PURPOSE
Contractors are required to have adequate insurance and bonding capacity before starting work on City of Los Angeles construction projects. A performance bond gives the City collateral and ensures that the project is completed, even if the Contractor defaults on the contract. Contractors are required to carry insurance to cover all types of accidents that could occur on the project. The insurance indemnifies the City against costly claims if the Contractor is responsible for the accident. The purpose of this procedure is to provide guidelines for this process.
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RESPONSIBILITIES
City Administrative Officer: The City Administrative Officer’s Risk Management Section, reviews and approves the bonds and insurance to make sure that they provide adequate coverage for the type of construction project. They send the bonds and insurance back to the Board of Public Works once they are approved.
Board of Public Works: The Board accepts the bonds then submits them for review and approval by the Risk Management Section of the City Administration Office (CAO). The Insurance is uploaded by the Contractors Insurance Company via Cao’s Track4LA (http://track4la.lacity.org/) for approval. Once approved, They then issue the Notice to Proceed (NTP) to the Contractor once the Risk Management Section approves the bonds and insurance in coordination with the PM.
Project Manager (PM): Depending on the project’s schedule, the PM may contact the selected Contractor and encourage them to submit their bonds and insurance as quickly as possible. The PM is responsible for negotiating the date that the NTP is issued with the Contractor, if necessary, to make sure that construction starts on schedule. The Contractor should submit the bonds and insurance immediately, even if the NTP date is delayed beyond the date specified in the contract documents. The PM must approve the NTP date if the date is different from the NTP date spelled out in the bid documents. The PM should work with the Contractor and the Board as necessary to determine the date that the NTP is issued.
PROCEDURE
The Board of Public Works staff notifies the successful Bidder immediately after the project is awarded (see Procedure 14.4) and requests the Contractor to submit the following information:
Payment Bond – The Payment Bond guarantees that suppliers and subcontractors will be paid for all work performed on the contract by the Surety Company if the Contractor defaults on the bond and fails to pay.
Contractor's Performance Bond – The Performance Bond guarantees that the contract will be fully and faithfully carried out until it is completed. The Surety Company that issues the bond is liable for completion of the project if the Contractor defaults on the contract.
General Liability Insurance – General Liability insurance covers the Contractor’s field operations whenever the City is at risk of third-party claims. Contractors are required to carry the City as Additional Insured for liability and defense of lawsuits for operations performed by the Contractor.
Automobile Liability Insurance – Automobile insurance for the Contractor covers both the Contractor and the City separately and covers all written agreements, contracts, and permits in force with the City. Contractors are required to carry the City as Additional Insured for liability and in defense of lawsuits for operations performed by the Contractor.
Workers Compensation Insurance – The Board submits the insurance documents to Risk Management for review and approval. This typically takes Risk Management 1-4 days to complete. The Board of Public Works usually issues the NTP within 5-15 days after Risk Management approves the insurance documents.
RELATED PROCEDURES
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