“We are very appreciative of the fact that AIA and EJCDC recognized the seriousness of the situation and acted quickly to address our request for interim revisions to their payment bond forms,” stated Bill Maroney, President of NASBP. “At present, our members are faced with a challenging situation in convincing owners and contractors about the need for modifications to the A312 payment bond form and in administering the various amendments to the A312 payment bond form issued by different surety companies.” Dick Foss, NASBP’s Executive Vice President, related, “NASBP established a productive dialogue with AIA and EJCDC so that they heard producer concerns over the current situation.” “We plan to work closely with SFAA and others to help AIA and EJCDC enhance their bond forms further,” he added.

Indeed, both AIA and EJCDC were receptive to the idea of interim revisions to their bond forms and subsequently took action, each choosing to employ a different approach to its respective payment bond form revision. EJCDC’s revised payment bond form, issued as EJCDC C-615(A), deletes Paragraph 6 in its entirety, removing the language in the bond form that stipulated a 45-day period within which the surety must answer the claimant’s notice of claim. In the commentary accompanying the revised form, EJCDC states the following:

To read the whole EJCDC statement regarding its interim payment bond form, EJCDC C-615(A), and to access a sample copy of the form, please click here.

Rather than issuing an interim version of its payment bond form, AIA chose to publish a notice of amendment, showing suggested modifications to its existing A312 Payment Bond form. The amendment makes several important changes to the form: specifically, it increases the number of days for the surety’s response from 45 days to 60 days and it states that a surety’s “failure to discharge its obligations” under Section 6 will not act as a waiver of the surety’s defenses but will entitle a claimant to seek reasonable attorneys’ fees as the sanction for such failure under Section 6. The amendment is a significant improvement over existing language, since it lengthens the surety’s response period and it addresses the potential loss of defenses for a surety’s untimely response.

However, the amendment does not address another issue raised in discussions among the three organizations—that is, the addition of language to establish an obligation on the part of bond claimants to supply the surety with supporting documentation of their claims as a condition of triggering the commencement of the surety response period. AIA felt that such an addition could not be entertained in the absence of a “full airing” with organizations representing all parties affected by the bond form. Moreover, AIA believed that any such discussion would delay publication and issuance of the amendment significantly. To provide the construction community with improved language as early as possible, the decision was made to release the amendment in its present form. AIA’s interim revision is available by clicking here. To increase awareness, AIA, NASBP and SFAA have issued a joint press release, available by clicking here, informing the construction community, including owners, about the availability of the new A312 Payment Bond amendment.

Thanks are due to EJCDC and to AIA for recognizing that the concerns and confusion generated by recent court decisions interpreting A312 Payment Bond language necessitated changes in their bond forms and for taking action to mitigate concerns ahead of the regular revision cycles for those bond forms. Both EJCDC and AIA plan to initiate full revision processes for their bond forms later this year, and they already have reserved seats at the drafting table for the surety community through NASBP and SFAA.