Calculate the bond amount required for a Virginia Class A contractor bidding on a $2,400,000 public works project:
Correct Answer
B) $2,400,000
Virginia requires performance and payment bonds equal to 100% of the contract amount for public works projects, so a $2,400,000 project requires $2,400,000 in bonding.
Why This Is the Correct Answer
Virginia's Little Miller Act (Code of Virginia § 2.2-4337) requires performance bonds and payment bonds each equal to 100% of the contract price for public works projects. For a $2,400,000 contract, both the performance bond and the payment bond must each be $2,400,000, meaning the full contract amount is the required bond figure.
Why the Other Options Are Wrong
Option A: $480,000
$480,000 represents 20% of the contract amount. No Virginia statute sets a 20% bonding requirement for public works. This is a distractor playing on students who guess a percentage rather than knowing the 100% rule.
Option C: $1,200,000
$1,200,000 is 50% of the contract amount. Some students assume bonds are set at a fraction of the contract value, but Virginia law mandates 100% for public works. A 50% bond would not satisfy the Little Miller Act requirement.
Option D: $240,000
$240,000 is 10% of the contract amount. Bid bonds (not performance or payment bonds) are sometimes set at 5–10% of the bid price, which may cause this confusion. Performance and payment bonds for public works must equal 100% of the contract.
Memory Technique
Public works bond = 100% of contract. Think: 'Public work deserves full protection — 100 cents on every dollar.' The bond amount is always a mirror image of the contract amount for Virginia public projects.
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