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Bidding Requirements for Construction and Repair Contracts in North Carolina Part 4

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In parts one, two, and three of this four-part series, a Charlotte bid protest lawyer from Cotney Construction Law has been discussing the bidding requirements for construction and repair contracts in North Carolina. We have taken a close look at the government’s process for acquiring bids and the steps contractors must take to capitalize on these opportunities for procuring lucrative projects. Now, we will conclude our series by discussing the contractor’s duties for executing the contract and information related to contract management and retainage.

Executing the Contract

Whether the project falls in the informal or formal bidding range, it may be executed by the governing board chair or an authorized official or employee. Once a contract is awarded in the formal bidding range, it must be executed within 10 days of award. Otherwise, the contractor may forfeit the bid along with the bid deposit/bond. Contracts at any price level are required to be drafted in writing for projects located in cities. For other local governments, these same precautions are required if the contract falls within the formal bidding range. Local governments are barred from entering an oral agreement.

If a project costs more than $300,000, every contractor involved who is contracted for repairs or construction exceeding $50,000 is required to submit performance and payment bonds. These bonds should be valued at the total contract cost and executed by a licensed surety from North Carolina. Bonds take effect when the contract is awarded. The inability to provide these bonds will result in the forfeiture of the bid deposit/bond.

Contract Management and Retainage

What is retainage? Retainage is a withheld payment that is awarded once the project has been completed. According to North Carolina General Statutes, §143-134.1(b1), “No retainage may be withheld on contracts that are less than $100,000.” For projects exceeding $100,000, there are various requirements dictating the award of the payments being held in retainage including:

  • Local governments may not retain more than five percent of payment during the first half of the project.
  • Once the project reaches the halfway point, the local government may not increase retainage pending the performance of the contractor.
  • All retainage must be awarded to the contractor once a certificate of substantial completion is provided. Alternatively, retainage may be awarded once the requirements for beneficial occupancy have been met. However, the local government does have the power to hold up to 2.5 times the allotted value of remaining work. This is permitted to ensure projects are completed or corrected as needed.
  • The “line-item” release of any funds locked in retainage is necessary for awarding payment to subcontractors who complete jobs before the project has reached the halfway point.

The bidding process can be confusing for the uninitiated. Even contractors who have won bids in the past are often baffled by this process. Fortunately, a Charlotte bid protest attorney can assist you with all of your bid-related needs including bid proposals and disputes.

If you would like to speak with a Charlotte bid protest attorney, please contact us today.

Disclaimer: The information contained in this article is for general educational information only. This information does not constitute legal advice, is not intended to constitute legal advice, nor should it be relied upon as legal advice for your specific factual pattern or situation.