DAR File No. 28559

Transportation, Operations, Construction

R916-1-7

Execution of Contracts

NOTICE OF PROPOSED RULE

DAR File No.: 28559
Filed: 03/16/2006, 01:53
Received by: NL

RULE ANALYSIS

Purpose of the rule or reason for the change:

The reason for the change is to allow for the reduction of bond amounts in certain nondesign build contracts.

Summary of the rule or change:

This amendment fulfills the requirement in Section 63-56-504 that an agency must establish rules if it wants to reduce or waive payment or performance bonds. Pursuant to that statute, this rule allows the department to reduce or waive the bond when it believes the normal bond amount is unnecessary in order to protect the State.

State statutory or constitutional authorization for this rule:

Section 63-56-504

Anticipated cost or savings to:

the state budget:

This amendment should not have any impact on the state budget as it does not require any expenditure of funds nor cut back on any funds.

local governments:

Local governments are not contractors that would be affected by rule amendment; therefore, there should be no costs to them.

other persons:

Contractors on projects that qualify for the reduced or waived bond will see a savings in their costs, but there should be no increase in costs from this bill.

Compliance costs for affected persons:

There are no compliance costs from this rule because it does not require any person to take any action or receive any licensure.

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

This amendment would only have a positive fiscal impact on contractors that work on projects qualifying for reduction or waiver. John R. Njord, Executive Director

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

Direct questions regarding this rule to:

James Beadles at the above address, by phone at 801-965-4168, by FAX at 801-965-4796, or by Internet E-mail at jbeadles@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:

05/15/2006

This rule may become effective on:

05/16/2006

Authorized by:

John R. Njord, Executive Director

RULE TEXT

R916. Transportation, Operations, Construction.

R916-1. Advertising and Awarding Construction Contracts.

R916-1-7. Execution of Contracts.

(1) Unless the bonds are waived pursuant to Subparagraph (6), when the contract is executed, [At the time of execution of the contract, ]the successful bidder shall furnish a performance bond and a payment bond, each in a sum equal to the full amount of the contract. Each bond shall be on the form provided by the department and shall be executed by a surety company or companies licensed by the state of Utah. These companies must be listed on the current United States Department of the Treasury Circular 570 as acceptable sureties on Federal bonds. The department shall make available to the public this Circular at the following locations: Construction Division, UDOT Library, and Internet.

(2) The contract shall be signed by the successful bidder and returned together with the fully executed contract bonds within 15 days after the contract has been awarded.

(3) Failure to execute a contract and file acceptable bonds within 15 days after the contract has been awarded shall be just cause for the cancellation of the award and the forfeiture of the proposal guaranty.

(4) If the contract is not executed by the Department[Commission] within 30 days after receiving signed contracts and bonds, the bidder shall have the right to withdraw their bid without penalty.

(5) No contract shall be considered effective until it has been fully executed by all the parties thereto.

(6) In accordance with Utah Code Ann. Section 63-56-504, the Executive Director or designee may reduce or waive the amount of the payment and performance bonds below the 100% normally required, if he or she determines that the circumstances are such that the normal bonding requirement is unnecessary to protect the State.

KEY: bids, advertising, contracts, bonding requirements

Date of Enactment or Last Substantive Amendment: [April 1, 1997]2006

Notice of Continuation: January 18, 2002

Authorizing, and Implemented or Interpreted Law: 27-12-7; 27-12-108; 63-49-4; 63-56-38; 63-56-13

ADDITIONAL INFORMATION

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For questions regarding the content or application of this rule, please contact James Beadles at the above address, by phone at 801-965-4168, by FAX at 801-965-4796, or by Internet E-mail at jbeadles@utah.gov

For questions about the rulemaking process, please contact the Division of Administrative Rules (801-538-3764). Please Note: The Division of Administrative Rules is NOT able to answer questions about the content or application of these administrative rules.