Colorado Bonding Requirements Overview
Colorado's public construction bonding requirements are governed primarily by CRS § 38-26-106, which serves as the state's "Little Miller Act." This statute establishes the framework for when and how surety bonds must be furnished on publicly funded construction projects throughout the state. Understanding these requirements is essential for any contractor working on — or hoping to bid on — public projects in Colorado.
Under CRS § 38-26-106, both performance and payment bonds are required on all public construction projects in Colorado that exceed $150,000. Each bond must be in an amount equal to the full contract price. The performance bond guarantees that the contractor will complete the project in accordance with the contract documents, and the payment bond guarantees that the contractor will pay all subcontractors, laborers, and material suppliers who furnish labor, materials, or services on the project. This dual requirement mirrors the approach of the federal Miller Act and provides comprehensive protection to both project owners and the subcontractor and supplier community.
Colorado is one of the strongest construction markets in the western United States, driven by significant public infrastructure investment, rapid population growth along the Front Range corridor (Denver, Colorado Springs, Fort Collins, Boulder), and substantial federal spending on military installations including the U.S. Air Force Academy, Peterson Space Force Base, Fort Carson, and Buckley Space Force Base. The Colorado Department of Transportation (CDOT) administers one of the largest highway construction programs in the region, and the state's unique mountain geography creates specialized construction challenges — including tunnel construction, avalanche protection, and high-altitude roadwork — that require experienced and well-bonded contractors.
An important distinction about Colorado is that the state does not have a statewide contractor licensing system or a statewide contractor license bond requirement. Colorado is one of a handful of states that does not license general contractors at the state level. Instead, contractor licensing and registration requirements are established at the local level by individual cities, counties, and municipalities. Some Colorado municipalities — such as Denver, Colorado Springs, Aurora, and Lakewood — require local contractor licenses and may impose local bonding requirements, but these vary by jurisdiction. Certain specialty trades, including electrical and plumbing contractors, are licensed at the state level through the Colorado Department of Regulatory Agencies (DORA), but general contractors are not.
Colorado also has specific requirements for Design-Build contracts on public projects. Under CRS § 24-93-101 et seq., governmental entities using the design-build delivery method may require both performance and payment bonds as a condition of the contract, and these bonds must comply with the same requirements set forth in the bonding statutes.
Bid Bonds in Colorado
A bid bond is a contract surety bond submitted with a contractor's bid on a construction project. It guarantees two things: first, that the contractor will honor their bid price and enter into the contract if awarded the project; and second, that the contractor will provide the required performance and payment bonds upon contract execution. Bid bonds protect project owners from frivolous or unreliable bids and ensure that the bidding process is competitive and credible.
In Colorado, bid bonds are commonly required on public construction projects bid through the competitive bidding processes established by state and local procurement laws. Most invitations for bids (IFBs) and requests for proposals (RFPs) issued by Colorado public entities specify that a bid bond or bid security must accompany the bid submission. The typical bid bond amount is 5% of the bid price, although some Colorado agencies and municipalities may require different amounts depending on the project size and nature.
Colorado's bid bond requirements apply across a wide range of public project types, including:
- Colorado Department of Transportation (CDOT) highway, bridge, and tunnel projects
- Public school district construction and renovation projects
- County and municipal building and infrastructure projects
- Water and wastewater treatment facility construction
- Regional Transportation District (RTD) transit projects
- Denver International Airport expansion and improvement projects
- State university and college campus construction
- Federal military installation construction at Colorado bases
At Surety Specialist, bid bonds are always free — no premiums, no fees, no hidden costs. We issue bid bonds at no charge for Colorado contractors, whether you have an existing bonding line or are applying for the first time. This ensures you never have to pay for the opportunity to compete on a project.
Performance Bonds in Colorado
A performance bond guarantees that the contractor will complete the construction project in accordance with the contract documents, plans, specifications, and timeline. If the contractor defaults — by abandoning the project, performing substandard work, or failing to meet contractual deadlines — the surety is obligated to step in to ensure the project is completed.
Under CRS § 38-26-106, a performance bond is required on all Colorado public construction projects exceeding $150,000. This statutory mandate applies to all public entities in Colorado, including state agencies, counties, municipalities, school districts, special districts, and other governmental bodies. For contracts at or below $150,000, the public entity has discretion to require a performance bond as a matter of its own procurement policy.
Performance bonds are routinely required on the following types of Colorado public projects:
- CDOT highway, bridge, and transportation infrastructure projects
- Denver metro area transit and rail projects managed by RTD
- Public school construction and renovation projects statewide
- Municipal infrastructure projects including roads, water systems, and public facilities
- State facility construction managed by the Office of the State Architect
- Water conservancy district and water authority projects
When required, the performance bond amount is set at 100% of the contract price, consistent with industry standards and the practice under the federal Miller Act. The performance bond remains in effect until the project is substantially complete and accepted by the owner. Some Colorado contracts also require a maintenance bond or warranty provision extending beyond substantial completion.
Performance bond premiums for Colorado contractors generally range from 1% to 3% of the contract price, depending on the contractor's financial strength, credit history, experience, and the project's size and complexity. Performance and payment bonds are typically issued together as a matched pair, and the premium covers both bonds.
Payment Bonds in Colorado
The payment bond is a critical component of Colorado's public construction bonding framework. CRS § 38-26-106 requires a payment bond on every public construction project in the state that exceeds $150,000. The payment bond guarantees that the contractor will pay all subcontractors, laborers, and material suppliers who furnish labor, materials, or services on the project.
This requirement exists because mechanic's liens cannot be placed on public property in Colorado. On private projects, subcontractors and suppliers who are not paid can file a mechanic's lien under CRS § 38-22-101 et seq. to secure their interest in the property. But this remedy is not available on public projects. The payment bond serves as a substitute for mechanic's lien rights, ensuring that those who contribute labor and materials to a public project have a financial remedy if the contractor fails to pay them.
Key Requirements Under CRS § 38-26-106
The payment bond must meet several specific requirements under Colorado law:
- Bond amount: The payment bond must be in an amount equal to the contract price.
- Threshold: Required on all public construction projects exceeding $150,000.
- Surety qualification: The surety issuing the bond must be authorized to do business in the state of Colorado and must appear on the U.S. Treasury Department's Circular 570 list of approved sureties or must otherwise satisfy the financial requirements of the contracting public entity.
- Bond availability: A copy of the payment bond must be made available for inspection by any claimant who has furnished labor or materials for the project.
Notice Requirements for Payment Bond Claimants
The notice and claim procedures under CRS § 38-26-107 are critically important for subcontractors and suppliers seeking payment on bonded Colorado public projects. The requirements differ depending on whether the claimant has a direct contract with the contractor:
- Claimants in privity with the contractor (those with a direct contract with the bonded contractor) are not required to serve a preliminary notice as a condition of making a claim on the payment bond.
- Claimants not in privity with the contractor (sub-subcontractors, second-tier suppliers, and others without a direct contract with the contractor) must serve a written notice on the contractor within 90 days after the date on which the claimant last performed labor or last furnished materials. The notice must state the amount claimed, the name of the party for whom the work was performed, and a description of the labor or materials furnished.
- Method of service: The notice must be served by registered or certified mail.
Suit Deadline
Under CRS § 38-26-107, no suit on the payment bond may be commenced after six months from the date on which the last of the labor was performed or the last of the material was furnished by the claimant. This six-month statute of limitations is notably shorter than the one-year deadline found in many other states, including under the federal Miller Act. Colorado claimants must act promptly to preserve their payment bond rights. Missing this deadline permanently bars recovery on the bond, regardless of the merits of the claim.
Subdivision Bonds in Colorado
Subdivision bonds (also called site improvement bonds or plat bonds) are required by Colorado counties and municipalities when a land developer subdivides property and is responsible for constructing public improvements. These improvements typically include roads, sidewalks, curbing, storm drainage, water and sewer lines, street lighting, and landscaping within public rights-of-way.
In Colorado, subdivision bond requirements are established at the local level by individual counties and municipalities through their land use codes and subdivision regulations. The bond guarantees that the developer will complete the required public improvements according to the approved site plans, engineering drawings, and applicable building codes. If the developer fails to complete the improvements, the local government can draw on the bond to hire another contractor to finish the work.
Colorado's approach to land development is shaped by the state's local government land use authority established under CRS § 29-20-101 et seq. (the Local Government Land Use Control Enabling Act) and CRS § 30-28-133 (county subdivision regulation). Counties and municipalities adopt their own subdivision regulations and development standards, and these local codes determine when and how subdivision bonds must be furnished. Given Colorado's rapid growth — particularly along the Front Range corridor — subdivision bonds play an important role in ensuring that new residential and commercial developments are served by adequate public infrastructure.
The bond amount is typically determined by the local government's engineer based on the estimated cost of the required improvements, and it often equals 100% to 125% of that estimate. Premiums for Colorado subdivision bonds generally range from 1% to 3% of the bond amount, depending on the developer's financial condition, credit, and experience. Colorado developers working in multiple jurisdictions should be aware that bond requirements and amounts can vary significantly from one county or municipality to another.
Colorado Contractor Licensing
Colorado takes a unique approach to contractor licensing compared to most other states. Colorado does not license general contractors at the state level. There is no statewide general contractor license issued by a state board or agency. Instead, contractor licensing and registration requirements are established at the local level by individual cities, counties, and municipalities.
- Local Contractor Licenses: Many Colorado cities and counties require contractors to obtain a local license or registration before performing construction work within their jurisdiction. For example, the City and County of Denver requires a general contractor license through the Denver Department of Community Planning and Development. Colorado Springs, Aurora, Lakewood, Fort Collins, and other municipalities have their own licensing requirements. The specific requirements — including examinations, insurance, and bonding — vary by jurisdiction.
- State-Licensed Specialty Trades: While general contractors are not licensed at the state level, certain specialty trades are licensed through the Colorado Department of Regulatory Agencies (DORA). These include licensed electricians (through the State Electrical Board), licensed plumbers (through the State Plumbing Board), and other specialty contractors. Each specialty category has its own examination and experience requirements.
Colorado does not require a statewide contractor license bond because the state does not issue a statewide general contractor license. Some local jurisdictions may require a bond as part of their local licensing process, but these requirements vary. This distinguishes Colorado from states like California ($25,000 license bond), Nevada ($5,000 to $100,000 license bond), and Arizona ($2,500 to $16,000 license bond based on license class). Contractors working in Colorado should check with the specific city or county where they plan to perform work to determine local licensing and bonding requirements.
Notice & Claim Requirements in Colorado
Understanding Colorado's notice and claim requirements is essential for subcontractors, laborers, and material suppliers working on bonded public construction projects. The procedures under CRS § 38-26-107 are specific and strictly enforced, and failure to comply can result in the loss of payment bond rights. Below is a detailed breakdown of the key timelines and requirements.
| Requirement | Details |
|---|---|
| Bond threshold | Performance and payment bonds required on Colorado public construction projects exceeding $150,000. |
| Notice (claimants in privity) | Claimants who have a direct contract with the contractor are not required to serve a preliminary notice as a condition of their claim rights. |
| Notice (claimants not in privity) | Must serve written notice on the contractor within 90 days after the date on which the claimant last performed labor or last furnished materials. The notice must state the amount claimed and identify the party for whom the work was done. |
| Method of notice | Registered or certified mail. |
| Suit deadline | No suit on the payment bond may be commenced after 6 months from the date on which the claimant last performed labor or last furnished materials. This is shorter than the 1-year deadline in many other states. |
| Where to file suit | Actions on the payment bond must be brought in the district court in the county where the project is located. |
| Attorneys' fees | Colorado law does not provide a general statutory right to attorneys' fees in payment bond actions; recovery of fees depends on the bond terms and applicable contract provisions. |
These notice and claim provisions are distinct from the requirements under Colorado's private mechanic's lien law (CRS § 38-22-101 et seq.). On private projects, subcontractors and suppliers must comply with specific notice of intent to file a lien and recording requirements to preserve their lien rights. On public projects governed by CRS § 38-26-107, the notice requirements are different, and the remedies run against the payment bond rather than the property. Contractors, subcontractors, and suppliers should be careful not to confuse these two separate sets of requirements. The shorter six-month suit deadline on public projects is particularly important and catches some claimants off guard.
Frequently Asked Questions About Colorado Contract Bonds
Under CRS § 38-26-106, both performance and payment bonds are required on Colorado public construction projects exceeding $150,000. Each bond must be in an amount equal to the contract price. This statutory mandate applies to all public entities in the state, including state agencies, counties, municipalities, school districts, and special districts. Individual public entities may also require bonds on contracts below the $150,000 threshold as a matter of their own procurement policy.
The notice requirements depend on whether the claimant has a direct contract with the bonded contractor. Claimants who are in privity (have a direct contract with the contractor) are not required to serve a preliminary notice. Claimants who are not in privity (sub-subcontractors, second-tier suppliers, etc.) must serve written notice on the contractor within 90 days after the date on which the claimant last performed labor or last furnished materials. The notice must state the amount claimed, the name of the party for whom the work was performed, and a description of the labor or materials furnished. It must be served by registered or certified mail.
Under CRS § 38-26-107, no suit on the payment bond may be commenced after six months from the date on which the claimant last performed labor or last furnished materials. This six-month statute of limitations is notably shorter than the one-year deadline found in many other states and under the federal Miller Act. Colorado claimants must act promptly. Missing this deadline permanently bars recovery on the bond. Claimants should consult with an attorney immediately upon identifying a payment issue.
No. Colorado does not have a statewide contractor licensing system for general contractors and therefore does not have a statewide contractor license bond requirement. Contractor licensing in Colorado is handled at the local level by individual cities, counties, and municipalities. Some jurisdictions — such as Denver and Colorado Springs — require local contractor licenses and may impose local bonding requirements, but these vary significantly by jurisdiction. Certain specialty trades (electrical, plumbing) are licensed at the state level through DORA, but general contractors are not.
No. Mechanic's liens cannot be filed against public property in Colorado. This is a fundamental principle of construction law that applies in all 50 states. On Colorado public projects, the payment bond required under CRS § 38-26-106 serves as the substitute for mechanic's lien rights. If you are a subcontractor or supplier who has not been paid on a Colorado public project, your remedy is to make a claim against the contractor's payment bond rather than filing a lien. On private projects, Colorado's mechanic's lien statute (CRS § 38-22-101 et seq.) provides lien rights.
Colorado contract bond premiums typically range from 1% to 3% of the bond amount (which usually equals the contract price) for well-qualified contractors. The exact premium rate depends on several factors, including the contractor's personal and business credit scores, financial statements (balance sheet strength, working capital, net worth), years of construction experience in Colorado, project size and type, and current work backlog. New contractors or those with credit challenges may pay higher rates. Bid bonds are always free through Surety Specialist. As an example, a Colorado contractor bonding a $2,000,000 public project might pay $20,000 to $50,000 in combined performance and payment bond premiums.
Colorado is one of the strongest construction markets in the western United States. Rapid population growth along the Front Range corridor drives significant residential and commercial development, while major public infrastructure projects — including CDOT highway and tunnel construction, RTD transit expansion, Denver International Airport improvements, and water infrastructure development — create robust demand for contract surety bonds. The state's unique mountain geography, extreme weather conditions, and high-altitude construction challenges are factors that sureties consider when underwriting Colorado projects. Federal military spending at installations like the U.S. Air Force Academy, Peterson Space Force Base, and Fort Carson also contributes to construction volume.
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