Indiana’s public-works bond section says one thing that sounds ordinary and one thing that appears nowhere else in our reading of the 48 states. Both are in the same subsection.
One hundred percent, without the word
“(b) At the time of entering into any contract covered by the provisions of this chapter, the contractor shall furnish a valid performance bond which is acceptable to the state agency involved in an amount equal to the contractor’s total contract price.”
The amount is the whole contract price. Indiana joins Maine (“full contract amount”), North Dakota (“equal at least to the price stated in the contract”), Connecticut (“a bond in the amount of the contract”) and Florida (“shall equal the contract price”) in reaching one hundred percent without ever printing a percentage.
That is worth noticing as a drafting pattern, because the states that do print a percentage are the ones that depart from the full figure — Idaho’s eighty-five percent, Nevada’s and Louisiana’s fifty. A statute that names a fraction is usually telling you it means less than everything.
Note also the qualifier: the bond must be acceptable to the state agency involved. Acceptability is the agency’s call, and it reappears in the next sentence.
Bonding in pieces
“If it is acceptable to the state agency involved, this performance bond may provide for incremental bonding in the form of multiple or chronological bonds which, when taken as a whole, equal the total contract price.”
We have found no equivalent in any other state statute we have read.
Everywhere else the performance obligation is a single instrument for a single sum, issued once, sized to the contract. Indiana permits the same total to be assembled from several bonds — “multiple or chronological” — provided that together they equal the total contract price.
The two adjectives point at two different arrangements. Multiple suggests concurrent instruments covering separate portions. Chronological suggests instruments that follow one another through the life of the work — bonding a phase, then the next.
Two consequences follow, and they are the reason this matters more than a drafting curiosity.
It is a capacity mechanism. A surety’s single-job limit is the largest one contract it will bond for your account. A contract above that limit is normally simply out of reach. Under this provision the obligation can be met in stages that individually sit inside what your surety will write — which changes what a contractor can bid on, not merely how the paperwork is arranged.
It is discretionary, twice over. The bond must be acceptable to the agency, and the incremental arrangement must be acceptable to the agency. Neither is a right. A contractor planning to rely on it is planning around a permission that has to be obtained in advance, from a body that has no obligation to grant it.
For a contractor near the top of its bonding capacity on an Indiana public job, that is the single most useful sentence in the chapter — and it is worth raising with both the agency and the surety before the bid rather than after the award.
A bond or a certified check, at the bid
Indiana’s bid-security provision, at Ind. Code § 5-16-5.5-2(a), sets a threshold and then declines to make it a hard line:
“(a) The political subdivision or agency: (1) shall require a bond or a certified check to be filed with each bid by a bidder in the amount determined and specified by the board in the notice of the letting if the cost of the public work is estimated to be more than two hundred thousand dollars ($200,000); and (2) may require a bond or a certified check to be filed with each bid by a bidder in the amount determined and specified by the board in the notice of the letting if the cost of the public work is estimated to be not more than two hundred thousand dollars ($200,000).”
Shall above the figure; may below it. The same two instruments either way, and in both cases the amount comes from the notice of the letting, not from the statute — so, as in Idaho and Nevada, the number is in the solicitation.
The choice between a bond and a certified check is a real one and the two behave differently. A certified check is money deposited and returned. A bid bond is a surety’s undertaking; there is nothing held and nothing to return. Contractors who have posted both on different jobs sometimes conclude they were treated differently. They were not; they posted different instruments.
Sixty days, or ninety if bonds are being sold
Indiana puts a clock on the awarding body, which most states do not:
“(a) Except as provided in subsections (b) and (c), the board shall award the contract and shall provide the successful bidder with written notice to proceed within sixty (60) days after the date on which bids are opened. (b) If general obligation bonds are to be sold to finance the construction that is the subject of the bid, the board shall allow the bidder ninety (90) days.”
For a bidder that is a planning fact. Bid security has to stand for the award period, and the award period is longer when the project is being financed by a bond sale — the body needs time to go to market before it can tell you to proceed.
What Ind. Code § 5-16-5.5 does not reach
This page reads the amount provision, the incremental-bonding permission, the bid-security requirement and the award clock. Several things sit outside it.
The chapter as quoted here does not give the payment bond requirement, the class of claimants who may sue on it, the notice a claimant must give, or the limitation period. Those are the provisions that decide an unpaid claim on an Indiana public job, and they are not on this page.
The section also refers to contracts “covered by the provisions of this chapter” without defining that coverage in the text we have read, and the third exception at subsection (c) to the award clock is likewise not read here.
