AOC Public Information Officer Leigh Anne Hiatt stated that the construction manager on the justice center project provided a Performance and Payment Bond for $456,250, far short of the contract sum of roughly $9.9 million, adding that the amount provided might only cover the construction manager’s fee.
However, Trigg County Judge Executive Stan Humphries disagrees with the assertion that the project is insufficiently bonded, stating that when the more than 20 different smaller projects that encompass the overall justice center project are taken into account, the general project is fully funded.
Hiatt said the county’s project development board will have to require the construction manager to immediately provide a bond, as a single bond or as separate bonds, for the full amount, in order to bring the project into full compliance.
In regard to existing contracts, a general contractor or construction manager that can’t provide a bond for the full amount is considered to be in breach of the contract, and the county can pursue contractual and legal rights and remedies, according to Hiatt.
“It is 100 percent bonded,” Humphries said. “You take the other 95 percent, plus their five percent and you get 100 percent bonding. Where the confusion is now, is whether CMs have to act like a general contractor and bid the whole contract.”
The construction manager on the project bonded about five percent, which would amount to the CM’s fee, said Humphries.
It was said at the Wednesday, March 11, project development board meeting that an investigation revealed that the project is properly bonded. Administrative Office of the Courts Representative Brad Smith the timeline of the project wouldn’t be affected even if construction managers needed to re-bond the projects.
In this case, a bond is a guarantee from the bonding company that the construction manager will be in full compliance with the contract and will pay all of the subcontractors, laborers, suppliers and others involved with the project, both Hiatt and Humphries said.
“You don’t leave a job that is incomplete … in any way,” Humphries said.”
The maximum limit of the bond is known as the penal sum, and if the construction manager defaults under the terms of the contract, the CM’s bonding company can be potentially liable for that default, with a maximum exposure equal to the penal sum, which in this case is more than $9.9 million, said Hiatt.