Iowa shoulders risk of contractor default and must pay subs, court rules

02/5/2014 | Republic (Columbus, Ind.), The

The Iowa Supreme Court has reversed a lower-court decision in ruling that the state must pay three subcontractors for work completed for the state Department of Transportation. The general contractor, which owed the subcontractors more than $32,000 for work on interstate rest stops, wasn't required to post a surety bond under the Targeted Small Business classification. "The Legislature made the policy choice that the benefit of encouraging TSBs outweighs the increased financial risk of awarding a project to an unbondable business and that the state should bear the risk of default," the high court ruled.

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Republic (Columbus, Ind.), The

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