Carla Young, the project’s architect said these experiences have become more common in a suffering economy: “We had this happen four times in the last two years.” Other counties affected by the same contractor were Lee, Bullock, and Shelby counties.

With an increase in frequency of contract failures it’s a great reminder that surety bonding is critical to ensure that businesses and municipalities are protected in the event of defaults.

In the recent case of Vollers Excavating & Construction, Inc. vs. Citizens Bank of Pennsylvania, the court ruled that Vollers’ contract (the subcontractor) was with a company called Opus East, LLC (the general contractor) – NOT with Citizens Bank, as suggested by the lawsuit.

Since Opus East had filed bankruptcy petitions for relief under Chapter 7, and failed to pay their subcontractors in the process, Vollers attempted to collect payment from the lender, Citizens Bank.

The court’s decision proves that subs cannot collect outstanding debts owed by general contractors from a construction lender. As in this case, if the GC files for bankruptcy, the subcontractor(s) will likely not be paid. This is important to note because it means that a subcontractor’s construction lien rights may be of no benefit if the lender forecloses on a project because of a defaulted construction loan. A surety bond provides the best chance for subs to collect on outstanding invoices.

For more information about the court case, please visit jdsupra.com

Call us today about any concerns you have with managing this risk – 866-385-7760.

“WRAP insurance in a single “WRAP insurance program” can cover all players in a construction project. These programs are typically either owner controlled or contractor controlled. These WRAP programs can often save significant project costs due to reduced premiums and reduced costs of potential litigation.”

Take a look at the video below for more information.

Click here to view the video on YouTube.

By “bundling,” agencies limit competition for contracts by making it almost impossible for smaller businesses to participate. Only the larger contractors can bid on projects, because the smaller firms don’t have the resources to remain competitive. The “Contractor Opportunity Protection Act” would require officials to consider small businesses early on when planning a procurement.

If this bill passes, the SBA will be able to appeal questionable bundling decisions to the Civilian Board of Contract Appeals or the Armed Services Board of Contract Appeals through a third-party arbiter. And if the SBA declines to do so, the legislation allows third-party groups to submit their protest(s) to the Government Accountability Office.

The intent behind this legislation is to provide more transparency into contract bundling decisions, by forcing agencies to publish a justification statement for their actions. At least 45 days before an agency issues a solicitation, procurement officials will have to send it to their procurement-center representative, who can then advocate for small businesses.

Agencies must explain their decision, answering why officials are choosing to bundle the contacts and why the contract cannot be divided into smaller parts. Officials also would have to give a list of the contractors affected by the bundling, especially if it is a small business.

The contract bundling legislation is part of a comprehensive initiative from the Small Business Committee aimed at reforming small-business contracting policies.

The Pennsylvania Insurance Department recently petitioned the Commonwealth Court to liquidate the now defunct company. The petition was approved, and now the company’s assets will be used to pay outstanding claims.

Total liquidation of a surety company is a rare occurrence, but the First Sealord story provides a good reminder for contractors that thoroughly researching your financial partners is more important than ever to protect your business.

If you have any concerns, give us a call!

Please click play in the video clip below to watch Mr. McCallum’s opening remarks:

Click here to view the video on YouTube.

A recent article published in the Chatham, Ontario Daily News illustrates the point perfectly. Dirk Koomans and Sons Ltd., a local area contractor, fully expected to receive the most recent city contract to demolish a local auditorium. It came as a shock when, after 50 years of service to the Chatham area, they were not selected for the project.

City officials awarded the contract to a non-local firm in part because they were able to meet specific, time-sensitive bonding criteria. It’s a good lesson for “favorite” contractors who have come to rely on city contracts simply because they’ve been chosen in the past. Now is a great time to update your bond file at Surety Support Services, Inc. with current financial information. By providing some basic information, you can help us maintain your surety program, avoid last minute paperwork scrambles, and remain competitive when bidding on new projects.

The new law enforces payment to contractors and subcontractors for labor and materials used in construction projects – and it’s a big win for subs. Too often, they are unable to collect payment for services rendered because funds have been inappropriately handled (whether intentionally or unintentionally).

The fact that officers and directors can be both personally sued in civil court AND prosecuted by the state makes it much more likely that subcontractors will be better protected in the future, but it should not prevent or dissuade subcontractors from securing a lien on any project property – they should certainly not rely solely on the statute for protection.

For more information, please download the original article from Lexology.com