Page 31 - CONTRACT POLICY MANUAL

SECTION 2.3

SURETY AND INDEMNIFICATION

§2.3-101 Definitions

(1) As used in this Section, the following terms have the meanings set forth:
a) Indemnification: The agreement of one party to assume financial responsibility for the
liability of another party. The County’s standard indemnification provision transfers the
risk associated with the contract to the Contractor.

b) Insurance: A contractual relationship where an insurance company agrees, for a premium
paid, to reimburse the insured or other party for a loss to a specified subject caused by
designated hazards or risks.
c) Bid Bond: Used in conjunction with the bidding process. The bond acts as a guarantee
that, if awarded the contract based on the bid submitted, the contractor will enter into a
contract to perform the work at the price quoted. If the contractor declines to enter into a
contract to perform the work at the agreed-upon price, the bid bond will reimburse the
County the difference between the defaulting contractor’s bid and the next lowest bid, up
to the maximum amount covered under the bond.
d) Labor and Materials Bond: Labor and materials payment bond is an agreement in which
security is provided by a surety company to the County on behalf of a contractor. Such
bond guarantees the County that all bills for labor and materials contracted for and used by
the contractor will be paid by the surety if the contractor defaults.
e) Performance Bond: A performance bond guarantees that the contractor will perform the
work in accordance with the contract and related documents, thus protecting the County
from financial loss up to the maximum amount covered under the bond in the event the
contractor fails to fulfill its contractual obligations.

§2.3-102 Policy

(1) It is County policy for Deputy Purchasing Agents, as well as those individuals with the delegated
authority to issue contracts on behalf of their department, to assess the risks involved in the contract
and to seek review/approval from the County’s Risk Manager or authorized designee when a
vendor takes exceptions to the following County terms:
a) Standard Insurance Requirements;

b) Indemnification; or,
c) Limitation of Liability
(2) Indemnification: Contractors doing business with the County will indemnify the County against
loss arising from patent violations, copyright violations, unauthorized use of materials, wrongful
acts, injuries to persons or property, and other loss which may result from contractor performance.

(3) Insurance: Insurance will be required where the County may suffer risk of loss due to the nature
of the work being performed. Such situations include, but are not limited to, contractors performing

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