§2216. Written contract and bond

A.(1) When any bid is accepted for the construction or doing of any public works, a written contract shall be entered into by the successful bidder and the public entity letting the contract, and the party to whom the contract is awarded shall furnish good and solvent bond in an amount not less than one-half of the amount of the contract, for the faithful performance of his duties.

(2) Repealed by Acts 2001, No. 138, §1, eff. July 1, 2001.

B. When any bid is accepted for the purchase of materials or supplies, the public entity purchasing the materials or supplies may require that a written contract be entered into between the successful bidder and the public entity and further, the public entity may require that the successful bidder shall furnish good and solvent bond in an amount not less than one-half of the amount of the contract, for the faithful performance of his duties. Any such requirements shall be incorporated in the specifications and advertisement.

C.(1) On public contracts of two hundred thousand dollars or less, small businesses, as defined by the Department of Economic Development, shall only be required to furnish one-half the amount of bond, as called for in the bid, as provided in Subsections A and B, and by meeting the qualifications specified in Subsection D hereof.

(2)(a) For purposes of this Subsection, "responsible bidder" shall mean a contractor or subcontractor who has an established business and who has demonstrated the capability to provide goods and services in accordance with the terms of the contract, plan, and specifications without excessive delays, extensions, cost overruns, or changes for which the contractor or subcontractor was held to be responsible, and who does not have a documented record of past projects resulting in arbitration or litigation in which such contractor or subcontractor was found to be at fault.

(b) A responsible bidder shall have a negotiable net worth, or shall be underwritten by an entity with a negotiable net worth, which is equal to or exceeds in value the total cost amount of the public contract as provided in the bid submitted by such bidder. All property comprising the negotiable net worth shall be pledged and otherwise unencumbered throughout the duration of the contract period.

D. In order to qualify for the one-half bond requirements set forth in Paragraph (C)(1) hereof, a bidder shall have the following characteristics:

(1) Qualifies as a small business, as certified by the Department of Economic Development.

(2) Is a responsible bidder in accordance with Paragraph (C)(2) hereof.

(3) Has been certified by the director of the Department of Economic Development to be in compliance with the criteria set forth by the Department of Economic Development.

(4) Has been operating as the same business for a continuous period of at least three years.

(5) Has been denied guaranteed bond by the Small Business Administration or denied a performance bond by an established security firm as required under the provisions of Subsections A(1) and B of this Section, for reasons other than the applicant has a previous history of performance default.

E. In the event the responsible bidder, though meeting the requirements of Subsection D of this Section, is unable to secure the performance bond required under Paragraph (C)(1) of this Section, the responsible bidder shall pay a fee equal to the cost of a Small Business Administration guaranteed bond, as provided for under the provisions of Paragraph (C)(1) of this Section. All such fees shall be paid into the state treasury by the commissioner of administration and shall be credited to the Bond Security and Redemption Fund.

F. The provisions of Subsections C, D, and E of this Section shall be administered by the Department of Economic Development which shall promulgate all rules and regulations necessary for their effectuation.

G. It is hereby declared that any provision contained in a public contract, other than a contract of insurance, providing for a hold harmless or indemnity agreement, or both,

(1) From the contractor to the public body for damages arising out of injuries or property damage to third parties caused by the negligence of the public body, its employees, or agents, or,

(2) From the contractor to any architect, landscape architect, engineer, or land surveyor engaged by the public body for such damages caused by the negligence of such architect, landscape architect, engineer, or land surveyor is contrary to the public policy of the state, and any and all such provisions in any and all contracts are null and void.

H. Any provision contained in a public contract which purports to waive, release, or extinguish the rights of a contractor to recover cost of damages, or obtain equitable adjustment, for delays in performing such contract, if such delay is caused in whole, or in part, by acts or omissions within the control of the contracting public entity or persons acting on behalf thereof, is against public policy and is void or unenforceable. When a contract contains a provision which is void and unenforceable under this Subsection, that provision shall be severed from the other provisions of the contract and the fact that the provision is void and unenforceable shall not affect the other provisions of the contract.

I.(1) On public contracts of fifty thousand dollars or less, a performance bond as required by this Section may be waived by the public entity for a contractor or subcontractor who:

(a) Meets the definition and requirements of a "responsible bidder" as set forth in Paragraph C(2) of this Section.

(b) Has been operating as the same business for a continuous period of at least three years.

(c) Has been denied a performance bond by an established security firm, for reasons other than that the applicant has a previous history of performance default.

(d) Provides an irrevocable letter of credit, property bond, or other authorized form of security that is acceptable to the public entity and is in an amount of not less than the amount of the contract, for the faithful performance of his duties.

(2) The public entity may adopt rules and regulations in accordance with law to effectuate the provisions of this Subsection.

J. The provisions of this Section shall not be subject to waiver by contract.

K. The performance bond described by this Section shall inure solely to the benefit of the obligee named therein and his successors or assigns, and no other person shall have any right of action based thereon.

L.(1) There shall be no provision contained in a contract for public works which requires a contractor to reimburse a design professional for additional costs incurred by any design professional for inspections of the contracted project which occur outside of normal working hours.

(2) Notwithstanding the provisions of Paragraph (1) of this Subsection, in Jefferson Parish and in the city of New Orleans, the parish or municipality may require a contractor to pay for the additional costs incurred by a parish or municipality with respect to inspections of the contracted project provided the additional costs for inspections are above the budgeted amount for the contracted project, and further provided that the specifications or bidding documents include the average hourly rate to be charged for inspection and specify a reasonable budget for such inspections.

M. Any term, provision, or condition of any contract for public works which is contrary to or in violation of the provisions of the Public Bid Law, Chapter 10 of this Title, is against public policy and shall be invalid and unenforceable. When a contract contains a provision which is invalid and unenforceable under this Subsection, that provision shall be severed from the other provisions of the contract and the fact that the provision is void and unenforceable shall not affect the other provisions of the contract.

Acts 1977, No. 103, §1. Amended by Acts 1979, No. 389, §1; Acts 1980, No. 683, §1, eff. July 24, 1980; Acts 1981, No. 878, §1; Acts 1982, No. 251, §1; Acts 1982, No. 597, §1; Acts 1985, No. 667, §1; Acts 1986, No. 888, §1; Acts 1989, No. 13, §1; Acts 1989, No. 333, §1, eff. June 27, 1989; Acts 1989, No. 831, §1; Acts 1990, No. 304, §1; Acts 1995, No. 477, §1; Acts 1997, No. 1150, §1; Acts 1999, No. 744, §1; Acts 2001, No. 138, §1, eff. July 1, 2001; Acts 2003, No. 742, §1, eff. June 27, 2003; Acts 2011, 1st Ex. Sess., No. 5, §1; Acts 2012, No. 834, §8, July 1, 2012.