Louisiana Revised Statutes 38:2219 – Procurement of surety bonds and insurance
Terms Used In Louisiana Revised Statutes 38:2219
- Assets: (1) The property comprising the estate of a deceased person, or (2) the property in a trust account.
- Contract: A legal written agreement that becomes binding when signed.
- contract: means any contract awarded by any public entity for the making of any public works or for the purchase of any materials or supplies. See Louisiana Revised Statutes 38:2211
- Contractor: means any person or other legal entity who enters into a public contract. See Louisiana Revised Statutes 38:2211
- Liabilities: The aggregate of all debts and other legal obligations of a particular person or legal entity.
- person: includes a body of persons, whether incorporated or not. See Louisiana Revised Statutes 1:10
- Public entity: means and includes the state of Louisiana, or any agency, board, commission, department, or public corporation of the state, created by the constitution or statute or pursuant thereto, or any political subdivision of the state, including but not limited to any political subdivision as defined in Article VI Section 44 of the Constitution of Louisiana, and any public housing authority, public school board, or any public officer whether or not an officer of a public corporation or political subdivision. See Louisiana Revised Statutes 38:2211
A.(1)(a) Any surety bond written for a public works project shall be written by a surety or insurance company currently on the U.S. Department of the Treasury Financial Management Service list of approved bonding companies which is published annually in the Federal Register, or by a Louisiana domiciled insurance company with at least an A- rating in the latest printing of the A.M. Best’s Key Rating Guide to write individual bonds up to ten percent of policyholders’ surplus as shown in the A.M. Best’s Key Rating Guide, or by an insurance company that is either domiciled in Louisiana or owned by Louisiana residents and is licensed to write surety bonds.
(b) For any public works project, no surety or insurance company shall write a bond which is in excess of the amount indicated as approved by the U.S. Department of the Treasury Financial Management Service list or by a Louisiana domiciled insurance company with an A- rating by A.M. Best up to a limit of ten percent of policyholders’ surplus as shown by A.M. Best; companies authorized by this Paragraph who are not on the treasury list shall not write a bond when the penalty exceeds fifteen percent of its capital and surplus, such capital and surplus being the amount by which the company’s assets exceed its liabilities as reflected by the most recent financial statements filed by the company with the Department of Insurance.
(c) In addition, any surety bond written for a public works project shall be written by a surety or insurance company that is currently licensed to do business in the state of Louisiana.
(2) Notwithstanding Paragraph (1) of this Subsection, a surety bond for the faithful performance of a contractor on a public works project, the primary purpose of which is asbestos abatement, shall be deemed sufficient and acceptable under this Section if the surety thereon is an insurance company which is admitted to do business in Louisiana, provided all of the following conditions are met:
(a) The applicability of this Paragraph to the public entity for all such contracts has been specifically authorized:
(i) By the municipality or parish, through the adoption of an ordinance, after public hearing thereon, and with the written approval of the ordinance by its chief executive officer.
(ii) By any other public entity, through the adoption of a resolution, after public hearing thereon, together with the approval of the governing authority of the municipality as to public works projects located within the municipality, or the approval of the governing authority of the parish as to public works projects not located within a municipality, by resolution, after public hearing thereon, and with written approval of the chief executive officer of the municipality or parish.
(b) The contract is bid, let, and entered into on or prior to July 1, 1990.
(3) Notwithstanding any provision of law to the contrary, particularly the provisions of La. Rev. Stat. 33:4085, all contracts with the New Orleans Sewerage and Water Board for the purchase of goods and services, professional and nonprofessional, involving an amount less than one hundred thousand dollars shall not be subject to requirements for performance or surety bond. Any company or individual who defaults on performance of such a contract without bond and any individual or company having more than a fifty percent ownership interest in the defaulting company shall be prohibited from bidding on future contracts with the New Orleans Sewerage and Water Board for five years from the date of such default. Any company in which a defaulting company or individual has more than a fifty percent ownership interest shall also be prohibited from bidding on future contracts with the board for five years from the date of default.
B. No officer or employee of a public entity, or any person acting or purporting to act on behalf of any such officer or employee, shall with respect to any public building or construction contract or any other public contract, which is about to be, or which has been competitively bid, require the bidder to make application to or to procure any of the surety bonds or insurance specified by law or in connection with such contracts, from a particular surety or insurance company, or through a particular agent or broker in any particular locality.
Acts 1977, No. 103, §1. Amended by Acts 1982, No. 761, §1; Acts 1986, No. 442, §1; Acts 1989, No. 734, §2, eff. July 8, 1989; Acts 1990, No. 314, §1; Acts 1990, No. 1086, §1; Acts 1994, 3rd Ex. Sess., No. 111, §2, eff. July 7, 1994; Acts 2005, No. 139, §1, eff. June 28, 2005.