SENATE, No. 723

STATE OF NEW JERSEY

INTRODUCED FEBRUARY 15, 1996

By Senator LIPMAN

An Act concerning bonds of contractors for board of education projects and amending N.J.S.18A:18A-25.

    Be It Enacted by the Senate and General Assembly of the State of New Jersey:

    1. N.J.S.18A:18A-25 is amended to read as follows:

    18A:18A-25. When a surety company bond is required in the advertisement or specifications for a contract or agreement, every board of education shall require from any bidder submitting a bid in accordance with plans, specifications and advertisements, as provided for by law, a certificate from a surety company stating that it will provide the contractor with a bond in such sum as is required in the advertisement or in the specifications.

    This certificate shall be obtained for a bond--

    a. For the faithful performance of all provisions of the specifications or for all matters which may be contained in the notice to bidders, relating to the performance of the contract or agreement; including the guarantees required under article 12 of chapter 44 of Title 2A of the New Jersey Statutes; and

    b. If any be required, for a guarantee bond for the faithful performance of the contract provisions relating to the repair and maintenance of any work, project or facility and its appurtenances and keeping the same in good and serviceable condition during the term of the bond as provided for in the notice to bidders or in the specifications; or

    c. In such other form as may be provided in the notice to bidders or in the specifications.

    The board of education may: (1) establish for a contract the amount of the bond at any percentage, not exceeding 100%, of the amount bid, based upon the board's assessment of the risk presented to the board by the type of contract, past experience with a particular contractor and other relevant factors, and (2) waive the bond requirements of this

section and N.J.S.2A:44-143 entirely if the contract is for a sum not exceeding $100,000.

    If a bidder desires to offer the bond of an individual instead of that of a surety company, he shall submit with his bid a certificate signed by such individual similar to that required of a surety company.

    The board of education may reject any such bid if it is not satisfied with the sufficiency of the individual surety offered.

(cf: N.J.S.18A:18A-25)

    2. This act shall take effect immediately.

STATEMENT

    This bill amends the "Public School Contracts Law" by permitting a board of education to: (1) establish for a contract the amount of the bond at any percentage, not exceeding 100%, of the amount bid, based upon the board's assessment of the risk presented to the board by the type of contract, past experience with a particular contractor and other relevant factors, and (2) waive the bond requirements entirely if the contract is for a sum not exceeding $100,000.

    Increasing the ability of a board of education to waive or reduce bond requirements should reduce costs for contractors and therefore make it easier for small firms to compete for board of education contracts.

    The bill gives the same flexibility to boards of education in setting the bond requirements of contractors that was given to State departments by P.L.1991, c.454, approved on January 18, 1992.

Permits board of education to reduce or waive bond requirements of contractors.