Bonding Requirements Protect Public Investments
March 10, 2026
Public construction projects are funded by taxpayers and built to serve our communities for generations. That level of investment calls for common sense risk management from the start, and for decades, surety bonds have been a proven part of that protection. Merchants Bonding Company™ believes strong, consistent bonding requirements are one of the most effective and time-tested tools to safeguard public construction dollars.
“Strong bonding standards play a critical role in managing risk on public projects,” said David Hewett, Chief Underwriting Officer at Merchants. “Surety underwriting evaluates capacity, character and financial strength before a contract is ever awarded. That front-end discipline helps reduce the likelihood of default and protects taxpayer investment.”
That discipline matters. A recent Ernst & Young’s Quantitative Economics and Statistics Group study found that unbonded projects experience contractor defaults at rates up to ten times higher than bonded projects, and those defaults result in 85% higher completion costs. That’s why Merchants is addressing recent Utah legislation removing a statutory bonding requirement for certain public projects. When consistent bonding requirements are weakened, so is a trusted safeguard that protects public dollars.
“Surety bonds have been the silent guardians of Utah’s infrastructure,” said Kyle Peacock, Contract Surety Underwriter for Merchants in Utah. “Our focus remains on ensuring that every project built in our communities is backed by the integrity and financial security our taxpayers deserve.”
How Surety Protects Taxpayer Dollars
Surety bonds protect:
- Taxpayers, by helping ensure projects are completed according to contract
- Subcontractors and suppliers, by guaranteeing payment for their work
- Public owners, by reducing the risk of costly delays and financial loss
Without that protection:
- Taxpayers may assume the cost of overruns or contractor default
- Subcontractors and suppliers may face delayed or unpaid invoices
- Public owners may experience project delays and the added expense of hiring a replacement contractor
For decades, performance and payment bonds have delivered this proven protection on public projects. That track record is exactly why consistent bonding requirements matter.
Common sense risk management means protection is not an afterthought. It is a requirement. With more than 90 years of experience supporting contractors and public owners across the country, we have seen firsthand the value of consistent, built-in protection. We look forward to continued dialogue with policymakers and stakeholders to ensure Utah’s public projects are supported by the level of financial accountability taxpayers expect and deserve.