Date Published: May 16, 2013

Performance and Payment bonds on public works jobs are a requirement in all fifty states. The surety companies role is to pre-qualify the contractor it is bonding.  The added benefit is the sureties back up this pre-qualification with financial backing.  If the public entity did not bond a contractor, and that contractor failed to complete the project or failed to pay the sub and suppliers, without a bond the taxpayers would be stuck with an unfinished project and likely to paying for the work that was done twice.

In the Vermont town of Keane, a general contractor on a municipal job filed bankruptcy and the surety stepped in to pay the unpaid contractors, at no additional cost to the taxpayers.  As reported in the New Hampshire Sentimental Source , of May 14, 35 of the 40 subcontractors that had not been paid had been paid in full by the bonding company.

The town will have its project delivered, the subcontractors and suppliers will be paid in full, and the taxpayers will not be stuck with the bill, all thanks to the performance and payment bonds.


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