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45A.190 Performance bond and payment bond -- Recommendations on whether performance bond should be required -- Audit of contract performance -- Release from performance bond.

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45A.190 Performance bond and payment bond -- Recommendations on whether performance bond should be required -- Audit of contract performance -- <br>Release from performance bond. (1) As used in this section, &quot;agency contract administrator&quot; means the state agency employee responsible for the administration of a contract. (2) When a construction contract is awarded in an amount in excess of forty thousand dollars (&#36;40,000), the following bonds shall be furnished to the Commonwealth, <br>and shall be binding on the parties upon the award of the contract: <br>(a) A performance bond satisfactory to the Commonwealth executed by a surety company authorized to do business in this Commonwealth, or otherwise <br>supplied, satisfactory to the Commonwealth, in an amount equal to one <br>hundred percent (100%) of the contract price as it may be increased; and (b) A payment bond satisfactory to the Commonwealth executed by a surety company authorized to do business in the Commonwealth, or otherwise <br>supplied, satisfactory to the Commonwealth, for the protection of all persons <br>supplying labor and material to the contractor or his subcontractors, for the <br>performance of the work provided for in the contract. The bond shall be in an <br>amount equal to one hundred percent (100%) of the original contract price. (3) When any contract in an amount in excess of forty thousand dollars (&#36;40,000) for commodities, supplies, equipment, or services of any kind, or when a contract for <br>construction services costing forty thousand dollars (&#36;40,000) or less is proposed <br>for presentation to vendors or contractors, the agency contract administrator shall <br>evaluate whether a performance bond should be required in the procurement <br>document, and make his recommendation to the purchasing agency. The agency <br>contract administrator shall note the reason that a performance bond is or is not <br>recommended and his notation shall be a part of the permanent record relating to the <br>contract. If a performance bond is required, the requirement shall be included in the <br>invitation to bid, request for proposal, or other procurement document. The agency <br>contract administrator shall make audits of the performance of contracts upon <br>completion of one-third (1/3) of the contract and upon completion of two-thirds <br>(2/3) of the contract. For contracts taking longer than one (1) year to complete, <br>audits of performance shall be conducted at least annually. Before a vendor is <br>released from a performance bond, the agency contract administrator shall review <br>the audits of performance, make a final performance review, and promptly <br>determine whether, in his or her opinion, the vendor has fully complied with the <br>terms of the contract. The opinion of the agency contract administrator shall be <br>made in writing or electronically, set forth the reasons for his or her opinion <br>regarding compliance or noncompliance, and be signed by the agency contract <br>administrator. This opinion may have an electronic signature. The using agency <br>head shall, after consideration of the performance audits, the final performance <br>review, and the opinion of the agency contract administrator regarding compliance <br>or noncompliance, determine whether to recommend to the purchasing agency that <br>the performance bond be released or whether a claim should be made against the <br>performance bond. This determination of the using agency head shall be in writing, signed by the using agency head, and forwarded to the purchasing agency. This <br>determination may have an electronic signature and be transmitted electronically. If <br>the recommendation of the using agency is not followed by the purchasing agency, <br>the purchasing agency shall place a statement in the file explaining why it is not <br>followed. (4) Nothing in this section shall be construed to limit the authority of the Commonwealth to require a performance bond or other security in addition to those <br>bonds, or in circumstances other than specified in subsection (2) or (3) of this <br>section. Effective: June 20, 2005 <br>History: Amended 2005 Ky. Acts ch. 85, sec. 72, effective June 20, 2005. -- Amended 1998 Ky. Acts ch. 324, sec. 1, effective July 15, 1998. -- Created 1978 Ky. Acts <br>ch. 110, sec. 38, effective January 1, 1979.