CCDC Bond Forms 2024
An Evolutionary Change in Surety Protection
On May 21, 2024, the Canadian Construction Documents Committee (CCDC) published the 2024 editions of its standard surety bond forms including Form 220 (Bid Bond), Form 221 (Performance Bond) and Form 222 (Labour & Material Payment Bond).
To say that this update is long overdue would be a massive understatement. The surety bond documents were last updated in 2002 and by comparison, these earlier instruments are antiquated and by today’s standards, not adequately responsive to the current level of service required by key stakeholders (e.g. contractors and Obligee/end-users).
Over the first two decades of the millennium, SAC would frequently hear from owners and claimants, expressing their frustration about the inadequacy of the protection offered by the standard bond language. Often these owners would take matters into their own hands, creating and imposing their own bond wordings to address these inadequacies. Needless to say, these “alternative” wordings would often include extremely onerous provisions that would make it difficult for small to mid-sized contractors to obtain surety support, even on projects for which they would otherwise be qualified.
As an interim measure, the Surety Association of Canada published two sets of “updated” revised bond wordings, the first in 2012 and a second in 2021. These attempted to bring a more balanced approach to the surety-contractor-owner relationship while addressing the concerns of frustrated end-users and closing the gap between expectations and delivery. The efforts succeeded, however modestly and several high-profile profile public owners have adopted and continue to use these earlier SAC creations.
The 2012 and 2021 SAC bond wordings are still available for use and can be found on this website. However, with the long-awaited publication of the 2024 CCDC bond forms, these earlier SAC forms, will no longer be the focus of our association’s promotional efforts and we actively encourage owners to require these new state-of-the-art standards in their tender and contract documents.
As SAC members and other stakeholders may be aware, many (perhaps most) of the changes found in the 2024 versions of the CCDC bonds were inspired by the prescribed standards that were drafted for the regulations under the Construction Act of Ontario which was implemented in 2018. The new CCDC forms, particularly the performance and payment bond documents are much more detailed and bring in provisions not included, or even contemplated in earlier versions.
Most of these new provisions have been added to bring more clarity and responsiveness to the surety claim process. Others were included to address stakeholder concerns around the protection afforded by the bonds and what can and should be expected of a surety in the event of a claim. Still others were introduced to address recent developments, legal/judicial and commercial, that impact the construction and surety industries.
One key point of note is that the “risk profile” of the surety bond standards has not changed. In other words, the bonds don’t offer any broader range of coverage or give Obligees or Claimants any more than the predecessor 2002 versions did. The bonds continue to be conditional surety instruments which respond upon default of the underlying obligation. The remedies available to the surety remain unchanged as well.
What has changed is:
- The level of detail around the coverages which should go a long way to bringing more clarity and certainty to the protection provided.
- The enhanced level of responsiveness required of a surety when delivering its claim service.
- With the performance bond, the opportunity for more frequent constructive interaction between the Surety and the Obligee.