Colorado belongs to the small group of states whose bond is worth substantially less than the job. What sets it apart from the others in that group is a sentence about very large contracts that no other state in this series has.
A penal sum of not less than one-half
“(1) Before entering upon the performance of any work included in the contract, a contractor shall duly execute, deliver to, and file with the board, officer, body, or person by whom the contract was awarded a good and sufficient bond or other acceptable surety approved by the contracting board, officer, body, or person, in a penal sum not less than one-half of the total amount payable under the terms of the contract”
Three things to separate.
The timing is before performance, not before award or on execution — the bond is filed before the contractor enters upon the work.
The measure is the total amount payable under the terms of the contract. Not “the contract price”, which is the noun Florida, Connecticut and Oregon use. On a fixed-price job the two are the same; on a contract with allowances, options or variable quantities they need not be.
One-half is a floor. Colorado sits with Nevada (NRS 339.025) and Louisiana (La. R.S. 38:2241) at fifty percent, against Idaho’s eighty-five and the full-contract-amount states.
“Or other acceptable surety” — the instrument is open
Colorado does not close the list. The requirement is for “a good and sufficient bond or other acceptable surety approved by the contracting board, officer, body, or person”, and approval sits with the body.
Vermont reaches the same place with “other good and sufficient surety in lieu of a bond” under Vt. Stat. tit. 19 § 10. Colorado’s formulation is broader still, because the alternative is in the primary requirement rather than in a waiver clause — there is no default-to-a-bond that something else has to displace.
Five hundred million: a bond sized to the year
This is the provision with no counterpart anywhere else in either corpus:
“except that, for a public works contract having a total value of five hundred million dollars or more, a bond or other acceptable surety, including but not limited to a letter of credit, may be issued in a penal sum not less than one-half of the maximum amount payable under the terms of the contract in any calendar year in which the contract is performed.”
The base changes. Below the threshold the penal sum is half of the whole contract. At or above it, the penal sum may be half of the largest single calendar year’s payable amount.
On a multi-year megaproject that is a very large reduction. A ten-year contract with even spend would move from half of the total to half of roughly a tenth of it.
Two things make this coherent rather than a loophole. It is permissive — may be issued — so the body can still require the larger figure. And it names a letter of credit expressly as an acceptable alternative at that scale, which reads as an acknowledgement that at half a billion dollars the surety market may simply not produce a full-value instrument.
Florida approaches the same problem from the other end. Under Fla. Stat. § 255.05, above $250 million, if a bond in the amount of the contract price is not reasonably available, the owner sets the bond at the largest amount reasonably available. Both states are writing down a limit on market capacity; Florida tests availability, Colorado uses a formula.
Fifty thousand or less: the body may still require one
“(2) Notwithstanding the monetary qualification provided in subsection (1) of this section, the state, or the governing body of any county, municipality, school district, or other political subdivision determining it to be in the best interest of this state, or any county, municipality, school district, or other political subdivision may require the execution of a penal bond for any contract of fifty thousand dollars or less.”
A permission, conditioned on a best-interest determination by the body. Virginia and New Hampshire both preserve the same discretion below their thresholds; Colorado attaches an express judgment to it.
Ninety days from final settlement
Colorado’s claim window runs from a published event rather than from the claimant’s own last day:
“(2) All such persons mentioned in this section to whom any debt of the kind mentioned is due from any such contractor or subcontractor shall severally have a right of action upon any such bond covering such debt taken as provided for the recovery of the full amount of such debt.”
and
“At any time within ninety days following the date fixed for final settlement as published, any person … whose claims have not been paid by any such contractor or subcontractor may commence an action to recover the same, individually or collectively, against the surety or other qualified financial institution on the bond or other acceptable surety specified and required in section 38-26-106.”
Note “or other qualified financial institution” — the remedy follows whatever instrument was actually posted, exactly as it does in Pennsylvania where the action runs against “the payment bond or other financial security”.
“The date fixed for final settlement as published” is a project-level, publicly announced event, like Louisiana’s registry of acceptance. It shares Louisiana’s virtue and its hazard: an early-finishing supplier is not timed out before the job ends, but the clock starts where you have to be watching to see it.
Substituting a bond for a claim
One further mechanism appears, running the opposite direction from everything above:
“(5) When a corporate surety bond or undertaking is substituted for a claim as provided in this section, the claimant who filed the verified statement of a claim pursuant to section 38-26-107 (1) may bring an action against such bond or undertaking.”
A bond can be posted to release a claim — the contractor substitutes security for the withheld funds and the claimant’s remedy transfers to it. The section adds that once a certificate of release is filed, payments resume and previously withheld funds are released “within thirty days after the receipt of the certificate of release”.
What C.R.S. § 38-26-106 keeps elsewhere
The claim provisions above sit partly in section 38-26-107, which this page has not read — including what a verified statement of claim must contain and how it is filed. The “monetary qualification provided in subsection (1)” referred to in the small-contract permission is likewise not quoted here.
And bid security is not in this section. As in most states, it belongs to Colorado’s procurement rules.
