Oklahoma Construction Surety Bonds

In Oklahoma, there is no statewide licensing of contractors other than certain specialty contractors. Other specialty contractors and general contractors may be subject to local licensing laws. It’s up to the licensing authority (state or local) whether furnishing a contractor license bond is a prerequisite for obtaining a license.

Oklahoma’s “Little Miller Act,” the state’s version of the federal Miller Act, both performance bonds and payment bonds for projects valued in excess of $50,000, each bond for 100% of the contract value. Private construction projects are not subject to Oklahoma’s Little Miller Act. But, private project owners often choose to require both performance and payment bonds from their contractors. And both public and private project owners can make providing a bid bond a prerequisite when contractors are competing for a construction project.

Other construction bonds that contractors operating in Oklahoma may need to purchase include:

• Maintenance bonds
• Contractor license bonds
• Subdivision/site improvement bonds
• Supply bonds
• Solar decommissioning bonds
• Right of Way bonds

There are three parties to a construction bond, referred to in the language of surety bonds as the bond’s:

• obligee—the project owner requiring the bond,
• principal—the contractor purchasing the bond, and
• surety—the bond’s guarantor.

When a claim is received, the surety will conduct an investigation to determine whether it is valid. The principal is legally obligated to pay valid claims. However, it’s uncommon for a principal to be able to pay a claim on short notice.

As the bond’s guarantor, the surety has agreed to extend credit to the principal to be used for a claim, if necessary. So, the surety will pay a valid claim initially, and the principal must repay the resulting debt according to the surety’s credit terms. Not being repaid for the credit extended in paying a claim typically results in the surety initiating a lawsuit against the principal to recover the funds.