We have been seeing a lot more interest in municipalities bonding services, like janitorial contracts. With the huge pension obligations incurred by local governments for its own employees, many municipalities are our sourcing work that used to be performed in house. This includes, but is in no way limited to janitorial services.
Requiring performance bonds of the janitorial companies is a good way for the municipality to inequality the contractors. Without the bonding requirement the barriers to entry would be so low, the municipality could be overwhelmed with bids for services. The surety bond requirement means that a surety company underwriter is there to make sure the company bidding has the financial resources to properly staff the job. If the surety company is wrong, the multiparty has the benefit of a surety bond to fund the cost of hiring a replacement contractor.
The surety companies will usually require annually renewable bond forms even if the job being bid is a multi -year contract. Even with this stipulation, the benefits to the municipality, and ultimately the tax payer, are enormous. Both are assured that a qualified contractor will be doing the work. The bond requirement also helps avoid the sense of impropriety that accompanies a selection process that may not be based largely on the low bidder. Chances are a low bidder in a circumstance that does not require a bond, would not be qualified to perform the work.