If you are bidding or working on a Utah state building project, the payment protection you have counted on for decades may not be there anymore.
On March 26, 2026, the governor signed House Bill 508. As of May 6, 2026, the Division of Facilities Construction and Management is no longer required to obtain performance or payment bonds on the construction contracts it administers.
Most of the coverage of this bill called it a new waiver option. That undersells it, and it misses the second half of the bill entirely. Here is what actually changed, what did not, and what you should be asking for before you sign anything.
Utah Code 63G-6a-1103 has long required a performance bond and a payment bond, each equal to 100% of the contract price, on construction contracts awarded under the Procurement Code.
HB 508 added a new subsection 5. The operative sentence is short:
The division is not required to obtain from a contractor a performance bond or payment bond for a construction contract administered by the division.
The next subsection says DFCM may require a bond if it "determines that the bond is necessary to protect the division from financial loss or performance risk."
Read those two together and you can see this is not a waiver process. It is a reversal of the default. Before May 6, bonds were mandatory and a waiver was the exception that had to be justified. Now bonds are off unless DFCM affirmatively decides to require one.
The Legislature's own summary of the bill uses the word plainly. It says HB 508 "exempts construction contracts administered by the division from statutory performance and payment bond requirements."
Two more details matter. There is no dollar threshold anywhere in the new subsection, so it reaches DFCM contracts of any size. And the statute sets no standard DFCM has to meet, no findings it has to make, and no timeline. It is agency discretion.
Contracts signed before May 6, 2026 are not affected. Subsection 6 preserves those bonds.
Every article we found on HB 508 covered the change to the Procurement Code. None of them mentioned that HB 508 also rewrote a second statute, and that this is the change that actually costs subcontractors and suppliers money.
Section 1 of the bill amended Utah Code 14-1-19, titled "Failure of government entity to obtain payment bond." That statute used to be the safety net. If a government body failed to get a payment bond, an unpaid laborer or supplier could demand payment from the government itself, sue it directly in the county where the work was performed, and collect statutory interest, so long as written notice went out within 90 days.
HB 508 added this:
This section does not apply to a construction contract administered by the Division of Facilities Construction and Management.
That remedy is now off the table on DFCM work.
Stack the three layers of protection a Utah sub or supplier used to have on a state building job:
What is left is a breach of contract claim against the general contractor. On an unbonded DFCM project, the GC's balance sheet is your only security. If that contractor goes under mid-job, there is no surety standing behind the obligation and no state backstop.
That is the practical stake, and it is why "confirm whether a bond exists" is not paperwork. It is the whole question.
Part of why this change is confusing is that Utah never had one number. The statute, DFCM's rule, and the Purchasing rule each answer the question differently.
| Instrument | Payment bond required when contract exceeds | Effective |
|---|---|---|
| Utah Code 63G-6a-1103(1) | No dollar floor. 100% of contract price required. | 5/6/2026 |
| Utah Admin. Code R23-1-1102 (DFCM) | $100,000 | 8/8/2024 |
| Utah Admin. Code R33-11-303 (Purchasing) | $50,000 | 4/7/2022 |
| DFCM under 63G-6a-1103(5)(b) | Not required at any contract value | 5/6/2026 |
The commentary circulating right now overstates the reach of this bill. Three things are still exactly as they were.
The exemption is written for "the division," and the division is defined as DFCM alone. Utah Code 14-1-18 still applies the 100% performance and payment bond requirement to contracts of the state and of every political subdivision, and that definition is broad: counties, cities, towns, school districts, special districts, special service districts, community reinvestment agencies, public corporations, and institutions of higher education.
If you are bidding a city job, a county road, a school district building, or a university project procured by that institution, mandatory bonding did not move. Anyone telling you Utah stopped requiring bonds on public work is wrong.
Bid security lives in a different statute, 63G-6a-1102, and HB 508 did not amend it. It is not in the bill's list of sections affected. Bid bonds at 5% of the bid are still the rule. At least one industry write-up says this bill covered bid bonds. It did not.
Procurement units that run through the Division of Purchasing operate under a separate rule, R33-11, effective April 2022 and untouched by HB 508. It still requires performance and payment bonds at 100% of the contract price on construction contracts over $50,000. It also still says that a unit failing to obtain a payment bond "shall be subject to Section 14-1-19," which remains true for everyone except DFCM.
Here is the part that gives you something concrete to do.
A statute grants authority. An agency rule tells the agency how to use it. As of today, DFCM's rule has not been updated to match the new statute. Utah Administrative Code R23-1-1102 carries an effective date of August 8, 2024, and it still reads:
Payment and Performance Bonds. Except as provided in this subsection, payment and performance bonds in the amount of 100% of the contract price are required for all contracts over $100,000.
The same rule sets out how a waiver is supposed to work:
The director may waive any bonding requirements set forth in this rule if the director finds circumstances in which the director considers any of the bonds to be unnecessary to protect the division. Any such waiver shall be stated in writing, explaining the circumstances why the bonds are not necessary to protect the division, and the waiver shall be made part of the project file.
Four months after the statute took effect, the agency's own rule still calls for the bonds, and it requires that any waiver be put in writing, with the reasons stated, and filed with the project.
So if you are told a DFCM project is unbonded, ask for the written waiver from the project file. It should exist, it should name the circumstances, and it should be part of the record. That request is reasonable, it is grounded in the rule as currently written, and it tells you immediately whether a decision was documented or simply assumed.
We are not going to tell you whether the rule or the statute controls when they disagree. That is a question for your construction attorney, and if you are carrying real exposure on a state job right now it is worth the phone call. What we can tell you is that both documents exist, they say different things today, and you are entitled to see the file.
These are circulating in industry commentary and trade discussion. Getting them straight changes how you bid.
Both numbers are real and both are attached to the wrong thing. The $100,000 is DFCM's rule threshold in R23-1-1102, not a statutory one. The $1.5 million is the new ceiling on how much project cost a state entity may directly supervise without DFCM, raised from $100,000 by a different part of HB 508. It governs who runs the project, not whether it gets bonded. The statutory bond exemption has no dollar threshold at all.
Performance and payment only. Bid security was not touched.
Not as a matter of law. The carve-out names DFCM. Whether some local bodies copy the approach in their own policy is worth watching, but nothing in this bill changed their statutory obligation.
We help contractors qualify for bonds other agents turn down. Take our 2-minute scorecard and we will tell you exactly what your bonding program looks like - and what it could look like.
Find out at bid time, not at award, whether the project will be bonded. It changes your risk and it changes your number.
On an unbonded job you are absorbing exposure a surety used to carry, and your subs are absorbing exposure they used to be able to claim against. Expect subcontractor pricing to reflect that once the market catches up. Some of your subs will decline to bid unbonded work at all.
There is also a quieter effect worth thinking about. A surety underwriting your bond was, in practice, a second set of eyes on the project and on your capacity. Without it, nobody outside your own shop is checking whether the job fits your balance sheet. That job belongs to you and your broker now.
One thing that did not change and is worth knowing: the Procurement Code still prohibits a procurement official from requiring you to get your bond from a specific insurer, surety, producer, agent or broker. A violation is an infraction. You pick who writes your bonds.
Before you sign a subcontract on a DFCM project, ask three questions in writing.
Is there a payment bond on this project? If yes, get a copy and confirm the surety is authorized in Utah and listed in Treasury Circular 570. If no, ask for the written waiver from the project file.
Then price the risk you are actually taking. Without a bond, your recovery depends entirely on the GC's ability to pay. That is a credit decision, and it should be made deliberately. Shorter pay cycles, joint check agreements, tighter lien-waiver language and progress-payment discipline all matter more than they did in April.
If a bond does exist, note the deadlines. On bonds required under 63G-6a-1103, a claimant has a right of action once 90 days have passed without full payment, and the action is barred if not started within one year of the last day you furnished labor or materials. Those clocks run from your last day on the job, not from the day you gave up on getting paid.
Utah is not unique in this. Bond waiver proposals surface in state legislatures regularly, usually framed as removing cost from public projects. What makes HB 508 worth studying is how completely it worked: the mandate reversed and the statutory fallback remedy was closed in the same bill.
If you contract across state lines, the lesson is that public project payment security is now a state-by-state question you have to actually check, not a background assumption. The bond requirement you relied on in one state last year may not be the rule in another this year. Our surety team works with contractors nationally and tracks this state by state.
Yes, with one significant exception. Contracts of the state and its political subdivisions, including cities, counties, school districts, special districts and institutions of higher education, still require performance and payment bonds at 100% of the contract price. Since May 6, 2026, contracts administered by the Division of Facilities Construction and Management are exempt from that statutory requirement, and DFCM may require bonds at its discretion.
The governor signed it on March 26, 2026, and it took effect May 6, 2026. It was enacted as Chapter 473 of the 2026 General Session. Construction contracts executed before the effective date keep their bonds and any rights that had already accrued.
Not on a DFCM-administered contract. HB 508 amended Utah Code 14-1-19 to exclude DFCM contracts from the statute that gave unpaid laborers and suppliers a direct right of action against the government when it failed to obtain a payment bond. That remedy remains available on contracts administered by other Utah procurement units.
No. Mechanics liens cannot attach to public property. That is precisely why payment bonds have carried this role on public work, and why their removal leaves a real gap.
There is none in the statute. The exemption applies to DFCM-administered construction contracts regardless of contract size. The $100,000 figure that appears in discussion comes from DFCM's administrative rule, R23-1-1102, and the $1.5 million figure is an unrelated project supervision threshold from a different section of the same bill.
No. Bid security is governed by Utah Code 63G-6a-1102, which HB 508 did not amend. Bid bonds at 5% of the bid still apply.
If Utah state work is part of your pipeline, this is the moment to know exactly where you stand. Not just whether you can get a bond, but whether the jobs you are chasing will carry one and what that does to your risk.
Start with the Bond Scorecard. It takes a few minutes and it shows you how a surety reads your file right now, where your capacity actually sits, and what is holding your limits down. If the answer is that your limits are too low for the work you want, that is fixable, and increasing bonding capacity is most of what we do.
Then talk to us. The Grit team works with contractors nationally on bond programs, and we came out of these industries. We will tell you what to do, not just what a bond is.
Call (801) 505-5500 or take the Bond Scorecard at gritinsurance.com.
Grit Insurance Group is an independent national brokerage. This article is general information about Utah statutes and administrative rules as they read on September 10, 2026, and is not legal advice. Bond requirements, project terms and legal remedies should be confirmed with a licensed member of our team and, where your rights are at stake, with your construction attorney.