Public works contracts; revise contract threshold amounts relating to performance bond and general liability insurance requirements.

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To: Judiciary A
MISSISSIPPI LEGISLATURE REGULAR SESSION 2026

By: Representative Remak

HOUSE BILL NO. 496

AN ACT TO AMEND SECTION 31-5-51, MISSISSIPPI CODE OF 1972, TO 1
INCREASE FROM $25,000.00 TO $75,000.00 THE THRESHOLD AMOUNT FOR 2
PUBLIC WORKS CONTRACTS UNDER WHICH AN OWNER MAY ELECT TO MAKE A 3
LUMP-SUM PAYMENT AT COMPLETION OF THE CONTRACT INSTEAD OF 4
REQUIRING A PERFORMANCE BOND OR PAYMENT BOND; TO INCREASE FROM 5
$25,000.00 TO $75,000.00 THE THRESHOLD AMOUNT UNDER WHICH ANY 6
PERSON ENTERING INTO A FORMAL CONTRACT WITH A COUNTY, CITY OR 7
OTHER PUBLIC AUTHORITY FOR THE CONSTRUCTION, ALTERATION, OR REPAIR 8
OF ANY PUBLIC BUILDING OR PUBLIC WORK, MUST FURNISH PROOF OF 9
GENERAL LIABILITY INSURANCE COVERAGE IN AN AMOUNT NOT LESS THAN 10
$1,000,000.00 FOR BODILY INJURY AND PROPERTY DAMAGE; TO PROVIDE 11
THAT FOR ANY CONTRACT WITH THE STATE WHICH EXCEEDS $5,000.00, OR 12
WITH A COUNTY, CITY OR OTHER PUBLIC AUTHORITY WHICH EXCEEDS 13
$75,000.00, FOR THE CONSTRUCTION, ALTERATION OR REPAIR OF ANY 14
PUBLIC BUILDING OR PUBLIC WORK, IF A SUBCONTRACTOR OF THE GENERAL 15
CONTRACTOR FOR THE CONTRACT DOES NOT HAVE GENERAL LIABILITY 16
INSURANCE COVERAGE IN THE REQUIRED MINIMUM AMOUNT, THEN THE 17
GENERAL CONTRACTOR SHALL BE LIABLE FOR ANY AMOUNT UNDER SUCH 18
MINIMUM AMOUNT OF COVERAGE FOR WHICH THE SUBCONTRACTOR IS 19
UNDERINSURED OR NOT INSURED; AND FOR RELATED PURPOSES. 20
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MISSISSIPPI: 21
SECTION 1. Section 31-5-51, Mississippi Code of 1972, is 22
amended as follows: 23
31-5-51. (1) Any person entering into a formal contract 24
with the state or any county, city or political subdivision 25
thereof, or other public authority for the construction, 26
alteration or repair of any public building or public work, before 27
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entering into such contract, shall furnish to such public body, 28
except as provided in subsection (5) of this section, bonds with 29
good and sufficient surety as follows: 30
(a) A performance bond payable to, in favor of or for 31
the protection of such public body, as owner, for the work to be 32
done in an amount not less than the amount of the contract, 33
conditioned for the full and faithful performance of the contract; 34
(b) A payment bond payable to such public body but 35
conditioned for the prompt payment of all persons supplying labor 36
or material used in the prosecution of the work under said 37
contract, for the use of each such person, in an amount not less 38
than the amount of the contract; and 39
(c) The bonds herein provided for may be made by any 40
surety company which is authorized to do business in the State of 41
Mississippi and listed on the United States Treasury Department's 42
list of acceptable sureties, or such bonds may be guaranteed by a 43
personal surety as provided for herein. The personal surety shall 44
deposit with the State Treasurer cash or certificates of deposit 45
in an amount not less than the amount of the contract, and the 46
State Treasurer shall hold same in trust and on deposit for the 47
benefit of the public body that is a party to the contract 48
providing for the construction, alteration or repair of the public 49
building or for the public work. 50
(2) Every person who has furnished labor or material used in 51
the prosecution of the work provided for in such contract, in 52
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respect of which a payment bond is furnished and who has not been 53
paid in full therefor before the expiration of a period of ninety 54
(90) days after the date on which the last of the labor was 55
performed by him or the last of the materials was furnished by him 56
and for which such claim is made, provided the same has been 57
approved, where required, by the public authority or its architect 58
or engineers, or such approval is being withheld as a result of 59
unreasonable acts of the contractor, shall have the right to sue 60
on such payment bond for the amount, or the balance thereof that 61
is due and payable, but unpaid at the time of institution of such 62
suit and to prosecute said action to final execution and judgment. 63
Notwithstanding anything to the contrary contained herein, if the 64
amount claimed in such action is subject to contractual provisions 65
or conditions, between the parties involved in such action, the 66
action shall be abated pending the performance of such provisions 67
and the fulfillment of such conditions. 68
(3) Any person having direct contractual relationship with a 69
subcontractor but no contractual relationship express or implied 70
with the contractor furnishing said payment bond shall have a 71
right of action upon the said payment bond upon giving written 72
notice to said contractor within ninety (90) days from the date on 73
which such person did or performed the last of the labor or 74
furnished or supplied the last of the material for which such 75
claim is made, stating with substantial accuracy the amount 76
claimed and the name of the party to whom the material was 77
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furnished or supplied or for whom the labor was done or performed. 78
Such notice shall be given in writing by the claimant to the 79
contractor or surety at any place where the contractor or surety 80
maintains an office or conducts business. Such notice may be 81
personally delivered by the claimant to the contractor or surety, 82
or it may be mailed by certified mail, return receipt requested, 83
postage prepaid, to the contractor or surety. No such action may 84
be maintained by any person not having a direct contractual 85
relationship with the contractor-principal, unless the notice 86
required by this section shall have been given. 87
(4) The only persons protected by such payment bond, subject 88
to the notice provisions of this section are: 89
(a) Subcontractors and material suppliers of the 90
contractor; 91
(b) Sub-subcontractors and material suppliers of those 92
subcontractors named in subsection (4)(a) of this section; and 93
(c) Laborers who have performed work on the project 94
site. 95
(5) Whenever a contract is less than * * * Seventy-five 96
Thousand Dollars ($75,000.00) the owners may elect to make a lump 97
sum payment at the completion of the job. Lump-sum payments will 98
not be made until completion and acceptance by the governing 99
agency. In such a case a performance bond or payment bond will not 100
be required. 101
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(6) Except as otherwise provided in subsection (1)(c) for a 102
personal surety, no surety or surety company shall be allowed to 103
guarantee or write bonds for the benefit of the public body that 104
is a party to a contract providing for the construction, 105
alteration or repair of a public building or for public work, 106
unless that surety is listed on the United States Treasury 107
Department's list of acceptable sureties. If the surety is not 108
listed on the United States Treasury Department's list of 109
acceptable sureties, the public body for which the public work is 110
being performed shall be liable to the extent that the surety 111
would be liable. 112
(7) Any person entering into a formal contract with the 113
state which exceeds Five Thousand Dollars ($5,000.00), or with a 114
county, city or other public authority which exceeds * * * 115
Seventy-five Thousand Dollars ($75,000.00), for the construction, 116
alteration or repair of any public building or public work, before 117
entering into such contract, shall furnish to the public body 118
proof of general liability insurance coverage in an amount not 119
less than One Million Dollars ($1,000,000.00) for bodily injury 120
and property damage. For any such contract, if a subcontractor of 121
the general contractor for the contract does not have general 122
liability insurance coverage in the minimum amount required by 123
this subsection, then the general contractor shall be liable for 124
any amount under such minimum amount of coverage for which the 125
subcontractor is underinsured or not insured. Exempted from the 126
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ST: Public works contracts; revise contract
threshold amounts relating to performance bond
and general liability insurance requirements.
provisions of this subsection are any persons who enter into a 127
contract with the Mississippi Department of Rehabilitation 128
Services for the construction, alteration or repair of the home of 129
a disabled individual who has been determined eligible for 130
services by the Mississippi Department of Rehabilitation Services. 131
SECTION 2. This act shall take effect and be in force from 132
and after July 1, 2026. 133