Performance & Payment Bonds · State Guides

The States That Set Two Bond Thresholds, Not One

Most guides to state public-works bonding print one number per state. It is a tidy format and in five states it is wrong, because those statutes carry two dollar figures doing two different jobs.

This is not a drafting curiosity. In each of these five, a contractor can be above one figure and below the other, and the answer to “do I need a bond” is yes and no — a different bond, a different obligee, or a different obligation entirely.

The five, and what each pair separates

StateThe two figuresWhat separates themStatute
Texas$100,000 and $25,000 (or $50,000)Which bond — performance or paymentTex. Gov’t Code § 2253.021(a)
Pennsylvania$5,000 and $10,000Which contracting body is letting the work8 P.S. § 193
New Hampshire$75,000 and $125,000The state, or a political subdivisionRSA 447:16
Virginia$500,000 and $350,000Nontransportation, or transportation-relatedVa. Code § 2.2-4337
Louisiana$5,000 and $25,000Writing the contract, or bonding itLa. R.S. 38:2241

Texas splits by bond

Tex. Gov’t Code § 2253.021(a) puts both requirements in one sentence and gives them different triggers:

“A governmental entity that makes a public work contract with a prime contractor shall require the contractor, before beginning the work, to execute to the governmental entity: (1) a performance bond if the contract is in excess of $100,000; and (2) a payment bond if: (A) the contract is in excess of $25,000, and the governmental entity is not a municipality or a joint board created under Subchapter D , Chapter 22 , Transportation Code; or (B) the contract is in excess of $50,000, and the governmental entity is a municipality or a joint board created under Subchapter D , Chapter 22 , Transportation Code.”

A Texas contractor whose contract falls between the payment bond figure and the performance bond figure owes one bond and not the other. There is a third figure inside the same subsection, too: the payment bond trigger itself moves depending on whether the entity is a municipality or a qualifying joint board.

Pennsylvania splits by who is letting the work

Pennsylvania’s bond law carries two triggering provisions with two different figures. The first, quoted from 8 P.S. § 193, requires bonds “Before any contract exceeding five thousand dollars ($5,000) for the construction, reconstruction, alteration or repair of any public building or other public work or public improvement, including highway work, of any contracting body,” with “A performance bond at one hundred percent of the contract amount.”

The second provision in the same law, also at 8 P.S. § 193, states the requirement for a defined class of contracting body at a different figure — “Before any contract exceeding ten thousand dollars ($10,000)” — and describes the security more broadly, permitting “A performance bond, Federal or Commonwealth chartered lending institution irrevocable letter of credit or restrictive or escrow account in such lending institution, equal to one hundred percent of the contract amount.” It displaces the first for the bodies it covers.

So in Pennsylvania the question is not only how large the contract is. It is who is on the other side of it, and, for the covered bodies, what instrument may be posted at all.

New Hampshire splits by obligee

RSA 447:16 sets the requirement by reference to who is contracting, in a single sentence that reads as one condition and is really two:

“Officers, public boards, agents or other persons who contract in behalf of the state or any political subdivision thereof for the construction, repair or rebuilding of public buildings, public highways, bridges or other public works shall if said contract involves an expenditure of $75,000 in behalf of the state or $125,000 in behalf of a political subdivision, and may if it involves an expenditure of less amount, obtain as a condition precedent to the execution of the contract, sufficient security, by bond or otherwise, in an amount equal to at least 100 percent of the contract price”

Two features are easy to read past. The lower figure applies to state work and the higher to a town, city, county or district — so the same contract value can be mandatory with one obligee and discretionary with another. And below the threshold the body still may require the security: the statute grants a permission, not an exemption.

Virginia splits by project type

Va. Code § 2.2-4337 sets its figures by what kind of project it is: bonds are required “Upon the award of any (i) nontransportation-related public construction contract exceeding $500,000 awarded to any prime contractor or (ii) transportation-related project authorized pursuant to Article 2 (§ 33.2-208 et seq.) of Chapter 2 of Title 33.2 exceeding $350,000 that is partially or wholly funded by the Commonwealth.”

These are the highest general thresholds in our reading of the 48 states, and Va. Code § 2.2-4337 is explicit that they are floors on the requirement, not ceilings on the practice: “Nothing in this section shall preclude a public body from requiring payment or performance bonds for construction contracts below $500,000 for nontransportation-related projects or $350,000 for transportation-related projects.”

Louisiana splits the contract from the bond

Louisiana’s pair is the least like the others, because the two figures govern two different obligations. La. R.S. 38:2241(A)(1) requires that “Whenever a public entity enters into a contract in excess of five thousand dollars for the construction, alteration, or repair of any public works, the official representative of the public entity shall reduce the contract to writing and have it signed by the parties.”

The bond obligation sits at a different number. Under La. R.S. 38:2241, “For each contract in excess of twenty-five thousand dollars per project, the public entity shall require of the contractor a bond with good, solvent, and sufficient surety in a sum of not less than fifty percent of the contract price.” The statute also carries a parish-specific variation at a much higher figure: “for each contract in excess of two hundred fifty thousand dollars per project in Ascension Parish,” the same fifty percent bond is required.

A Louisiana contractor between the two general figures has a contract that must be in writing and need not be bonded — two rules, one statute, and no single threshold that answers both.

What the five have in common

Nothing in the drafting, which is the point. The pairs separate different things in each state, and no rule of thumb predicts which. What they share is a failure mode: a reader who finds one figure, stops, and assumes it is the answer.

They also share a lesson about sources. In all five, both figures are in the statute, usually in the same subsection, and neither is buried. The reason one of them goes missing in most write-ups is that the write-up is summarizing a summary.

Frequently asked questions

Which states have two public-works bond thresholds?
In our reading of the 48 states we write in, Texas, Pennsylvania, New Hampshire, Virginia and Louisiana each carry two different dollar figures in the same statutory scheme. Each pair does a different job: separating the two bonds, separating classes of contracting body, separating the state from its subdivisions, separating project types, or separating the writing requirement from the bonding requirement.
Why does Texas require a performance bond and a payment bond at different amounts?
Tex. Gov’t Code § 2253.021(a) sets the performance bond requirement for contracts in excess of $100,000 and the payment bond requirement for contracts in excess of $25,000, or in excess of $50,000 where the governmental entity is a municipality or a joint board created under Subchapter D, Chapter 22, Transportation Code.
Does Virginia require bonds on smaller projects?
It may. Va. Code § 2.2-4337 sets the thresholds at $500,000 for nontransportation-related public construction and $350,000 for qualifying transportation-related projects, and states that nothing in the section precludes a public body from requiring bonds below those figures.
Is the lower number in each state always the one that matters?
No. In Texas the lower figure triggers the payment bond and the higher one the performance bond, so a contractor between them owes one bond and not the other. In New Hampshire the lower figure applies to state work and the higher to a political subdivision, so which one binds depends on who is buying.

How to read your own state

The habit worth forming is to read the whole triggering sentence rather than the figure inside it. In each of these five states the second number is not hidden — it is in the same subsection as the first, attached to a different condition. A guide that reports one number per state is not summarizing; it is choosing.

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