Overview of Public Bonding in Iowa

by Drew Gentsch and Danya Keller, Whitfield & Eddy, PLC, Des Moines, IA
(Defense Update - Vol. XVIII., No. 1, Winter 2016)

When reviewing a bonded construction project in Iowa, there are many considerations that may arise. This article lays out some of the most common considerations. Note that this article is not meant to provide in-depth coverage of the topic, but rather a general overview.

Identifying the Type of Undertaking
Of course, the first step in the analysis is to determine whether the project is public or private. If it is private, it is important to note that Iowa does not have any statutory authority regarding payment bonds on private projects. Iowa’s mechanic’s lien statutes do, however, permit a party to bond off a lien and then proceed against the bond. The provisions of private bonds frequently track the language of the mechanic’s lien statute. Nevertheless, it is imperative to analyze the contract language for a private project. Public-project bonds will be governed by one of two statutes. If the project is federal, then the Miller Act will govern payment and performance bonds.  Bonding for state improvement projects, meanwhile, is governed by Iowa’s Little Miller Act, which is located in Iowa Code Chapter 573. Iowa’s Little Miller Act primarily protects suppliers and subcontractors. Contract remedies are generally the only remedies available for general contractors of public improvement projects. Additionally, Iowa’s mechanic’s lien statutes, Iowa Code Chapter 572, do not apply to public projects. Thus, subcontractors and suppliers on a public improvement must look to Chapter 573 for their remedies. 

Because Iowa has no statutory requirements for bonding on private projects,  this article will focus on bonding for state projects.

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