ASA White Paper Helps Subs Master Negotiations on Surety Bond Requirements

Surety bonds are required on practically all public and on some private projects. The terms of bonds vary dramatically. ASA’s white paper Mastering Negotiations on Surety Bond Requirements provides ASA members with background and negotiating tips whether they’re providing the surety bond or seeking payment protection under the prime contractor’s payment bond. The ASA white paper reminds subcontractors that they should get a copy of the prime contractor’s payment bond prior to signing the subcontract. In addition, it provides a list of resources a subcontractor can use to determine the validity of the prime contractor’s bond. The white paper ends with suggestions of how a subcontractor can best make its case to its customer. Here are some typical arguments that can be used during negotiations about bonds with prime contractors:

  • I’ve brought you my insurance certificates in exchange for a copy of your payment bond on the job.
  • We received copies of all the contract documents, with the exception of your payment bond. The bond is an important part of the documents, and standard industry contracts say that subs are entitled to those copies.
  • The bid documents say nothing about bonds being required. I’m willing to get these for you now, but I can’t agree to furnish them later, since I may have used my bond capacity elsewhere by then.
  • You questioned why my charge for bonds was more than others. I provided the bonds as an accommodation and need something for my overhead and the use of my bonding capacity.