KRS 45A.190: Performance bond and payment bond -- Recommendations on whether

performance bond should be required -- Audit of contract performance --

Release from performance bond.

(1) As used in this section, "agency contract administrator" means the state ag ency

employee responsible for the administration of a contract.

(2) When a construction contract is awarded in an amount in excess of one hundred

thousand dollars ($100,000), the following bonds shall be furnished to the

Commonwealth, and shall be binding on the parties upon the award of the contract:

(a) A performance bond satisfactory to the Commonwealth executed by a surety

company authorized to do business in this Commonwealth, or otherwise

supplied, satisfactory to the Commonwealth, in an amount equal to one

hundred percent (100%) of the contract price as it may be increased; and

(b) A payment bond satisfactory to the Commonwealth executed by a surety

company authorized to do business in the Commonwealth, or otherwise

supplied, satisfactory to the Commo nwealth, for the protection of all persons

supplying labor and material to the contractor or his subcontractors, for the

performance of the work provided for in the contract. The bond shall be in an

amount equal to one hundred percent (100%) of the original contract price.

(3) When any contract in an amount in excess of one hundred thousand dollars

($100,000) for commodities, supplies, equipment, or services of any kind, or when

a contract for construction services costing one hundred thousand dollars

($100,000) or less is proposed for presentation to vendors or contractors, the agency

contract administrator shall evaluate whether a performance bond should be

required in the procurement document, and make his recommendation to the

purchasing agency. The age ncy contract administrator shall note the reason that a

performance bond is or is not recommended and his notation shall be a part of the

permanent record relating to the contract. If a performance bond is required, the

requirement shall be included in the invitation to bid, request for proposal, or other

procurement document. The agency contract administrator shall make audits of the

performance of contracts upon completion of one -third (1/3) of the contract and

upon completion of two-thirds (2/3) of the contract. For contracts taking longer than

one (1) year to complete, audits of performance shall be conducted at least

annually. Before a vendor is released from a performance bond, the agency contract

administrator shall review the audits of performance, m ake a final performance

review, and promptly determine whether, in his or her opinion, the vendor has fully

complied with the terms of the contract. The opinion of the agency contract

administrator shall be made in writing or electronically, set forth the reasons for his

or her opinion regarding compliance or noncompliance, and be signed by the

agency contract administrator. This opinion may have an electronic signature. The

using agency head shall, after consideration of the performance audits, the final

performance review, and the opinion of the agency contract administrator regarding

compliance or noncompliance, determine whether to recommend to the purchasing

agency that the performance bond be released or whether a claim should be made

against the performance bond. This determination of the using agency head shall be

in writing, signed by the using agency head, and forwarded to the purchasing

agency. This determination may have an electronic signature and be transmitted

electronically. If the recommendat ion of the using agency is not followed by the

purchasing agency, the purchasing agency shall place a statement in the file

explaining why it is not followed.

(4) Nothing in this section shall be construed to limit the authority of the

Commonwealth to require a performance bond or other security in addition to those

bonds, or in circumstances other than specified in subsection (2) or (3) of this

section.