With the approval of the Federal Highway Administration and the support and encouragement of the heavy highway construction industry, MDOT will implement a new policy that allows for “pass-through” warranty bonds on projects with warranty provisions. Starting with projects let in the November 3, 2006 bid letting, prime contractors will be able to assign responsibility for the warranty obligations and the posting of the warranty bond to a first-tier subcontractor who actually constructed the warranted work.
In an effort to minimize the administrative impacts associated with this new built in layer of contracting and bonding, and to facilitate the continued timely awarding of contracts, MDOT’s new policy will require that bidders designate their assignment of any warranty obligations at the time of their electronic bid submittal. MDOT has indicated they will not accept assignments of any warranty obligations after the final bid submittal by the bidder. Procedures have been implemented in the electronic bidding process that allows the bidder to make their warranty obligation assignments.
In supporting the “pass-through bonding” policy, MITA maintained that we would eliminate the “double bonding” cost impacts of two contractors purchasing bonds for the same work, more appropriately distribute the risks associated with warranty work construction and future obligations, and minimize bond liability and capacity concerns for contractors that eventually could limit their ability to bid additional work.
Click here to view and print MDOT’s “Pass-Through Warranty Bonds, Contractor Announcement”.
If you have any questions or comments regarding the above, please contact Glenn Bukoski at glennbukoski@mi-ita.com or Doug Needham at douglasneedham@mi-ita.com or by phone at (517) 347-8336.
