Louisiana Administrative Code › Title 19 - CORPORATION AND BUSINESS › Part II - Small and Emerging Business Development Program › Chapter 9 - Small Business Bonding Program › Section II-911 - Guarantee

Current through Register Vol. 50, No. 6, June 20, 2024
A. Amount of
				Guarantee. Providing collateral in the form of an irrevocable letter of credit
				to the surety may be posted on an individual project basis, for one or more
				projects at any one time, at the discretion of the Department of Economic
				Development.
B. Surety Bond
				Guarantee Agreement
1. Terms and Conditions
a. The guarantee agreement is made
				exclusively for the benefit of BAP and the surety; it does not confer any
				rights or benefits on any other party including any right of action against BAP
				by any person claiming under the bond. When problems occur on a contract
				substantive enough to involve the surety, the surety is authorized to take
				actions it deems necessary. Regardless of the extent or outcome of surety's
				involvement, the surety's services, including legal fees and other expenses,
				will be chargeable to the contractor unless otherwise settled.
b. Any agreement by BAP to guarantee a surety
				bond issued by a surety company shall contain the following terms and
				conditions:
i. the surety represents that the
				bond or bonds being issued are appropriate to the contract requiring
				them;
ii. the surety represents
				that the terms and conditions of the bond or bonds executed are in accordance
				with those generally used by the surety for the type of bond or bonds
				involved;
iii. the surety affirms
				that without the BAP guarantee to surety, it will not issue the bond or bonds
				to the principal;
iv. the surety
				shall take all steps necessary to mitigate any loss resulting from principal's
				default;
v. the surety shall inform
				BAP of any suit or claim filed against it on any guaranteed bond within 30 days
				of surety's receipt of notice thereof. Unless BAP decides otherwise, and so
				notifies surety within 30 days of BAP's receipt of surety's notice, surety
				shall take charge of the suit for claim and compromise, settle or defend such
				suit or claim until so notified. BAP shall be bound by the surety's actions in
				such matters;
vi. the surety shall
				not join BAP as a third party in any lawsuit to which surety is a party unless
				BAP has denied liability in writing or BAP has consented to such
				joinder.
c. When
				contractor successfully completes bonded job a status inquiry report is signed
				by appropriate parties and is forwarded to surety's collateral department.
				Surety shall release standby letter of credit within 90 days of recordation of
				acceptance date shown on status inquiry report.
d. Variances. The terms and conditions of
				BAP's guarantee commitment or actual bond guarantee may vary from surety to
				surety and contract to contract depending on BAP's experiences with a
				particular surety and other relevant factors. In determining whether BAP's
				experience with a surety warrants terms and conditions which may be at variance
				with terms and conditions applicable to another surety, BAP will consider,
				among other things, the adequacy of the surety's underwriting; the adequacy of
				the surety's substantiation and documentation of its claims practice; the
				surety's loss ratio and its efforts to minimize loss on BAP guaranteed bonds;
				and other factors. Any surety which deems itself adversely affected by the
				director's exercise of the foregoing authority may file an appeal with the
				Secretary of the Department of Economic Development. The secretary will render
				the final decision.