Almost every public-works bond statute that names a percentage applies it to the contract price. South Carolina names a percentage and then changes what it applies to — and the difference is worth real money on the kind of contract where it appears.
The sentence that does it
S.C. Code § 11-35-3030 requires
“(i) a performance bond satisfactory to the State, executed by a surety company meeting the criteria established by the board in regulations, or otherwise secured in a manner satisfactory to the State, in an amount equal to one hundred percent of the portion of the contract price that does not include the cost of operation, maintenance, and finance”
and a payment bond “for the protection of all persons supplying labor and material to the contractor or its subcontractors”, with the same measure: “The bond must be in an amount equal to one hundred percent of the portion of the contract price that does not include the cost of operation, maintenance, and finance”.
Break the measure into its two steps, because they happen in this order:
- Take the contract price and remove the cost of operation, maintenance, and finance.
- Bond one hundred percent of what is left.
Every other state we have read does step two only. Maine and North Dakota bond the full contract amount; Idaho floors at eighty-five percent of the contract amount; Louisiana at fifty percent of the contract price. Each applies its figure to the whole price. South Carolina subtracts first.
Why the subtraction exists, and where it bites
The three categories that come out — operation, maintenance, finance — are the costs of a contract that continue after or run alongside the construction rather than being construction. A bond guarantees the building of the thing and the paying of the people who built it. Financing costs and years of subsequent operation and maintenance are neither.
On a conventional design-bid-build job with none of those elements, the base and the contract price are the same number and the subtraction changes nothing. On a contract that bundles construction with an operating or maintenance term, or that carries a financing component, the base can be materially smaller than the headline value — and the bond with it.
The practical consequence for a bidder: the penal sum is not derivable from the contract value alone. You need the breakdown. Two contractors bidding the same total on differently structured proposals can owe different bonds, and a surety asked to quote from a headline number is quoting from the wrong figure.
The statute also allows the obligation to be “otherwise secured in a manner satisfactory to the State”, so a surety bond is the expected instrument rather than the only one.
Two different figures, doing two different jobs
South Carolina carries a second dollar amount, and it is easy to conflate with the first.
Fifty thousand dollars or less — the bonds may be waived. “in the case of a construction contract valued at fifty thousand dollars or less, the governmental body may waive the requirements of subitems (i) and (ii) above, if the governmental body has protected the State”. Both bonds, discretionary, conditioned on the body having protected the State.
In excess of one hundred thousand dollars — bid security is required. “Bid security is required for all competitive sealed bidding for construction contracts in a design-bid-build procurement in excess of one hundred thousand dollars and other contracts as may be prescribed by the State Engineer’s Office.”
So the bid-security threshold sits at twice the waiver ceiling, and the two do not describe the same tier of work. A contract between them is above the waiver ceiling (so the bonds are not waivable on that ground) and below the bid-security threshold — bonded, but with no bid security required by this sentence.
Construction manager at-risk: bonds can wait
The section carries a phasing provision that most Little Miller Acts do not:
“in the case of a construction manager at-risk contract, the solicitation may provide that bonds or security are not required during the project’s preconstruction or design phase, if construction does not commence until the requirements of subitems (i) and (ii) above have been satisfied.”
That is a sequencing rule rather than an exemption. A CM at-risk contractor can be engaged for preconstruction and design without bonds in place, but construction cannot begin until they are. For a contractor whose bonding capacity is the constraint, it separates winning the engagement from having to demonstrate full capacity on day one.
The remote claimant, and where suit goes
South Carolina uses its own term — remote claimant — for what the federal statute describes as a second-tier claimant, and the mechanics track the familiar pattern:
“A remote claimant has a right of action on the payment bond only upon giving written notice to the contractor within ninety days from the date on which the person did or performed the last of the labor or furnished or supplied the last of the material or rental equipment upon which the claim is made, stating with substantial accuracy the amount claimed as unpaid and the name of the party to whom the material or rental equipment was furnished or supplied”
Note that rental equipment appears in the definition alongside labor and material — as it does in Idaho and West Virginia, and as it does not in the federal formulation.
Venue and the deadline arrive in one sentence:
“Every suit instituted upon a payment bond must be brought in a court of competent jurisdiction for the county or circuit in which the construction contract was to be performed; except that a suit must not be commenced after the expiration of one year after the day on which the last of the labor was performed or material was supplied by the person bringing suit.”
One year, from the claimant’s own last work — the federal measure at 40 U.S.C. § 3133(b)(4) — plus a venue fixed to the place of performance, which the federal statute also does at § 3133(b)(3).
What the Procurement Code keeps elsewhere
Section 11-35-3030 sits inside a much larger procurement code, and this page reads only the bond section.
It does not state the surety-eligibility criteria, which the section delegates to “the board in regulations” — so which sureties are acceptable is a regulatory question we have not read. It does not cover the State Engineer’s Office prescriptions the bid-security sentence refers to. And it does not address how a body demonstrates it “has protected the State” for the purposes of the waiver, which is the condition the whole waiver turns on.
