General Assembly Increases the Threshold for Payment and Performance Bonds
Aug 30, 2013
Effective August 9, 2013, Public Act 98-0216 amended the Public Construction Bond Act, 30 ILCS 550/1, to increase the threshold, from $5,000 to $50,000, at which public bodies must require contractors to obtain performance and payment bonds. This means that most political subdivisions, including school districts and community colleges, will not need to require their contractors to obtain performance and payment bonds for public works projects unless the contract sum is over $50,000. For smaller jobs, this will save some administrative time and should result in modest cost savings due to bond premiums avoided. Public bodies can still require performance and payment bonds for these smaller contracts if they choose to do so by placing the requirement in the project specifications and contract.
This Law Alert was prepared by Samuel B. Cavnar, an associate in the firm’s Chicago office.