(a) When Required; Amounts. When a construction contract is awarded in excess of Twenty-Five Thousand Dollars ($25,000), the following bonds or security shall be delivered to Guam and

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shall become binding on the parties upon the execution of the contract:

(1) a performance bond satisfactory to Guam, executed by a surety company authorized to do business in Guam or otherwise secured in a manner satisfactory to Guam, in an amount equal to one hundred percent (100%) of the price specified in the contract; and

(2) a payment bond satisfactory to Guam, executed by a surety company authorized to do business in Guam or otherwise secured in a manner satisfactory to Guam, for the protection of all persons supplying labor and material to the contractor or its subcontractors for the performance of the work provided for in the contract. The bond shall be in an amount equal to one hundred percent (100%) of the price specified in the contract.

(b) Reduction of Bond Amounts. The Policy Office may promulgate regulations that authorize the Director of Public Works or head of a purchasing agency to reduce the amount of performance and payment bonds to fifty percent (50%) of the contract price for each bond.

(c) Authority to Require Additional Bonds. Nothing in this Section shall be construed to limit the authority of the Government of Guam to require a performance bond or other security for a construction contract awarded hereunder in addition to those bonds specified in Subsection (a) of this Section.

(d) Suits on Payment Bonds; Right to Institute. Every person who has furnished labor or material to the contractor or its subcontractors for the work provided in the contract, in respect of which a payment bond is furnished under this Section, and who has not been paid in full therefor before the expiration of a period of ninety (90) days after the day on which the last of the labor was done or performed by such person or material was furnished or supplied by such person for which such claim is made, shall have the right to sue on the payment bond for the amount, or the balance thereof, unpaid at the time of institution of such suit and to prosecute said action for the sum or sums justly due such person; provided, however, that any person having a direct contractual

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relationship with a subcontractor of the contractor, but no contractual relationship express or implied with the contractor furnishing said payment bond, shall have a right of action upon the payment bond upon giving written notice to the contractor within ninety (90) days from the date on which such person did or performed the last of the labor or furnished or supplied the last of the material upon which such claim is made, stating with substantial accuracy the amount claimed and the name of the party to whom the material was furnished or supplied or for whom the labor was done or performed. Such notice shall be personally served or served by mailing the same by registered or certified mail, postage prepaid, in an envelope addressed to the contractor at any place the contractor maintains an office or conducts its business.

(e) Suits on Payment Bonds; Where and When Brought. Every suit instituted upon a payment bond shall be brought in the Superior Court, but no such suit shall be commenced after the expiration of one (l) year after the day on which the last of the labor was performed or material was sup plied by the person bringing suit. The obligee named in the bond need not be joined as a part in any such suit.

SOURCE: GC § 6967.1. MPC § 5-302 modified. Subsection (c) amended by P.L. 27-127:3 (Dec. 2, 2004).

2023 NOTE: References to “”Territory”” replaced with “”Guam”” pursuant to 1 Guam Code Ann. § 420.

COMMENT: 1. “”The provision of this Section with regard to suits on payment bonds essentially follows the Miller Act, 40 U.S.C. § 270 (1970), and with many state statutes.”” Official Comments

2. Name of court specified as Superior Court.