Los Angeles World Airports Construction: Bonds, Insurance and Airside Rules

Subsection 2-4 of the template replaces the Greenbook's bond paragraph with LAWA's own: "The Faithful Performance Bond shall be for one hundred percent (100%) of the Contract price." The contractor must keep that bond in full effect for the warranty period or one year after the Executive Director accepts the work, whichever is longer, as security for correcting defects in materials or workmanship LAWA reports within that time. All bonds are due within 30 days of the Notice of Award.

The extended term matters to the surety. A LAWA performance bond can stay open for a year or more after acceptance, and a longer specified warranty extends it further, which can tie up capacity the contractor would otherwise use on its next bid. The template we read does not state the payment bond percentage in the passages we checked, so confirm it in the bond forms issued with the solicitation.

Retention can come back in stages. When LAWA issues a Statement of Partial Acceptance, it may release part of the retention on that portion if partial final inspection corrections are complete, the contractor requests release with a verifiable valuation, affected subcontractors, major suppliers and the contractor's surety agree in writing and a change order states the amount. Where minor cleanup items remain, twice their value is held back.

Subsection 2-3.2 requires the prime to perform with its own organization at least 20 percent of the contract price for building work and 35 percent for civil work. General provisions, profit, bonds and supervision do not count toward that share. A general contractor that typically subcontracts most trades needs to plan its self-performed scope before bid, and the self-performed work shapes its own insurance exposure.

Under 2-3.6, a prime may ask subcontractors for performance and payment bonds from an admitted surety naming the prime as obligee, and may reject a subcontractor that does not furnish them. The subcontractor bears the bond cost only if the prime's written or published request for sub-bids says so and clearly states the amount and requirements of the bonds. A violation of the subcontracting rules can lead to cancellation or a penalty of up to 10 percent of the subcontract involved.

Subsection 7-3.2 of the template lists aviation or airport liability or, as an alternative, general liability covering premises and operations, contractual liability, independent contractors, products and completed operations, broad form property damage, personal injury and explosion, collapse and underground hazards. It adds auto liability for owned, non-owned and hired vehicles if the contractor's operations require licensed vehicles on the airport, and employer's liability. No limits appear in the template; it points to the Insurance Requirements of the contract documents and lets the Executive Director revisit limits annually and require adjustments.

The template also asks that the City, LAWA and their officers, employees and agents be included as insureds, that coverage be primary and noncontributing, that policies carry a severability of interest clause and contractual endorsement, and that cancellation or reduction take 30 days' written notice to the City Attorney by certified mail. If a contractor lets coverage lapse, LAWA may buy it and charge the cost plus 15 percent.

LAWA Risk Management's Insurance Requirements supplement (Revision 10/2022, marked draft) adds detail. That form is written for air carrier operating permits rather than construction contracts, so treat it as an indication of LAWA's standards, not a contract term:

• Insurers rated AM Best A- or better with a financial size of at least IV
• Workers' compensation waiver of subrogation naming LAWA (WC 04 03 06 or similar)
• Additional insured endorsements for ongoing and products-completed operations
• Evidence on an ACORD certificate or a certified copy of the policy
• No blanket or automatic additional insured endorsement unless the firm has a direct contract with LAWA
• Auto limits for vehicles with airfield access far above those without it; confirm the figure in the contract

LAWA has used an owner controlled insurance program before. An Airports Development Group project status report dated November 30, 2012, has an OCIP section, notes coordination with Risk Management to verify OCIP coverage for damages from a waterline break and lists an ARB OCIP credit change order on the Bradley West contract. The PLA extension packet also anticipates one, with a clause that begins, "Should the City institute an Owner Controlled Insurance Program."

We did not find a current OCIP or rolling wrap-up manual on LAWA's site, so this page does not say whether today's projects are wrapped. When a solicitation includes a wrap, the program manual sets which lines it provides, what the contractor still carries and how insurance cost is excluded from or credited against the bid. When it does not, the contractor's own program has to meet the insurance requirements on its own.

The template requires contractors to comply with FAA Advisory Circular 150/5370-2C, Operational Safety on Airports During Construction, along with LAWA's own rules. The C edition is several revisions old, another sign of the template's age; check which edition the solicitation names.

Closures need planning. The template asks for at least 48 working hours' notice before any closure, bars closing streets or the AOA without LAWA's express written permission and calls for lighted X markers on runway closures. Badging and escort terms for construction crews were not in the documents we read, so take them from the solicitation and LAWA's security office.

LAWA has a construction project labor agreement. We read its extension packet, effective January 1, 2011, and updated December 1, 2016, which ran through December 31, 2020. A PLA local hire report through May 2025 shows the agreement is still applied to active projects. Confirm whether the agreement applies to a given contract.

A multiple award task order contract program approved by City Council on February 19, 2025, totals $5 billion across 51 agreements with 31 prime contractors, valid for five years with two one-year options. Its goals are 30 percent SBE, 3 percent DVBE, 20 percent LBE and 15 percent LSBE participation. The template lists the DBE acronym, but we did not verify LAWA's current federal DBE approach, so check the solicitation.

LAWA's Bond Assistance Program offers surety companies support on bid, performance and payment bonds for local contractors and subsidizes CPA-prepared financial statements. A 2021 Contractor Financial Assistance Program offered loans of up to $250,000 to small, local and diverse construction firms. These programs are LAWA's; a contractor applies to LAWA directly, and the surety still underwrites the bond.