KCASA Opposes Increasing Statutory Bond Requirements

KCASA strongly opposes SB 436,which would amend K.S.A. 19-214 by increasing the statutory bond requirements for counties from $25,000 to $100,000. An increase of $75,000 would mean that many more county construction contracts throughout the state would be procured without the benefit of performance and payment guarantees, which provide essential protection to Kansas taxpayers, Kansas businesses, and to our Kansas members.

KCASA members participate in county construction projects as subcontractors and suppliers. They depend on the presence of the statutorily required payment bond for their payment assurance. They understand that, if the prime contractor fails to pay them due to insolvency or other reasons, they have the ability to recover our wages, costs, and expenses by making a claim on the payment bond. In the absence of a payment bond, they may not have viable remedies for recovery. They cannot seek recovery from the county procuring agency, as they are not in a contractual relationship with that entity, and they cannot place a mechanic’s lien against public property. Their only remedy would be expensive, time-consuming litigation, which will be unaffordable and impractical, and, if they are insolvent, no real recovery is available.

Similarly, county taxpayer dollars are at risk when contracts are awarded without the protection of performance bonds. In the absence of a performance bond, which otherwise would transfer the risk of contractor default to a knowledgeable surety company, the county and, in turn, its local taxpayers will bear the direct and indirect consequences of contractor defaults, including deploying additional county resources and tapping more taxpayer funds to complete defaulted construction projects.

In summary, increasing the current bond threshold for counties would remove time-tested and critical performance and payment protections for taxpayers, our members, and many similarly situated small businesses. For these reasons KCASA opposes SB 436.