Tex.
Gov't Code Section 2253.021
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:(1)
a performance bond if the contract is in excess of $100,000; and(2)
a payment bond if:(A)
the contract is in excess of $25,000, and the governmental entity is not a municipality or a joint board created under Subchapter D (Definitions), Chapter 22 (County and Municipal Airports), Transportation Code; or(B)
the contract is in excess of $50,000, and the governmental entity is a municipality or a joint board created under Subchapter D (Definitions), Chapter 22 (County and Municipal Airports), Transportation Code.(b)
The performance bond is:(1)
solely for the protection of the state or governmental entity awarding the public work contract;(2)
in the amount of the contract; and(3)
conditioned on the faithful performance of the work in accordance with the plans, specifications, and contract documents.(c)
The payment bond is:(1)
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(2)
in the amount of the contract.(d)
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).(e)
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.(f)
A bond required under this section must clearly and prominently display on the bond or on an attachment to the bond:(1)
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(2)
the toll-free telephone number maintained by the Texas Department of Insurance under Subchapter B (Department Toll-free Number for Information and Complaints), Chapter 521 (Consumer Information and Complaints), 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.(g)
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.(h)
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 (Purchase Methods) or a procedure similar to that described by Section 2155.062 (Purchase Methods).
Source:
Section 2253.021 — Performance and Payment Bonds Required, https://statutes.capitol.texas.gov/Docs/GV/htm/GV.2253.htm#2253.021 (accessed Apr. 13, 2024).
