1. Workshop for Architects, Engineers & Construction Contractors
Presented by:
Government Agency Panelists & Cheryl Foley, Florida Surety Bonds, Inc.

2. Similarities between A&E and Construction from a Government Perspective
Architects & Engineers (A&E):
Requests for Qualifications, Notifications, Short Listing, Negotiations (as prescribed by FS ), & Professional Liability Insurance
Construction:
Solicitations, Notifications, Short Listing, Negotiations (if CMAR or Design Build), Insurance and/or Bonding

3. Differences between Public vs. Private
A&E and Construction Procurement

4. Solicitation Notifications Award Criteria Published Upfront
Questions, Pre-bid Conferences &/or Walk-Throughs
Insurance &/or Bonding

5. Solicitation Multiple year or continuing contracts, if specified
For Construction, announce bidders and prices
Notice of Intended Award
Reliable Payments

6. Private vs. Public Description Private Public
Architects & Engineers (A/E)
Publish publicly
May publish
Shall publish if over $35K fee or $325K project
Short list to 3 firms, if 3 firms available
May
Shall
Negotiate with most qualified firm first
Announce bidder & price at the earlier of intended notice of award or 30 days after bid opening
Shall publish
A/E Solicitations:
Award criteria published upfront
Continuing Contracts, multiple years
Shall, if specified
Reliable on-time payments for correct invoices
Will be paid

7. Private vs. Public Description Private Public Construction Contractors
Construction Notifications:
In Newspaper & usually another outlet
May publish
Shall publish if over $200K
Provide at least 5 days notice prior to pre-bid conference
Provide at least 21 days notice prior to bid opening
Provide at least 30 days notice prior to bid opening
Shall publish if over $500K
Announce bidder & price at public bid opening
Shall publish
Contruction Solicitations:
Award criteria published upfront
Award Continuing Contracts, multiple years
May
Shall, if specified
Reliable on-time payments for correct invoices
Will be paid
Bid Bond Requirement
Shall require if over $200K
Performance & Payment Bond

8. Are “Bond Costs” Important ?
If a contractor bids a lower price for the base bid, but has an overall higher price, inclusive of bond costs, can this contractor lose the entire bid?

9. Bonds
Presented by:
Cheryl Foley & Kim Niv
Florida Surety Bonds, Inc.

10. Bonding is not always an option, it could be required by law
Section of the Florida Statutes – Florida’s “Little Miller Act” is based upon the Federal Miller Act, which requires contractors on federal jobs $100,000+ to post performance and payment bonds. In Florida, all public construction projects over $200,000 must be bonded.
Public projects cannot be liened
Protects the state from defaults of GC’s in performance of the contract and payment of subs and suppliers.
FDOT Statute calls for bonds on projects $250,000+.
Subs, sub-subs and suppliers must give notice they intend to look to a bond for payment

11. What is a surety bond?
A surety bond is a three-party agreement where the Surety assures the Obligee that the Principal will perform a contract.
Three parties to a bond – 1. Obligee (owner) 2. Principal (contractor) 3. Surety (insurance company)

12. How are bonds different from insurance?
Surety is not insurance, but an extension of credit
Indemnity - If a surety must finish the contractor’s work, or pay any bills, they will look to the company and individual owners/spouses for reimbursement.
One-time premium at the beginning
of each job, versus regular monthly
insurance premiums.

13. Three types of contract surety bonds
Bid Bond
Performance Bond
Payment Bond

14. Bid Bonds
Provide financial assurance that the bid has been submitted in good faith and the successful bidder will enter the contract at the price bid and provide required PP bonds.
Unless
Overbid
Spread >10%
Material change in job or financial condition

15. Performance and Payment Bonds
Performance Bond - Protects owner from financial loss if contractor fails to perform.
Payment Bond - Assures contractor will pay certain workers, subs and suppliers.

16. How to Qualify for Bonding

17. Three C’s of Bonding Character Capital Capacity BONDING Capaci ty
Does the Principal have a credit record and other history
suggesting good character and that they will be faithful to
their obligation?
Capital
Does the Principal have the skill, experience, knowledge,
staff and equipment necessary to perform their contract?
Capacity
Does the Principal have the financial wherewithal to finance
the new project as well as other current obligations?
BONDING
Capaci ty
Capital
Character

18. You may be wondering…
“. . . How do I apply
for one of these "Bonds?"

19. Bond Application Contractor Profile.
Copy of current Certificate of Insurance.
Last three years financial statements and meaningful interim in-house statement. Include bank statement and AR aging.
Personal financial statement on owners.
Work in progress schedule.
Evidence of bank line of credit.

20. United Fire Western Suety Liberty Mutual Travelers Gray Insurance
Bond Premiums
Vary by surety company.
Range from 1%-3% of contract.
Rating factors include complexity of project & financial strength/presentation.
Bid bonds free except in short programs.
Refunds in premium result from reductions
in scope, not Owner Direct Purchase.
United Fire
Western Suety
Liberty Mutual
Industry standard rates based on final contract price are:
2.5% for first $100,000
1.5% for the next $400,000
1% for the next $2,000,000.
Travelers
Gray Insurance
Berkley Insurance

21. Bonding Limits
Assuming appropriate financial results and presentation, sureties may consider single jobs times largest successfully completed project.
Aggregate limit is determined by working capital, net worth and historical annual revenues.
Rule of 10

22. Credit Based/Small Contract Programs
Several “A” rated sureties have programs to help even the smaller contractors that do not have CPA Financial Statements, or that have been in business for years but have never had the need for bonding.
We have markets that can consider up to $1,000,000 just with qualifying Internal Financial Statements.
Emerging contractors can be bonded up to $400,000 single with strong personal credit! No financials required.
Acceptable credit is 680 +/- depending on the surety. Less than 680? SBA now has a program for that too!
2-3 page application is basically all that is needed! For “out of the box” programs, some sureties may ask for additional information.

23. Can you get Pre-Qualified without a bond need?
YES!!
We actually prefer for someone to come to us to get set up and pre-qualified BEFORE they have an urgent bond need. It makes the process easier for everyone.
It’s Free!
Once you are set up, we can provide you with free bondability letters for marketing or job pre-qualifications.
Better to know if you qualify and what you qualify for before you bid on a job.
We try to make it as easy and streamlined as possible. We are more than happy to come out to help fill out forms, etc.

24. Cheryl Foley (407)
Kim Niv (407)