental entity:
a performance bond if the contract is in excess of $100,000; and
a payment bond if:
the contract is in excess of $25,000, and the governmental entity is not a municipality or a joint board created under Subchapter D, Chapter 22, Transportation Code; or
the contract is in excess of $50,000, and the governmental entity is a municipality or a joint board created under Subchapter D, Chapter 22, Transportation Code.
The performance bond is:
solely for the protection of the state or governmental entity awarding the public work contract;
in the amount of the contract; and
conditioned on the faithful performance of the work in accordance with the plans, specifications, and contract documents.
The payment bond is:
solely for the protection and use of payment bond beneficiaries who have a direct contractual relationship with the prime contractor or a subcontractor to supply public work labor or material; and
in the amount of the contract.
A bond required by this section must be executed by a corporate surety in accordance with Section 1, Chapter 87, Acts of the 56th Legislature, Regular Session, 1959 (Article 7.19-1, Vernon's Texas Insurance Code).
A bond executed for a public work contract with the state or a department, board, or agency of the state must be payable to the state and its form must be approved by the attorney general. A bond executed for a public work contract with another governmental entity must be payable to and its form must be approved by the awarding governmental entity.
A bond required under this section must clearly and prominently display on the bond or on an attachment to the bond:
the name, mailing address, physical address, and telephone number, including the area code, of the surety company to which any notice of claim should be sent; or
the toll-free telephone number maintained by the Texas Department of Insurance under Subchapter B, Chapter 521, Insurance Code, and a statement that the address of the surety company to which any notice of claim should be sent may be obtained from the Texas Department of Insurance by calling the toll-free telephone number.
A governmental entity may not require a contractor for any public building or other construction contract to obtain a surety bond from any specific insurance or surety company, agent, or broker.
A reverse auction procedure may not be used to obtain services related to a public work contract for which a bond is required under this section. In this subsection, "reverse auction procedure" has the meaning assigned by Section 2155.062 or a procedure similar to that described by Section 2155.062.
Added by Acts 1993, 73rd Leg., ch. 268, Sec. 1, eff. Sept. 1, 1993. Amended by Acts 1995, 74th Leg., ch. 76, Sec. 5.43(a), eff. Sept. 1, 1995; Acts 2001, 77th Leg., ch. 380, Sec. 1, eff. Sept. 1, 2001; Acts 2001, 77th Leg., ch. 614, Sec. 2, eff. Sept. 1, 2001; Acts 2003, 78th Leg., ch. 1275, Sec. 2(86), eff. Sept. 1, 2003.
Acts 2005, 79th Leg., Ch. 728, Sec. 11.122, eff. September 1, 2005.
Acts 2009, 81st Leg., R.S., Ch. 1304, Sec. 1, eff. September 1, 2009.
Acts 2011, 82nd Leg., R.S., Ch. 1129, Sec. 1.01, eff. September 1, 2011.