Ohio Performance BondThree Statutes. One Bond.

It depends on who awarded the contract. General public improvement contracts (schools, municipal buildings, water systems) fall under ORC sections 153.54 through 153.57, Ohio's Little Miller Act. If the Ohio Department of Transportation awarded the contract, ORC section 5525.16 controls -- it requires separate performance and payment bonds at 100% each, and final bond amounts must be adjusted if the contract changes by $40,000 or more. Construction Manager at Risk and Design-Build projects procured through the Ohio Facilities Construction Commission use OAC 153:1-4-02 and OFCC Form M170. Each framework has distinct bond forms, claim procedures, and surety requirements. Using the wrong statute's procedures can forfeit your rights.

ORC section 153.56 sets three strict deadlines. First, a claimant must serve a written statement of the amount due within 90 days after the contracting authority accepts the completed work. Second, the claimant must wait at least 60 days after serving that statement before filing suit on the bond. Third, no suit may be commenced more than one year after the date the contracting authority accepted the project. Missing any of these deadlines can permanently extinguish your claim. The 90-day clock starts from project acceptance -- not from the last day you furnished labor or materials.

Sub-subcontractors and material suppliers who are not in direct contractual privity with the prime contractor must serve a Notice of Furnishing under ORC section 1311.261 if their labor or materials exceed $30,000. The notice must be served on the prime contractor within 21 days of first furnishing. Failure to serve this notice can eliminate your right to make a claim against the performance and payment bond. This requirement does not apply to first-tier subcontractors who contracted directly with the general contractor -- only those further down the contractual chain.

Under ORC section 153.54, a bidder on a public improvement project valued under $500,000 may withdraw a bid without penalty if the surety certifies that executing the contract at the bid price would cause the contractor's bonding capacity to be exceeded. This narrow protection exists because smaller contractors may not realize the full bonding impact of a new project until after bid submission. For projects at or above $500,000, bid withdrawal triggers forfeiture of the bid guaranty -- either the full-amount bid bond or the 10% certified check, cashier's check, or letter of credit.

ORC section 153.80 allows the contracting authority to reduce retained funds by 50% once the contractor has completed at least half the work. This is a significant cash flow benefit on large projects where retainage can tie up hundreds of thousands of dollars. The reduction is at the discretion of the contracting authority -- it is not automatic. Your performance bond remains at 100% of the original contract value regardless of retainage reductions.

The Ohio Facilities Construction Commission requires 100% performance and 100% payment bonds on both CM at Risk and Design-Build projects, filed using OFCC Form M170 under OAC 153:1-4-02. If your surety becomes bankrupt or insolvent during the project, you must provide a replacement surety within 21 days. Unlike projects under the Little Miller Act (ORC 153.54), CM at Risk and Design-Build contractors are exempt from the bid guaranty requirement. The surety must be authorized to do business in Ohio and approved by the awarding authority.