Ark. Code Ann. § 18-44-503 (2026)
Public buildings and improvements
- A contract in a sum exceeding the amount stated in § 22-9-203 providing for the repair, alteration, or erection of any public building, public structure, or public improvement shall not be entered into by the State of Arkansas or any subdivision of the state, by any county, municipality, school district, or other local taxing unit, or by any agency of the state, a subdivision of the state, a county, a municipality, a school district, or any other local taxing unit, unless the contractor shall furnish to the party letting the contract a bond in a sum equal to the amount of the contract.
- All persons, firms, associations, and corporations who have valid claims against the bond may bring an action on the bond against the corporate surety, provided that no action shall be brought on the bond after twelve (12) months from the date on which the Building Authority Division or institutions exempt from construction review and approval by the division approve final payment on the state contract, nor shall any action be brought outside the State of Arkansas.
History. Acts 1953, No. 351, § 1; 1957, No. 209, § 1; 1969, No. 468, § 1; 1979, No. 539, § 1; A.S.A. 1947, § 51-632; Acts 1987, No. 757, § 1; 2001, No. 961, § 2; 2015 (1st Ex. Sess.), No. 7, § 8; 2015 (1st Ex. Sess.), No. 8, § 8; 2019, No. 658, § 1; 2019, No. 910, § 6078.
A.C.R.C. Notes.
Acts 2015 (1st Ex. Sess.), Nos. 7 and 8, § 1, provided: “Transfer of the Arkansas Building Authority to the Department of Finance and Administration.
“(a)(1) The Arkansas Building Authority is transferred to the Department of Finance and Administration by a type 2 transfer under § 25-2-105.
“(2) For the purposes of this act, the Department of Finance and Administration shall be considered a principal department established by Acts 1971, No. 38.
“(b) All authority, powers, duties, functions, records, personnel, property, unexpended balances of appropriations, allocations, and other funds, including the functions of budgeting or purchasing, are transferred to the Department of Finance and Administration, except as specified by this act.
“(c) All powers, duties, and functions, including rulemaking, regulation, and licensing, promulgation of rules, rates, regulations, and standards, and the rendering of findings, orders, and adjudications are transferred to the Director of the Department of Finance and Administration.
“(d) The members of the Arkansas Building Authority Council, and their successors, shall continue to be selected in the manner and serve for the terms provided by the statutes applicable to the council except as specified in this act.
“(e) The Arkansas Code Revision Commission shall make appropriate name changes in the Arkansas Code to implement this act.”
Amendments. The 2001 amendment substituted “Services, or … approve” for “Services approves” in (b).
The 2015 amendment by Acts 2015 (1st Ex. Sess.), Nos. 7 and 8, in (b), substituted “the Building Authority Division of the Department of Finance and Administration” for “the Arkansas Building Authority” and “the division” for “the authority”.
The 2019 amendment by No. 658, in (a), substituted “the amount stated in § 22-9-203” for “twenty thousand dollars ($20,000)”, substituted “the state, a subdivision of the state, a county, a municipality, a school district, or any other local taxing unit” for “any of the foregoing”, and made stylistic changes.
The 2019 amendment by No. 910, in (b), deleted “of the Department of Finance and Administration” following “Building Authority Division”.
Case Notes
Purpose.
The giving of the bond adds nothing to the obligation of the contractor but adds sureties to his obligation, and thus effectively protects those furnishing labor and materials. The legislature intended to substitute the obligation of the bond given by the contractor on public work for the security given by the statutory lien in the case of property of private individuals. Oliver Constr. Co. v. Williams, 152 Ark. 414, 238 S.W. 615 (1922); Kotchtitsky v. Magnolia Petroleum Co., 161 Ark. 275, 257 S.W. 48 (1923) (preceding decisions under prior law).
Bond Requirement.
This section requires a bond only when the public authority enters into a contract to repair, alter, or erect a public building, structure, or improvement; where the city housing authority entered into a contract to purchase the public housing units after the units were constructed, a bond was not required. Rawick Mfg. Co. v. Talisman, Inc., 17 Ark. App. 202, 706 S.W.2d 194 (1986).
Liability on Bond.
A contractor's bond is liable only for materials that are actually used in the construction of the building. Reiff v. Redfield School Bd., 126 Ark. 474, 191 S.W. 16 (1916) (decision under prior law).
A surety on a contractor's bond will be liable for a conversion by the contractor of materials furnished for the construction of the improvement, but a cosurety who had no part in such conversion will not be so liable. Reiff v. Redfield School Bd., 126 Ark. 474, 191 S.W. 16 (1916) (decision under prior law).
Where the bond has been executed, the contractor becomes responsible for all labor used in the performance of his contract, unless released by the laborers themselves. Miller v. Roetzel Bros., 155 Ark. 620, 245 S.W. 33 (1922) (decision under prior law).
A claim for coal to run steam shovel was not protected by this bond. Southern Sur. Co. v. Simon, 172 Ark. 924, 290 S.W. 960 (1927); Southern Coal Co. v. McWilliams Co., 186 Ark. 775, 55 S.W.2d 932 (1933) (preceding decisions under prior law).
A surety on the bond of the principal contractor constructing drainage ditches for a drainage district is liable for the contractor's default in failing to pay a subcontractor for labor performed and materials furnished in constructing lateral ditches. Union Indem. Co. v. Forgey, 174 Ark. 1110, 298 S.W. 1032 (1927) (decision under prior law).
A materialman who furnishes material to a materialman has no recourse against the bond for lack of privity with the prime contractor, while a materialman who supplies material to a subcontractor in privity with the contractor may recover on the bond. American States Ins. Co. v. Tri Tech, Inc., 35 Ark. App. 134, 812 S.W.2d 490 (1991).
Where prime contractor contracted with defendant to supply miscellaneous metals, and defendant then contracted with plaintiff for handrails and failed to pay the plaintiff, the defendant was a materialman, not a subcontractor and plaintiff could not recover under the bond. American States Ins. Co. v. Tri Tech, Inc., 35 Ark. App. 134, 812 S.W.2d 490 (1991).
Noncompliance.
The directors of a school district are not individually liable to a person furnishing building material to a contractor who was building a schoolhouse because of their failure to require a bond of the contractor. Blanchard v. Burns, 110 Ark. 515, 162 S.W. 63 (1913) (decision under prior law).
Trial court properly ruled in favor of a contractor and its president on a steel company's fraud claim because the company could not make out a claim of fraud for failure to obtain a payment bond under subsection (a) of this section as the company did not determine that there was not a bond until after it had provided supplies to the contractor. Alliance Steel, Inc. v. TNT Constr., Inc., 2009 Ark. App. 405, 322 S.W.3d 501 (2009).
—Duty to Check Records.
This section does not create a property right or any constitutional right in materialmen; therefore, even though cities failed to exact bonds from construction companies, the builder did not have a cause of action against the cities when the suppliers subsequently failed to perform, because the builder had no right to rely on this section but, instead, had a duty to check to see if the bonds had been posted. Arkhola Sand & Gravel Co. v. City of Booneville, 694 F.2d 528 (8th Cir. 1982).
The burden has been placed on materialmen dealing with a contractor to check the public records to verify the fact that a bond has been obtained before selling supplies to the contractor; accordingly, where a supply company materialman failed to check the records, it could not maintain suit against the school district or its officials to recover the balance of the money owed the materialman by the contractor. Beebe School Dist. v. National Supply Co., 280 Ark. 340, 658 S.W.2d 372 (1983).
Persons Protected.
Where a bond was executed pursuant to former statute, an action may be maintained by one furnishing labor and materials to recover for services rendered or material supplied. Reiff v. Redfield School Bd., 126 Ark. 474, 191 S.W. 16 (1916); Aetna Cas. & Sur. Co. v. Henslee, 163 Ark. 492, 260 S.W. 414 (1924) (preceding decisions under prior law).
Since §§ 18-44-503 and 18-44-508 do not grant to materialmen and mechanics rights against either the public project or funds in the hands of contractor, indemnitors acquired no derivative right to the progress payments through the materialmen and laborers. United States v. Trigg, 465 F.2d 1264 (8th Cir. 1972), cert. denied, 410 U.S. 909, 93 S. Ct. 963, 35 L. Ed. 2d 270 (1973).
—Privity.
A person who furnishes material to a subcontractor, being in privity with the prime contractor, may recover on surety bond of prime contractor. B. Sweetser Constr. Co. v. Newman Bros., 236 Ark. 939, 371 S.W.2d 515 (1963).
A manufacturer which sold the material to the distributor who in turn sold material to the subcontractor was not in privity with prime contractor; therefore, surety on bond of prime contractor was not obligated to pay the manufacturer. B. Sweetser Constr. Co. v. Newman Bros., 236 Ark. 939, 371 S.W.2d 515 (1963).
Companies that supplied labor and materials to subcontractors rather than directly to the prime contractor had sufficient privity to contract to be covered by the contractor's statutory performance and payment bond since the claims had their origin in the original contract and grew out of that contract. River Valley, Inc. v. American States Ins. Co., 287 Ark. 386, 699 S.W.2d 745 (1985).
Cited: National Sur. Corp. v. Edison, 240 Ark. 641, 401 S.W.2d 754 (1966); House v. Scott, 244 Ark. 1075, 429 S.W.2d 108 (1968); Dow Chem. Co. v. Bruce Rogers Co., 255 Ark. 448, 501 S.W.2d 235 (1973); Valley Metal Works, Inc. v. A.O. Smith-Inland, Inc., 264 Ark. 341, 572 S.W.2d 138 (1978); Milord v. Arkmo Lumber & Supply Co., 272 Ark. 462, 615 S.W.2d 349 (1981); Ergon Asphalt & Emulsions, Inc. v. Hogan Constr. Co., 721 F. Supp. 1050 (E.D. Ark. 1989).