On August 22, 2014, Governor Quinn signed HB 4769, amending the Public Construction Bond Act. P.A. 98-1018. That Act requires public bodies, including municipalities and other local governments to require contractors to provide security (i.e., letter of credit or surety bond) for any public works project costing over $50,000. The amendment added the following language to the Act establishing minimum rating standards for surety companies that provide bonds for public projects:
The surety on the bond shall be a company that is licensed by the Department of Insurance authorizing it to execute surety bonds and the company shall have a financial strength rating of at least A- as rated by A.M. Best Company, Inc., Moody’s Investors Service, Standard & Poor’s Corporation, or a similar rating agency.
Local governments should make sure that the surety companies that provide bonds to secure public works projects over $50,000 meet these new rating requirements. It would also be good practice for local governments to include language in any RFP, bid documents, and construction contracts putting contractors on notice of this new legal requirement.
Post Authored by Julie Tappendorf