Georgia Proposes Raising Public Works Bond Threshold to $250,000

What is Georgia House Bill 137 and how does it affect public works bonds?

Georgia House Bill 137 proposes to significantly increase the threshold for payment and performance bonds on public works projects, potentially effective July 1, 2025.

Proposed Changes

Current Threshold: $100,000 - public works projects exceeding this amount currently require payment and performance bonds

Proposed Threshold: $250,000 - if enacted, only projects exceeding this amount would require bonds

Increase: 150% increase in the bonding threshold

Potential Effective Date: July 1, 2025 (if signed by the governor)

Current Status

As of the latest available information, House Bill 137 has been passed by the Georgia legislature and is awaiting the governor's signature. The bill's status should be verified with the Georgia General Assembly for the most current information.

Impact on Contractors

Small to Mid-Size Projects: Contractors working on public projects between $100,000 and $250,000 would no longer need to obtain payment and performance bonds, potentially:

• Reducing project costs by eliminating bonding premiums
• Opening opportunities for smaller contractors who cannot obtain bonding
• Speeding up project start times by eliminating the bonding process

Risk Considerations: While eliminating bonding requirements reduces costs, it also removes protections for:

• Subcontractors and suppliers (payment bond protection)
• Project owners (performance bond protection)
• The public (assurance of project completion)

Impact on Subcontractors and Suppliers

Reduced Protection: On projects between $100,000 and $250,000, subcontractors and suppliers would lose payment bond protection, meaning they would need to rely on:

• Georgia's mechanics lien laws for payment protection
• Direct contracts with more protective payment terms
• Credit checks and payment history reviews before starting work

Context: Multi-State Trend

Georgia's proposal is part of a broader trend of states raising public bond thresholds to account for inflation. Recent increases include:

• Alabama: $50,000 to $100,000
• Kentucky: $40,000 to $100,000
• Illinois: $50,000 to $150,000
• Montana: $50,000 to $150,000

These thresholds haven't been updated in many states for decades, and inflation has significantly eroded their practical effect.

What Contractors Should Know

If the Bill Passes:

• Contractors should review their project pipeline to identify projects that may no longer require bonding
• Update cost estimates and bids to reflect potential bonding savings
• Consider voluntary bonding on sub-threshold projects as a competitive advantage
• Evaluate whether reduced bonding requirements affect project risk management

If the Bill Does Not Pass:

• Current $100,000 threshold remains in effect
• All existing bonding procedures continue unchanged

Verification

Contractors and subcontractors working on Georgia public works projects should:

• Monitor the governor's action on HB 137
• Consult with legal counsel about how the change may affect their projects
• Review project contracts to confirm bonding requirements
• Verify effective dates if the bill is signed into law

The most current information on HB 137 can be found on the Georgia General Assembly website.