Sec. 4-6-320. Contract performance and payment bonds.
(a) When required; amounts. When a construction contract is awarded in excess of fifty thousand dollars ($50,000.00), or it is deemed necessary by the department head or the Town Manager, the following bonds or security shall be delivered to the Town and shall become binding on the parties upon the execution of the contract:
(1) A performance bond or other security satisfactory to the Town, executed by a surety company authorized to do business in the State, or otherwise secured in a manner satisfactory to the Town; and
(2) A payment bond or other security satisfactory to the Town, executed by a surety company authorized to do business in the State, or otherwise secured in a manner satisfactory to the Town, for the protection of all persons supplying labor and material to the contractor or its subcontractors for the performance of the work provided for in the contract.
(b) Amount of bonds or other security. The amount of the performance and payment bonds or other security specified in Subsection (a) above shall be determined by the Town Manager. In determining the amounts required, the Town Manager shall weigh the following policy considerations:
(1) The Colorado State Legislature has determined that, for construction contracts in excess of fifty thousand dollars ($50,000.00), it is prudent to obtain performance and payment bonds in amounts equal to fifty percent (50%) of the price specified in the contract. (See Sections 24-105-202 and 38-26-106, C.R.S.).
(2) The Town has a policy of encouraging local, minority and women-owned businesses to participate in the Town’s procurement process. The cost of obtaining performance and payment bonds may discourage local, minority and women-owned businesses from bidding on Town construction projects.
(3) It is in the Town’s interest to ensure that construction projects will be completed according to the contract documents without the Town having to expend more than the contract amount.
(4) It is in the Town’s interest to ensure that payment is made for all labor and materials supplied to Town construction projects by contractors and subcontractors.
(5) Certain construction projects may be required by state or federal law to be bonded in a particular manner or in a certain amount.
(6) Phasing of bond amounts should be considered, when appropriate, for projects that are constructed in discrete and identifiable phases. (Prior code 17.03.120)