30 Minutes on Payment & Performance Bonds

Transcription

1 30 Minutes on Payment & Performance Bonds PRESENTATION MATERIALS August 18, 2016 FOSTER PEPPER PLLC 1111 Third Avenue, Suite 3000 Seattle, Washington

2 Table of Contents Presentation Speaker Bio Greg Guedel, Foster Pepper PLLC Presented by:

3 Presentation

4 30 MINUTES ON PAYMENT & PERFORMANCE BONDS August 18, 2016 Greg Guedel, Ph.D., J.D

5 What Are Payment and Performance Bonds? Protection for Owner against Contractor default. Contracts with a Surety company to provide an additional source of funding to remedy the problem. Insurance policies designed to ensure the work is properly completed and all workers are properly paid. 2

6 Do I Need Bonds On My Project? Public Works RCW requires Payment & Performance bonds for most projects. GC/CM RCW also requires Payment & Performance bonds from subcontractors for all subcontracts $300k and above. Private Projects Not required, Owner s discretion. * Payment & Performance Bonds are in addition to retainage. 3

7 What Do Payment Bonds Cover? Source of funds to cover monies owed by contractor. Employee wages, subcontractor invoices, supplier charges. Does not pay for completion or correction of work. 4

8 Sample Payment Bond Language NOW, THEREFORE, THE CONDITION OF THIS OBLIGATION IS SUCH, that if the Principal shall promptly make payment to all Claimants, as hereinafter defined, for all labor and material used or reasonably required for use in the performance of the Contract, then this obligation shall be null and void; otherwise it shall remain in full force and effect. 5

9 Sample Payment Bond Language A "Claimant" is defined as one having a direct contract with the Principal or with a subcontractor of the Principal for labor, material, or both, used or reasonably required for use in the performance of the Contract, labor and material being construed to include that part of water, gas, power, light, heat, oil, gasoline, telephone service or rental of equipment directly applicable to the Contract. Claimant shall have given written notice to the Principal and the Surety within ninety (90) days (or such lesser or greater time period as otherwise permitted by relevant law) after such Claimant did or performed the last of the work or labor, or furnished the last of the materials for which said claim is made. 6

10 What Do Performance Bonds Cover? Source of funds to complete or correct Contractor s work. Requires material default by Contractor that is not cured after notice is given. Surety typically has the option to retain current Contractor, hire new contractors, or pay Owner. 7

11 Sample Performance Bond Language NOW, THEREFORE, THE CONDITION OF THIS OBLIGATION IS SUCH, that if the Principal shall promptly and faithfully perform the Contract, then this obligation shall be null and void; otherwise it shall remain in full force and effect. 1.1 Arrange for the Principal, with consent of the Obligee, to perform and complete the Contract; or 1.2 Undertake to perform and complete the Contract itself, through its agents or through independent contractors; or 1.3 Obtain a bid or bids from alternative contractors to complete the Contract in accordance with its terms and conditions. 8

12 Sample Performance Bond Language 1.4 Waive its right to perform and complete, arrange for completion, or obtain a new contractor and with reasonable promptness under the circumstances tender payment therefore to the Obligee Any suit under this bond must be instituted before the expiration of one (1) year from the date on which the Principal ceased to work on the Contract or such time period as otherwise permitted by relevant statute. If the provisions of this paragraph are void or prohibited by law, the minimum period of limitation available to sureties as a defense in the jurisdiction of the suit shall be applicable. 9

13 Retainage Bonds Bond provided by Contractor to obtain release of retainage. Bond takes place of cash retainage as Owner s security for final completion and close-out. Claims go against bond Note that this reduces Owner options/control for resolving claims. Owner s discretion whether to accept a retainage bond and release cash retainage. 10

14 How Much Do Payment & Performance Bonds Cost? Bond premium depends on size of contract and Contractor s performance record. Cost is typically passed on to Owner. Contracts less than $1M Bond premium typically 1-3% of total contract value. Contracts above $1M Bond premium typically 1% or less of total contract value. Project phasing can reduce size/cost of bonds. 11

15 Key Concepts for Payment & Performance Bonds Read the bonds before work commences. Understand the scope of coverage watch for reductions and exceptions. Understand the claim notice requirements. RCW : Surety must agree to Washington law and jurisdiction. 12

16 Claims Against Bonds Upon discovery of claim, set clear requirements and timeline for Contractor s response. If unresolved, formally notify Surety of claim and demand Surety action per terms of bond. Engage with Surety to obtain best remedy. Do not release bonds at the end of the project. 13

17 Questions? Your feedback helps us create better webinars. New topic ideas much appreciated. THANK YOU! 14

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19 Speaker Bio

20 W. Gregory Guedel, Ph.D. MEMBER SEATTLE T F greg.guedel@foster.com SERVICES Litigation & Dispute Resolution Construction Employment & Labor Infrastructure Municipal Government Native American (Chair) Real Estate School Districts PRACTICE OVERVIEW Greg serves as Chair of Foster Pepper's Native American practice, and his practice emphasizes complex construction, government contracting and business law. His litigation work includes all aspects of pre-trial, trial and appellate case management in state, federal and Tribal courts. He provides his clients with analysis, preparation, negotiation and resolution of contract claims, and drafts and interprets multi-party contracts. He regularly assists clients with business and construction planning and management, serving government, private and Tribal entities. Greg also serves as Editor of Foster Pepper's Native American legal blog: RECOGNITION King County Bar Association, Young Lawyer Division Outstanding Mentor Award for 2008 Army ROTC Scholarship Distinguished Military Scholar and Graduate American Legion Award Army Reserve Officers Association Award Golden Key National Honor Society ACTIVITIES American Bar Association + National Chair for Native American Concerns, 2010-present + Member 1996-present New Mexico Community Capital, Board Member American Legion, Earl Weinhart Post 96 + Member 2008-present King County Bar Association, Member, 1996-present Washington State Bar Association, Member, 1994-present 1

21 W. Gregory Guedel MEMBER SEATTLE T F greg.guedel@foster.com Washington State Bar Association Committee for Legal Services to the Armed Forces + Member Chairman JAGC, United States Army, Washington Army National Guard, Captain, QUOTED High Court Upholds Tribal Jurisdiction in Dollar General Case, Society for Human Resource Management, June 2016 Wash. Coal Terminal Defeat Puts Tribes in Driver s Seat, Law360, May 2016 Horizon: The Indian Economic Miracle, DR TV, January Tips For Managing Tribal Infrastructure Projects, Law360, November 2015 Gambling and poverty: Of slots and sloth, The Economist, January 2015 This Tribe Wants to Kick Rich People Out of the Hamptons, Vice, August 2014 Ogala Sioux Hope Bitcoin Alternative, Mazacoin, Will Change Economic Woes, Newsweek, August 14, 2014 Your Legal Rights if Member of Office Pool that Purchases Winning Lottery Ticket, Q13 News, April 2012 Greg Guedel on Native American Energy Summit, Today's Inland Empire, October 2010 LAW: Questions for Greg Guedel, Chairman, Native American Legal Services Group, Puget Sound Business Journal, August 27-September 2, 2010 Tribes Trump City in Quest for Economic Development, InMaricopa.com - August 11, 2010 Many Eyes Watching Foxwoods' Negotiations With Creditors, The Hartford Courant, November 29, 2009 Chair Lift Helps American Legion Members in Snohomish, Everett HeraldNet, February 16, 2009 PUBLICATIONS Native American Legal Update, Editor, Foster Pepper's Native American legal blog, 2008-Present Strategies and Methods for Tribal Economic Development: Building Sustainable Prosperity in Native American Communities, Author, Thomson Reuters Aspatore Publishing, July 2013 Briefly About Me: Greg Guedel, Washington State Bar News, April 2012 Coastal Tribes Scoring Export Win with Geoducks, Author, Foster Pepper News, July 2011 Construction Contracts Should Have Performance Provisions, Author, Daily Journal of Commerce, September 11, 2003 Ruling Extends Life of Construction Lawsuits, Daily Journal of Commerce, September 2002 Bidders, Put Away Your Stopwatches: Court Declines 10-Second Rule For Late Bid Submissions, Daily Journal of Commerce, August 2002 The Crystal Ball Theory of Changed Conditions: Recent Court Decisions May Have Big Impact on Earthwork Contractors, Author, Daily Journal of Commerce, October 2001 Building Inspector Approval - No Guarantee of Quality, Daily Journal of Commerce, April 2001 Background Checks Needed On Public School Jobs, Daily Journal of Commerce, December 15, 2000 Don t Overlook Lien Notice Requirements, Daily Journal of Commerce, September 15, 2000 Researching Contract Forms On The Internet, The Construction Lawyer (ABA s Journal of the Forum on the Construction Industry), July 2000 Check Calendar When Filing Liens, Daily Journal of Commerce, September 17, 1999 Getting Public Records For Construction Lawsuits, Daily Journal of Commerce, April 23, 1999 Obtaining Information From The Government In Miller Act Lawsuits, Daily Journal of Commerce, July 18,

22 W. Gregory Guedel MEMBER SEATTLE T F greg.guedel@foster.com PRESENTATIONS Public Contracting, Speaker, Government Law for Public and Private Practitioners, The Seminar Group, July 2016 Construction Project Scheduling & Delay Claims, Program Co-Chair, The Seminar Group, April Primary Legal Concepts for Delay Claims + What Do You Do When? + Real Life Issues in Project Delays Contracting on Major Projects, Speaker, WSBA Spring Real Estate Seminar, April 2016 Foster Pepper Construction Webinar Series + Five Hot Topics for Public School Construction, Speaker, March Using GC/CM Contracting for Construction Projects, Speaker, November What Insurance Does My Construction Project Need? Speaker, July How to Pick the Right Contractor for Your Construction Project, Speaker, April How Long Can a Construction Claim Last? Speaker, February 2015 Construction Law, Speaker, 14 th Annual CLE Bootcamp, The Seminar Group, December 2015 Political Economy and Human Security in Native American Nations, Speaker and Moderator, Sovereignty, Development and Human Security: A Colloquium on United States and Native American Relations, May 2015 Strategies for Managing Project Delays, Program Co-Chair and Moderator, Construction Project Scheduling & Delay Claims, The Seminar Group, November 2014 "Sovereignty, Economic Development, and Poverty Reduction in Indian Country: Legal Issues Related to Proven Strategies and Untapped Opportunities, Speaker, ABA Annual Meeting - Section of Individual Rights and Responsibilities, August 2014 Tribal Employment Rights & Law: Sovereignty, Jurisdiction and Best Practices, Program Co-Chair, July 2014 Construction Law, 12th Annual CLE Bootcamp, December 2013 "Strategic Planning for Tribal Economic and Community Development," Speaker, Tribal Sovereignty, Strategic Planning and Economic Development, November 2013 School Construction Contracting: How to Get Best Value in an Uncertain Economy, Co-Chair and Speaker, Foster Pepper Client Briefing, November 2013 Contracting Strategies for Schedule Issues, Co-Chair and Speaker, Construction: Project Scheduling & Delay Claims, October 2013 Managing Schedule Delays and Claims on Complex Construction, Co-Chair and Panelist, Construction: Project Scheduling & Delay Claims, October 2013 Challenges and Opportunities for Tribal Economic Development, Speaker and Moderator, Foster Pepper PLLC, February 2013 Establishing Bidder Responsibility and Performance Capacity, Moderator/Speaker, Public Works Contracting: Success Strategies in Interesting Times, October 2012 "Legal Tools For Construction Contracting" and "How to Avoid Expensive Surprises In Construction Projects," Speaker, The Washington Association of School Business Officials (WASBO) Workshops, May 2011 Construction: Contracting, Litigation; Procurement and CPARB, Panelist, 2012 Association of Washington Housing Authorities (AWHA) Meeting, April 2012 Using Sovereign Rights to Enhance Development Opportunities, Speaker, 2012 Enhancing Sustainable Development in Indian Country, March 2012 Construction Law, Speaker, 10th Annual Washington CLE Bootcamp, December 2011 Bidder Responsibility in Public Works Contracting, Speaker, AGC Education Foundation: Successful Contracting in the Recession, November

23 W. Gregory Guedel MEMBER SEATTLE T F greg.guedel@foster.com Federal Contracting Law, Speaker, Tribal Governmental Business Law CLE Program for , September 2011 Serving the Legal Needs of Urban Native Americans, Moderator, Native American Seminar, March 2011 Indian Law Career Panel, Panelist, Indian Law Career Evening, University of Washington School of Law, March 2011 Native American Concerns, Speaker, ABA Mid-Year Concerns, February 2011 Construction Law, Speaker, 9th Annual Washington CLE Bootcamp, December 2010 Legal Tools for Effective Public Works Contracting, Speaker, School District Public Works Seminar, November 2010 Cultural Awareness while Representing Native Americans, Presenter, Nonprofit Law in Indian Country, March 2010 Labor and Employment Law Issues for Tribes, Speaker, Indian Law Section of the Spokane County Bar Association, March 2010 Contracting for Alternative Delivery Projects, Speaker, CMAA Annual Seminar: Alternative Project Delivery of Capital Projects, February 2010 Employment/Labor Law for Tribes and Tribal Businesses, Speaker, NHRMA 71st Annual Conference & Tradeshow, September 30-October 2, 2009 Tribal Leaders Roundtable: The Impact of President Obama s Administration, Co-Chair/Moderator, Third Annual Native American Economic Development Conference, September 2009 Northwest Native American Economic Development Conference, Co-Chair, June 2009 Utilizing Alternative Procurement Methods Such As GC/CM And Design-Build For Energy And Environmental Infrastructure Projects, Speaker, Community Energy Roadmap: Pacific Northwest Summit & Workshop, May 13-14, 2009 Advocating for Children in the Dependency System, Speaker, Advocacy For The Native American Child Honoring The Spirit And Intent Of The Indian Child Welfare Act, November 2008 Developing Infrastructure Under Washington's New Alternative Procurement Statutes, Speaker, Managing Infrastructure: Planning, Development and Maintenance in Washington, November 2008 Public-Private Cooperative Development of Infrastructure, Speaker, Approval and Funding of Infrastructure in Washington, May 2008 Tribal Court Jurisdiction, Speaker, Key Tribal Issues Seminar, October 26, 2007 Utilities Coordination on Public Works Projects - Who's Your Daddy? Speaker, Construction Law and Risk Management for Municipalities Latest Traps & Strategies, February 28, 2007 Pursuing Contractor Claims Against Owners, Featured Speaker, 12th Annual Conference on Washington Construction Law & Dispute Resolution, September 23, 2005 Construction Law Issues For Housing Authorities, Featured Speaker, Association of Washington Housing Authorities Conference, September 8, 2005 Construction Claims, Litigation, And Alternative Dispute Resolution, Featured Speaker, Lorman Education Services professional seminar, August 24, 2005 Claims Between Contractors and Owners, Featured Speaker, 11th Annual Conference on Washington Construction Law & Dispute Resolution, September 25, 2004 Contracting With and Managing Design Professionals, Featured Speaker, Association of Washington Housing Authorities Conference, September 9, 2004 Construction Contracting With Public Entities in Washington, Featured Speaker, Lorman Education Services professional seminar, August 20, 2004 Contracting With Local Government, Featured Speaker, Law Seminars International professional seminar, August 12,

24 W. Gregory Guedel MEMBER SEATTLE T F greg.guedel@foster.com Pursuing Contractors Claims Against Owners, Featured Speaker, 10th Annual Conference on Washington Construction Law & Dispute Resolution, September 19, 2003 Preparing for and Preventing Contractor Claims, Featured Speaker, Association of Washington Housing Authorities Conference, September 4, 2003 Contract Law for Construction Managers, Featured Speaker, The Construction Management Association's Pacific Northwest Chapter, February 19, 2003 EXPERIENCE Foster Pepper PLLC + Member, 2003-Present + Associate, Real Estate Law Instructor, Washington Department of Licensing, 2016-Present Snohomish City Council, Elected Councilmember, 2010-Present Oles Morrison Rinker & Baker LLP (Seattle, WA), Attorney, United States Army, Office of the Staff Judge Advocate, 2D Armored Division/4th Division Infantry, Fort Hood, Texas, + Administrative Law Attorney, BAR ADMISSIONS Washington, 1994 U.S. District Court, Western District of Washington, 1997 U.S. Court of Federal Claims, 1998 Tribal Court of the Cow Creek Band of Umpqua Tribe of Indians, 2008 Tulalip Tribal Court Bar, 2008 EDUCATION Ph.D. (with distinction), University of Washington, International Studies, 2016 The London School of Economics and Political Science, Diploma for Graduates (with merit), International Relations, 2006 United States Army Judge Advocate General Corps Officer Course, 1998 United States Army Corps of Engineers Office Course, Distinguished Graduate, 1995 J.D., University of Washington, 1994 B.S., University of Southern California,