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Bid bonds - Not just a Nice to Have

Below is a good article on what happens when you don't consider the cost of a bond in your bid.  As you can see from the article, the contractor did not submit a bid bond for the contract, which would have led to a great piece of business.   Given the size of the contract, the contractor would likely have received a significant boost to his bottom line if he had priced it including the bond requirements.


Two new entryway signs for Enid are on hold after a motion to award a construction contract was defeated during an Enid City Commission meeting last week.

The city commission considered a $127,000 contract with Henson Construction Co., of Enid, on April 19.

Plans have entailed constructing one sign on U.S. 412, east of 66th, and another to replace an existing sign on South U.S. 81, City Engineer Robert Hitt said.

The contract included one bid alternate to construct a low wall at the base of each sign. Two other alternates — not recommended for inclusion in the contract — were a mow strip, or concrete curb, around the exterior of the signs, and a solar lighting system for the sign on U.S. 412.

“We felt, at this time, the cost to provide the mow strip and to provide the solar panel is probably a little excessive,” Hitt said.

There is a $130,000 budget for the two signs, he said.

Ward 4 Commissioner Rodney Timm asked for an explanation about a $40,000 bidder.

Hitt said Vital Signs of Oklahoma, of Edmond, submitted a bid without a bid bond and are considered non-responsive. It’s required that companies submit a 5 percent bid bond with a guarantee, if awarded, that the company will enter into the contract.

“I would not recommend awarding a contract for a public improvement, as such, on a contractor that did not provide a bid bond,” he said.

Engineering Director Chris Gdanski said the contractor was notified of the need for a bid bond.

“He was somewhat concerned that we required a bid bond, a performance bond and a three-year maintenance bond, and, apparently, from what he told me, he hadn’t planned those into the cost estimate and he politely requested to withdraw his bid,” Gdanski said.

Timm said it is “nice to see” something appraised for what it actually costs to make.

“I think this is a very good place to start our budget. This is way too much money for a sign,” Timm said.

Ward 1 Commissioner Ron Janzen said the cost is his concern as well.

“I expressed this during the budget hearings that, to me, if we’re prioritizing projects, and in our last budget we took out a number of street and bridge projects that we’d postponed, and yet we’re going to spend $127,000 putting up two entrance signs? I can’t vote for that. To me, I think we need to establish priorities and try to get some things done that I think are more important than this,” he said.

Ward 3 Commissioner Ben Ezzell said it does seem like a lot of money for a couple of signs.

“They’re so pretty, I think they’re great, but that’s just a lot of money for signs,” he said.

A motion to approve the contract, made by Ward 6 Commissioner David Vanhooser, was defeated 4-3 with Janzen, Ezzell, Timm and Mayor Bill Shewey voting against it.

See here for our California Bid Bonds, and more on Texas bid bonds or a Florida Bid Bond

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