Pennsylvania Bond Claim Guide and FAQs

This act shall be known and may be cited as the “Public Works Contractors’ Bond Law of 1967.”

As used in this act–

(1) “Claimant” includes any individual, firm, partnership, association or corporation.

(2) “Contracting body” means any officer, employe, authority, board, bureau, commission, department, agency or institution of the Commonwealth of Pennsylvania or any State-aided institution, or any county, city, district, municipal corporation, municipality, municipal authority, political subdivision, school district, educational institution, borough, incorporated town, township, poor district, county institution district, other incorporated district or other public instrumentality, which has authority to contract for the construction, reconstruction, alteration or repair of any public building or other public work or public improvement, including highway work.

(3) “State-aided institution” shall mean and include any institution which receives State funds directly or indirectly for the construction, reconstruction, alteration or repair of its buildings, works or improvements, including highway work.

(a) 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 is awarded to any prime contractor, such contractor shall furnish to the contracting body the following bonds, which shall become binding upon the awarding of said contract to such contractor:

(1) A performance bond at one hundred percent of the contract amount, conditioned upon the faithful performance of the contract in accordance with the plans, specifications and conditions of the contract. Such bond shall be solely for the protection of the contracting body which awarded the contract.

(2) A payment bond at one hundred percent of the contract amount. Such bond shall be solely for the protection of claimants supplying labor or materials to the prime contractor to whom the contract was awarded, or to any of his subcontractors, in the prosecution of the work provided for in such contract, and shall be conditioned for the prompt payment of all such material furnished or labor supplied or performed in the prosecution of the work. “Labor or materials” shall include public utility services and reasonable rentals of equipment, but only for periods when the equipment rented is actually used at the site.

(b) Each of such bonds shall be executed by one or more surety companies legally authorized to do business in the Commonwealth of Pennsylvania. If the contracting body is the Commonwealth of Pennsylvania or any officer, employe, board, bureau, commission, department, agency or institution thereof, such bond shall be payable to the Commonwealth of Pennsylvania. If the contracting body is other than one of those enumerated in this subsection, such bond shall be payable to such other contracting body.

(c) Each of such bonds shall be filed in the office of the contracting body which awarded the contract for which such bonds were given.

(a) Before any contract exceeding ten thousand dollars ($10,000) 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 is awarded to any prime contractor, such contractor shall furnish to the contracting body the following financial security, which shall become binding upon the awarding of said contract to such contractor:

(1) Any financial security, acceptable to and approved by the contracting body, including, but not limited to, Federal or Commonwealth chartered lending institution irrevocable letters of credit and restrictive or escrow accounts in such lending institutions, equal to one hundred percent of the contract amount, conditioned upon the faithful performance of the contract in accordance with the plans, specifications and conditions of the contract. Such financial security shall be solely for the protection of the contracting body which awarded the contract.

(2) Any financial security, acceptable to and approved by the contracting body, including, but not limited to, Federal or Commonwealth chartered lending institution irrevocable letters of credit and restrictive or escrow accounts in such lending institutions, equal to one hundred percent of the contract amount. Such financial security shall be solely for the protection of claimants supplying labor or materials to the prime contractor to whom the contract was awarded, or to any of his subcontractors, in the prosecution of the work provided for in such contract, and shall be conditioned for the prompt payment of all such material furnished or labor supplied or performed in the prosecution of the work. “Labor or materials” shall include public utility services and reasonable rentals of equipment, but only for periods when the equipment rented is actually used at the site.

(b) Any bond or other financial security under the provisions of this act shall be executed by one or more surety companies or Federal or Commonwealth chartered lending institutions, chosen by the party posting the financial security and acceptable to the contracting body, legally authorized to do business in the Commonwealth of Pennsylvania.

(c) A duplicate copy of each financial security, including bonds, shall be filed in the office of the contracting body which awarded the contract for which such bonds or financial security were given.

(d) For purposes of this section, the phrase “contracting body” shall mean any county, school district, intermediate unit, area vocational-technical school, city, borough, incorporated town, township, home-rule municipality and any authority formed under the act of May 2, 1945 (P.L. 382, No. 164), known as the “Municipality Authorities Act of 1945.”

(e) For the contracting body as defined in subsection (d), the provisions of this section supersede the provisions of section 3 of this act.

(f) In the case of contracts of ten thousand dollars ($10,000) or less, nothing in this section shall be construed as preventing a contracting body, prior to awarding a contract for the construction, reconstruction, alteration or repair of any public building or other public work or public improvement, including highway work, from requiring a prime contractor to furnish financial security in accordance with subsection (a).

(a) Subject to the provisions of subsection (b) hereof, any claimant who has performed labor or furnished material in the prosecution of the work provided for in any contract for which a payment bond has been given pursuant to the provisions of subsection (a) of section 3 of this act or for which other financial security has been given pursuant to subsection (a) of section 3.1 of this act , and who has not been paid in full therefor before the expiration of ninety days after the day on which such claimant performed the last of such labor or furnished the last of such materials for which he claims payments, may bring an action on such payment bond or other financial security in his own name, in assumpsit, to recover any amount due him for such labor or material, and may prosecute such action to final judgment and have execution on the judgment.

(b) Any claimant who has a direct contractual relationship with any subcontractor of the prime contractor who gave such payment bond or other financial security but has no contractual relationship, express or implied, with such prime contractor may bring an action on the payment bond or other financial security only if he has given written notice to such contractor within ninety days from the date on which the claimant performed the last of the labor or furnished the last of the materials for which he claims payment, stating with substantial accuracy the amount claimed and the name of the person for whom the work was performed or to whom the material was furnished.
Notice shall be served by registered or certified mail, postage prepaid, in an envelope addressed to such contractor at any place where his office is regularly maintained for the transaction of business or served in any manner in which legal process may be served in the manner now or hereafter provided by law for the service of a summons, except that such service need not be made by a public officer.

This act shall apply whether or not the material furnished or labor performed enters into and becomes a component part of the public building or other public work or public improvement, including highway work.

(a) The contracting body shall furnish a certified copy of any payment bond or other financial security and the contract for which such bond or security was given to any person who makes an application for such copy and who submits an affidavit stating that:

(1) He has furnished material or performed labor, for the completion of the work provided for in the contract, and that he has not been fully paid for such labor or material; or

(2) He is a defendant in an action brought on a payment bond or other financial security; or

(3) He is the surety in a payment bond on which an action has been brought or is the representative of a lending institution that has issued or is maintaining financial security on which an action has been brought.

(b) Every such applicant shall pay for each certified copy a fee fixed by the contracting body to cover the actual cost of the preparation of such copy.

(c) A certified copy of any payment bond or other financial security and of the contract for which such bond or security was given shall constitute prima facie evidence of the contents, execution and delivery of the original of such bond and contract.

(a) It is unlawful for any representative of a contracting body, in issuing an invitation for bids, to require that any bond specified in section 3 of this act or authorized under section 3.1 of this act be furnished by a particular surety company or through a particular agent or broker.

(b) Any person who violates the provisions of this section is guilty of a misdemeanor and upon conviction thereof shall be sentenced to pay a fine not exceeding five thousand dollars ($5,000), or undergo imprisonment for a term not exceeding five years, or both.