NDOT Construction Contracts: Prequalification, Bonds and Retention Under NRS 408

Under NRS 408.333, before NDOT furnishes plans and specifications for advertised work, the Director requires a statement, verified under oath, in the form of answers to a standard questionnaire and financial statement. It must give a complete statement of the bidder's financial ability and experience performing public work and other comparable experience, and it must be filed in ample time for the Department to verify it before proposal forms and plans are issued.

The Director may refuse plans when not satisfied with the answers, and must refuse them to a bidder found to have materially breached a contract for a public work costing more than $25,000,000 within the preceding year. A bidder refused plans may appeal to the Board no later than 5 days before bid opening. The statute does not describe how NDOT rates a bidder's capacity, and the qualification sections of NAC chapter 408 address requests for qualifications on public-private and design-build projects rather than low-bid work, so the low-bid prequalification process is confirmed directly with NDOT. Whether a firm qualifies for a given contract is NDOT's decision.

The financial statement filed with NDOT and the one a surety asks for typically draw on the same year-end figures, so preparing them together helps keep the numbers consistent.

NRS 408.337 requires each bid to be accompanied by an undertaking executed by a corporate surety authorized to do business in Nevada, or by cash or a certified check, in an amount equal to at least 5 percent of the amount bid. If the successful bidder does not deliver the contract and bond within 20 days after award, the security can be forfeited.

Under NRS 408.343, the contract goes to the lowest responsible bidder who has qualified, and the statute authorizes online bidding. Projects of up to $250,000 may be let by informal bids under NRS 408.367, but those contracts still require bonds and a questionnaire covering the contractor's license classification and state business license. Because the 20-day window covers both the contract and the bonds, it helps to settle the surety's terms for the final bonds when the bid bond is written.

NRS 408.357 requires every contract to provide for one or more bonds from the successful bidder, with corporate sureties approved by the Department and authorized to do business in Nevada, in a sum equal to the full or total amount of the contract awarded. The bonds are performance bonds, labor and material bonds or both. A performance bond must secure faithful performance under the plans, specifications and contract terms and be maintained for one year after the date of completion of the contract. A labor and material bond also secures state and local taxes on the contract, premiums under the Nevada Industrial Insurance Act and unemployment contributions, with interest at 8 percent.

A bidder may not act as surety on its own contract, and the Department can require additional sureties. Because the performance bond outlasts completion by a year, a surety typically counts it against the contractor's capacity well after the last progress payment, and that effect compounds when several NDOT contracts overlap. Bond terms are subject to the surety's underwriting and the bonds issued.

Subsection 6 of NRS 408.357 provides that the Department in every contract may require the successful bidder to furnish proof of public liability and insurance coverage for damage to property. The statute sets no dollar limits, additional insured wording or carrier rating, so those terms come from NDOT's Standard Specifications and each contract's special provisions, and they are confirmed with NDOT for the contract being bid.

Workers' compensation is tied to payment. Under NRS 408.373, the State Controller withholds payment until there is evidence of compliance with Nevada's industrial insurance law (NRS chapters 616A to 617) and unemployment contributions, and NRS 408.377 applies the same compliance to subcontractors. On design-build contracts, NRS 408.3884 requires the design-build team to carry a performance and payment bond and insurance covering general liability and liability for errors and omissions, which brings a professional liability placement into the team's program.

Because the statute leaves limits to the contract, a contractor moving from another state's DOT work cannot assume its current limits or endorsements fit. Whether a policy responds to a given highway claim depends on its wording and the facts, subject to the terms of the policies issued.

Under NRS 408.377 and 408.379, a contractor may not sublet any part of an NDOT contract without the Department's written approval, and a subcontractor must hold a Nevada state business license under NRS chapter 76 to receive public money. Subcontractors must also show workers' compensation and unemployment compliance the same way the prime does. When a prime receives a progress payment, NRS 408.383 requires it to pay its subcontractors within 15 days after receipt.

For the prime, the order of steps matters: a subcontractor added late may not be approved in time for its scheduled work, and one without a state business license cannot be paid with public money. Subcontract insurance and indemnity terms on NDOT jobs come from the contract documents rather than the statute, so primes typically carry those requirements into each subcontract once they have the special provisions.

NRS 408.383 limits progress payments to not more than 95 percent of the entire contract price, and the remaining 5 percent, but not more than $50,000, must be retained. The Director may reduce the percentage retained only after obtaining written approval from every surety furnishing bonds for the work, and securities can be substituted for retained money. Retention is payable after the 30-day period for creditor claims under NRS 408.363, and NRS 408.387 bars final settlement until 30 days after the published final acceptance.

Two practical effects follow for the surety relationship. The surety's written consent is part of any retention reduction, so the request goes to the surety with current job status, and the bonds remain open while the claim period and the one-year performance bond tail run. NRS 408.354 separately lets the Department exempt a railroad company awarded a contract on its own property from the bond requirement; the exemption is written for the railroad company itself.